Award-winning university spin-out Celtic Catalysts boasts a Nobel Prize-winning chairman, and its technologies have caught the eye of the big pharma players, but, says founding CEO Dr. Brian Kelly, it wants to remain an Irish company. He spoke to Jim Aughney.

Life sciences company Celtic Catalysts has developed a ground-breaking chemistry that enables its end-user clients in the pharmaceutical, biotech and fine chemicals industries to realize significant manufacturing cost savings.

The innovative venture capital-backed company and its founders have caught the eye of the experts in recent years, snatching some awards that include the Thistle Biotech International Rising Star Award (2008), the NovaUCD Innovation Award (2008) and the Shell LiveWire Entrepreneur of the Year Regional Winner (2006). In April it won the Application of R&D category at the 2011 Irish Times InterTradeIreland Innovation Awards.

Headquartered in NovaUCD, the Innovation and Technology Transfer Centre, Celtic Catalysts boasts Barry Sharpless, who won the 2001 Nobel Prize for his pioneering work in chiral chemistry, as the chairman of its scientific advisory board.

Today the company’s technology is integrated into the manufacture of some potential blockbuster drugs currently in development by major pharmaceutical companies, but it has taken Dr. Brian Kelly 13 years to bring his idea to this stage.

“I was at a Ph.D. conference in St Andrews, Scotland, sitting listening to a speaker when I realized that robotics could be applied to use and discover catalysts,” Kelly recalls when we meet. The catalysts which Kelly was considering are those chemicals that speed up chemical reactions, mainly as they apply to the pharmaceutical industry. The conference was held in 1998 and Kelly was halfway through his Ph.D. at the time.

“I put the idea to the back of my mind and got on with finishing my Ph.D. Later, as part of my study, I was asked by Dr. Declan Gilheany, my Ph.D. supervisor, to proof-read a paper that was part of a grant application to the European Union,” he continues.

Gilheaney wanted to carry out experiments in parallel in research labs. “It was clear to me that he was thinking along similar lines to my idea from St Andrews. We spoke about it and identified the type of machine which would be most suitable for the lab experiments.”

The third-year Ph.D. student realized how “somebody of Declan’s caliber could add value to the concept” and in February 2000 the pair jointly set up Celtic Catalysts as a campus company at UCD.

However, it was not until 2001 that Kelly completed his Ph.D. and began working seriously on a business plan aimed at raising the necessary funding. Kelly and Gilheany needed about €2.5m, but Kelly quickly discovered that raising financing would not be easy.

“The Government was into IT and biotechnology, and we were neither. Indeed the venture capital companies did not understand a chemistry start-up. They didn’t know where to place us,” he explains.

The pair of chemists quickly realized that one of the first things they needed for the company was a heavy-weight scientific board. “Through Declan Gilheany’s academic contacts, Barry Sharpless of MIT agreed to come on board as chair of the scientific board of Celtic Catalysts.”

Sharpless was impressed by the duo’s plans, and when he won the Nobel Prize in this area, interest in the company increased and, as Kelly puts it, “we became credible.”

To assist in raising funding, Kelly contacted the UCD Smurfit Graduate Business School, which ran a scheme called the Hatchery that was set up to help MBA graduates start businesses. “Jonathan Mills took an interest, and he paired us up with Pierce Cole, an MBA who helped us revise the business plan,” Kelly says. He was still living with his parents and teaching music to make a living.

Eureka moment

Then came a real Eureka moment which gave the company the momentum it needed. “We were sitting in Luton, coming from Switzerland, waiting for a flight, when we realized that we needed some intellectual property, so we licensed an IP for a catalyst from UCD,” Kelly recalls. “This gave the company a recognized patent plus the plan to research and develop others.”

Throughout 2002 Kelly continued to engage with venture capital companies with little success until he addressed a conference in early 2003 in the Burlington Hotel. He was approached afterward by Denis Jennings, founder of Fourth Level Ventures, who expressed an interest in the start-up.

In February 2004, Celtic agreed a €700,000 funding package with Fourth Level Ventures and Enterprise Ireland came in with €250,000 to get them going. Celtic took on Brian Elliott as part-time CEO and hired two full-time chemists to develop the technology licensed from UCD.

“We hit all the milestones, and in 2006 we raised €1m in Business Expansion Scheme funding through our own contacts. We also recruited Geoffrey Fuller who had huge experience, having built and sold his own business. He came out of semi-retirement to run our labs, and we continued to hit all the technical milestones,” Kelly explains.

Fuller brought new impetus to the team, and towards the end of 2006, Celtic won its first contract from a major pharmaceutical company to carry out lab contracts at UCD. “Our business model evolved. There is not much money to be made from selling catalysts, so we worked on building up relationships with the fine chemical and pharma companies through doing service contracts. These companies need to trust your technical ability and your security.

“I shadowed Brian Elliott and then became CEO. We were doing well on service contracts, which made up most of our turnover in 2008/09. Since then we have developed a range of products to sell,” Kelly says.

The Celtic CEO explains that the company uses catalysts to make key chemical-enabling technology to create chemicals, many of which end up in essential drugs.

UK facility

However, licensing catalysts to a fine chemical company would not maximise the added value Kelly wanted.

“We looked all over Ireland to see if we could manufacture catalysts ourselves, but there just wasn’t enough wet lab space. After looking at quite a few sites in the UK, we decided to go with a former ICI manufacturing facility in Wilton near Middlesbrough because it had all the licenses and permits. We were manufacturing within three weeks of going there.”

Wilton gives Celtic Catalysts a facility to show its customers. “We don’t just hand clients a recipe for a catalyst; we partner with them to produce the chemicals and the end drugs. This is a longer-term process before we will receive a royalty,” Kelly explains. Celtic will only receive a royalty when all clinical trials are passed.

Significantly most of the Celtic Catalysts’ clients are based in the UK, Switzerland, US, Germany, and Scandinavia. “What happens in Ireland is that the large pharma companies manufacture the drugs which are developed elsewhere,” he says.

Celtic Catalysts now has five patents in its stable and turnover is today in seven figures. It deals with all of the top 10 pharma companies in the world, and catalysts it has developed are in use as building blocks for a treatment for Parkinson’s and another for rheumatoid arthritis.

The company specializes in chiral catalysts which are used in the manufacture of 40pc of all drugs on the market. Kelly explains that chiral catalysts act on the chemical reaction to produce the drugs you want. Chemical reactions normally produce good and bad drugs, which means half of the results must be destroyed. Chiral catalysts can be used to stimulate the production of the good drug thus minimising waste.

According to Kelly, the company has raised €3.5m to date and plans to raise another €750,000 this year to fund expansion through sales offices in the US and continental Europe.

And the future? “We have had expressions of interest from fine chemical companies who want to engage in development, which would result in them taking us over, but we are not interested,” he stresses. “We want to remain an Irish company.”

Pictured: Celtic Catalysts CEO, Dr. Brian Kelley

This article first appeared in Irish Director magazine, Summer 2011

Jim Aughney