Encorium, the financially strapped US-based contract research organisation (CRO) that recently showed a more confident face by acquiring Swiss CRO Progenitor Holdings, cut its operating loss to US$775,260 in the second quarter of 2010, from US$1.27 million in the same quarter last year.
The reduced losses were despite a 15.8% fall to US$ 3.78 million in net revenue for the quarter ended 30 June 2010, which Encorium blamed largely on fewer new business awards, contract cancellations and “performance of unexpected out-of-scope work for which revenue could not be recognised until corresponding change orders are executed with the clients”.
Of the US$700,000 decline in net revenue year-on-year, the CRO added, US$325,000 was attributable to unfavourable foreign currency fluctuations during the latest quarter. The Q2 results also included as discontinued operations the US business whose assets were sold to Pierrel Research USA in July 2009.
Encorium’s net loss from continuing operations in the latest quarter was US$805,157 versus US$1.127 million in the second quarter of 2009. The net loss overall was also US$805,157, or US$0.24 per common share, in Q2 2010 but was US$1.94 million or US$0.76 per share one year earlier.
As of 30 June, Encorium had a consolidated backlog of US$16.6 million, compared with backlog of US$14.7 million at 31 March 2010 and of US$19.6 million at 30 June 2009.
The company’s balance sheet as of 30 June 2010 showed cash and equivalents of US$176,000. Encorium believes it can meet its cash requirements through to September 2011, assuming the company can implement fully its current cost-cutting initiatives, win additional contracts during fiscal 2010 and maintain its current customer contracts.
“We are pleased to see the improved results over the first quarter as a result of recent contract awards and our continued focus on cost-cutting,” commented chief executive officer Dr Kai Lindevall. “With the acquisition of Progenitor we have expanded our service offerings in key emerging markets, including Latin America, India and Asia Pacific, which was a key step to realising our goal of becoming the world's leading vaccine CRO.”
As the market continues to stabilise and Encorium continues to see increases in requests for proposal, “we believe we are well positioned to continue to improve our performance”, Dr Lindevall said.