Sprout Pharma raised $100M, faced hurdles

Sprout Pharmaceuticals logo(Photo: Sprout Pharmaceuticals)

The privately-owned company that won government approval for the libido-boosting “little pink pill” for women has raised an estimated $100 million in private stock offerings since 2012, and could get even more if the firm goes public.

But Sprout Pharmaceuticals' road to success hasn't been without bumps. It took multiple tries for the Flibanserin pill to win Tuesday night's Food and Drug Administration nod. And two of the firm's executives were previously involved with another drug company that got an FDA warning about misleading consumers of a different product.

Based in Raleigh, N.C., Sprout made global headlines Wednesday after the FDA approved Flibanserin for use by women. The ruling makes the drug the first to be marketed alongside Viagra and other medications prescribed to improve sexual function in men.

Sprout CEO Cindy Whitehead said the drug should reach the market on Oct. 17 under the brand name Addyi.

The company raised money from dozens of investors well before the approval. Sprout issued five exempt offerings of securities between March 2012 and June 2015, Securities and Exchange Commission filings show. Each offering, which did not list the company's revenue, drew between five and 88 investors.

Outside investors were required to put up a minimum of $50,000 in all but one of the offerings, the records show. The proceeds were to be used for "working capital purposes, of which a portion may be used to pay the salaries of the company's executive officers," the filings state.

In the wake of the FDA approval, the investor fundraising total could skyrocket for an eventual Sprout initial public offering of stock. A company statement Wednesday said Sprout is focused on bringing Addyi to women who seek an FDA-approved treatment option, as well as on educating healthcare providers about the drug.

Potential stockholders would likely seek details of two FDA rejections during the past five years before the regulator approved Sprout's breakthrough drug.

The turn-downs, over side effects and questions of effectiveness, prompted the National Women's Health Network and other opponents to urge further study toward a safer libido booster for women. They faced opposition from Flibanserin supporters, including a Sprout-backed group, who questioned whether the FDA's previous rejections of the drug resulted from gender bias.

In March 2010, the FDA issued a warning letter to Slate Pharmaceuticals, a Durham, N.C.-based firm that marketed testosterone pellets for men under the brand name Testopel. The agency said a sales aid, web pages and consumer video for the drug were misleading because they promoted "unapproved uses" of the drug and omitted or minimized risk information.

Whitehead "co-founded and led all operational functions at Slate," according to her Sprout website biography. Her husband, Robert Whitehead, served as Slate's CEO and was listed as the recipient of the FDA warning letter. A Sprout statement Wednesday said Slate "took the matter very seriously and promptly took the corrective actions necessary to fully resolve it with the agency."

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