Aftermath of a Drug-Testing Firm
What happened to SFBC International, a once fast-growing drug-testing firm in Miami?
Among the clinical trial firms that rode the outsourcing boom was a Miami company called SFBC International. SFBC came about in 1999 through the merger of two south Florida clinical research firms -- South Florida Bioavailability Clinic and South Florida Kinetics. The six-employee South Florida Kinetics was founded in 1995 by Lisa Krinsky, a Miami native and the daughter of a pharmacist. Krinsky had worked as a licensed clinical laboratory technician after getting a medical degree from Spartan Health Sciences University, a medical school on the Caribbean island of St. Lucia. Her lawyer, Fort Lauderdale attorney Alvin Entin, says Krinsky's interest "has always been research." South Florida Bioavailability Clinic was owned by Arnold Hantman, a former executive vice president and director of American Hospital Management Corp. who also worked as a certified public accountant for 20 years. After the merger, Hantman kept his CEO title, and Krinsky became president and chairwoman of the new company.
On Oct. 11, 2000, two years after SFBC International's founding, its executives took the firm public. An IPO raised $8.5 million that SFBC used to acquire competitors and expand the size of clinical trials the company conducted at its Miami headquarters. "To bring a company from its infancy to being able to ring the bell on the stock market (was) an amazing feeling," Krinsky told the Miami Herald in an interview less than a year later.
Some of SFBC's paid volunteers for trials reportedly tried to earn extra money by dodging rules meant to keep them from taking part in more than one trial at a time.
By 2003, SFBC ranked third on Forbes' list of the "200 Best Small Companies," based in part on the dramatic rise of its stock price, which had almost quadrupled from its $8-a-share IPO level to nearly $30. By 2005, SFBC's revenue had grown from $19 million at the time of the IPO to $180 million, and its workforce had swelled from 117 to more than 2,000. SFBC was conducting up to 180 studies a year at its Miami test center on behalf of some of the world's largest pharmaceutical companies, including Merck, Johnson & Johnson and Abbott Laboratories. Those contracts had made the Miami facility the largest single-site clinical studies location in North America -- the "Plaza Hotel" of the contract research industry, as Krinsky once described it.
The company's success also had made Krinsky, its largest stockholder, wealthy. Within a month of a 3-for-2 stock split early in 2004, she and Hantman together sold $2.6 million worth of shares. Nine months later, in March 2005, the duo cashed in another $13.4 million. That same year, Fortune magazine named Krinsky the 15th-richest executive at a fast-growing small public company, with an estimated $40 million in stock and stock options.