TRENTON, N.J. (AP) — Activist investor Bill Ackman has sold his hedge fund's stake in beleaguered drugmaker Valeant Pharmaceuticals International Inc., saying the investment took up a "disproportionately large amount of time and resources."
The move announced Monday comes after Valeant's latest disappointing financial results and forecast led a number of analysts to downgrade their recommendations and stock-price targets on the one-time Wall Street darling.
After a yearslong spree of drug and company acquisitions, followed by triple-digit price hikes on critical heart drugs and other medicines it had acquired, Valeant's practices were put under a microscope by multiple congressional committees probing soaring prescription drug prices.
No longer able to raise prices much, Valeant is struggling with roughly $30 billion in debt and is having to sell off assets to cover debt payments. It was briefly in default on its debt last spring.
The stock has lost 83 percent of its value over the past 12 months. It peaked at $264 in August 2015, before its business practices came under scrutiny.
In after-hours trading Monday, it dropped almost 10 percent further to $10.91.
Pershing Square said that it will realize a "large tax loss" on its investment in Valeant. It had been Valeant's No. 2 shareholder, according to data provider Capital IQ.
Neither Ackman nor Pershing Square's vice chairman, Steve Fraidin, will seek re-election to Valeant's board. Ackman became a director in March 2016 during an executive shake-up meant to turn things around, which hasn't happened.
Valeant, which technically is based in Canada but operates from headquarters in Bridgewater, New Jersey, ousted Michael Pearson, the CEO responsible for the price-hiking strategy, early last year. It has also replaced numerous other top executives. Meanwhile, former executives of Valeant and a related mail-order pharmacy called Philidor were charged with a fraud-and-kickback scheme in November.
The company sells numerous generic medicines, along with several brand-name drugs, including Addyi for low female sex drive. It also sells medicines in the fields of dermatology, gastrointestinal disorders, eye health and neurology.
AP Business Writer Tali Arbel in New York contributed to this story.
Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma.