Controversial Valeant Pharma swoops in with a $1B Addyi buyout

Valeant CEO J. Michael Pearson

A little more than a day after little Sprout Pharmaceuticals won a controversial FDA approval to market Addyi (flibanserin) as a new drug that can help inspire sexual desire among women, Valeant Pharmaceuticals ($VRX) announced a deal to acquire the one-drug company in a $1 billion buyout.

An aggressive biopharma buyer that's currently in hot water with Congress over the way it multiplies a drug's price once it's in the portfolio, Valeant says it is paying $500 million upfront and another $500 million in Q1 2016 for a clean takeout that includes hiring up all 25 or so employees at Sprout as they go about the most closely-launched drug launch in recent times. Sprout investors will also get a share of the profits.

Valeant billed the buyout as a move into women's health, with plans to build a new division around this drug.

"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," said Valeant CEO Michael Pearson in a statement. "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."

Sprout Pharmaceuticals CEO Cindy Whitehead

The news was first reported by The Wall Street Journal's Jonathan Rockoff. 

A host of advocates and critics divided over the question of whether Addyi--twice rejected at the FDA--should have been given the green light on the third try. Supporters who helped stoke an influential social media campaign to pressure the FDA for an approval contended that the agency was guilty of gender bias in its regular approval of therapies for male sexual health while women had nothing similar.

Critics noted that the drug was only marginally effective, typically able to provide only one added satisfying female sexual experience a month. The drug was associated with numerous side effects--especially fainting and low blood pressure, which can become dangerous when associated with drinking--and rejected the comparison with drugs like Viagra, which focus on the mechanics of an erection instead of trying to spark sexual desire in the brain – a murky scientific field at best.

Sprout signaled instantly that it would continue to make Addyi all about gender equality, with CEO Cindy Whitehead saying that it would be priced similarly to Viagra (close to $5,000 a year for women) with co-pays expected to be about the same as well as insurers are brought on board.

Sprout did promise to avoid marketing the drug for 18 months, but in recent days it's been handed a free blockbuster media campaign, with reporters and editors around the world often incorrectly calling it a "female Viagra." That kind of marketing grease will help touch off sales and distribution planned for October, which a much bigger company like Valeant can expect to capitalize on much more readily.   

Valeant, though, has a reputation as something of a bully in biopharma, ready to ignore criticisms over its pricing policies with a rep for pumping profits from approved therapies and avoiding drug development whenever possible. Already a concern for lawmakers in both parties, Valeant will likely be in the spotlight even more if it gets control of Addyi. 

The buyout, if completed, will add to a frenzy of acquisitions and deals in the industry, which have been running hot for at least two years now in the biopharma business.

- here's the release
- read the Journal's story (sub. req.)

Editor's Corner: The FDA blundered badly on the Addyi approval

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