Following a distinct improvement in the first quarter of 2009, troubled US-based contract research organisation (CRO) Encorium Group saw its operating losses climb from US$665,443 to US$1.27 million in the second quarter of the year.

The net loss from continuing operations was also US$1.27 million, or US$0.06 per common share, compared with US$664,455 or US$0.03 per common share in the second quarter of 2008. Encorium completed the sale of substantially all of its US business assets to Italian CRO Pierrel on 16 July, leaving it with no employees or significant operations in its home country.

The net loss from the US business, which was presented as discontinued operations in Encorium’s second-quarter financial statements, was US$674,416 against a US$726,230 loss in last year’s quarter.

Net revenues, which excluded reimbursement revenue, dropped by 23.4% to US$4.5 million in the latest quarter, with Encorium blaming mostly unfavourable foreign currency fluctuations, which shaved US$1.4 million off the Q2 revenue figure.

As of 30 June 2009, the company had a consolidated backlog of US$19.6 million from continuing operations, including around US$4.8 million in new business wins during the first half of 2009. The consolidated backlog at 30 June 2008 was US$23.5 million.

Encorium also provided an update on the planned sale of its wholly owned European subsidiary, Encorium Oy, to an unnamed “US-based clinical research organisation”.

The terms of this transaction, which was the subject of a non-binding letter of intent announced in May, are still being negotiated. Encorium does not expect to conclude the sale until the fourth quarter of 2009, subject to due diligence, the execution of definitive agreements and shareholder approval.

If the deal does go through, Encorium will no longer have any operations. In that event, the board intends to adopt a plan to dissolve the company, distributing any liquidation proceedings – “if any” – to shareholders.

If the sale of Encorium Oy is not consummated, its parent believes it will be able to meet its cash requirements until June 2010, “assuming we are able to fully implement our current cost cutting initiatives, we are able to win additional contracts during fiscal 2009 and we are able to maintain our current customer contracts”.

The CRO will then “continue to seek strategic alternatives”, such as attempting to secure additional financing. Failing that, Encorium “may significantly reduce our operating costs, which may include the cessation of operations in some countries, or seek stockholder approval to liquidate and dissolve”, it noted.