Valeant Buys Sprout Pharmaceuticals

Valeant announced on Aug. 20, 2015 that it will acquire Sprout Pharmaceuticals. The announcement comes a day after Sprout won FDA approval for the first-ever drug targeting low libido in women. The female sexual dysfunction pill from Sprout-Addyi (flibanserin)-is being casually referred to as the “female Viagra” or the “pink Viagra” in many news outlets. Under the terms of the agreement, Valeant will pay Sprout approximately $1 billion in cash upfront, and Sprout will be eligible for future milestone payments.

Uptake of Addyi may be interesting to track, as Sprout promised not to market the drug for 18 months after approval and vowed to market the medication to physicians, rather than directly to consumers, reports the New York Times. The direct-to-consumer (DTC) model proved to be extremely lucrative for Viagra (sildenafil) when it launched in 1998. Sprout proposed the delayed release of Addyi into the market as a method to address concerns surrounding “overuse” of the medication; overuse of Viagra did not appear to be a major concern for FDA when it initially hit the market.

Despite the gap in time between the approval of Addyi and the start of marketing campaigns to support sale of the medication, Valeant expects Addyi to be available in the United States at some point in the fourth quarter of 2015. Addyi may have already benefitted, however, from a preapproval marketing campaign-dubbed Even the Score-that was launched to promote women’s sexual health equity and featured the hashtag #womendeserve. Despite the large amount of press Addyi has already received prior to launch, Valeant noted in a press release that it does not expect the deal with Sprout to impact 2015 earnings and predicts only “moderate accretion” in 2016.

Although the financial benefits related to the transaction may be moderate at first, the acquisition gives Valeant the chance to specifically address women’s health, the company said. "Delivering a first-ever treatment for a commonly reported form of female sexual dysfunction gives us the perfect opportunity to establish a new portfolio of important medications that uniquely impact women," Valeant's Chairman and CEO, J. Michael Pearson, said in a press release. "We applaud the efforts of the Sprout team to address this important area of unmet need and look forward to working with them to bring the benefits of Addyi to additional markets around the world."

Source: Valeant