Berwyn, Pa.-based contract research organization (CRO) Encorium Group has terminated another deal to sell off part of the company.
Instead, Encorium has completed a private placement of 3.94 million shares of its common stock with a private investor for an aggregate purchase price of $1.575 million, or $0.40 per share, after ending its previously announced negotiations to sell its subsidiary Encorium Oy to a U.S.-based CRO.
Encorium now plans to move ahead as an independent company after receiving the financing and recently being awarded $8.7 million of new business contract wins with its selection by a major pharmaceutical company for participation in a swine flu vaccine program.
"We are very pleased that we were able to close this financing to shore up our balance sheet and provide the company with additional working capital. 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,” said Dr. Kai Lindevall, executive chairman of Encorium. “We believe these developments will position us to move ahead independently and are in the best interest of all stockholders."
Of the 35 million authorized capital stock of the company, 26,325,383 shares of common stock will be issued and outstanding immediately following the closing.
Prior to the transaction, Encorium entered into warrant exchange agreements with two investors to whom the company issued an aggregate of 1.864 million shares of common stock and warrants to purchase an aggregate of 874,126 shares of common stock, exercisable for a period of five years, at an exercise price of $0.40 per share. Warrants were issued in exchange for warrants dated as of May 9, 2007, held by the investors to purchase an aggregate of 874,126 shares of common stock of the company.
In July, Encorium completed the sale of its U.S. business to Pierrel Research USA, a subsidiary of Italian CRO Pierrel SpA, for $2.7 million. The final purchase price comprised $80,000 in cash plus the assumption of $2.6 million in liabilities. With the closing, Encorium announced that CEO David Ginsberg had joined Pierrel Research USA as its CEO, and chief operating officer Linda Nardone, Ph.D., left the company.