Encorium Group, the troubled US-based contract research organisation (CRO) that is repositioning to focus on vaccines and oncology, has recorded an operating loss of US$616,713 for the third quarter of 2009, compared with a US$2.42 million loss in the same period last year.
The net loss was US$1.0 million or US$0.05 per common share against a net loss of US$3.88 million or US$0.19 per common share in Q3 2008.
The latest quarter included net losses of US$742,215 and US$258,436 respectively from continuing and discontinued operations, reflecting the sale of most of Encorium’s US business assets to Italian CRO Pierrel in July. Net losses from continuing and discontinued operations in the third quarter of 2008 were US$2.43 million and US$1.46 million respectively.
Net revenues for the quarter ended 30 September 2009 dropped by 17.6% year on year to US$4.45 million, which Encorium blamed mainly on unfavourable foreign currency fluctuations amounting to US$200,000 for the quarter. Around US$650,000 was attributable to revenue recognised on a contract completed in 2008.
Encorium had a consolidated backlog from continuing operations of US$19.9 million as of 30 September 2009, compared with a US$27.0 million backlog one year previously. The latest backlog figure included around US$8.3 million in new business wins for the first nine months of 2009.
The CRO’s balance sheet at 30 September 2009 included cash and cash equivalents of US$318,243 and stockholders’ equity of US$925,423. Last month Encorium completed a placement of 3,937,500 shares of common stock with a private investor for an aggregate purchase price of US$1,575,000 or US$0.40 per share.
Prior to that, the CRO entered into warrant exchange agreements with two investors, under which it issued an aggregate of 1,864,000 shares of common stock and warrants to purchase an aggregate 874,126 shares of common stock, exercisable for five years at an exercise price of US$0.40 per share.
Encorium expects to be able to meet is cash requirements until at least the second quarter of 2010, assuming it can fully implement its current cost-cutting initiatives, win additional contracts during fiscal 2009 and maintain existing customer contracts.
The CRO recently terminated negotiations to sell its wholly owned European subsidiary, Encorium OY, to an unnamed US-based clinical research organisation, saying that its best bet was “moving forward independently”.
“We are very pleased that we were recently able to shore up our balance sheet,” commented executive chairman Dr Kai Lindevall on the third quarter performance.
“While additional financing is likely necessary, we believe our experience and capabilities in the vaccine field, coupled with the recent new awards in this area, demonstrate the long-term potential we have to grow into a leading vaccine franchise with expertise in preclinical support, regulatory consultancy and strategic trial planning.”
