* Deal for $1 bln in cash, plus milestone payments
* Drug to be available in U.S. by end of the year
* Valeant CEO says has been in talks with Sprout for 3 weeks
(Adds details, Valeant CEO quote)
By Natalie Grover
Aug 20 (Reuters) - Canada's Valeant Pharmaceuticals (NYSE:VRX)
International Inc VRX.TO VRX.N said on Thursday it would buy
Sprout Pharmaceuticals, whose drug this week became the first
approved treatment for low sexual desire in women, for about $1
billion plus milestone payments.
Sprout's controversial pink libido pill, Addyi, was approved
on Tuesday by the U.S. Food and Drug Administration for
pre-menopausal women, after being rejected twice over concerns
about its effectiveness and side-effects.
Addyi, popularly known as the "female Viagra", carries a
strong warning about potentially dangerous low blood pressure
and fainting, especially when taken with alcohol, raising some
doubts about its commercial prospects.
Raghuram Selvaraju, managing director of brokerage H.C.
Wainwright & Co, has estimated peak sales of $100 million a year
for Addyi. Viagra - a "blockbuster" in drug industry parlance -
generated sales of about $1.7 billion in 2014.
There are also concerns that the FDA was pressured into
approving Addyi, given that Viagra - the first treatment for
male sexual dysfunction - was approved more than a decade ago.
Unlike Pfizer Inc's PFE.N Viagra, which affects blood flow
to the genitals, Addyi is meant to activate sexual impulses in
the brain. ID:nL1N10T2EB
Sprout, based in Raleigh, North Carolina, was co-founded in
2011 by husband and wife Cindy and Robert Whitehead.
The couple had previously sold another small drugmaker they
founded, Slate Pharmaceuticals, which had received repeated
warnings from the FDA about its marketing tactics.
Slate marketed an implantable testosterone pellet for men
with low levels of the male sexual hormone, called Testopel.
Valeant, which has grown rapidly through acquisitions, said
it would pay $500 million upfront and make another installment
next year for privately owned Sprout.
The Canadian company said it expected the deal to close in
the third quarter of 2015 and Addyi to be available in the
United States by the end of the year. ID:nPn5C3pJm
Skadden, Arps, Slate, Meagher & Flom served as Valeant's
legal counsel. Sullivan & Cromwell was Sprout's legal adviser
and Perella Weinberg Partners was its financial adviser.