Q & A : Sluggish InVitro’s New Chief Gets Word Out on His Goals : Biotechnology: The Irvine firm has been losing money since it went public in 1991. Richard Ulmer says a marketing effort involving customer contact is essential to turn things around.
InVitro International has won high praise from animal-rights activists for its products, which it says are a low-cost substitute for testing corrosive substances on living tissue.
But the Irvine biotechnology company, which went public in 1991, has yet to succeed at marketing its Corrositex and other products, and it has yet to post a profit.
On Tuesday, the company announced the appointment of Richard Ulmer, a 25-year veteran of the pharmaceutical maker Allergan Inc., as its president and chief executive officer. He fills a position vacated in August, when President Bill Fisher left the company to pursue other business interests.
Analysts say that the new job will be a difficult test of management and marketing skills for Ulmer, who worked in various marketing capacities for 10 years before taking an executive position in Allergan’s domestic sales division.
InVitro’s executives “need to successfully launch a major marketing effort, and if they don’t they will have more problems,” said David Anast, publisher of Costa Mesa-based Biomedical Market Newsletter Inc. In a telephone interview Thursday, Ulmer discussed the challenges he faces and his plans for the company.
Question: Despite past marketing efforts by InVitro, its products have not been selling. Why is that? How do you intend to turn that around?
Answer: I plan on having a tremendous customer orientation. We have superior technology, and there are not enough people who recognize it. InVitro pretty much had an “if we build it, they will come” mentality that does not work. They had not gone out and talked to enough customers in the earlier stages.
At Allergan, I took a job with an ailing surgical products division and helped them increase their volume. The way we did that was to go out and talk to customers. I went to surgery with doctors and talked to them about their problems with the lenses we made, for example. I talked to patients about how they had used the lenses.
That kind of potential is realized when you figure out how to fit your products into the world. It has not been done at InVitro.
Q: When the Department of Transportation approved the use of Corrositex to test hazardous materials, a lot of analysts expected the revenue to start rolling in. But since that time, sales have not changed much. The company has suggested that the government should get serious about enforcing regulations on the transportation of hazardous materials. Is there any reason to believe the enforcement will be more strict in the future?
A: Corrositex did not take off like a rocket as was expected. But just saying it got this approval does not mean anything without selling and marketing. It is a tool for sales and marketing. It does not mean companies will do the testing or use our product.
And I don’t think we can look for government to bulk up and enforce the regulations. But there are companies that will want to make the transportation of hazardous materials safer. Businesses with a conscience will want to do this.
Q: What is the market potential of the products?
A: It is elephant-sized. Analysts have said that it is in the hundreds of millions to billions, but I can’t project what we expect this to represent.
Q: InVitro’s stock was once a high-flier on the Nasdaq market because of the expected revenue. It traded as high as $15 a share. But it has been in a steady slide, and it recently hit a 52-week low of $1.38. Do you have a plan to bring value back to the stock?
A: The idea is to build shareholder value by building InVitro into a profitable company. Shareholder value needs to be at the forefront of your strategy. What I would say to every shareholder is, if you win over customers and they stay with you, you have provided value for them. And shareholder value will follow.
You don’t need to go to Wall Street first. You listen to customers, have good technology and employees, and all those things are going to come together to create value for our shareholders.
Q: Who do you think are the biggest potential customers?
A: There is no doubt that the pharmaceutical, skin-care “cosmo-ceutical” industries are not using our products enough in testing.
Also, despite the fact the Department of Transportation tested and accepted Corrositex for the transportation of hazardous materials, it is not being used enough. We need to make waste haulers, for example, aware of this.
We also see tremendous potential in the area of workplace safety and can approach a number of employers about that. I was shocked to find out that 30% of all workers’ comp claims have to do with skin irritation.
Q: At one point, $5.2 million was raised by InVitro from the sale of warrants and was supposed to be tagged for acquisitions and joint ventures. What happened to those plans?
A: I had a lot of success with Allergan establishing joint ventures. I think there is plenty of room for us to talk with people in partnering in the world of the ‘90s. So that strategy is much more likely than an acquisition.
Q: Having worked at a large, profitable company like Allergan, why do you want to head up a small company that nearly went bankrupt two years ago and still is not reporting profits?
A: I never had as much fun at Allergan as when it was growing like the proverbial weed. Allergan grew from $3 million (in annual revenue) to $900 million over the time I was there, and it was a wonderful 25-year ride.
But your focus changes when you get big. You don’t spend a lot of time with the customers . . .
At small to medium-size companies, it is a different environment. There is a fire in people’s hearts for making things happen. But when you get to be big, it is hard to keep that fire alive.
InVitro’s New Leader
Name: W. Richard Ulmer
Title: President and chief executive officer, InVitro International
Age: 51
Education: Bachelor’s degree in economics, Brown University, 1964
Experience: From 1967 to 1992, held various executive positions at Allergan Inc., including senior vice president of U.S. operations, president of Allergan Pharmaceuticals, president of Allergan Medical Optics and, most recently, president of the company’s Allergan Herbert division. Left Allergan in 1992 to start his own business, Rich Ulmer & Associates. Closed that company in March and became president of Wilshire Transdermal Products Ltd., a subsidiary of Wilshire Technologies in Carlsbad.
Source: InVitro International
InVitro International Plagued by Losses
Since it went public in 1991, InVitro International has won high praise from animal-rights activists for its products, which it says are a low-cost substitute for testing corrosive substances on living tissue. But the firm has yet to succeed at marketing its Corrositex and other products, and it has never posted a profit.
Revenue Shrinking and Losses Continuing
Revenue
June 1993: $519,571
June 1994: $323,024
Losses (in millions of dollars)
June 1993: $0.73
June 1994: $1.11
Stock Price Falling
InVitro International stock price, Friday close:
Dec. 1993: $6.12
Nov. 1994: $1.44
Source: InVitro International
