Covalent Group, Inc. Enters into Combination Agreement with Remedium Oy; Conference Call Scheduled for 11:00 AM ET Today
03 3์ 2006 - 10:12PM
Business Wire
Covalent Group, Inc. (Nasdaq: CVGR): Highlights of the Proposed
Transaction -- Combined Company to Offer Advanced Consulting
Services and Cost Efficient Clinical Research Operations Across
Multiple Therapeutic Areas in 26 Countries Including Central and
Eastern Europe -- New Business Model Covering the Drug Development
Value Chain -- Allows the Combined Company to Achieve a Critical
Mass of Workload Supporting Top-line Growth and Profitable
Operations -- A Joint Client Base Consisting of 11 of the Top 15
Global Biopharmaceutical Companies -- Combined $35-40 Million
Backlog Expected at Closing -- Combined Company to be Named
Encorium BioSolutions, Inc. Covalent Group, Inc. (Nasdaq: CVGR)
("Covalent"), a leader in the design and management of complex
clinical trials and patient disease registries for the
pharmaceutical, biotechnology and medical device industries, today
announced that it has entered into a definitive combination
agreement with Remedium Oy ("Remedium"), a privately-held,
full-service clinical research organization ("CRO") based in
Finland with offices in 8 countries throughout Scandinavia, Central
Europe, and Eastern Europe. Transaction Details Under the terms of
the agreement, which has been approved by the Boards of Directors
of both companies and the shareholders of Remedium, Covalent
expects to pay $20 million for all of the outstanding shares and
common stock equivalents of Remedium. The consideration for the
transaction is expected to be in the form of Covalent shares in the
amount of $16 million and $4 million in cash, subject to certain
purchase price adjustments. The closing is expected to occur at the
end of the second quarter of 2006 subject to certain contingencies
including, but not limited to, the approval of Covalent's
shareholders and a scheduled new fundraising to help finance the
transaction. Upon closing, the combined company will be named
Encorium BioSolutions Inc. ("Encorium"). Covalent will apply for a
new ticker symbol in connection with the name change. Covalent
expects that the combined company will continue to be listed on the
Nasdaq Small Cap market subsequent to the closing. Strategic
Objectives Including New Business Model The goal for Encorium is to
become a global leader in the design and management of complex
clinical trials and patient registries for the pharmaceutical,
biotechnology, and medical device industries. The company intends
to accomplish this goal by further expanding its service offerings
to cover the biopharmaceutical product development value chain.
This will be reached through a strategy based on the following
cornerstones: i) utilizing the benefits of the geographic footprint
of the combined entity to provide timely and cost efficient
advanced as well as traditional services for the development of
biopharmaceuticals and medical devices; ii) leveraging
scientific/medical consulting capabilities that target areas of
exceptional expertise including cardiology and cardiovascular
disease-related illnesses, the use of biologics and/or vaccines for
infectious disease and counter-bioterrorism applications, and
oncology; iii) expanding into the post-approval market for drugs
and biologics through patient registries, post-marketing
surveillance studies, and strategic partnerships; iv) becoming a
strategic partner in the development of biopharmaceutical products
on a global scale. Combined Operations Encorium BioSolutions, Inc.
will be headquartered in Wayne, Pennsylvania and have its European
base of operations in Espoo, Finland. At the time of closing, it
will have approximately 220 employees based in North America,
Scandinavia, and throughout Europe. Encorium will have a direct
geographic reach that covers 26 countries with offices located in
10 countries including the United States and the United Kingdom as
well as throughout Scandinavia, Central Europe, and Eastern Europe.
In addition, Encorium will continue its collaboration with its
Brazilian partner allowing the provision of full-service
operational capabilities in 12 South and Central American
countries. Financials and Financial Targets At closing, the
annualized revenue of the combined company is expected to be in the
range of $21-$23 million, supported by a backlog at closing of
approximately $35-40 million. The growth strategy and future
synergies that are expected through the combination are believed to
have the potential to significantly enhance revenues and
profitability going forward. The goal for Encorium is to have
revenues exceeding $100 million by 2010. Kenneth M. Borow, M.D.,
Covalent Group's President and Chief Executive Officer, commented,
"We believe that this transaction represents a breakthrough event
in Covalent's history. Previously, new business contracts of
significant size and scope had been difficult to win when Covalent
and Remedium were operating as stand-alone companies. The combined
company will be able to compete for a broader range of global and
regional new business contracts by virtue of its increased size,
expanded geographic footprint, and depth of resources. In addition,
this combination will provide Covalent with a global platform from
which to further expand our highly respected position as a
consulting company focused on value-added intellectual input,
innovative drug development planning and design, and exceptional
clinical trial execution." Dr. Borow continued, "Kai Lindevall,
M.D., Ph.D., Remedium's President and CEO, leads a respected and
seasoned group of industry professionals. Covalent and Remedium
have a history of successfully working together to serve our
clients by virtue of our strategic relationship on important
clinical trials. Our companies fit well together culturally and
share a commonality of values and vision. We believe that all of
these factors will greatly facilitate a smooth integration and
transition of the companies into Encorium BioSolutions, Inc." Dr.
Borow added, "Remedium's operations cover countries that provide
access to approximately 180 million people. This will have positive
impact on our ability to identify appropriate study sites in Europe
and Scandinavia and allow us to recruit for various clinical trials
in a timely and cost effective manner. I am delighted that Dr.
