Research Desk Line-up: IntelliPharmaCeutics Intl. Post Earnings Coverage
LONDON, UK / ACCESSWIRE / November 8, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Valeant Pharmaceuticals International, Inc. (NYSE: VRX) ("Valeant"), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/'symbol=VRX. The Company announced on November 06, 2017, that its affiliate has signed an agreement to sell the Sprout Pharmaceuticals subsidiary to a buyer who is affiliated with former shareholders of Sprout. The financial details of the deal were not disclosed. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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Commenting on the divestment, Joseph C. Papa, Chairman and CEO of Valeant, said:
"Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business. 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."
Terms of divestment
While divesting Sprout to its former shareholders, Valeant's only consideration is that it would receive a 6% royalty on global sales of ADDYI for the first 18 months after the completion of the transaction. The deal also released Valeant from all obligations listed in the original agreement with Sprout. These obligations included matters like sharing of future profits with the former shareholders and other conditions like the commitment to spend on certain marketing and promotional expenses related to ADDYI, etc.
In addition, the agreement sought that all legal disputes between Sprout's former shareholders and Valeant be dismissed with prejudice. This would prevent future chance of litigation. In November 2016, the former shareholders of Sprout had filed a lawsuit against Valeant in the Court of Chancery of the State of Delaware, alleging that the pharma company did a second-rate job marketing and developing drug candidate ADDYI.
As per the terms of the divestment, Valeant will also provide a $25 million loan to the shareholders acquiring Sprout to fund initial operating expenses. The transaction is expected to close before end of Q4 2017 subject to shareholders and regulatory approvals and other closing conditions.
Reasons for Divestment
Valeant had acquired Sprout, women's sexual health Company and its main drug ADDYI® (flibanserin) in August 2015 in a $1 billion deal. The deal was signed within days of Sprout getting FDA approval for the drug. It was also the only approved and commercialized product of Sprout. ADDYI is the first and only FDA-approved treatment for Hypoactive (low) Sexual Desire Disorder (HSDD) in women who have not gone through menopause. ADDYI is a non-hormonal oral pill taken once daily at bedtime. ADDYI has demonstrated improvements in desire for sex, reducing distress from the loss of sexual desire and increasing the number of satisfying sexual events.
Valeant had high expectations from ADDYI, given that there were very few similar products available in the markets for women. Valeant made all necessary efforts including spending of at least $200 million to market and promote the product. However, the actual sale of the drug was way below expectations. The low sales had affected the payment of royalties to the former shareholders and this had prompted them to file a lawsuit against Valeant. The former shareholders had alleged that Valeant failed to commercialize the drug ADDYI in a proper way, set the price of the drug very high, approximately $800 per month. Another factor that played a major indirect role was Valeant's top executives and its mail order pharma distribution Company being embroiled in a fraud case which saw the exit of its former CEO Michael Pearson in March 2016.
The current divestment is part of Chairman and CEO Joseph Papa's efforts to turnaround the debt laden Company and bring it back on the growth track. Joseph Papa took over the leadership of the Company in April 2016 after the exit of its former CEO Michael Pearson. He has been doggedly taking various steps to improve the Company's performance and reduce its debt. This included raising of funds to reduce its debt obligations by divesting of non-core assets and businesses.
Last Close Stock Review
On Tuesday, November 07, 2017, Valeant Pharma's stock closed the trading session at $14.10, surging 17.11% from its previous closing price of $12.04. A total volume of 68.91 million shares were exchanged during the session, which was above the 3-month average volume of 11.78 million shares. In the last three months and previous six months, shares of the Company have rallied 0.21% and 11.20%, respectively. The stock currently has a market cap of $4.94 billion.
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