Diabetes Drug Drives Firm's Success

July 29, 2008 - Halifax, NS - The Chronicle Herald - When Bob Cervelli talks about his company, he says he's "amazed" at how things have developed over the past several years. Cervelli is the founder and president of Origin BioMed, a Halifax pharmaceutical company experiencing significant growth in the over-the-counter market across North America.

When Cervelli launched Origin in 2001, it was a virtual company.

"We had one desk, one phone, one computer and a couple of part-time employees," he says. "Our first angel investor, a compounding pharmacist from Chicago, sent us a cheque for $100,000 and we were on our way."

The journey from this modest beginning to a thriving company that's marketing to major drugstore chains in Canada and the United States is an interesting example of how life sciences businesses grow in Nova Scotia.

Cervelli, who had experience in the biotechnology industry and in raising capital, started off with a business model based on the realities of the region, one that had low overhead costs and opportunities for near-term revenues, and would be attractive to angel investors. He had been building a "radar screen" of opportunities to license technologies with existing patents that could be commercialized without significant regulatory hurdles and were validated by good science. He built Origin on several botanical compounds that met his criteria.

For the next several years, Origin faced lean times, like most start-ups. Through hard work and a lot of travelling, Cervelli was able to attract more angel investors. This allowed him to start manufacturing several natural health products, get through Canadian regulatory approvals and head into the marketplace. Sales started trickling in through the company's website and natural health food stores, but Cervelli knew that the drugstore market was where the company would make or break it.

The opportunity to get onto drugstore shelves came about as the marked increase in the number of people living with diabetes, which has led drugstores to create dedicated space for products to treat the disease. One of Origin's products, Neuragen, had proven to be effective in relieving neuropathy, a chronic, intractable pain experienced by most diabetics. So it was relatively easy to get shelf space.

The first significant order was for an Ontario chain of 15 stores that ordered $5,000 of product. From there, Neuragen made its way to larger chains and finally into Shoppers Drug Mart nationwide. Armed with this success, Origin opened an office in New York last fall to ease the foray into the all-important American market. Less than a year later, Neuragen is on the shelves of CVS and Rite-Aid, two of the top three American drugstore chains. Cervelli and Wayne Miller, his vice-president, sales and marketing, are meeting next month with Walgreens, the other chain. Sales have been increasing by 250 to 300 per cent annually, and projections for this year indicate the trend is continuing.

The "amazing" success of Neuragen has changed Origin. First of all, the company had to focus all of its attention on building the market for it, thus leaving its other products, such as a cold sore remedy and a line of green tea merchandise, on their own. Additional investment was needed, so Cervelli was back in the road. In addition to more from the angels who have stood by from the beginning, Origin was able to attract a $3.8-million venture capital deal in 2007 that involved a Calgary firm and Nova Scotia Business Inc. Cervelli indicates that a new round has attracted even more than that in 2008.

And new skills were required. Loyal employees who had built the company alongside its founder were joined by industry-savvy advisers and staff. There are now more than 35 employees.

Origin is looking to the future with optimism. With money to invest in research and development, new products are in the pipeline and patent applications are being made. Foreign markets are being investigated. Marketing personnel are looking at everything from packaging to new Neuragen-based products. While neuropathic pain is typical in diabetics, nerve pain can be caused by accidents, surgery, even chemotherapy, so the potential market for a product that relieves this chronic suffering is substantial. And advertising is being placed where the aging population gets its information, from the Globe and Mail to Reader's Digest to the magazine of the American Association of Retired Persons, which has a circulation of 22 million.

Cervelli credits his employees, "an incredible bunch that just keeps on working regardless of the obstacles," for Origin's success, along with committed investors (including the original pharmacist from Chicago, who's still investing) and, of course, satisfied customers. Users have talked about how Neuragen has improved their quality of life, and these reminders serve as inspiration for everyone connected with Origin. It's worth noting that percentage of Neuragen sales is contributed to organizations that help people with chronic pain.

Origin's story is a great reminder of how small Nova Scotia companies can overcome significant hurdles to play on the world stage. Vision, an innovative approach to financing, top quality products validated by science and high- energy, dedicated employees are a prescription for success in the life sciences industry.

( business@herald.ca)

BioBusiness Matters is a monthly column contributed by BioNova, the Nova Scotia biotechnology and life sciences industry association.

