Rare Disease Therapeutics Developers Continued to Rake in Cash in May

Companies developing therapeutics for rare diseases continued their capital raising streak, adding a collective $1.5 billion in public and private financings to bring total 2021 year-to-date capital raised to $11.9 billion, up 122 percent from the $5.4 billion raised during the same period in 2020.

Some $874 million (58 percent) of the $1.5 billion new capital raised in May came from 14 venture deals. Another $378 million 25 percent), came from three initial public offerings. Rare disease drug developers accounted for almost one third of the $2.2 billion raised in venture capital and almost half of the $779 million in IPOs raised by all therapeutics drug developers in May, but only a tenth the $2.6 billion in capital raised by public companies through public equity and debt deals.

Rare disease companies developing gene therapies accounted for $563 million–nearly two thirds of the capital raised through venture financings. The largest financing of the month was a $200 million investment by Temasek into newly launched G2 Bio Companies, which was founded by James Wilson of UPenn’s Gene Therapy Program, and Tachi Yamada. G2 Bio will fund and develop potential next-generation gene therapy candidates from the UPenn GTP, which manages a portfolio of approximately 50 diseases and dozens of translational research projects using technologies that include gene therapy, gene editing, and mRNA therapeutic approaches using adeno-associated viruses or lipid nanoparticles.

Three companies developing therapies for rare conditions completed IPOs in May, bringing the number of such companies completing IPOs to 14 in 2021, compared to just five during the same period in 2020. Day One Pharmaceuticals completed the largest offering of the month, raising $160 million in its IPO to advance a clinical stage pipeline of targeted therapies for genetically defined cancers, with a special focus on pediatric cancers.

Talaris Therapeutics raised $150 million in an IPO to advance a late-stage pipeline of allogeneic cell therapies targeting organ transplantation, certain severe autoimmune diseases, and severe non-malignant blood, immune and metabolic disorders that the company says has the potential to induce durable immune tolerance across a range of indications.

Finally, Vera Therapeutics raised $44 million in an IPO to advance its lead clinical candidate in patients with IgA nephropathy, a rare autoimmune disease driven by the deposition of abnormal immune complexes that accumulate in the kidneys, causing inflammatory tissue damage and kidney failure.

While partnering and M&A deal values year-to-date are significantly greater compared to the same period in 2020, deal activity in May did not add much to the numbers. There were very few partnering deals struck by rare disease drug developers in May, accounting for only 23.4 percent of the $7 billion in total partnering disclosed potential deal values, and 15 percent of the $352 million paid at signing.

The only notable deal was a strategic collaboration between Biogen and Capsigen that leverages Capsigen’s capsid engineering expertise and Biogen’s discovery, development, manufacturing, and commercialization capabilities with the goal to accelerate delivery of gene therapies for CNS and neuromuscular diseases to patients in need. Biogen will pay Capsigen $15 million upfront and up to $42 million in potential research milestones. Capsigen is also eligible for up to an additional $1.25 billion in potential development and commercial payments should the collaboration programs achieve certain developmental milestones and sales thresholds, plus royalties.

May also saw very few M&A deals among therapeutics companies in general, with only $1.1 billion in total disclosed deal values of which $267 million focused on companies developing therapeutics for rare conditions.

Xeris Pharmaceutics acquisition of Strongbridge Biopharma in a stock swap with contingent value rights that is valued at $267 million was one of only two M&A transactions in May that were focused on rare diseases.

The combined company, majority owned by Xeris, will be focused on rare endocrine disorders with two commercial products and a pipeline that includes Strongbridge’s Recorlev, which is under review for marketing approval by the U.S. Food and Drug Administration as a treatment for Cushing’s syndrome.

In the second M&A transaction, Amryt acquired Chiasma in an all-stock combination to create a combined company in rare and orphan diseases with three commercial products targeting rare and orphan diseases. Chiasma’s oral somatostatin analog Mycapssa, for the long-term maintenance treatment in patients with the growth hormone disorder acromegaly, was approved in 2020.