MONTREAL — A Canadian pharmaceutical company is entering the sexual stimulation business by spending more than US$1 billion to acquire the maker of a libido drug dubbed, if somewhat incorrectly, the female Viagra.
Valeant Pharmaceuticals (TSX:VRX) said it has reached a friendly deal to buy North Carolina-based Sprout Pharmaceuticals for cash and a share of future profits.
The transaction was announced just two days after the U.S. Federal Drug Administration gave the green light to market its drug Addyi in the United States. It's the first FDA-approved treatment for sexual desire disorders in men or women, but one with questionable benefits and potentially serious side-effects.
The companies say that the drug is a treatment for premenopausal women with HSDD — hypoactive sexual desire disorder or unexplained loss of libido — that reportedly afflicts about 10 per cent of women.
"Addyi can be a game changer in women's sexual health in terms of opening this door, just as Viagra was in male sexual health," Sprout CEO Cindy Whitehead said from New York City.
Treatment of erectile dysfunction is a huge global business worth about US$5 billion a year. But drugs like Viagra and Cialis are very different from Addyi. They treat the mechanics of sex by relaxing blood vessels of the penis to permit an erection while Addyi works on the brain by targeting sexual desire.
Whitehead, who will head the new Valeant division, said Addyi will finally help women who have suffered for years without a single treatment option.
Valeant expects the pink pill will be available in the United States by Oct. 17 through certified prescribers and pharmacies. It's aiming to take the drug to international markets, including Canada. An application will be filed with Health Canada this year with a decision expected within a year, said Valeant CEO Michael Pearson.
The cost for the daily bedtime drug is expected to be similar to Viagra — up to about US$400 per month — assuming it can win the same insurance coverage.
With Addyi, Valeant is establishing a new portfolio of medications that uniquely impact women, a business it hopes to grow either with acquisitions or through the development of new products.
"We think the drug itself is a great opportunity (to be) a growth driver of the overall company and it creates a portfolio for us in the whole area of women's health we currently don't have," Pearson added in an interview.
Valeant is taking a bet on a drug developed as an anti-depressant that was rejected twice by the FDA.
The agency gave its approval even though only about 10 per cent of women treated with Addyi compared with those treated with placebo in clinical trials reported meaningful improvements in satisfying sexual desire, sexual events or distress — a significant factor in HSDD.
Potential side-effects are so severe, especially for patients who consume alcohol or certain other medications, that Addyi will only be available through doctors and pharmacies that receive special certification. The drug can cause severely low blood pressure and loss of consciousness.
Critics have suggested that the FDA gave its approval only after Sprout launched a campaign backed by women's groups aimed at levelling the playing field between the number of sexual dysfunction drugs available for men and women.
But Whitefield said critics miss the evolution of science since 2010, including additional research, that led an advisory panel to recommend the drug's approval by a margin of 18 to six.
Valeant will pay about US$500 million on closing of the deal in the third quarter and an additional US$500 million in the first quarter of 2016, plus a share of future profits.
It expects no impact on results in 2015 and just a moderate increase in 2016, but declined to indicate the potential long-term financial benefit.
Alex Arfaei of BMO Capital Markets expects the uptake for the drug will be substantially lower than erectile dysfunction given safety issues with the product.
Valeant shares were down more than four per cent at $306.85 in Thursday afternoon trading on the Toronto Stock Exchange.
