LAB Research's Canadian lender appoints receivers

In a filing​ on the Toronto Stock Exchange the contract research organisation (CRO) said the unnamed US group with which it signed a non-binding letter of intent earlier this month​ is “no longer interested in completing the transaction.”​

The firm also said its remaining board members have resigned and that the receiver appointed by the Superior Court of Laval, Samson Belair Deloitte and Touche (SBDT), has officially taken control of operations.

SBDT said it would seek a buyer for Lab Research and would prefer to sell the CRO, which has preclinical R&D facilities in Canada, Denmark and Hungary, as a going concern.

CEO Luc Mainville told Outsourcing-pharma.com that: "Lab still operates as a going concern. This merely represents a change of ownership. All staff including myself and all senior management remain with the company. ​

"This will have no impacts for clients The US buyer and several other bidders are still actively discussing with the Bank. The Bank will support the company until it enters into a an agreement to sell.The European subsidiaries are not impacted by this and also continue to operate in the same manner as before​."

Strategic Review​

Lab Research has been trying to find a buyer since last October​ when it began a strategic business review in response to falling demand for preclinical development services.

Speaking at the time Mainville said the firm “[has] outperformed the industry in terms of revenue growth despite limited financial resources and flexibility”​ adding 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 release a month later when it said a 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 Canada was $6.7m, down from $7.1m a year earlier.

In January the firm extended its review, securing additional finances to fund continuing operations while the process continued.

Days later the CRO announced it had found a buyer, the aforementioned US group, willing to pay $13m (€9.4m) for its assets, finance operations and repay some of its debts which were C$39m as of September 30, 2010.