SFBC Parts With Miami Chief

SFBC (SFCC Quote), a company that tests drugs for others, has learned a little something about the safety and efficacy of its own operations.

In a nutshell, SFBC's early clinical trial business in Miami seemed to cause more harm than good. The company has by now started closing that once-lucrative business and, this week, severed ties with the remaining leader of that operation. Gregory Holmes, a board-certified pharmacologist who once lent some measure of credibility to the unit, has now followed his disgraced bosses out the door.

Holmes had technically been serving as president of corporate development for the entire company, but he had spent most of his time attempting -- in vain -- to turn the Miami division around. He was the last remaining holdover who, together with SFBC's ousted CEO and president, used to run the show before a Bloomberg expose raised grave safety concerns about the Miami division.

Baird analyst Eric Coldwell celebrated Holmes' exit on Tuesday.

"Certain of our interactions with Dr. Holmes caused us concern, including his response to detailed questions at various times in 2005," writes Coldwell, whose firm hopes to secure investment banking business from SFBC over the next three months. So "given less-than-positive past experiences with this executive -- and his role in building legacy operations -- we view the departure as positive to SFCC's remediation efforts and the company's attempt to rebuild credibility, though we remain on the sidelines with a neutral rating" for now.

Investors expressed some relief as well, pushing the company's stock up 2% to $14.54 Tuesday. Still, the stock continues to trade near the bottom of its 52-week range of $12.38 to $45.73.

Meanwhile, bearish investors -- who have sold 63% of the company's available stock short -- questioned even measured enthusiasm in response to the latest news.