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PPD Spin-off Enters Stock Market

By Alison Lee Satake, posted Jun 15, 2010

Stock from Wilmington-based contract organization PPD, Inc.’s new spin-off company, Furiex Pharmaceuticals Inc., began being traded today.

Furiex stock (Nasdaq: FURX) traded between $9.30 to $10.97 a share today as of deadline. PPD’s stock traded between $25.75 to $26.37 per share today, according to the Nasdaq website.

On Monday, PPD shareholders of record received a pro rata dividend of one share of Furiex common stock for every 12 shares of PPD common stock they held. Fractional shares were paid in cash. PPD received a private letter ruling from the Internal Revenue Service that the dividend of common stock of Furiex to PPD shareholders qualifies as a tax-free distribution for U.S. income tax purposes.

PPD and Furiex now operate as two independent companies. PPD has no ownership of Furiex, which will continue PPD’s former compound partnering business.

Prior to the spin-off, PPD transferred $100 million in cash to Furiex, which has assumed current accounts receivable and payable associated with the compound partnering business.

Japan’s health ministry’s recent approval of the anti-diabetic drug, NESINA, developed by Takeda Pharmaceutical Co. Ltd., triggered a $7.5 million milestone payment to PPD, which will be transferred to Furiex. The accounts receivable Furiex is assuming from PPD consist primarily of the $7.5 million Takeda milestone payment.

The assumed accounts payable, which are predominantly to third-party vendors, should substantially offset the assumed accounts receivable, resulting in about $100 million of net working capital for Furiex as of June 14.

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