Sprout Pharmaceuticals, the Raleigh-based firm that earlier this week received FDA approval for its drug to boost women’s sexual desire, is being sold to Canada-based Valeant Pharmaceuticals.
The deal was announced early Thursday.
Valeant is paying $1 billion in cash for Sprout, which is privately held. A share of future profits also will be paid to Sprout’s owners and investors based on milestones.
Sprout will remain based in Raleigh.
Cindy Whitehead, the chief executive officer of Sprout, will continue to lead Sprout as a division of Valeant.
“I am extremely proud of the commitment and passion of our 34 employees who have been mission-driven to get to this breakthrough first for women,” Whitehead said in a statement. “This partnership with Valeant allows us the capacity to now ensure broader, more affordable access to all the women who have been waiting for this treatment. Beyond building this in the United States, Valeant also offers us a global footprint that could eventually bring Addyi to women across the globe.”
Valeant has agreed to pay some $500 million up front when the deal closes and another $500 million in the first quarter of 2016.
The deal is the second made for a Raleigh-based firm by Valeant this year. It acquired Salix Pharmaceuticals for some $11 billion. A third of Salix employees based in Raleigh were later laid off.
“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’s Chairman and Chief Executive Officer J. Michael Pearson in the announcement. “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 raised $50 million from investors earlier this year, anticipating FDA approval and commercialization of the drug.
Capitol Broadcasting, the parent firm of WRAL TechWire, WRAL-TV and WRAL.com, was an early investor in the company.
The FDA on Tuesday approved Sprout’s product as the first prescription drug designed to boost sexual desire in women, a milestone long sought by a pharmaceutical industry eager to replicate the blockbuster success of impotence drugs for men.
But stringent safety measures on the daily pill called Addyi mean it will probably never achieve the sales of Viagra, which has generated billions of dollars since the late 1990s.
The drug’s label will bear a boxed warning – the most serious type – alerting doctors and patients that combining the pill with alcohol can cause dangerously low blood pressure and fainting. That same risk can occur when taking the drug with other commonly prescribed medications, including antifungals used to treat yeast infections.
“This is not a drug you take an hour before you have sex. You have to take it for weeks and months in order to see any benefit at all,” said Leonore Tiefer, a psychologist and sex therapist who organized a petition last month calling on the FDA to reject the drug.
