Rare Disease Drug Developers Face Bear Market in April

April was a brutal month for therapeutics drug developers in general, with daily announcements of workforce reductions and pipeline prioritization in efforts to conserve cash and extend their runway.

At the end of April, total capital raised by therapeutics companies year-to-date was 40 percent below the same period in 2021, and down almost 50 percent for companies focused on developing therapeutics to treat rare diseases, according to data from Dealforma and Global Genes.

The volatile bear market persisted through April, drying up an important source of capital. Data compiled by Global Genes showed that nine companies focused on rare disease drug development announced restructuring plans. They included Taysha Gene Therapies, Bluebird bio, Ionis’ Akcea subsidiary, ProQR, Magenta Therapeutics, Imara, Solid Biosciences, SwanBio Therapeutics, and Dutch biotech Saniona.

IPOs in the sector are down about 80 percent year-to-date compared to the same time period in 2021 in terms of capital raised. Out of three therapeutics IPOs completed in April, Belite Bio, a U.S.- and China-based company with a phase 3 experimental treatment for Stargardt disease and other retinopathies, raised $40.6 million in an offering of shares and warrants at the midpoint of its range.

Venture capital financings remain an important source of capital for private companies, but increasingly large rounds are going to fewer players. In the rare disease space, two companies accounted for 50 percent of the $787 million in venture capital raised in the month.

One year after raising $230 million in a series B round, Tessera Therapeutics raised $300 million in a series C financing to support the buildout of its Gene Writing platforms and development of multiple therapeutic programs. Tessera says its gene writing technology is designed to cure disease by writing in the code of life. The gene writing platform can change any base pair to any other, make small insertions or deletions, and write entire genes into the genome with delivery of only RNA. This unlocks the potential to cure nearly any genetic disease, create life-changing medicines for other serious conditions such as cancer, and prevent illnesses with curative, scalable, and easily administered genetic medicines that could become a new modality in human healthcare.

OMass Therapeutics completed a $100 million (£75.5 million) series B financing round to advance its pipeline of therapeutics for rare disease and immune disorders towards clinical trials, which includes the development of an insurmountable antagonist of the MC2 receptor for congenital adrenal hyperplasia, a gasdermin D inhibitor for the treatment of inflammatory diseases. The biotech’s platform integrates novel biochemistry techniques, next-generation native mass spectrometry, and custom chemistry to allow for the interrogation of protein interactions within its native ecosystem while avoiding the confounding complexity of the cell.

Partnering was the only category that did not experience a drop in total potential values compared to the previous year but did see a significant decline of 64 percent in disclosed upfront cash and equity values for rare disease focused biotechs.

Takeda entered a strategic research collaboration and license agreement with Evozyne to research and develop proteins that could be incorporated into next-generation gene therapies for up to four rare disease targets with Takeda having the option to obtain an exclusive license to develop and commercialize the novel protein sequences as part of its gene therapy program. Besides an undisclosed upfront payment and research funding, Evozyne is eligible to receive up to $400 million if all milestones are achieved in target indications over the course of the partnership, plus tiered royalties on net sales of any commercial product resulting from the collaboration.

Year-to-date M&A values for rare disease focused drug developers are 61 percent below the same time period in 2021. There was only one significant acquisition in April as GlaxoSmithKline agreed to acquire rare cancer biotech Sierra Oncology for $1.9 billion, a 39 percent premium from its closing price before the announcement. Sierra’s lead candidate, momelotinib, is ready to be submitted to regulators for marketing approval as a treatment for myelofibrosis, a rare fatal cancer of the bone marrow where fibrous scar tissue gradually replaces normal bone marrow, limiting its ability to make blood cells.

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