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By Patrick Springer and Charly Haley, Published March 21 2013

Employees, study subjects left hanging as next step for PRACS unclear

FARGO – PRACS Institute founder James Carlson said Thursday that he is striving to salvage the clinical drug research firm, the day after hundreds of employees were told they are out of work.

“It may be vapor, but until the final paperwork is signed” the matter isn’t concluded, he said.

Employees said they were told Wednesday afternoon that their jobs were terminated and the firm, purchased last year by an investment group, is headed for bankruptcy.

As of last year, PRACS employed almost 400 at its sprawling center at 4801 Amber Valley Parkway. The 116,000-square-foot center had 544 beds for clinical drug study participants.

Carlson would not say if he is trying to put together a new group of investors, or whether PRACS’ owners would seek to liquidate assets or reorganize in a bankruptcy proceeding.

“I really can’t say at the moment,” he said, adding that he was awaiting the outcome of a couple of developments. He declined to elaborate.

“We went through talks all day yesterday,” he added, referring to meetings with the investors. “It was an all-day process.”

As recently as last October, Carlson said he was expecting to add 45 to 50 positions over the next year – growth that would generate between $10 million and $15 million a year in payments to participants in clinical drug

trials carried out by PRACS.

Wednesday’s announcement that the firm was closing and workers were thrust into unemployment appeared to leave even senior executives grasping for answers.

“I don’t know anything,” said Anthony Godfrey, vice president of clinical research, who was traveling Thursday.

“It’s completely out of our hands. It’s all in the hands of the investors.”

Alan Copa, chief scientific officer and a 20-year veteran of PRACS, said he does not know whether operations can continue through a reorganization or new ownership.

“There’s nothing I can tell you,” he said. “I was terminated yesterday. I don’t know what the path forward is.”

Ashley Hoeck, a phlebotomist safety monitor, said employees had been told for many months that business would pick up in April.

“We were told over and over again, ‘Don’t start looking for new jobs,’ ” she said. “ ‘Just hang through it; just hang with us. It’s going to get better.’ ”

Hoeck, who just got engaged, said she resigned from another job to allow her to work full time at PRACS. The abrupt job loss means uncertainty and hardship for employees, she said.

“One of my supervisors on Tuesday night, when I was working, just told me he was closing on a house that he bought. And a couple other co-workers just had babies,” Hoeck said.

Participants in the drug studies were left wondering if they will be paid. For many, weekends spent at PRACS could generate a few thousand dollars of income.

Cody Rainford and Carson Spitzak, both freshmen at North Dakota State University, stopped by PRACS Thursday to see if they would be paid for two of three weekends of studies involving a cholesterol medication that would have paid $2,000 upon completion.

“We haven’t even gotten a phone call,” Rainford said. “You’d hope for better from an organization like this – at least a phone call.”

The two students spoke with laid-off employees who were removing personal belongings from their offices.

“For us, it’s two grand,” Spitzak said. “For them, it’s their income,” he added, gesturing to employees out of work.

Chris Culver, a 36-year-old West Fargo resident, was supposed to finish a study this weekend and planned to use the money for his upcoming wedding.

“I was hoping to not use as much money from loans and credit cards for the wedding,” he said.

The past few years have been turbulent for PRACS and its predecessor company.

In 1983, Carlson co-founded PRACS in Fargo. In 2006 the firm was sold to Cetero Research, based in Crary, N.C. Cetero became embroiled in controversy in 2011, when an investigation found that chemists at its Houston lab had falsified pay records.

Ultimately it was found that the research was not compromised, but the damaging publicity crippled Cetero, which filed for bankruptcy last year.

A Chicago-based group of investors, Freeport Financial, bought Cetero’s assets for $80 million. Freeport Financial now is part of Stark Investments, based near Milwaukee, which declined comment.

Besides its Fargo headquarters and research center, PRACS has locations in St. Louis and Toronto. Early last year the company had about 1,140 employees.

Jim Gartin, president of the Greater Fargo Moorhead Economic Development Corp., said he had spoken recently with Carlson, who gave no hint that anything was amiss.

Perhaps investors sought to “cut their losses,” Gartin said. If so, he said he didn’t think they had given the resurrected firm enough time to recover and “get it back on track to a positive outcome.”

PRACS was at the center of the group’s effort to establish Fargo-Moorhead as a biotechnology and life sciences hub, and the development group stands ready to help in any way it can, Gartin said.

“It’s a huge void because of the jobs, the type of jobs, many of them for highly educated people,” he said. “This is a definite impact on the community at every level.”


Readers can reach Forum reporter Patrick Springer at (701) 241-5522