PPD is spinning out its existing compound partnering business and plans to capitalize the new company with about $100 million in cash. PPD separately signed an agreement to acquire Chinese CRO Excel PharmaStudies and will also make a $100 million investment in Celtic Therapeutics.
PPD says that divesting its compound-partnering segment will give the separate entities freedom to focus on their primary areas of expertise. PPD will concentrate on its core drug discovery and development services business, and the compound-partnering firm will focus on developing and commercializing drug candidates. “Each company will have the opportunity to focus exclusively on its core strengths, seek new strategic opportunities, and compete more effectively in its respective market,” comments Fred Eschelman, PPD executive chairman.
To this end, the compound-partnering spin-out is expected to take with it a number of compounds, rights, and investments, including rights to all potential new compounds acquired by PPD prior to the split. These include two additional molecules that PPD expects to license during the fourth quarter.
More specifically, the new company is expected to have rights to: sales-based milestones and royalties relating to PPD’s collaboration with the Janssen-Cilag affiliate, Alza, for the marketed premature ejaculation drug Priligy®; future regulatory and sales-based milestones and royalties relating to Takeda Pharmaceuticals’ late-stage dipeptidyl peptidase IV inhibitor antidiabetic candidate, alogliptin; a dermatology program PPD inherited through its acquisition of Magen BioSciences in April; and the clinical-stage statin compound licensed from Ranbaxy Laboratories for the treatment of dislipidemia.
PPD has also proposed a takeover of Excel PharmaStudies. The company claims the acquisition will significantly boost its presence and client base in the Asia Pacific region and strengthen its ability to offer Phase II-IV clinical, regulatory, data-management, and other services.
“Biopharmaceutical companies are increasingly including China and Japan in their drug development programs because of the rapid growth of these markets,” explains David Grange, PPD CEO. “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.”
If the acquisition of Excel is finalized, Excel’s 300 or so staff will join PPD, which currently employs over 400 people in Asia Pacific. PPD’s Beijing office, opened in 2003, provides a range of clinical development services. In 2008, the company expanded its global central lab services into China through an exclusive agreement with Peking Union Lawke Biomedical Development.
PPD separately reported signing an agreement to invest $100 million in Celtic Therapeutics as a means to forging a strategic alliance through which PPD will perform clinical development services for Celtic’s portfolio. Celtic Therapeutics is a global private equity firm focused on investing in novel therapeutic product candidates that address important unmet medical needs. The company concentrates on mid-stage drug development candidates that have progressed through human proof-of-concept studies.