PPD posts strong Q2 results, cuts year outlook
the year in net contrast to its lacklustre performance in Q1, but
cut its earning outlook for the full year.
The contract research organisation's (CRO) operating income for the quarter ended 30 June 2007 was $61.1m (€44.2m), an increase of 24.6 per cent compared to $49.0m for the same period last year. In addition, the firm recorded sales of $350.0m for the period, a 13 per cent jump from last year's revenues. Meanwhile, total directs costs increased by 13 per cent to $188.9m for the quarter. The company's Development segment once again was the strongest performer, with a 13.5 per cent increase in sales to $316.5m and an operating profit up 30 per cent to $64.7m on the same period in 2006. In contrast, the smaller Discovery Sciences segment continued to remain loss-making, with revenues decreasing 2 per cent to $4.5m and an bigger operating loss of $3.7m, compared to income from operations of $0.6m for the second quarter 2006. But the company was confident that its Development business was strong enough to support further growth. "There are several opportunities at the discussion stage in the development segment that reaffirm our confidence in the market and our potential to come on strong as we approach 2008," said Fred Eshelman, chief executive officer of PPD. Meanwhile, the CRO reduced its 2007 earnings outlook, citing a potential increase in expenses associated with further development of its cholesterol drug candidate as PPD still has not found a partner to help shoulder the burden that the added R&D expenditure continues to have on the business. The compound showed positive results in a first-in-human study. Based on these results, PPD has started a first-in-patient study with plans to proceed into a Phase II proof-of-concept study. "We are pushing the 10558 statin program very hard with the intent to reach a partnerable stage by early 2008," said Eshelman. The company recently in-licensed the compound from India's Ranbaxy in a deal worth up to $44m. He added that while his company's revenues for the quarter were on target, new authorisations fell short of the level needed to drive the business, which was pinpointed as another reason why the company has revised its annual guidance initially given in December of 2006. "This was a PPD execution issue, and not reflective of the market, as RFP volume for the first six months of 2007 was comparable to the same period in 2006." The firm now expects net revenue for the year to be between $1.29bn and $1.34bn, compared to an earlier estimate of $1.34bn to $1.39bn.
