ANTHONY TRIMBOLI - VITARX
CEO Interview - published 05/28/2001

DOCUMENT # MAJ601

ANTHONY TRIMBOLI is President and Chief Executive Officer at VitaRx. He
began his pharmacy career as the Assistant Director of Pharmacy Service
at a hospital in Philadelphia and later became part owner of his own
pharmacy for five years. In March 1988 he became the Regional Pharmacy
Director of US Healthcare. After the US Healthcare merger with Aetna,
Mr. Trimboli was promoted to the position of Director of Clinical
Programs for Aetna, where he stayed until April 1999 when he joined
VitaRx. Mr. Trimboli is a member of the American Society of Health-Care
Pharmacy and the Academy of Managed Care Pharmacy. He has a BS degree in
Pharmacy from Temple University, Master of Business Administration from
Philadelphia University and is a Registered Pharmacist.

Sector: specialized health services

TWST: Can we start out with a short history and  overview of the
company?

Mr. Trimboli: VitaRx falls into the pharmaceutical sector termed
specialty pharmacy. Our focus is on disease management and distribution
of injectable drug therapies primarily to physician offices or directly
to patients, if it's a self-injectable medication. We are just beginning
our fourth year in operations, and are in a market that is growing
extremely quickly. Currently, pharmaceuticals, as a whole, are about a
$112 billion a year market, with specialty pharmaceuticals being the
fastest growing segment of the overall market.

TWST: How do you define specialty pharmaceuticals?

Mr. Trimboli: There are different ways to define the sector, depending
on whom you talk to. Number one, specialty pharmaceuticals tend to
target high risk disease states. Most are injectable drug products,
especially aligned with many of the new biotech medications that are
hitting the marketplace. Secondly, they tend to be medications that are
not covered by a traditional pharmacy benefit program from a managed
care organization, but rather they are covered under a patient's medical
benefit. So they're really a complete and separate carve-out from what
one would think of as the typical pharmacy benefit drug.

TWST: How much of that $112 billion falls in that category?

Mr. Trimboli: I'm not sure of the actual breakdown, but we know the
market has grown extremely quickly over the last three to four years.
There are about 200 to 300 biotech drugs that fall into what we'll term
specialty pharmacy in Phase III clinical trials right now. How many of
those will hit the market in the next couple of years is certainly
unknown, but even if 10% or 15% hit the marketplace, that is going to
dramatically increase the number of products that fall into this
category.

TWST: In the market that you're participating in, with whom are you
competing?

Mr. Trimboli: A number of public companies ' companies like Priority
Healthcare, Accredo, or Chronimed perhaps. And there are some other
private entities as well.

TWST: As you look at this space, what do you see developing? What
changes are likely to take place that you will have to react to?

Mr. Trimboli: From day one, we've taken a position of having a different
focus and strategy than what was prevalent in the market at that time.
Our focus was to go directly to the managed care payors and have direct
preferred or exclusive contracts with those payors for a full range of
injectable drug products. We were not targeting just one or two
particular disease states, but offering a full range, one-stop-shopping
concept. We think that philosophy has been very successful. It's been
different even from that of our public competition, and we've had
tremendous growth and opportunity because of it.

TWST: What is the benefit to the company?

Mr. Trimboli: Managed care organizations are able to offer a
comprehensive program, and actually a very simplified program,
especially to the provider networks they are dealing with. It is much
easier to tell a group of providers, and by providers I mean physicians,
that there is one place they can access all of their injectable
therapies, rather than having to deal with a menu of different places to
access. We're able to simplify the process: one set of communications,
one set of order materials, one place for physicians to contact.

TWST: Has the response been good?

Mr. Trimboli: We've had a tremendous increase in sales every year in
operation. We went from $3 million in sales our first year to $36
million our second year, ending at $52 million last year. We have had
excellent opportunities and success with this approach.

TWST: Given that, what is to prevent others from copying your model?

Mr. Trimboli: Nothing. This is like any other business  ' you certainly
can have competition. The key is how well you run your program, how
efficient you are. To us, customer service is still the major aspect of
this program. The orders have to go out on time. Medication has to be
there when a physician or patient needs it. In conjunction, we offer a
host of disease management services, prior authorization services, and
reimbursement strategies.

TWST: So there are no real barriers to entry into the business.

Mr. Trimboli: Not really. However, there is a lot of expertise behind
the scenes of this business. I think that's the true barrier. It's not
just a matter of opening up a specialty pharmacy ' just hanging a
shingle ' and expecting to be able to compete.

TWST: As we look out over the next two or three years, how would you
describe the strategy that you're going to follow?

Mr. Trimboli: We're going to expand our disease management programs. We
think that is something that managed care organizations, whether our
current clients or future clients, are going to start focusing on a
little more critically in the future.

TWST: What do you mean by disease management?

