Valeant may fall if new drug disappoints-Barron's

NEW YORK Nov 22 (Reuters) - Investors could shave off a third of the valuation of Valeant Pharmaceuticals International (VRX.N) if its prospective epilepsy drug retigabine fails to live up to expectations, according to a Barron's report.

The Nov. 23 edition of the business weekly said Valeant shares are 50 percent more expensive than the valuations of other specialty drug companies due to high investor hopes for retigabine, which has just been submitted for regulatory approval by Valeant's partner GlaxoSmithKline Pharmaceuticals (GLAX.BO).

"If retigabine can't sustain Valeant's premium stock multiple, the shares could drop by a third," Barron's said.

Investors could flee if retigabine is not approved by regulators or if it is approved but fails to offset a waning royalties from ribavirin, Valeant's biggest product, it said.

The story noted that Valeant trades at 10 times trailing 12-month cash flow and 15 times the consensus estimate for next year's earnings.

It said that these multiples are about 50 percent more pricey than comparable companies such as Biovail Corp BVF.TO or Cephalon Inc CEPH.O.

Valeant shares closed down 1.1 percent at $33.28 in Friday on the New York Stock Exchange. ((Reporting by Sinead Carew, Editing by Gary Crosse)) ((sinead.carew@thomsonreuters.com; +1-646-223-6186))