Karolinska Development (STO:KDEV) has laid down a marker in its ongoing attempts to pivot away from its previously isolated model of life science investing. The milestone relates to a Series B round by one its portfolio companies, which was able to pull off the largest fundraising in Sweden in the past decade because of KDEV's newfound willingness to bring other financiers on board.KDEV CEO Jim Van heusden
Aprea, the KDEV portfolio company that attracted the investment, pulled in €46 million ($50 million) from a syndicate of investors co-led by Versant Ventures and 5AM Ventures. KDEV participated in the round by converting around €6.5 million in outstanding loans. Following the deal, KDEV's direct and indirect stake in Aprea has fallen to 19%, but the portfolio company has collected the money it needs to expand clinical development of a compound designed to reactivate the tumor suppressor protein p53. The new KDEV is increasingly open to making such trade offs in its portfolio.
"For us, this is a very important deal and a very important milestone because the way Karolinska Development was working before was doing everything by themselves and being the only majority shareholder" KDEV CEO Jim Van heusden told FierceBiotech. "Since I joined a little over a year ago, I've changed the focus of the portfolio and also wanted to have other co-investors ... because the average age of the portfolio was already quite advanced. Investing in life sciences is long term, high risk [and] capital intensive. So, it's better to share that risk with other experienced investors."
Van heusden singled out Aprea's well-connected executive chairman Bernd Seizinger as playing a big role in putting together the investment syndicate, resulting in KDEV's primary job lying elsewhere. "We needed to make room for other investors," Van heusden said. "We have been working more on the deal structure, deal negotiations." In the future, the connections of the in-house team at KDEV could be more important. "Through that network, we are able to attract other investors into our companies," he said.
This process is central to the revamped KDEV. "Certainly for our existing portfolio, the strategy is to get other top-tier investors into the deals," Van heusden said. "The majority of the financing for the existing portfolio will actually come this year from external investors. We can use our own financial resources to do new investments again."
Investors reacted favorably to the validation of KDEV's new approach, sending its stock up more than 9%. KDEV is still down around 80% on the price at which it went public in 2011, a steep decline that contributed to the change in direction initiated by Van heusden.
- read the release