Quintiles Transnational Corp., coming off strong fourth quarter earnings and a rising stock price, is hoping a new deal announced last week will build more momentum.

Quintiles announced Jan. 30 that it was entering a deal in which it will provide 150 of its representatives to help commercialize Kos Pharmaceuticals’ recently-approved cholesterol drug, Advicor.

Strategic partnerships such as the one with Kos should continue to strengthen analysts’ forecasts. Last quarter, Quintile’s commercialization business accounted for 42 percent of total revenue.

“Management remains confident that increased benefits from restructuring initiatives and new contracts wins will plant this business back on its feet to drive sales and expand operating margins,” says John Souter, an analyst for S.G. Cowen who follows Quintiles.

The deal stems from a five-year financial agreement Kos has with Quintiles’ strategic investment group, PharmaBio Development. Quintile’s commercialization unit, Innovex, will supply 150 cardiovascular-trained representatives from its existing staff. The group underwent a week-long training session last week before the announcement was made. The move will increase the total sales force, which is already on the job, by 50 percent from 300 to 450 representatives commercializing Advicor for Kos.

A spokesman for Quintiles says the firm will make money by helping Koss sell the drug. Quintiles will get a percentage of the sales. Quintiles has similar deals with Scios, CV Therapeutics and other companies.

“We think it’s a way to increase our growth profitability,” says Gregg Connors, who works in investor relations for Quintiles. “They are all different, but they all help, and in the contracts,
we target higher margins.”

The Food and Drug Administration approved Advicor, which offers multidimensional lipid management in a single tablet, on Dec. 17. Kos then officially launched Advicor on Jan. 28 with a significant promotional campaign.

In addition to Advicor, the first dual-component therapy approved by the FDA for cholesterol modulation, Quintile’s Innovex group will also help market Niaspan, one of the fastest growing treatments in the $10 billion cholesterol market. The commercialization arrangement between Quintile’s Innovex and Miami-based Kos is for two years.

“This launch marks a significant milestone for Kos with our second product launch on the heels of such a pioneering drug as Niaspan,” Adrian Adams, president and CEO of Kos said in a statement. “We are especially excited about Advicor because it will be launched with a sales force five times that of Niaspan’s launch in 1997.”

Numbers on the rise

Quintiles, whose earnings per share for the fourth quarter were up 56% from the previous quarter, expects this deal with Kos to generate operating profit throughout the term of the agreement. Ron Wooten, president of PharmaBio Development, says, “Our agreement with Kos is
another example of Quintiles’ ability to structure strategic and financial solutions for its customers.”

And just as its stock price jumped when the RTP-based company announced its fourth-quarter earnings on Jan. 23, this latest announcement regarding Kos has stabilized that trend. While the overall stock price is down from a 52-week high of 26.05 last June, it is climbing back from its low of 12.45 after Sept. 11. For the week, Quintiles, which trades under the symbol QTRN, is up almost one percent to around 16.00.

Strategic partnerships such as the one with Kos should continue to strengthen analysts’ forecasts. Last quarter, Quintile’s commercialization business accounted for 42 percent of total revenue.

Kos not the first

During the last two years, Quintiles has entered a dozen or so such arrangements as it has with Kos, although each one is unique. Two deals, in particular, were on the same scale and specter as the Kos agreement.

One deal was with Scios, a biopharmaceutical company headquartered in Sunnyvale, Calif., who makes the heart medication, Natrecor. Quintiles had an equity investment in Scios, in addition to providing the company with a sales force from Innovex, much like the arrangement with Kos. But in the deal with Kos, Quintiles does not have an equity investment.

The other agreement Quintiles made was with CV Therapeutics, a biopharmaceutical company headquartered in Palo Alto, Calif., who makes Ranolazine, a compound in still awaiting approval for the treatment of chronic angina. Quintiles struck the deal with CB in May 2000 and made an investment in the company, but will not commit sales reps until the FDA approves Ranolazine.

“Each of these arrangements is just a little different than the one that goes before it,” says Tom Fulder, senior director of corporate communications for Quintiles. “Each is customized and meets the needs of that customer. The one thing that may be consistent is the presence by the senior company, Quintiles Transnational, and depending on the nature of the deal, PharmaBio, the corporate venture group.”

Quintiles’ PharmaBio also has a sales and marketing alliance with Discovery Laboratories of Doylestown, Penn., to commercialize Discovery’s Surfaxin product, now in Phase III clinical trials for the treatment of respiratory ailments in newborns. The corporate ventures group also acquired the North America license to market and sell Solaraze, a topical gel approved by the FDA for the treatment of actinic keratosis, a pre-cancerous skin condition linked to over-exposure to the sun. Solaraze is being launched across the United States this month.