To hear Anthony Giovinazzo tell it, a successful entrepreneur needs qualities akin to those of a US Marine: tenacity, courage, perseverance, resilience under extreme pressure and the ability to adapt to circumstances, combined with empathy, humility and hard work.
Giovinazzo, a Canadian who over the past 40 years has worked in tax, finance and pharmaceuticals, speaks with some authority. In 2016, he sold Cynapsus Therapeutics, the drugs company he built over nine long years with a handful of colleagues, to a leading Japanese counterpart for C$841 million (US $684m) – all cash upfront.
Pitched at a 120% premium, the deal marked the end of a struggle to turn belief in a ground-breaking treatment from dream to reality. Among the obstacles were painstaking scientific validation, acquiring manufacturing proficiency and securing regulatory approval, along with regular battles to prevent the company from going under.
“It was a combination of persistence and perseverance, but also listening to what other people were saying. We believed in the technology, even when others were dubious. The stamina and mental fortitude required were not for the faint hearted,” recalls Giovinazzo in a Zoom call from his office in Toronto.
An IMD MBA graduate of 1986, Giovinazzo continued to spend time in pharmaceuticals venture capital, but always wanted to have his own company rather than accept a safer niche as an executive in an established group.
“IMD helped me look at business from an international perspective,” he said. “The MBA provided leadership paradigms along with insights into vision and strategy, as well as the importance of mapping financial strategy with business strategy and performance milestones.”
Fascinated by chemistry since childhood, Giovinazzo put his expertise to bear on apomorphine, an off-patent drug (unrelated to the like sounding painkiller) that had been tested for various ailments. He and his colleagues were convinced the product could address an unmet need among sufferers of Parkinson’s Disease, who regularly experienced so called ‘off’ episodes, when the signals to the brain are interrupted and their muscles would become stiff and hard to move.
Apomorphine’s efficacy was known, but the drug had serious drawbacks. Very high acidity meant it could be administered only by injection – risking painful and disfiguring boil-like ‘nodules’ wherever the needle penetrated. Many patients also reported nausea. And any delivery system had to ensure swift uptake in the brain, as ‘off’ episodes came unannounced and could occur as often as five times a day.
We believed in the technology, even when others were dubious. The stamina and mental fortitude required were not for the faint hearted.
Cynapsus’s breakthrough was to harness an alternative route to administration – a thin, dual layered film placed under the tongue – to deliver the drug safely and overcome latency. But while simple on paper, the transition from lab bench to reality was everything but easy.
To some extent, the innovation came through repackaging existing knowledge – an old active ingredient and a partly developed delivery method – to create a new, more effective, and easy to use medicine – in effect, an entirely new value proposition.
“But the chemistry was extremely complex. Then there were patent issues. And we had to be certain there was a real market,” said Giovinazzo. “We conducted surveys into the frequency and severity of ‘off’ episodes. Even once sure about the need, there were psychological barriers among caregivers, not to mention the patients who bore injection scars across their bodies. Hence there was some reticence to use the drug.”
Drama was foretold. Giovinazzo’s career had provided valuable contacts in finance and pharmaceuticals. But raising money was a battle, especially at the start. Among his hair raising episodes was a dash to secure funds hours before a loan fell due. “Raising capital was very difficult in the early days,” he recalled.
Often, that involved bootstrapping and tapping unconventional sources by industry standards. “The first three years involved 22 financings, raising anything from C$50,000 to C$1.5 million. In 2011 and 2012, respectively, we had two US$20 million financings fail.” he said.
It took six years of attrition to verify the sublingual strip worked and convince the medical establishment of the need to be filled. Three more went on gathering late stage clinical trial data, securing analyst coverage and overseeing a transition to the main board of the Toronto stock exchange, and then an uplisting to the NASDAQ through a tier one syndicate led by Bank of America.
Then came the issue of what to do once apomorphine had proved its worth. “We’d always had a dual track approach: trade sale or developing a commercial arm for the company,” said Giovinazzo. Both had merits. “We were ready to go ahead and raise additional capital, in tranches of C$200-300 million a time, to commercialise the product.”
On the other hand, big pharma companies were hungry to pay top dollar for proven drugs in late stage development to supplement their own research and fill their pipelines. “I’d always assumed that, in the final years, I’d be reaching out to potential acquirers. It was very time consuming and many team members were frustrated about the extra effort involved.”
In the end, Cynapsus opted for a trade sale. “It is very difficult to build a fully integrated pharmaceuticals company, he said. “You need a sales force, regulatory expertise, and there’s huge execution risk.”
“Your salespeople want to have more than one product in their bags when visiting doctors. But it’s very hard to find more; you’re really head on with big pharma. I had extensive conversations with all my contacts and they stressed how hard it was. It’s difficult being just a one product company.”
Hence the decision to sell. “Mitigating risk was a key part of my strategy.”
Apomorphine, now branded as Kynmobi, is on sale in the US, though approval in Europe and Japan has yet to come. Uptake has been relatively slow, partly because of the continuing need to educate doctors and caregivers about the benefits – all suggesting the decision to retreat was the right call at the right time.
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