SAN DIEGO (TheStreet) -- In a letter to employees filed with the SEC Thursday, Valeant Pharmaceuticals' (VRX) CEO Michael Pearson claimed critics are using "the wrong assumptions" as they analyze the company.
Wrong assumptions. Really? That's like a company telling a reporter or analyst, who pushes too hard, that they're asking the "wrong" questions. (Which, in general, usually means they're the right questions.)
From the letter:
Our actions have generated a lot of attention from the media, and we expect this transaction will continue to be the focus of many press reports. Unfortunately, some of these reports have criticized our overall business model and raised questions about our approach to R&D. We disagree with these criticisms and they are often based upon wrong assumptions, and we have been setting the record straight with facts about our operating model and the performance of our businesses.
At the risk of making the wrong assumptions -- and I do not believe I am, as I wrote in January when I red-flagged Valeant: Despite its claims to the contrary, Valeant is a rollup revolving around the idea of stripping away R&D costs for instant bottom line results. (And that's before getting into the wonderful world of acquisition accounting.)
The letter goes on to say:
We continue to believe that innovation is critical for the future of healthcare and the success of Valeant. The source of that innovation, however, has shifted dramatically over time and Valeant's output-driven approach to R&D is on the forefront of this shift. We support lower-risk projects, like line extensions and new indications, and our portfolio prioritization is determined through rigorous and unbiased peer scientific review.