8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 16, 2009

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

(Exact name of registrant as specified in its charter)

North Carolina

(State or other jurisdiction of incorporation)

0-27570	56-1640186
(Commission File Number)	(IRS Employer ID Number)

929 North Front Street, Wilmington, North Carolina 28401

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (910) 251-0081

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Agreements related to mu opioid and delta opioid compound

On November 16, 2009, PPD Therapeutics, Inc. (“PPD Therapeutics”), a wholly owned subsidiary of Pharmaceutical Product Development, Inc. (“PPD, Inc.”), and Janssen Pharmaceutica, NV (“Janssen”) entered into a Development and License Agreement for a mu opioid receptor agonist and delta opioid receptor antagonist compound owned by Janssen (the “Opioid Compound”).

Under the agreement, Janssen granted to PPD Therapeutics the exclusive worldwide license, with rights to sublicense, to develop the Opioid Compound. PPD Therapeutics will be responsible for the Phase II clinical trials and related development of a product incorporating the Opioid Compound (the “Opioid Product”). For the license, PPD Therapeutics will pay Janssen an upfront non-refundable license fee of $3.5 million.

For an agreed time following the completion of Phase II trials, Janssen will have the right to exercise an option to continue development and commercialization of the Opioid Product. If Janssen exercises its option, it can terminate the development license granted to PPD Therapeutics and receive from PPD Therapeutics all right, title, and interest in all regulatory assets related to the Opioid Compound and Product and a royalty-bearing, worldwide, exclusive license, with rights to sublicense, under PPD Therapeutics’ patents and know-how related to the Opioid Compound for the further development and commercialization of the Opioid Product in all therapeutic, prophylactic and diagnostic uses for humans and animals. For this license, Janssen might have to pay PPD Therapeutics regulatory milestone payments of up to $90 million, sales-based milestones of up to $75 million and tiered royalties on sales, ranging from middle single digit to low double digit percentages, subject to reduction in the event of loss of patent protection or generic competition.

Additionally, if Janssen exercises its option, Janssen will, subject to certain conditions, use PPD, Inc. as the sole provider of clinical research services for:

• the Phase III trials required for obtaining regulatory approval of the Opioid Product for the primary indication of diarrhea predominant irritable bowel syndrome;

• any Phase II trials for any other indications of the Opioid Product if PPD, Inc. elects to conduct such Phase II trials; and

• any Phase III trials for any other indications of the Opioid Product if PPD, Inc. elects to conduct as well as fund the Phase II trials for such other indications of the Opioid Product.

If after it exercises its option, Janssen outsources non-clinical services related to any Phase III trials of the Opioid Compound conducted by PPD, Inc., Janssen will, subject to certain conditions, use PPD, Inc. for those non-clinical services. PPD, Inc. will provide its clinical research and non-clinical services at agreed upon rates and subject to customary terms and conditions.

If Janssen does not exercise its option or discontinues development and material commercialization activities after exercising its option, PPD Therapeutics has the option for an agreed upon period of time to be solely responsible for all development and commercialization of the Opioid

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Product in the United States and certain European markets. If PPD Therapeutics exercises its option, Janssen will assign to PPD Therapeutics all regulatory assets related to the Opioid Compound and the Opioid Product and grant to PPD Therapeutics a royalty bearing, worldwide, exclusive license, with rights to sublicense, for the development and commercialization of Opioid Products in all therapeutic, prophylactic and diagnostic uses for humans and animals. For this license, PPD Therapeutics might have to pay Janssen regulatory milestone payments of up to $50 million, sales-based milestone payments of up to $75 million and tiered royalties on sales in the middle to upper single digits, subject to reduction in the event of loss of patent protection or generic competition.

For a period of time after the effective date of the agreement, or until the agreement is earlier terminated under certain conditions, PPD Therapeutics will not develop or commercialize any compound or product targeting diarrhea predominant irritable bowel syndrome using the same mechanism of action as the Opioid Compound (a “Competing Product”). PPD, Inc. is also bound by this non-compete, except that it does not impact its ability to provide CRO services to customers. Janssen likewise will not conduct research, develop, license, sell, manufacture or commercialize a Competing Product.

Unless earlier terminated, the agreement will remain in full force and effect on a product-by-product and country-by-country basis until the date no further payment obligations exist, at which time the license granted under the agreement will become non-exclusive, fully paid up and royalty free, with the right to sublicense.

The agreement will terminate in the following events:

• In the event of an uncured material breach by a party, the other party may terminate the agreement, in which event the non-breaching party gets the rights to commercialize an Opioid Product but must pay the other reduced royalties, or no royalties if PPD Therapeutics breaches before delivering the Phase II report or if Janssen, following a termination for its breach, sells or manufactures a Competing Product or transfers to a third party any rights reasonably useful for a Competing Product;

• PPD Therapeutics may terminate the agreement for any or no reason during its option period or when it is developing or commercializing an Opioid Product, in which case Janssen will get all rights to the Opioid Compound and the Opioid Product with no payment obligations;

• Janssen may terminate its rights under the agreement for any or no reason at any time, in which case PPD Therapeutics has the option to obtain all rights to the Opioid Compound and the Opioid Product subject to obligations to pay Janssen milestones and royalties unless Janssen sells or manufactures a Competing Product or transfers to a third party any rights reasonably useful for a Competing Product; and

• In the event PPD Therapeutics does not exercise its option to develop and commercialize the Opioid Product, or PPD Therapeutics terminates the agreement due to Janssen’s material breach of the Master Services Agreement referenced below, the agreement and all licenses granted thereunder shall terminate, and each party shall retain ownership of all Opioid Compound- and Opioid Product-related assets it contributed to or generated under the relationship.

