Concordia can add trouble with a short seller to the list of things it wishes it didn’t share in common with Valeant Pharmaceuticals.
The drugmaker’s CEO, Mark Thompson, is suing Marc Cohodes--a former employee of short-selling hedge fund Rocker Partners--for libel, The Wall Street Journal reports.
Thompson is seeking $4 million Canadian dollars, alleging in documents reviewed by the WSJ that he has “suffered damage to his reputation and feelings” thanks to “false and defamatory statements” by Cohodes.
It all started with an April TV appearance by Cohodes on a Canadian financial news channel. He brought up Thompson’s employment history at Biovail--now part of Valeant--which in 2008 paid $10 million to U.S. securities regulators to settle accounting fraud charges.
“The management of Concordia, their past gig was at something called Biovail, which I was short a long time ago [and] was a complete and utter fraud. So [Mr.] Thompson has a history of nonsense when he was at Biovail,” Cohodes said.
The way Thompson sees it, those statements were understood to mean that he himself had committed fraud while at Biovail. And as he argues in the lawsuit, Cohodes “has launched a campaign to manipulate downward the price of Concordia shares by, among other things, criticizing Mr. Thompson.”
Meanwhile, shares of Concordia--which has been tagged as a mini-Valeant thanks to its similar strategy, which includes price hikes, rampant M&A and a large debt load--have taken a beating over the past 12 months, sinking by nearly 80%, the WSJ notes.
And Concordia isn’t alone. Specialty peers Mallinckrodt, Endo, Horizon and others have all suffered on the stock market since Valeant’s own decline began last year. That downfall, set in motion by governmental drug-pricing pushback, was propelled by short-seller Andrew Left of Citron Research, who in October claimed Valeant had used its specialty pharmacy network to inflate its top line.
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