PPD, Inc. (Nasdaq: PPDI) today announced its board of directors has authorized management to proceed with preparations to spin off its compound partnering business from its core contract research organization, or CRO, business.
The spin-off will result in two well capitalized, highly focused, independent public companies. Acknowledging the different needs of the profitable CRO services business and a pharmaceutical research and development business, this transaction creates two “pure play” investments for PPD’s shareholders and potential future investors. The CRO business will continue to operate under the PPD name and will be focused solely on its drug discovery and development service businesses and will no longer be coupled with the earnings dilution from the company’s compound partnering business. The compound partnering business will have the opportunity to focus on developing and commercializing its drug candidates and to access external capital, if needed, without any constraints associated with operating in combination with the CRO business. In addition to, and as a result of these substantial corporate-level benefits, both businesses will be better positioned to create long-term shareholder value.
“While our innovative compound partnering program has benefited PPD over the years, we believe by separating this business from our core CRO business we can unlock the intrinsic value of both businesses,” said Fred Eshelman, executive chairman of PPD. “Each company will have the opportunity to focus exclusively on its core strengths, seek new strategic opportunities and compete more effectively in its respective market.”
The compound partnering company resulting from the spin-off is expected to have the following compounds, rights and investments: