Q1 2009 Earning Report of Pharmaceutical Product Development

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Q1 2009 Earning Report of Pharmaceutical Product Development

  1. 1. PHARMACEUTICAL PRODUCT DEVELOPMENT INC FORM 8-K (Current report filing) Filed 04/22/09 for the Period Ending 04/21/09 Address 929 NORTH FRONT STREET WILMINGTON, NC 28401 Telephone 9102510081 CIK 0001003124 Symbol PPDI SIC Code 8731 - Commercial Physical and Biological Research Industry Biotechnology & Drugs Sector Healthcare Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2009, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
  2. 2. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 21, 2009 PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. (Exact name of Registrant as specified in its charter) North Carolina (State or other jurisdiction of incorporation) 0-27570 56-1640186 (Commission file Number) (IRS Employer ID Number) 929 North Front Street, Wilmington, North Carolina 28401 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code 910-251-0081 NA (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: Written communications pursuant to Rule 425 under the Securities Act Soliciting material pursuant to Rule 14a-12 under the Exchange Act Pre-commencement communications material pursuant to Rule 14d-2(b) under the Exchange Act Pre-commencement communications material pursuant to Rule 13e-4(c) under the Exchange Act
  3. 3. Item 2.02 Results of Operations and Financial Condition. On April 21, 2009, the Company issued a press release announcing its financial and operating results for the three months ended March 31, 2009, and updating 2009 financial guidance. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference. The information furnished in this Item, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. Item 9.01 Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description 99.1 Press release dated April 21, 2009 of Pharmaceutical Product Development, Inc. announcing its financial and operating results for the three months ended March 31, 2009, and updating 2009 financial guidance. (Furnished pursuant to Item 2.02, not filed; see Item 2.02 above.)
  4. 4. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Pharmaceutical Product Development, Inc. Date: April 21, 2009 /s/ Daniel Darazsdi By: Name: Daniel Darazsdi Title: Chief Financial Officer
  5. 5. Exhibit 99.1 Contacts: Dan Darazsdi +1 910 558 7915 daniel.darazsdi@wilm.ppdi.com Luke Heagle +1 910 558 7585 luke.heagle@wilm.ppdi.com FOR IMMEDIATE RELEASE PPD Reports First Quarter 2009 Financial Results; Updates 2009 Financial Guidance First Quarter Highlights: • Development segment operating margin increased 200 basis points year-over-year • Cash flow from operations of $67 million • Priligy TM (dapoxetine) approved in Sweden, Finland, Portugal and Austria WILMINGTON, N.C. (April 21, 2009) —PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the first quarter ended March 31, 2009. PPD recorded net revenue of $364.9 million for the first quarter of 2009, compared to net revenue of $392.5 million for the first quarter of 2008. First quarter 2009 income from continuing operations was $65.2 million, compared to income from continuing operations of $67.1 million for the same period in 2008. First quarter 2009 diluted earnings per share were $0.38, compared to diluted earnings per share of $0.33 for the same period last year. First quarter 2008 diluted earnings per share included asset and investment impairments of $12.5 million, net of tax. Segment Performance Development segment net revenue for the first quarter of 2009 was $335.4 million, compared to net revenue of $347.8 million for the first quarter of 2008. Development segment income from continuing operations for the first quarter of 2009 was $62.8 million compared to income from continuing operations of $58.3 million for the same period in 2008. Discovery sciences segment net revenue for the first quarter of 2009 was $5.7 million, compared to net revenue of $16.0 million for the first quarter of 2008. First quarter 2009 net revenue for this segment included two milestone payments from Janssen-Cilag totaling $5.0 million triggered by the first two national regulatory approvals of Priligy. Discovery sciences segment net revenue for the first quarter 2008 included a $15.0 million milestone payment from Takeda Pharmaceutical Company Limited triggered by the U.S. Food and Drug Administration’s acceptance of the alogliptin new drug application. Discovery sciences segment income from continuing operations for the first quarter of 2009 was $2.5 million, compared to income from continuing operations of $8.8 million for the same period in 2008. 1
  6. 6. As previously disclosed, PPD has entered into a definitive agreement to sell the business of its wholly-owned subsidiary Piedmont Research Center, LLC. This business unit has been part of the company’s discovery sciences segment. Beginning first quarter 2009, the company is reporting current and historical financial results for this business in discontinued operations. Other Financial Information New business authorizations for the first quarter of 2009 totaled $579.7 million. Contract cancellations and adjustments for the quarter were $214.6 million, including a $76.9 million cancellation from a large biotech client for a multinational clinical trial. The net book-to-bill ratio was 1.07 for the first quarter of 2009. Backlog at March 31, 2009, was $3.2 billion. Days sales outstanding for the first quarter of 2009 were 31.1 days, compared to 42.2 days at December 31, 2008. Cash flow from operations for the first quarter of 2009 was $67.5 million. At March 31, 2009, PPD had $656.1 million in cash and investments. The effective tax rate for the first quarter of 2009 was 32.0 percent. Guidance PPD has revised its 2009 revenue and earnings guidance to reflect the impact of current business conditions and the effect of previously announced changes within the company’s discovery sciences segment. The following table shows the revised full year 2009 net revenue and diluted earnings per share guidance for each segment and the total company. Revised 2009 Guidance Net revenue* Development $ 1,375 - $1,450 Discovery sciences 20 - 20 Total company $ 1,395 - $1,470 EPS Development $ 1.44 - $1.50 Discovery sciences 0.10 - 0.10 Total company $ 1.54 - $1.60 * Net revenue in millions, excluding reimbursed out-of-pocket expenses. The company continues to anticipate that Takeda will submit a marketing authorization application, or MAA, for alogliptin to the European Medicines Agency, or EMEA, in the third quarter of 2009. PPD will earn a $10.0 million milestone payment from Takeda upon acceptance of the MAA by the EMEA. This milestone payment is included in the company’s third quarter 2009 diluted earnings per share guidance. For the remainder of 2009, quarterly diluted earnings per share for the total company are expected to be in the following ranges: Q2—$0.42 to $0.44; Q3—$0.38 to $0.40; and Q4—$0.36 to $0.38. The expected after-tax gain on the sale of Piedmont Research Center of approximately $0.14 per diluted share is included in the second quarter of 2009. PPD anticipates that cash flow from operations for the full year 2009 will be approximately $200 million. 2
