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Term Sheet — Monday, June 11


Good morning, Term Sheet readers.

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.

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.

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.

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.”

Read the full story here.

BIG DEAL: KKR will buy U.S. physician services provider Envision Healthcare Corp (NYSE:EVHC) for $5.57 billion. KKR’s offer of $46 per share represents a premium of 5.4% to Envision’s last close on June 8. Including debt, the deal is valued at approximately $9.9 billion. This is one of the largest private equity buyouts in recent years.

The agreement comes on the heels of KKR’s announcement that it will buy U.S. business software company BMC Software in a deal that values the company at about $8.5 billion, including debt.

SCOOP: My colleague Robert Hackett got a scoop that big data-cruncher Splunk is acquiring VictorOps, a Boulder, Colo.-based startup whose tools help software developers collaborate and resolve engineering issues, for $120 million mostly in cash with some stock equity. The deal is expected to close before August. From his story:

Through its acquisition of VictorOps, Splunk is elevating its role within the hot segment of software engineering known as development operations, or DevOps. The subdomain encompasses a body of practices that are characterized by a fast, lean approach to building software applications.

VictorOps’ tech brings together software engineers so they can overcome technical issues as they arise. The system generates notifications, pulls relevant parties into chat groups, presents pertinent documents, and keeps detailed records as teams work through coding problems.

Read more here.


• The AT&T-Time Warner Merger Ruling Is Expected Tuesday. Here’s What’s at Stake (By Hallie Detrick)

• Net Neutrality Is Officially Dead in the U.S.—Here’s What Happens Next (by David Meyer)

• Bitcoin Billionaires, R3’s Woes, and ‘Silicon Valley’ Blockchain Advisors (by Robert Hackett)

• J.J. Abrams Partners With Tencent to Launch a Video Game Company (by Chris Morris)


Blackstone offers discounts on Saudi-backed infrastructure fund. Abraaj audit finds funds mingled corporate and investor cash. Car auctioneer BCA Marketplace rejects $2.15 billion buyout. Rent-A-Center fails to find suitable buyer, ends strategic review.


Claroty, a New York-based company focused on cybersecurity for industrial control networks, raised $60 million in Series B funding. Temasek led the round, and was joined by investors including Rockwell Automation, Aster Capital, Next47, Envision Ventures, and Tekfen Ventures.

Aye Finance, an India-based micro-loan startup, raised $21.5 million in Series C funding. CapitalG led the round, and was joined by investors including SAIF Partners and LGT.

JetClosing, a Seattle-based provider of digital real estate title and settlement transactions, raised $20 million in Series A funding. Investors include T. Rowe Price Associates Inc, PSL Ventures, Imagen Capital Partners, Trilogy Equity Partners and Maveron.

Eigen Technologies, a London-based artificial intelligence technology platform that reads legal and financial documents, raised £13 million ($17.4 million). Investors include Goldman Sachs Principal Strategic Investments and Temasek.

Memrise, a U.K.-based online learning startup, raised $15.5 million in funding.

Nextinput, a Mountain View, Calif.-based provider of MEMS-based force-sensing solutions, raised $13 million in Series B funding. Investors include Sierra Ventures, Cota Capital and UMC Capital.

iBeat, a San Francisco-based health tech company, raised funding of an undisclosed amount. Investors include SCOR Life & Health Ventures and Transamerica Ventures.


Metacrine, a San Diego-based developer of therapies for patients with liver, gastrointestinal and metabolic diseases, raised $65 million in Series C funding. Venrock Healthcare Partners led the round, and was joined by investors including Franklin Templeton Investments, Deerfield Management, Arrowmark Partners, Invus, Lilly Asia Ventures, Vivo Capital, Arch Venture Partners, venBio, Polaris Partners, New Enterprise Associates and Alexandria Venture Investments.


EyeSouth Partners, which is backed by Shore Capital Partners, invested in South Georgia Eye, an eye care provider with clinics located in Georgia and Florida. Financial terms weren’t disclosed.

Aterian Investment Partners acquired Albany Industries Inc, a Bay Minette, Ala.-based maker of home furnishings. Financial terms weren’t disclosed.

H.I.G. Capital made an investment in Grupo Meridional, a Brazil-based hospital group. Financial terms weren’t disclosed.

L Catterton and Ambienta agreed to acquire Pibiplast, an Italy-based designer and manufacturing of beauty and personal care plastic packaging solutions. Financial terms weren’t disclosed.


Mercari, a Japanese flea marketplace app, plans to raise $1.2 billion in an IPO of 43.5 million shares priced at 3,000 yen ($27.30), above its 2,200 to 2,700 yen ($20 to $25) range. Read more.

Autolus Therapeutics, a London-based cell therapy treatment maker, plans to raise $125 million in an IPO of 7.8 million shares priced between $15 to $17. The firm has yet to post a revenue. Syncona (40.6%), Woodford (26.4%), and Arix Biosciences Holdings (9.1%) back the firm. Goldman Sachs and Jefferies are underwriters in the deal. The firm plans to list on the Nasdaq as “AUTL.” Terms have yet to be announced. Read more.

Eidos Therapeutics, a San Francisco-based biopharmaceutical firm focused on diseases caused by transthyretin or amyloidosis, plans to raise $100 million (50% insider) in an IPO of 6.3 million shares priced between $15 to $17. It has yet to post revenue. BridgeBio Pharma (62.7%) backs the firm. J.P. Morgan and BofA Merrill Lynch are underwriters. The firm plans to list on the Nasdaq as “EIDX.” Read more.

Magenta Therapeutics, a Cambridge, Mass.-based focused on bone marrow transplants, plans to raise $100 million in an IPO of 6.7 million shares priced between $14 to $16. J.P. Morgan, Goldman Sachs, and Cowen are underwriters. The firm has yet to post a revenue. Third Rock Ventures (28.9%), Atlas Venture (17.5%), and Alphabet (12%) back the firm. Read more.

Kezar Life Sciences, a South San Francisco-based small molecule therapeutics maker for autoimmune diseases and cancer, plans to raise $70 million in an IPO of 4.7 million shares priced between $14 to $17. The firm has yet to post revenue. Morningside Venture Investments (15.5% pre-offering), Cormorant Asset Managers (9.9%), Onyx Therapeutics (8.4%), and Cowen Healthcare Investments  (7.6%) back the firm. Jefferies, Cowen, Wells Fargo, and William Blair are underwriters. The firm plans to list on the Nasdaq as “KZR.” Read more.


Mars Petcare agreed to buy AniCura, a Sweden-based provider of a specialized veterinary care. The sellers include Nordic Capital and Fidelio Capital.


firstminute capital, a London-based seed fund, raised $100 million for its new fund.


Idinvest Partners appointed Nicolas Debock as investment director.


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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.