Valeant Acquires Sprout for $1 Billion

Valeant Pharmaceuticals wasted no time in signing a deal to acquire Sprout Pharmaceuticals for $1 billion, following last week’s FDA approval of Sprout’s female libido drug, Addyi.

J. Michael Pearson, chairman and CEO of the Canadian drugmaker, said the U.S. clearance of the first-ever treatment for female sexual dysfunction offers the “perfect opportunity” to establish a new portfolio of therapies aimed exclusively at women.

The drugmaker plans initially to explore expanded indications for Addyi, such as its use by postmenopausal women — a population not served by the current approval.

Valeant believes sales could reach several hundred million dollars annually for Addyi, which will be priced similarly to erectile dysfunction drugs, but S&P Capital IQ analyst Jeffrey Loo questions that estimate.

Loo said he anticipates a slow uptake of the drug and resistance from insurance companies, but also expects pressure from women’s groups to reimburse for the treatment.

Under terms of the agreement, announced last week, Valeant will pay $500 million when the transaction closes and an additional $500 million in the first quarter of 2016, plus a share of future profits based on certain milestones.

Following completion of the deal, expected in the third quarter of this year, Sprout will become a division of Valeant, retaining its headquarters in Raleigh, N.C.

Sprout plans to launch Addyi (flibanserin) in the U.S. market by Oct. 17, and Valeant says it will leverage its global scale to register the drug internationally.

The deal follows earlier acquisitions this year of Egyptian drugmaker Amoun Pharmaceutical, gastrointestinal drugmaker Salix Pharmaceuticals and contact lens maker Unilens Vision. — Jonathon Shacat