Layoffs possible as BASi looks to cut costs after weak Q1 results

Double-digit year-on-year increases in operating expenses and cost of sales dragged on first quarter results at BASi and prompted the bioanalytical CRO (contract research organisation) to consider cuts. The indefinite delay of a toxicology contract added to the problems.

“Revenue in the first quarter was below our expectations, primarily because of the delay of a large toxicology contract during the period​”, Tony Chilton, president and CEO of BASi, said. Sales fell by seven per cent year-on-year and the dip contributed to BASi posting a $1.5m (€1.1m) net loss.

BASi is still aiming to post a full-year operating profit and is looking to “sharply​” cut costs to meet this goal, Chilton told investors in a call after the results. Cuts to staffing levels are possible as BASi looks to offset higher costs from investment in its discovery centre and the sales setback.

Indefinite toxicology delay​

The postponed work was for a back-up compound that a client has paused development of after its primary candidate had a success, Michael Cox, chief financial officer at BASi, said. After a weak first quarter Cox said revenues should increase sequentially in the next financial reporting period.

However, with shares down 40 per cent over the past year, large pharma business falling, and uncertainty from the takeover of its biggest client, Pharmasset, some shareholders are concerned.

Tom Harenburg, a major BASi shareholder, said the first quarter results are “just plain pitiful​”. To grow revenues BASi has hired sales staff and begun targeting small and medium-sized biopharm companies.

Building relationships with these businesses takes a little longer, Chilton said, but with big pharma companies consolidating vendors and biotechs driving discovery the new strategy is necessary.