Troubled US-based contract research organisation (CRO) Encorium Group has still not delivered its annual report for 2008 and now faces the threat of delisting from the Nasdaq stock exchange.

The company has also put a figure on the impairment charge it flagged up at the end of last month. Encorium has determined that a non-cash charge to earnings of around US$12.5 million will need to be logged for the fourth quarter of 2008, relating to goodwill and certain intangible assets acquired along with the Finnish CRO Remedium Oy in November 2006.

Then known as Covalent Group, Encorium adjusted the terms of its planned $20 million acquisition of Remedium following an audit of the latter’s financial results between 2003 and 2005.

In March 2006 Covalent said it intended to buy Remedium for US$16 million in stock and US$4 million in cash, with Remedium’s shareholders receiving US$14 million in Encorium stock and US$4 million in cash. The amended terms gave the Remedium shareholders US$11 million in stock and US$2.5 million in cash.

As far as Encorium’s Form 10-K annual report goes, the CRO announced at the end of March that it had asked for more time to file the report so it could complete the aforementioned impairment analysis of its goodwill. Encorium had already conducted an interim goodwill-impairment analysis that produced a non-cash charge of US$1.9 million for the third quarter of 2008.

On 20 April, Encorium received a letter from Nasdaq pointing out that, since the CRO had not yet filed its 10-K for the fiscal year ended 31 December 2008, it was no longer in compliance with the rules for continued listing on the exchange. Encorium had 60 calendar days from the date of the letter to submit a plan to regain compliance, the letter added.

According to the CRO, it “currently anticipates regaining compliance with the filing requirement by filing its Annual Report on Form 10-K prior to the period provided and intends to submit a compliance plan to Nasdaq if it is unable do so. Following a review of any such submission, Nasdaq staff can grant Encorium an exception, up to 180 calendar days from the due date of the 10-K, to regain compliance”.

In addition to the general woes afflicting the contract research sector in the current economic climate, Encorium has suffered from the collapse of two deals last year that would have raised the company’s profile both at home and abroad.

In September 2008 Encorium withdrew from a deal to globalise its operations through a merger with investment vehicle Linkcon. The following month it compounded the damage by announcing it was postponing negotiations to acquire US CRO Prologue Research International, settling instead for a strategic partnership “while leaving open the possibility of restarting negotiations relating to a merger of the two entities at a later date”.