Mr. Trimboli: What we mean is examining how we can interact with
patients to help increase compliance with their drug therapy program and
keep them out of the hospital or away from surgeries. Or, with a
particular product, disease management just may be having a patient
assessment of lifestyle, trying to help them avoid future complications
and problems associated with a particular disease state. How we address
each patient depends upon the level of interaction we can have with both
the health plan and the provider networks. The more we can be involved
in that circle, the more key we can be in coordinating services for
these patients.

TWST: Is that something the health plans want or need?

Mr. Trimboli: We're certainly seeing the smaller health plans ask us to
take a larger role in disease management, because they may not have the
infrastructure to do it all on their own. We currently interact with
them, for example, by taking a part in the prior authorization process,
which is the initial screening to determine whether a person meets the
medical criteria for therapy. The large organizations have the
infrastructure  established in terms of disease management, but we can
still interact with them and perform a key role in helping them make
decisions through better access to data, utilization, etc.

TWST: As we look out, is there an opportunity to expand the product
offering, just a broader array of products in the marketplace?

Mr. Trimboli: I think the next thing on the horizon that  will impact
all of this is the role genomics will play in disease treatment,
especially in specialty pharmacy. As we get closer to tailoring drugs to
treat a patient specifically based upon the patient's DNA makeup, we're
going to have perhaps one drug therapy that is tailored in three or four
different ways. Those therapies are going to need to be coordinated
through a specialty pharmacy in order to be truly effective.

TWST: Are you positioned to do that today?

Mr. Trimboli: I wouldn't say we are 100% there, but we are positioning
to be there when these changes truly affect the marketplace.

TWST: Given the efforts at cost containment on the medical side, how is
that going to impact you in coming years?

Mr. Trimboli: Actually, this marketplace has been very competitive from
day one. So we always have played an active role in helping
organizations to be more cost-effective. I really don't think there will
be a further deterioration of profits on our side because we have been
very competitive from the beginning.

TWST: How about on your customers as they face increased pressures to
contain costs?

Mr. Trimboli: There are always those pressures. That's why I think
disease management is the next focal point. If we can keep a patient on
therapy rather than in a hospital or an emergency room, that will be a
key component in decreasing cost, and we can play a vital role on that
front.

TWST: You talked about the very strong growth you've seen. Is that
sustainable?

Mr. Trimboli: No, not at the levels at which we saw it initially. We're
going to hope for a growth in the 20%-25% range going forward.

TWST: Do you have the structure in place to support that rather
substantial growth?

Mr. Trimboli: We are very fortunate to have a fairly new facility, a
30,000 square-foot facility, which we moved into in November of 1999. It
gives us the infrastructure we need to expand and take on growth. We've
been fortunate that we've been able to manage our cash flow properly. We
need to as a private company. We're virtually debt-free. We have a
substantial amount of untapped working capital available to us. We're
aligned to make that growth happen.

TWST: Will the growth all be internal, or could you make some
acquisitions to fill out areas?

Mr. Trimboli: We're currently looking at that. We know that growth is
going to come from three different areas. First there is going to be
organic growth just from new products hitting the marketplace with our
current customers. Second, there are going to be continued efforts on
our part to expand our customer base. Third, there may be the
opportunity for a proper acquisition.

TWST: How do you define your customers?

Mr. Trimboli: The way we've approached this has been through the managed
care organizations, HMOs, PPOs, and indemnity plans that are out there.

TWST: As you go in, who are you replacing, as it were?

Mr. Trimboli: Sometimes it depends on where the organization is at the
point in time. When we started a little over three years ago, these
products primarily were distributed by physicians or home healthcare
agencies. We've been able to assist in relieving physicians of the
burden of inventorying product and the infrastructure needed to bill and
seek reimbursement. Most of the growth has come from that market.

TWST: Has this been something that physicians are willing to give up, or
do they view it as a profitable part of their business?

Mr. Trimboli: I think it breaks down by region and even by specialty of
physician. For the most part, physicians are more than willing to give
it up. The number of products, as we mentioned, has multiplied
tremendously, and that presents various problems for the physician, such
as much more inventory and a huge increase in cost of the products. So
it's more of a cash flow issue for an individual physician.  Over time,
we've also seen the decrease in reimbursement because of cost
containment measures. All three factors combined lead to a situation in
which physicians are welcoming a program like this.

TWST: What's the risk here, what could go wrong?

Mr. Trimboli: We've aimed to diversify our payor mix, so that we are not
concentrated in one particular managed care organization or payor. There
are companies in our sector that are highly concentrated, and that
certainly was a concern of ours. We don't want to have all of our eggs
in one basket.

TWST: How big is your biggest customer?

Mr. Trimboli: Probably in the range of about 3 million lives. At this
point, I don't think any one customer is over 20% of our business. The
next thing we wanted to concentrate on, and we did this because of our
focal point of offering all injectable drug products, is a diversified
drug therapy base that we deal with. That minimizes concern of being
concentrated in any one drug that suddenly has a serious competitor or
faces a recall that interferes with that therapy. So, we're not
concentrated from a drug-specific aspect either.

TWST: So you have a broad diversification.

