Genesys Capital Wins VC Deal of the Year Award for Inversago Pharma

Founded in 2015, Montreal-based Inversago Pharma is a leader in the development of next-generation CB1 receptor blocker therapies designed to treat obesity, diabetes, and the complications associated with an array of metabolic disorders. A clinical-stage company, Inversago’s treatments stand out because of their potential to deliver the efficacy of other medications previously developed for the same target, but without the adverse side effects that ultimately rendered those earlier products unmarketable.

The fact that Inversago was trying to bring back a class of drugs that had gained a lot of attention in the early 2000s, but went on to earn a negative reputation, meant that raising capital was incredibly difficult. ​“We weren’t able to secure any financing our first two years,” recalls Inversago CEO François Ravenelle. ​“Investors were wary because they thought that investing in CB1 blockers was too risky.”

One exception was Genesys Capital. An early-stage Toronto-based venture capital fund, Genesys has a 20-year history of investing in the healthcare industry and had previously worked with Inversago’s founding CEO, Maxime Ranger. ​“When we heard that Max was starting another business, we wrote to the National Institutes of Health on his behalf,” recalls Genesys Managing Director, Jamie Stiff. ​“We were happy to lend a hand and help Max secure the patent he needed to start his new business.”

While Genesys invested a lot of time at the very beginning, the Fund didn’t commit actual dollars in the business until 2018 when they co-led its Series A with Maxime Ranger as part of his role at Amorchem at the time. With Ranger’s transition into venture, Ravenelle, who had previously served as the company’s COO, had taken his place as the CEO. ​“That change in leadership meant adjusting our investment thesis,” says Stiff. ​“Our intent had been to back a

CEO like Max who we knew well and trusted, and François was still somewhat of an unknown to us at the time. But he came highly recommended, and we saw the potential in what the company was doing, so we decided to lead their Series A round.”

It turned out to be a very shrewd investment. While Genesys’s relationship with Ravenelle deepened over the next several years, so did Inversago’s relationships with big pharmaceutical companies. ​“I would meet with all of the major players every year to make sure they were aware of what we were doing and all of the progress we were making,” says Ravenelle. ​“I’m sure some of them thought we were crazy, but they also understood what a huge opportunity it would create if we were successful in developing a CB1 receptor blocker that worked without any adverse side effects.”

In 2022, the company ran a preliminary efficacy study that yielded some fantastic results. ​“We honestly thought we were headed for an IPO,” says Ravenelle. Instead, the company was approached by Novo Nordisk and was acquired the following year for C$1.4 billion in the largest private acquisition in Canadian biotech history.

“The exit may have come sooner than we expected, but we were all thrilled with the outcome and grateful for all of the support Genesys gave us throughout our journey,” says Ravenelle. ​“From helping us develop our initial business plan to making important connections and sharing their insights and expertise, the Genesys team was a true partner. Plus, they were willing to be our lead investor at a time when there were a lot of other, less risky biotech newcomers companies competing for capital. They took a risk that most wouldn’t and I’m happy that it paid off for everyone.”

Stiff and the rest of Genesys share Ravenelle’s enthusiasm about the exit. The Fund’s investment in Inversago Pharma generated an impressive MOIC of 11x and an IRR 84%, while also earning the firm the VC Deal of the Year Award, sponsored by Fonds de solidarité FTQ. ​“We are extraordinarily pleased with the result,” says Stiff. ​“François was great to work with and we were delighted to see such a great return for him, our LPs, and many of the company’s other stakeholders.”

Beyond the financial outcome, the work Inversago continues to do will have a very real social impact. ​“These are real drugs with real potential,” says Stiff. ​“They’re going to help people all over the world one day, and we’re proud to have been a part of that.”