The short seller going after Valeant says he has more dirt on the company

Citron Research, the California-based short-selling research firm led by Andrew Left, Tweeted on Friday that it's going to release an updated report on embattled drug giant Valeant on Monday.

"[Valeant] has a better chance of going to [$0] than [Herbalife] ever will," the firm tweeted, adding that the story is "dirtier than anyone has reported!!"

The Citron Tweet came during hedge fund manager Bill Ackman's conference call defending his massive investment in Valeant. Ackman is short Herbalife. For almost three years, he's been betting that Herbalife's stock will go to $0. 

Valeant's stock was last trading down about 10% at $100.  

Ackman's Pershing Square Capital has lost more than $1.5 billion on paper this year on its Valeant bet. Much of those losses have happened in the last two weeks.

Shares of Valeant crashed 40% since last Wednesday, which is when Citron published a report asking whether Valeant was operating an Enron-like fraud.

Citron's report focuses on the company's relationship with Philidor, a specialty pharmacy that distributes prescription drugs for Valeant. Valeant is the only supplier to Philidor, and it also has an option to buy the company. On Wall Street, no one had really heard of Philidor until earlier this month.

Citron has accused Valeant of using Philidor to create "phantom sales" of its products.

Ackman said on his investor call that he does not think Valeant engaged in deceptive accounting. He did add that he does "think some of Philidor's numbers are exaggerated." 

Valeant has categorically denied the allegations in the Citron report. The company hosted an all-hands call Monday this week morning to address the allegations.

On Friday morning, Valeant said it will sever "all ties" with Philidor.