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Valeant to sell "female Viagra" back to its original owners

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Valeant Pharmaceuticals and its "female Viagra" drug may be a case of deflated desire. 

Valeant (VRX) said it will sell Sprout, the subsidiary that makes the Addyi female libido pill, back to former Sprout shareholders, two years after it bought the smaller company amid much fanfare and a $1 billion sticker price. Despite high hopes for the medication, Addyi proved controversial and was the subject of a lawsuit accusing Valeant of botching its marketing. 

The FDA had rejected the drug twice before it was approved in 2015, when an agency advisory panel voted to recommend approval on the condition that the drug's manufacturer develops a plan to limit safety risks. The medication was linked to low blood pressure, nausea, drowsiness and dizziness, especially when combined with alcohol.

Valeant said the divestiture will provide it with a 6 percent royalty on global Addyi revenue during the 18 months following the sale. The agreement also releases the drugmaker from obligations to split future profits with former shareholders as well as marketing and spending provisions. The buyers will also receive a $25 million loan from Valeant to fund initial operating expenses.

"Returning Sprout to its former owners will enable us to further streamline our portfolio and reduce complexity in our business," said Joseph C. Papa, CEO of Valeant, in a statement. 

Valeant said it will focus on its core businesses in eye health, gastroenterology and dermatology.

Addyi sales will amount to less than $10 million, according to The Wall Street Journal, which cited RBC Capital Markets.

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