PPD to acquire Excel PharmaStudies, hives off compounding business and invests in Celtic

In what was a busy day for US pharmaceutical contract research organization PPD, the firm announced several new initiatives, aimed at expanding in China, capitalizing on its compounding business and has invested in Celtic Therapeutics to gain access a diversified portfolio of product candidates.

In the first move, PPD says it has entered into an agreement to acquire Excel PharmaStudies, the market leader and one of the largest CROs in China, providing additional capacity and expertise in this rapidly growing market. It also significantly increases its employee and client base in the Asia-Pacific region.

The acquisition strengthens PPD's ability to offer Phase II'IV clinical, data management, biostatistics, regulatory and quality assurance services under a variety of operating models, ranging from functional to full service. Combining its drug development expertise with its global central laboratory operations in Beijing and Singapore uniquely positions PPD to deliver a broad set of services to biopharmaceutical companies in China, Japan and throughout the region, the US firm notes. Excel will operate as a wholly-owned subsidiary of PPD.

'Biopharmaceutical companies are increasingly including China and Japan in their drug development programs because of the rapid growth of these markets,' said David Grange, chief executive of PPD. 'Excel brings a solid reputation, broad client base and regulatory expertise and is an important part of our continued expansion in this fast-growing region.'

Spin off expected to unlock value

PPD also revealed that it will proceed with preparations to spin off its compound partnering business from its core CRO, business, resulting in two well capitalized, highly focused, independent public companies.

Acknowledging the different needs of the profitable CRO services business and a pharmaceutical R&D unit, this transaction creates two 'pure play' investments for PPD's shareholders and potential future investors, the firm maintains. The CRO business will continue to operate under the PPD name and will be focused solely on its drug discovery and development service businesses and will no longer be coupled with the earnings dilution from the company's compound partnering business. The compound partnering business will have the opportunity to focus on developing and commercializing its drug candidates and to access external capital, if needed, without any constraints associated with operating in combination with the CRO business.

The compound partnering company resulting from the spin-off is expected to have the following compounds, rights and investments:

' rights to royalties and sales-based milestones from a collaboration with ALZA, a Janssen-Cilag affiliate, on Priligy (dapoxetine), the first and only approved treatment for premature ejaculation, which has been approved for marketing in Sweden, Finland, Portugal, Spain, Austria, Germany, Italy, Mexico and South Korea;
' rights to potential future regulatory and sales-based milestones and, if approved, royalties on sales for Takeda Pharmaceutical's dipeptidyl peptidase IV (DPP-4) inhibitor, alogliptin, for which the US Food and Drug Administration issued a complete response letter in June 2009 and requested Takeda to conduct an additional cardiovascular safety trial to satisfy the FDA's December 2008 guidance on anti-diabetic therapies;
' the dermatology program PPD acquired with the acquisition of Magen BioSciences, in April 2009;
' the statin compound licensed from India's Ranbaxy Laboratories for the treatment of dyslipidemia, for which PPD has completed a high-dose comparator study in healthy volunteers that indicated the drug was well-tolerated and suggested it compares favorably to currently marketed statins; and
' rights to all potential new compounds acquired by PPD prior to the spin off.

Invests $100 million in Celtic

Finally, PPD announced it has signed an agreement to invest $100 million in Celtic Therapeutics Holdings, an investment partnership organized for the purpose of identifying, acquiring and investing in a diversified portfolio of 10 to 15 novel therapeutic product candidates. Celtic Therapeutics will focus on mid-stage drug development candidates that have progressed through human proof-of-concept studies and are targeted to address unmet medical needs, seeking to advance development of these candidates to the next key product milestone, usually the beginning or end of Phase III.

This investment is intended to set the stage for a strategic alliance between Celtic and PPD. Both organizations are committed to forging a new framework for timely, cost-efficient drug development. As a result, PPD believes these efficiencies will lead to higher quality data and overall markedly reduced timelines. The goal of the alliance is to bring the best products to market more quickly to meet unmet needs of patients. PPD believes it will benefit Celtic Therapeutics' mid-to-late stage pipeline across the board.