News and publications
Interview Felice Verduyn-Van Weegen
'There are still so many game changers waiting in biotech.'
Every year, EQT Life Sciences invests in five to ten biotech companies that are working on the most revolutionary technologies, says partner Felice Verduyn-Van Weegen. At any moment, breakthrough technologies could turn the medical world upside down. There also remains a lot of potential. It is therefore very important that venture capital funds are better filled - a wonderful task for pension funds, among others.
At an early age, Felice Verduyn-Van Weegen said she wanted to become a professor when she grew up. Fascinated by the functioning of the brain and a passion for making people better, she graduated as a neuroscientist. But once she started working in the research world, it turned out to be very static. She wanted to achieve results faster and not just focus on data. Verduyn-Van Weegen switched to consultancy firm McKinsey. As a strategic advisor to various organizations, her hunger for speed and entrepreneurship was satisfied, but she missed the substance. Since 2015 she has worked at EQT Life Sciences, formerly Life Science Partners (LSP). That was the right match. At this investment house she can combine her love for innovation in medical science with her drive to make an impact on the lives of patients.
With venture capital, the company has been financing biotech companies that develop medicines for 20 years. This happens at an early stage, before a pharmaceutical company dares to do so. “EQT Life Sciences therefore plays an important role in drug development,” says Verduyn-Van Weegen. 'Every year we invest in five to ten companies that are working on the most revolutionary technologies - we stay on board with such a company for several years to help it move forward.' EQT Life Sciences was one of the founders of well-known biotech companies such as Crucell and Merus and Argenx.
Verduyn-Van Weegen experienced the rapid growth firsthand. The then investment fund LSP 5 had 250 million euros at its disposal, the sixth fund raised 550 million euros. LSP 7, the most recent fund, reached a record amount of 1 billion euros. “We are the largest European fund for biotech investments,” she says with pride.
Thanks to the fact that other major venture investors are located in the Netherlands, such as Forbion and Gilde Healthcare, the Netherlands occupies a leading position within Europe. 'The wave of innovation in the biotech sector is growing.' As a partner at EQT Life Sciences, she looks to the future with great anticipation. “Breakthrough technologies can turn the medical world upside down at any moment.” She explains what this requires and what role investors play in a conversation with Juul Vaandrager, director of venture capital at the Dutch Association of Participation Companies (NVP).
What does a typical investment process look like?
'We often step in when the effect of a medicine or therapy – such as cell or gene therapy – has been scientifically proven in animal models. We are then involved in various clinical trials. Phase I tests safety in healthy volunteers, phase II evaluates efficacy and safety in a small group of patients. A pharmacist usually presents himself in phase III. During this phase, the same research is carried out as in phases I and II, but within a larger population. That is a logical moment for a pharmaceutical company. The risk is lower because safety and effectiveness have been demonstrated in humans. Moreover, pharmaceutical companies are good at running large studies efficiently. But we often get in later. Sometimes pharmaceutical companies are not yet interested in a phase III because the medicine is too innovative. Sometimes phase II has not gone smoothly and a pharmaceutical company considers the results too risky. By the way, a biotech company does not always end up in the hands of a pharmaceutical company; it can also remain independent - for example through an IPO.'
The biotech sector has been growing strongly in recent years. How do you explain that?
'The quality in the biotech sector has increased, companies have better management teams. This makes it easier for us to invest larger amounts in a company. This allows a company to work on different medicines, allowing it to spread the risks.
We also regularly invest in so-called platform companies that want to develop a specific technology. With such technology, a company can roll out an endless series of products. Argenx is an example of this. This Belgian-Dutch biotech company succeeded in using antibodies from the blood of llamas as its main ingredient. Not only do these animals have strong immune systems, their antibodies are also very similar to those of humans. Therefore, these immune cells are suitable for drug development. Argenx developed the drug Vyvgart to treat a rare autoimmune disease. This medicine is also effective for possibly 15 other diseases.'
LSP has been part of the Swedish EQT since 2021. Why did you choose to take over?
'Our funds kept growing. With our last fund we raised 1 billion euros. That was wonderful, but with 30 people we were reaching our limits if we wanted to grow even further. In EQT we found a partner that is good at fundraising, they have a large organization that can approach this very professionally. Conversely, LSP was interesting for EQT because of our expertise. We are right on top of interesting innovations. We know which new technologies are coming and are good at recognizing the diamonds in the healthcare sector. Together we can now also look at a new segment of the market, in our new life sciences growth fund.”
When is an investment successful?
'Return is ultimately what drives our funds. After all, we invest money that we have on loan - we would prefer to return that capital to investors in multiples. The great thing about the healthcare sector is that good returns and “doing good” go hand in hand. If we invest in a medicine or therapy and thus respond to an unmet need of a group of patients, this is a gap in the market and delivers value.
