US-based contract research organisation (CRO) PPD is selling its preclinical services subsidiary Piedmont Research Center to fellow CRO Charles River Laboratories International for US$46.0 million in cash.
PPD also announced the acquisition of Magen BioSciences, a US biotechnology company specialising in dermatological therapies, for US$14.5 million in cash. The net impact of the two deals on PPD’s financial guidance for 2009 is expected to be a reduction of around US$19.0 million in projected revenues for the discovery sciences segment and an increase of about US$0.03 in projected diluted earnings per share.
Based in North Carolina, Piedmont Research Center (PRC) provides non-Good Laboratory Practice (GLP) preclinical discovery services, with a particular emphasis on efficacy testing for oncology compounds. The company supplements it core pharmacology offering with a range of other in vivo, in vitro and analytical services.
Charles River said PRC would significantly expand the oncology expertise offered through its Charles River Discovery and Imaging Services unit. The PPD business will continue to operate from its North Carolina headquarters and Charles River expects the acquisition – which should close during the second quarter – to be neutral to earnings per share on both a GAAP (Generally Accepted Accounting Principles) and a non-GAAP basis in 2009.
“As our clients increasingly align their research and development efforts by therapeutic area, we believe it is critical that we provide deep expertise in their key areas of focus,” Charles River commented.
With Charles River Discovery and Imaging Services (which includes MIR Preclinical Services, acquired last year), the CRO has established itself as a premier provider of non-GLP pharmacology and in vivo imaging services for evaluating compound efficacy, it said. Charles River’s therapeutic areas of expertise span oncology, cardiovascular disease, metabolism and inflammation – four of the busiest categories for biopharmaceutical research and development, it pointed out.
PPD explained that it was divesting PRC to focus more tightly on its core service businesses and compound partnering programmes. “Under Beth Hollister’s leadership, Piedmont Research Center has been a solid contributor to our discovery sciences segment since we acquired this business in 2002,” stated chief executive officer Fred Eshelman.
“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.”
The acquisition of Magen BioSciences expands PPD’s compound partnering programme into the dermatology field, initially for the indications of psoriasis, atopic dermatitis and acne. PPD also gains a pipeline of compounds through Magen’s exclusive licence to develop and commercialise preclinical compounds discovered by Eli Lilly for use in dermatological therapeutics.
