Valeant Pharmaceuticals CEO J. Michael Pearson to step down

Embattled drug company Valeant Pharmaceuticals is shaking up its leadership by looking for a new CEO and adding activist investor William Ackman to its board of directors.

U.S.-traded shares of the Canadian company soared more than 12 percent in Monday morning trading.

Valeant said that current CEO J. Michael Pearson will stay until his replacement has been appointed. Pearson just returned from a two-month medical leave. The company did not specify whether Pearson is resigning or if he had been asked to leave.

A statement from the company did say that Valeant’s board has asked director Howard Schiller to tender his resignation, but Schiller has not done so. Schiller is the company’s former chief financial officer, and he served as interim CEO during Pearson’s medical leave.

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Valeant’s stock soared last year as it carried out its strategy of growing mainly by buying older drugs and then hiking their prices. But the company has been swamped in recent months with a host of problems including massive debt, three ongoing federal probes of its accounting and pricing practices, and shareholder lawsuits in the U.S. and Canada.

Pearson told investors earlier this month that Valeant won’t be able to file its annual financial report with the Securities and Exchange Commission until sometime in April at the earliest, due to an internal probe of its 2014 financial reporting.

He also said Valeant is in confidential discussions with partners on selling some noncore assets and hopes to use that and other money this year to pay off $1.7 billion of its debt, accumulated from a spree of acquisitions in recent years.

Valeant Chairman Robert Ingram said Monday in a statement that while Valeant has gone through some difficult months, “I am confident that the company will be able to rebuild its reputation and thrive under new leadership.”

Valeant Pharmaceuticals International Inc. also said Ackman is joining its board immediately. His Pershing Square Capital Management holds a 9 percent stake in the drug company and already has another executive, Stephen Fraidin, on Valeant’s board.

Ackman had recently sent his hedge fund investors a note stating that Pershing will “take a much more proactive role at the company to protect” its investment.

Valeant shares jumped $3.42, or 12.7 percent, to $30.41 in morning trading Monday. That’s still a fraction of the all-time high price of $263.81 that the stock reached last August.