30 Oct 2019 | 12.15 pm
Solvotrin Poised For China Expansion
Pat O’Flynn partnered with Trinity and UCD professors for his iron supplements startup, Solvotrin. China and US expansion now await
30 Oct 2019 | 12.15 pm
Developing academic research into a commercial product takes time and entrepreneurial expertise. Cork man Pat O’Flynn had both when Enterprise Ireland approached him in 2009. O’Flynn had already proved his business acumen by founding a successful chemical waste disposal business, which had been acquired by Veolia.
Through EI’s Business Partnering Programme, O’Flynn (48) was presented with 15 pieces of third-level research with commercial potential. He decided to go with a drug delivery and absorption technology that was being developed in Trinity College Dublin by Prof. John Gilmer, with help from Prof. Mark Ledwidge in UCD. O’Flynn set about spinning the technology out as Solvotrin Therapeutics, and a decade later the venture is ramping up on a global scale.
Solvotrin’s USP is a patented process of delivering aspirin, iron, B vitamins and other nutrients to the body in a way that maximises absorption rates and minimises nasty side-effects. The company’s Active Iron product has found good traction in the Irish, UK, German and Benelux markets, and O’Flynn recently tied down a distribution deal to bring Active Iron to China.
Pharma startups face a costly infancy period, when there is substantial spend on R&D, patenting, licensing and other overheads. Filed accounts for Solvotrin Therapeutics Ltd show that startup losses stood at €4.5m in December 2017. As well as developing this novel product and bringing it to market, O’Flynn has had to maintain a regular focus on sourcing new funds.
Since 2011, Solvotrin has raised around €7.5m from backers who include Healy Group founder Maurice Healy and Ergo CEO John Purdy. In a €3.5m funding round concluded in 2017, Elkstone Capital was the lead investor, with an investment of €1m. Other investors in that round were Purdy (€250,000) and Healy (€350,000). A further €655,000 was raised in 2018, with Enterprise Ireland making a payment of €100,000 to add to the €250,000 the agency had previously invested.
Solvotrin employs 20 people and O’Flynn is particularly enthused about the recent instalment of Peter Caldini as the company’s executive chairman. “I wasn’t able to attract a superstar to Solvotrin until now,” says O’Flynn. “Peter was president of Pfizer North America and he has also worked for Bayer, GSK and Wyeth. He will be instrumental in our market strategy for US expansion.
“It’s important to have a variety of people from different backgrounds on our board. I like to think of every one of them as better than myself; if you’re the smartest guy at the table then you’re probably in trouble.”
Pat O’Flynn’s first business venture was Southcoast Transport, a logistics company that targeted the pharmaceutical industry. The business grew to operate some 800 tanks for the transport of chemical waste, and was merged with another O’Flynn family business to form Safeway in the late 1990s.
In 2001, Safeway it formed a joint venture with AVR, a Dutch government-owned utility company, to become AVR-Safeway. The business enjoyed several years of growth, so much so that in 2008 O’Flynn was a nominee for an EY Entrepreneur of the Year award. The same year, the business was acquired by Veolia. O’Flynn stayed on in the business until 2010, and by then was already hatching his Solvotrin idea.
“Enterprise Ireland was aware that I was selling the business and approached me to participate in its Business Partners Programme,” O’Flynn explains. “The agency showcased a range of advanced technologies and the one that I really liked was from Prof. John Gilmer in Trinity.”
Gilmer’s research had found a way to significantly improve the body’s absorption rates of aspirin and iron, while also reducing side effects. Iron is traditionally a tough element for the body to absorb; it can also cause gut inflammation, leading to constipation and/or diarrhoea. Iron supplements and aspirin are among the most prescribed drugs in the world, and O’Flynn saw the commercial opportunity of Gilmer’s research immediately.
“It took us about nine months to spin out Solvotrin and get everyone aligned,” O’Flynn recalls. “You need to be aware from the start about how the spin-out process works. I’ve heard other entrepreneurs who complain about the process, claiming that academic and agency partners look for too much. But you have to bear in mind that they have developed something valuable and they have to be rewarded too. Don’t think that it’s going to be a walkover: there are experienced negotiators in third-level institutes and in agencies like Enterprise Ireland.”
Solvotrin launched Active Iron in 2016, after several years of R&D, clinical trials, patenting and ticking regulatory boxes. “A challenge was managing a P&L without revenue,” says O’Flynn. “That was quite new to me. In my other startups, I started small, generated a little revenue and built from there. With Solvotrin we had to push to make sure we could hit monthly targets to shorten to road to bringing the product to market.”
Once the product was finalised, the founders had to source manufacturers. “We found our first partner in the US and we also work with a manufacturing partner in France,” O’Flynn explains. “A production facility in Ireland wouldn’t satisfy all of our markets, as we want to avoid import tariffs. Our IP, regulatory and marketing brains are all based in Ireland.”
A key early hire for Solvotrin was a lawyer with IP expertise. The business has three patents and fourth one is in the works. “They give us 20 years of protection, which is a nice position to be in. However, the patenting itself is expensive and time-consuming.”
The funding path has also been gradual, with annual incremental fundraisers linked to achieving milestones. “This makes sure we’re lean and focused. We also look for investors who understand what we’re doing and can add some value beyond the funding,” says O’Flynn.
Solovtrin’s Active Iron supplements launched in Ireland and the UK via an exclusive deal with Boots. Distribution was later expanded to pharmacy chains Sam McCauley, Lloyds, Holland & Barret and independent pharmacies.
In 2019, Solvotrin added distribution partners on the continent, including ADP, the largest nationwide independent pharmacy distributor in Germany. Belgium, Luxembourg and the Netherlands have also become new markets for Solvotrin this year. “It took the bones of a year to set these distribution agreements up,” says O’Flynn. “These four key markets will demonstrate our capability of rolling out to additional markets.”
Earlier this year Solvotrin also finalised a licensing and distribution agreement for Active Iron with Shanghai Fosun Pharmaceutical Group. China has one of the highest iron deficiencies in the world, and Fosun has national distribution, bringing Solvotrin access to a potential 350,000 pharmacies.
O’Flynn was introduced by Fosun by one of the company’s investors, and it took a year to finalise an agreement, which includes milestone payments payable by the Chinese firm to Solvotrin.
“Fosun liked the Active Iron product from the outset but the company needed to validate me. I travelled back and forth to China, satisfying the hierarchical business culture that operates there. In Germany, you get to talk to the decision maker from the start. In China, you need to go through a number of layers first.”
Active Iron retails in Ireland for €18 for a 30-capsule box, and other products in the range provide B vitamins and iron specifically targeting male or female consumers. Planned product launches will see iron supplements for children and pregnant women, while higher-dose products will come on stream for hospitals.
“We have an iron supplement for vegans in the pipeline, as well as zinc supplements, which also traditionally have low absorption rates,” O’Flynn adds. “We registered a product in the US earlier this year and it went on sale recently on Amazon, where it’s doing quite well.
“We’re only just kicking off our US strategy and I think that having a dynamic board has helped us a lot. It stops you from believing your own propaganda until you have actually proven it first to your board.”
Photo: Pat O’Flynn (centre), with Mark Ledwidge (left) and John Gilmer