Pharmaceutical Product Development Inc. (PPDI, Financial) filed Quarterly Report for the period ended 2010-03-31.
Pharmaceutical Product Development Inc. has a market cap of $3.26 billion; its shares were traded at around $27.51 with a P/E ratio of 26.45 and P/S ratio of 2.3. The dividend yield of Pharmaceutical Product Development Inc. stocks is 2.18%. Pharmaceutical Product Development Inc. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Pharmaceutical Product Development Inc. the business predictability rank of 3.5-star.PPDI is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Andreas Halvorsen of Viking Global Investors LP, Richard Aster Jr of Meridian Fund, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Total direct costs decreased $5.5 million to $182.8 million in the first quarter of 2010 primarily as the result of a decrease in Development segment direct costs. Development segment direct costs decreased $4.2 million to $160.0 million in the first quarter of 2010. The decrease was mainly attributable to a hedging gain of $2.0 million in the first quarter of 2010 compared to a hedging loss of $4.6 million in the first quarter of 2009 resulting in a decrease to direct costs of $6.5 million. In addition, we incurred an increase in research credits taken of $2.7 million and a decrease in contract labor and subcontractor costs of $2.3 million due to the April 2009 acquisition of AbC.R.O., Inc., partially offset by a $2.4 million increase in personnel costs and a $2.4 million increase in supply costs related to our laboratories.
SG&A expenses increased $19.9 million to $113.1 million in the first quarter of 2010. The increase in SG&A expenses was primarily related to a $10.3 million increase in personnel costs related to merit increases and costs associated with an additional 700 employees primarily related to the acquisitions completed in 2009. In addition, we incurred a $3.2 million increase in accounting and legal costs related to our proposed compound partnering spin-off and a $3.3 million increase in facilities and information systems costs.
In October 2009, we committed to invest up to $102.7 million in Celtic Therapeutics Holdings, L.P, or Celtic. As of March 31, 2010, we had invested a total of $32.7 million of the aggregate commitment. This investment is accounted for under the equity method of accounting. For the three months ended March 31, 2010, we recognized a loss from equity investment of $2.0 million. As of March 31, 2010, our investment balance in Celtic was $29.4 million.
Net income decreased $27.4 million to $17.2 million in the first quarter of 2010, a decrease of 61.4% from $44.6 million in the first quarter of 2009. Net income per diluted share of $0.14 in the first quarter of 2010 represents a 63.2% decrease from $0.38 net income per diluted share in the first quarter of 2009.
We held approximately $88.6 million and $90.0 million, net of unrealized loss, in auction rate securities at December 31, 2009 and March 31, 2010, respectively. Our portfolio of investments in auction rate securities consists of interests in government-guaranteed student loans, insured municipal debt obligations and municipal preferred auction rate securities. Even though we liquidated $1.3 million of our auction rate securities portfolio at par value in the first quarter of 2010, we classified our entire balance of auction rate securities as long-term investments as of March 31, 2010 due to uncertainties about the liquidity in the auction rate securities market. We also recorded an unrealized loss on these investments of $21.3 million and $18.6 million as of December 31, 2009 and March 31, 2010, respectively. We concluded that this was a temporary impairment because of our ability to hold the auction rate securities until the fair value recovers. We will continue to seek to liquidate these investments at par value and will review the classification and valuation of these securities quarterly.
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Pharmaceutical Product Development Inc. has a market cap of $3.26 billion; its shares were traded at around $27.51 with a P/E ratio of 26.45 and P/S ratio of 2.3. The dividend yield of Pharmaceutical Product Development Inc. stocks is 2.18%. Pharmaceutical Product Development Inc. had an annual average earning growth of 17.1% over the past 10 years. GuruFocus rated Pharmaceutical Product Development Inc. the business predictability rank of 3.5-star.PPDI is in the portfolios of Third Avenue Management, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC, Andreas Halvorsen of Viking Global Investors LP, Richard Aster Jr of Meridian Fund, George Soros of Soros Fund Management LLC, Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Highlight of Business Operations:
Total net revenue decreased $17.6 million to $346.8 million in the first quarter of 2010. The decrease in total net revenue resulted from decreases in both our Development and Discovery Sciences segment revenue. The Development segment generated net revenue of $323.8 million, which accounted for 93.4% of total net revenue for the first quarter of 2010. The $11.5 million decrease in Development segment net revenue was primarily attributable to an $18.8 million decrease in net revenue from our Phase II-IV services, partially offset by an increase of $6.4 million in our laboratory units. Of the decrease in our Phase II-IV services, $3.2 million was due to the weakening of the U.S. dollar relative to the euro, Brazilian real and pound sterling and the remaining $15.6 million decrease in Phase II-IV services was related to the decrease in net authorizations awarded in 2009. The increase in net revenue from our laboratory units was primarily related to the laboratory we acquired in late 2009.Total direct costs decreased $5.5 million to $182.8 million in the first quarter of 2010 primarily as the result of a decrease in Development segment direct costs. Development segment direct costs decreased $4.2 million to $160.0 million in the first quarter of 2010. The decrease was mainly attributable to a hedging gain of $2.0 million in the first quarter of 2010 compared to a hedging loss of $4.6 million in the first quarter of 2009 resulting in a decrease to direct costs of $6.5 million. In addition, we incurred an increase in research credits taken of $2.7 million and a decrease in contract labor and subcontractor costs of $2.3 million due to the April 2009 acquisition of AbC.R.O., Inc., partially offset by a $2.4 million increase in personnel costs and a $2.4 million increase in supply costs related to our laboratories.
SG&A expenses increased $19.9 million to $113.1 million in the first quarter of 2010. The increase in SG&A expenses was primarily related to a $10.3 million increase in personnel costs related to merit increases and costs associated with an additional 700 employees primarily related to the acquisitions completed in 2009. In addition, we incurred a $3.2 million increase in accounting and legal costs related to our proposed compound partnering spin-off and a $3.3 million increase in facilities and information systems costs.
In October 2009, we committed to invest up to $102.7 million in Celtic Therapeutics Holdings, L.P, or Celtic. As of March 31, 2010, we had invested a total of $32.7 million of the aggregate commitment. This investment is accounted for under the equity method of accounting. For the three months ended March 31, 2010, we recognized a loss from equity investment of $2.0 million. As of March 31, 2010, our investment balance in Celtic was $29.4 million.
Net income decreased $27.4 million to $17.2 million in the first quarter of 2010, a decrease of 61.4% from $44.6 million in the first quarter of 2009. Net income per diluted share of $0.14 in the first quarter of 2010 represents a 63.2% decrease from $0.38 net income per diluted share in the first quarter of 2009.
We held approximately $88.6 million and $90.0 million, net of unrealized loss, in auction rate securities at December 31, 2009 and March 31, 2010, respectively. Our portfolio of investments in auction rate securities consists of interests in government-guaranteed student loans, insured municipal debt obligations and municipal preferred auction rate securities. Even though we liquidated $1.3 million of our auction rate securities portfolio at par value in the first quarter of 2010, we classified our entire balance of auction rate securities as long-term investments as of March 31, 2010 due to uncertainties about the liquidity in the auction rate securities market. We also recorded an unrealized loss on these investments of $21.3 million and $18.6 million as of December 31, 2009 and March 31, 2010, respectively. We concluded that this was a temporary impairment because of our ability to hold the auction rate securities until the fair value recovers. We will continue to seek to liquidate these investments at par value and will review the classification and valuation of these securities quarterly.
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