Stephen Cutler, senior vice president and chief operating officer (COO) at Kendle International, will take over as the company’s president and chief executive officer (CEO) as of 1 May.

The move sees co-founders and husband-and-wife team Candace Kendle and Christopher Bergen ease their hold on the reins at the US-based contract research organisation. Current chairman and CEO Candace Kendle is hanging onto the chairman’s role while stepping down as CEO.

Bergen, who is Kendle’s executive vice president and chief administrative officer, will relinquish those positions on 1 May but will remain on the Kendle board. The CAO’s role, held by Bergen since July 2009 as leader of the company’s key global connectivity initiatives, including its enterprise resource planning programme, will be eliminated “as these initiatives are in advanced stages of implementation”, the CRO noted.

The vacancy left by Cutler’s promotion will be filled by Jamie Macdonald, who spent 16 years with rival CRO Quintiles, most recently as senior vice president and head of global project management. Dr Cutler had a 14-year history at Quintiles, in a number of senior and regional management roles, before he joined Kendle in 2009.

“With the company solidly positioned for growth in a strengthening market and an outstanding CEO successor and executive team in place, now is the right time for me to step into the role of a non-executive chairman,” Candace Kendle commented.

Since 2009, she said, Cutler had been “central to Kendle’s leadership during a critical period in our history” as well as “a key architect of our return-to-growth strategy”.

Morningstar analyst Lauren Migliore applauded Kendle’s separation of the CEO and board chair roles, saying it should encourage management oversight.

She also suggested the appointment to key positions of two Quintiles veterans “could help Kendle in its attempt to keep up with its larger peers as large-scale strategic deals increase in importance and the CRO industry becomes increasingly global”.

Commenting on Cutler’s promotion, though, Migliore expressed surprise that Kendle had not recruited an outsider as part of its succession plan, following “a sustained period of underperformance”.

Tough time

Like many of the larger CROs, Kendle has had a tough time of late. In the third quarter of 2010, its operating income fell by 63.9% year on year as net service revenues declined by 20.5%.

It was less than two years ago that Kendle announced a re-alignment of top-tier executive positions, including Bergen’s move from COO into the new chief administrative office’s role, in a continuing effort to ride out the global recession. In May 2009, the CRO had uncapped a mixture of cost-cutting and restructuring initiatives to set the company back on course.

In the second quarter of 2010, Kendle incurred restructuring charges of US$1.15 billion related to the consolidation of certain UK offices and to unspecified “limited additional workforce action to better balance staffing levels with customer demand and sales”.

In the latest quarter, the company launched a strategic review of its Early Stage operations, which recorded an operating loss of US$303,000 in the three months to the end of September.

It now transpires that Kendle is closing down its Early Stage operations at the CRO’s Phase I unit in Utrecht, the Netherlands.

Severance-related costs are estimated at around US$3 million under the Social Plan agreed with the Works Council at the Utrecht site, notes a From 8-K report filed with the US Securities and Exchange Commission. Kendle will also incur lease-related costs of US$1.3 million in connection with the Dutch closure.