Valeant’s new chairman and CEO says he hopes the battered drug manufacturer will one day be ranked among Canada’s most valuable companies just as it was before a series of crises decimated the value of its stock.
"I believe that the point of view of being one of the largest companies in Canada is an admirable goal I would absolutely like to do," Joseph Papa told the media Tuesday after speaking to Valeant shareholders at their annual meeting.
"I’m a sports fan and competitive and so trying to get back to a size to where we were before — earnings per share — would be important for me."
Once Canada’s most valuable company by stock market value, Valeant’s (TSX:VRX) stock has plunged by nearly 90 per cent amid various controversies.
Papa, who joined the firm about six weeks ago, said restoring the company’s value will be the result of doing a better job providing patients with the medications that make a real difference in their lives. He said the Quebec−based firm has a strong portfolio of products and a pipeline of promising new drugs.
The veteran pharmaceutical executive acknowledged that past errors, including its focus on excessive drug prices, caused major distractions over the past nine months.
But when pressed by a shareholder for an explanation of what’s gone wrong, Papa said he’s focused on the future, including up to six months of stabilization followed by efforts to revive Valeant’s long−term fortunes.
Long−time Montreal investor Philip Harrison said he was disappointed by Papa’s response.
"What I’m really surprised about is that there weren’t more substantial questions from people much more important and more heavily invested than me," Harrison said in an interview.
With US$1.3 billion in cash and projected cash flows, Papa said the company will adhere to its debt covenants for 2016 and repay more than US$1.7 billion of debt this year.
Additional money will be directed to reducing its US$30−billion debt if the company manages to sell non−core assets, which excludes Bausch & Lomb and Salix, as well as its dermatology, gastrointestinal and consumer products operations.
Papa said he’s already been approached by potential buyers and expects some sales can be finalized in the next six months to a year.
It’s too early to assess the long−term viability of Addyi, the first pill for boosting female libido, he added. The medication — part of last year’s purchase of Sprout Pharmaceuticals for US$1 billion cash, plus a share of future profits — hasn’t been performing well is set for a relaunch.
One candidate for sale could be Egypt−based drugmaker Amoun Pharmaceuticals, purchased last fall for US$850 million. Its sales have dropped by a third and its top drug slipped off Valeant’s 30 bestsellers list in the first quarter.
Vicki Bryan, an analyst with corporate bond research company Gimme Credit, doubts Valeant will quickly find a buyer for Amoun and believes the company may struggle to meet its reduced guidance for 2016 and amended debt covenants.
Papa has been working to reassure investors that Valeant is on the mend following the year of "major distractions,’’ including investigations in the U.S. over drug−pricing practices, a board of directors shuffle, misstated earnings and concerns about its debt.
He warned that change and regaining trust won’t happen quickly.
"People are going to need to see how we perform," he said.
On Friday, Papa bought 202,000 shares in Valeant for US$24.48 apiece, increasing his stake in the company to 2.44 million shares.
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