Year-on-year, the CDMO (contract development and manufacturing organisation) reported a total drop of $34.4m – a blow it said would have been cushioned by almost $33m had the contract still stood.
The firm did not reveal which agreement it was referring to, saying only that it was a contract terminated in the first quarter of the fiscal year ending October 31, 2011. In March 2011, a customer ended a contract with Patheon over a lyophilised cephalosporin candidate.
Another factor was the $6.4m bill for consulting over the biz’s commercial activities in the UK, in September last year.
CEO James Mullen said that though the fee took its toll in the first quarter of 2012, it is part of his new cost-cutting strategy which will help the firm to focus more on its core efforts – development – and will see favourable results in the long-term
"We anticipate recognizing real cost savings from our initiatives," Mullen said. “In the second half of our fiscal year, consulting costs related to implementing our transformation program should decline and we anticipate recognizing real cost savings from our initiatives. Top line growth together with improved performance should deliver improved financial results in the future.”
Earlier this year the firm placed former BioCryst strategist Stuart Grant in the CFO seat as part of the plans. At the time Mullen said he would be “a key player in Patheon's transformation.”
Other operating costs were also on the rise for the company with a $9m boost for general and corporate expense compared to 2011.
Boost for revenues
However, despite a loss so early in the year for Patheon, Mullen insisted the underlying business has improved.
Revenues reached a 7.8 per cent increase as opposed to last year, due in large part to its contract development services unit, which posted a 15% increase to $31 million – a boost of $4.1m.
The report states: “Had the local currency rates remained constant to the three months ended January 31, 2011, PDS revenues in the quarter would have been 15.6 per cent higher than the same period of prior year.”