Shares of PPD, one of the Triangle's largest drug-research companies, fell as much as 9.9 percent this morning after the company appointed a new CEO.
PPD's board of directors announced today that they named Raymond H. Hill as CEO and gave him a spot on the board.
PPD's founder and executive chairman Fred Eshelman has been managing the company since former CEO David Grange retired in May.
While rumors persist about drug researcher PPD’s possible takeover by a private equity group, an analyst report this week suggests the company has room to expand as its clients increase their research and development funding, staff writer Tori Stilwell reports.
More of PPD's clients plan to boost spending on the clinical part of drug development, the company's main business, according to Garen Sarafian, an analyst with Citigroup Global Markets who follows the company.
“That naturally favors PPDI,” Sarafian said, referring to the company’s stock ticker. He also cited the company’s “lean” cost structure and strong leadership as an explanation for why he started coverage of the company with a “buy” rating.
Several media outlets are reporting that PPD, on the Triangle's largest drug-research companies, is talking about a sale to the Carlyle Group.
Bloomberg News, citing five anonymous sources, is reporting that Carlyle has edged out other private equity groups, including the Blackstone Group, that either bid or expressed interest in the company.
PPD, one of the Triangle's largest drug-research companies, reported that its quarterly profit more than doubled, bolstered by stronger sales to pharmaceutical customers.
The Wilmington-based business, which employs about 1,400 people in the Triangle, helps drug companies conduct clinical trials on experimental drugs and provides other services.
The strong results followed rumors earlier this month that PPD officials were considering a sale. Founder and executive chairman Fred Eshelman said at the time that PPD doesn't comment on speculation, but that management is reviewing its "long-term plan and our capital structure to see if there are any actions" that would increase shareholder value.
PPD has hired a financial advisor to help with the review, "including advising us on potential ways to unlock value for shareholders," Eshelman said on a conference call with Wall Street analysts today. The review "does not envision a combination with another CRO," he said, but declined further comment.
PPD released a prepared statement this afternoon that management is reviewing its strategic plan and capital structure "with a focus on unlocking value for shareholders," following a published report that the company is considering a sale.
Here is PPD's statement:
Following recent stock market developments, PPD, Inc. (Nasdaq:PPDI - News) today announced that its board of directors has asked management to review PPD’s strategic plan and capital structure with a focus on unlocking value for shareholders.
“While the company generally has a policy of not commenting on speculation,” said Fred Eshelman, executive chairman of PPD, “we want to assure our customers and employees that the company remains focused on executing its long-term business strategy.” Eshelman added, “We are absolutely dedicated to performing for our customers and committed to executing the important research programs that they have entrusted to us.”
Eshelman continued, “We are looking at our long-term plan and our capital structure to see if there are any actions, which might create value at this time. We are not engaged in any discussions around a combination with other clinical research providers. We remain laser-focused on executing our business and serving our customers with the quality and service they expect and deserve.”
The legislature's new Republican majority has made its first move to put an imprint on the UNC system. On Thursday, the Senate appointed eight new members to the UNC system's Board of Governors.
The eight new appointees don't signal a dramatic shift, in that four are either re-appointed current or former board members. But taken collectively, they are seven white men and one white woman; meanwhile, the board stands to lose four African-Americans and at least five women once all appointments are made.
The House appoints eight additional new members next week.
Here's today's story.
Reappointed to the UNC Board of Governors were long-time education advocate Ann Goodnight, wife of SAS Institute CEO Jim Goodnight, and Peter Hans, a senior policy adviser with the Nelson Mullins law firm in Raleigh.
Former board members H. Frank Grainger of Cary and John Fennebresque of Charlotte also were appointed. Grainger is part-owner of Fair Products Inc. and Tritest Environmental Lab, and Fennebresque is an attorney.
The four newcomers were Fred Eshelman of Wilmington, executive chairman and founder of Pharmaceutical Product Development Corp.; W. Louis Bissette Jr., an attorney from Asheville; Thomas Harrelson of Southport, vice president of AECOM, a former state legislator and DOT secretary appointed by Republican Gov. Jim Martin; and Phillip Walker, senior vice president with BB&T in Hickory.
Last summer, Fred Eshelman, the founder and top executive at PPD, handed the CEO reins to a former Army general so that he could spend more time reshaping the company's long-term strategy.
Late Tuesday, the Wilmington-based firm announced several major changes. For starters, PPD next year plans to spin off its drug-development division as a separate publicly traded company.
PPD, which employs about 1,400 in the Triangle and 10,000 worldwide, will keep its name and focus on the main business of providing contract research services for pharmaceutical companies. Most of the company's Triangle workers are involved in the contract research side.
The new company will work with other drug companies on new medicines, including a treatment for premature ejaculation that is already on sale in parts of Europe.
"We believe by separating this business from our core CRO business we can unlock the intrinsic value of both businesses," Eshelman said.
