The company said it is working with USB Investment Bank to explore “strategic alternatives,” including the potential sale of the company.
Management said the firm had already received “several confidential, non-binding written expressions of interest from a number of parties, none of whom are direct competitors.”
PharmaNet has been suffering from cancelled and delayed contracts – particularly in its late-stage clinical trials business - which have eaten into its sales and profits, both of which fell in the third quarter of 2008.
Late-stage testing has traditionally been the backbone of PharmaNet’s business, although the company has been building a portfolio of early-stage testing services as well in order to diversify and make the firm more financially secure. The firm cut its annual revenues forecast back in September.
Growth in early-stage has offset weakness in the late-stage segment in recent quarters, but worryingly PharmaNet has started to see some softening in the market for Phase I, bioequivalence studies and bioanalytical services, according to CEO Jeff McMullen.
The impact of that on the company’s share price has been nothing short of implosive. It’s shares are now trading at less than a dollar ($0.91), a mere fraction of the 52-week high of $43.05 in February, ahead of the presentation of its 2008 results.
That share price decline has caused the almost-inevitable crop of class action lawsuits from shareholders, claiming that the firm has violated federal securities laws.
The complaints make a number of allegations, including that PharmaNet management made false and misleading statements to the market about the company, its business, backlog and earnings guidance.