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The third-year PhD student realised how
“somebody of Declan’s calibre could add value
to the concept” and in February 2000 the pair
jointly set up Celtic Catalysts as a campus
company in UCD.
However it was not until 2001 that Kelly
completed his PhD 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 funding 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 realised that
one of the first things they needed for the company
was a heavyweight 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 UCD Michael
Smurfit Graduate Business School, which ran a scheme called
the Hatchery that was set up to help MBA graduates to 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 in order to make a living.
EUREKA MOMENT
Then came a real Eureka moment, giving the company the momentum
it needed. “We were sitting in Luton, waiting for a
flight, when we realised that we needed some intellectual property
so we licensed an IP for a catalyst from UCD,” Kelly recalls.
“This gave the company a recognised 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
afterwards 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 parttime
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
‘I was at a PhD
conference in
St Andrews,
listening to a
speaker, when I
realised that
robotics could be
applied to use
and discover
catalysts’
company to carry out lab contracts in 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 important drugs.
However, licensing catalysts to a fine chemical
company would not maximise the added
value that 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 Middlesborough
because it had all the licences 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 from this process
when all clinical trials are passed.
Significantly, most of Celtic Catalysts clients are based in the
UK, Switzerland, the US, Germany and Scandinavia. “What
happens in Ireland is that the large pharma companies manufacture
the drugs, which are developed elsewhere,” he says.
The company 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 specialises 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, so this means half of the results must be
destroyed. Chiral catalysts can be used to stimulate the production
of the good drug, thus minimising waste.
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, Kelly points out.
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.”
This article first appeared in Irish Director magazine,
Summer 2011
Issue 2 Spring/Summer 2011 INNOVATION IRELAND REVIEW 19