Less than a week before Applied Biosystems was to release its fiscal first-quarter financial results, Cathy Burzik resigned as president, effective immediately.
She had been on the job a little more than two years since taking over from Mike Hunkapiller, who retired also abruptly in August 2004. Burzik, whose tasks at ABI included cutting costs and resuscitating a flagging business, will become CEO of Kinetic Concepts, a medical device company based in San Antonio, Texas.
Her two years as ABI’s leader were marked by a successful turnaround of the company’s finances and acquisitions that expanded ABI’s product portfolio. The company also strengthened its position in the proteomics space by expanding its joint venture with mass spectrometry developer MDS Sciex and introducing several mass spectrometry systems and other proteomic tools.
Additionally, the value of ABI’s stock nearly doubled while she was president.
Publicly, Burzik attributed her departure to the chance to become the CEO of a “significant public company…a professional and personal goal,” she said in a statement issued by ABI.
She further said she was proud of the management team at ABI and “the repositioning we have accomplished. … I leave the company in a very healthy position.”
In her new role, Burzik “will return to the medical device industry where I have spent the majority of my career,” she said.
In a conference call accompanying ABI’s release of its quarterly results this week, Applera CEO Tony White said only that she left for “personal reasons.”
In a statement, White called Burzik an “effective leader who made many contributions in her three years” at ABI. Burzik first joined ABI in September 2003 as COO and executive vice president.
White will take over as president on an interim basis until the company finds a permanent replacement.
ABI did not respond to requests for comment on the abruptness of Burzik’s departure or when she first told the company she would be leaving.
According to a document filed with the US Securities and Exchange Commission, Kinetic offered her the CEO position on Oct. 16.
Prior to ABI, Burzik was president of Johnson & Johnson’s Ortho-Clinical Diagnostics business. Less than a year later, she became ABI’s president when Hunkapiller abruptly stepped down for what the company said at the time were personal reasons [See GWDN 08/23/04].
According to SEC documents, Burzik will receive a base salary of $800,000 at Kinetic — $120,000 more than what she stood to earn at ABI this year. She can also opt into a bonus program that could pay her another $800,000. If she opts out of that program, she will receive $350,000 as a signing bonus.
Depending on how long she is with Kinetic, she would also be entitled to stock options that would net her more than $14 million if the stock price remains unchanged from its current price of approximately $34. If she stays at Kinetics for at least three years, she will receive another equity grant valued at about $3 million.
At ABI, Burzik would have made $680,000 in base salary for fiscal 2007 which began on July 1. In 2006, she made $554,530 in base salary according to the company’s proxy statement. In addition she received a $948,971 bonus and $110,805 in other annual compensation including, among other things, use of the company airplane and a car allowance.
According to Peter McDonald, an analyst at American Technology Research, given her background in medical devices and the prodigious offer by Kinetic, the opportunity at Kinetic may have been just too good for Burzik to turn down.
“She basically wanted to run her own company. That’s what probably drove her [decision],” he said. “ABI is still part of Applera, it’s got a tracking stock…this is her opportunity to be the leadership.”
Turmoil and Turnaround
Burzik took control at ABI during a time when it was trying to simultaneously turn around flagging finances and rejigger its product offerings. After posting a net income of $212 million in fiscal 2001, ABI saw its profits plummet to $168 million the following year. In 2003, net income bounced back to $200 million then fell again in 2004 to $172 million.
In February 2004 ABI had hired Boston-based consulting firm Bain & Company to conduct a review of the company and in July — one month before Burzik became president — ABI laid off 145 people and reorganized its operations. It became a company with four separate divisions with their own leadership, strategic planning resources, R&D, and marketing and sales: Molecular and cell biology; proteomics and small molecule; applied markets; and global service and supply chain.
To further streamline the company, in June 2005 ABI announced it would cut its workforce by about 250, or 6 percent.
Meanwhile, ABI was aggressively forging ahead with its strategy of moving from a company narrowly focused on expensive tools to include consumables.
“She came in [and] cleaned up the operations a lot,” McDonald said. “She moved the company away from its research-driven marketplace to more of an operational/marketing/research combination business.
“I think a lot of her efforts over the past three years are starting to pay off in the sense that margins are higher, the new product revitalization efforts have increased, and they’ve kind of shifted their focus to broader markets outside of pure life sciences,” he said.
The two biggest ABI transactions under Burzik’s leadership were the purchase of RNAi firm Ambion in March and Agencourt Personal Genomics, a developer of genetic analysis technologies in July.
“She came in [and] cleaned up the operations a lot. She moved the company away from its research-driven market place to more of an operational/marketing/research combination business.”
Meanwhile, the company expanded its proteomics offerings under her watch as well. In October 2004, ABI and MDS expanded their mass spectrometry joint venture, and during the past year-and-a-half the two companies introduced a number of new mass specs including the 3200 Q Trap and the API 3200 LC/MS/MS [See PM 04/08/2005] in April 2005; the 4800 MALDI TOF/TOF Analyzer a month later [See PM 05/27/05]; and the QStar Elite LC/MS/MS system in January [See PM 03/16/06].
In addition, ABI introduced its LIMS Software for genomic and proteomic labs in September 2004 [See PM 09/24/04], and with MDS launched the Tempo liquid chromatography system last November [See PM 11/18/05].
As a result of the changes implemented during Burzik’s tenure, ABI’s income rebounded to $237 million in fiscal 2005 and $275 million in 2006. Its mass spec business steadily rose during her tenure as well, from revenues of $414.8 million in 2004 to $426.8 million in 2005. This past fiscal year, mass spec revenue totaled $465.3 million.
ABI’s stock also flourished during her time at the helm of ABI, rising from a low of $17.76 shortly after she became president to a high of $33.96 on Oct. 18.
As the company looks for her replacement, no clear frontrunner has emerged internally or externally. During the conference call, White said only that he and the board of directors will “carefully consider our alternatives for the management succession.”
McDonald said that in addition to seeking someone who can continue the company’s growth trajectory, ABI may be on the lookout for a president with mergers-and-acquisitions experience.
“ABI has definitely signaled that they want to be more active in bringing new technologies in, so I think someone with that background would help,” he said.