‘Female Viagra’ Founder Is Back as CEO After Valeant Gave the Billion-Dollar Drug Back for Free
Cindy Eckert (previously Cindy Whitehead) is back at the helm of Sprout Pharmaceuticals, the company behind female libido drug Addyi.
This marks Eckert’s second round as CEO of Sprout, the Raleigh, N.C.-based developer of a drug intended to treat hypoactive sexual desire disorder in pre-menopausal women. Under her leadership, the company raised nearly $100 million in venture funding and was approved by the FDA after two failed attempts.
Valeant agreed to buy Sprout for $1 billion in cash in August 2015. And then, things turned sour. Short seller firm Citron Research compared Valeant to Enron & the Securities and Exchange Commission opened an investigation into the pharma giant’s accounting methods. CEO Michael Pearson was ousted after a disastrous earnings report, and Sprout took a back seat.
“At the time, I had somebody at the table who was willing to keep the entire original team, fund Addyi in a way we couldn’t imagine, and march it across the globe,” Eckert told Fortune. “Did it work out that way? No. How could I have seen that coming?”
As Fortune reported last year, the drug’s sales flailed under Valeant since many insurers denied coverage for the pill, and Addyi was facing criticism for its high price point and reportedly low efficacy rates.
Last March, Eckert and a group of Sprout’s shareholders filed a lawsuit against Valeant claiming it overcharged consumers for the pill and failed to successfully commercialize it. The complaint said that sales of the pill may have totaled less than $10 million in 2016, far short of the $1 billion targeted by July, 2017.
“The notion that it was launched is a false notion,” Eckert said. “It was theoretically in the supply chain, but for a woman to have gotten this drug in the last two years was like winning the Powerball.”
In November, Valeant gave up and handed over Sprout to its former owners without charging an upfront fee. According to the terms of the deal, Sprout’s shareholders would drop the pending lawsuit and Valeant would get a 6% royalty on global sales of Addyi. In turn, Valeant agreed to loan the company $25 million to “fund initial operating expenses.”
Now, Eckert is back in the CEO seat, and she’s making some radical changes to boost sales. She’s cutting Addyi’s price in half — from $800 down to $400 for a monthly prescription. This means that women will pay approximately $25 a month if their insurance covers the drug. Patients who are not covered will pay no more than $99 per month out of pocket.
“I need to fix access and make sure that women get accurate information,” Eckert said. “My pricing will be at parity pricing to the PDE5 drug prices for men, which include Viagra and Cialis, for which 80% of men have insurance coverage.”
Additionally, Eckert plans to beef up marketing, launch a new website, and expand to other markets. Addyi has already received federal approval in Canada with plans to officially launch by the end of 2018.
“I used to think that an acquirer would come in and market it across the globe, but we’re starting to do those things ourselves,” she said.
In the last two years, Eckert has been running The Pink Ceiling, a cross between a VC fund, incubator, and consulting firm with a focus on women. She said she will continue to invest alongside her duties as CEO. So far, Eckert has deployed $15 million of her own capital across 10 health tech startups. She previously told Fortune her investment strategy is to “make other women really fucking rich.”
“My book is going to be called 0101 — I got Sprout for nothing, I sold it for a billion, I got it back for nothing, and out of that, let’s hope I create a billion dollars of wealth for other women,” she said.
Here’s where it gets interesting: Sprout’s investors already got a big windfall from the billion-dollar acquisition, so in theory, they could double dip. If the company beefs up its business and gets sales off the ground, shareholders could even see a second, potentially even bigger, exit.
When asked about whether she plans to sell Sprout again, Eckert smiled and said, “Never say never.”