  7. 7. “While net revenue was below expectations for the quarter, PPD generated strong earnings and solid cash flow,” said Fred Eshelman, chief executive officer of PPD. “In this challenging economic environment, we have experienced unprecedented cancellation levels, significant rescheduling of existing backlog, and lower-than-expected authorizations for the first quarter. As a result, we have adjusted our 2009 financial guidance accordingly. Despite these challenges, we continue to believe the CRO market remains attractive, and we will remain focused on core business execution throughout the year.” Commenting on compound partnering, Eshelman said, “We are delighted with the regulatory approvals of Priligy granted in four European countries during the quarter, and we look forward to our compound partnering efforts generating additional value for our partners and shareholders as our programs continue to advance.” Net revenue is the most directly comparable GAAP financial measure to net revenue excluding reimbursed out-of-pocket expenses. Although net revenue excluding reimbursed out-of-pocket expenses is not superior to or a substitute for GAAP net revenue, PPD excludes reimbursed out-of- pocket expenses from its forecasted net revenue because they are difficult to accurately predict and are immaterial in that they do not affect operating income, net income or earnings per share. PPD further believes this non-GAAP financial information is useful to investors because it more accurately reflects the net revenue that will be generated by PPD’s services, and because it provides information for period-to-period comparisons. PPD will conduct a live conference call and audio webcast tomorrow, April 22, 2009, at 9 a.m. ET to discuss its first quarter 2009 results and revised 2009 financial guidance. A Q&A session will follow. All interested parties can access the webcast through the Presentations & Events link in the Investors section of the PPD Web site at http://www.ppdi.com. The webcast will be archived shortly after the call for on-demand replay. The conference call will be broadcast live over the Internet, and the live call may be accessed via the following direct dial numbers: Participant dial in: +1 877 644 0692 (U.S./Canada) +1 973 200 3387 (International) Conference ID: 89016529 PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 38 countries and approximately 10,500 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at http://www.ppdi.com . Except for historical information, all of the statements, expectations and assumptions contained in this news release, including projections of net revenue, earnings, milestone payments, and cash flow for 2009, are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause actual results to differ materially include the following: success in sales growth; loss of and delay in large contracts; higher-than-expected cancellation 3
  8. 8. rates; competition within the outsourcing industry; reliance on economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries and academic and government-sponsored research sectors; overall global economic conditions; costs and risks associated with the development and commercialization of drugs, including uncertainties regarding regulatory submissions and approvals for alogliptin and Priligy; rapid technological advances that make our products and services less competitive; risks associated with acquisitions and investments, such as impairments; risks associated with and dependence on collaborative relationships; the ability to attract and retain key personnel; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department. 4
  9. 9. PPD, Inc. Statement of Operations Data (in thousands, except per share amounts) (unaudited) Three Months Ended March 31, 2009 2008 Net revenue: Development $335,354 $347,798 Discovery Sciences 5,676 15,978 Reimbursed out-of-pockets 23,862 28,681 Total net revenue 364,892 392,457 Direct costs: Development 164,169 177,190 Discovery Sciences 616 457 Reimbursable out-of-pocket expenses 23,862 28,681 Total direct costs 188,647 206,328 Research and development 1,526 4,303 Selling, general and administrative 94,237 98,403 Depreciation and amortization 15,233 14,747 Impairment of intangible asset — 1,607 Income from continuing operations 65,249 67,069 Impairment of investments — (16,319) Other income, net (218) 5,717 Income from continuing operations before income taxes 65,031 56,467 Provision for income taxes 20,733 16,853 Income from continuing operations 44,298 39,614 Discontinued operations, net of taxes 271 515 Net income $ 44,569 $ 40,129 Net income per share from continuing operations: Basic $ 0.38 $ 0.33 Diluted $ 0.37 $ 0.33 Net income per share from discontinued operations: Basic $ 0.00 $ 0.00 Diluted $ 0.00 $ 0.00 Net income per share: Basic $ 0.38 $ 0.34 Diluted $ 0.38 $ 0.33 Dividends declared per common share $ 0.125 $ 0.100 Weighted average number of shares outstanding: Basic 117,827 119,386 Diluted 118,534 120,996
  10. 10. PPD, Inc. Balance Sheet Data (in thousands) (unaudited) December 31, March 31, 2009 2008 Cash, cash equivalents, short-term and long-term investments $ 656,104 $ 608,437 Accounts receivable and unbilled services, net 394,656 401,303 Total assets 1,784,867 1,754,428 Unearned income 241,964 246,649 Shareholders’ equity 1,221,526 1,180,996 Additional information (in thousands) (unaudited) Cash, cash equivalents, short-term and long-term investments categories December 31, March 31, 2009 2008 Cash and cash equivalents $543,414 $ 491,755 Auction rate securities 98,511 89,618 Other municipal debt securities 14,179 27,064 $656,104 $ 608,437

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