UPDATE: 4:33 p.m. EDT

Investors were largely unconvinced by entreaties to keep the faith with Valeant, driving the stock down 16 percent Friday, ending the day at $93.81. The pain continued after markets when Standard and Poor's downgraded Valeant debt to B+, setting its outlook to negative.

Original story:

On the same morning that Valeant Pharmaceuticals' stock opened down 6.5 percent on news that it had cut ties with a specialty pharmacy partner, hedge fund manager Bill Ackman mounted a lengthy defense of the embattled drugmaker. Though critical of the company's laissez-faire approach to public relations, Ackman expressed confidence in Valeant's business and growth prospects. 

"We don't think the business model is broken," Ackman said on the hourslong call Friday morning, one week after he increased his stake in Valeant by 2 million shares as scrutiny intensified over Valeant's specialty pharmacy partners. In March, Ackman's hedge fund, Pershing Square Capital Management, disclosed a 5 percent stake in Valeant, when the stock was trading at around $200 per share. Valeant shares opened at $103 Friday. 

Investors have grown increasingly wary of the Canadian drug manufacturer after its relationship with a little-known specialty pharmacy, Philidor Rx, was revealed. Former Philidor employees have told the press they were trained to use questionable means to push insurers into accepting Valeant's drugs for treatments that could otherwise have been covered by cheaper generics. 

It was only hours before the scheduled call that Valeant announced it had severed ties with Philidor, which together with related pharmacies represented 7 percent of Valeant's earnings for the third quarter of 2015. "We understand that patients, doctors and business partners have been disturbed by the reports of improper behavior at Philidor, just as we have been," Michael Pearson, Valeant's chief executive, said in a statement.

Ackman defended the use of specialty pharmacies, but said Valeant's underinvestment in public relations and government outreach was a "meaningful mistake."

"I don't think Michael Pearson has walked the halls of Congress, maybe ever," Ackman said. Valeant is facing multiple federal investigations over issues surrounding patient assistance, drug pricing and market fairness. 

The hedge fund manager also downplayed the cost to Valeant of the Philidor debacle, saying the estimated $500 million in revenue that flows through Philidor's distribution channels represented just a small part of Valeant's business. The drugmaker has distinguished itself with a decadelong string of major acquisitions, including Pepcid maker Salix and eye care giant Bausch and Lomb.

Given the stock's current value -- which has plunged more than 50 percent since its August highs -- Ackman estimated that by 2019, Valeant's shares could be worth roughly double Friday's $100 price. An explosive short seller's report last week sent the stock plunging nearly 30 percent, where it has remained.  

Since Ackman redoubled his investment, shareholders have grown dubious of the specialty pharmacy model, in which mail-order operations like Philidor offer to discount patients' prescriptions and maneuver insurers into covering pricey drug costs. Critical reports in the New York Times and elsewhere have connected the model to eye-popping price hikes in niche pharmaceuticals. 

Ackman said Valeant might be more careful moving forward with practices that, while legal, raise hackles in the public, citing what he called the New York Times rule. "It might be a legit business practice, but it doesn't look good on the front page of the New York Times."

Still, Valeant's forays into the specialty pharmacy world still won Ackman's approval on the call. “Specialty pharmacy is the future of the industry,” he said.

Ackman and other Pershing Square partners were midway through the hundred-plus questions submitted by investors when short seller Citron Research -- whose somewhat unsubstantiated report last week helped tank Valeant's stock -- tweeted that a story "dirtier than anyone has reported" was due Monday. Valeant stock immediately fell 3 percent on the announcement.