The MD in ‘Managing Director’ might easily stand for many other things. Mitigating Disaster. Moving Deliberately. Making Deals – the list goes on.
And with the average tenure of those in the hot seat at an Australian listed company being approximately 5 years, you’d be forgiven for thinking ‘Mortal Danger’ was also apt. There are however always a few bucking the trend.
Mr Paul Brennan, Managing Director of PolyNovo – a leading Australian medical device manufacturing company and Griffith Hack client, provides a useful case in-point.
In a candid conversation with Griffith Hack Principal Karen Sinclair during AusBiotech’s 2020 + INVEST conference, Paul kindly shared some of the ‘secrets’ behind PolyNovo’s rise to prominence. If that sounds somewhat grandiose, consider PolyNovo’s share price at the time of Brennan’s appointment in 2015: 7 cents versus today’s: $2.60 (plus).
Brennan is quick to give credit for this transformation to several factors beyond his desk; first and foremost, the quality of PolyNovo’s people (including a high-performing board), the uniqueness of the company’s products, engaged customers, proactive referrers, and a strong IP position.
PolyNovo’s ‘hero’ platform NovoSorb ®, builds upon polymer technology which originated from the Commonwealth Science Industry Research Organisation (CSIRO). “Free of aromatic cyanates, with no solvents used in the manufacturing process – NovoSorb ® breaks down via hydrolysis into lactic acid, Co2 and water” Brennan says.
Although not a scientist or academic by trade, Brennan’s grasp on the company’s technology is clear. In fact, a deep dive into PolyNovo’s intellectual property (IP) was something he sought to do right at the start. “There’s a significant amount of value and opportunity with IP. It’s not just about protecting the information and technology you have, it’s also about adding value and protection for your investors – that they have comfort about the safety and security of your technology” shared Brennan.
IP as a commercial priority
In the early days, particularly when cash-flow was restricted, Brennan acknowledges the tension he felt with respect of allocating resources to IP instead of on essential ‘day to day’ expenses. “But if you don’t spend it early on, you’ll be spending it late, and when you’re spending it late, you’re spending more” Brennan warns. “It’s a balancing act, but it’s an important thing to do”.
The benefits are two-fold according to Brennan. Not only does a strong IP position increase attractiveness to investors, it also enhances potential partnerships for joint technology developments in the future “giving certainty about what is theirs and what is yours”. Furthermore, particularly for companies like PolyNovo, Brennan believes IP portfolios (including registered trade marks), are a key element to effective marketing.
Maximising the value of external advice
Rather than a ‘transactional’ approach with external advisers, Brennan prioritises a hands-on, collaborative working relationship. Quarterly IP strategy meetings held between key PolyNovo stakeholders (including Brennan, and Chief Scientist Dr Tim Moore) and Griffith Hack team members including Principal Karen Sinclair, seek to continuously capture value and challenge the status quo.
Themes for these discussions include what to patent (and therefore publish) and what to keep secret, applications to new devices or fields of use, the understanding and managing technology partners and keeping a watchful eye on the competition, making the most of the breadth and depth of the portfolio, and trademarks. With respect to growth in foreign markets, Brennan is an advocate for trade mark and brand protection citing the risk of hidden logistic costs if all the necessary angles aren’t considered. “To reduce future business costs, you need to take this seriously”.
In relation to PolyNovo’s patenting strategy, Brennan explained the importance of having a strong grasp of the intended commercial use for your patented products. Apart from the technology itself, Brennan believes that for “all manufacturers, there is that ‘art side’…. So it’s important to consider what you leave in the patents and what you leave out, and make sure you have protection around your trade secrets and the people that hold them” he adds. More than safeguarding the technology itself, Brennan also encourages innovative companies to ensure that they have “processes in place behind the scenes to protect against losing the inherent wisdom” of key individuals.
Overcoming regulatory hurdles
For companies like PolyNovo that operate in a highly regulated market, Brennan places the utmost importance on getting one’s house in order from a quality management system perspective. In fact, he suggests that a capable quality management professional might be more valuable in the early days than scientists.
Taking the view that regulators exist primarily for the safety of patients (rather than as an adversary) promotes the right mindset says Brennan. “You need to work back from that position in your quality system. What do regulators want to see? What are the standards and how do we meet them? Make sure you’re always building towards that”.
Clearly understanding the regulator’s perspective is also dependant on the specific region points out Brennan. In the US for example, which operates on a ‘predicate system’, PolyNovo needed to prove the equivalence of nominated products – whereas in Australia, clinical work and clinical evidence are key. But “if you don’t have regulatory approval, you don’t have sales access” warns Brennan.
Engaging the board
Brennan is refreshingly honest and admits freely that PolyNovo’s board plays a pivotal role in helping him lead the organisation. “I’ve never run an ASX listed company” Brennan says… “my board is my bench of coaches”. He credits the PolyNovo board as being strong, active and diverse, and encourages leaders to be proactive in leveraging board members. “They aren’t there as a friendship club” reminds Brennan “they’re there to help bring value to shareholders and make sure you cover your governance points”.
Regardless of the industry or sector, Brennan believes that a board should not only be involved in reviewing the strategy but be keenly interested in what organisations are doing to protect and grow their IP platform, how companies are stewarding the brand and what leaders are prioritising with their time. “Time is valuable, and time is opportunity”.
While discussing PolyNovo’s clinical strategy, Brennan highlights something that often paralyses younger companies. “It’s not possibly to eat it all at once, so who do you go to first?” he asks. Referring to the formal theory of adoption curves, Brennan says that PolyNovo made a deliberate play in prioritising early adopters and key opinion leaders within specific markets. Australians Professor John Greenwood and Dr Marcus Wagstaff were key to NovoSorb ® BTM’s development and helped create momentum in other markets. Building evidence of clinical success helped PolyNovo strengthen its marketing power and created a positive cycle – more referral sites, more opinion leaders, more weight behind the product.
The advantage of having influential leaders who want to scrutinise your work and provide constructive feedback in a safe environment shouldn’t be underestimated. “Wherever you start from, you’re going to learn from your customers. Always keep your attitude and your ears open to your customers. Take on their values” Brennan implores.
Despite being six years in, Brennan talks about PolyNovo’s future as if the best is yet to come. However, he also remains committed to the principles he believes have helped the organisation become what it is; including its foundation in IP. Brennan believes that focussing “on the development of IP completely changes the way a company looks at its R&D” and that the right approach to applying technologies across a broad platform will keep IP “safe and alive for years to come”.
Note: Griffith Hack thanks Mr Paul Brennan for his time during the conference, from which this article has been written.