Lindevall will lead our combined company as President, European and
Asian Operations, reporting directly to me. I will be President and
CEO of Encorium, with Larry Hoffman, CPA, Esq., Covalent's current
CFO, assuming the position of Chief Financial Officer and General
Legal Counsel for Encorium. Because we believe that this
combination represents an important growth opportunity for Covalent
and for Remedium, we do not anticipate significant workforce
reductions as a result of this merger." Remedium's President and
CEO Dr. Lindevall stated, "Covalent has a proven management team, a
full range of clinical trial capabilities and expertise, and an
impressive track record of programmatic successes. Its consulting
services, an important distinguishing feature, provide an
integrated scientific and operational approach to the successful
development of drugs and biologics. The new company will be well
positioned to provide timely and cost efficient solutions to the
biopharmaceutical industry utilizing our extensive clinical
research capabilities in Scandinavia, Central Europe, and Eastern
Europe. In addition, Covalent will provide Remedium's current
clients with expanded access to clinical trial resources in the
Americas and Western Europe. I believe that the excellent track
record of the combined entity in the areas of advanced
cardiovascular disease as well as infectious diseases and vaccines
will form a firm foundation for Encorium to become a leading global
service provider to the biopharmaceutical and medical device
industries." Information regarding Covalent and Remedium is
available at the companies respective web sites:
www.covalentgroup.com and www.remedium.com. In addition,
information specific to Encorium BioSolutions, Inc. will be
accessible at www.encorium.com. Conference Call Covalent Group will
hold a conference call later this morning (March 3, 2006) at 11:00
A.M. EST to discuss this proposed acquisition. To participate in
the live call by telephone, please dial (866) 550-5902, or for
international callers, please dial +1 706 643-2029. Those
interested in listening to the conference call live via the
Internet may do so by visiting the Company's Web site at
www.covalentgroup.com. Please go to the Web site 15 minutes prior
to the scheduled start to register, download, and install any
necessary audio software. A webcast audio replay will be available
through March 30, 2006. A telephone audio replay will also be
available through March 12, 2006, by dialing (800) 642-1687 from
the U.S., or +1 706 645-9291 for international callers, and
entering conference ID number 5825658 when prompted. About Remedium
Founded in 1996, Remedium is a full-service CRO for Phase I-IV
clinical development of drugs and biologics to the pharmaceutical
and biotechnology industries. Its in-house staff consists of 11
physicians, clinical and data management teams, and an early
development team that specializes in fast-tracking Phase I and
Phase II studies. Remedium's comprehensive services include the
filing of Investigational New Drug (IND) and similar regulatory
applications, preparation and submission of New Drug Applications
(NDAs), and post-marketing surveillance on an international basis.
Remedium has completed more than 160 clinical research projects
involving over 45,000 subjects. Remedium applies the highest
standards within the industry and has validated systems which are
compliant with 21 CFR part 11. It has strong relationships with
government-owned clinics and specialty societies focused on
cardiovascular and oncologic diseases. In addition, it has a
well-developed network of consulting specialists and Principal
Investigators throughout Europe. For more information, please visit
www.remedium.com. About Covalent Group, Inc. Covalent Group, Inc.
is a clinical research organization that is a leader in the design
and management of complex clinical trials and Patient Disease
Registries for the pharmaceutical, biotechnology and medical device
industries. The Company's mission is to provide its clients with
high quality, full-service support for their biopharmaceutical
development programs. Covalent offers therapeutic expertise,
experienced team management and advanced technologies. The Company
has drug and biologics development as well as clinical trial
experience across a wide variety of therapeutic areas such as
cardiovascular, endocrinology/metabolism, diabetes, vaccines,
infectious diseases, gene therapy, immunology, neurology, oncology,
gastroenterology, dermatology, hepatology, women's health and
respiratory medicine. Covalent believes that its leadership in the
design of complex clinical trials, its therapeutic expertise and
commitment to excellence, and its application of innovative
technologies, offer its clients a means to more quickly and cost
effectively move products through the clinical development process.
With its wholly-owned international subsidiary, Covalent Group,
Ltd., Covalent is able to meet the North American and Western
European drug development needs of its clients. For more
information, please visit www.covalentgroup.com. This press release
contains forward-looking statements identified by words such as
"estimate," "project," "expect," "intend," "believe," "anticipate"
and similar expressions. Actual results might differ materially
from those projected in, expressed in or implied by the
forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results and financial
condition include, without limitation: (i) our success in
attracting new business and retaining existing clients and
projects; (ii) the size, duration, and timing of clinical trials we
are currently managing may change unexpectedly; (iii) the
termination, delay or cancellation of clinical trials we are
currently managing could cause revenues to decline unexpectedly;
(iv) the timing difference between our receipt of contract
milestone or scheduled payments and our incurring costs to manage
these trials; (v) outsourcing trends in the pharmaceutical,
biotechnology and medical device industries; (vi) the ability to
maintain profit margins in a competitive marketplace; (vii) our
ability to attract and retain qualified personnel; (viii) the
sensitivity of our business to general economic conditions; (ix)
other economic, competitive, governmental and technological factors
affecting our operations, markets, products, services and prices;
(x) announced awards received from existing and potential customers
are not definitive until fully negotiated contracts are executed by
the parties; (xi) our backlog may not be indicative of future
revenues and may not generate the revenues expected; (xii) our
ability to successfully integrate the businesses of Covalent and
Remedium and (xiii) the performance of the combined business to
operate successfully and generate growth. You should not place any
undue reliance on these forward looking statements which speak only
as of the date of this press release. Additional information
concerning factors that might affect our business or stock price
which could cause actual results to materially differ from those in
forward-looking statements is contained in Covalent Group's SEC
filings, including its Annual Report on Form 10-K for the year
ended December 31, 2004 and other periodic reports under the
Securities Exchange Act of 1934, as amended, copies of which are
available upon request from Covalent Group's investor relations
department or The Equity Group Inc.
Covalent (NASDAQ:CVGR)
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Covalent (NASDAQ:CVGR)
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