The new contract secures toxicology space for an undisclosed major pharmaceutical company from 2007 to 2013 and is an extension of an existing contract entered into by the two firms earlier this year.
"We have worked closely with this client to fully understand their needs for integrated preclinical services, including bioanalytical and metabolism capabilities, to test the safety and efficacy of new drug candidates," said Joe Herring, Covance chairman and CEO.
The windfall will add approximately $150m to Covance's second quarter backlog, the majority of which will be converted to revenue between 2009 and 2013, said the firm.
Covance is guaranteed to see the money, as according to analyst David Windley, who works for Covance investor relations, the contract is "non-cancellable."
This will come as welcome news for the company after its first quarter results fell short of Wall Street's revenue estimate after it experienced problems with delays in clinical trials for three major clients.
Under the dedicated space agreement the mystery pharma company will be guaranteed long-term capacity and infrastructure to run a range of preclinical studies, enabling it to focus on the development of its pipeline without logistical and resource constraints.
In addition, Covance claims it is able to provide the company with higher levels of quality, speed, and efficiency in preclinical studies than if it kept the function in-house.
"Our dedicated space model offers a win-win proposition for both our client as well as for Covance," said Wendel Barr, corporate senior vice president of Covance Early Development Services.
Covance has been looking to attract and secure dedicated agreements for toxicology capacity in a time when little capacity exists.
"Our continued progress with the dedicated space model signals changing market dynamics that creates significant strategic opportunities for Covance," said Barr.