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Know a Niche, Hang a Shingle

A longtime CFO bucks the recession to launch a consulting operation, drawing on his industry-specific expertise.
Christopher HosfordAugust 15, 2008

Don’t you just love optimism? Take the brand exhibited by James W. Clark Jr., who just left a cushy job for a whirl at self-employment amid dicey economic times. Clark figures the fact that entrepreneurs and corporations still have financial needs, whatever the economy is doing, trumps the loss of a guaranteed paycheck.

A longtime CFO for clinical-trials companies, Clark is betting that his specialized expertise in that growing industry and insight into its evolving market challenges will be in wide demand as he heads out on his own.

“The tougher the economic times, the more important the strategic and financial planning is for a business,” says Clark, who in July announced the formation of Clark Financial Group, based in Chapel Hill, North Carolina. He aims to help pharmaceutical and biotech companies with their financing and technical needs, speed their clinical research, and bring products to market faster.

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While it’s surely difficult at present for private-equity firms to get highly leveraged financial instruments in place, “that’s not what I’m involved in,” says Clark. “I’m helping fund existing enterprises, so they can grow through internal initiatives, expand, explore new markets, and accomplish all the strategic transactions that accompany those things. There’s still a very active market for asset-based financing for companies that are solid, profitable performers.”

Clark’s most recent full-time stint was as CFO of etrials Worldwide, a provider of software and services to the pharma, biotech, and medical-device industry. There he oversaw financial reporting and internal audit, crafted business plans, negotiated and maintained bank lines of credit, made stock placements, and spearheaded critical acquisitions to expand the company’s technological capabilities.

In Clark’s view, enhancing shareholder and fueling growth are equally important, and in fact often go hand in hand.

One of his first independent assignments this summer concerned his former company, etrials. He filed with the Securities and Exchange Commission a Schedule 13D for stockholders representing about 20 percent of etrials shares, aiming to push management to improve the company’s growth strategy. Possible results include a stock repurchase, more acquisitions, and even the sale of the company.

“That’s one of the first exciting projects for Clark Financial Group,” he says. “It’s this kind of work that has guided my career — developing the capital resources to enable companies to grow.”

Clark believes his focus on pharma and biotech clinical-trials companies should inoculate him from the economic wrinkles other sectors are suffering. It’s an industry with few bad debts and good collections, and the human habit of getting sick virtually ensures an abiding market for drugs.

Mergers and acquisitions also will be a key component of Clark’s offerings, in particular those that boost shareholder value. He has had some success in this area: in 2003 he engineered the merger of his then-company, Araccel Corp. (also an electronic clinical-trials service provider), with etrials. The merger and its aftermath provide a lesson in not just economies of scale but also extracting profitability from growth. “The two companies were doing $4 million in business each, and both were losing $4 million,” he says. “After the merger, we got them to break even in two months.”

After three years of growth, funding, and selected acquisitions, etrials’s market value had grown to $60 million, prompting the big payoff: a sale in February 2006 to Florida-based CEA Acquisition Corp., raising capital to further grow the business.

In his new entrepreneurial capacity, Clark also aims to focus on the sophisticated technology on which clinical-trials companies increasingly rely.

While slow to transform itself, the sector is becoming increasingly digitized, with the use of PDAs and smart phones to allow patients to input feedback on trials, the implementation of telephone interactive voice response for the same purpose, the use of electronically collected EKGs and other tests, nurses to report via the Web back to the pharmaceuticals companies for virtually instant trials evaluation, and more.

Clark aims to help companies select the right e-clinical technology so they can stay in the game. Far from becoming a tech consultant, he sees this as complementary to his financial and M&A services. Advanced business practices lead to growth, profitability, and mergers, he observes.

“It all comes together, really,” says Clark. “The whole industry is undergoing dramatic change, with digital processes that help companies lower costs and speed the time of trials to get drugs to the market faster. If you’re providing clinical research services, you need an e-clinical strategy.”

And (he might have added, but didn’t) you may need Clark Financial Group.

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