Corrections or additions?
Life in the Fast Lane
These articles by Barbara Fox and Melinda Sherwood were published in U.S. 1 Newspaper on May 12, 1999. All rights
In January, H. Joseph Reiser promised that Cytogen
Corp. would emerge from red ink in March. Reiser, CEO of the struggling
biotech only since September, made good on his promise. The biotech
firm has posted its first profitable quarter in 18 years.
For the three months ending March 31, net profits were $1.7 million,
compared to a net loss of $4.3 million in the first quarter of last
year. Earnings per share were three cents compared with last year’s
net loss of eight cents. This quarter marks the first time the company
has made a profit in its 17-year history.
In planning its makeover, Cytogen’s board consulted with a turnaround
expert but left the specifics to Reiser, who replaced founder Thomas
McKearn as president and CEO last September. "When I came to Cytogen
the board had decided to reinvent the company. It was a challenging
undertaking to say the least," says Reiser.
The son of a scientist, Reiser was born in Bad Kissingen, Germany,
but was raised in midwestern United States. He went to Indiana University
(Class of 1970), where he earned his PhD in physiology, and spent
his career at Berlex Laboratories, the Wayne-based subsidiary of Schering
"In repositioning the company, we needed to have some consistent
income from products and some streamlining of operations. My charge
was to bring a management orientation to this," says Reiser.
Cytogen had sold the nearly 20,000 square foot laboratory at 201 College
Road East, built in 1992 to prepare shipments of its first two OncoScint
products. Connecticut-based Purdue Biopharma LP purchased the lab
for $4 million and has agreed to manufacture Cytogen products on a
contract basis while retaining 90 percent of Cytogen’s workers (see
story below). Cytogen realized $3.7 million from that sale. Another
chunk of this quarter’s cash, $1.6 million, represents part of the
$4 million private stock offering — 6 million shares of common
stock sold to such major investors as the State of Wisconsin. Adding
to the profit margin was a reduction of $4.5 million in operating
Another of Reiser’s successful moves has been to enlist the Berlex
sales force to market one of Cytogen’s three major products, Quadramet.
Used for managing cancer bone pain, Quadramet is one of three of Cytogen’s
nuclear medicine-based diagnostics.
Reiser’s connections at his former company helped, he
admits, "but quite honestly I do believe that Berlex was the right
choice. They have an evolving franchise in oncology with only one
product on the market," says Reiser. A company with a limited
product line, he believes, will take each new product more seriously.
"They were committed to it — the original agreement was for
about 50 representatives and now they have 120 or so."
After stabilizing Cytogen and showing that it is moving forward, his
next big challenge is to grow the company by strategically focusing
on prostate disease. He realigned the sales force for the prostate
cancer imaging product, ProstaScint; developed an interactive Internet-based
training program for its use; and made plans to develop a new technology
(Prostate Specific Membrane Antigen or PSMA). His long-range goal
is to leverage relationships with urologists to add new products and
Sales of products for the quarter did not contribute much to the net
profits; they were $2 million, including a slight increase in sales
showed by ProstaScint (for prostate cancer) and a slight decrease
for OncoScint (for ovarian cancer). Quadramet sales figures are misleading
because 1998 figures include a one-time influx of $1.6 million from
royalties from a now-defunct sales partnership.
In the cash pipeline is $4 million that could come from the new state
program for selling tax losses and R&D credits. Buyers are lined up
to purchase these credits, Reiser says, but the state is still working
on refining the legislation.
Does Cytogen have a For Sale sign on the lawn at 600 College Road?
"You never know," says Reiser, "but our goal is not to
be sold at this point, our goal is to stabilize and grow. If someone
becomes interested in us in the future, we will look at that."
CN 5308, Princeton 08543-5308. H. Joseph Reiser, president and CEO.
609-987-8200; fax, 609-452-2975. Home page: http://www.cytogen.com.
— Barbara Fox
Purdue Biopharma L.P., a research-oriented biopharmaceutical
company seeking to benefit patients by providing treatment for cancer,
infectious diseases, and disorders of the immune system, has just
moved in to the laboratory formerly occupied by Cytogen at 201 College
Road East. It is manufacturing Cytogen’s products on a contract basis.
