LSP closes LSP 7 at EUR 1bn

The venture capital firm, which was bought by EQT in November 2021, says it is the largest life sciences growth fund raised in Europe to date. 

"The funds that we've seen in Europe tend to be around EUR 350-400m," managing partner René Kuijten told Unquote. "We haven't seen one above EUR 600m." 

LSP had already raised EUR 850m for LSP 7 in November 2021 but one large investor committed a further EUR 150m the day after EQT announced its acquisition of LSP. 

LSP 7 was launched with a target of EUR 750m with a hard cap of EUR 1bn, taking seven months to raise the first tranche. It will invest in 15-20 companies developing new drug therapies and medical technologies with a ticket size of around EUR 40m-55m. 

The portfolio will be equally split between pre-clinical early-stage, mid-stage and pre-exit. The investment focus will be predominately on Europe but the fund could make 2-3 deals in the US. 

It has already invested in Evommune (dermatology and immunology), Egle Therapeutics (oncology and autoimmune diseases), Hotspot (autoimmune diseases, rare diseases and oncology) and an undisclosed German radiotherapeutics company founded by LSP.

"We are opportunistic investors so we grow with the trends rather than make them," Kuijten said. "At the moment we have a lot of interest in immunology and oncology, cardiovascular and rare disease." 

Its predecessor LSP VI closed in March 2020 at a hard cap of USD 600m. It made 17 investments with notable exits including Arvelle Therapeutics, acquired by Angelini Pharma for EUR 960m, and Nkarta, which listed on the Nasdaq in July 2020 at a market cap of USD 584m, but is since down 80%. 

Kuijten said that it will not add any more portfolio companies from this fund but has some dry powder left to join later rounds. 

The GP said its portfolio companies are currently engaged in over 100 clinical trials, which is comparable to the pipeline of the largest pharmaceutical companies.

Targetted exit routes include both trade sales and public listings, depending on the market environment. 

"Currently it's not a very good time to list, public markets are a bit silent and quiet. A trade sale often comes with a nice strategic valuation.

"We like companies in the pre-clinical to Phase II, by this point pharma usually becomes interested in a buyout." 

EQT's acquisition of LSP is expected to close in Q1 2022, after which the company will be renamed EQT Life Sciences. 

Investors

LSP 7 is backed by five pharma companies: four from Asia and one from the US, as well as other types of investors. "We're one of the few that have pharma investing in our fund," said Kuijten. 

Other investors include pension funds, insurance companies, wealth managers, government funds such as the European Investment Fund (EIF), and family offices. 

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