Gilead’s $11bn Pharmasset buy could boost BASi’s business

By Nick Taylor

- Last updated on GMT

Related tags: Basi, Stock market

Gilead’s $11bn Pharmasset buy could boost BASi’s business
BASi is optimistic Gilead Sciences’ $11bn acquisition of Pharmasset, the CRO’s biggest client, will be positive for the business.

Pharmasset accounts for more than 10 per cent of sales at Bioanalytical Systems Inc (BASi) and as such disruption from Gilead’s $11bn (€8.4bn) takeover could have serious implications. However, BASi management is optimistic it can keep the Pharmasset work, and maybe add more business.

I don’t think at this point, with the conversations we’ve had with our Pharmasset contacts, that [the Gilead takeover] will impact our existing arrangement​”, Anthony Chilton, CEO of BASi, said in a call with investors.

While the “dust is still settling​” on the deal Chilton said results BASi has generated for Pharmasset, and “pretty good relations with key folks in Gilead​”, should help it keep, and maybe add, work. “It should be a positive thing [for BASi]​”, Chilton said.

Retaining the year-old toxicology and bioanalytical preferred provider relationship with Pharmasset is crucial to BASi’s growth plans. Michael Cox, chief financial officer at BASi, said the CRO (contract research organisation) is targeting high single digit growth next year on increased biotech demand.

In fiscal 2010 Pfizer was BASi’s largest client, accounting for seven per cent of sales, but since then the big pharma has consolidated its network of service providers. Chilton said BASi’s business with big pharma firms has been hit by the shift to using the same CRO for clinical and bioanalytical work.

Skin in the game

A double-digit sales increase in fiscal 2011 was the first time BASi has grown revenues since 2008. Cox said the upwards trend will continue in 2012 but some investors called for more aggressive revenue growth.

The key here is you guys got to get revenue up to $40m and doing it in single digit growth is going to take a month of Sundays​”, Tom Harenburg, a major BASi shareholder, told Cox and Chilton. BASi last posted full year total sales of more than $40m in 2008.

In January Harenburg owned 5.6 per cent of BASi’s shares, making him the third largest stockholder, and he is angry that people involved with running the company lack a similar commitment. At the start of 2011 BASi executive officers and directors collectively owned fewer shares than Harenburg.

You’ve got the chairman of the board who’s been on there for three years and doesn’t own one stinking share of stock. That is pathetic. This whole management team doesn’t have to give a rat’s ass about this 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​”, Harenburg said.

Related topics: Preclinical Research, Preclinical

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