Canada's bustling pharmaceutical giant pens yet another acquisition
LAVAL, Quebec—Valeant Pharmaceuticals International Inc. has agreed to buy Raleigh, N.C.-based Sprout Pharmaceuticals Inc. for approximately US$1 billion in cash, plus a share of future profits based on certain conditions.
The news comes on the heels of the U.S. Food and Drug Administration’s approval of a new Sprout drug that aims to increase a woman’s libido while reducing distress from the loss of sexual desire. Dubbed “female Viagra,” flibanserin, which will be marketed as Addyi, is taken once daily in the form of a pill. Valeant noted the drug is also supposed to increase the number of satisfying sexual events.
Valeant expects Addyi to be available in the U.S. in the fourth quarter of 2015 through prescribers and pharmacies. The drug will be Valeant’s first foray into the sexual health market, while the Sprout acquisition is one of several billion-dollar buys the company has undertaken this year. Valeant’s rapid expansion has catapulted it to the top of Canada’s corporate sphere; it overtook RBC as Canada’s most valuable company in July.
“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,” the company’s chairman and CEO, Michael Pearson, said. “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.”
Following the closing of the acquisition, Sprout will remain headquartered in Raleigh, N.C. and become a division of Valeant. The Laval-based company said Cindy Whitehead, Sprout’s CEO, will join Valeant to lead this division dedicated to the introduction and global commercialization of Addyi.
“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. “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.”
Under terms of the acquisition agreement, Valeant will pay approximately $500 million, subject to customary purchase price adjustments, upon the closing of the transaction and an additional payment in the amount of $500 million, payable in the first quarter of 2016, plus a share of future profits based upon the achievement of certain milestones. Valeant expects no impact to 2015 earnings, and moderate accretion to 2016 earnings.
The transaction is subject to customary closing conditions and regulatory approval, including Hart-Scott-Rodino antitrust clearance. The transaction is expected to close in the third quarter of 2015.