Mr. Trimboli: That's what we tried to do to eliminate or at least to
minimize some of the risks and concerns that we knew were in this
marketplace.

TWST: How profitable can this type of business be?

Mr. Trimboli: We now are looking at profits, EBITDA, in the 7%-8% range.
As I said, it's currently a very competitive market and so I don't think
there is going to be much of a decrease in those percentages.

TWST: Is there an opportunity to enhance the margin over time?

Mr. Trimboli: Definitely. I think there certainly are opportunities to
work more with the pharmaceutical manufacturers in specialized programs
for their particular products. Perhaps over time, we may be looking at
developing programs that increase market share for their products and,
in turn, developing increased margins on that side.

TWST: Do you have the management staff that you need to support all of
this?

Mr. Trimboli: Yes, we're in a solid position there. Most of our staff
has had experience directly in managed care, and we know the landscape.
We know what managed care wants and needs because we've been on that
side of the fence. A few of us were there when the first program was
developed. We know how to develop a program, we know how to run a
program.

TWST: How about from a balance sheet point of view? Do you have the
funds you need?

Mr. Trimboli: Yes. We really are debt-free. We have a nice line of
credit that we have not tapped at this point. Certainly, we would like
to have growth where we need to tap into that credit line. However, the
key in this business is to manage your cash flow and collect on the
revenues that are there. We've done an excellent job getting our days
outstanding down to a very manageable point.

TWST: Where are they today?

Mr. Trimboli: We are slightly under 45 days.

TWST: Is that where you want to be?

Mr. Trimboli: If I had my choice it would be under 15 days, but
realistically, if we can keep it in the 40s we'll be in a good position.

TWST: How have you managed to do that? It's notoriously difficult to
accomplish.

Mr. Trimboli: A number of factors. You have to develop a front-end
process that allows you to bill correctly. Each individual plan is
different. You have to implement programs correctly. You have to know
exactly what the payor is looking for, exactly what they need, make sure
prior authorizations are available or current. There is a lot of front-
end work. The more front-end work you do in this process, the more
successful you are in collecting your money. It's nothing scientific.
It's knowing who your payors are, knowing what they need, making
contacts, following through. It's just a lot of behind-the-scenes work.

TWST: For investors who would be keeping an eye on the company, what can
they use as benchmarks or milestones to judge you?

Mr. Trimboli: We know where we probably need to be in order to even
think about an IPO for VitaRx. We know that we need to be in the $125
million to $150 million range in terms of annual revenues. We're not
going to be there at the end of this year, but long term that's what
we're shooting for.

TWST: Do you have everything you need today to get there?

Mr. Trimboli: As you asked, is an acquisition out of the question?
Absolutely not. That may be something that will help get us to the point
of critical mass to get where we need to be.

TWST: Is there something particular that you would be looking for in an
acquisition?

Mr. Trimboli: If we are interested in any acquisition, we will look for
a company that is closely modeled after or very similar to Vita, a
company that currently has the infrastructure and is collecting its
dollars. As we discussed, that's a very difficult task in this day and
age and in this market. We wouldn't be interested in a company that has
a lot of bad debt.

TWST: So you're not looking to reform someone.

Mr. Trimboli: It's a difficult process. Unless there is enough business
there to wipe away the past debt and go forward, it's very difficult to
walk into an organization and look at claims that are 120, 180 days old
and be confident that you're going to have any success collecting those.

TWST: Is the opportunity you have essentially a domestic one, or is
there some international potential?

Mr. Trimboli: We are really curious about the international market, but
have looked at it only briefly. The concern is, who will be the ultimate
payor? What we do know is that there may be some, what I'll call,
patient cash business available in the international market, especially
in countries where a particular product is not available. Obviously,
there are a lot of issues that have to be sorted out before you reach
into that marketplace.

TWST: But there's enough here to keep you busy for a while.

Mr. Trimboli: There is plenty. We are just scratching the surface, from
a managed care perspective, of the number of companies that need a
structured program, such as the one we offer, and still haven't made a
decision to implement one.

TWST: If you were sitting down with some potential longer-term
investors, what two or three summary reasons would you give them to take
a look at the company today?

Mr. Trimboli: I think we have a great focus. Our strategy of one-stop-
shopping sells well. We have the management expertise to implement
programs and run effectively, and we're virtually debt-free. That's a
sign that we are working hard, we are collecting our dollars, and from
an investment standpoint, that's certainly a win.

TWST: Thank you. (TM)

ANTHONY TRIMBOLI
 President & CEO
 VitaRx
 5712 Jarvis Street
 Harahan, LA 70123
 (888) 456-7274
 (888) 591-8482 - FAX
 www.vitarx.com
 e-mail: info@vitarx.com

Each Executive who is the featured subject of a TWST Interview is
offered the opportunity to include an Investor's Brief or other
highlight material to be provided and sponsored by and for the company.
This Interview with Anthony Trimboli, President & CEO of VitaRx, is
accompanied by an Investors Brief containing corporate information.

Copyright 2001 The Wall Street Transcript Corporation
All Rights Reserved


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