Encorium terminates sale plans on success of vaccines strategy

By Gareth Macdonald

- Last updated on GMT

Related tags Contract research organisation Vaccine Contract research organization

Encorium has abandoned plans to sell its Finnish unit, Encorium OY, citing its new strategic focus and recent contract wins as the basis for the decision.

The contract research organisation (CRO) had been seeking a buyer for the unit since May after a difficult 12 months dominated by contract cancellations that culminated in the sale of its US operations to Italian counterpart Pierrel in July

Since the end of the summer however, Encorium’s fortunes have improved. In September, it unveiled plans to refocus as a vaccine, infectious disease and oncology drug development specialist in a bid to differentiate itself from the competition.

Executive chairman Kai Lindevall told Outsourcing-Pharma about the firm’s change of plan, explaining that: “The success of our strategy in focusing on vaccines as exemplified by our recent business wins clearly influenced the decision.

The decision to terminate [sale] negotiations… was based on the Board's judgment on what is in the best interest in maximizing the return to the shareholder. Many different things need to be factored in, when judging the different options for future development.”

Another key factor in Encorium’s move is the $8.7m (€5.8m) worth of contracts it signed last month. While details have not been released, the firm did disclose that one of the deals is with a “major” pharmaceutical firm for the development of a H1N1 vaccine.

Geographic expansion

Dr Lindevall also touched on Encorium’s expansion plans, explaining that since refocusing “it is natural that we have the ambition to get a geographic coverage that corresponds to this strategy. This implies presence in at least South America and Asia Pacific​.”

South America and Asia-Pacific are growth areas for the contract research sector at the moment as companies strive to access both treatment naïve patients and large emerging markets.

In addition, Encorium’s focus on and expertise in vaccine development is likely to be attractive to pharmaceutical companies that wish to develop products for viral disease that are endemic in such regions.

Encorium is also in a better position to fund this expansion than it has been in recent years having recently raised $1.6m though a private placement of common stock some of which, Lindevall said, will be used for this purpose.

He explained that: “The proceeds from the investment will be used for general working capital to strengthen the company's balance sheet and to finance future growth within the company's key therapeutic areas​.”

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