SeraCare’s Corporate Turnaround




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Video title: SeraCare’s Corporate Turnaround
Released on: March 03, 2009. © PharmaVentures Ltd
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Sue Vogt, CEO of SeraCare Life Sciences, backed by a new management team, has, over the past 12-18 months, brought the company back from bankruptcy and restored the credibility that had been lost. In this interview, she explains how she managed to achieve this, using the recent re-listing of SeraCare on NASDAQ as an example of this turnaround.
SeraCare serving the Global Life Sciences Community
Fintan Walton:
Hello and welcome to PharmaVentures business review here in San Francisco. On this show I have Sue Vogt who is the CEO of SeraCare life sciences Incorporated based here in the US. Welcome to the show.
Sue Vogt:
Thank you.
Fintan Walton:
Sue Vogt you run an interesting company it is a company that has both products and services and you joined that company just about 18 months ago. Could you a tell us a little bit about what the what the business actually is of SeraCare?
Sue Vogt:
Sure. we talk about SeraCare as being the picks and shovels for the life science industry. We are really a tools provider and we have a part of our business which is around services to the life science industry and then another part of our business which is specific products that are used by diagnostic and pharmaceutical manufacturers and developers.
Fintan Walton:
Right so specifically what are those products? (indiscernable)
Sue Vogt:
So our products are focused around biological materials and typically they are derived from human plasma, they may be recovered antibodies or they may be plasma that has been characterized as being negative for certain analytes and these are materials that were used in the actual manufacture of diagnostic products or in one part of our business we make finished quality controls that are used by clinical testing labs to insure the integrity of their testing.
SeraCare's advantage over competitor companies.
Fintan Walton:
Right so where would you place yourself in that particular in that market? Or you obviously you got competitors what is the differentiation? what differentiates you from your competitor companies?
Sue Vogt:
Sure. You know overall we think the biggest differentiator for us is actually quality and for our manufacturing customers that is something that is really critical to them because we become a part of their supply chain for manufacturing their products so they put a high value on that and SeraCare really is ahead of the game in terms of the infrastructure that we have around the quality the quality systems. You know beyond that from a competitive point of view we actually feel that we are the market leader in the segments in the product side that we serve so in bulk process plasma for diagnostics we believe that we are the market leader and in our business with around quality control products we are absolutely the leader for. So all though these are niches within the industry we have a very strong very strong competitive position.
Fintan Walton:
Right so on the product side you obviously got a very specific focus there but on the services side how does that work in relation to the product side?
Sue Vogt:
Sure. So you know certainly on the competitive front with services its different in products we compete on the small side with CROs we also compete with large players like Thermo Fishers around repository operations so you know in that case it's a little bit different. The way that our services business fits with our products business as in many cases we have a relationship with the customer on the product side which we can then go in and expand that relationship to our services operations and vice versa so you know we find that there is a lot of synergy because we are addressing the same customer base with those two segments of our business.
SeraCare's innovation component capability.
Fintan Walton:
So obviously one way of having that as advantage is the innovation either in products that you have or the services that you can provide.
Sue Vogt:
Right.
Fintan Walton:
So what is your key innovation component? What is the differentiating innovation that you have got?
Sue Vogt:
So most of our innovation is around our ability to manipulate these biological materials for the specific applications that we are looking for a good example is we recently introduced the first and what will become full line of controls used for genetic testing, quality controls for genetic testing. If you think about looking at a range of genetic mutations you are not gonna find that in any one individual so you need to find ways of actually manipulating materials to manufacture that is truly artificial you wouldn't find it in you know in natural circumstances and so there is some expertise and know how around how to design some of these things so that they can function for the use that they have so there is expertise around how to do that we also have expertise around sourcing of different materials and then again you know how to manipulate those things so I would say that's really where innovation is, its really around the capabilities. We are not necessarily be the innovator when it comes to coming up with a therapeutic or even the innovator when it comes to identifying a particular a bio marker but then for the segments in the applications that we serve we do have this expertise around this natural biological materials and synthetic biological materials.
Fintan Walton:
I would like to know that if you have to work very closely with other innovative companies?
Sue Vogt:
We do. So you know in the best case scenario we are working with a diagnostic company during their development process and we have you know case studies and examples where we have been able to provide materials during their discovery phase and then through that relationship work with them to help design the biological materials that are used as part of the manufacturing of their assay and then use to actually enable the clinical labs to validate those assays and then maintain a quality control program going forward once they have brought those assays into their lab.
Back from bankruptcy and restoration of credibility
Fintan Walton:
Right. Now the other thing I mentioned that you joined the company rather very recently in its history but you had a you have had a turnaround story. The company when you joined it had already around? been put into bankruptcy as fallout for chapter 11. Could you tell us you took on that challenge which I am sure lots of people applauded you for but how how did you turn the company around and what did you have to do to turn the company?
Sue Vogt:
Sure so when I joined the company which was in the summer of 2006, the company had gone into chapter 11 bankruptcy protection, it had been delisted, it had been unable to complete its filing and we also had a clause action lawsuit against us and so you know lots of alligators in the water so to speak but when I joined you know the first priority was really to bring in a leadership team that could turn the company around, there were some good people in the company but we did need to bring in some some new management as well so that was the critical first step, secondly while you are in bankruptcy you have a stakeholders, you have your creditors, you have investors, we were dealing with an SCC investigation of course we had this lawsuit against us so you have a lot of people that need to be communicated with and at the same time you need to keep running the business. So you have your customers you have suppliers who you need to maintain even though they might not have been paid with some of the prepetition issues so there is a lot to keep going so clearly getting the organization we focused on operating the business, was critical well at the same time working through the issues of being in bankruptcy we needed to be financed and we capitalized the company which we were able to do through a rights offering to our existing shareholders so through this reorganizational plan and the recapitalization SeraCare was able to emerge from bankruptcy which we did in may of 2007 and so about 15 months after the company had gone into bankruptcy and what we really unique is that emerged under the ownership of our existing shareholders which is very unusual, usually shareholder value equity gets wiped out, we were able to pay all of our creditors in full with interest and we were able to recapitalize the company and emerge from bankruptcy virtually debt free so we emerged with the operating capital that we needed at the time and we were able to really come out with a much stronger balance sheet then we had going into them.
