Pharmaceutical Product Development NASDAQ PPDI

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					Pharmaceutical Product Development

Fred Eshelman
Chief Executive Officer
Lehman Brothers Global Healthcare Conference 2008
19 March 2008
                    Safe Harbor

Except for historical information, all of the statements,
expectations and assumptions discussed in today’s
presentations, including statements and expectations
regarding PPD’s future financial performance, the market for
CRO services and its compound partnering initiatives, 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 may differ from the assumptions on
which such statements are based. Additional factors that
could cause actual results to differ materially are set forth
from time to time in the SEC filings of PPD.

To ensure compliance with Reg. FD, PPD will not disclose
during this presentation or Q&A session any material
information that has not been previously publicly disclosed.
               Regulation G

This presentation includes selected non-GAAP
financial measures. For a presentation of and
reconciliation to the most directly comparable
GAAP financial measures, go to the link titled
“GAAP/Non-GAAP Reconciliation” under News &
IR Presentations in the Investors section of PPD’s
Web site located at
          Our Business Statement

We are in the business of pharma, biotech, medical
device and government sponsored R&D. Our mission
  is to help our partners maximize returns on their
                 R&D investment.
 Company Overview

  • Development services since 1985
  • Clients have included 45 of top 50 pharmaceutical*
    companies and 250+ biotechnology/small
    pharmaceutical and medical device companies
  • Second largest Phase II-IV CRO business
  • Industry leading margins
  • Innovative compound partnering/risk sharing model

* Ranked according to R&D spend
Two Business Segments

  1. Contract Research & Development
  2. Discovery Sciences / Compound Partnering
  Our Clients

  Net Revenue, Backlog by Client Type - 12 months ended 12/31/07

           Revenue                            Backlog

                Government /
                                                    Government /

 59%                                                          Biotech
Service Scope
 Phase II-IV Development                 Phase I Clinics (Austin, TX)           Lab Services
 • Phase II-IV trial management          • State-of-the-art Phase I             • Bioanalytical labs in Richmond,
 • Data management & biostats            • Phase I/IIa clinical studies           VA and Madison, WI
 • Medical communications                • Specializing in larger, complex      • cGMP lab in Madison, WI
 • Market development                      studies                              • Central labs (Highland Heights,
 • Clinical informatics                  • Dental research clinic                 KY and Belgium, EU)
 • Regulatory management

 Discovery           Preclinical             Phase I             Phase II         Phase III          Post-Launch

                 Discovery Services                         Compound Partnering
                 • Piedmont Research Center                 • Development-based risk sharing
                   specialty non-clinical research            model
                   lab (oncology)                           • Pipeline of five partnered
                 • Biomarker services                         products in various stages of
  Where We Play                                           PPD operates traditionally
                                                         in large scale development,
                                                           but performs services in
    Breakdown of global R&D spending                       almost all of these areas

           Uncategorized               11.0%

                  Phase IV               13.3%

                  Approval        6.9%

                  Phase III                      25.5%

                   Phase II            11.7%

                    Phase I       5.8%


Source: PhRMA, 2007 Annual Membership Survey
Key Service Areas

  Net Revenue by Business and Rx Area – 12 months ended 12/31/07

            Business Group                   Therapeutic Area

               14%                                      CNS
     Phase I
      3%                                   Cardio                       Other
Discovery                                               4
                                     Endocrine      3

                                                            2       1
                       Phase II-IV               AI/AV
Global Scale

•   10,200+ professionals worldwide
•   Offices in 30 countries
                                   Belgium                  Poland
                                   England                  Czech Republic
                                   France                   Hungary
                                   Germany                                              China
                                   Italy                    Greece                                  Korea
                 USA               Netherlands Spain
                                   Scotland    Portugal
                                                                         India               Hong Kong



                       Chile                              South Africa
    Geographic Mix

       Development Net Revenue1 Mix / Growth by Region - FY2007

                   Latin America
                                                     Discovery         ’07/’06 Growth2
           Asia                                                       North America   12%
                                                                      EMEA            28%
                                                                      Latin America   31%
                                                                      Asia            80%



    Net revenue amounts exclude reimbursed out-of-pockets
    North America growth excludes discovery sciences revenues
Growth Drivers

                      Pharmabio R&D investment1
                         ±10% CAGR per year
                         Outsourcing penetration1
                          Estimated 25% by 2011
                   Growth in government segment

                          PPD market share gains

                      PPD top line growth ~15%
                           (Sector ±12.6% CAGR through 20111)

