Terren Peizer

Terren S. Peizer (born 1959) is an American investor and business executive. He is currently Chairman and CEO of Hythiam, Inc., a public company offering the Prometa treatment program for drug and alcohol addiction. Earlier in his career Peizer was a bond salesman with Drexel Burnham Lambert in the 1980s, and helped provide information that led to the conviction of Michael Milken during the government's crackdown on insider trading.

Peizer was raised in Beachwood, Ohio, a suburb of Cleveland. He graduated from the University of Pennsylvania Wharton School of Economics. Kelly, Michael. “Racers’ Owner Given Immunity.” "Omaha World-Herald", February 25, 1990. ]

Drexel Burnham Lambert

Peizer began his career as a bond trader in the Beverly Hills office of Drexel Burnham Lambert, where he worked under Michael Milken. At the X-shaped trading desk that would become a symbol of the office in media accounts, he sat at Milken's left elbow. Peizer later attributed his public image to this fact, saying, "If I'd been one seat over from Milken, this would all be different".cite news|url=http://www.forbes.com//forbes/1999/0906/6405054a.html |last=Lubove |first=Seth |title=Small world, ain't it? |work=Forbes |date=September 6, 1999 |accessdate=2008-08-21]

When Milken was sued by the Securities and Exchange Commission over his practices in running the high-yield "junk" bond department, Peizer was one of the employees who ultimately cooperated with the government. After receiving a subpoena, he negotiated an agreement with federal prosecutors in December 1988 to testify in exchange for immunity from prosecution, helping lead to Milken's criminal indictment in March 1989. cite news |url=http://query.nytimes.com/gst/fullpage.html?res=940DE5D7133EF933A25751C1A96E948260&scp=4&sq=%22Terren+Peizer%22&st=nyt |last=Labaton |first=Stephen |title=4th Drexel Employee in Immunity Bargain |date=December 10, 1988 |work=New York Times |accessdate=2008-08-20] cite news |last=Paltrow |first=Scot J. |title=Fourth Drexel Worker Makes Deal With U.S. |work=Los Angeles Times |page=2 |date=December 10, 1988 |accessdate=2008-08-22] Two weeks after this agreement, Peizer was placed on an indefinite leave of absence for unknown reasons, although a Drexel spokesman said the company informed the government of its reasons. "The New York Times" reported that Peizer had declined to meet with Drexel attorneys, while the "Los Angeles Times" recounted an angry scene between Peizer and a supervisor.cite news |title=Drexel Talks With S.E.C. |work=New York Times |date=December 24, 1988 |accessdate=2008-08-22] cite news |last=Paltrow |first=Scot J. |coauthors=Douglas Frantz |title=Informant Disciplined as Anger Splits Milken Team |work=Los Angeles Times |date=December 24, 1988 |accessdate=2008-08-22] Peizer's lawyer complained to the company and the government about this treatment.cite news |url=http://pqasb.pqarchiver.com/washingtonpost/access/73652800.html?dids=73652800:73652800&FMT=ABS&FMTS=ABS:FT&date=Dec+24%2C+1988&author=David+A.+Vise%3BSteve+Coll&pub=The+Washington+Post+(pre-1997+Fulltext)&edition=&startpage=d.07&desc=Drexel+Puts+Employee+Aiding+Prosecutors+on+Leave+of+Absence |last=Vise |first=David A. |coauthors=Steve Coll |title=Drexel Puts Employee Aiding Prosecutors on Leave of Absence |work=Washington Post |page=D7 |date=December 24, 1988 |accessdate=2008-08-20] Investigators then demanded that Drexel explain its plans for Peizer and another suspended employee, given the appearance that it might be retaliation for their cooperation.cite news |last=Vise |first=David A. |coauthors=Steve Coll |title=Investigators Order Drexel To Justify Worker Treatment |work=Washington Post |page=A8 |date=January 16, 1989 |accessdate=2008-08-20] Drexel finally allowed Peizer to return to work in February 1989, but gave him a different job.cite news |title=Drexel Says Its Suspensions Of 2 Employees Will End |work=Wall Street Journal |page=1 |date=January 31, 1989 |accessdate=2008-08-20]

