Clare Terlouw Rising Leader Interview with In Vivo

April 9, 2024

Success in life sciences venture funding requires drive and speed, says In Vivo Rising Leader, Clare Terlouw. But there is more to it than that.

Clare Terlouw rose to head of corporate development at Syncona before accepting the challenge of building an investment platform in early-stage biopharma at LifeArc Ventures. It seems miles away from her early career path as a qualified sports physio in Canada.

Terlouw has noticed a change of attitude among UK founders seeking VC investment to get their technologies on the development pathway. Potential innovators are more willing to ask questions about their ideas and present research to venture capital investors, she says. “Still, we need to do more of that. Scientists should realize that the idea of putting themselves out there, and maybe failing, is all part of it.”

It needs to be seen as a less risky thing for them to do. “If they don’t succeed, they’ve learnt a lot along the way, which they should see as a positive experience.”

Terlouw speaks from a position of some experience in the UK market. She has led LifeArc Ventures since 2020, and before that enjoyed 16 years at other UK life science investor companies and investment banks, including life sciences investor Syncona, where she was head of corporate development.

“Scientists should realize that the idea of putting themselves out there, and maybe failing, is all part of it.”

That role opened up the opportunity in 2018 to join the board of the BioIndustry Association, where, for the past for six years, she has worked on access to finance strategies. In an ongoing project with BIA chief executive Steve Bates, she is raising awareness of life sciences as an asset class and encouraging investment in the sector.

Terlouw would have been largely unaware of the VC environment for life sciences while working as a qualified sports physio in her native Canada. But after a few years she decided to do an MBA (winning Canada’s national MBA competition along the way) and came to realize that a future career in life sciences potentially ticked many boxes. Being head of LifeArc Ventures ticks most, if not all.

LifeArc Ventures, she explains, differs from other seed and series A investors. As part of the LifeArc charity, it operates under a unique model – in the UK at least – which presents networking and investor opportunities that are perhaps not available to other investors.

LifeArc (previously MRC Technology) is a self-funded medical research charity specializing for the past 25 years in translating early science into health care treatments. In 2019, it sold a portion of its royalty interests in Keytruda (pembrolizumab), the anti-PD-1 therapy developed and commercialized by Merck & Co., Inc., to the Canada Pension Plan Investment Board’s wholly owned subsidiary, CPPIB Credit Europe, for $1.3bn.

In part-monetizing this royalty stream, LifeArc, until then a small UK charity, was transformed by the new financial fire power it had on the balance sheet. LifeArc trustees sought people to manage the fund and set a new course for the charity. After hiring a chief investment officer (Graham Duce), Terlouw was appointed to head the venture side.

Her remit from the board was to set a financial investing strategy. LifeArc knew it wanted venture investments, but knew none of the detail about content and size, and the team needed.

“It was an amazing opportunity to build from scratch a financial investing strategy,” Terlouw said. The board approved the strategy and an investment team – now seven strong – was hired to drive it.

Business Synergies Via The Fund Of Funds

In 2022-23, she developed and launched a fund of funds strategy, enabling LifeArc to take LP positions in leading global life science funds. Along with the venture program and the direct investments in companies, the fund of funds, investing in the world’s top life sciences funds, is the third strand of Terlouw’s strategy.

Apart from the financial returns delivered by these very experienced investors, being a limited partner helps LifeArc to be better at its own job and understand the landscape. “LifeArc invests in high risk, and this allows us to diversify across a subset of investments.” In that way, these positions are “very strategically important for us.”

In addition, some of the investments align with five translational challenges, one of which being neurodegeneration, that LifeArc tackles on the charity/grant side of the business. LifeArc also has limited partner positions in two dementia/neurodegenerative-related funds, in the EU and UK. The LP positions it takes are often large enough for a seat on the advisory committees.

As of today, LifeArc has 16 active companies, 10 LP positions in different global funds and is scaled to deliver 2-4 investments per year. “It’s not our strategy to build a portfolio that’s too big for us to personally manage.” A new investment principal hired in January (Jon Nash from M Ventures in the Netherlands) means LifeArc Ventures is up to full strength.

Developing LifeArc Ventures

Terlouw won the LifeArc role for a number of reasons, chief among which was her track record at investment houses.

“When I started at LifeArc Ventures, I focused on how to build an investment strategy that aligns with the charity’s mission and governance,” she said.

“I had worked with quite a few listed biotech/biopharma companies, but also with investment trusts and more complex financial structures for funding. I knew how to invest in a risky asset class and manage that level of risk.”