          Source: Goldman Sachs Dec 3, 2007, PPD Estimates
    Growth Drivers

        • Total outsourced R&D expected to nearly double from
          2006 to 20111
              – $16.3 B grows to $29.4 B, 12.6% CAGR
              – CROs get 67% to 70% of above
        • Public CRO Cohort TTM revenue growth through Q4’07
          of ± 20% has far exceeded background R&D2
        • Outsourced Phase II-IV spending expected to grow 15%
          - 16% CAGR from 2006 to 2011
        • Significant work going to preferred vendors3

  Goldman Sachs Healthcare Services, December 3, 2007
  Company filings and reports, PPD analysis, which includes PPDI, CVD, ICLR, PRAI, KNDL, PRXL
  Contract Pharma, May 2006
 Growth Drivers
 RFQs and New Authorizations
              Dollar Value of RFPs*                                    New Authorizations
                    ($ billions)                                         ($ thousands)

                          2%                                                  CA
                       GR2                               3000
7.0                 CA                            6.0                                                     2197
6.0                                                      2500
                                           4.9                    Gross                     1766
5.0                                                               Cancellations
                                    4.1                  2000     Net
4.0                                                                                  1212
                            3.0                                               1068
              2.7    2.8                                 1500          1002
3.0                                                             741
1.0                                                       500

-                                                          0
      2001   2002   2003    2004   2005    2006   2007          2001   2002   2003   2004 2005     2006   2007

 * Excludes RFQs from Discovery Sciences
Two Business Segments

  1. Contract Research & Development
  2. Discovery Sciences / Compound Partnering
Compound Partnering / Discovery

• Mid- to long-term financial strategy for PPD
• Received $65MM in milestones, recognized $130MM
  CRO revenue through February 2008.
• Dilutive through 1H’08
• Has the potential for substantial boost to EPS in
• Hedge against potential cycles and “shouldering” of
  CRO growth
Compound Partnering / Discovery

Compound Partnering - Why partner with PPD?

 • Vast development experience in most therapeutic
 • Big development machine to pair with discovery
 • Flexibility, speed in getting deals done
 • Rigor, speed, innovation in driving to market
 • Compounds don’t get “lost in the shuffle”
 • Innovator preserves more value
Compound Partnering / Discovery

Compound Partnering - PPD Approach?
 • Compound/lead series close to IND or Phase I
 • Must have clear outcome measure
 • Straight forward, reasonably short development profile
 • Clear regulatory path
 • Acceptable COGS
 • Solid patent and/or regulatory protection
 • Supportable market forecast
 • Iterative NPV/EPS modeling
 • Favorable financial terms
 • Number of drugs in pipeline to balance risk, enhance rate of
Compound Partnering / Discovery
   Pre-IND            Phase I          Phase II           Phase III      NDA/MAA

Dapoxetine (genitourinary) w/JNJ

TAK 322
             (DP4 Inhibitor, type II diabetes) w/Takeda

TAK 322 in combination with Actos®
             (DP4 Inhibitor)
TAK 472
             (DP4 Inhibitor)
                                                                      AmpB for CS
                                                                      w/ Accentia

RBX statin                               HMG-CoA reductase inhibitor w/Ranbaxy
Indication:        Premature ejaculation

Status:            NDA accepted for filing 2/05; not approvable letter 10/05;
                   EU filing December 7, 2007
Source:            Eli Lilly

Sales/Marketing:   Johnson & Johnson

Market:            Estimate ~30% of males experience PE

Economic Terms:    PPD bought out Lilly’s share (up to peak annual sales of $800
                   MM) for $65 MM. J&J responsible for development and
                   marketing costs; remaining deal terms include up to $5 MM
                   potential pre-marketing milestones on Ex-US regulatory
                   approvals, up to $50 MM in sales-based milestones, double
                   digit royalties which increase with sales levels.
DPPIV Inhibitors (Takeda)
Indication:        Type II diabetes
Status:            TAK 322 NDA - submitted December 27, 2007
                                 - filed February 27, 2007
                   TAK 322 in combination with Actos® Phase 3
Source:            TAK 472 Phase 2
                   Syrrx (Takeda)

Sales/Marketing:   Takeda

Market:            $10-12 billion

Economic Terms:    PPD made $25MM equity investment (11.7%) in Syrrx– now repaid.
                   Received up-front payment of $15MM and $15MM payment for dosing of
                   20th patient in Phase III from TAK. Remaining deal terms include a
                   potential of up to $70.5 MM development milestones of which we expect
                   $15M in Q1-08 and $25M in Q4-08; up to $33 MM sales-based
                   milestones; US sales-based royalties from mid-single digit to low double
                   digit levels; ROW royalty range from mid-to-upper single digit levels.
SinuNase (IN AmpB)
Indication:        Chronic Sinusitis

