Under the terms of the agreement, in exchange for the assets of SurroMed’s biomarker business, PPD will surrender for cancellation its shares of SurroMed preferred stock, will assume $3.4 million of liabilities under capital leases and certain additional operating liabilities associated with SurroMed’s biomarker business, and will guarantee repayment of a portion of a SurroMed bank loan up to $1.5 million.
PPD acquired its shares of SurroMed preferred stock in 2002 and 2003 in exchange for $29 million in consideration consisting of cash, tangible assets and intellectual property.
Assuming the transaction closes under the terms of the agreement, PPD expects to recognize an after-tax gain in the range of $1.5 to $3.0 million on the disposition of its SurroMed preferred stock, which is not reflected in PPD’s previously issued 2005 earnings guidance.
The acquisition will expand PPD’s business by adding biomarker discovery and patient sample analysis capability to the collection of services currently offered. SurroMed’s technology allows clients to analyze patient samples for novel or known biomarkers, in the presence or absence of a drug. The changes in the biomarker profile of a patient can assist in the evaluation of the efficacy of a drug.
“We believe the FDA initiative targeting the discovery of biomarkers to improve drug efficacy and safety evaluations will result in accelerated client interest and demand,” said Fred Eshelman, CEO of PPD.
“This acquisition will provide PPD the opportunity to incorporate biomarker services at any point in the development cycle, especially during early patient evaluation in phase II, and aligns well with our strategy of investing in proprietary technology that complements our existing business.”