Valeant is not doing enough to sell the female libido pill and also is charging too high a price for the drug, say the investors in Sprout Pharmaceuticals’ which developed the drug called Addyi.
In a letter, Sprout investors say that Valeant is not living up to terms of the $1 billion merger agreement through which the large Canada-based firm acquired Sprout, a Raleigh-based startup.
Bloomberg news reported the story Friday.
“The group, representing all Sprout shareholders at the time of the acquisition, sent Valeant a letter on March 14 requesting materials showing that the drugmaker can fulfill its obligations under the deal going forward,” wrote Bloomberg’s Cynthia Koons.
“Among the documents, the investors are seeking evidence that Valeant plans to spend $200 million for marketing and research and development for 2016 and half of 2017, as part of the agreement. They also ask for assurance that Valeant will keep a sales force of 150 to distribute the drug, called Addyi, which has posted disappointing sales since its introduction five months ago.”
Cindy Whitehead, the CEO of Sprout which steered Addyi to FDA approval last year, left Sprout in December.
Valeant acquired Sprout in August.
The company, which also bought Raleigh-based Salix Pharmaceuticals last year, is facing a variety of challenges and its board, under Triangle life science executive/investor Bob Ingram, is now seeking a new CEO.
“Valeant predatorily priced Addyi at $800 a month even though Sprout had established a price point of approximately $400 a month for the drug based on market research,” the investor group said in the letter obtained by Bloomberg. “As a result of this predatory pricing, insurance companies refused to cover the drug, which has led to the drug not being affordable for millions of women.”
Spokeswoman Laurie Little said in an e-mail to Bloomberg that the company had received the letter and would respond.
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