Innovation level is an important parameter in evaluating the commercial potential of life science projects. Some are designed to make marginal improvements to existing treatments, whilst others are based on radically new types of compounds or technologies with the potential to dramatically improve patients’ quality of life and maybe even increase the chances of a cure and survival. Karolinska Development only invests in the latter project category.  

The investments are made in partnership with other leading specialist investors, giving Karolinska Development access to a broader capital base, additional expertise in pharmaceutical/medtech development and commercialisation, and an augmented international network of potential licensing and business partners for the portfolio companies.  

We identify our investment opportunities from among leading entrepreneurs in the Nordic life science sector. We are keen to invest in mature projects, where the value can be realised more quickly than in companies in early research and development phases. Pharmaceutical projects must have completed the preclinical development stage to be of interest to us, while other types of life science companies must have begun generating sales revenues. There are, however, a number of other items on our checklist that must be ticked off by potential portfolio companies:  

• A potentially revolutionary medical innovation with clear competitive advantages over existing products.  
• A management group and Board of Directors with extensive experience and knowledge of the relevant field of research, who have demonstrated the ability to successfully commercialise scientific gains.  
• A well-defined strategy for achieving regulatory approval.  
• An equally well-defined strategy for commercialising the product.  
• The potential for market exclusivity, based on a strong intellectual rights platform and/or orphan drug status.  
• The potential for syndicating the investment with other international life science investors whose expertise and networks can contribute to the value generation process.  
• Good preconditions for positioning the company for an attractive divestment or listing within a reasonable timeframe.

There are many companies conducting projects of high scientific quality, but fewer with the management expertise required to monetise their research findings. This is why, over the past few years, we have placed great emphasis on strengthening the Boards of Directors and management groups of our portfolio companies through the recruitment of people with a documented ability to close international business deals in the life sciences sector.

Karolinska Development has long-established processes for minimising the risk that the results of clinical trials fail to live up to justifiable expectations. The portfolio companies receive professional support throughout the process of optimising the design of their clinical studies, and the potential for spreading the risks by expanding therapeutic indications is subject to continuous assessment. The development strategies for the individual projects are structured in close cooperation with world-leading scientific and clinical experts.

The investments in pharmaceutical projects continue until proof-of-concept is demonstrated in phase II studies, at which point the potential for entering into cash flow-generating licensing deals, trade sales, or IPOs will be examined. The reasoning here is that positive phase II data markedly increases the potential for attractive business deals. It is only when this data has been generated that it is possible to demonstrate that a candidate drug has the anticipated biological effect, thereby substantially reducing the ongoing development risk and significantly increasing the value of the project. Karolinska Development’s objective for the holdings in portfolio companies within medtech is to divest at the point when the companies have launched their first product and have become cash flow-positive.