Montreal-based drugmaker Valeant has announced its chief executive Michael Pearson is stepping down as soon as a replacement can be found.
The move comes after Valeant lost more than 90 per cent of its value, tumbling from being the most valuable company in Canada — worth more than $100 billion at $346 a share last summer — to less than $11 billion and $35 a share today amid a series of accounting and other scandals.
The company, which makes a wide variety of generic drugs and other medical supplies, grew quickly through acquisitions for much of the last half-decade. It fell on tough times in the summer of 2015 when short-seller Andrew Left called the company's finances a "fraud" because of the way it books revenue.
The company also landed in the crosshairs of a U.S. government probe into rapidly escalating drug prices, which has emerged as a campaign theme.
And Valeant also faces several shareholders lawsuits. Japanese investment bank Nomura said investors "have lost confidence in management's ability to understand its own business and to provide reliable guidance."
Activist investor Bill Ackman — who as chief executive of Pershing Square Capital Management is Valeant's largest single shareholder with nine per cent of the company — will take a seat on the board. Pershing already has another, Stephen Fraidin, on Valeant's board.
Ackman has lobbied for months for changes at Valeant, and his seat on the board puts him in a good position to put his plan into action.
Investors reacted positively to the news, sending the shares up 12 per cent on the TSX to $39.28.
Pearson had only recently returned from a two-month medical leave. He told investors earlier this month that the company wouldn't be able to file quarterly earnings on time, after discovering an accounting error it was trying to unravel.
He also said Valeant is in confidential discussions with partners on selling some non-core assets and hopes to use that and other money this year to pay off its debt load, which is as large as $30 billion, all told, to be paid in the coming years.
Director Howard Schiller was also asked to tender his resignation, but Schiller has not done so. Schiller is the company's former chief financial officer, and he served as interim CEO during Pearson's medical leave.