Valeant’s $58M Accounting Error Prompts The Question: What Other Flaws Will Emerge?
The company made a mistake in booking sales to a specialty pharmacy. Improperly booking revenue, as Valeant did with Philidor, is a tactic called "stuffing the channel" that sophisticated investors stay alert for. Elsewhere, new clinical data give hope that Regeneron's new drug could help reverse the company's 2016 stock slump.
The New York Times:
A Valeant Boo-Boo May Portend Bigger Errors
In the five months since Valeant’s board established a committee to examine the company’s accounting practices, it has turned up one $58 million error. Valeant Pharmaceuticals International, the besieged drug company, had made a mistake in booking $58 million in sales in 2014 to Philidor Rx Services, a specialty pharmacy the company used to sell its drugs. Those sales should have been recorded later, when the drugs were actually dispensed to patients, the committee said. A $58 million boo-boo is no biggie for Valeant, which reported over $8 billion in sales in 2014. Still, the question lingers: Will other accounting flaws emerge? (Morgenson, 4/1)
The Wall Street Journal:
Regeneron’s Blockbuster Dreams Get Brighter
After a rough start to the year, fresh clinical data gave Regeneron Pharmaceuticals shareholders some much-needed relief. Regeneron’s stock surged 12% on Friday after the company announced strong phase 3 clinical results for dupilumab, its experimental treatment for atopic dermatitis. Regeneron is developing the drug with the French pharmaceutical company Sanofi. (Grant, 4/3)