Celtic fund reaches $100m on way to $700m

Celtic Therapeutics, based in the Virgin Islands, will seek to exploit a ‘crisis’ in the pharmaceutical industry by buying early-to mid-stage drug development programmes. The fund is the successor to Celtic Pharmaceuticals, which reached $400m in commitments and mezzanine funding for investment in drug development programmes.

Celtic Therapeutics, a Virgin Islands private equity fund focused on investments in early to mid-stage drug development programmes, has held a first close on $100 million on its way to a $700 million objective.

The fund will make its initial investments in the first quarter of 2009, according to Stephen Evans-Freke, who leads the firm along with Peter Corr, former head of research and development at Pfizer.

The fund has attractive mostly return investors, which consist of pensions and investment management groups, Evans-Freke said in an interview. Fundraising has been slow because of the market turmoil of the past few months, he said.

Celtic Therapeutics is the successor fund to Celtic Pharmaceuticals, a private equity fund with $400 million

Drug development:
investment target

committed from limited partners and mezzanine funding. Celtic Pharmaceuticals used the same investment model as the therapeutics fund.

The therapeutics fund will focus on buying out drug development programmes in the early- to mid-stages of the clinical trial cycle, Evans-Freke said. The fund, run by executives with operational experience in the biotech industry, will develop the drugs through the mid-to later-phases of the trials, he said. The fund will seek to sell the drug development programmes to bigger pharmaceutical companies once they have moved sufficiently through clinical phases.

The investments will help small biotech firms that are in need of capital to stay afloat, Evans-Freke said.

Small biotech companies have had liquidity trouble since the recession in 2001, when the public markets for the smaller companies closed, he said. The current recession has caused the companies even more distress.

“There’s a crisis in the industry,” Evans-Freke said. “The plight of the biotechs is a combination of the whole, more risk-adverse climate post-9/11, the general freeze-up for all IPO activity, regulatory factors.”

Evans-Freke and Corr are joined by Michael Forer, co-founder of Bioscience Managers, a London-based advisory and private equity firm. Celtic Therapeutics also has hired Tomasz Sablinski as managing director of European development. Sablinski previously was vice president of US clinical development and medical affairs at Novartis.

The firm also has named Celtic Pharmaceuticals executives Patrick O’Connor as global head of clinical development and Robert Ryan as global head of regulatory and pre-clinical development.