Troubled US-based contract research organisation (CRO) Encorium does not expect to receive any cash from Italian CRO Pierrel if the latter goes through with its planned acquisition of Encorium’s US business.

This is despite an amended letter of intent that widened the margin on the liabilities to be offset against Encorium’s US assets in the deal. Another unnamed “full-service internationally based contract research organisation” already pulled out of acquiring the US business following an initial announcement by Encorium last month, with Pierrel quickly stepping into the breach.

Subject to negotiation of a definitive agreement, Pierrel may now acquire Encorium’s US business for a purchase price equal to 17% of the latter’s US backlog at closing, minus the amount that assumed current liabilities exceed acquired current assets by more than $500,000. In the original letter of intent, this deficiency allowance was $350,000.

Encorium is projecting a backlog of around US$11.5 million as of 30 June 2009. “It is estimated that at closing, the liabilities assumed by Pierrel will exceed the assets transferred by the Company by more than the $500,000 deficiency allowance,” it stated. “As a result, the Company does not anticipate it will receive cash from Pierrel at closing.”

Encorium also signed a non-binding letter of intent in May to sell off its wholly owned European subsidiary, Encorium Oy, to a “leading full-service clinical research organisation based in the United States and with operations globally”, for an undisclosed price. Encorium says it is proceeding with negotiations and due diligence for this transaction, which it expects to close in the third quarter of 2009.

In the case of Encorium Oy, the CRO noted, it is “not currently expected that distributions to stockholders will result in a premium to the current stock price”.