Paladin Labs founder finds a new Knight
Pharmaceutical company takes root in Westmount
Entrepreneurs Jonathan Goodman and Mark Beaudet built Paladin Labs Inc. from zero into a $3.2-billion international pharmaceuticals distributor in only 19 years.
Now Goodman, chairman of Paladin Labs when it was sold to Pennsylvania-based Endo Health Solutions Inc. on Feb. 28, has founded Knight Therapeutics Inc. in Montreal.
“Knight won’t rest until it’s at least as successful as Paladin Labs,” he declared Friday, taking a brief respite from organizing Knight’s new Westmount headquarters.
“And hopefully, it won’t take so long this time to reach that achievement despite rising competition,” Goodman added. “Remember that $1.50 invested in Paladin Labs at its founding in 1995 was worth $150 when the company was finally sold to Endo for cash and stock in a friendly deal.”
Knight, originally a Paladin Labs subsidiary, which spun out in the Endo takeover to existing Paladin shareholders, has raised $255 million in equity capital and began trading on the TSX Venture Exchange in early March.
“That’s more than twice what we had expected to raise in two issues of special warrants and the phone’s still ringing,” Goodman said. “It includes my own $65-million commitment to Knight’s future success ... that gives me one-third ownership.”
Knight already has one new specialized drug approved by U.S. regulators for distribution in 16 countries, including the U.S. It has also developed a wish list of other products that could be in-licensed (drugs acquired from others) for distribution in Canada. Goodman would not identify any of them. “Sometimes it’s better to be lucky than smart in this game,” he said.
“Canada will remain a focus, but ultimately Knight will aim at growth markets outside North America, including parts of Latin America and Africa, following Paladin Labs’ track,” said Goodman. “But don’t expect Knight to enter the viciously competitive U.S. market.”
He shares the challenge of setting up Knight’s HQ with CFO Jeff Kadanoff. Beaudet, the marketing ace he met when working for Procter & Gamble Canada in Toronto in 1995 and co-founder of Paladin, has become president of the continuing Paladin Division of Endo, a large international drug distributor. The division continues to be operated from Montreal.
But Beaudet has joined Knight’s board along with several former Paladin directors.
“First step is to complete the Westmount HQ and start negotiating for in-licensing candidates and partnerships,” said Goodman. The second step will be building up our specialized team.”
Knight “won’t poach people from Endo’s new Paladin division ... that wouldn’t be right. ... And anyway, there’s plenty of talent available in Montreal after the lengthy decline of the province’s biotech and biopharma industries,” he added.
But Knight will adopt some of Paladin Labs’ key watchwords, such as “Limit risk and promote growth” and “Search, acquire and commercialize.” Goodman originated them and they fit today’s market conditions.
Goodman, 46, a fitness buff, said he has made an excellent recovery from his cycling accident in the Laurentians on Aug. 17, 2011. He holds economics, business and law degrees from McGill University and the London School of Economics, and co-founded Paladin Labs with Beaudet when he was 26.
He was Paladin’s CEO from the start, with Beaudet vicepresident of sales and marketing. After the accident, Goodman became chairman and Beaudet took over active leadership as interim CEO.
Paladin Labs developed consistently as a specialty pharma company and an early success was the Plan B emergency contraceptive in-licensed from a small U.S. firm.
It added a variety of painkiller, urology and allergy products, bringing its port- folio to more than 40. Paladin Labs always outsourced production and focused on distribution. It never got into basic research.
There were setbacks, too. In 2011, Paladin offered to buy Edmonton’s Afexa Life Sciences Inc. and its ColdFX flu treatment for $57 million, but was finally outbid by Valeant Pharmaceuticals International Inc.
“We were negotiating that and acquisition of Montreal’s Labopharm Inc. when the accident occurred and I was in a coma,” said Goodman. “Beaudet took over and finally we were not unhappy with the Afexa outcome since we pocketed a $10-million break fee.”
A week ago, Knight announced U.S. Food and Drug Administration approval for Impavido, a drug to treat sandfly bite infections incurred sometimes by soldiers returning from Iraq and Afghanistan.
“Developing Paladin Labs provided specialized training and at least 100 permanent jobs in Quebec, besides an excellent return to shareholders,” said Goodman. “Knight can do it again, only faster, and hopefully contribute to the recovery of Quebec’s depressed biotech industry.”
Goodman’s brother David, who holds a doctorate in pharmacology, is CEO of Pharmascience Inc., Quebec’s biggest life sciences company and the third-largest generic drug group in Canada.
It was co-founded by their father Morris Goodman during the early 1980s.