The company is owned by Purdue Pharma L.P., headquartered in Norwalk,
Connecticut, which handles research and development, as well as marketing,
sales, distribution, and licensing for prescription drugs, over the
counter medicines, and hospital products. The Norwalk headquarters
will provide human resources, communications, and upper management
for the New Jersey-based lab, says Bob Broeze, vice president of biologics
research at Purdue Biopharma and also the former vice president of
operations for Cytogen.
Purdue bought the property for $4 million from Cytogen. Broeze says
that Purdue opened the office because of the high concentration of
pharmaceuticals in the area and instant access to a lab. "It was
an excellent match for what the company needed," says Broeze.
Purdue Biopharma is also acquiring most of the Cytogen employees.
"In the next six months or so about 20 to 30 Cytogen employees
will transit over to Purdue," says Broeze. By the end of the year
he expects to have a team of 80, and he is still looking for individuals
with experience in molecular biology, pharmaceutical development,
and protein purification.
08540. Robert Broeze, vice president of biologics research. 609-987-8240.
The flak hit the fan, but the dust has settled, and
the outcome of Base Ten’s shareholder meeting at company headquarters
on Friday, May 18, at 4 p.m. is a foregone conclusion. In the face
of a stockholder revolt, two officers of the company and two board
members have resigned, but Thomas E. Gardner, the 51-year-old president,
has kept his job, at least for now.
Trading as BASEA, the 32-year-old company at 1 Electronics Drive Ten
had made its name doing weapons control systems and custom electronic
systems for data handling. After the fall of the Berlin Wall in 1989
it lost its major client, the Federal Republic of Germany, and in
1991 Mike Kranzler, the CEO, began to broaden the companies focus
to manufacturing execution systems and services for the international
pharmaceutical and medical devices industries.
No one from the company returned calls by press time, but what happened
over the past two years can be gleaned from a report to shareholders
issued May 3 and other documents. In 1997 Base Ten reported $15.5
million in losses, more than double the losses for 1996. In May of
1997, a Fort Worth-based investor, Jesse L. Upchurch, put up $3 million
to develop a medical imaging technology. (Upchurch is an heir by marriage
to the Tandy fortune and has a travel business in Fort Worth.) Board
member Alexander M. Adelson of the RTS Research Lab was hired to devise
marketing strategies for medical technology businesses.
In November, 1997, Thomas E. Gardner came on board as president and
CEO. A native of Toledo, where his family had a wholesale toy business,
Gardner went to the University of St. Thomas, Class of ’70, and had
worked for Proctor & Gamble, J&J, Simon & Schuster, and Dun & Bradstreet.
Gardner brought on William F. Hackett as senior vice president and
CFO, and the company floated a $19 million private placement. Already
well underway was a spin-off — an employee buyout — of the
defense equipment side of its business, to be known as Strategic Technology
Systems. Base Ten was to continue developing manufacturing execution
systems. Perhaps as a result of the spinoff, the stock dropped from
$10 to $6.
But by September, 1998, William Sword (a board member
who heads the Chambers Street-based investment banking firm) had an
$80,000 three-month contract to look for someone to buy one of the
company’s medical imaging technologies, a way of archiving ultrasound
images to track ovarian cancer. The search did not, apparently, bear
The stock continued to fall until it went below $2. In November, 1998,
Upchurch bought up a mammoth amount of the stock, perhaps to protect
his earlier investment. The stock rose to around $3, and Upchurch’s
ownership went from 13.3 percent of the voting power to 42.3 percent.
He and two cohorts in the Upchurch Group — Drew Sycoff and Kevin
R. Lockhart — now own 13.5 million shares and control 59.4 percent
of the stock.
In any case, these dissident stockholders objected to the way the
company was being managed, and in March they called for Gardner’s
resignation. Both Richard Bagshaw, executive vice president, and Stephen
A. Cloughley, marketing vice president, resigned at the end of April,
but Gardner is still in place.
