New Valeant = Old Valeant: Wells Fargo

Valeant Pharmaceuticals Intl Inc VRX continues its reliance on price as a means of growth as it recently implemented 95 different price increases across more than 50 products.

“We continue to believe that the ‘new Valeant’ is the same Valeant using the same strategy and pricing levers that have been used before,” Wells Fargo analysts wrote in a note.

Old? New? Little Difference

Wells Fargo noted that the price increases may also signal that Valeant's prescription volumes continue to remain challenged.

The latest price increases come on top of significant price increases taken on products in previous years and several taken in late 2016. The price increases appear to span Valeant's dermatology, ophthalmology and gastroenterology portfolios.

However, Valeant lowered the list price of Nitropress by about 66 percent. Nitropress appears to be the only list price decrease Valeant has implemented since the initiation of its Patient Access and Pricing Committee.

The analysts question whether without the price increases Valeant would be able to remain in compliance with its debt covenants in 2017 and awaits Valeant's 2017 financial guidance to see how close its adjusted EBITDA forecast will be to the covenant requirements.

Divestitures And Stock Moves

But, shares of Valeant surged more than 11 percent in the pre-market hours Tuesday after it made a slew of divestitures that would provide more than $2 billion in cash that in turn could be used to cut debt. The company also released positive results from its psoriasis study.

Valeant has agreed to sell its CeraVe, AcneFree and AMBI skincare brands to L'Oreal SA (ADR) LRLCY for $1.3 billion in cash. The product lines have annualized revenue of about $168 million. Valeant is also selling its stake in Dendreon Pharmaceuticals, Inc. to the Sanpower Group Co., Ltd. for $819.9 million.

Separately, Valeant said its IDP-118 lotion for plaque psoriasis showed statistical significance (p < 0.001) to vehicle with a treatment success rate at eight weeks of 35.76 percent to 6.98 percent in a late stage study.

Shares of Valeant closed Monday’s regular trading at $15.35. In the pre-market hours, the shares climbed 11.73 percent to $17.15. Wells Fargo has a valuation range of $10–$13.