Financings of Public Rare Disease Drug Developers Soar in First Quarter 2024

Companies developing drugs for rare diseases raised substantial new capital so far this year, as rare disease focused public equity and debt financings reached $7.1 billion in the first quarter of 2024, up 307 percent from the $1.8 billion raised in the first quarter of 2023, according to data from Dealforma and Global Genes.

Almost a third of the new money came in the form of PIPES—private investment in public enterprises—reaching $2.2 billion at the end of March.

While public companies found success in raising private capital and secondary stock offerings, often in the wake of hitting positive milestones, the IPO market ended the quarter quietly with no initial public offerings of rare disease focused drug developers and only one completed therapeutics IPO in March.

Venture capital for rare disease focused companies reached $918 million, dropping 42 percent year to date compared to the same period in 2023, even as venture financings for all therapeutics companies reached $5 billion, up 31 percent year to date compared to 2023.

There were two significant rare disease focused venture financings in March. Sionna Therapeutics, a clinical-stage company developing differentiated treatments for cystic fibrosis, closed a $182 million series C financing to support the clinical development of first-in-class small molecules designed to fully restore the function of faulty protein underlying cystic fibrosis. Capstan Therapeutics raised $175 million in a series B financing to advance in vivo reprogramming of cells through RNA delivery using targeted lipid nanoparticles.

The uptick in equity and debt raised by rare disease focused companies in the first quarter of 2024, up 154 percent compared to Q1 2023, 15 companies announced corporate restructurings and layoffs. That compared to 19 companies forced to restructure during the first three months of 2023. In March, Spruce Biosciences said it was implementing cost savings after a phase 2b failure that included a 21 percent workforce reduction.

Despite three billion-dollar deals in the first week of January, rare disease focused therapeutics partnering total deal values slumped in the first quarter of 2024, down 34 percent compared to the same period last year. The number of announced deals dropped 34 percent, from 47 in the first quarter of 2023 to 31 in the first quarter of 2024.

In March, Spanish biopharma Almirall entered an exclusive license agreement with Eloxx Pharmaceuticals to develop and commercialize Eloxx’s phase 1 ready oral candidate ZKN-013 for rare dermatological diseases and other diseases associated with nonsense mutations. Eloxx will receive an upfront of $3 million, and additional payments throughout the potential development phases, including regulatory and sales milestones of up to $470 million, as well as tiered royalties based on any potential future global sales.

While partnering deals are down, rare disease focused therapeutics M&A remains a bright spot with total potential deal values up 99 percent in Q1 2024 compared to the same period last year.

In the largest deal in March, AstraZeneca acquired Amolyt Pharma for up to $1.05 billion to expand its rare diseases pipeline of therapeutic peptides targeting rare endocrine diseases. Under the terms of the agreement, AstraZeneca will acquire all of Amolyt Pharma’s outstanding shares for $800 million cash upfront at deal closing, plus the right for Amolyt Pharma’s shareholders to receive an additional contingent payment of $250 million payable upon achievement of a specified regulatory milestone.