Bigmar Inc. has never made money. Annual losses at the Johnstown-based pharmaceutical company are routinely in the millions and if a fund-raising deal doesn’t come through soon, Bigmar could run out of capital this quarter.
So why, then, are so many people still optimistic about Bigmar? This will be the year we find out what this hopeful, young company is made of.
Michael Medors, Bigmar’s treasurer and secretary, describes the company’s overall financial situation as “tenuous,” but quickly adds that Bigmar’s repeated losses have been expected.
“We are in a very capital-intensive business being in pharmaceuticals,” he says. “And time is not on your side, so to speak, due to the fact that even for [abbreviated new drug applications], it takes one to three years to get approved by the FDA.”
That’s key. Although Bigmar received blanket authorization from the Swiss equivalent of the U.S. Food & Drug Administration last year to distribute its injectable drug products from a Switzerland facility, it does not yet have approval from the FDA to distribute in the U.S.
Bigmar’s success—perhaps even its survival—hinges on getting FDA approval this year. If it comes, the repercussions could be huge.
“I think you’ll see a real breakout in the next six months,” says Harold C. Baldauf, an Arizona businessman who has been asked to raise between $5 million and $10 million for Bigmar in a private placement to keep the company operating through 1999. Baldauf is the founder of several companies, including Michigan-based Graminex, a Bigmar supplier. He is also a minority member of Jericho II LLC, a private investment firm which purchased enough shares of Bigmar stock last year to raise $6 million for the company.
“If we get the FDA approvals, I think it could be a $30 stock,” Baldauf continues. “I feel real positive that we can achieve that.”
But first, he must get the funds to hold the company over until those approvals come in.
“We’ve always been able to find financing,” Medors says. “I’m optimistic that we’ll be able to raise the money.”
Let’s hope so.
If an influx of cash does surface soon, look for Bigmar to start pursuing acquisitions that could enhance the company’s production capabilities. After all, Bigmar wants to be ready to move immediately out of its research and development phase and into full-scale manufacturing and distribution once the FDA approvals are in hand. It’s the only way the company will turn a profit.
If that pot of money and the FDA approvals don’t materialize this year, however, the financial crunch may be too much to bear.
Either way, 1999 is apt to be a true turning point for this company.
Bigmar Inc.
9711 Sportsman Club Road, Johnstown
Top officer: John Tramontana
Founded 1995
Employees: 70
Estimated 1998 revenues: $6.47 million ††
Revenue growth, ’96 to ’97: -17%
Ownership: Public
1996 IPO share price: $7.50
1998 average share price: $3.25
†† Figure based on average revenue growth through first three quarters of 1998 projected at same rate through fourth quarter.