By: Scott Nishimura
By: Scott Nishimura
As a business development executive for Galderma, a Fort Worth pharmaceuticals company, Art Clapp was a drug seeker, spending a lot of time looking worldwide for products to license and develop. “I was looking for drugs all over the world,” he jokes dryly. At one point, Clapp even lived in Paris for five years, spending his free time flying an airplane he owned across Europe.
Funny thing then, that Clapp, 58, who retired from Galderma at age 55 after two decades with the company to look for an entrepreneurial project, ended up developing his own product. Clapp expects to go to market in October with an over-the-counter topical treatment – a cream – for psoriasis, a painful, chronic skin condition. There are other treatments on the market for psoriasis, but Clapp says his treats the symptoms and underlying condition to keep it from coming back. “There’s no good treatments today,” he says.
Clapp, CEO of the startup he founded, NuvoThera, has completed product development and now is in pre-launch, working with a contract manufacturer in Carrollton to make his treatment, called Prosoria. In February, he closed his first round of fundraising, declining to say how much he raised, that included investments by eight members of the Cowtown Angels angel group.
Clapp plans initially to sell the product through online channels like Amazon.com, dermstore.com and the company’s website. He’ll target dermatologists for referrals. Then he’ll move to retail, looking to get Prosoria into large drugstores like Walgreen’s and CVS and mass merchandisers like Walmart and Target.
The initial product line is a three-product kit that includes an anti-microbial gel, treatment gel, and exfoliating moisturizer.
Clapp estimates the U.S. psoriasis treatment market at more than $7 billion annually, with more than 7.5 million sufferers and growing 3-4 percent per year. Worldwide, psoriasis has 125 million sufferers. Clapp cites American Academy of Dermatology figures showing more than 85 percent of patients report their psoriasis symptoms are not well controlled with current therapies. Clapp hasn’t disclosed his pricing yet, but he expects to be able to price strongly.
“The psoriasis market is a well-priced market,” he says. “People will pay more to control their condition because of its severity. It used to be thought of as leprosy. Not only do they have to deal with the disease, they have to deal with people looking at it. The more nervous they get, the more it flares.”
When Clapp, a Floridian who has undergraduate degrees in biology and biochemistry from the University of South Florida and an MBA from TCU, started to develop the psoriasis treatment and look for a path to bringing the medication to market, he started down the path of botanicals, because those ingredients are already generally considered safe by the federal Food & Drug Administration.
“That’s still the pathway,” Clapp says, but he included some ingredients that appear on the FDA’s “OTC Monograph,” a list of approved ingredients that appear in other treatments on the market. The goal in combining the ingredients is to “get them to work together and work additively,” he says.
Prosoria controls skin scaling and inflammation, and the anti-microbial kills bacteria and fungus that can trigger frequent flare-ups, he said. In human trials, NuvoThera saw results in patients in as early as one or two weeks, he said.
“There seems to be a microbial link” to psoriasis, Clapp says. “These people have a genetic predisposition.” Current treatments don’t address chronic flare-ups, he said. “They make it go away, and it just comes back.”
Current topical treatments can atrophy the skin or suppress the immune system, he says. The history of treatment for psoriasis has included peeling off the diseased skin and treating with ultraviolet light.
“The majority of people today, their symptoms remain uncontrolled,” says Clapp, who figures 80 percent of people with mild to moderate symptoms can be treated topically. More serious cases would still have to be treated with oral or injected medication, he says. “If you could use steroids every day, you wouldn’t have a problem. Very rarely are people totally clear.”
Prosoria can be used as a “great piggyback treatment” alongside prescribed treatments, Clapp says. “I don’t want to replace prescription drugs that the doctor gives them. I want to be additive.”
Clapp grew up the son of a “can-do” military pilot. His mother immigrated to the United States after World War II. The family coat of arms reads “Do the Right Things Despite the Consequences.” As a child, he gravitated quickly toward science. “I just liked the research side of things,” he says.
During a conversation about college one day, his brother, an entrepreneur, recommended a career in sales and marketing, Clapp says.
Clapp entered pharmaceuticals as a sales representative and then moved into development, becoming Galderma’s vice president for business development.
“I always took the leadership roles as a kid,” Clapp says. “I got into pharma, and I liked it. I knew consultative selling really well.” One early manager encouraged him to go down the road of “canned” approach, which Clapp says he resisted. “I knew the science; I could communicate at their level.”
Galderma hired him to launch Differin, a new acne treatment, and moved him to Paris for five years to handle the job. Clapp, a pilot who obtained his license at age 17, shipped an airplane he owned – a single-engine, two-seat RV-4 sport plane – to Europe for play. Today, he owns a Russian acrobatic plane that he keeps in the Vintage Flying Museum at Meacham International Airport. “I always do at least one roll when I fly it,” he says.
Also while at Galderma, Clapp started studying botanicals, “as we used to do a couple hundred years ago,” where pharmacies had “jars of plants.” A lot of the ingredients are considered safe and known to combat symptoms such as inflammation.
He views over-the-counter treatments as fertile ground for innovation. “That’s the trend of what’s going on today” in health care, he says. “The government doesn’t have to pay.”
In weighing the decision to retire early, Clapp says, “I could have continued my career and left at 65 or left at this time and tried this. There was an opportunity to create products that can help people.” After leaving Galderma, he looked into ideas on psoriasis, warts, toenail fungus, acne, and eczema, starting initially on a product for warts before settling on psoriasis.
