Sprout Pharmaceuticals is getting back into business as Sprout2 with 203 investors lining up to launch the company that was sold just two years ago to Valeant Pharmaceuticals for $1 billion and then restarted when the Canadian venture decided to wash its hands of the Raleigh-based investment.
According to an SEC filing, Sprout2 began working with investors to invest in the revived company on Dec. 20.
[Note: Valeant in an email says no Valeant shares were involved in the deal.
[“There were no Valeant shares sold or transferred in the course of this transaction so therefore, there were no Valeant shareholders who traded any Valeant stock for Sprout2 stock. In fact, when Valeant acquired Sprout in 2015, the transaction included $1 billion in cash plus a share of future profits, so none of the legacy Sprout shareholders received Valeant shares as part of the deal.,” a Valeant spokesperson said.
By Jan. 4, 203 investors had signed on, reflecting the wide number of backers who had backed the company from launch to FDA approval of its female sexual enhancement drug Addyi.
Known as the “little pink pill,” Addyi also has been called “the female Viagra.”
Cindy Whitehead as WRAL TechWire reported in December is back as CEO.
Sprout2 cites as its corporate address the HQ for The Pink Ceiling, a consulting and investment firm launched by Whitehead after the sale to Valeant.
Robert Whitehead is also involved in the new venture as he was when the original company launched.
In explaining the filing, Sprout2 noted:
“This offering was effected to obtain the requisite approvals by former shareholders of Sprout Pharmaceuticals, Inc., in connection with the acquisition by Sprout2 Inc. of Sprout Pharmaceuticals, Inc., and certain assets and liabilities related thereto.”
An additional $2 million “was satisfied in cash,” the filing notes. “No additional securities will be sold in the offering.”
The original paperwork timeline in a filing with the State of North Carolina shows that Whitehead and her colleagues had laid the groundwork for the relaunch before Valeant disclosed its decision to give up on its $1 billion buy.
Whitehead, who led Raleigh-based Sprout as its CEO, incorporated Sprout2 in Delaware on Oct. 31 along with Robert Whitehead and Eric Atkins. Whitehead is listed as CEO, Robert Whitehead as chief operating officer, and Atkins as chief financial officer.
The same three then registered with the State of North Carolina to do business on Nov. 2.
Valeant announced the decision on Monday, Nov. 6, as part of a lawsuit dismissal by Sprout’s original shareholders who charged the company had not lived up to terms of the 2015 acquisition by not supporting aggressively enough – on their view – sales of Addyi.
To help seal the deal, Valeant is providing $25 million in financing to help Whitehead restart the company. The deal is expected to close before the end of the year. Valeant also will receive a percentage of Addyi sales beginning 18 months after relaunch.
Whitehead became CEO of Sprout in January of 2015 at which time Robert Whitehead gave up the CEO role to become vice chairman of the board and executive director.