Cetero posts $3.1m net loss as FDA rework drags on earnings
Redoing work to ease US Food and Drug Administration (FDA) fears about data integrity cost the CRO (contract research organisation) $890,000 from March 26 to April 30 and contributed to it posting a net loss.
The net loss before reorganisation expenses totalled $2.7m but costs, mainly professional fees, tied to the ongoing bankruptcy case added a further $360,000 to outgoings at the US-based CRO in April.
Although these extraordinary costs dragged on earnings the sales figures are a little more positive. In the five-week period covered by the financials Cetero posted a gross profit of $2.2m on net sales of $7.6m.
No prior year figures are given but when Cetero filed for bankruptcy in March its filings showed sales over the first two months of the year totalled $11m, suggesting revenues have grown sequentially.
Performance is uneven across the different operating units that make up Cetero though. The $2.2m gross profit posted by the CRO is underpinned by two units – PRACS Institute and Gateway Medical Research.
Combined, these units posted a gross profit of $2.6m and accounted for 60 per cent of net sales at the CRO. However, other units, notably the Allied Research facility in Ontario, Canada and Diabetes and Glandular Research Associates, struggled and dragged the gross profit down by $660,000.
Most of the the units had profits chipped away at by FDA rework costs but PRACS and BA Research International LP were hit hardest. PRACS is the North Dakota-based clinical research facility Cetero bought in 2006 while BA is the Texas-based bioanalytical laboratory the CRO acquired later that year.
It was a FDA inspection of the BA laboratory in Houston in 2010 that started the series of events that led to the Cetero bankruptcy filing in March. FDA inspectors visiting the facility accused Cetero staff of “widespread falsification of dates and times in laboratory records” and sent an untitled letter.
