Valeant sells off its ‘female Viagra’ after losing money
Remember that high-profile $1 billion wager Valeant Pharmaceuticals International made two years ago on the potential of the so-called female Viagra treatment? The troubled drugmaker lost big on the bet.
Throwing in the towel, Valeant has divested the treatment to a buyer affiliated with former shareholders of Sprout Pharmaceuticals, which originally sold it to Valeant.
The company disclosed the sale agreement a day before announcing improved financial results Tuesday. How bad was the 2013 acquisition? So bad that the product known as Addyi was losing money, Valeant CEO Joseph Papa said during a conference call with financial analysts. So bad that former Sprout shareholders sued Valeant, accusing the Montreal-based company of failing to properly market the treatment — which Valeant denied.
Eager to put the transaction in the rear-view mirror, Valeant agreed to give the former Sprout shareholders a $25 million loan to get back into business. In exchange, the shareholders are expected to drop the lawsuit, and Valeant will get a 6% royalty on global sales of Addyi.
The sale is expected to close before the end of 2017, subject to approvals by the former Sprout shareholders.
Valeant had attempted to relaunch the treatment earlier this year, with a “Find My Spark” campaign and an increased sales force. “We believe that there is a great opportunity for this brand,” company CFO Paul Herendeen told analysts at a conference in June.
However, in announcing the divest- ment, Papa said the sale would further streamline Valeant’s portfolio and “reduce complexity in our business.”
Sprout took Addyi to the Federal Drug Administration several times before the product won regulatory approval. Women’s health advocates and others campaigned for the approval, hoping it would lead to libido-boosting treatment options for women.
But even after the approval, some medical experts maintained that Addyi had limited effectiveness and predicted potential users might avoid the treatment because it carried a warning about fainting risks if combined with alcohol or certain medications.
Valeant (VRX) shares soared Tuesday after the company announced third-quarter results that beat Wall Street forecasts. The stock was up 16% at $13.99 as of 2 p.m. ET Tuesday.
The jump came after the company announced 1% year-over-year organic growth in Valeant’s Bausch + Lomb eye care business, and a 3% increase in revenue for its Salix division, which makes treatments for stomach and gastrointestinal disorders.
However, the company also updated its full-year revenue forecast, which is now $8.65 billion to $8.8 billion, down from $8.7 billion to $8.9 billion previously.
In all, Valeant reported third-quarter net income of $1.3 billion, or earnings per share of $3.69, both of which beat the forecasts of analysts polled by S&P Global Market Intelligence.