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the lunch

After brain injury, tenacious CEO builds new drug company Add to ...

On Aug. 17, 2011, everything changed for Jonathan Goodman.

The aggressive, hard driving executive – at the time the CEO of hugely successful drug distributor Paladin Labs Inc. – had just sealed one of Paladin’s biggest acquisitions ever. Taking a celebratory bicycle ride with fellow employees in the hills north of Montreal, he fell off his bike and hit his head. Despite wearing a helmet, the result was a serious brain injury.

Mr. Goodman, now 46, was in a coma for five weeks, had septic shock, a pulmonary embolism, heart attacks, and he contracted C. difficile, a hospital based-infection. His family worried he would die. He was in hospital for four months, and the struggle back to health took many more months of hard work and strenuous physical therapy. He had double vision, and had to re-learn how to walk and run.

Now, two-and-a-half years after the accident, Mr. Goodman is sitting across from me in a booth at Park Restaurant in Westmount, in the posh west end Montreal, deftly sampling his Bento box lunch special with chopsticks and exhibiting classic entrepreneurial enthusiasm for his latest venture. Since returning to work he has sold Paladin for $3-billion (netting him and his family $1-billion for their one-third share) and started a new drug distribution business called Knight Therapeutics. At first glance you’d never know he’s been through a near life-ending trauma.

But there are a few adjustments. He’s brought a sheaf of notes along to help with the occasional lapses in short-term memory. And he’s got his wife, Dana Caplan-Goodman, at his side, ready to give him a nudge if he starts to talk a little too candidly about his business – something he says he tends to do because his accident causes him to speak without a “filter.” Dana also fills me in on some of the details of the accident and its aftermath, since her husband of 10 years has no memory of it.

As we talk in the restaurant, which is a few blocks from their home and in the same building as the new Knight Therapeutics office, several people wave at the couple, or drop by the table to say hello. One man, who was on the bike ride with Mr. Goodman when the accident took place, tells him, “It is incredible to see you like this.”

“When people say, ‘Good to see you,’ I answer, ‘Good to be seen,’” Mr. Goodman tells me, turning back to our conversation.

He is happy to appear normal, but that is not entirely the reality.

“I am not 100 per cent. I will never be 100 per cent,” he says.

“I have two things that kind of linger and will be around forever and I will have to live with. One is memory issues, especially short-term memory, and the second is fatigue. I am always tired. I kind of feel like I just pulled an all-nighter for an exam. I feel that the moment I wake up until I go to bed.”

Although he can no longer ride a bike – his doctors tell him he could not withstand another head injury – he hits the gym almost every day to stay in shape.

He’s adopted what he calls “compensatory strategies” to deal with the memory issues. “I take crazy notes. I have my BlackBerry on me at all times. I write things down. I have to create a system to follow up and make sure I deliver what I promise.”

Still, he insists that his capacity to make business decisions is “perfectly intact and functioning at a high level … I think, intellectually, I’m as smart as I was.”

It is clear that what he calls his “type A plus” personality is fully intact. He is still competitive and massively self-confident, and he wants things his way.

Indeed, it was his need to run his own show that got him started in the drug distribution business in the first place. Mr. Goodman, who earned an MBA and a law degree after his undergraduate B.A., realized that he wouldn’t fit in as a manager at his father’s company, a maker of generic pharmaceuticals. (That firm, Pharmascience, is still in business. His father Morris is now chairman and his brother David is CEO).

Pharmascience had a small arm that sold specialty drugs, so Mr. Goodman decided to spin that off and run it himself.

“I couldn’t work with my father and brother. I said, ‘I am a control freak and so are you. It is a recipe for disaster.’”

The spinoff, Paladin Labs, was anything but a disaster. Founded in 1995 and publicly traded from the start, it began on an uninterrupted upward trajectory. By selling drugs it bought or licensed from other companies, it had no development risk.

The portfolio eventually included everything from birth control pills to allergy treatments to pain medications. Sales blossomed in Canada, and beyond, to Israel, South Africa, and Latin America.

Revenue rose for 19 consecutive years, and profits followed.

At the time of Mr. Goodman’s accident, Paladin had sales of around $150-million, and a market cap of almost $1-billion. It had just bought Montreal drug firm Labopharm Inc., and was trying to take over Afexa Life Sciences Inc., the maker of Cold-FX. (It eventually lost a bidding war for Afexa to giant rival Valeant Pharmaceuticals International Inc.)

The day he addressed Labopharm employees as their new CEO, Mr. Goodman headed off for that fateful bike ride.

After he was rushed to hospital “it was just touch and go, trying to keep him alive,” Ms. Caplan-Goodman tells me.

While in the coma “he looked so peaceful and so healthy and strong,” she said, but it was terrifying to deal with, especially with three small children at home.

“I told them their dad had an accident and banged his head and is sleeping in the hospital. I didn’t bring them to see him until he was able to talk … I had to tell [Jonathan] what to say to them. He still couldn’t function normally.”

