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Noted Biotech Analyst Doesn't Think Valeant And Horizon Are Frauds, But Did Push A Line

Noted Biotech Analyst Doesn't Think Valeant And Horizon Are Frauds, But Did Push A Line
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The "specialty pharma" space has received a lot of attention this week, and it's not very positive.

It began on Monday with a New York Times article focusing on "Prescriptions Made easy." The market felt the effects on Wednesday when Citron Research came out with a scathing report on Valeant Pharmaceuticals Intl Inc (NYSE: VRX). It continued on Thursday morning, as Depomed Inc (NASDAQ: DEPO) called out Horizon Pharma PLC (NASDAQ: HZNP) over its business methods.

The iShares NASDAQ Biotechnology Index (ETF) (NASDAQ: IBB) is down about 4 percent on the week.

Benzinga spoke with noted biotech analyst Jason Napodano, who believes aggressive biotech companies that don't do R&D are most affected. He said the specialty model could be in question with increased scrutiny, reputation of companies affects those with this model.

Napodano doesn't think doesn't think Valeant and Horizon are frauds, but does believe they pushed a line. He would be surprised if experienced institutional investors didn't know of these businesses prior to investing in Valeant and Horizon.

Related Link: These Four Analysts Remain Bullish On Valeant

The analyst said that aggressive companies like Enron were lauded for financial aggressiveness before going to zero. The fact that Citron used "Enron" in its report's title ("Valeant: Could this be the Pharmaceutical Enron?") was a big reason for movement and scrutiny in the stock. Valeant said the Citron report was "erroneous."

Napodano thinks there could be investment opportunities for cleaner companies that fell on the Valeant move, such as Depomed and Allergan PLC (NYSE: AGN).

  • Shares of Valeant were down more than 17 percent at $97.90 Thursday afternoon.
  • Shares of Horizon were down 11.5 percent at $13.12.
  • Shares of Depomed were down nearly 6 percent at $15.17.

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Sep 2016Deutsche BankInitiates Coverage onHold
Aug 2016Morgan StanleyUpgradesEqual-WeightOverweight
Aug 2016MizuhoUpgradesUnderperformNeutral

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