Status:            Phase 3, expect top-line results Q1’08

Source:            Accentia

Sales/Marketing:   TBD

Market:            $5 billion

Economic Terms:    PPD has $15MM equity investment in Accentia; made $2.5MM
                   one-time cash payment in 9/04 for 7% royalty on future sales of
                   specified antifungal products for the treatment of chronic
                   sinusitis (CRS).
RBX Statin
Indication:        Dyslipidemia

Status:            Phase 1B (in patients); Phase 2 TBD

Source:            Ranbaxy

Sales/Marketing:   TBD

Market:            $32+ billion

Economic Terms:    PPD paid $250,000 up-front license fee; PPD responsible for
                   future development, manufacturing and commercial expense;
                   PPD pays potential development and sales-based milestones
                   up to $44 million and royalties on potential product sales. PPD
                   has worldwide exclusive license except India.
Compound Partnering
Relative Revenue Potential Of Existing Pipeline


       2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
 • Based on projections for gross revenue streams including milestones and royalties, and assumptions regarding product pricing
   and acceptance.
 • Future revenue projections associated with compound partnering programs may not be realized and depend on numerous
   factors, including: achieving development milestones, obtaining regulatory approvals; competitive products; ability to
   successfully manufacture products; product pricing and demand and other factors set forth in PPD’s SEC filings.
Competitive Differentiation

      • Clear strategy
              – Leading CRO business focused on quality and large, complex
                development projects to mitigate pricing pressure
              – Compound partnering as licensee and licensor
      • Management
              – Experienced
              – “Hands-on”
      • Financial Performance
              –    Sustained revenue & EPS growth*
              –    Robust cash flow
              –    Virtually no LTD

* Excluding impairments to equity investments, $65 MM payment for dapoxetine patents, gain on sale of assets and restructuring charges
  associated with discovery sciences.
Historical Performance
Backlog ($MM)

                               R 34
                        C AG


  2000 2001 2002 2003 2004 2005 2006 2007
    Historical Performance
    Net Revenue1 ($MM)

                                                                  %                 $1,146
                                                              R 21
                                                     CA                      $962

                 2000 2001 2002 2003 2004 2005 2006 2007

1   Net revenue amounts shown exclude reimbursed out-of-pockets.
       Historical Performance
       Earnings-per-share*, split-adjusted

                                                              G         R                                         $1.13
                                                                                                                                                                                 2007 includes
                                                                                                                                                                                 $14.9MM in R&D
                                                                                                                                                                                 expense for the
                                                                                                                                                                                 development of
                                                                                                                                                                                 the RBX Statin
                                                                        1                2                 3                4
                        2000 2001 2002 2003 2004 2005 2006 2007
* Earnings per diluted share from 2000 to 2007 exclude non-cash stock option expense

1 Excludes $33.8 million in non-operating, non-cash charges related to the impairment of equity investments, $32 million of which is related to impairment of our equity investment in DNA Sciences
2 Excludes $10.1 million related to the impairment of equity investments, $1.9 million restructuring charge, $5.7 million gain related to the sale of assets of the Discovery business, and $65 million payment to acquire
  dapoxetine patents
3 Excludes $2.6 million restructuring costs, a $3.7 million tax benefit associated with release of valuation allowance and $2.0 million related to impairment of equity investments.
4 Excludes $5.1 million gain on exchange of assets, a $0.8 million reduction in a capital loss valuation allowance, and a $5.9 million impairment of investment
Balance Sheet

                                PPD, Inc.
                            Balance Sheet Data
                                (in thousands)
                                                    December 31, December 31,
                                                        2007         2006

Cash, cash equivalents and short-term investments   $     502,384   $     435,671
Accounts receivable and unbilled services, net      $     481,477   $     408,917
Working capital                                     $     599,980   $     412,711
Total assets                                        $   1,684,375   $   1,481,565
Unearned income                                     $     205,779   $     195,707
Current maturities of long-term debt                $           -   $      75,159
Shareholders' equity                                $   1,150,096   $     952,900
Why invest in PPD?

  • 36 consecutive quarters of backlog growth (leads sector)
  • Industry-leading margins
  • Solid track record of growth
  • No LTD
  • Solid cash position, dividend
  • Ability to generate robust free cash flow
  • Clear long-term strategy to drive EPS growth and
    generate cash
Pharmaceutical Product Development

Fred Eshelman
Chief Executive Officer

Lehman Brothers Global Healthcare Conference 2008
19 March 2008