Q1 2010 Earnings Call Transcript

Transcript Call Date 04/27/2010

Operator: Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the PPD's First Quarter 2010 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions). Thank you.

At this time, I'd like to turn the call over to Mr. Luke Heagle, Director of Investor Relations. You may begin, sir.

Luke Heagle - IR: Good morning and welcome to PPD’s first quarter 2010 earnings conference call. I would like to remind everyone that except for historical information of the statements, expectations, and assumptions discussed in today’s call are forward-looking statements and involve the number of risks and uncertainties. Actual results might differ materially from those in the forward-looking statements. Information about factors that could cause actual results to vary is disclosed in the press release announcing our results and in the SEC filings for PPD. Copies of which are available free of charge from our Investor Relations department.

In our comments today, we will refer to selected non-GAAP financial measures for all periods discussed today unless specifically noted net revenue, income from operations and margins exclude reimbursed out-of-pocket and stock option expense under FAS 123(R) for a quantitative reconciliation of all non-GAAP numbers discussed in today’s call for the most comparable GAAP financial measure, please see the GAAP, non-GAAP reconciliation information that is posted on the presentations and events in the Investors section of our website at

I will now turn the call over to our Chief Executive Officer, David Grange.

David L. Grange - CEO: Thanks, Luke and good morning. Let me start by saying we are very pleased with our strong sales execution during the first quarter, which delivered a 30% sequential increase in gross authorizations to $607 million. In the first quarter, we renewed a large government clinical site and study monitoring contracts for clinical trials supported by the National Institute of Allergy and Infectious Diseases.

The total value of the new contract, as disclosed by NIAID on its website, is $135 million. This amount includes the value of the scope of work for the seven-year program plus the cost of all options NIAID has to expand the scope of work and approximately $9 million of reimbursed out-of-pocket expenses.

We included approximately $60 million from this contract in our gross authorizations for the first quarter. We are also continuing to establish strategic partnerships with sponsors and there are variety of types demonstrating our commitment and configuring our confidence in the market for CRO services and the long-term potential for PPD.

So far this year, we have established seven strategic outsourcing partnerships with clients. We also have established a joint referral bidding collaboration with the highly specialized non-profit organization. Request for proposal activity was also strong in the first quarter, and we continue to see RFPs for large global studies. Both the number and average size of Phase II-IV proposals were up year-over-year and sequentially. The majority of RFPs were from big pharma and mid-sized biotech companies and oncology and CNS were the largest therapeutic areas in terms of RFPs.

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