Two years after buying a company that manufacturers female libido pills for $1 billion, Valeant Pharmaceuticals International announced that it is reselling the business back to its former owners.
Sprout Pharmaceuticals, which was acquired by Valent back in 2015, makes Addyi, the controversial pink tablet which at that time was the first U.S. Food and Drug Administration-approved treatment for acquired, generalized hypoactive sexual desire disorder (HSDD) in women who have not gone through menopause.
The medication was touted as a potential blockbuster drug in a market estimated to be worth around $2 billion. However, sales of the drug had been slow and former investors of Sprout had sued Valeant for allegedly failing to successfully market Addyi.
By reselling Sprout, Valent hopes to be able to cut cost and allow it to focus on its remaining portfolio.
“Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business,” said Joseph C. Papa, chairman and CEO, 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.”
On Nov. 6, Valeant announced that its affiliate has entered into agreement to sell Sprout to a buyer affiliated with the former shareholders of Sprout in exchange for a six per cent royalty on glabal sales of Addyi.
Under the agreement, Valeant will be free from ongoing obligations of its original transaction to split future profits with the former shareholders as well as obligations to fund marketing of the product.
Valeant, however, will provide a $25 million loan to fund the initial operating expenses. The sale is expected to close before the end of this year.