Testing Facilities to Open

While colorful businessman Jennings Osborne wades back into the medical testing business in Little Rock, William M. Carpenter says he’s close to reviving Charles River Laboratories Inc.’s medical testing facility in Redfield.

Carpenter, the 30-year-old CEO of Consensus Biolabs LLC of Little Rock, said that for about a year he has been trying to secure funding to buy Charles River’s lab, which at one time employed 120 people, many of whom held doctoral degrees.

Charles River, of Wilmington, Mass., closed its Redfield location at the end of the year to save money.

Carpenter had announced in August that Consensus Biolabs had signed papers to buy the lab, but it hasn’t been able to close on the deal.

In mid-January, Carpenter blamed current economic conditions and the lending environment for slowing down the deal. But now he has “very high-net-worth investors” that can “make this deal happen,” he said.

Carpenter declined to identify the investors or say what the purchase price is.

“We’re still in discussions regarding the lab,” said Amy Cianciaruso, a spokeswoman for Charles River. “Nothing has been finalized.”

Biotechnology officials hope that Carpenter can reopen the doors of the Redfield lab, which was the only facility in the state that handled the very first tests needed for experimental drugs.

“It’s a type of facility that’s needed in the industry right now,” said Michael Douglas, director of the University of Arkansas for Medical Sciences Arkansas BioVentures, which helps startup companies develop their research into products that benefit human health.

Douglas said new therapeutic drugs were just waiting to be tested and the animal experiments at the Redfield lab could help the drugs move faster to market.

Meanwhile, Osborne, known for his extravagant Christmas lights and fireworks displays, said his new medical testing center, Osborne Research Center, should be open in about a month.

In the middle of last year, Osborne’s former medical testing company changed its named to Axient Research. An official with the company declined to comment on Axient.

 

Consensus Biolabs

Growing up in Hamburg, Carpenter planned on making it as an orchestra conductor. But while pursuing the dream, he became disenchanted with the music business.

“I was interested in being an artist,” he said. “I didn’t want to do it for a job to make money.”

Then he worked with his mother, Marilyn Carpenter, who has a doctorate in education, to start a company called Quest Education, which is a consulting company to train teachers to become better instructors.

With the psychology department at Yale University, the Carpenters formed a partnership in which they co-developed a program called Emotional Literacy.

“We became the commercial side of their academic research,” he said. “And that’s where I got my first exposure to working with university systems and taking their ideas and putting them into the commercial marketplace.”

He said total sales of Quest Education were more than $500,000. Carpenter said he and his mother licensed the products to SELmedia Inc. of Cary, N.C.

Carpenter also said he had done some consulting work for SimuQuest, a software development company in Ann Arbor, Mich. He also did consulting work for Wadia Digital, which develops technology related to digital audio reproduction in Saline, Mich.

SimuQuest President John Mills said that about three or four years ago Carpenter did some work to help market the company to investors.

“I was really impressed with his energy, intelligence,” Mills said. “He really impressed me with what he was able to do.”

Carpenter then became interested in science and the development of “promising technologies,” he said. “And it naturally led me to the drug market.”

Last February, Carpenter came across the news that Charles River was closing its lab in Redfield. The company reported $1.3 billion in sales in 2008 but had a loss of $521.8 million. In 2007, the company generated $1.2 billion in sales with a net income of $154.4 million.

Charles River said in its 2008 annual report that the closure of the Arkansas facility and other cost-saving moves would reduce costs by $40 million in 2009. Carpenter said he leaped at the chance to buy Charles River’s Redfield plant.

Carpenter said he thought he could be successful at Redfield because he would focus on smaller biotech and pharmaceutical companies, instead of the larger ones that Charles River chased.

He said Charles River hadn’t opened the books on the lab to him, but company officials had told him that the lab had a lower operation cost compared with other labs across the country and had historically seen a profit.

The negotiations for the property were going smoothly and the deal was on track to close on Oct. 15, Carpenter announced in an August news release. The lab was supposed to be operational in January.

But Carpenter said he hit a snag when he couldn’t get funding from banks.

“Our story is probably echoed by a lot of small businesses,” he said. “I can’t say I fault the banks. … But nobody wants to be a property owner.”

In recent weeks, however, Carpenter said, he has been in talks with high-end investors and a professor from Vanderbilt University in Nashville, Tenn. to boost his chances to receive funding. He said the investors would put up the collateral for the loan in exchange for part of Biolabs, but that deal hadn’t closed yet.

Carpenter said he expected to hear from the lender, which he declined to name, in the next week or so about whether he will receive the money he needs for the lab.

Carpenter said Consensus Biolabs already had about $3 million in “commitments” from Ikor Pharmaceuticals of St. Aberdeen, S.D., to study the effects of a wound-sealing therapy. And it also will study a treatment that is supposed to increase oxygen delivery to cancer cells.

Revenue Projections

Carpenter said once funding is approved, all he would need is regulatory approval from the U.S. Food & Drug Administration, which could take about six weeks.

Consensus Biolabs will focus on three testing areas: drugs that are delivered through the skin, drugs for the eyes and behavior pharmacology.

“However, we can take just about any drug or medical device through the preclinical regulatory approval process,” he said.

Carpenter said he expected the lab to generate between $15 million and $17 million in annual revenue in the next two or three years. He also hopes to help UAMS’ Arkansas BioVentures companies get regulatory approval needed.

Reopening the lab would be a boost for the state’s economy, said Jerry Adams, president and CEO of the Arkansas Research Alliance of Conway.

“If it works out, then it’s retention of jobs,” Adams said.

Also, Tom Dalton, director of Innovate Arkansas of Little Rock, said if the Redfield lab stayed closed, it would be a loss of “key high-paying jobs.”

“We at Innovate Arkansas are working with [Carpenter] and have indicated it will work with the company if this deal takes place,” Dalton said.

But Adams isn’t counting on the lab opening just yet.

“You’re never there until you’re there,” Adams said. “These things are delicate issues. William is probably through quite a bit of it, but I don’t think he’s on the other side of it.”

 

Osborne Back

Osborne couldn’t stand being retired, and will open his new medical research testing facility, Osborne Research Center, in about a month.

“It gives me a reason to get up in the morning and go to work,” he said. “I did it my whole life. I never, ever dreaded going to work.”

In 2004, Osborne sold his company, Arkansas Research Medical Testing LLC of Little Rock, for $20.3 million to a company owned by Little Rock financier Warren Stephens. Osborne was supposed to receive an additional $9 million during the next three years if the company hit certain financial goals. He also was to receive $1 million in consulting fees and to cover his non-compete agreement.

Osborne, though, became frustrated when Arkansas Research’s managers ignored him and the company failed to reach its financial goals. Osborne sued Stephens’ related entities for the $6 million he said he lost in deferred compensation.

In September, a Pulaski County Circuit Court jury awarded Osborne $3 million.

Last year, Osborne’s non-compete agreement ended, which allowed him to jump back into the medical testing business.

Over the years, drug company officials had urged Osborne to launch another medical testing company. He had considered re-entering the medical testing business because he missed the work.

“I love for a drug company to give me a hard study and then I’m able to pull it off,” he said. “It’s just a simple high for me.”

Osborne said he already had the orders in hand to start conducting medical tests when the center was operational. The lab will focus on early drug testing on humans.

He declined to say what the revenue projections were, but said he would have 10 people on staff.

Osborne said he would tackle 12 to 14 studies a year. He also said he did not have any plans to expand the company.

“I think that’s why I was successful before,” he said. “I never thought in terms of global. I had enough to do at home.”