Sprout investors reportedly allege Valeant overpriced Addyi
- A group of Sprout investors are reportedly asking Valeant for documents proving the embattled drugmaker is fulfilling its commercialization requirements for the female libido drug Addyi, according to Bloomberg.
- The investors claim Valeant overpriced the drug, charging twice as much as Spout originally planned before Valeant bought the company for $1 billion last year. Alleging this has hurt uptake of the drug, the investors want proof Valeant still intends to meet its merger agreement obligations.
- In that agreement, Valeant pledged to spend $200 million for marketing and R&D over the next year and a half, as well as maintain a 150-person strong sales force.
Valeant and Sprout had high hopes for the Addyi, projecting $1 billion plus in sales over the first seven quarters of commercialization, according to the Bloomberg report.
However, Addyi has suffered from lackluster uptake since its launch last October. In a business update on March 15, CEO Michael Pearson identified the drug as one of the products which Valeant had to “reduce the forecast significantly on.”
There has been some recent improvement in access, with about 57% of prescriptions written for Addyi now being filled, the company group chairman said on the same investor call. This is up from 25% - 30% in the fourth quarter of 2015.
The investor letter is another headache for a company under intense scrutiny. Valeant stock fell by over 60% after the drugmaker cut revenue projections for 2016 by $1.5 billion and warned of a potential default on some loan obligations. It has to file an annual report with the SEC by April 29 to avoid triggering a breach of contract.
The company has also announced Pearson will step down as CEO once a successor is found, and accused its former CFO Howard Schiller of improper conduct tied to an ongoing accounting probe.
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