In conversation with Laurence Barker, a Partner with DDF
Can you give me some background on the creation of DDF and the objectives of the world’s first specialist venture capital fund focused on dementia?
The catalyst for the creation of DDF as a dementia-focussed venture capital fund was the G8 Summit held in London in 2013, which had the looming dementia crisis as its focus. At this high-profile meeting, world leaders from academia, industry and charities, gathered to discuss and agree how to address the urgent need for drugs to impact the disease. G8 ministers agreed to specific resolutions including the need to devise a framework with the goal of identifying new approaches more systematically to generate disease-modifying treatments for dementia.
As a result, DDF was created as a venture capital fund to employ the rigour and discipline of the venture investment model to a high-risk area of science. The fund’s explicit goal was to back novel scientific discoveries to advance a much wider and more diverse set of approaches to developing drugs to treat dementia, including Alzheimer’s disease, while also generating financial returns for fund investors. At this time, few others were making significant investment into novel therapeutics for dementia, and in fact many key industry players were reducing their R&D commitments due to continued failure, making DDF the first of its kind to reverse this trend.
We all saw this as a major opportunity to address one of the most pressing healthcare issues of the 21st Century, where success has been extremely limited, and the unmet need remains vast.
Why was there so much investor interest in the fund from the very beginning?
We launched DDF in October 2015 raising £70 million (ca. $100m), which came from the UK Government, as well as the initial six pharma cornerstone investors, GSK, Pfizer, Eli Lilly, Johnson & Johnson, Takeda and Biogen, and the charity Alzheimer’s Research UK.
In June 2018, we announced the final oversubscribed close of the fund at £250 million (ca. $350m), far exceeding our original target of £131 million (ca. $200m). This success was helped by strong support through additional investments from several important stakeholders including AARP ($60m) and Bill Gates ($50m).
The fund is managed by SV Health Investors, a leading life sciences venture capital and growth equity firm. SV, which was appointed in October 2015 following a competitive tender process initiated by the UK Department of Health, brings an impressive track record of identifying, investing in, and supporting the development of novel drugs across a range of clinical indications including neuroscience as well as generating returns for investors.
I believe that the significant interest generated was the result of the backing of our original pharma investors, the approach and the dedicated team SV built to manage the fund, which included neuroscientists with deep neurodegenerative domain expertise working alongside experienced venture investors. This new combined expertise enabled the team to identify the most recent advances in the science underlying many of these disease pathologies and back the most promising opportunities to exploit these insights to develop innovative and much needed dementia treatments.
For many of the investment decision makers there was also a very personal family experience of the devastating impact of dementia.
When did you become involved in DDF?
My involvement pre-dates the creation of DDF. I was working at GSK in early 2015 when the idea of a fund was floated.
As Head of Investment Management, I represented GSK in the discussions between the initial pharma investors. Collectively, we decided that the best approach to achieving the greatest impact with the capital we had was to create a dedicated venture fund focused on advancing a diverse range of discovery efforts towards treating dementia. This was clearly a high-risk endeavour but, given SV’s venture track record and the unparalleled partnership with industry that we had established in DDF, I felt completely convinced that this approach would offer us the greatest opportunity at success; and on a personal level, dementia had already taken its toll on my family, so I just had to join the team.
I joined DDF in 2016 and play a key role in sourcing, developing, and managing investments as a Partner with the fund.
Can you provide me with more insight into the evolution of DDF since its inception and how it has been positioned for success?
Over the last five years we have built an investment team and fund structure that is uniquely positioned in the industry to deliver on the key objective of the fund, to generate high-impact therapeutics for age-related dementias. We worked to ensure that DDF could combine venture investing and company creation expertise with unparalleled dementia domain expertise coupled with the unrivalled access to world-class innovation that we have developed through collaboration with leading academic neuroscientists and clinicians, disease-focused foundations, and strategic limited partners.
Our team has grown from four people in 2015 to more than 12 in 2021, divided between our offices in London and Boston, who combine unparalleled investing and neuroscience expertise. The fund is now led by three Partners, my fellow Partners, Jonathan Behr and Christian Jung and me – together, we bring a powerful blend of investment, industry, and scientific experience, as well as our networks spanning the UK, Europe, and the US.
In addition, we have the committed support of three Managing Partners from SV Health Investors, namely Kate Bingham, Houman Ashrafian and Mike Ross, who share our passion for DDF’s goals, act as advisors and bring a wealth of venture experience.
Can you tell me more about Kate Bingham’s role in the success of DDF?
Kate has played a critical role in creating and shaping the DDF that we see today.
From Day 1, Kate was clear that the DDF should have the same financial goals as any other biotech venture fund, even though we are a fund more narrowly focused on funding companies to discover new dementia drugs. This financial approach was critical in ensuring we were able to raise the requisite capital from investors necessary to have an impact, as well as enabling us to access top level investment talent for the DDF team.
Kate also recognised from the outset that given the high risk of dementia R&D, she would need to assemble an in-house team that combined the venture skill set as well as the deep neuroscience expertise, an approach that only makes sense for a sector-focussed fund. Furthermore, the close industry partnerships we have with our pharma investors and other industry key players, (e.g., via our Scientific Advisory Board) above and beyond the capital they invest, is a critical success factor for the fund. This is now being born out as a very high proportion of our portfolio benefits directly from pharma capital, whether via an investment, business development, or both.
Can you tell me more about DDF’s Scientific Advisory Board (SAB) and its role in identifying successful investments?
We are privileged to have an SAB comprising senior neuroscience and R&D leaders from across our strategic investors, including our pharma partners, who bring deep scientific and industry insights to DDF and our portfolio. The SAB is a critical resource for us as they play a key role in helping us to evaluate the science emerging in the dementia field. The SAB also provides a critical sounding board as we review the progress of investments that we commit to, which is of particular value given the pharma investors form a representative group of potential partners and acquirors of our portfolio companies.
We formed our SAB at the inception of the fund as one of the key commitments of the strategic investors to place science at the centre of DDF’s investment approach and ensure that DDF could leverage their combined industry knowledge and experience.
Our SAB is led by Luca Santarelli, M.D., who brings a unique skill set and experience base ideal for this role. He combines an academic science background with pharma neuroscience R&D leadership of many years developing drugs to treat neurodegenerative diseases as well as a successful track record as a biotech CEO.
Can you tell me a bit more about your deal flow?
We have established an attractive proprietary deal flow as a result of the network of relationships that we have developed with a wide variety of key players across the dementia drug discovery and investment ecosystem, as well as from leveraging the wider established SV network.
We review more than 250 qualified dementia investment opportunities a year using privileged access to leading academic centres, our close partnerships with disease-focussed foundations, and our pharma industry and healthcare investors. We believe that our network gives us a clear competitive edge in sourcing, evaluating and executing on dementia therapeutic investments.
Can you discuss DDF’s current portfolio of investments?
We currently have a portfolio comprising 18 companies. Importantly eight of these were built by DDF based on our established approach to biotech company creation.
We have a clear investment strategy, which centres around us taking stakes in a broad range of novel scientific concepts as well as potential breakthrough modes of action.
Among the areas where our companies are at the forefront of developments are Microglia & Neuroinflammation, Synaptic Physiology, Proteostasis, Genomic Instability, as well as a range of novel platform approaches and enabling technologies.
We are optimistic that our portfolio can deliver both significant returns for our shareholders, based on the science and the management teams we have backed and new drugs that will have significant impact on dementia that the world desperately needs.
In our next blog, DDF Partner Christian Jung, will look more closely at how DDF has transformed the dementia drug discovery effort in recent years.