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 US by approximately 18%.
In addition to this and other immediate actions to improve profitability in its US 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 to investigate possible strategic alternatives to maximize shareholder value.
Kai Lindevall, executive chairman of the board of Encorium, said: “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. 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.”
David Ginsberg, CEO of Encorium, said: “The cost-cutting initiatives which are designed to save approximately $1 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.”