An Australia-based hedge fund manager has entered the fray over Valeant, alleging a vast web of dubious, Valeant-linked pharmacies with names only chess experts and Stephen King aficionados would recognize as forming a pattern.

Bloomberg notes John Hempton, chief investment officer of Bronte Capital, has been doing some detective work on the allegations surrounding Valeant and claims in a blog post to have spotted a pattern.

“The Philidor allegation is that Valeant (through undisclosed proxies) established or owned pharmacies (such as R&O in California) and used their pharmacy numbers to deceive insurance companies into believing that scripts for expensive drugs with generic substitutes were being presented at smaller suburban pharmacies rather than at a Valeant captive pharmacy. […]

“If, however, they put all those [prescriptions] through one Valeant-associated pharmacy, the insurance companies would wise up.” Hempton alleges “they put the scripts through multiple pharmacies — deceiving the insurance companies.”

Hempton claims to have found dozens of Valeant-related pharmacies all registered under names that are references to obscure chess-related facts, or people or places in Stephen King novels. A sampling of Hempton’s examples:

Stephen King

DH Stark Pharmacy, LLC – Possibly short for Dark Half from the novel of the same title. George Stark is the major character.

Burlingame Pharmacy, LLC – Jessie Burlingame is a major Stephen King character.

Lauder & Cross Pharmacy, LLC – The last names of two characters in King’s novel, “The Stand.”

Edgecombe Pharmacy, LLC – From Paul Edgecombe, who used to run Death Row in a King novel.

Cold Mountain Pharmacy, LLC – The Cold Mountain Penitentiary is where Paul Edgecombe ran death row.


Fifty Moves, LLC – Chess term: Fifty Move Rule

ELO Pharmacy, LLC – Chess term: ELO ranking system

C-K Pharmacies, LLC – Chess term: The Caro-Kahn defence

Tarrasch Pharmacy Holdings, LLC – Chess term: Tarrasch was a great player

NC3 Pharmacy, LLC – Chess term: The rarely used Dunst Opening

“[T]hey are all, we think, related to Valeant,” says Hempton. He also claims “registration of false pharmacies” allegedly occurred after Valeant severed ties with Philidor, and that “the people on registration documents are also often on the pay roll of Valeant (not Philidor).” Hempton’s claims have not been proven.

Valeant has released a statement on Hempton’s blog post:

“Short sellers have been making false, unsubstantiated claims about Valeant for months in an attempt to drive down our stock price, and today’s allegations also contain significant inaccuracies. Valeant has already disclosed that 7.2% of our sales this year through the third quarter went through specialty pharmaceutical channels, and that has not changed. As we have said, in October we decided it was appropriate to sever our relationship with Philidor after allegations about their business practices came to light. The entities mentioned today appear to have been formed on or prior to 8/18/2015, based on public records. Furthermore, our board of directors has appointed an ad hoc committee to review allegations related to Valeant’s business relationship with Philidor and related matters.”

Also read:

Valeant, Ackman to face insider trading lawsuit

Consider private equity for untapped healthcare opportunities

Everything you want to know about IPOs

Originally published on

Add a comment

You must be logged in to comment.

Register on