Charnwood Molecular’s journey from university spin-off to high-growth, PE-backed integrated drug discovery leader
CCD Partners • Oct 12, 2021
Steve Allin co-founded Charnwood Molecular with Phil Page in 1998. 22 years later, the business has evolved dramatically from its origins as a spinout of Loughborough University. Backed by a partnership with Synova Capital, the company is now preparing to move into a former AstraZeneca research facility and has already completed its first M&A deal, acquiring Aurelia Bioscience in summer 2021.
CCD Partners’ Matt Dixon spoke with Steve about the journey from full-time academia to running a high-growth market leader.
MD: Can you provide some quick background on Charnwood’s corporate profile?
SA:
We were founded in 1998 as an academic spin-off but have developed in the last 5-6 years into fully-fledged drug discovery and development organization, with services spanning discovery biology, computational and medicinal chemistry, through to chemical development. This means we can do small-scale medchem synthesis of specific target compounds, produce up to tens of grams of material, and perform early process R&D where we develop scalable routes for producing multi-kilo amounts. These routes can then be provided via tech transfer packages to larger cGMP manufacturers.
Our client base ranges from VC-funded start-ups or other university spinouts through to established biotech and small pharma, though we do have some big pharma engagements as well.
In 2019 Charnwood worked with CCD Partners to secure investment from Synova Capital. What were the drivers in seeking a private equity partnership?
For the first 10-15 years of operation we were probably a typical founder-led organization. In hindsight, we could have grown the business more quickly, but myself and co-founder Phil Page were both full-time academics with lots of other things going on. We had reached a point where we recognised that creating something that’s going to be around long term and become a major player in the industry, would benefit from external expertise.
We were ambitious about where we wanted to go with the business, but we knew we needed the experience of that type of growth to support the plans that we already knew we could deliver if we had the right facilities and backing.
What gave you confidence that Synova were the right team to partner with?
When we met the Synova guys it was clear that we got on personally with them, but also that they understood the marketplace and the sector we were in. They were just as enthusiastic and ambitious in terms of what we could do together, and they were happy to allow us to drive the direction. Of course, there’s a business plan and they’re ambitious, and we have to hit the targets that have been set, but the experience to date has been enjoyable and felt like a real partnership.
In fact, as founder of a business with its roots in academia and science, it’s been quite an eye-opener in terms of KPI-tracking and cashflow and other business metrics that are really interesting and important in a growing business, but don’t come naturally to an academic founder.
What have been some of the major developments in Charnwood since the investment?
Since we closed the deal, we have started to deliver on a business plan that has seen us expand our service lines within the business. For instance, we’ve added computational chemistry and the recent acquisition of Aurelia Bioscience gave us an important discovery biology platform.
We’ve also started to look at what’s required to deliver the plan in terms of future expansion, so we’ve recently agreed to take on a former AstraZeneca research facility at Charnwood Campus in Loughborough. With its capacity to house 180-200 scientists, it’s a significant growth step up from our current staff of 60 research chemists.
The building should be delivered later this year, and at that point we’ll move to become a single site operation, so the facilities that we have in other locations and the teams there will come together in one site at a world-class research facility including the biologists and computational chemists. We’ll then be a standalone discovery and development organization running all the way from discovery biology to process R&D chemistry.
How have clients responded to Charnwood’s expanded commercial offering?
The reaction has been really positive, and we’re increasingly asked to deliver quotes and design projects around integrating computational chemistry, biology, and medicinal chemistry.
For both us and the client the added value is that because of the chemical development and process research capability that we’ve got, we can start to look at that transfer of client technology and capabilities that we’ve developed through to delivery of around a kilo of material.
For some clients that seems a long way away, but in reality it isn’t, and the earlier clients start to think about the development of a successful candidate, the better for them.
We’ve always known that was a USP that Charnwood had, and it’s working really well for us in terms of a market offering.
Along with the capital investment and acquisition, what additions have you made to the Charnwood team?
It was important that after the deal we brought on people that had experience of rapidly growing businesses.
For example, we appointed Trevor Nolan as CFO, and the financial oversight he offers is important not just for the investors, but for us operationally as we grow the business. Trevor brings a high degree of credibility and control over finance but is also a scientist himself, which helps so that when we talk about what we want to do. Trevor sees it as more than just a group of numbers, so he’s been incredibly supportive – not just in supporting the operational staff in the business to achieve their goals, but actually because of his scientific background in supporting the ambitions with the investors.
We also brought in John Handley as Managing Director, who brought valuable experience as COO in a related business in the sector. John has been incredibly helpful and useful in planning operational change within this business, again on this rapid growth trend. He was also really pivotal in working towards the acquisition of Aurelia Bioscience.
How was the experience of making your first acquisition?
It was relatively smooth from our side, in part because of the experience brought by the Synova team. With that said, my presence still in the business was also important for the deal, as Gary Allenby and Cathy Dodgson, the founders of Aurelia, had similar questions and concerns to the ones I’d faced 18 months previously.
