Syntro Chief Resigns for New Venture
Completing what one former board member described as a “management transition,” Thomas Parmeter has resigned as chairman of Syntro, a troubled biotechnology company that manufactures animal vaccines. Parmeter will try to form a separate business to commercialize Syntro’s protein-polymer technology for making synthetic fabrics.
Parmeter, who joined Syntro a year after the company was founded, tried unsuccessfully while at Syntro to finance development of the new fabric product by arranging a manufacturing agreement with an unnamed, European-based chemical company. But the agreement fell through earlier this year after the chemical company became embroiled in a takeover battle, he said.
Stephen O’Neil, a founding Syntro investor and board member, was named new chairman. Parmeter was replaced as Syntro chief executive in November, 1987, by Cam Garner.
Syntro has been racked by losses totaling $10 million since its founding in 1981. Parmeter expects Syntro to lose about $5 million for the fiscal year ending Sept. 30. Syntro’s revenues have declined over the last three years as the company’s contract research has dropped off. Sales will drop significantly again in 1988.
Former Syntro board member Richard Moser, whose said that Parmeter’s replacement completes a “carefully managed management transition,” said there were differences of opinion between some Syntro board members and Parmeter on whether the company should pursue human and animal health care products or the protein polymers.
“As the company has evolved, Syntro has established one solid business, the animal-vaccine business,” said Moser, president of PruTech, a Santa Clara-based research and development partnership that has paid out $10 million in contract-research revenue to Syntro.
“In order to reach commercial potential, the polymer requires entrepreneurial fervor and energy. The animal vaccine requires a different kind of managerial approach. It’s tough to make the two kinds of businesses work effectively under an integrated management structure,” Moser said.
After relying on research, interest income and license fees for revenues during the first seven years of its existence, Syntro recently began selling its first product, a pseudorabies vaccine for swine. The vaccine is expected to generate $1 million in calendar 1988 revenue, Parmeter said.
For the two quarters ended March 31, Syntro lost $2.9 million on revenue of $933,635 after losing $4.1 million on revenue of $3.7 million in fiscal 1987. Despite the mounting losses, the company is in no apparent short-term danger of insolvency. Shareholder equity stands at $18 million.
Parmeter’s new venture is still without financing. Finding it is Parmeter’s “No. 1 challenge. It’s up to him to find financing,” Moser said.
In an interview Thursday, Parmeter expressed confidence that he would be able to find seed capital for his unnamed company. He said he left Syntro before securing the financing so he would be free to form an “arm’s-length agreement with Syntro” for the use of its technology.
Syntro will supply Parmeter’s new company with technical staff and laboratory support for at least the next six months, he said. Parmeter will remain a consultant with Syntro through the end of 1988, an agreement that replaces an employment contract that was to have run through mid-1989.
