And, when the time was right, Salquist became a player in the consolidation that has been whittling down the agriculture sector of the biotech business. Plant Genetics, by most accounts, chose the merger with Calgene over other options for needed funding.
The Plant Genetics deal, a $10-million stock swap completed last June, brought new products and sales opportunities to Calgene. Plant Genetics sells alfalfa seeds and seed potato tubers, and added research programs in those plants and tomatoes to Calgene's lineup of rapeseed, cotton, tomatoes, soybeans and corn. Calgene expects its first genetically engineered product to reach the market to be a tomato designed to be meatier and stay fresh longer. Calgene's other research programs are aimed at developing crops that are resistant to pests, pesticides and herbicides, and developing plants and oils for industrial uses.
However, the addition of Wochok to Calgene's executive ranks may turn out to be the most significant aspect of the acquisition.
Wochok, a meat-and-potatoes kind of manager, will help take some of the day-to-day pressure off Salquist. With his easy smile, chatty manner and seemingly irrepressible optimism, Salquist has been one of Calgene's best assets through its entrepreneurial, fund-raising era. Wochok measures out his words in careful doses, and projects a steady, thoughtful and conservative image.
Blending of Styles
"Zachary fills an important void at Calgene by being the day-to-day operations person, and has relieved Roger of those tasks," said analyst McGeorge. "Now, Roger can continue to concentrate on looking at the company in a more macro fashion."
"What ultimately happened with Plant Genetics is not a reflection of (Wochok's) abilities," she said. Plant Genetics was looking for funding at a "terrible time," having gone public at the tail end of Wall Street's enthusiasm for biotechnology issues, and shortly before the October, 1987, crash--from which ag-biotech stocks have shown only meager recovery.
How well the differing styles and talents of Salquist and Wochok can be blended is one of the questions that Calgene faces as it moves further toward maturity. By choosing the acquisition route to vertical integration, Calgene has imposed on itself the onerous task of blending several different management styles and company cultures into one.
George Dahlman, a biotechnology analyst with Piper, Jaffray & Hopwood in Minneapolis, says there is a risk that the company is taking on more than it can handle by acquiring such diverse operating businesses.
Wochok is handling the task of integrating the operating companies under the Calgene umbrella, but the company is still relying heavily on existing management at the acquired companies for stability and expertise. Daniel Wagster, Calgene's chief financial officer, said the strength of existing management and their commitment to remain on board for a smooth transition was an important factor in Calgene's judgment of potential acquisition targets.
At Calgene Chemical (named Agro Ingredients when it was Calgene's first acquisition in May, 1986), the founder continued on for 2 1/2 years before retiring. And at Stoneville Pedigreed Seed Co., which Calgene bought in December, 1986, the current general manager is the company's former owner and a member of Stoneville's founding family.
Yet, the more diverse the operating businesses, the more daunting is the task to integrate them. Calgene Chemical sells specialty oils, chemicals and food ingredients while Stoneville produces and sells cotton seed. Other operating businesses produce and sell corn, soybean and canola seed, and process canola oil and meal. "It's added complexity because the operating companies require different skills," said Wagster.
FDA Role 'Pivotal'
And yet Calgene would rather take on that challenge than narrow its prospects to one or two different product lines, or in this case, plant varieties. If part of a company's business requires dealing with the Food and Drug Administration--as Calgene does--then "you'd better have a portfolio that spreads your risk," said Salquist.
For Calgene, the FDA "is clearly a pivotal question," said Sutro's McGeorge. "The issues are how the FDA will choose to be involved . . . and to what degree they will want to review" the company's genetically engineered plants and products.
The first test of those questions will come later this year when Calgene submits for FDA review the tomato variety that it is developing in conjunction with Campbell Institute of Research and Technology (a Campbell Soup operation).