NEWS | ABOUT | TEAM | INVESTMENT CRITERIA | PORTFOLIO | CONTACT




Diabetes Drug Drives Firm's Success

July 29, 2008 - Halifax, NS - The Chronicle Herald - When Bob Cervelli talks about his company, he says he's "amazed" at how things have developed over the past several years. Cervelli is the founder and president of Origin BioMed, a Halifax pharmaceutical company experiencing significant growth in the over-the-counter market across North America.

When Cervelli launched Origin in 2001, it was a virtual company.

"We had one desk, one phone, one computer and a couple of part-time employees," he says. "Our first angel investor, a compounding pharmacist from Chicago, sent us a cheque for $100,000 and we were on our way."

The journey from this modest beginning to a thriving company that's marketing to major drugstore chains in Canada and the United States is an interesting example of how life sciences businesses grow in Nova Scotia.

Cervelli, who had experience in the biotechnology industry and in raising capital, started off with a business model based on the realities of the region, one that had low overhead costs and opportunities for near-term revenues, and would be attractive to angel investors. He had been building a "radar screen" of opportunities to license technologies with existing patents that could be commercialized without significant regulatory hurdles and were validated by good science. He built Origin on several botanical compounds that met his criteria.

For the next several years, Origin faced lean times, like most start-ups. Through hard work and a lot of travelling, Cervelli was able to attract more angel investors. This allowed him to start manufacturing several natural health products, get through Canadian regulatory approvals and head into the marketplace. Sales started trickling in through the company's website and natural health food stores, but Cervelli knew that the drugstore market was where the company would make or break it.

The opportunity to get onto drugstore shelves came about as the marked increase in the number of people living with diabetes, which has led drugstores to create dedicated space for products to treat the disease. One of Origin's products, Neuragen, had proven to be effective in relieving neuropathy, a chronic, intractable pain experienced by most diabetics. So it was relatively easy to get shelf space.

The first significant order was for an Ontario chain of 15 stores that ordered $5,000 of product. From there, Neuragen made its way to larger chains and finally into Shoppers Drug Mart nationwide. Armed with this success, Origin opened an office in New York last fall to ease the foray into the all-important American market. Less than a year later, Neuragen is on the shelves of CVS and Rite-Aid, two of the top three American drugstore chains. Cervelli and Wayne Miller, his vice-president, sales and marketing, are meeting next month with Walgreens, the other chain. Sales have been increasing by 250 to 300 per cent annually, and projections for this year indicate the trend is continuing.

The "amazing" success of Neuragen has changed Origin. First of all, the company had to focus all of its attention on building the market for it, thus leaving its other products, such as a cold sore remedy and a line of green tea merchandise, on their own. Additional investment was needed, so Cervelli was back in the road. In addition to more from the angels who have stood by from the beginning, Origin was able to attract a $3.8-million venture capital deal in 2007 that involved a Calgary firm and Nova Scotia Business Inc. Cervelli indicates that a new round has attracted even more than that in 2008.

And new skills were required. Loyal employees who had built the company alongside its founder were joined by industry-savvy advisers and staff. There are now more than 35 employees.

Origin is looking to the future with optimism. With money to invest in research and development, new products are in the pipeline and patent applications are being made. Foreign markets are being investigated. Marketing personnel are looking at everything from packaging to new Neuragen-based products. While neuropathic pain is typical in diabetics, nerve pain can be caused by accidents, surgery, even chemotherapy, so the potential market for a product that relieves this chronic suffering is substantial. And advertising is being placed where the aging population gets its information, from the Globe and Mail to Reader's Digest to the magazine of the American Association of Retired Persons, which has a circulation of 22 million.

Cervelli credits his employees, "an incredible bunch that just keeps on working regardless of the obstacles," for Origin's success, along with committed investors (including the original pharmacist from Chicago, who's still investing) and, of course, satisfied customers. Users have talked about how Neuragen has improved their quality of life, and these reminders serve as inspiration for everyone connected with Origin. It's worth noting that percentage of Neuragen sales is contributed to organizations that help people with chronic pain.

Origin's story is a great reminder of how small Nova Scotia companies can overcome significant hurdles to play on the world stage. Vision, an innovative approach to financing, top quality products validated by science and high- energy, dedicated employees are a prescription for success in the life sciences industry.

( business@herald.ca)

BioBusiness Matters is a monthly column contributed by BioNova, the Nova Scotia biotechnology and life sciences industry association.