Bill Ackman spends 4 hours defending Valeant investment

Maybe it wasn’t the cold room so much as the chilly reception from investors.

Hedge fund mogul Bill Ackman, who complained it was “freezing” in his conference room, held a marathon call Friday to defend his big investment in Valeant, the Canadian drug giant whose shares have been in a free fall since its relationship with specialty pharmacy Philidor came under scrutiny.

The billionaire investor spent four hours — stopping for a bathroom break and to order lunch — telling investors how the besieged drug maker could weather the storm of investigations and negative headlines even if they lead to big fines.

“Life will go on for Valeant,” said Ackman, adding that Valeant Chief Executive Michael Pearson was “headed in the right direction” by severing ties with Philidor.

If anyone thought the bad news was behind Valeant, however, a short-seller who last week likened it to a “pharmaceutical Enron,” and accused it of using Philidor to inflate sales, punctured that illusion.

Citron Research’s Andrew Left tweeted Friday at 11:25 a.m. that he would release a new Valeant short report on Monday showing it is “dirtier” than anyone knows.

The stock — which had been flat at that point — went straight down from there. By the end of trading, Valeant hit a new low of $93.77, a 15.9 percent tumble.

The day started with Valeant saying it had cut ties with Philidor after the three largest US pharmacy-benefit managers terminated their relationships with the mail-order pharmacy because of concerns about alleged improprieties. Philidor is shutting down, Valeant added.

Then Ackman, whose Pershing Square hedge fund has now lost about $2 billion on paper on its Valeant investment, launched into his defense, even invoking Warren Buffett’s investment in American Express after a huge scandal in 1963, which turned out to be a winner.

He also listed a slew of drug companies that have survived criminal judgments and said there’s no reason to believe Montreal-based Valeant won’t, too.

“Some of the best regarded drug companies are repeat offenders,” said Ackman, listing 20 that have paid a total of $30 billion in fines since 1991.

Just this week, Novartis paid $390 million to settle a $3.35 billion criminal charge regarding its dealings with a specialty pharmacy, he noted.

Ackman criticized Valeant for not disclosing more about Philidor and said he only learned about the extent of its relationship with Valeant last week, when the company disclosed it had paid $100 million for an option to buy the pharmacy.

The activist said it’s possible Valeant will be a takeover target, mentioning a “new Pfizer Allergan as a “great buyer.”

Ackman also argued that even if Valeant loses all the sales Philidor was running, the stock is a steal at current levels.

“If you just run the business, buy back stock and don’t buy anything new, the stock today has 80 percent upside,” he said.

Despite showing 37 slides and answering almost 200 questions from investors, analysts and reporters, the stock continued south.

Valeant, which has lost 61 percent of its value since Sept. 18, closed at $93.77 on Friday, a two-year low.