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CenterWatch Commentary: More Bad News for Encorium

Friday, September 26, 2008 01:25 PM

If this week’s news is any indication, Encorium’s summer of ups and downs will continue into fall.

The Wayne, Pa.-based contract research organization (CRO) is reducing its staff by 18%, effective immediately, and postponing negotiations to acquire Prologue Research, a Columbus, Ohio-based CRO specializing in oncology. This news comes just days after Encorium’s shares fell almost 50% following the company’s announcement that it had terminated plans to purchase Fine Success Investments, a holding company doing business as Linkcon. In an investor conference call earlier this month, Encorium executives cited the Prologue acquisition, expected to close Sept. 19, as a key to the company’s future financial success. This week, the deal is off.

On the up side, the recent cost-cutting initiatives are expected to save the company approximately $1 million annually, enabling them to focus on business development and organic growth, according to Encorium’s new CEO David Ginsberg. Ginsberg is optimistic about the company’s future and even announced $6.2 million in new business contracts with “major pharmaceutical companies.”

But, with bad news for this company coming more often than good (and a stock price that remains stuck around $0.35), it seems less likely that this CRO’s story will have a happy ending.

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