SwingTrade Member Forum

[Painterguy1]

Bloomberg's Vendetta Against SFCC Continues...

They ran this story 3 times during market hours yesterday, and once after hours. I guess when they couldn't get the FDA to jump all over them they called the Fire Marshall and Building Inspector...




SFBC Cuts Bed Capacity by 48% Amid Test Center Probe (Update3)
Dec. 1 (Bloomberg) -- SFBC International Inc. cut in half the number of beds at its Miami drug-testing center, the largest private clinical trials site in North America, after officials began probing the building's safety, the company said.

SFBC's shares fell 26 percent today after the company said in a filing with the U.S. Securities and Exchange Commission that it is cooperating with Miami-Dade County building department inspectors investigating if the center is structurally safe. Miami-based SFBC said it has been told it can continue operations at the building during the probe.

The company uses the center to test experimental drugs on paid participants who sleep six to a room, in double-decker beds. SFBC said it has reduced the number of beds to 350 from 675, and will relocate 120 of them within 10 days. Inspectors have cited the building for structural weakness, hazardous electrical installations and work done without a permit.

SFBC ``believes that the reduction of beds at the Biscayne Boulevard facility will not have a material adverse affect on the company,'' according to the SEC filing.

Shares of Miami-based SFBC fell $5.45 o $15.64 at 4 p.m. New York time in Nasdaq Stock Market composite trading. About 11.4 million shares were traded, equivalent to more than half of the 18.5 million shares outstanding. The shares have dropped 58 percent this year through yesterday.

SFBC Chief Executive Officer Arnold Hantman wasn't available to comment after three calls to his office.

Maximum Number

Bloomberg News reported on Nov. 2 that the company told the Miami-Dade County Building Authority that its maximum number of study participants is 350. It told investors that all 675 beds in the facility could be filled. The company also said it planned to expand the Miami center to 750 beds by year-end.

``The Building Department followed up on the lead it received from the Bloomberg story suggesting the company was not complying with the building code,'' said Marisol Triana, a spokeswoman for the Miami-Dade Building Department.

Last week, local officials posted signs outside the building, saying it was unsafe and ordering it vacated, SFBC said. The company said it added structural reinforcements and persuaded officials to allow it to continue operating.

``The company's understanding was that it would be allowed to continue to operate its business after the sign was posted as it worked with officials to satisfy their concerns,'' said Michael York, an attorney hired by SFBC with Wehner & York P.C. of Reston, Virginia, in a telephone interview today.

`Safe in all Respects'

The company in its filing said officials raised concerns about ``structural issues'' with the building because SFBC had removed some interior walls. The building, a former motel and later an assisted living center, was purchased in February 2004 for $12.1 million. The company's statement said the building is ``safe in all respects.''

The Miami Dade Building Department's Web site describes the violations found at SFBC's Miami headquarters under the heading ''unsafe structures.''

``The structure's condition creates hazards with respect to means of egress and fire protection,'' according to the building department's summary of the violations. ``The electrical or mechanical installations or systems create a hazardous condition.''

Analyst Ricky Goldwater of UBS Securities today reduced her price target for SFBC to $21 from $33, and kept her rating at ``hold.'' In a note to investors today, she wrote ``We believe today's announcement illustrates the ongoing risks and uncertainties for SFBC.''

UBS raised $108 million for SFBC in March, selling 3.1 million shares to the public at $38 a share.

Hantman said on Nov. 18 that the company officials would meet with the staff of U.S. Senator Charles Grassley to review allegations concerning the way the company conducts clinical trials, and that it had hired an independent counsel. Grassley, an Iowa Republican who chairs the Senate Finance Committee, requested the meeting, Hantman said.



To contact the reporter on this story:
David Evans in Los Angeles at [e-mail]
Last Updated: December 1, 2005 16:24 EST

http://quote.bloomberg.com/apps/news?pid=nifea&&sid=a_1gZz960nYM