Rare disease therapeutic developers raised a total of $22.9 billion through public and private equity and debt financings in 2021. That grew 28 percent over the $18 billion raised in 2020, according to data from DealForma and Global Genes.
The rare disease therapeutic sector set a new record for venture capital financing as the sector raised a total of $8.8 billion, up from the $7.2 billion raised in 2020. In a reflection of the large amounts of capital available through venture financings a total of 29 of the rare disease rounds exceeded $100 million, up from 22 a year ago and just six in 2018. Global Genes released the topline numbers ahead of the February 2022 release of its NEXT 2022 report, the organization’s annual report on the world of rare disease.
While the number of series A deals fell to 39 in 2021 from 45 a year ago, there continued to be a strong appetite for early-stage deals. In fact, rare disease drug developers raised $2.4 billion in series A financings in 2021, up from the $2.2 billion raised in series A financings for the same period a year ago. Overall, series A rounds accounted for 27.2% of the total venture capital raised by rare disease drug developers in 2021.
The average venture funding for rare disease therapeutics developers reached $83.2 million in 2021, up from $74.7 million a year ago. Cell and gene therapy developer ElevateBio, which is developing treatments for cancer and rare diseases, closed the largest rare disease financing round of the year with a $525 million series C round.
While rare disease drug developer IPOs began the year on a record-setting pace, a shift in financial activity during the second half of the year derailed IPO activity for rare disease companies. In fact, IPOs were the one area that rare disease fundraising declined from a year ago. Overall, rare disease drug developers raised a total of $4.3 billion in 23 IPOs in 2021, down from $4.5 billion in 25 deals the previous year.
Engineered cell therapy developer Sana Biotechnology’s $676 million public market debut was the largest rare disease IPO of the year. A total of 17 of the rare disease IPOs were completed by June 30 and accounted for $3.4 billion or 79 percent of the total raised during the year. Average IPO deal sizes in the first half of the year totaled $200.2 million. That compared to an average of $108.7 for rare disease IPOs in the second half of 2021.
Rare disease therapeutic developers were the subject of 48 M&A transactions, one less than in 2020. Of those, 32 deals had disclosed values totaling $53.2 billion, $49.4 billion of which was paid at closing. Rare disease transactions accounted for 29 percent of all biopharma therapeutic M&A deals and for 54 percent of all reported M&A deal values in 2021. Overall, the biopharma therapeutic sector saw 167 M&A transactions with a total value of $98.3 billion.
Though M&A activity fell short of record levels in the absence of blockbuster transactions that bolstered the overall numbers in 2018, 2019, and 2020, acquisitions of rare disease drug developers dominated the largest M&A deals of the year. In all, rare disease M&A transactions accounted for 59.3 percent of all therapeutic M&A deal payouts in 2021, up from 22.8 percent excluding megadeals. In fact, seven of the ten largest transactions in 2021 involved rare disease companies as the target.
The largest M&A transaction in 2021 was CSL’s $11.7 billion acquisition of Vifor Pharma. The deal provides CSL with a high-growth, cash generating business that complements and expands CSL’s two business units. It adds a portfolio of products across nephrology, dialysis, and iron deficiency therapies.
The total value of partnering deals involving rare disease therapeutics rose in 2021 to a total potential value of $59.7 billion, up from $35.2 billion in 2020. The total disclosed value at closing rose to $4.8 billion, up from $4.5 billion in 2020. The total number of rare partnering deals totaled 180, up from 135 in 2020.
Takeda Pharmaceutical was the most active company on the rare disease partnering front with a total of 12 transactions, eight of which had disclosed values. The total potential value of those transactions topped $10 billion with the upfront cash and R&D portion approaching $1.1 billion. These transactions included the largest potential value of any life sciences therapeutic partnering deal in 2021, a broad collaboration with Poseida Therapeutics to use its DNA and RNA nanoparticle delivery technology and other genetic engineering platforms for the research and development of up to eight gene therapies with a focus on non-viral in vivo gene therapy programs including Poseida’s hemophilia A program. The deal included $45 million in upfront payments and up to $3.6 billion in potential milestone payments.
Rare disease therapeutic developers continue to have a strong allure to investors and as evidenced by the significant amounts of capital they were able to raise in 2021 to advance their pipelines. The sector should continue to be strengthened by emerging technologies and the growing ability of rare disease therapeutics developers to not only provide meaningful treatments for conditions with unmet needs, but address the underlying cause of genetic diseases and provide functional cures.