For each product, we check whether a patient group is really waiting for it and whether doctors will prescribe it. If not, it's not worth the investment. Our team looks beyond just returns. Positive studies at a portfolio company make us incredibly happy. Not because it generates money, but because we really want to realize breakthroughs for patients. Some technologies are so revolutionary – sooner or later they will turn the medical world upside down.'
How do you select companies?
'Companies come to us themselves, but we also actively look for promising technologies or medicines. We screen approximately 2,000 to 2,500 companies every year. We actually work with about five to ten companies every year. We will only make a deal if we believe that the intended product will have a real impact, that it can solve a major problem or that it can be a breakthrough technology. The focus is broad. It could be a medicine for the treatment of rare diseases – for these patients the unmet need is great because there is often nothing. But we also invest in medicines that benefit Alzheimer's or cardiovascular patients. The effect is sometimes smaller, but it means a lot for the system.'
There is social criticism of parties that make a lot of money from expensive medicines. What do you think of that?
'Drug development is risky. Although we are good at assessing promising medicines and therapies, things sometimes go wrong. A drug may prove less effective in a later research phase. This remains difficult to predict. Not only does it take money to bring a product to market, money is also invested in products that ultimately fail. I can't defend all the criticism. Ultimately, we do not determine the price of medicines. There are pharmaceutical companies that make big profits. I agree that politicians can do something to prevent these excesses, but at the same time financial incentives must be maintained. To keep drug development interesting for investors and pharmaceutical companies, there must be a pot of gold at the end of the rainbow.
It is good to realize that biotech companies are playing an increasingly important role within the drug development ecosystem. Pharmaceutical companies used to develop medicines themselves, but nowadays they mainly focus on late-phase development. R&D has become too expensive for pharmaceutical companies because it produces too few successful medicines. Biotech companies have adopted this risky path and are more successful in it. Why? Biotech companies put a lot of focus and drive on the small number of products being developed in that company. This is where the attention goes. But biotech is also close to the academic world. This is where the greatest knowledge lies. Scientists have often done research for 30 years before considering a drug. Much is already known from the start. Because the biotech sector has taken over the risks of pharmaceutical companies, the ecosystem has improved and become more balanced. Every Dutch person benefits from this. After all, more innovation comes from the academic world to the patient.'
The Dutch biotech sector has acquired a leading position in recent years. What were the success factors?
'Thanks to our leading universities, the Netherlands ranks sixth worldwide among countries with the largest number of patent applications. We also have many innovative entrepreneurs and a relatively large number of international pharmaceutical companies. They know where to find each other. But the role of the government is also important. The netherlands have innovation is always encouraged with subsidies and fiscally attractive measures. What is especially important is that the sector has produced several successes – think of Crucell, Argenx or Galapagos. The entrepreneurs involved in these and other successes often use their expertise and experience in new companies. This is how successes are repeated and investor confidence grows. All this leads to a flywheel effect.'
Can the sector now do this on its own? In other words, can the government withdraw?
'That would be a waste. We are making good progress, this is precisely the time to double our efforts and take action. There are still so many game changers waiting. Encouraging innovation by the government remains important in the early development phase. The pipeline with promising technologies must remain well filled. There are still gains to be made throughout the entire drug development process. For example, it would be valuable if the academic world did more preliminary work. For example, scientists could test a medicine with animal models. As a venture investor, it would be easier for us to get involved. Now a biotech company must do this themselves before they can qualify for financing.
But we will make the greatest profit if the European venture capital funds are filled even better. Compared to America, they are still too small. If a European company really wants to raise a lot of money, it still has to go to the United States. Institutional parties, especially pension funds, can make a difference in the future. Now they hardly invest in venture capital funds. Something happens. ABP and PGGM have announced their intention to invest on a large scale in high-impact funds. Biotech is an obvious choice.'
America is the example for the biotech sector. What can we learn from this?
'There is more money available in the US. Venture capital investors are also on top of things much earlier and help build companies around promising technology. In many cases we do not take that effort because so many ready-made companies come to us. We have the luxury of choosing the very best companies. At the same time, this means that a lot of potential remains untapped. If more money becomes available in Europe, it can be put to better use.'
What investments excite you?
'Very recently, Amolyt Pharma, a French company developing a drug for one of the largest rare diseases, was sold to AstraZeneca. We entered this field based on good preclinical data and a convincing team. This molecule was then tested in phase I/II and is now in phase III, and can apply for approval next year.
That's what we do it for anyway. I am also pleased with the establishment of the Dementia Fund, worth 260 million euros. We thereby focus on the development of effective treatments for dementia. The fund is led by professor of neurology and Alzheimer's expert Philip Scheltens. We will invest in about 12 companies that are working on promising Alzheimer's drugs. It is an ambitious mission, but we believe that with this fund we can eradicate dementia from the world.'
