Encorium Group, Inc. Delays Aquisition; Cuts Jobs by Approximately 18%
In conjunction with the postponement of negotiations with Prologue, Encorium's management and Board has initiated a strategic reorganization designed to cut costs and preserve capital. As an initial action to achieve profitability, Encorium is announcing an immediate reduction of its staff in the United States by approximately 18%. In addition to this and other immediate actions to improve profitability in its U.S. and European operations, Encorium will focus its management energies on intracompany sales growth as well. The Company also announced that it has engaged Mufson Howe Hunter & Company LLC to investigate possible strategic alternatives to maximize shareholder value.
"While we are disappointed we could not reach a final agreement on the acquisition at this time, in light of the strong strategic and cultural fit between Encorium and Prologue and their respective management teams, we believe that the formation of a strategic partnership will enable us to realize many of the potential benefits that a transaction could have created," stated Kai Lindevall, Executive Chairman of the Board of Encorium. "This will also allow Encorium to continue to focus on profitability improvements and our cost reduction plan to help us achieve profitability as soon as possible."
"Our therapeutic focus areas of cardiology and vaccines, particularly in Europe, continue to provide significant growth opportunities," commented Dr. David Ginsberg, the new Chief Executive Officer of Encorium. "We are announcing today awards of $6.2 million of new business contracts, primarily consisting of vaccine clinical trials with a major global biopharmaceutical company to be conducted in multiple European countries. We also intend to expand and focus our growth efforts in additional therapeutic areas as well.
"The cost-cutting initiatives announced today, which are designed to save approximately $1.0 million annually, demonstrate our focus on achieving profitability and positive cash flow. We believe we are repositioning the business to take advantage of the high-growth opportunities in the clinical research industry and will continue to review strategic alternatives for the Company as we strive to make Encorium successful."
About Encorium Group, Inc.
Encorium Group, Inc. is a global clinical research organization specializing in the design and management of complex clinical trials and Patient Registries for the pharmaceutical, biotechnology and medical device industries. The Company's mission is to provide its clients with high quality, full-service support for their biopharmaceutical and medical device development programs. Encorium offers therapeutic expertise, experienced team management and advanced technologies. The Company has drug and biologics development as well as clinical trial experience across a wide variety of therapeutic areas such as infectious diseases, cardiovascular, vaccines, oncology, diabetes endocrinology/metabolism, gene therapy, immunology, neurology, gastroenterology, dermatology, hepatology, women's health and respiratory medicine. Encorium believes that its expertise in the design of complex clinical trials, its therapeutic experience and commitment to excellence, and its application of innovative technologies, offer its clients a means to more quickly and cost effectively move products through the clinical development process. Encorium is headquartered in Wayne, Pennsylvania with its European base of operations in Espoo, Finland. The Company has a geographic footprint that includes over one billion people in North America, Western/Central/Eastern Europe, Scandinavia, and the Baltics.
This press release contains forward-looking statements identified by words such as "estimate," "project," "expect," "intend," "believe," "anticipate" and similar expressions regarding future expectations. Those statements involve risks and uncertainties, and actual results could differ materially from those discussed. Risks and uncertainties that could affect the Company's future operating results and financial condition generally include, without limitation: (i) our success in attracting new business and retaining existing clients and projects; (ii) the size, duration, and timing of clinical trials we are currently managing may change unexpectedly; (iii) the termination, delay or cancellation of clinical trials we are currently managing could cause revenues and cash-on-hand to decline unexpectedly; (iv) the timing difference between our receipt of contract milestone or scheduled payments and our incurring costs to manage these trials; (v) outsourcing trends in the pharmaceutical, biotechnology and medical device industries; (vi) the ability to maintain profit margins in a competitive marketplace; (vii) our ability to attract and retain qualified personnel; (viii) the sensitivity of our business to general economic conditions; (ix) other economic, competitive, governmental and technological factors affecting our operations, markets, products, services and prices; (x) announced awards received from existing and potential customers are not definitive until fully negotiated contracts are executed by the parties; (xi) our backlog may not be indicative of future revenues and may not generate the revenues expected; (xii) our ability to successfully integrate the businesses of Encorium and Remedium Oy which we acquired on November 1, 2006; and (xiii) the performance of the combined business to operate successfully and generate growth. You should not place any undue reliance on these forward-looking statements which speak only as of the date of this press release. Additional information concerning factors that might affect our business or stock price which could cause actual results to materially differ from those in forward-looking statements is contained in Encorium Group's SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2007 and other periodic reports under the Securities Exchange Act of 1934, as amended, copies of which are available upon request from Encorium Group's investor relations department.
Source: Encorium Group, Inc.