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ARCHIVED  July 16, 1999

Biotech gives tech execs a run for their money

Biotechnology scored winning numbers for regional executives in 1998, as total compensation for leaders at Atrix Laboratories Inc. (Nasdaq: ATRX) and Heska Corp. (Nasdaq: HSKA) surged past those of the region’s traditional front-runners.

Top honors went to G. Lee Southard, retired president and chief scientific officer of Fort-Collins-based Atrix, who reeled in a compensation package totaling $991,156 for the year. Southard was previously the 18th-highest-paid executive in the region.

Heska’s former president and CEO, Fred Schwarzer, and former executive vice president of operations John Shadduck, ranked second and third on The Northern Colorado Business Report’s list of highest-paid executives at locally based public companies, with $406,000 and $370,000 in total compensation respectively.

“A lot of the larger bio and biomedical companies have done well through mergers and sales in the last year,´ said Nan Matthews, executive director of the Colorado Biotechnology Association.

“There are not as many larger Colorado bred-and-built companies as there were a year ago, but that’s not really a bad thing. In biomedical and biotech, growth comes from mergers and strategic alliances — that’s how companies survive and/or grow.”

To determine which companies paid their executives the most, The Business Report used the sum of the ranks of the company’s top four entrants — the lower the score, the better.

Based on team scores, Advanced Energy Industries Inc. (Nasdaq: AEIS) employed the highest-paid executives in Northern Colorado for the second year in a row, with an overall team score of 31. But rankings for the region’s biggest payers are tightening — Heska and Atrix were close behind in 1998, with scores of 36 and 41 points respectively, compared with scores of 64 and 57 against Advanced Energy’s 17 in 1997.

“The slowing of the European and Asian economies in the last 18 months have created significant challenges for the biotech industry, which depends on international agreements to raise capital to go on with their research and development,” reported Rick Bolin, deputy director of the Governor’s Office of Innovation & Technology. “But because the European and Asian economies are picking up steam, the future of Colorado biotech looks very bright.”

The biotechnology industry in Colorado appears to be just taking off. Recovering foreign markets will aid biotech and high-tech companies alike, but the biotech industry has some extra fuel in its tanks after the May 12 passage of House Bill 1335, which provides a sales-tax rebate on equipment used by biotechnology firms in research and development.

“The passage of the biotech research and development tax credit, under the leadership of Gov. Owens, is a signal of the Governor’s commitment to this important high-tech industry,” Bolin stated.

Matthews added: “There are dollar savings related to the passage of that bill that will assist biotech companies — particularly the younger companies — and provide working capital to continue projects and research.”

In Atrix’s case, relatively high executive salaries were generated from the success of last year’s profitability and product launches, said Vicki Miller, corporate communications coordinator for the company.

“Atrix was profitable for the first time in its 11-year history in 1998,” Miller said. “Last year, out of the company’s $21.1 million in revenues, $17 million were milestone earnings from Block Drug (which is marketing the Atridox system) — that’s what bumped us into profitability. Our strategy is to generate new products based on our [drug-delivery] technology.”

Miller pointed out that top earner Southard took Atrix Laboratories public and was responsible for the company’s flagship product, the Atridox drug-delivery system. Five Atrix executives appeared among the region’s highest-paid, ranking first, fifth, 12th, 23rd and 24th, for a team score of 41.

With one well-received product already on the market and a host of potential applications waiting to be found for its drug-delivery technology, Atrix appears to be on the verge of cashing in on years spent in research, but it’s not the only Northern Colorado biotech company shifting into higher gear.

Heska Corp., a Fort Collins-based manufacturer of health products for animals (primarily dogs, cats and horses), also had five executives in the top 25, with personnel in the No. 2, 3, 14, 17 and 19 positions. The company realized a net loss of $7.9 million in the first quarter of 1999 — an improvement from the $9.8 million in net loss reported over the same period in 1998.

“We are very pleased with our progress this past quarter,´ said Heska CEO Robert Grieve in a prepared statement. Grieve ranked 14th among the region’s highest-paid executives. “In addition to our increased revenue over the same quarter last year, our total operating expenses for the quarter were approximately $1.8 million lower than in the comparable quarter of 1998.”

Two newcomers to the highest-paid executives list in 1998 were Horizon Organic Holdings (Nasdaq: HCOW) president and CEO Barney M. Feinblum and senior vice president of corporate development Mark A. Retzloff. Amy Barr, director of corporate communications for Horizon, attributed Feinblum’s and Retzloff’s entrance to an increase in the company’s stock in the past year and the growing market for organic dairy products.

“Boulder and Santa Cruz are the epicenters of the organic-foods industry, which is still growing at a 20 percent per year clip. We have been very successful,” Barr said.

She further explained that Horizon owed its success in 1998 to two of the world’s largest natural-foods retailers, Wild Oats Markets Inc. and Whole Foods Markets Inc.: “It was Wild Oats and Whole Foods that did it for us in 1998,” she said. “Organics is doing well. We’re seeing consolidation in the industry, and we’re doing that (seeking acquisitions) as well.”

Horizon acquired Rachel’s Dairy Ltd. of Aberystwyth, Wales, in 1998, as well as their biggest domestic competitor, The Organic Cow of Vermont. “It was less expensive to buy our competition, than compete with them,” she said.

Advanced Energy, Heska, Atrix and Hach Co. (Nasdaq: HACH) have been the perennial competitors for team scoring on the highest-paid executives list and have been the only companies to consistently place four or more executives in the top 25.

Hach, a water-analysis equipment manufacturer based in Loveland, fell back slightly in 1998, with a team score of 65, compared with its score of 60 in 1997. Horizon Organic may be the region’s next legitimate contender for team scoring. In 1998, the company put five executives into the region’s top 40, with entrants ranked ninth, 25th, 27th, 29th and 34th for an over-all team score of 90 points. High-tech Longmont and Weld County firm Applied Films Corp. (Nasdaq: AFCO) rounded out the field of team-eligible companies with a total score of 121 points.

Biotechnology scored winning numbers for regional executives in 1998, as total compensation for leaders at Atrix Laboratories Inc. (Nasdaq: ATRX) and Heska Corp. (Nasdaq: HSKA) surged past those of the region’s traditional front-runners.

Top honors went to G. Lee Southard, retired president and chief scientific officer of Fort-Collins-based Atrix, who reeled in a compensation package totaling $991,156 for the year. Southard was previously the 18th-highest-paid executive in the region.

Heska’s former president and CEO, Fred Schwarzer, and former executive vice president of operations John Shadduck, ranked second and third on The Northern Colorado Business Report’s list of highest-paid executives at locally based…

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