Valeant hands off its controversial, $1B female libido drug to Sprout backers in sweetheart deal

A little more than 2 years ago, Valeant agreed to buy Sprout Pharmaceuticals and its controversial female libido drug Addyi for a cool $1 billion, half up front, while insisting they were on to a blockbuster. But while a dysfunctional Valeant was headed south and Addyi proved to be a commercial disaster, the deal was sidetracked into court as the Sprout founders accused the deeply troubled biopharma of a launch misfire for a drug that many in the industry believe should never have been approved in the first place.

Today, the new management at Valeant $VRX is washing its hands of the whole thing, including the cash put up to bring this therapy into the portfolio. The company agreed to sell its subsidiary and the drug to a new company “associated” with Sprout’s founders, for a royalty stream of only 6%.

Joseph Papa

In addition, Valeant is providing a $25 million loan to the new company to get things started. And in exchange the Sprout group is dropping their lawsuit claiming Valeant bungled the launch by hiking the price too high and sticking with a specialty pharma company under criminal investigation.

A host of advocates and critics divided over the question of whether Addyi (flibanserin) — twice rejected at the FDA — should have been given the green light on the third try in 2015. 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. A requirement that women on this drug would also have to avoid alcohol triggered concerns at the FDA of safety issues.

Sprout was founded by Cindy and Bob Whitehead.

“Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business,” said Joseph Papa, chairman and CEO of Valeant. “As we transform Valeant, we are focusing our resources on our core businesses to best serve our shareholders, customers and patients. These areas include eye health, gastroenterology and dermatology.”

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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