While he recovered, his colleague and Paladin co-founder Mark Beaudet held the reins at the company. In May, 2012, nine months after the accident, Mr. Goodman returned to the firm as chairman, but mainly focused on small deals and loans from the company coffers.

The transition was tough for someone who was used to being in charge. “I like to describe myself as a benevolent dictator, [but when] I came back it was a democracy, and it was hard to deal with,” he says. “I put myself in my office and did deals, where I could do them by myself.”

At that point, he decided to put the company up for sale. “When I came back I realized I couldn’t run this business any more. And if I couldn’t run it, I didn’t want it. So I ran a process to sell it.”

But by the time Credit Suisse, who he had hired to find a buyer, came back with some not-great offers, Mr. Goodman’s cognition had improved and he decided not to sell after all.

Ironically, after making that about face, U.S. drug giant Endo Health Solutions Inc. showed up at his door and made him an offer he couldn’t refuse.

Endo’s $1.6-billion cash and share merger proposal last November was at “an amazing price,” Mr. Goodman said, but it immediately got even better. Endo’s shareholders were extraordinarily enthusiastic about the plans to shift the merged organization’s registration to Ireland to save tax dollars, and the stock price leaped.

Because Paladin’s shareholders were to be paid partly in Endo shares, their holdings also skyrocketed. Paladin’s shares almost doubled in price by the time the deal closed at the end of February, surpassing $140. That valued the company at more than $3-billion.

But Mr. Goodman, who readily admits that he loves to work, was not going to sit around spending his new wealth. He had negotiated with Endo to spin off one Paladin product – a treatment for the tropical disease leishmaniasis – to form the basis for a new company, Knight Therapeutics, whose stock was distributed to Paladin’s shareholders. While the rest of Paladin’s staff stayed with Endo, he left to run Knight.

In just a few weeks of existence Knight has raised more than $250-million in private placements – a testament to Mr. Goodman’s reputation for managing a growing drug company. While it now has loads of cash, and plans to acquire the rights to sell many more drugs, the firm has only one other employee, CFO Jeffrey Kadanoff, whom Mr. Goodman hired on day one.

Investors appear to think he can turn it into another Paladin: The stock has risen by more than 50 per cent since its first day of trading in early March.

The day of our lunch, Knight’s offices were, like the company, in its formative stages. Drywall was unpainted, boxes and packaging materials were strewn about, and technicians were fiddling with phones and computer equipment.

Mr. Goodman acknowledges that he is trying to make a point with his aggressive little venture.

“I want to prove that the first brain-damaged CEO can thrive,” he said. “That is why I am doing this interview … I want to be inspirational. I want to be a source of inspiration for people who are facing challenges.”

Mr. Beaudet, his long-time colleague, says that is exactly what Mr. Goodman is doing. “His life was taken away and he has progressively been taking it back,” Mr. Beaudet said.

“What he has done is nothing short of heroic, and should be a source of hope for anybody who is facing a really difficult situation.” The aggressive and energetic way Mr. Goodman approached his recovery and his new business venture “fits with the pattern of his entire life,” he said.

As Mr. Goodman sums it up, “tenacity is something that has served me well.”

========

Personal

  • Born in Montreal; 46 years old
  • Married to Dana; three children

Education

  • B.A. from McGill University and the London School of Economics, law degree from McGill, MBA from McGill

Career highlights

  • Worked at Bain & Co. as a consultant
  • Joined Procter & Gamble in brand management
  • In mid-1990s became CEO of drug distributor Paladin Labs Inc., a spinoff from his father’s generic drug maker Pharmascience
  • Sold Paladin for $3-billion in 2014 to Endo Health Solutions
  • Created startup Knight Therapeutics, whose shares were distributed to Paladin shareholders, in Feb. 2014

In his own words

  • “My working memory is solid. I can run iterations in my head. I may not remember the next day perfectly, the basis of my decision. But if I were given the same facts again, the computer will still come to the same decision. That part of the brain is perfectly intact and functioning at a high level.”
  • “Most people with a severe traumatic brain injury lose their wives and best friends because of changes of personality. It haunts me that that could happen to me. And I understand why. I see it and I fight it.”
  • “We know more about Mars than we do about the human brain.”
  • “The pharmaceutical industry is the best industry to be in, because you make a great living and you make people better. I can’t imagine a better vocation. It is so much better than selling widgets.”
  • “Montreal’s pharma sector is dwindling quickly. [The big] R&D spenders are gone. There are a lot of people in pharma looking for work. It is very unfortunate. Smaller companies are diminishing as well. Certainly, Canadian biotech has been decimated.”
  • “I believe that I am hard-wired to sell drugs. I grew up in the pharmaceutical industry. That is what I love to do.”
  • “I don’t want to just take up room, to take up space. I want to make a difference. Making a difference in work and making a difference in society.”
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