Lowered Guidance Won’t Stop Covance
Global contract research organization (CRO) Covance ended the year with a flurry, lowering its 2008 guidance, purchasing an equity stake in a proteomics biomarker services provider and adding four executive positions.
The Princeton, N.J.-based company lowered its full-year 2008 guidance in late December, after experiencing a slower-than-expected fourth quarter. The CRO expects its full-year earnings per share to be $3.02 with “low double-digit” revenue growth, versus its previous full-year estimates of $3.18 per diluted share with 20% annual growth.
“During the fourth quarter, demand for our toxicology and clinical pharmacology services are below our expectations due to a combination of lower new project initiatives and a further increase in project delays from Q4 into 2009,” said Covance chairman and CEO Joe Herring in an investor conference call last month.
Covance expects full-year 2009 revenue growth to be in the range of 5% to 10% compared with 2008 and earnings per share to be in the range of $3.00 to $3.20.
Herring told investors that the company will take a more conservative approach to its financial projections for 2009, as well as take steps to reduce expenses.
Covance continued with its end-of-year growth plans, however, with the purchase of a minority equity stake in Caprion Proteomics.
Under the terms of the agreement, Covance will serve as the exclusive CRO distributor of Caprion’s biomarker services, and Caprion will be Covance’s exclusive proteomic discovery provider.
Covance hopes the partnership will enhance the CRO’s biomarker services business— a high-growth market.
“We are very pleased to be adding Caprion’s solid scientific capabilities and leading biomarker technology platform to Covance’s line up,” said Covance’s corporate senior vice president and president of Covance Central Laboratory Services Deborah Tanner in a company release. “We expect that our clients will have a keen interest in this additional capability.”
To strengthen its biomarker business, Covance plans to establish a Biomarker Center of Excellence at its Greenfield, Ind., campus. The company acquired the 450-acre early drug development campus last August as part of a groundbreaking $1.6-billion deal with Eli Lilly.
Newly hired vice president of biomarkers Thomas Turi, Ph.D., will run Covance’s biomarker team and the planned Center of Excellence. Turi served as the senior director of translational biomarkers and mechanistic biology for Pfizer before joining Covance.
The company also added three new senior executive positions to its periapproval services team in December. Glynis Neagle, M.D., (formerly Covance’s senior director for clinical development) is the new vice president for medical affairs. He will oversee medical affairs, epidemiology and product safety. Robert Bader, the former senior director for global pharmacovigilance and epidemiology at Cephalon, will lead phase IIIb and IV pharmacovigilance programs as director for product safety services; and Thomas Noto will oversee regulatory affairs as the vice president for regulatory affairs.