EQT closes LSP Dementia on EUR 260m hard cap

Rachel Lewis
30 March 2023

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EQT Life Sciences has closed its first dementia-focused fund on its hard cap of EUR 260m as the sector increasingly needs specialised investors, partner and head of the Dementia Fund Philip Scheltens told Unquote.

LSP Dementia, which was launched in October 2020, exceeded its EUR 100m target. It held a first close in December 2020 and made its first investment in January 2021 in the form of NewAmsterdam Pharma, following which it extended the fundraising following heightened interest from LPs, he said.

Scheltens is one of the world's leading experts on dementia, EQT said in a statement, having founded the Alzheimer Centre in Amsterdam in 2000. He has spent his academic career pushing research on biomarkers for diagnosing neurodegeneration, among other areas.

He was approached by LSP in 2019 to set up the specialised fund. "The whole point is that the field needed a specialised investor, we didn't want to do this from the flagship fund because we wanted to build deep expertise," he said.

The fund was transferred when EQT acquired LSP in November 2021, forming EQT Life Sciences.

"Fundraising wasn't easy, a lot of people said it was too niche and a risky business," he said. "We had to go out and convince people that has changed, which became easier now there are two drugs approved by the FDA."

There is just one other dementia specialised fund operating in Europe, Scheltens said, the GBP 250m Dementia Discovery Fund, which is managed by SV Health Investors and makes seed investments.

The healthcare sector has recently seen a rise in narrow-focused funds as LPs flock to specialised managers. Sofinnova recently launched a digital medicine strategy, while Seventure is prepping for the third iteration of its microbiome fund.

Investors
The fund is backed by the Alzheimer's Association, the European Investment Fund (EIF), several global pharmaceutical companies, and insurance companies, among others.

The pharmaceutical companies "have the sense that dementia is the next big thing after oncology," said Scheltens, adding that many do not have their own active pipeline and the relationship gives them visibility on the sector's deal flow. "They can then decide whether to take one of the companies further and do their own due diligence."

The Alzheimer's Association was one of the first bodies that he approached, having worked with them for years. At first, it said that it did not invest in venture capital, he said, preferring to focus on grants for research and direct seed funding, but it changed its mind halfway through 2022.

Investments
The fund will invest in 10-15 companies working in neurodegeneration diagnosis, prevention and treatment, with a focus on Europe, Scheltens said. Around 70%-75% of the capital will be deployed in drugs, with around 25% reserved for technology, digital and biomarker solutions.

It has already made five investments, with the current portfolio reflecting that makeup. One, Nobi, is a medtech company that helps prevent and detect falls. "I realised that investing in drugs for the future doesn't impact patients that have dementia now," he said.

It will deploy tickets of EUR 5m-EUR 15m, co-investing at Series A and reserving a similar size investment for follow-ons in the best companies, he added. The fund is neither building companies nor funding projects so investments need to have a proof of concept and some commercialisation, he said.

The fund will invest across the whole disease spectrum of neurodegeneration, including Alzheimer's, multiple sclerosis, and Parkinson's. Therapy-wise, it is interested in proteins, mitochondrial dysfunction, genetics, microbial antibodies, and small molecules, among others.

People
EQT Life Sciences – Philip Scheltens (partner, head of the Dementia Fund)