Updated from 11:44 a.m. to include new video.
Embattled Valeant Pharmaceuticals (VRX) on Friday announced it was reorganizing its board and filing an overdue financial report that revealed a number of government probes into its operations, in a series of moves that did nothing to appease investors and drove the drug company's stock price sharply down in midday trading.
The drug company said it had nominated three new independent directors, Argeris Karabelas, a partner at life sciences venture firm Care Capital; Russel Robertson, executive vice president and head of anti-money laundering at BMO Financial and Amy Wechsler, M.D., a practicing dermatologist in New York since 2005. The three will stand for election at the 2016 annual meeting set for June 14.
In addition, Robert Ingram, who governance experts have viewed as overboarded, is stepping down from the Valeant chairman position, to be replaced by the drug company's incoming CEO Joseph Papa. Valeant announced Monday that Papa, who resigned from his post as CEO of Perrigo (PRGO) , would take the job.
The drug company's stock price traded downward on the news, at around $33.30 a share at midday, down 5.5% for the day. The stock price is down significantly from its high of more than $263 a share in August.
Trouble started for Valeant after short-seller activist Andrew Left of Citron Research issued an eight-page note in October alleging that there was a secret relationship between Valeant, a mail-order pharmacy called Philidor Rx Services and a Philidor customer, R&O Pharmacy.
And the Canadian drugmaker shocked the market in March when it slashed its 2016 financial guidance significantly below prior estimates and said it might default on its debt. Valeant said Friday that the default under its senior note indentures arising from the failure to file its form 10-K in a timely manner was "cured" and the company "remains in full compliance with its credit agreement."
However, the report also revealed additional information about a variety of investigations, including investigations launched by the Southern District of New York, the State of North Carolina Department of Justice, the Securities and Exchange Commission and a couple of congressional panels, including the U.S. House Committee on Oversight and Government Reform.
The move to remove Ingram from the chairman position is likely to be met with partial support by the governance community, because he was viewed as overboarded. According to BoardEx, an affiliate of The Deal, Ingram sits on four publicly traded boards, including one based in Ireland, as well as three private company boards.
However, the move to install Papa as both CEO and chairman is likely not going to be met with total approval by governance experts. They generally would prefer corporations have chairmen that are independent of CEOs. Despite that, BoardEx notes that Papa only sits on one other public board, Smith & Nephew (SNN) , where he is an independent nonexecutive director.
The incoming independent directors don't appear to be anywhere close to being overboarded, according to BoardEx.
Care Capital partner Karabelas sits on two other public company boards, Inotek Pharmaceuticals (ITEK) and Regenxbio (RGNX) , as well as one private one, Polyphor. BMO Financial's Russel Robertson sits on the boards of Virtus Investment Partners (VRTS) and Turquoise Hill Resources (TRQ) . Wechsler doesn't appear to sit on any other boards, though she is an active member of several professional medical organizations.
Neither ex-CEO J. Michael Pearson, who had led the company for about eight years and former interim CEO Howard Schiller will be standing for re-election at the annual meeting. Valeant has alleged that the improper conduct of Schiller resulted in the "provision of incorrect information to the company's auditors" and contributed to Valeant's misstatements of earnings for its fiscal year 2014.
The new directors come after Valeant's board was reshuffled already in March, when embattled activist investor Bill Ackman of Pershing Square Capital Management was installed on its board amid the allegations of improper conduct by Schiller. Ackman joined his colleague at Pershing Square, Vice Chairman Stephen Fraidin, who was appointed to Valeant's board earlier in March.