The German company saw its sales erode 22 per cent to $23.2m (€15.9m), primarily through a loss in revenue ($4.0m) following the sale of its library synthesis business, along with lower milestone income ($3.0m) compared to the same period last year, the firm said. Meanwhile, the firm's operating loss widen to $36.6m, from $25.0m in the comparable 2006 quarter. In addition, R&D expenses rose 22 per cent and in SG&A expenses climbed 19 per cent. The reduction in revenue and high investment in the advancement of its proprietary pipeline, including transaction costs for divestments and acquisitions, were cited by Evotec as the primary cause. This year Evotec has been taking a series of steps to divulge a lot of its services businesses and concentrate instead on its own internal research, focused on central nervous system (CNS) diseases. In September the firm executed the final step in its current plan, making its first real foray into the US through the acquisition of a US speciality pharma company, when it splashed out $151.8m on Renovis to obtain its first US research facility - in California - and five new drug discovery programmes at the preclinical stage. Prior to this, its only US site was a sales facility in Maryland. In the lead up to this, the company had already sold Evotec Technologies to PerkinElmer, transferred its library synthesis business into a joint venture with Indian RSIL, and sold its chemical development business to Aptuit. A company spokesperson explained that while Evotec remains committed to continuing to offer discovery services, such as screening and library synthesis services, it will also use these areas to develop its own pipeline. Going forward, the company will concentrate on new partnerships and alliances to generate cash.