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Comment by 7Figures2Commas | Hacker News Reader

Since there's so much interest in unicorn valuations today, and Theranos is a prominent unicorn, anyone wondering about the potential implications of all this news on Theranos' valuation might find it useful to look at Valeant Pharmaceuticals, a publicly-traded company (ticker: VRX).

It is facing a number of issues, a few of which have led some to speculate that it could become pharma's version of Enron[1]. In July, VRX hit a high above $260. Today it's trading at less than $110.

[1] http://www.nytimes.com/2015/10/27/opinion/is-valeant-pharmac...

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Valeant is especially pernicious case of credulous investors looking at a rising stock price and skipping their due diligence. There's a lot of amazing blog posts from John Hempton and others outlining the problems with their story.

http://brontecapital.blogspot.com/2015/10/some-comments-on-v... http://brontecapital.blogspot.com/2015/10/simple-proof-that-... http://brontecapital.blogspot.com/2015/10/valeant-and-its-ca...

http://azvalue.blogspot.com/2015/08/valeant-detailed-look-in... http://azvalue.blogspot.com/2015/08/valeant-detailed-look-in...

VRX really seems like it's much more smoke than actual fire; at least on recent specialty pharmacy news. It's definitely a complicated and shady-looking structure but it seems like they have shielded themselves from any fallout from fraud. That's not to say the stock won't take a hit in the meantime but Enron comparisons are really overblown right now. Management definitely screwed up by not clarifying things earlier.

Theranos is in a completely different situation. They could easily lose Wallgreens among others over the current fallout and not get the FDA to go the way they want. Company would take a huge hit and given that their signature technology is not really usable right now, I don't know how much more leeway they would really have after this.

Accounting rules changed after Enron; it's a lot harder to do what they did. The biggest recent drop was after a very negative piece from someone who publishes negative pieces while short-selling. I don't have much information, but I'm not all that convinced Valeant has real fraud issues.

Also, Theranos and Valeant seem like entirely different businesses.

> Theranos and Valeant seem like entirely different businesses.

I think you're missing the point I was making: Valeant is a timely and interesting example of what can happen to the valuation of a company under fire.

> I don't have much information, but I'm not all that convinced Valeant has real fraud issues.

If you don't have much information, how can you be convinced of anything one way or the other?

Would you short it x10?

I would totally short it. Speaking as a husband whose wife's company was bought then killed by Valeant....

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