PPD, Inc. announced it would acquire from Eli Lilly and Company the patents for the compound dapoxetine for development in the field of genitourinary disorders. As previously disclosed, PPD in-licensed dapoxetine from Lilly in 1998, developed the compound through Phase II proof-of-concept, and then out-licensed it to Alza Corporation, a wholly-owned subsidiary of Johnson & Johnson, in January 2001. Dapoxetine is currently in Phase III development for premature ejaculation, which is thought to affect 30 per cent of males worldwide. If approved, dapoxetine would be the first prescription drug with a labeled claim for this indication.

Under the terms of the agreement with Lilly, PPD will pay Lilly $65 million in cash. PPD will also pay Lilly a royalty on net sales of dapoxetine in excess of a certain threshold of annual net sales. As part of the transaction, PPD and Lilly terminated their existing license agreement for dapoxetine.

Under US generally accepted accounting principles (GAAP), PPD will be required to expense the $65 million cash payment to Lilly in 2003. As a result, PPD reported that it is revising its earnings guidance for the fourth quarter 2003. As revised, PPD now expects a net loss per diluted share for the fourth quarter 2003 in the range of $0.28 to $0.30, compared to the prior forecast of earnings per diluted share of $0.44 to $0.46.

"The agreement with Lilly restructures the financial picture with respect to dapoxetine," said Fred Eshelman, CEO of PPD. "We will retain all future milestone and royalty payments from Alza up to a significant threshold of annual net sales. We believe this is a very positive development for PPD."

PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients maximize the return on their R&D investments. With proven early discovery through post-market resources, the company also offers compound partnering opportunities. PPD has more than 5,600 professionals in 26 countries around the world.