PPD buys one company, sells another
PPD paid $14.5m for Magen, gaining a portfolio of dermatology compounds targetting diseases such as psoriasis, actinic keratosis, atopic dermatitis and acne, including a series of compounds acquired last year from Eli Lilly.
PPD is unusual among CROs in that it has two distinct business units, one focusing on the provision of contract R&D services and another which licenses in compounds and takes them through early development, with a view to out-licensing them to commercial partners at a later date.
The purchase of Magen takes PPD’s compound partnering programme into the field of dermatology for the first time.
“By combining Magen’s unique dermal biology expertise and innovative pipeline of compounds with our extensive development experience, we hope to develop compounds that address unmet needs for major dermatological disorders,” said PPD CEO Fred Eshelman in a statement.
“The market is strong and growing for dermatologic products, which generally present fewer development hurdles than other therapeutics and have a more straightforward path to regulatory approval.”
Meanwhile, PPD has entered into a definitive agreement to sell its wholly-owned subsidiary Piedmont Research Center, which specialises in preclinical cancer studies, to Charles River Laboratories for $46m.
Consolidation has been occurring at an increasing rate, particularly among early-stage development CROs, which are struggling to keep their units operating at full capacity as demand from smaller drug developers slows down.
“Although this unit has grown nicely over the years, Piedmont Research Center is somewhat of a niche operation for PPD, and its in vivo and in vitro services should be a better long-term strategic fit for Charles River’s preclinical research business,” said Eshelman.
“Following the completion of this divestiture, we intend to continue to focus on our core service businesses and compound partnering programs to drive future revenue and earnings growth.”
The Piedmont divestment is expected to close during the second quarter 2009.
PPD also updated its financial guidance for 2009, saying it expects to post an operating loss of approximately $15m as a result of acquiring Magen. The impact of the Piedmont sale will be an approximate $19m reduction in projected revenues.
