How does an investment fund in pharmaceutical companies oversee conflicts of interest?


Recently, it has come to light that the academic and commercial work of renowned Alzheimer’s disease researcher Philip Scheltens is getting more and more mingled. Scheltens is the head researcher in a study into a medicine developed by the pharma company Vivoryon. In addition, he is a board member of the investment fund LSP Dementia. The indirect board members of this fund are also the board member of an LSP fund that has shares in Vivoryon. Arnoud Pijls, Associate Professor of Corporate Law and Financial Law at Erasmus School of Law, discusses the vulnerability of this construction in an article in Trouw and De Groene Amsterdammer.

Philip Scheltens has contributed a lot to research into Alzheimer’s disease over the last ten years. He currently conducts research into several medicines that could potentially slow down the development of Alzheimer’s disease, and even prevent it to a certain level. These are so-called ‘amyloid cleaners’. This research is mainly financed by investors from the pharmaceutical industry.

Shift in involvement

Recently, Scheltens has outsourced more and more of his research activities, and he has gradually taken on more tasks in the pharmaceutical industry. For example, he works for a private-equity fund, Life Science Partners (in 2022 renamed EQT Life Sciences), from 2020 onwards. This fund invests into biotech and pharma companies via several sub-funds, with a budget of three billion euros.

Vulnerable situation

Scheltens still conducts research into Alzheimer’s medicine based on his research appointment. He is the head researcher of a study into a medicine developed by the publicly traded pharma company Vivoryon. According to experts, this could be a possible conflict of interests. It is unclear whether this is handled carefully enough.

Associate Professor Pijls also considers this a vulnerable construction regarding (the avoiding of) possible insider trading. According to him, EQT Life Sciences should have thorough procedures for handling conflicts of interest. They must take adequate measures to avoid insider trading.

"Scheltens is not allowed to communicate about intermediary research results of Vivoryon with third parties. This rule also applies to his colleagues at one of the LSP funds. The indirect board members of LSP Dementia, the fund where Scheltens holds sway, are also board members of an LSP fund that holds stocks in Vivoryon. When they get acquainted earlier than others with intermediary results of Vivoryon, they are not allowed to act on this knowledge“, explains Pijls.

According to François Kristen, Professor of Criminal Law at Utrecht University, it is hard to monitor as an outsider who at EQT Life Sciences has contact with who and about what. Pijls explains that “to adequately handle a conflict, the so-called 'Chinese Walls' cannot be built high enough".

Associate professor
More information

Click here for the entire article of Trouw (in Dutch).
Click here for the entire article of De Groene Amsterdammer (in Dutch).

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