BioVeris Corp. officials said yesterday that the Gaithersburg biotechnology company will develop a new line of business, developing vaccines, vaccine services and products that test an individual's immune status.
BioVeris chairman and chief executive Samuel J. Wohlstadter said the new effort had "blockbuster" potential.
_____Background_____
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BioVeris Still May Lose Its Investment (The Washington Post, Aug 18, 2004)
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BioVeris Files Delayed Report (The Washington Post, Aug 17, 2004)
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BioVeris Settles 2 Lawsuits Against Chief Executive's Son (The Washington Post, Aug 14, 2004)
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Suit Says Venture 'Sabotaged' (The Washington Post, Jul 20, 2004)
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BioVeris Sues to End Venture Run by Founder's Son (The Washington Post, Jul 17, 2004)
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BioVeris Founder's Son Fights to Stay (The Washington Post, Jul 7, 2004)
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Wohlstadter made his comments yesterday at a meeting that the company held with shareholders, the first time BioVeris executives have faced investors since it sued the chief executive's son, accusing him of spending $7 million from a joint venture on cars and real estate.
The annual shareholders meeting lasted about 15 minutes and was attended by about 40 people. Two security officials at the RitzCarlton in McLean stood outside the meeting room, which was restricted to investors, who needed tickets to enter. It was followed by a business briefing for investors.
Jay McCrensky, a longtime BioVeris shareholder, said Wohlstadter appeared calm and confident, although BioVeris executives stumbled a bit when asked why they had been so silent in recent months. Eventually they said that they have been silent for "strategic reasons regarding patent development and competition considerations" related to their effort to expand into vaccines and immunology products, he said.
McCrensky said he supported the company's new direction into the vaccine business. "This public relations disaster is hopefully behind them and now they can focus on the potential of the company," he said.
The business briefing was simulcast on the Internet and over the telephone, but the coverage abruptly stopped as the question-and-answer portion of the presentation began. That upset some investors, said Luke Smith, a principal with Chapin, Davis, a Baltimore brokerage firm.
Investors "were calling me and asking why they got cut off," Davis said. "I'm not surprised given the amount of information they have been sharing with us. I pretty much assumed it was intentional."
Nell Minow of the Corporate Library, an independent research group, said if it was intentional, it would have been "foolish and shortsighted" on the company's part. Because of the company's legal fights with the chief executive's son, "They have a great responsibility to be as forthcoming as possible."
A spokesman for BioVeris declined to comment on whether the simulcast was intentionally cut off.
Chief executive Samuel Wohlstadter also declined to answer a reporter's questions after the meeting. His son, Jacob N. Wohlstadter, was not believed to have been in attendance.
BioVeris sued the younger Wohlstadter twice, accusing him of spending $7 million from a joint venture he controlled on real estate and luxury cars. The joint venture was set up nine years ago to design testing technology for drug development companies, a project of Jacob Wohlstadter's.
As part of an August settlement, the younger Wohlstadter turned over financial records that allowed BioVeris to submit its annual report to regulators. It had been late, prompting Nasdaq to begin delisting proceedings. BioVeris filed the delayed report in August, just days before the delisting hearing. In September the company said Nasdaq notified it that it was in compliance with marketplace rules and would not be delisted.
In August, BioVeris also paid the joint venture $5 million for various licensing obligations and agreed to sell its interests in the venture. BioVeris yesterday said its interest in the joint venture was appraised at approximately $9.9 million.
The company recorded a loss last year of $93.3 million on revenue of $20 million.
BioVeris said it is developing a test for determining an individual's susceptibility to infectious diseases for which vaccines exist or can be developed. This can help identify groups that should be vaccinated.
With the children's hospital in Oakland it is working to commercialize products to fight meningitis. Under the agreement, BioVeris could sponsor up to $800,000 of research at the hospital. A BioVeris spokesman declined to comment on the new effort or any details from the meeting. A spokesman for Children's Hospital did not return phone calls.