Clapp has one partner in former colleague Mike Yankovoy, NuvoThera's chief financial officer, who lives in Pennsylvania and has held senior finance positions and run business units at Air Products and Galderma. Clapp and Yankovoy are considering taking on another partner, a biomedical engineer.
NuvoThera joined the TECH Fort Worth incubator more than two years ago with a proposed device that could be used to treat another ailment before he moved on to psoriasis, recalls Darlene Boudreaux, the executive director, who built her own contract manufacturing company and sold it and has known Clapp since his days at Galderma.
TECH Fort Worth, as it does with other entrepreneurs, gave Clapp a raft of referrals and helped him talk through the business. He formed an advisory board and sought access to legal and marketing people and bankers. “When we have an issue, it’s great to be able to tap into that expertise,” he says.
Among the various referrals TECH Fort Worth gave Clapp was one to TMAC, the Texas public-private partnership that provides technical assistance and training to businesses. TMAC offers its first $10,000 of services free to clients.
TECH Fort Worth also helped Clapp put together his slides and presentation for the pitch last fall to the Cowtown Angels, which TECH Fort Worth and Boudreaux founded in 2013.
“We talk a lot,” Boudreaux says of TECH Fort Worth’s relationship with Clapp. “Art is a guy who [spent a career] looking for companies to acquire. He came to realize it’s a whole different story when you acquire your own company.”
NuvoThera received a total $275,000 in investment from the eight Cowtown Angels members in the first round of fundraising. Clapp declined to disclose how much total he was raising in the round, other than to say it’s structured as convertible debt and he hasn’t surrendered equity to investors. He also declined to say how much money NuvoThera has invested to this point in Prosoria.
“We were bootstrapping all of this,” says Clapp, adding he came up with the formula quickly. “We spent a fraction of what we do at Galderma.
Ken Stephens, who spent 22 years working as a corporate “fix-it guy” for the Perot family before logging his 4 millionth mile flying and retiring at 49, is the lead Cowtown Angels member on the group’s NuvoThera investment.
“When you’re fixing stuff that’s on fire, you’re working hard,” he says. “I wanted to do something that legitimately added value, but I just didn’t want to work that hard” anymore.
Stephens joined the Angels three years ago and estimates he’s done 22 investments in 18 companies in that time. “Some of these companies are doing very well and generally changing the world,” he says. “It’s genuinely great stuff.”
He remembers the NuvoThera pitch. “We’re all equals” at the Cowtown Angels, Stephens says. “When a company comes in the door, we all assess it. Somebody has to raise their hand and volunteer to be the lead. If nobody raises their hand, we kill the deal. I raised my hand.”
What he saw in NuvoThera: “There is some real value in over-the-counter medications that are coming to market,” he says. “They’re a little more creative than we’ve seen in the past. It doesn’t have to be prescription. It doesn’t have to be harmful to the body.”
He feels younger consumers are driving some of the change. “There’s a huge wave of the younger generation embracing natural stuff,” he says. “It’s drinks, it’s clothing, it’s everything. They want healthy stuff.”
Moreover, he liked Clapp. “Art has a long track record.”
The Angels also like to consider companies they feel can break into a billion-dollar-plus market, Stephens says. He remembers pitches for a bar and, recently, a wedding planning company where “if they blew it out,” the company would approach $1 million in annual sales.
“Awesome,” Stephens says, but that’s not to the scale the Angels will consider. “If the target market doesn’t approach a billion dollars, you start questioning the investment.”
Some investors in NuvoThera are also exiting investors in Encore Vision, a TECH Fort Worth-spawned, Cowtown Angels-backed eye care company that in December sold to the giant Novartis for as much as $465 million.
But the Encore Vision investors committed to NuvoThera before the Encore Vision announcement, Stephens says. “All of the investors committed several weeks before Encore Vision cashed out, and they all provided their checks at least a month before they got their Encore checks,” Stephens says.
While TECH Fort Worth’s profile, and that of the Angels, is increasing with the success, the Angels remain “very conservative,” says Stephens, who drives a 2002 Chevrolet pickup with 231,000 miles and says he could easily afford a new truck, but doesn’t want one.
“And I wear jeans and a sweat top,” says Stephens, who joined the Angels after several members invested in Encore Vision and was not in on that deal. “There’s no sort of craziness going on. There’s nobody throwing money around. Nobody going ‘drinks on me.’ It’s all very conservative, very intelligent. So when things like Encore Vision happen, there’s a flutter of noise, but it’s just a flutter.”
As for the future, once NuvoThera moves Prosoria into retail channels, Clapp says he’ll look to launch new products. “Then you start looking for an exit at that point,” he says.
He expects to be able to develop other products and channels using the same approach he did for Prosoria. “We have a nice platform,” he says. Costs of goods are “quite acceptable,” time to market is quicker, margins are good, and exit multiples are “usually really good.”
The ability to use today’s technology to market digitally also represents a big asset in building a new-era health care company, Clapp says. “The time is right to reach out to people and have them reach out to us.”
Clapp views the international markets as strong for the products he’ll pursue. “We can sell these products in Asia and Latin America,” he says. Clapp views current treatments for warts, eczema, and toenail fungus to be “poorly effective solutions.”
Of his wart fancy, he says, “Cut ‘em, burn ‘em, freeze ‘em. There’s no good treatment today. The sky’s the kind of the limit. There’s no lack of people we can help.”
By: Scott Nishimura
By: Scott Nishimura
By: Jocelyn Tatum