The first Genexa product David Johnson and Max Spielberg released was a children’s cold medicine, which alleviates the same symptoms as its competitors — congestion, cough, sore throat, runny nose.
The difference is the ingredients.
Genexa, an Atlanta pharmaceutical startup, produces “clean” medicine that doesn’t have artificial dyes or other artificial inactive ingredients, which the founders say could have harmful side effects or cause allergic reactions. Instead, Genexa products use natural preservatives, capitalizing on a trend toward clean diets and health products that cut out processed or refined ingredients.
"All these industries have started to shift toward better-for-you, cleaner labels, but no one was doing anything about the massive, $120 billion market of drugs,” Johnson said.
Four years after launching, Genexa has landed $60 million and celebrity support for its innovation in over-the-counter medicine.
Jared Stein, managing partner of Monogram Capital, led the round. Unilever Ventures, Verlinvest, Northcastle Partners and Point King Capital participated. Celebrity wellness activists Gwyneth Paltrow, Chris Pratt and Donald Glover are a few of the 16 celebrities who also back Genexa.
Johnson and Spielberg are long-time friends who had their first children around the same time. They started questioning the inactive ingredients in the medicine they were giving their kids, which brought them to the Genexa solution.
“If we knew what it took to get this across the finish line, we probably wouldn’t have started,” Johnson said.
Neither founder had a background in the pharmaceutical industry, which Spielberg calls one of their biggest advantages. That naivete allowed them to innovate the market in a way an industry insider could not have, and they weren’t initially intimidated by the regulatory and research hoops that made development such a long journey.
Manufacturers told the founders that their vision was impossible — artificial ingredients were needed for the preservation and composition of these over-the-counter drugs. But Johnson and Spielberg weren’t convinced, and their skepticism paid off.
The founders have patents on preservation systems for their medicines, which include children and adult products for pain, cold and flu relief, digestion, sleep and allergies. Genexa is in 45,000 retailers, including Walmart, Target, CVS, Walgreens and Whole Foods.
Genexa products are manufactured at seven locations in the United States, mostly in California, which is where the startup began. Johnson says the company is looking for an East Coast manufacturing center.
The founders moved Genexa to Atlanta from Los Angeles during the pandemic for the city’s quality of life, reputation in the logistics industry and large, consumer-packaged goods companies. The Genexa office is in West Midtown, an area bustling with new investments and tech companies.
Johnson and Spielberg planned to raise a $25 million Series A round, but interest from investors increased the round to $60 million, which Genexa says is the highest raise ever for an over-the-counter medicine company.
Johnson credits the celebrity involvement to a growing trend in health and wellness, about which he says the investors are passionate. For example, Paltrow owns a modern lifestyle brand called goop, which emphasizes natural remedies and clean products.
McKinsey & Co. 2021 data shows "a substantial increase” in consumers prioritizing wellness over the past two or three years. The pandemic health concerns elevated the trend even further, Johnson said. Genexa saw a boost in business over the past year and a half.
This round of funding will go toward more research and development as well as educating consumers about clean medicine and marketing, Johnson said. Genexa’s goal is to disrupt the entire industry.
“You’ve got your five Goliaths but no David,” said Johnson, referring to the companies that dominate the pharmaceutical industry. “Genexa is a David right now. We can own this space.”
Genexa has about 25 employees right now and plans to increase to 65 within the next year and a half, Johnson said. That count doesn’t include manufacturing or disruption.
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