The in-licensing move is highly unusual for a contract research organisation (CRO) like PPD, whose primary business model is providing drug development assistance on a fee-for-service basis, however, the new compound will be taken under the wing of PPD's small but growing Compound Partnering division, which currently has four compounds in development with three partners. Commenting on the decision, Fred Eshelman, CEO of PPD, said, "The opportunity to develop and commercialise Ranbaxy's statin is a logical extension of our compound partnering program. It meets the rigorous requirements for our partnering strategy and further strengthens our metabolic franchise." Eshelman did stress, however, that the company is now "aggressively seeking a commercial partner" for the compound in order to help shoulder the burden that the added research and development expenditure will have on the business. "If we do not find a partner by the end of 2007 we will have to look at restructuring our Compound Partnering division in order to avoid having to alter our financial guidance," said Eshelman in a Webcast last week. "We will take advice from outside counsel on this but the restructure will involve whatever looks most appropriate from a shareholder and a tax point of view – most likely the creation of a spin-off company." Meanwhile, the US-based CRO is planning to launch a development program for the drug immediately and said it expects to start a first-in-man Phase I trial in May; begin Phase II proof of concept (POC) studies in early 2007; hopes to file an investigational new drug (IND) application with the US Food and Drug Administration (FDA) in April 2007; and if all goes well, could have a new drug application (NDA) with the FDA at the end of 2010. PPD said that it adopted Ranbaxy's compound after a thorough investigation of its preclinical and in vitro profile, which suggested that the statin has the potential to offer an improved safety profile over currently marketed statins. "The preclinical data showed that Ranbaxy's drug has a lower potential for drug:drug interactions, a lower systemic exposure relevant to other statins on the market, the same maximum therapeutic benefit as other statins but a better safety profile, and can therefore potentially also be used at higher doses than currently available for those failing treatment," said Eshelman. "If this all turns out to be true in clinical trials, we will have a novel statin that is potent with an improved safety and tolerability profile that has the potential to capture a big market in a proven sector." Indeed, statins are the most widely prescribed class of drugs for lowering cholesterol, in a worldwide market valued at $32.4bn in 2005. Under the terms of the licensing agreement, Ranbaxy will be entitled to receive milestone payments upon the occurrence of specified clinical events, including the completion of a Phase I trial. In the event of approval to market a drug product, Ranbaxy will be entitled to receive royalties on sales of the drug and sales-based milestones. PPD will be responsible for all costs and expenses associated with the development and commercialisation of the compound, including preclinical and clinical studies. Ranbaxy has retained co-marketing rights to the compound in India. The deal - worth up to $44m for Ranbaxy if the drug reaches the market - has been labelled a bargain by analysts, taking into account its vast market potential upon success.