The firm, which provides preclinical development and toxicology testing services to drug industry clients, started the process in October, 2010, securing a credit facility of C$4m to fund operations while it weighed up its options.
This review process, along with the credit facility, was due to expire on December 17. However, according to an announcement last week, the review and credit has been extended until close of business today with room for further extension.
“In the event that the Company is unable to complete a transaction before January 31, 2011, the Company will have to conclude further arrangements with its main Canadian lender with respect to the funding of its operations and the payment of the postponed instalments.”
Canadian pressure
Lab Research did not provide much explanation when it first the began the review, other than to say that the process could include financing, a recapitalization, strategic partnering, a merger or sale of all or part of its assets.
At the time, CEO Luc Mainville said the firm “[has] outperformed the industry in terms of revenue growth despite limited financial resources and flexibility” but did say that: “Our Canadian site will benefit the most from the new banking arrangements and the Strategic Process.”
This was echoed in the third-quarter results the firm release a month later when it said the low level of R&D spending in North America’s “very challenging” early-phase research market was impacting on its financial performance.
It explained that: “This was especially the case for our Canadian site as the North American market experienced significant price competition driven by the large CROs,” and reported that revenue from Canadian was $6.7m, down from $7.1m a year earlier.
This was in marked contrast with the performance of Lab Research’s Danish and Hungarian units in the three months to September 31, which each saw revenue grow $400,000 to $4.7m and $2m, respectively.