Quintiles to acquire Triangle company Novella Clinical

dranii@newsobserver.comAugust 14, 2013 

STAFF PHOTOGRAPHER

Quintiles Transnational is a medical research company in Durham.

TRAVIS LONG — 2009 NEWS & OBSERVER FILE PHOTO

Durham-based Quintiles is increasing its Triangle footprint and bolstering its services for smaller drug companies focused on developing cancer treatments by acquiring Novella Clinical of Morrisville.

Novella, which has been expanding significantly and has about 300 Triangle employees and a total of more than 800 in North America and Europe, “has the experience and ... the staff and the focus on quality that was important to us,” said Paula Brown Stafford, president of clinical development at Quintiles, the world’s largest pharmaceutical services company.

Financial terms of the deal, which was announced Wednesday and is expected to be completed by the end of September, weren’t disclosed.

Both companies are contract research organizations, or CROs, that help pharmaceutical and biotechnology companies test experimental drugs. The Triangle has the world’s largest concentration of CRO companies and employees.

Novella will operate under its own name as a unit within publicly traded Quintiles with its existing management team led by Richard Staub, who is Novella’s president and CEO.

Stafford said no layoffs are anticipated.

“That’s certainly one of the things that made the deal very, very attractive for us at Novella Clinical,” Staub said. “The strategy of the deal is really around the revenue synergies that we can pick up together.”

Privately held Novella doesn’t disclose its revenue, but analyst Eric Coldwell of Robert W. Baird & Co. estimates that it is in line to generate about $150 million in revenue over the next 12 months.

The deal, the first by Quintiles since it went public in May and its largest since the fall of 2011, “makes strategic sense,” Coldwell wrote in a research note.

Staub said Novella has been growing significantly under its own steam – it has blossomed from just 72 employees when he joined the company in 2004 – and wasn’t looking for a buyer.

Novella was, however, looking for a way to expand its ability to run clinical trials in more countries to meet customer demand.

“Their programs are becoming increasingly complex and increasingly global in nature,” he said.

Joining forces with Quintiles solves that problem. Novella can manage clinical trials in 40 countries; Quintiles operates in 100.

Stafford said Quintiles decided about 18 months ago that, although it has a considerable oncology business, it fell short when it came to working with smaller companies. Quintiles also wanted to add capabilities in the fields of medical devices and diagnostics.

“Novella came on the radar as really being able to fill all three of those needs,” she said.

Stafford said the decision to have Novella operate as a stand-alone unit within Quintiles was a recognition of the differences in their operations.

She called Novella more of “a high-touch organization in terms of how they deal with customers. I would say they have staff who cover more activities or tasks than perhaps what we do on some projects just because of the size of the projects we run.”

Cancer drugs are “probably the fastest-growing area within pharmaceutical development,” Staub said. “It represents a great opportunity for both us and Quintiles moving forward.”

Privately held Novella Clinical was founded in 1998 as PharmaLink. The majority owner of the business is the nonprofit FHI Foundation, with the remainder of the business owned by current and former Novella executives and employees.

The FHI Foundation’s investment portfolio supports Durham-based FHI 360, a global public health and economic development organization.

FHI 360 has 4,056 employees, including 400 in North Carolina, and posted about $700 million in revenue last year.

Albert J. Siemens, who is FHI 360’s CEO as well as the chairman of Novella, wasn’t available for comment but said in an emailed statement: “While Novella Clinical had been pursued over the years by other investors, Quintiles clearly represented the best fit and was best positioned to ensure the future success of Novella Clinical.”

Novella just moved into its current offices in Morrisville’s Perimeter Park in January and is staying put.

“I don’t have room for 300 people,” Stafford said.

Ranii: 919-829-4877

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