Shareholders gives earful to BASI execs

For the first time in three years, Bioanalytical Systems Inc. boosted its annual revenue. But instead of receiving congratulations, one of the company’s largest shareholders said the company’s trends are “bleak.”

Tom Harenburg, a Wisconsin stockbroker who held 5.6 percent of the West Lafayette company’s stock before it staged a secondary offering this year, told company executives they need to grow even faster if they hope to recoup all the business that’s been lost since the recession hammered the company in 2008.

Bioanalytical is a contract-research organization, or CRO, which performs tests on experimental drug molecules for pharmaceutical companies, to help the companies prepare for human testing.

“The key here is, you guys have got to get revenue up to $40 million and doing it in single-digit growth, it’s going to take a month of Sundays to get us there,” Harenburg said during a Dec. 20 conference call.

Bioanalytical had revenue of nearly $42 million in 2008, but saw it plunge the following two years. In its fiscal year ended Sept. 30, revenue grew 15 percent, to $33 million. Profit was $543,000 compared with a loss in fiscal 2010 of $2.7 million.

In the three months ended Sept. 30, revenue climbed 10 percent, compared with the same quarter the prior year.

Harenburg praised the company for adding 25 clients during the fiscal year, but demanded to know why Bioanalytical lost business with its large pharmaceutical clients, such as New York-based Pfizer Inc.

“We have seen a change in the large pharma work that we do,” CEO Anthony Chilton responded, adding, “The larger [pharmaceutical] companies are tending to go to the larger CROs, where both the clinical and the analytical can be taken care of.”

As of January 2011, the month for which the most recent data is available, Harenburg was the third-largest shareholder in Bioanalytical, behind only co-founders Peter and Candice Kissinger. Some holdings may have changed since Bioanalytical raised net proceeds of $4.6 million in a stock offering in May.

But Harenburg still holds more shares than all the directors and officers of Bioanalytical combined—something he lectured Chilton about sternly.

“I will just put you on notice that these directors that don’t have a position, as far as I’m concerned, will not get my vote. You’ve got the chairman of the board [John B. Landis], who’s been on there for three years, that doesn’t own one stinking share of stock. That is pathetic.”

Chilton didn’t dispute Harenburg’s claims, but didn’t promise to do anything about it, either.

“You raise obviously a good factual point there, Tom,” Chilton said. “I don’t know what to say. I can’t comment at the moment. It is what it is.”

Not satisfied, Harenburg drove the point home, insisting the entire management team doesn't care about the company's stock because "they get paid whether the stock is up or down. My advice to them is either get some skin in the game or get off the pot.”