Strategic CRO takes $100m hit from Pfizer's shelved PCSK9 candidate
The Big Biopharma firm shelved development of its proprotein convertase subtilisin kexin type 9 (PCSK9) inhibitor candidate bococizumab in November, following disappointing Phase III study results.
The abandonment of the monoclonal antibody candidate had repercussions on a $425m (€400m) planned expansion at Pfizer’s Grange Castle, Ireland manufacturing and has had a negative impact on the firm’s strategic partner ICON, the extent of which the CRO revealed in a Q4 financial results call yesterday.
Cancellations in the fourth quarter stood at $171m (€160m), and according to ICON’s COO Stephen Cutler around $100m of this was down to the bococizumab programme.
As such, ICON’s net book-to-bill ratio – a CRO’s gross new business (minus cancellations) divided by consolidated service revenue – stood at 1.0 for the quarter, rather than a “normal 1.2-ish,” Ctler told stakeholders.
ICON has been in a strategic partnership with Pfizer since 2011 and at one point attributed around one-third of its revenue to work relating to the Big Biopharma’s development projects.
But Pfizer also uses Parexel as a strategic partner, and the recent addition of a third (PPD), and then a fourth (inVentiv Health) preferred CRO partner has forced ICON to diversify its revenue stream and increase its customer base.
“As part of our overall strategy to diversify our customer base, both our clinical research and functional services businesses have added a number of significant new clients during the year,” CEO Ciaran Murray said on the call.
“As we continue to build and diversify our customer base, we expect the concentration of our top customer [Pfizer] in revenue to reduce to about 15% to 17%.”
For the full year 2016, ICON reported net revenues of $1.67bn, up 5.8% year-on-year. Net income was up by 9.5% on 2015, to $262m.