Early next month, Maryland should become headquarters to a biotechnology company that has more than 400 employees and anticipates revenues of $41 million this year.
BioWhittaker Inc., situated near Frederick since the early 1970s, is breaking away from its Los Angeles-based parent company, Philip L. Rohrer, BioWhittaker's vice president and chief financial officer, said yesterday.
Until a few days ago, his company was Whittaker Bioproducts, a subsidiary of Whittaker Corp., an aerospace and electronics business. Among other things, BioWhittaker develops and manufactures diagnostic test kits that detect the presence of infectious diseases. It also makes endotoxin detection devices that let pharmaceutical companies detect impurities in their products.
If BioWhittaker separates from Whittaker -- a move that is subject to Securities and Exchange Commission approval -- it will become the second-largest biotech company in Maryland. The largest is Life Technologies Inc. of Gaithersburg, which has 500 employees in Maryland and had $151 million in revenue last year. BioWhittaker has its operations on 116 acres in Walkersville.
BioWhittaker has completed six acquisitions since 1985. The most recent was 3M Diagnostic Systems, a Santa Clara, Calif., manufacturer of clinical diagnostic kits for allergies and Lyme disease that was purchased for $11.4 million.
BioWhittaker and its shareholders stand to benefit from the spinoff because biotech companies trade at 20 to 25 times earnings, compared with five to 15 times earnings for aerospace and electronics companies, Mr. Rohrer said. That should allow BioWhittaker stock to be more profitable.
"Generally, the stock market responds better to biotech companies than to a defense and aerospace company," Mr. Rohrer said.
BioWhittaker "seems to be fairly well managed. It grows not only through its supplying of the biotech industry, but also by periodic acquisitions," said Eugene Melnitchenko, a Legg Mason Wood Walker Inc. analyst.
"The future of biotechnology should be one of the most exciting, one of the most dynamic industries, and BioWhittaker is positioned to grow with the industry," he said. "I don't see any serious problems in their future."