Vaccine firm gets a new president North American's Mates succeeded by Canadian executive

Key drug is late to market

Beltsville company strapped for cash, hopes to boost sales

October 22, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

In an effort to bring new life to its operations, North American Vaccine Inc. replaced its president of the past eight years with an executive from one of its competitors yesterday.

Randal Chase, president of Canadian operations for vaccine maker Pasteur Merieux Connaught, will assume the top job at the Beltsville company by the end of the year, replacing Sharon Mates, who has departed.

"The company felt it was time for a management change because its needs have changed. North American Vaccine is shifting from an emerging biotechnology company to an operating company. We are moving toward generating revenues with a goal of profitability," said Daniel Abdun-Nabi, vice president and general counsel for North American.

Chase was not available for comment yesterday. But in a statement North American issued, he said he was pleased to be joining "one of the most promising and exciting vaccine companies in the world today."

He will be president and also hold the newly created post of chief executive officer at North American.

Analysts said he has his work cut out for him.

"Chase will have his hands full. I'd say they have a lot of blocking and tackling to do," said Evan Sturza, editor of Sturza's Medical Investment Letter, based in New York. "You can't come to this market late with a vaccine that isn't as effective as your competitors,' " Sturza said.

Among the top issues Chase will be faced with: persuading U.S. public health officials and pediatricians to switch to North American's Certiva vaccine, navigating the company through a cash crunch, and boosting investor confidence.

The most important task he must tackle will be generating significant sales of Certiva, North American's combined vaccine for diphtheria, tetanus and whooping cough.

Abbott Laboratories holds the rights to sell Certiva to U.S. pediatricians, while North American, which has never turned a profit, holds the rights to sell it to public health agencies.

Approved for sale in the United States in July, Certiva faces a field of at least four other new whooping cough vaccines already on the market, estimated at $350 million, including one made by Pasteur Merieux Connaught, a unit of Rhone-Poulenc S. A. of France and the world's largest vaccine manufacturer.

North American's entry in the market was delayed by unexpected problems in winning Food and Drug Administration approval. That not only gave competitors a leg up, but deprived the company of anticipated revenue.

That left the company in need of a cash infusion, which it got in late September. The company's top two stockholders, BioChem Pharma Inc. of Canada and Dr. Phillip Frost of Miami, agreed to lend the company $25 million under a debenture agreement convertible to common shares.

The company plans to use that money to market Certiva and to fuel clinical development of other vaccines in its pipeline, Abdun-Nabi said.

As of June 30, the publicly held company, which posted a $10 million loss in the second quarter, reported that it had about $18 million in cash on hand -- enough to cover about six months' operating expenses.

The delay in getting Certiva to the U.S. market also has hammered the company's stock, which is down 58 percent from last October's $29.815. Shares closed yesterday at $12.375, up $1.25.

Chase has run Connaught's Canadian operation since January 1996. Before joining Connaught, he was chief operating officer of Quadra Logic Technologies, a biotechnology company based in Vancouver, British Columbia. He worked in senior management at drugmaker Glaxo Wellcome's Canadian office. Chase holds a doctorate in biochemistry from the University of British Columbia.

Abdun-Nabi declined to disclose details of Chase's compensation package.

Mates, 45, earned a salary of $350,000 with options for 80,000 shares, making her one of the highest-paid U.S. women executives, and one of the top-paid biotechnology executives in the country. The board of directors increased her salary last year by more than $60,000.

In April 1997, Mates was named High Tech Executive of the Year by the Suburban Maryland High Technology Council, a regional industry trade group. She was chosen from a field of 90 nominees.

Mates had worked at an investment bank before joining North American. She was hired as president after doing some consulting work for the company.

Until Chase comes on board, Arthur Y. Elliott, chief operating officer for North American, will be acting president.

Pub Date: 10/22/98

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