To be No. 1, rich and unknown Life Technologies lives under a pale limelight despite record


March 10, 1996|By Mark Guidera | Mark Guidera,SUN STAFF

J. Stark Thompson has a lot to smile about these days. After all, the 12-year-old biotechnology company he heads, Life Technologies Inc., just had its most profitable year.

Nonetheless the chief executive officer is feeling a tad frustrated.

Despite the company's bullish growth and strong bottom line during the most recent fiscal year, the publicly held Rockville concern is virtually unknown outside the biotechnology and medical research industries.

Only two stock analysts -- neither of them based in Maryland -- closely follow the Gaithersburg-based company, which makes and supplies more than 3,000 products used in biotechnology and medical research.

Yet the company has a market value -- $429 million -- almost as large as Legg Mason, the nationally known Baltimore brokerage house.

"It's very frustrating," said Dr. Thompson, a former executive and scientist with DuPont Co., a company that's vir- tually a household name. "I guess the reason is we're just not in a very sexy business."

Despite the dim limelight, Life Technologies, which employs about 450 in Maryland and 950 elsewhere, just wrapped up a banner year.

For one, the company had 1995 sales of more than $272 million -- a 16 percent improvement over 1994. Net profit increased to $22.3 million, a 22 percent rise over 1994 earnings.

The company may not be developing products like new vaccines and cancer drugs that grab headlines, but analysts say it provides the materials needed by researchers to do their work.

"Gene trapper"

The company's products range from fetal bovine serum, widely used in medical research, to its biggest selling product, a substance it calls the "gene trapper," which is used to isolate a specific gene.

With sales and profits up, the company finally has been acknowledging its own growth.

After more than a decade in four leased warehouses and an office building, Life Technologies broke ground last fall on a $40 million headquarters and research and development complex in Montgomery County's Shady Grove Life Sciences Research Park Gaithersburg.

The company's new research and development building is expected to open next year, while the headquarters building is slated for completion in 1998. The company also has manufacturing plants in Frederick and Grand Island, N.Y. They'll stay put.

The company, which is virtually debt free, is paying for the new construction in cash.

"Amazing story"

"It's a rather amazing story," says George Shipp, an analyst who follows the company for the Scott & Stringfellow brokerage in Norfolk, Va.

"Here you've got the world leader in a global business whose balance sheet is nothing but cash positive. Yet few analysts are even aware of them. "From a stock trader's point of view, I guess, they are not very exciting," said Mr. Shipp.

On average just 9,000 of Life Technologies' 15.5 million shares outstanding trade daily.

But at $27.875 a share -- less than 20 times earnings -- the stock is "a real value," said Mr. Shipp.

He declined to project how much higher the share price might climb in the near future, but he noted that any other company in the biotechnology industry that had a similar balance sheet would probably be trading at 20 times earnings.

"From an analyst's point of view, I like the fact that they don't live by exposure," he said. "They aren't your typical biotech company where every time an FDA panel says something about a product their stock jumps or dips. They're earnings driven."

Mr. Shipp believes Life Technologies' strong financial showing in 1995 can be attributed to a mix of factors, including an increase in the number of products it sells and the payoff from four years of building a sales-distribution force overseas.

Dr. Thompson and other Life Technology executives believe most of the credit for 1995's strong earnings report goes to a strategy the company began in 1991.

It was then that the company decided to begin shedding its use of independent distributors overseas.

Those distributors supplied Life Technology's wares to its core customers -- research institutions, universities, and biomedical companies in Japan, Europe and other markets.

"We weren't controlling our own destiny in key markets overseas," recalled Dr. Thompson.

The executive decided it would be best to replace the old representatives with a sales and distribution network that was directly accountable to Life Technologies.

Today the company employs about 500 people in Europe, Asia and Australia.

In some countries, such as India, the company opened small offices. In others, such as Japan, its second-largest market, the company bought controlling interest in its main distributor.

Joseph C. Stokes, Jr., the company's chief executive officer, said the subsidiary network allowed Life Technologies to service DTC overseas clients with expert scientific help, which was a key factor in the company becoming the largest biotechnology research supplier in North America.

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