PPD agreed to sell its Piedmont Research Center (PRC) to Charles River Laboratories for $46 million in cash. Separately, the company spent $14.5 million to acquire Magen BioSciences and expand its compound partnering program into dermatology.
For the remainder of 2009, PPD anticipates Magen's R&D activities will generate a loss of approximately $15.2 million, or a diluted loss per share of $0.09. Additionally, the divestiture of Piedmont will reduce PPD's projected full year 2009 discovery sciences segment net revenue by approximately $19 million. The net impact of this sale and the acquisition of Magen on PPD’s full-year 2009 financial guidance will be an increase in projected diluted earnings per share of approximately $0.03.
PPD decided that a sale of its preclinical research services, PRC, would allow it to focus on its clinical research contract services. Charles River has basically focused on the early-stage services that PRC provides, like preclinical research and evaluation of anticancer agents. Charles River will continue to operate PRC from its North Carolina headquarters.
"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," says Fred Eshelman, CEO of PPD.
With the Magen 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 initial focus is on psoriasis, atopic dermatitis, and acne. The transaction also provides PPD capabilities to screen dermatologic compounds to determine efficacy and safety.