We’ve been through similar growth stories, so we were able to work together to a suitable outcome that gave Gary the confidence that we shared the same ambition for growth, not just in terms of numbers and biology but in terms of service and wanting to be science-led as we enter this new 3-4 year plan together.
It’s been a really good acquisition for us, and it’s settling into a combined business really well.
It enhances our service offering, so we can now truly deliver integrated drug discovery projects, whereas previously we were partnering for that sort of approach.
What has the transition been like for you as a founder, taking Charnwood to the next level of growth?
I began my career as an academic scientist and gave lectures at Loughborough. If anyone had suggested to me when we stared the spinoff company in 1998 that we’d be moving into a former AstraZeneca research facility in future, I’d have thought they were crazy!
But that’s the nature of the growth that we’ve created, and it’s all built on the excellence of the growth that we provide as a service.
In terms of the transition, prior to the deal with Synova, Charnwood was a relatively small business of around 50 total staff. At that size as a business owner you can keep a lot of the key information around capacity, business development and profit margins in your head. But, obviously, it’s not a great thing to run a company that way – that information needs to be documented, even if only from a risk management perspective. After the deal, it’s been an interesting challenge to move to systems where there’s a wider understanding across the senior management team of things that are important to the business that we need to track, we need to keep on top of, not just operationally but financially, for an ambitious growth plan.
Finally, for any other founders at a similar decision point to where you were with Charnwood last year, what key advice would you give?
Having been through the process with CCD not too long ago, finding the right backers that you are comfortable with is high on the list.
It’s key to get on with your investors on a human level and to talk a similar language, but you also need to share the same vision. Are they enthusiastic about the business they want to get into, are they excited about what you can build together?
That synergy is important, but from a founder perspective it’s also about realising that you will most likely get to a point with the business where you just have to be honest with yourself about what it is you can deliver with organic growth compared with rapid expansion and an injection of expertise.
Along with Synova’s capital, we’ve bolstered our senior management team with appointments of CFO, MD, and more recently chief commercial officer roles, and the new team members have pushed the business on, without a doubt.
Charnwood was certainly at a crossroads in terms of growth potential, and we don’t regret any of the steps of that we’ve taken to this point in time.
It was the right thing for Charnwood, for the founders personally, and for our staff. They can see the ambition the company has, and they’re really enthused about being on that journey with us.
CCD Partners is a consultancy specialised in corporate transformations in small and mid-market chemicals and life sciences businesses.
To organise a call with one of our partners please email contact@ccdpartners.com
Receive M&A news relevant to your business
At critical moments our clients engage us to provide pre-publicity "off-market" intelligence to give them the edge over the competition - we also provide up-to-the-minute public or "on-market" intelligence for free
Contact Us
RECENT POSTS
Market leading provider of formulated chemical process aids and foam control, PennWhite has been acquired by Manali Petrochemicals, part of the AM International Holdings group.
Global source of industrial gas news, views, and debate, gas world has been sold by John and Karen Raquet to the senior management team in an MBO, backed by Mobeus Equity Partners.
Polyblend UK Ltd is one of the market leaders in PVC based polymers. We are experts in manufacturing a comprehensive range of liquid plastisol and dispersion systems, complemented by our Speciality Distribution business supplying plasticisers, resins and PVC additives.
GFBiochemicals is a sustainable chemicals company that produces levulinic acid derivatives at commercial scale directly from biomass. Having perfected its technology, product, and certification, the company is entering a new phase of commercialization.
In the latest episode of the Chemical Transformations podcast , CCD Partners' Managing Partner Matt Dixon speaks with Ted Clark, former President and CEO of Royal Adhesives & Sealants, discussing his new book "Shipping Clerk to CEO: The Power of Curiosity, Will, and Self Directed Learning”. The book tells the story of Clark’s remarkable career journey from entry-level worker to CEO of a $240m chemical company by the age of 42.
Esteve Química purchases one of the UQUIFA Group's two pharmaceutical fine chemicals plants in Barcelona.
Specialty materials manufacturer Vertellus has acquired Polyscope Polymers B.V., a global leader in specialty additives for coatings, electronics applications, and engineering polymers.
Biosynth Carbosynth is a fully hybrid Research Products, Life Sciences Reagents and Custom Synthesis and Manufacturing Services Company with global research, manufacturing and distribution facilities. They are the supplier of choice for many in the pharmaceutical, life science, food, agrochemical, cosmetic and diagnostic sectors and manufacture and source a vast range of chemical and biochemical products.
Aspire was founded in 2009. Aspire has an asset-light business model that focuses on R&D, business development and sales and marketing, while outsourcing manufacturing and distribution to specialist third parties. For more details see www.aspirepharma.co.uk.
CCD Partners Senior Advisor Dr Michelle Lynch analyses the net zero roadmaps of five of Europe's leading speciality chemical companies, exploring the details of their strategies and evaluating the real-world impact of their commitments to climate neutrality.
CCD Partners
Insight | Network | Execution
We are a network of multi-disciplinary specialists united in the common purpose of identifying and delivering the full potential of innovative and impactful chemicals and life sciences businesses.
Get In Touch
