Valeant Hits Another Bump

The beleaguered drugmaker says the FDA raised red flags at a Tampa-based manufacturing plant.
By James Passeri ,

Editor's Note: This article was originally published on Real Money at 7:58 a.m. on July 22.

One of a trio of potentially lucrativeValeant Pharmaceutical (VRX) drugs that are currently under FDA review failed to pass regulatory muster after an FDA inspection of a manufacturing plant raised eyebrows.

Bausch & Lomb, the eye care giant and Valeant subsidiary that billionaire activist Bill Ackman has called one of Valeant's "crown jewel" assets, is the manufacturer behind the product, labeled latanoprostene bunod, which is being tested as an eye drop to treat glaucoma and hypertension. (Ackman and Stephen Fraidin, the vice-chairman of his hedge fund Pershing Square, took seats on Valeant's board in March.)

Valeant said in a Friday release that the FDA sent the debt-laden Canadian drugmaker a Complete Response Letter following the submission of Valeant's New Drug Application filing, citing concerns raised by an inspection of the Bausch & Lomb manufacturing plant in Tampa.

Valeant was not specific about any particular flags raised, but said the FDA did not identify efficacy or safety concerns related to the drug itself -- just concerns related to the Florida facility -- and noted the company plans to meet with the FDA "as soon as possible" to reach a resolution.

Shares of Valeant are up nearly 8% this week following the FDA approval on Tuesday of Valeant's opiod-induced constipation treatment Oral Relistor, which came in hours after an FDA advisory board voted 18-0 to approve a second drug, psoriasis treatment Brodalumab -- contingent on Valeant putting in place certain safety regimens and warning labels.

Altogether, the three drugs under review were estimated to add as much as $2 billion in much-needed annual sales to Valeant, Rodman & Renshaw managing director Raghuram Selvaraju said in a phone interview with Real Money.

Latanoprostene bunod, alone, was likely to pull in about $500 million on an annual basis -- and at wide profit margins, thanks to the sales and marketing team already established at Valeant's Bausch & Lomb, Selvaraju added.

Valeant currently holds about $31 billion in debt.

Valeant shares were down more than 4% in Friday trading.

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