PPD Acquires Magen BioSciences, Plans to Sell Piedmont Research
Friday, April 3, 2009
PPD acquired Magen BioSciences, a dermatology-focused biotechnology company—just as the contract research organization (CRO) announced plans to divest its preclinical research subsidiary Piedmont Research Center.
PPD purchased Waltham, Mass.-based Magen for $14.5 million in cash. According to a PPD spokesperson, most of Magen’s employees will join PPD as part of the acquisition, including Magen’s co-founder Sandra Luikenhuis, Ph.D., who will serve as executive director, dermatology. Magen’s CEO Brian Gallagher will not be staying on with the company.
The purchase of Magen Biosciences expands PPD’s compound partnering program into dermatology as PPD gains a pipeline of dermatologic compounds through Magen’s exclusive license to develop and commercialize preclinical dermatologic compounds discovered by Eli Lilly. The company is one of the few CROs with a risk-sharing business.
“By combining Magen’s unique dermal biology expertise and innovative pipeline of compounds with our extensive development experience, we hope to develop compounds that address unmet needs for major dermatological disorders,” said PPD CEO Fred Eshelman in a company statement. “The market is strong and growing for dermatologic products, which generally present fewer development hurdles than other therapeutics and have a more straightforward path to regulatory approval.”
PPD also has entered into a definitive agreement to sell its wholly owned subsidiary Piedmont Research Center to preclinical CRO Charles River Laboratories of Wilmington, Mass., for $46 million in cash. This deal is expected to close during the second quarter 2009.
Piedmont Research provides preclinical research and evaluation of anticancer agents and therapies and employs 70 full-time staff, all of whom will be offered employment with Charles River, according to the PPD spokesperson.
“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,” Eshelman said in a statement. “Following the completion of this divestiture, we intend to continue to focus on our core service businesses and compound partnering programs to drive future revenue and earnings growth.”
For the remainder of 2009, PPD expects a loss from operations of approximately $15.2 million, or a diluted loss per share of $0.09, as a result of Magen’s research and development activities. The net impact of the Piedmont sale and the acquisition of Magen will be a reduction of projected discovery segment revenues by $19 million and an increase in projected diluted earnings per share of $0.03.