Since Milken ultimately pled guilty, Peizer's testimony in court came during an October 1990 pre-sentencing hearing. He testified about offering money manager David Solomon equity warrants in Storer Broadcasting, at Milken's suggestion, as an incentive to buy riskier preferred stock in the company, which helped facilitate the Drexel-financed leveraged buyout of Storer. However, Peizer declined to support the government's contention that this amounted to a personal bribe, and said he was not aware until later that Solomon had kept the warrants instead of passing them through to his investors.cite news |last=Paltrow |first=Scot J. |title=Milken's Former Boss May Testify |work=Los Angeles Times |page=2 |date=October 20, 1990 |accessdate=2008-08-22]

Investing career

By this time Peizer had left failing Drexel, but he stayed in the financial business as CEO of his own investment company, first called Financial Group Holdings and later Beachwood Financial. He provided venture capital to emerging companies and frequently sat on their boards. By 1994, he claimed a net worth over $50 million.cite news |last=Lee |first=Patrick |title=In the Shadow of the '80s Yesterday's High Rollers Struggle in a New Era of Sobriety |work=Los Angeles Times |page=1 |date=July 31, 1994 |accessdate=2008-08-20] Among others, Peizer was chairman of tire company Urethane Technologies, footwear marketer Millfeld Trading (succeeding founder Barry Feldstein in July 1991), and computer supplies firm CMS Enhancements (replacing founder Jamshed Farooquee in December 1993).cite news |title=Millfeld's Feldstein Resigns Chairman Post |work=Wall Street Journal |page=B2 |date=July 16, 1991 |accessdate=2008-08-20] cite news |last=Gomez |first=James M. |title=CMS Enhancements Names New Top Management Team |work=Los Angeles Times |page=3 |date=December 10, 1993 |accessdate=2008-08-20] In a bit of a sideline, Peizer was also briefly the owner of the Omaha Racers franchise in the Continental Basketball Association.Fact|date=August 2008

Some of these ventures were ultimately unsuccessful. Advanced Promotion Technologies, which focused on coupon machines for use in checkout lines, failed in 1996 after Peizer pulled out. With Urethane Technologies, Peizer acquired a majority ownership stake in the company, which sold bicycle tires billed as being puncture-resistant. He later unloaded his investment at a profit, but the company went bankrupt in 1997. Peizer blamed the failure on management after his departure. Another shoe company, Candie's, was more profitable. Despite the mixed performance of these companies, Peizer said he made money on nearly all of his investments.citenews|url=http://query.nytimes.com/gst/fullpage.html?res=980CE4D7163FF934A25751C0A96E958260 |title=Market Place; No Sales, but Watch the Stock Soar |last=Eaton |first=Leslie |date=February 17, 1998 |work=New York Times |page=D5 |accessdate=2008-08-20]

In 1997, Peizer became president of Hollis-Eden Pharmaceuticals, a company working to develop drugs for AIDS treatment. By the next year, Hollis-Eden's stock had gone up 170%, but it had yet to begin clinical trials. Peizer suddenly resigned his positions with the company in March 1999 without explanation, prompting a drop in the stock and speculation about infighting with company founder Richard Hollis. "Forbes" later reported on connections between Hollis and Milken associates, one of whom was brought on board after Peizer's departure, having refused to serve while he remained with the company.

Peizer moved on to Clearant, founded in 1999, a company that patented a pathogen inactivation technology to prevent infectious disease transmission. He served as its CEO and chairman until 2003. citenews|url=http://www.accessmylibrary.com/coms2/summary_0286-25000178_ITM|title=L.A. venture deals slump at year-end|publisher=Los Angeles Business Journal|date=January 28, 2008|author=Palazzo, Anthony] “Clearant Names President, CEO.” "Los Angeles Business Journal," October 13, 2003.] Meanwhile, he bought 10% of Tera Computer, which in turn bought the business unit of Cray Research from Silicon Graphics in 2000. The company adopted the name of Cray Inc. with Peizer as chairman, although he left the post in December due to an inability to obtain a security clearance related to its government contracts. He remained a substantial investor in the company.citenews |url=http://today.msnbc.msn.com/id/15310599/ |title=Unproven meth, cocaine ‘remedy’ hits market — Researchers debate quick fix: Is it good medicine or just marketing? |last=Huus |first=Kari |date=February 5, 2007 |work=MSNBC.com |accessdate=2008-08-21] Since August 2006, Peizer has also served as chairman of the board of Xcorporeal, Inc., a developer of congestive heart failure treatment products, wearable artificial kidney, and other medical devices.Fact|date=August 2008

