July M&A and Partnering Deals Boost Numbers for Rare Disease Drug Developers

Rare disease drug developers made progress raising capital in public markets and enjoyed a flurry of dealmaking during a busy July that was capped by Biogen’s announcement that it was buying Reata Pharmaceuticals for $7.3 billion, according to data compiled by DealForma and Global Genes.

Year-to-date venture capital financings for rare disease focused therapeutics companies remain below last year’s numbers, down 15.7 percent year-to-date. Septerna closed a $150 million series B financing to advance a pipeline of G-protein-coupled receptors (GPCR)-targeting medicines including lead program targeting hypoparathyroidism. Cyclerion Therapeutics closed an asset purchase agreement with Tisento Therapeutics, launching it with an $81 million series A financing to support its development of zagociguat in MELAS and other genetic mitochondrial diseases.

Initial public offerings of rare disease therapeutics developers remain almost non-existent, but the public markets seem to be slowly opening up to biotech issues. Four therapeutics developers completed IPOs in July, including Apogee, which raised $345 million to advance its pipeline of therapeutics for inflammatory diseases.

Nevertheless, rare disease drug developers raised significant capital in the public markets to boost numbers by 10 percent ahead of the amount raised year-to-date in 2022. Autoimmune disease drug developer Argenx, on the heels of reporting positive phase 2 results for its Vyvgart Hytrulo in patients with chronic inflammatory demyelinating polyneuropathy, raised $1.1 billion from the global sale of American Depository Shares and a simultaneous private placement of ordinary shares. Gossamer Bio raised $212 million in a private placement financing to advance the development and commercialization of seralutinib for the treatment of pulmonary arterial hypertension.

Ten companies announced rare disease focused M&A transactions in July, including five of which are focused on neurological indications. That brings year-to-date total potential deal values to 92 percent above the same period in 2022. Biogen’s acquisition of Reata gives it a pipeline targeting a rage of neurological diseases, including the recently FDA-approved Skyclaris for the treatment of Friedreich’s ataxia and cemdomespib for the treatment of patients with diabetic neuropathic pain.

Novartis is paying up to $1 billion to acquire DTx Pharmaceuticals, a preclinical-stage company addressing the delivery challenges of oligonucleotide therapeutics and a preclinical pipeline of rare disease therapeutics. Novartis will make an upfront payment of $500 million and up to an additional $500 million upon completion of pre-specified milestones. DTx’s platform enables the delivery and activity of small interfering RNA therapeutics to tissues beyond the liver, enhancing biodistribution and cellular uptake. The company’s lead program is for the treatment of Charcot-Marie-Tooth Disease Type 1A, a progressive, neuromuscular, autosomal-dominant disease that can lead to life-long loss of muscle function and disability.

Ten rare disease focused partnering transactions were also announced in July, bringing year-to-date total potential deal values up 17 percent ahead of the same period last year. At the same time, many companies are not disclosing upfront payments as deal value at signing for rare disease focused collaborations is down 29 percent year-to-date compared to 2022 numbers.

Companies announced four potential billion-dollar deals in July. Alexion, AstraZeneca Rare Disease’s entered into a purchase and license agreement for Pfizer’s portfolio of preclinical gene therapy programs and enabling technologies for a total consideration of up to $1 billion, plus tiered royalties on sales. Scribe Therapeutics expanded its collaboration with Sanofi giving it an exclusive license to use it CRISPR X-Editing genome editing technologies for the development of in vivo therapies, including sickle cell disease, valued at up to $1.2 billion. Sangamo Therapeutic’s entered into a research and option agreement with Lilly subsidiary Prevail Therapeutics valued at up to $1.2 billion. And Astellas Pharma’s announced a license agreement with 4D Molecular Therapeutics for rights to utilize 4DMT’s intravitreal retinotropic R100 vector for one genetic target implicated in rare monogenic ophthalmic disease in a deal valued at up to $963 million.

Alexion’s deal with Pfizer and Prevail’s deal with Sangamo did not disclose upfront payments. Sanofi is paying Scribe $40 million upfront to license its technology and Astellas is paying 4DMT $20 million upfront for its licensing deal.