Fintan Walton:
So do to something like that you need to have the right team around you did you have to change the team around you to do that?
Sue Vogt:
So there was some change. When I joined there was a contractor working as our interim CFO so that was a temporary situation. The first hire I had was bringing Greg our CFO and that was a critical hire I cant tell you how critically that was especially for a company that needed to go back and basically restate filings from prior years, and marketing to pull that part of business together and brought in a new head of quality because brought in a new VP of sales that was critical to the success and how we differentiate ourselves so there was some new management brought in and then we had some good strong management within the organization that we were able to to keep at the senior level. We did bring in people at the next layer below in marketing, in manufacturing in all parts of the operation sales management so there was a rebuilding of the organization that took place.
Recent re-listing on NASDAQ and rebuilding the business model for future.
Fintan Walton:
The relisting its of-was that relatively straightforward or..?
Sue Vogt:
It is straightforward once you are once you meet all the requirements to be listed but in fact for us we had to go back and file three years worth of financial filings and then we needed a couple of quarters to become a timely filers so you know that in it of itself was a huge undertaking especially where one of the years was the year that the auditors had raised the concerns and basically the company had rescinded its priorly issued quarterly financials for that year so it is really reconstructing from scratch the books and records. So it was a huge undertaking to do that and we were relisted as you know in June of 2008. There are few companies that once they have been delisted from NASDAQ get relisted because typically the kinds of problems that caused the delisting you know insurmountable in terms of getting relisted again. So we feel very fortunate that we were able to you know that was a major milestone for us in terms of you know getting back to normal.
Fintan Walton:
Yeah but the markets didn't welcome no welcoming market to enter into it?
Sue Vogt:
Yeah right, but the timing is everything, right? So we were relisted right at the end of june and that of course to hit the summer months that are kind of quiet and then of course the markets have fallen apart and we certainly we certainly been impacted by that but..
Fintan Walton:
You have got you have got other company with you too on the NASDAQ
Sue Vogt:
Yeah right we are not the only one but we are better off though having been relisted then we were facing all of this and we were still trading on the pink sheets.
Fintan Walton:
So I mean clearly its important now that the company is listed that you gonna have to continue to rebuild so the business model, you described already how the business operates in its products and services. How now so do you build this company going forward?
Sue Vogt:
Sure. So you know over the last of couple of years we have been focusing on putting in an infrastructure to support growth, we have also been consolidating our operations, when I joined we had seven locations we are now down to three and we have just completed consolidating our manufacturing in Massacheussats. So we think we have the right footprint and platform to support growth and you know we will grow through we still believe that we are under penetrated in number of areas both in the market and geographic point of view so we know that there is opportunity for us to continue to take share and we also know that we have opportunities with new products that we have in the pipeline that will gain share through those new products and services and eventually we will be looking to grow through acquisition as well. So with that you know for us the leverage is really on continuing to develop and introduce really value added products that leverage our manufacturing infrastructure, in the near term we are still towards becoming profitable. We were not profitable last year so we are looking at those opportunities that can help us leverage and you know add profitable growth through the leverage and we think we have a lot of room to do that.
Fintan Walton:
So focused on continued organic growth, shift to profitability and down stream possibly more financing, more raising more finance or�?
Sue Vogt:
Well for us to do acquisitions we certainly would need to raise money in order to do that and that is part of our that is part of our goals �
Fintan Walton:
And relisted obviously helps a lot?
Sue Vogt:
Yes so that was a key milestone for us because that opens up the access to the public markets, again timing is everything and you know we will see what the right timing for us is but in the mean time we have been looking at forging commercial alliances that help us grow and expand what we are able to offer you know that that isn't an acquisition but gets us into some of the space that we want to be and you know not the ideal scenario but we believe that there are opportunities for us like that we are gonna to continue to pursue those in the near term.
Fintan Walton:
Well thank you very much indeed Sue Vogt for coming on the show.
Sue Vogt:
Thank you.
Sue Vogt
President and Chief Executive Officer
Sue Vogt has been president, chief executive officer, and a board member at SeraCare since 2006. She was previously president of the biopharmaceutical division of Millipore Corporation, where she led a $520 million division. Prior, she served as vice president and general manager of the laboratory water division at Millipore. Sue Vogt holds an MBA from Boston University and a BA from Brown University.
SeraCare Life Sciences
SeraCare Life Sciences, Inc. (SeraCare) serves the global life sciences industry by providing products and services to facilitate the discovery, development and production of human and animal diagnostics and therapeutics. The Company's portfolio includes diagnostic controls, plasma-derived reagents and molecular biomarkers, biobanking and contract research services. The Company's business is divided into two segments: Diagnostic Biopharmaceutical Products and BioServices. SeraCare's Diagnostic and Biopharmaceutical Products segment includes two types of products: controls and panels, which include the manufacture of products used for quality control of infectious disease testing in hospital and clinical testing laboratories and blood banks, and by in vitro diagnostic (IVD) manufacturers, and reagents and bioprocessing products, which include the manufacture and supply of biological materials used in the research, development and manufacturing of human and animal diagnostics, therapeutics and vaccines. The BioServices segment includes biobanking, sample processing and testing services for research and clinical trials, and contract research services in molecular biology, virology, immunology and biochemistry.