A Banner Year for Venture Funding

Venture investors turned up their spending on rare disease companies in 2020 as drug developers targeting orphan indications raised $7.2 billion in venture capital in 96 transactions with disclosed values. That was more than three times the $2.2 billion raised in 2019 through 34 transactions with disclosed values. Average deal values in 2020 rose to $74.7 million up from $66.1 million the previous year. That’s more than that $54.1 million average for biopharmaceutical venture financings overall in 2020. A total of 45 financings were series A rounds, up from just 10 deals in 2019. These rounds accounted for $2.2 billion (31 percent) of the total rare disease venture funding, up from $562.4 million (25 percent) of the total rare disease venture funding in 2019.

Cell and gene therapy companies dominated the list of biggest venture deals in 2020 accounting for seven of the year’s ten largest funding rounds. Sana Biotechnology, which is developing engineered cells as medicines, topped the list with an eye-popping $700 million in venture funding. The company, founded by former Juno Therapeutics CEO Hans Bishop, is developing therapies for serious diseases such as cancer, central nervous system diseases, heart disease, and various genetic disorders. It has not revealed specific indications it is pursuing.

Of the 96 rare disease venture financings in 2020, 22 carried values of $100 million or more. Only two financings raised $10 million or less. Investors were unafraid to pursue early-stage companies. A total of 25 deals were for platform/discovery stage companies and 28 were for preclinical/IND stage companies. Of the financings for companies in clinical development, 13 companies had a lead asset in phase 1 studies, 14 had a lead asset in phase 2 studies, and five had a lead asset in phase 3 clinical trials.

Companies developing therapies for neurologic indications were the largest groups of companies to raise venture funding as 28 companies raised nearly $1.7 billion. For example, Praxis Precision Medicines raised $210 in venture funding—launching in May with more than $100 million in funding and a phase 2 pipeline of experimental therapies for genetic epilepsies, movement disorders, and psychiatric disorders, then followed at the end of July with a $110 million round. It completed $218.5 million IPO in October. Annexon, which is developing complement inhibitors for neurologic and immune disorders, raised $100 million in a series D round at the beginning of July, then completed an IPO at the end of the month adding another $251 million to its coffers.

OVERVIEW
VENTURE FUNDINGS
IPOS
PUBLIC DEBT AND EQUITY
PARTNERING
M&A