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Low demand for QC testing hits Warnex’ revs in Q3; seeks another debenture delay

By Gareth Macdonald , 15-Nov-2011

Warnex’ pharmaceutical quality control (QC) contracting business continued to struggle in Q3, offsetting gains made by its trial laboratory services unit.

According to its latest filing total revenue for the three months ended September 30 was $4.9m, down 11 per cent on the year earlier quarter. Warnex analytical – which provides QC services to the drug sector – contributed $1.9m, which is 25 per cent lower than in Q3 last year.

Warnex, which closed its laboratory in Laval, Canada and consolidated continuing analytical operations at its facility in Blainville earlier this year , attributed the revenue decline to lower demand from key pharmaceutical industry customers during the period.

The firm’s medical testing unit – which provides genetic analysis to governments and the pharmaceutical sector – also struggled in Q3 with revenue falling $94,645 to $1.2m primarily due to lower demand for prenatal and pharmacogenetic analysis work.

In contrast Warnex’ bioanalytical business – whose focus is on the provision of bioavailability and bioequivalence analysis for pharmaceutical companies and CROs conducting clinical trials – saw revenue gains of $200,000 in the three month period.

The firm said: “This increase is mainly due to the execution of more complex projects with an average price per analysis higher than the same quarter last year.”

Financial status

Warnex also announced that it is in advanced talks to extend the maturity date of convertible debentures – in effect loans that can be converted into company shares – to November 18 with an option to extend this until December 13.

If agreed the extension would be the third the contract services firm has sought since beginning its debenture restructuring plan in August.

Warnex explained that it is “not in a financial position to pay the principal and interest due on the debentures, all of which matured on November 8,” adding that it is also in talks with its largest shareholder, Persistence Capital Partners, to obtain additional financing.

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