Biden aide calls Bucks firm a model for worker-owners

Jared Bernstein, a top economic adviser to President-elect Joe Biden, is citing the example of New Age Industries’ 135-worker Bucks County plant in urging Americans to set up more employee stock ownership plans (ESOPs), which enjoy tax advantages over for-profit companies.

In a report that Bernstein recently wrote for an ESOP trade group, he uses New Age Industries in Southampton as a case study. The article details how Ken Baker sold his family-founded company in Southampton to staffers in stages between 2006 and 2019. The company makes AdvantaPure, BrewSavor and Vergenics tubing.

It is now 100% employee-owned, unlike some larger area-based ESOPs such as those at W.L. Gore & Co. a maker of plastic products, and Wawa, where founding families have kept control but workers can accumulate shares to help fund retirement.

Baker says the internal value of New Age’s ESOP shares is up tenfold since the ESOP started in 2006, more than triple the rise in the S&P 500.

In his 17-page article, Bernstein said the tax incentives to create ESOPs were already potent and need no sweetening. He says the main factor slowing adoption was a simple lack of information about ESOPs and the absence of an expert “bench” to provide advice.

Worker-owned companies are popular among small manufacturers and professional-service firms in engineering, insurance and other areas. Advocates see them as a worker-led, or at least a worker-equity, alternative to familiar investor capitalism.

Bernstein is a senior fellow at the liberal Center on Budget and Policy Priorities. During Barack Obama’s first presidential term, he was chief economist for Biden, who then was vice president. Last month, Biden named him to the White House’s Council of Economic Advisors.

Magellan Health, the big U.S. provider of drugs and mental-health services, has led a $20 million investment (with others) in NeuroFlow, a Philadelphia company whose software helps doctors, hospitals, governments, and insurers track patient conditions and treatments.

NeuroFlow employs 60 workers, some on contract. With the new funding, it plans to hire 40 more this year, according to chief executive Chris Molaro, a West Point graduate and Iraq veteran who began planning the company with cofounder Adam Pardes when they were grad students at Penn (Molaro for the Wharton MBA he got, Pardes for the bioengineering Ph.D. he got distracted away from.)

They founded the company in 2016. Early backers include the state-funded Ben Franklin Technology Partners of Southeastern Pennsylvania; the start-up-focused Red and Blue Ventures, founded by Penn alumni to invest in Penn-related businesses; and Philadelphia-based DreamIt Ventures. Its early funders included Builders VC in San Francisco.

Molaro said the service is used by 200 hospitals and other health-care providers, ranging from Jefferson Health to the Air Force. About 118,000 health professionals run the software to look after 330,000 patients, up tenfold in a year.

On Jan. 6, Magellan agreed to be sold to health insurer Centene Corp. in a $2.2 billion deal.

Chimerix, a publicly traded cancer-drug developer based in Durham, N.C., last week agreed to pay $78 million, half in cash and half in stock, to purchase Philadelphia-based Oncoceutics, which has been developing a cure for recurrent glioma, a brain cancer that usually kills patients in less than a year.

Oncoceutics, which employs 20, is developing a clinical trial for its lead drug candidate, ONC201. Gliomas generally are “one of the highest areas of unmet need” in fighting cancer, and no pill already on the market treats H3 K27M-mutant recurrent glioma, the particular condition the drug is designed to treat, Chimerix CEO Mike Sherman said in a statement.

“We are thrilled to join the Chimerix team,” said Lee Schalop, a former stock analyst who cofounded Oncoceutics in 2009 and took over as CEO in April. The cofounders include cancer doctors Wafik El-Deiry, of Brown University, and Wolfgang Oster. Oster stepped down as Oncoceutics CEO in April and has started Ambler-based Virus Abatement Corp.

The sellers included Oncoceutics’ lead investor, Spring Mountain Capital, of New York. Philadelphia law firm Morgan Lewis advised Oncoceutics in the sale.