Great article on CRY by the Marietta Daily Journal
MARIETTA — At age 73, most executives are slowing down, but CryoLife founder and CEO Steve Anderson shows no signs of leaving the company he started at his dining-room table 28 years ago.
CryoLife pioneered the process and preservation of human cardiac and vascular homografts used in heart and blood vessel reconstructive surgery. The Minnesota native’s first post-college job was as a pharmaceutical sales representative with chemical giant Merck.
In the late 1970s, an industry friend told Anderson about University of Alabama Medical School doctors who were repairing congenital heart defects using homografts, or human heart valves that were cryopreserved.
Fascinated, Anderson met with the pediatric cardiovascular surgeon who demonstrated the benefits of using homografts. Unlike mechanical or pig valves, the human valves did not require the patient to use blood thinners; lasted much longer and did not have a catastrophic failure mode.
During the fall of 1983, Anderson contacted his friend and future partner, Bob McNally, a former colleague and biomedical engineer, and the two traveled to London to visit a homograft laboratory where surgical cardiac reconstruction techniques were being developed by Dr. Donald N. Ross.
“It had become apparent to us that the technology for preserving human heart valves was unique and outweighed the benefits of synthetic implantable devices,” Anderson said.
In 1984, Anderson and McNally rented a 2,400-square-foot laboratory on Camp Creek Parkway, near Atlanta’s airport, and founded CryoLife.
With his background in sales, Anderson called on cardiovascular surgeons trained in homografts.
“I found out there were a lot of American docs who had trained in London in these procedures and there was an alumni club,” Anderson said. “One of the docs gave me his Christmas card list and I started calling on them. That is what formed the basis of our customer base.”
By 1985, the company had six employees and netted $900,000 in revenues, and soon moved to a 60,000-square-foot laboratory on New Market Parkway, near Dobbins Air Reserve Base in Marietta. In 1997, the company moved to its current 200,000-square-foot facility off Roberts Drive in Kennesaw.
McNally retired in 1998.
Today, CryoLife has contracts with 70 nonprofit tissue banks and organ procurement groups in the United States. When a suitable organ donor dies, whole-organ donation is the priority, but if that’s not possible, valve, vein and tissue donation can still be viable. The groups have 24 hours to transport the donations to CryoLife for preservation.
In 1993, the company went public. Three years later, CryoLife licensed BioGlue, a surgical adhesive that has become a major product for the company. BioGlue received FDA approval in 2001 and has been used in more than 600,000 surgical procedures worldwide.
In the early years, CryoLife processed orthopedic tissues, but after the 2001 death of a man who received bone cartilage processed by CryoLife and a FDA product recall, the company exited the orthopedic sector all together. According to published reports, by the end of 2003, after the company dealt with the ensuing lawsuits, revenues had dropped 31 percent.
But with Anderson at the helm, the company has climbed back and recently reported second-quarter revenues of $33.2 million. Anderson said the company projects $130 million in revenues this year, up $10 million from 2011.
The company has 450 employees and plans to hire 50 more this year. Two new products, Bioseal and PerClot, are in the clinical trials and licensing stages. The company also recently purchased HeRO Graft for hemodialysis patients with central venous stenosis.
Clint Richardson is a partner with Atlanta-based business-law firm Womble Carlyle Sandrich and Rice.
“In my 35 years of representing CEOs and founders of technology companies, Steve stands out for building a great company that not only improves people’s lives but that also created a new industry,” Richardson said. “Few entrepreneurs can successfully make the transitions from founder to CEO of a large and sophisticated business, to successfully guiding a public New York Stock Exchange company. Steve has done just that.”
The subject article was long on ego stroking and short on financial content.
You can talk all you want about SA being a “good guy” (Marietta Daily Journal) or a “bad guy” (Robin Young – Orthopedics This Week, where Robin Young called SA the “Bad Boy of Biotech”). However, my point is that SA has not been an effective Director, CEO, and President if you measure him in terms of stock appreciation over the past 18 years. Note too that this is an objective metric, not a subjective opinion.
Two stories for possible new investors:
Story 1: You should buy CRY stock because the CEO is a “nice guy”. Stock performance has historically been poor for 18 years, but the CEO is helping the world so you should invest in CRY anyway because while you don’t really care about your equity investment you do care about helping people. Hooray for you! Heaven is your destiny!
Story 2: You should invest in CRY in hopes of receiving stock appreciation while simultaneously helping people in the process. After 18 years as CEO and 18 years of poor stock performance perhaps SA should finally be replaced by a new CEO who is actually interested in creating appreciation for shareholders.
I’m sure there are more possible stories too, so write your own.
Robin Young is so prejudiced against Cryolife that he's even posted incorrect numbers. One example: he wrote that CRY had flushed $6 million down the toilet -- note his unbusinesslike choice of phrases -- trying to acquire Medafor. Ten years ago, he all but said the company would go out of business. Young typically writes about CRY with a tone worthy of the most outspoken short-sellers. I can think of only two other cases where a supposedly neutral observer has consistently shown such bias and those writers were just financial reporters while Young is a CFA.