Pershing Square Activist Presentation Deck
Despite Improved Disclosure, Questions Remain
On its October 26th conference call, Valeant management answered many
important questions and disproved alleged accounting fraud, but did not
adequately answer three important questions
1. Why did Valeant not provide more disclosure about Philidor?
Valeant's answer:
• "We have viewed our relationship with Philidor and our other specialty pharmacies as
proprietary and as one of our competitive advantages"(1)
"Philidor was not specifically mentioned in our disclosures because it had not been material
to the consolidated financial statements."(2)
2. Why did Valeant structure the Philidor option with a $100mm premium and $0 strike price?
Valeant's answer:
• "Ultimately we determined that the structured option acquisition with the oversight rights we
negotiated provided the security we were looking for and preserved the flexibility to acquire
in the future a new growth platform."(²)
"The rationale to acquire the option was to keep Philidor focused on Valeant's business and
to ensure continued strong customer service. The option also gave Valeant a level of
contractual influence to benefit our business while providing an option on long-term
ownership." (2)
3. Did Philidor violate laws and regulations in the operation of its specialty pharmacy?
Valeant's board has formed an ad hoc committee to investigate Philidor's compliance
(1): Valeant Q3 2015 earnings presentation. October 19, 2015.
(2): Valeant investor conference call. October 26, 2015.
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