Sprout Pharmaceuticals is set to be acquired by Valeant Pharmaceuticals for $1 billion cash, a deal that comes just two days after the small drug company secured FDA approval for the first drug to boost the sex drive in women with low libido.
The agreement, announced this morning, will put Raleigh, NC-based Sprout’s flibanserin (Addyi) in the hands of a large partner with the scale and experience to sell products all over the world. Under the terms of the agreement, Valeant (NYSE: VRX) will pay Sprout about $500 million upon closing, with the balance to be paid in the first quarter of 2016. Sprout also stands to gain a share of profits generated by Valeant’s sales of the drug, based on achievement of unspecified milestones.
But sales efforts could be constrained by strict warnings and a monitoring program mandated by the FDA to guard against health risks associated with the drug. In clinical trials, some patients taking flibanserin experienced severe low blood pressure, as well as the loss of consciousness. Those side effects were exacerbated by alcohol and certain drugs that interfere with the way the drug is broken down in the body.
To mitigate the risks, and monitor any adverse events, the FDA is requiring that the drug be prescribed only by physicians certified to do so. The drug can also only be dispensed by certified pharmacies, which must receive training on those risks. Flibanserin must carry a boxed warning flagging the health risks, and the FDA is requiring three post-marketing studies of the drug that will study the health risks.
Sprout acquired global rights to flibanserin in 2012 from Boehringer Ingelheim, a German company that had sought and failed to secure FDA approval on the drug as a treatment for hypoactive sexual desire disorder, or low libido. Though Sprout’s resubmission of flibanserin also failed to secure FDA approval in 2013, the company tried again with additional data. The company in June won over an independent advisory panel to the FDA, which recommended approval of flibanserin as long as that approval came with a monitoring program to protect against the health risks of the drug.
Valeant and Sprout expect to close the deal in the third quarter. Sprout will remain headquartered in Raleigh and become a division of Valeant. Sprout CEO Cindy Whitehead will join Valeant to lead this division, overseeing the launch and commercialization of the drug. Sprout aims to make the drug available by mid-October.
Image courtesy of Flickr user Bill Brooks under a Creative Commons license.