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Concurrent with the execution of the license agreement, PPD Therapeutics and Janssen entered into a Master Services Agreement pursuant to which Janssen will provide chemistry and manufacturing services at agreed prices for the development of the Opioid Compound.

Agreements related to topoisomerase inhibitor compound

On November 16, 2009, PPD Therapeutics and Janssen also entered into a Development and License Agreement and a Master Services Agreement for a topoisomerase inhibitor compound owned by Janssen for the treatment of complicated skin and skin structure and respiratory infections. The terms of these agreements are identical to the agreements for the Opioid Compound and Opioid Product except for terms related to the specific activity of the topoisomerase inhibitor compound.

General

A copy of the press release announcing the execution of the license and development agreements is attached as Exhibit 99.1 to this Report. Copies of the agreements will be filed by PPD, Inc. as exhibits to its Annual Report on Form 10-K for the year ending December 31, 2009.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

Exhibit No.	Description
99.1	Press release dated November 16, 2009

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

	PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
Date: November 20, 2009
		/S/    DANIEL G. DARAZSDI
	Name:	Daniel G. Darazsdi
	Title:	Chief Financial Officer

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EX-99.1

Exhibit 99.1

Contacts

Media:

Sue Ann Pentecost

+1 919 456 5890

sueann.pentecost@ppdi.com

Analysts/Investors:

Luke Heagle

+1 910 558 7585

luke.heagle@ppdi.com

FOR IMMEDIATE RELEASE

PPD and Janssen Pharmaceutica Collaborate to Develop Compounds for

Treatment of Irritable Bowel Syndrome and Bacterial Infections

Compounds show promise in early clinical studies

WILMINGTON, N.C. (November 16, 2009) – PPD, Inc. (Nasdaq: PPDI) today announced it has entered an agreement with Janssen Pharmaceutica N.V. to develop and commercialize two Phase II-ready therapeutic compounds, one to treat diarrhea-predominant irritable bowel syndrome (IBS-d) and the other to treat complicated skin and skin structure and respiratory infections.

Under two agreements, PPD in-licensed the two assets and will advance the compounds through Phase II development. At the completion of Phase II, Janssen will have the option to resume development and commercialization of each compound. In exchange, PPD may receive up to $330 million USD in clinical and sales milestones and royalties on sales of the compounds if approved for marketing. If Janssen does not buy back a program, PPD will have the option to continue developing and commercializing the compound for that program and Janssen may receive up to $250 million USD in clinical and sales milestones and royalties on sales of the compounds if approved for marketing.

“Our agreements with Janssen diversify and strengthen our compound partnering portfolio and may gain us entry into two large markets,” said Fred Eshelman, executive chairman of PPD. “The IBS-d market holds significant drug development potential because of the lack of approved products for this indication, and new antibiotics are needed to address increasing incidences of resistant strain bacterial infections.”

The IBS-d compound is a potential first-in-class locally active mu opioid receptor agonist and delta opioid receptor antagonist. According to a market report in Nature Reviews Drug Discovery (February 2006), IBS-d affects approximately 29 million Americans age 15 and older.

The anti-bacterial compound is a broad-spectrum fluoroquinolone potential antibiotic with activity against gram positive and gram negative bacteria and methicillin-resistant staph aureus (MRSA). It is being developed as both an oral and intravenous therapy to treat skin and respiratory infections. Bacterial infections are a major cause of morbidity and mortality, and

antibiotic resistant infections have become a growing public health concern. More than 14 million ambulatory physician visits each year are related to skin and soft-tissue infections, and approximately 94,000 Americans developed serious MRSA infections in 2005, according to a recent study published in the Journal of the American Medical Association.

PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 38 countries and more than 10,000 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at www.ppdi.com.

Except for historical information, all of the statements, expectations and assumptions contained in this news release, including expectations and assumptions about the collaboration with Janssen Pharmaceutica N.V. and the promise and potential value of the compounds that are the subject of the collaboration, are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause results to differ materially include the following: earnings dilution; risks associated with and dependence on collaborative relationships; risks associated with the development and commercialization of drugs, including drug failures and delays and obtaining required regulatory approvals; rapid technological advances that make our compounds less competitive; risks associated with acquisitions and investments, such as impairments; the ability to attract and retain key personnel; success in sales growth; loss of large contracts; increased cancellation rates; economic conditions and outsourcing trends in the pharmaceutical, biotechnology, medical device, academic and government industry segments; competition within the outsourcing industry; risks that we may not continue our dividend policy; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.

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