Valeant will buy Sprout pharmaceuticals, maker of "female Viagra," for about $1 billion. The deal represents a sizable return for investors in Sprout, a privately held company in Raleigh, N.C., with 34 employees, reports the New York Times. A total of about $100 million has been invested in Sprout since its formation in 2011.
Sprout’s drug, Addyi, won approval from the Food and Drug Administration Tuesday to treat a lack of sexual desire in premenopausal women. One survey has suggested that about 10 percent of American women suffer from this condition, which is known as hypoactive sexual desire disorder. Valeant said it expected the drug to be available on the market in the United States in the fourth quarter.
The U.S. Food and Drug Administration approved Sprout's Addyi on Tuesday after rejecting it twice, writes Reuters. The pink pill proved only marginally effective in clinical trials and carries a strong warning about potentially dangerous low blood pressure and fainting, especially when taken with alcohol. "Although the drug has a potentially large addressable patient population and will benefit from the marketing scale of Valeant’s sales force, acceptance of this product may ultimately be limited," Morningstar Research analyst Michael Waterhouse said. Health insurers may not cover the drug, he added.
While Addyi has been nicknamed "female Viagra," it works differently from Pfizer Inc's (PFE.N) product, which was introduced nearly two decades ago as the first drug for erectile dysfunction. Addyi is meant to activate sexual impulses in the brain and is taken daily, while Viagra affects blood flow and is taken as needed. Valeant will pay $500 million now and $500 million early next year in cash, delaying the company's plans to reduce debt from its $800 million purchase of Amoun Pharmaceutical announced last month and its $11 billion acquisition of Salix Pharmaceuticals, Moody's Investors Service said. Including Sprout, the company has done $18.2 billion in deals so far this year. Valeant Chief Executive Officer Michael Pearson said in an interview that Addyi could be approved in Canada within a year. Approval in Europe, based on completed European studies, could take "a little longer," he said.