Hythiam and Prometa

In 2003, Peizer founded Hythiam as an investment to build on the research of Spanish psychologist Juan Jose Legarda with $150 million in capital.cite news |last=Ramshaw |first=Emily |title=Texas' Prometa program for treating meth addicts draws skeptics |work=Dallas Morning News |date=January 20, 2008 |accessdate=2008-08-22] Legarda had developed a therapy combining three medications as a treatment for substance abuse, which became known as the Prometa treatment protocol. Hythiam bought the rights to this therapy from Legarda and began marketing it to clinics, although its effectiveness had yet to be proven. The medications involved have FDA approval, allowing physicians to prescribe them legally, but combining them for addiction treatment is different from the purposes for which they were approved.

Peizer used a reverse merger to get Hythiam listed on the NASDAQ stock exchange, a technique he had previously used with Hollis-Eden as well. As of 2007, he owned 35% of the company. Hythiam's business model involves licensing Prometa to treatment providers, and the costs for outpatient treatment range from $12,000 to $15,000. Peizer told the "Los Angeles Times" that discounts could be available through health insurance, Medicaid, or the criminal justice system, although insurers have yet to cover the treatment.cite news |last=Roan |first=Shari |title=Addiction treatment, novel but unproved; Prometa's promoters point to anecdotal success. But critics want to see hard numbers |work=Los Angeles Times |page=F1 |date=October 9, 2006 |accessdate=2008-08-20] Hythiam claims about 2,500 private patients have gone through the treatment, either with physicians who have licensed it from the company, or at one of the four Prometa centers Hythiam itself operates.citenews |url=http://www.msnbc.msn.com/id/22315918/ |title=Setbacks plague drug addiction remedy: Prometa pilot program loses funding amid questions over effectiveness |last=Huus |first=Kari |date=January 11, 2008 |work=MSNBC.com |accessdate=2008-08-22]

Hythiam gained some notice for its 2006 ad campaign featuring deceased comedian Chris Farley, with the slogan, "It wasn't all his fault" (alluding to his death from a drug overdose). The company paid $25,000 to Farley's estate in order to use his image.citenews |title=Farley’s photo to be used on drug treatment ads: Family gives approval to use image of star who died of overdose |date=April 1, 2006 |work=Associated Press |accessdate=2008-08-21] Despite questions about its tastefulness, and criticism from addiction treatment providers for advertising direct to consumers, Peizer defended the campaign as "creating awareness" about addiction as a disease.

Other critics focused on the company's emphasis on sales over research that would establish the validity of Prometa, especially since the FDA restricts marketing of drugs to the purpose for which they have been approved. Peizer justified the company's approach in a "60 Minutes" investigation as providing information about the treatment protocol to physicians, since Hythiam does not market the medications directly.cite news |date=December 9, 2007 |url=http://www.cbsnews.com/stories/2007/12/07/60minutes/main3590535.shtml |title=Prescription For Addiction |work=60 Minutes |publisher=CBS News |accessdate=2008-08-22] Meanwhile, efforts to get Prometa adopted in drug court programs around the country found officials reluctant due the lack of scientific backing. Hythiam experienced a setback when Pierce County, Washington, suspended a trial program after an audit indicated Hythiam had worked with the administering agency to exaggerate results. Local officials also admitted they had bought stock in the company, and the stock's value declined dramatically as these reports were coming out, dropping the value of Peizer's ownership stake by over $75 million.cite news |date=December 23, 2007 |last=Robinson |first=Sean |title=Data show mixed value of Prometa |work=The News Tribune |accessdate=2008-08-26]

References