She added: “I think it is so important to de-risk the things that you can control, because, in biotech, so much is beyond your control; science ultimately will do what it is going to do, and you can’t always control the outcome of that.”

“It is so important to de-risk the things that you can control, because, in biotech, so much is beyond your control.”

That oversight and experience from working in the public markets gave her knowledge of where the opportunities were and where there was need for capital. She was aware that her input would also help develop UK domestic opportunities generally in the life sciences.

“I’ve been excited to build it up, and now four years in, we are running at a steady pace of investment,” Terlouw said. “It’s very unusual to have balance sheet capacity of that quantum where there is the ability to build something meaningful from scratch.”

LifeArc Ventures specializes in preclinical investments and translational (post academic and precommercial) research. Its investments are aligned with where the charity specializes, and it does co-investments to share financial risk.

“We also share operating and strategic risk, given that the bigger funds are used to running trials, and so we need to partner with them,” Terlouw said.

The company has already had two good exits: the sale of DJS Antibodies to AbbVie for $255m upfront in 2022; and the sale of Ducentis, in which LifeArc was the first institutional shareholder, to Arcutis Biotherapeutics in 2022 for up to $400m including $30m upfront.

Also, monoclonal antibody company RQBio, cofounded by Terlouw, did an outlicensing deal with AstraZeneca in 2023.

Alongside these early successes, LifeArc has, as would be expected, had to shut some companies down. In the high-risk biotech and healthtech field, attrition is not uncommon. “It’s playing out the way we expected it to, based on market norms, and many are expected to take years to play out,” she said.

“It’s a fantastic place to run a venture fund,” she added.

Indeed, the LifeArc concept is unique in the UK, and, as to similar models internationally, there are but a handful, in Australia and the US. LifeArc does not have venture partners or operating partners. Instead, it taps into in-house diligence delivered by 14 PhD scientists, whose brief covers all the venture, grant and other programs coming in and out of LifeArc.

Working inside a charity is another aspect that sets LifeArc apart. A further differentiator is the 100 or so scientists working at labs in Edinburgh and Stevenage, including wet labs.

But venture success hinges on a combination of management and scientific expertise. “I am very conscious that I am not a trained scientist, and in life science venture, that can be a big disadvantage, but it can also be a huge advantage as you can see the big picture a bit earlier and can ask the straightforward questions. And I surround myself with scientists.”

On Leadership

Humility plays a big part in how Terlouw conducts herself and runs her venture fund. “I am more aware that I don’t know everything – you cannot in this business. The more people to give you insight, the better, and if that genuinely means if I should change a decision, then I will. I am not afraid to admit I was wrong,” she said.

“As a leader, I like to get things done and I’m definitely known to be driven by action, speed and outcomes. But I also value people’s opinions so I try to make sure I’m listening to what they say. My team should be able to tell me what they think – and I should be able to take it in properly.”

Hearing that, Terlouw’s next comment was not unexpected, when she said: “I’ve worked really hard to be a decent person who people want to be around. Taking time to talk to people is not to be underestimated.”

Day-to-day, she takes a big interest in solving problems, which, in VC, can be complex, take a lot of time and require much consultation with others.

“A lot of investing is a people business. In my role I should be seen as taking the responsibility and trying to solve those problems, to keep the momentum up and keep LifeArc moving forward. That is my job.”

Unusual Origins?

It is all a far cry from Terlouw’s early career, working in a sports injury clinic having graduated with two Canadian degrees. On one long day at work, having seen eight or more patients, she decided to apply to do an MBA. She then won a business plan competition and found herself in 2000 representing Canada at the International MBA competition, in Austin, TX.

“VCs were there – and I was hooked,” she said.

It had not been in the initial draft of the career plan, but “that’s just how life goes. You’ve got to reach forward,” Terlouw said. “I’ve always been fascinated by life sciences, I love the sector, and everything I’ve done has been with that in mind.”

Those early health care origins have played a subtle but significant part in Terlouw’s progress since then. “I believe that when you’ve worked in health care, it helps you understand people in general and it helps you with your investments – it also helps you get deals done and understand what makes people tick and the philosophy behind how people react.”

Support from the top has also been important to her. “That’s what made it possible for me.

I am proud of what we have done, and give thanks to the people who had the confidence in me to do it. They have always been very supportive and given me the resources to do the job.”

It has evidently been a recipe for success, and has allowed the LifeArc Venture’s head to work at the top of her game.

With characteristic modesty, Terlouw batted this aside. “I haven’t got to the top of anything yet – I’m still working on it.”