The Upchurch Group nominated two directors to replace Sword and another
well-known Princeton investment expert, Carl W. Schafer, former financial
vice president of Princeton University. Current board members who
will remain include another Princeton-based executive, 72-year-old
Alan S. Poole, formerly international vice president of Johnson &
Johnson Pharmaceutical in Belgium, and David C. Batten, 53, formerly
a general partner with Lazard Freres and a managing director of First
The Upchurch nominees are John C. Rhineberger and Robert Hurwitz.
Each has extensive retail experience. Rhineberger had headed Color
Tile, Sherwin Williams Floor World, and most recently worked for Home
Depot and Shaw Industries. Hurwitz was chairman and co-founder of
Office Max Inc. but his chain of home furnishing stores, HomePlace
Stores, went into Chapter 11 bankruptcy reorganization last year.
"Tom Gardner did a superb job of getting the company out of debt
and restructuring the preferred stock," says Kranzler, Gardner’s
predecessor, who now has a consulting business, Bootstrap Partners,
at the Straube Center. "That Upchurch provided additional funds
happened during Tom’s watch, and he gets kudos for that."
3151, Trenton 08619-3151. Thomas Gardner, president, CEO, co-chairman.
609-586-7010; fax, 609-586-1593.
— Barbara Fox
Street, Suites 10 and 233, Princeton 08542. Daniel J. Scanlon, president.
609-430-1011; fax, 609-430-1245.
Galen Holdings PLC, the UK-based integrated pharmaceutical company
with services in both Europe and the United States, has purchased
Interactive Clinical Technologies Inc. (ICTI) at 20 Nassau Street.
"This acquisition gives us access to more clients and a sister
company with complementary services," says Daniel J. Scanlon,
CEO of ICTI. "In addition to offering everything from turnkey
programs to highly tailored services, we can now offer an even broader
scope of international capabilities and services, making ICTI a one-stop
resource for the pharmaceutical and biotech industry."
ICTI is expecting to move into its 15,000 square foot facility currently
under construction in Lambertville by August. ICTI will continue to
operate under its own name as a wholly owned subsidiary of Galen.
Scanlon founded the company with Scott McCarty in 1995. "We have
grown very very quickly," says Scanlon. "We are a small, strong
company, and aligning ourselves to Galen will allow us to grow more
quickly." Scanlon has a background in business information systems
from the College of New Jersey and worked for a pharmaceutical company
for seven years before founding ICTI. McCarty has a degree in pharmacy
from Philadelphia College of Pharmacy.
Galen provides packaging and distribution services to 18 of the world’s
top 20 pharmaceutical companies, says Scanlon. ICTI provides centralized
patient randomization, data collection, and drug management services
for clinical trials in the pharmaceutical industry. "We share
the same philosophy, a commitment to quality and superior customer
service," says Scanlon. "Galen recognized our long term value
and has something to give back to us."
"Princeton has a lot of good talent and is a great location for
growing businesses," says Scanlon. ICTI presently has around 25
employees in Princeton and three employees at its facility in San
Francisco. "There is a great need for talent," says Scanlon.
— Melinda Sherwood
College Road East, Princeton Forrestal Center, Princeton 08540. Mark
E. Swanson, vice president transgenic sciences. 609-520-0300; fax,
The acquisition of Chrysalis International, the DNX Transgenics group,
by Montreal-based Phoenix International was completed Friday, April
30. "DNX is very pleased to be joining the Phoenix organization,"
says Mark Swanson, vice president. "We are attracted by Phoenix’s
science-driven management and innovative position in the CRO industry.
As a result of our acquisition by Phoenix, and the opening later this
year of a new facility in Princeton that will triple our capacity,
we believe we are well positioned to provide expanded transgenic animal
technologies and target-selection services to assist current and new
clients in their rapidly growing genomics efforts."
Phoenix’s new facility will be at Cedar Brook Corporate Center at
Exit 8A. Chrysalis has closed down its corporate headquarters in Raritan.
Phoenix International is a contract research organization providing
a wide spectrum of clinical, analytical, preclinical, drug discovery
support, and ancillary services to the pharmaceutical and biotechnology
— Teena Chandy
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