Woes At Valeant Distributor Philidor Seen As Boon For Anacor - TheStreet

After both CVS Health (CVS) - Get Report and Express Scripts (ESRX) confirmed last night that they have removed Philidor -- the specialty pharmacy used by Valeant (VRX) -- from their pharmacy-benefit management networks, the embattled drugmaker announced this morning that it is severing all ties with Philidor Rx Services.

POTENTIAL WIN FOR ANACOR: Jefferies analyst David Steinberg says that CVS and Express Scripts' removal of Philidor from their respective networks could benefit Anacor's (ANAC) Kerydin. He points out that 44% of prescriptions for Jublia, Valeant's competitive onychomycosis drug, were distributed through Philidor in Q3. If patients or physicians that are currently using Jublia encounter difficulty securing their prescriptions, this could benefit Kerydin, the analyst argues. Steinberg adds that Anacor also reported positive top-line results from its long-term safety study evaluating Crisaborole for the treatment of atopic dermatitis. He has a Buy rating on Anacor shares with a $171 price target.

BACKGROUND: Philidor and other pharmacies in the Philidor pharmacy network, including R&O, have recently been at the center of a firestorm of controversy that has plagued Valeant and sent its shares tumbling. The stock plunged last week after short-selling firm Citron Research alleged that the drugmaker artificially inflates its revenue through its relationships with those specialty pharmacies. Last night, Bloomberg reported, citing statements from former Philidor employees and internal manuals, that the specialty pharmacy urged its employees to modify prescriptions to ensure more orders of Valeant-branded drugs rather than generics. In addition to severing all ties with Philidor, Valeant has stated that Philidor will shut down operations as soon as possible, consistent with applicable laws. Valeant intends to develop a plan to ensure patients' access to drugs is minimally disrupted, the company remarked. This morning, Bill Ackman's Pershing Square Capital Management will host a conference call on its investment in Valeant. CNBC reported that on October 21, Pershing bought an additional 2M shares of the pharmaceutical company amid the selloff following the report by Citron.

PRICE ACTION: In pre-market trading ahead of Ackman's call, Valeant shares are down more than 5.5% to $105.25, while shares of Anacor are up over 1% to $106.55.

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