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