The preclinical contract research organisation (CRO), which was established to move Huntingdon Life Sciences’ financial centre to the US, faced a challenging quarter that it attributed to “short-term softness in demand”.
Brian Cass, LSR’s managing director, anticipates that the situation will improve in the coming months. Cass supports this positive outlook by referring to the confidence that LSR’s customers have in their pipelines.
He believes that as these new therapies are developed outsourcing will “almost inevitably increase” and this will refresh the order books of CROs.
An improvement in the sector could help LSR reverse the recent trend of declining new orders. In Q2 2008 the company received net new orders totalling $70.2m but this fell to $44.7m in the corresponding period of this year.
Revenues in Q2 were $45.3m, down from $64.3m the previous year. This was partially offset by lower costs but net income still fell by 13.5 per cent to $6.3m.
These financial difficulties have led to BWS Financial downgrading LSR from buy to hold. BWS made this decision because LSR has not recovered from the financial crisis as quickly as its competitors.
Furthermore, BWS believes that over capacity has diminished companies urge to book projects early.
Accepts private takeover offer
LSR has agreed to be acquired by Lion Holdings, an entity owned by the CRO’s CEO Andrew Baker who currently owns 17.5 per cent. Lion Holdings will now pay $8.50 for each share not already owned by Baker and his affiliates.
The price is a 77 per cent premium over LSR’s closing share price on March 3, the day before Baker’s initial offer.