Pyxant Labs Inc. was nearly at the point of shutting down when CEO Maurice Gaubatz instead shifted to a new strategy that has helped the Colorado Springs-based pharmaceutical testing company to double its staff to 50 people in the past year with plans to add 150-250 employees during the next five years.
Three years ago, Gaubatz recapitalized the company by creating a class of stock that would control the company and help him raise more than $1 million to finance Pyxant's expansion into the clinical toxicology market - testing urine, oral fluids and tissue samples for pharmaceuticals and other drugs. That meant he and other shareholders lost their voting rights and saw the value of their shares slashed. At the same time, Pyxant shut down a division that had tested for pesticides that had struggled for much of the company's first 14 years.
"A reasonable person might have said that it was time to shut down and go out and get a real job," Gaubatz said. "Instead, we have been able to grow the value of the enterprise by at least 50 percent in the past year. After nearly 20 years of hard work, we are hoping to be a big overnight success."
Gaubatz started the company just weeks before the technology stock bubble burst in early 2000, triggering a recession that was worsened by the Sept. 11 attacks. After working for 15 years at Dow Chemical, he used his savings and a loan guaranteed by the U.S. Small Business Administration to buy Colorado Analytical Research and Development Corp., which he renamed Pyxant. The company had no clients or revenue because the previous owner was about to retire and was winding down the business, so Gaubatz began cold-calling potential customers.
Pyxant won customers by agreeing to defer payments, working through holidays and hustling to complete tests quicker for customers, which included pesticide and drug manufacturers to ensure their products were safe and complied with federal rules. The company landed venture financing in small amounts, a few hundred thousand dollars at a time, over the years and managed to survive two recessions. But a distribution of shares by one of those funds left Pyxant with an unwieldy 85 shareholders, complicating further fundraising efforts.
After recapitalizing Pyxant, Gaubatz hired drug development and diagnostic industry veteran Jean Pineault as the company's president and chief operating officer to narrow its focus to pharmaceuticals and out of pesticides and agriculture, a specialized and volatile market in which Pyxant had struggled for much of its existence.
Gaubatz said he had spent years looking for ways to bring Pineault, who had held senior management posts at competitors and suppliers, to Pyxant to use his expertise and experience to roll out the new strategy.
"We saw that the way clinical toxicology had been done was neither as efficient or as compliant with federal regulations as we have been able to achieve in our contract research organization" division, which tests blood and tissue samples from clinical trial subjects to ensure the safety and effectiveness of new drugs under development, Gaubatz said. "While the two markets (testing for research and clinical toxicology testing for medication management) are completely different, the expertise required is very similar and difficult and expensive to develop from scratch."
Pyxant raised more than $1 million from senior management, including Gaubatz and Pineault; existing investors, including board member and local real estate broker Jack Gloriod; and other investors on the East Coast to buy equipment and expand into the clinical toxicology market. The company started the service in January and now does testing for 27 physician offices, pain management clinics, drug treatment centers and hospitals to screen for more than 85 drugs, including opioids, psychiatric and cardiac medications and illegal drugs.
The company also expanded its executive staff with the help of a new service from the Colorado Springs Chamber of Commerce and EDC that includes an online site called choosecoloradosprings.com with career and housing search engines, information on local schools and colleges, lifestyle information and individual stories from residents. Pyxant added 25 employees in the past year - 12 in the Springs and 13 elsewhere - to ramp up the clinical toxicology operation and plans to further expand its workforce to between 200 and 300 in five years, Pineault said.
"This is medical testing that doctors and hospitals cannot do efficiently," Pineault said. "The doctors need these tests more quickly to help them make better decisions and achieve a better outcome. The clinical industry, especially the medication management sector, needs a high-quality laboratory like Pyxant Labs."
Gaubatz said the company has secured customers in the Springs area, along the Front Range and elsewhere by offering quicker results than most laboratories, including the ability to test perinatal umbilical cords starting in July to determine whether a newborn is suffering from opioid withdrawal or other drug dependencies. He said Pyxant can get results in 24 hours - or less than 48 hours for umbilical cord testing - by using couriers to pick up and deliver specimens from local hospitals, while other labs typically deliver results in several days.
"Prescription opioid abuse is the largest drug epidemic in the nation. What we are doing helps to address that and is driving our growth in the clinical toxicology market," Gaubatz said. "We expect our testing load to keep growing to the point where we anticipate (that operation) to be consistently profitable by the end of June."
As the company grows, Gaubatz expects Pyxant to eventually outgrow its offices on Forge Road, off Garden of the Gods Road, and force the new operation to move, but he wants all of the company's operations to remain in Colorado Springs and within five to seven miles of each other.