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Expands PPD's compound partnering program into dermatology; Provides innovative screening capability for dermatologic compounds
WILMINGTON, N.C. (April 3, 2009)-PPD, Inc. (Nasdaq: PPDI) today announced it has acquired Magen BioSciences, Inc., a biotechnology company focused on dermatologic therapies based in Waltham, Mass. The acquisition expands PPD's compound partnering program into dermatology, initially in the indications of psoriasis, atopic dermatitis and acne.
With the acquisition, PPD gains a pipeline of compounds through Magen's exclusive license to develop and commercialize preclinical compounds discovered by Eli Lilly & Co. for dermatologic therapeutics. The acquisition also provides PPD state-of-the-art research and development capability to screen dermatologic compounds to determine efficacy and safety.
"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 Fred Eshelman, chief executive officer of PPD. "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."
Sandra Luikenhuis, Ph.D., who was integral in founding and growing Magen and who joined PPD with the acquisition, will oversee development of these compounds in her role as executive director, dermatology.
"We see significant potential for the discovery and development of new treatments in dermatology, where few novel products are currently being developed," said Dr. Luikenhuis. "Magen's experience will be valuable in helping PPD evaluate future opportunities in this growing therapeutic area."
Under the terms of the deal, PPD purchased Magen for $14.5 million in cash. For the remainder of 2009, PPD anticipates that Magen's research and development activities will generate a loss from operations of approximately $15.2 million, or a diluted loss per share of $0.09. The quarterly 2009 diluted loss per share from the operations of Magen is expected to be as follows: Q2 - $0.03; Q3 - $0.03; and Q4 - $0.03.
As announced earlier today, PPD has also entered into a definitive agreement to sell its Piedmont Research Center business, subject to various closing conditions. Assuming it is consummated as expected in the second quarter, the net impact of this sale and the acquisition of Magen on PPD's full year 2009 financial guidance will be a reduction of projected discovery segment revenues by approximately $19.0 million and an increase in projected diluted earnings per share of approximately $0.03. The net impact of these transactions on PPD's projected quarterly diluted earnings per share is expected to be as follows: Q2 - $0.11; Q3 - ($0.04); and Q4 - ($0.04).
PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 33 countries and approximately 10,500 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at http://www.ppdi.com.
Except for historical information, all of the statements, expectations and assumptions contained in this news release, including statements, expectations and assumptions about this acquisition, the prospects of Magen, the divestiture of Piedmont Research Center, and PPD's 2009 financial guidance, are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause results to differ materially include the following: risks associated with acquisitions and investments, such as integration risks and impairments; risks that the PRC divestiture does not occur, is delayed or is amended; risks associated with the development and commercialization of drugs, including earnings dilution and obtaining regulatory approvals; rapid technological advances that make our products and services less competitive; the ability to attract and retain key personnel; continued success in sales growth; loss of large contracts; increased cancellation rates; economic conditions and outsourcing trends in the pharmaceutical, biotechnology, medical device, academic and government industry segments; competition within the outsourcing industry; risks associated with and dependence on collaborative relationships; risks that we may not continue our dividend policy; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.