Every now and then, a company comes out of nowhere to dramatically alter its field and make a ton of money, too, like Apple Computer.
PharmaKinetics Laboratories Inc. was supposed to be the Apple of the pharmaceuticals business. The Baltimore drug-testing firm practically pioneered the concept of using independent laboratories to test and gain federal approval for pharmaceutical manufacturers' products. Observers still marvel that the 14-year-old firm managed to isolate and act upon a once-in-a-lifetime opportunity.
So why is PharmaKinetics bankrupt and fighting for its corporate life?
The answer is as complicated as the esoteric chemical compounds the firm analyzes and administers to human test subjects. There are too many imponderables to consider, a maddening chronology of "could have beens" and "what ifs."
For example, what if the Baltimore drug-testing firm hadn't had to implicate Bolar Pharmaceuticals, its largest customer, last year in an alleged drug-switching scam, a move that cost then-thriving PharmaKinetics 45 percent of its business and set a course toward bankruptcy?
And what if PharmaKinetics' former chief scientific officer and the firm itself hadn't been named this year as the targets of an unspecified U.S. Attorney's Office investigation, a blow that further damaged the company's stock price and drove away more business?
Or what if turnover among corporate officers hadn't been so high under former Chief Executive Officer Steven Woodman, a talented, abrasive manager who recently stepped aside himself: Would more internal continuity have helped PharmaKinetics avoid its present situation?
Whatever questions hang over the company, PharmaKinetics still has dedicated scientists who continue to do good work and managers intent on turning things around. But it also has problems that could easily snuff out the company's existence.
For example, the company announced in October that it had found a quick, albeit painful, fix for its money problems. The firm had struck a deal to sell its drug-testing unit, PharmaKinetics' heart and soul. At the time, Mr. Woodman proclaimed the move "a desirable solution to the financing challenges currently facing the company."
However, in keeping with PharmaKinetics' stretch of bad luck, the solution proved illusory. Last month, tentative purchaser Applied Biosciences International Inc. withdrew from the deal, which would have generated more than $10 million for cash-strapped PharmaKinetics.
The lone bright spot has been a profitable German subsidiary that does toxicology and biotechnology work. But that firm, International Bio Research, doesn't produce a big enough revenue stream by itself to keep the parent company afloat. IBR's earnings grew from $5 million to $8 million in the fiscal year that ended June 30, and accounted for 55 percent of PharmaKinetics' revenues, according to the parent company.
Two entities will ultimately decide whether the Baltimore firm survives. One is Maryland National Bank, which last month called loans to Pharmakinetics worth more than $8 million, forcing the drug-testing company to declare Chapter 11 bankruptcy. A few days ago, however, the bank did OK an arrangement that allows PharmaKinetics to apply its receivables toward operating expenses.
The other entity is the U.S. Attorney's Office.
Neither is tipping its hand at this point, and their tight-lipped lead has been followed by PharmaKinetics' employees at the advice of corporate legal adviser Joel I. Sher. From the security guard in the lobby of the company's 302 W. Fayette St. headquarters all the way up to the third-floor office of the new president and chief executive officer, V. Brewster Jones, mum's the word.
Many former corporate officers were also reluctant to talk about the company, and the few who did insisted on anonymity. They spoke of a firm that attracted talented scientists and businessmen eager to participate in the creation of a brand new industry.
When success eventually came, it changed the business and the people who ran it, blunting the sense of camaraderie and entrepreneurship that characterized the firm's formative years, they said. Mr. Woodman, an aggressive chief executive who came in and expertly expanded the business after a financially disastrous 1985, had an autocratic management style that rubbed many people the wrong way, according to former executives. By the time the generic drug scandal and federal probe began to hamstring the company, PharmaKinetics had become a revolving door for some of the pharmaceutical industry's best and brightest.
Mr. Woodman quietly stepped aside last month, in a move neither he nor PharmaKinetics will discuss. A starkly worded press release said that Mr. Woodman resigned as president, chief executive officer and a director to take on a "business development" role. The Nov. 7 release also said scientist Mark Perkal, who is a focus of the U.S. attorney's probe, was leaving the firm to pursue other interests.