Shares of Valeant Pharmaceutical International (VRX) dropped by about 9% Monday afternoon when embattled activist investor Bill Ackman reported that he has liquidated his position in the drug company and plans to eventually step down from the board.
The liquidation is the latest blow for the troubled pharmaceutical company, whose stock has dropped from a high of about $262 a share in August 2015 to trade recently at $11 a share, down in after-hours trading.
The company has been struggling in the aftermath of a report issued by short-seller activist Andrew Left of Citron Research in October 2015 alleging a secret relationship between Valeant, a mail-order pharmacy and one of its customers. Citron alleged that Valeant used the relationship to improperly hike revenues.
Valeant on March 6 announced that it had paid down $1.1 billion in senior secured term loans after closing the sale of its skincare assets to L'Oreal SA. However, the Lava, Quebec-based biotech still has about $28 billion in debt after paying off the small piece.
Ackman's move is a bit of a surprise because the activist fund manager behind insurgent fund Pershing Square Capital Management has steadfastly supported Valeant over the past year, arguing late last year that the company could find its way out of a multi-billion-dollar debt swamp by selling non-core assets.
In a statement, Ackman saidthat the investment represented a disproportionately large among of time and resources and he decided to sell its investment and realize a large tax loss.