Rare Disease Therapeutics Developers Turn to Public Markets to Raise Capital in October

Several rare disease focused drug developers turned to the public markets in October to raise capital as total rare disease public and private financings remained difficult in 2022. Overall these companies raised $14.5 billion year-to-date, down 26.5 percent compared to the same period in 2021, according to data from DealForma and Global Genes.

With venture financings and initial public offerings remain in the doldrums in 2022, many companies have turned to raising money in the public markets—whether equity, debt, or through strategic royalty agreements. In October, rare disease focused drug developers raised $1.6 billion from public and private investors. It included an IPO by Prime Medicines, the only therapeutics initial public offering in the month. Prime raised $175 million to advance its base-editing genetic medicines into the clinic.

Amylyx Pharmaceuticals raised $246 million in a secondary offering on the heels of U.S Food and Drug Administration approval of Relyvrio, an oral combination therapy for the rare, neurodegenerative disease amyotrophic lateral sclerosis.

Biohaven raised $302 million in a public offering concurrent with its launch as a new publicly traded company focused on neurological diseases, a spinoff from Pfizer’s $11.6 billion acquisition of Biohaven in May 2022.  

Denali Therapeutics raised $316 million in a public offering of common stock after recently reporting new positive interim data from a phase 1/2 study of lead candidate DNL310, a recombinant form of the IDS enzyme engineered to cross the blood-brain barrier, for the treatment of the rare metabolic disease MPS II, also known as Hunter syndrome.

And PTC Therapeutics entered into a strategic financing collaboration with private equity firm Blackstone for up to $1 billion to support its mission to reach a steady state of delivering at least one therapy every two to three years to patients globally. As part of the collaboration, funds managed by Blackstone Life Sciences and Blackstone Credit will provide PTC with an initial $500 million commitment, including $350 million in low-cost, low-dilution capital at close. The customized senior secured term loan investment by Blackstone is collateralized by Translarna, Emflaza, Upstaza, sepiapterin, and vatiquinone.

Finally, Agios Pharmaceuticals went a different route to raise $132 million by selling royalty rights to Sagard Healthcare Royalty Partners for Tibsovo, an approved treatment for acute myeloid leukemia.

Partnering and M&A activity for rare disease drug developers remained sluggish in October, down 24 percent and 47 percent year-to-date, respectively compared to total deal values during the same period in 2021. Among a few deals of note, Sanofi partnered with MiRecule to develop and commercialize a best-in-class antibody-RNA conjugate for the treatment of facioscapulohumeral muscular dystrophy.

The collaboration will combine MiRecule’s anti-DUX4 RNA therapy with Sanofi’s proprietary muscle-targeted NANOBODY technology to join the two molecules into an antibody-RNA conjugate (ARC) utilizing MiRecule’s NAVIgGator conjugation and formulation chemistry that selectively targets and suppresses the underlying cause of FSHD in muscle tissue to enable FSHD patients to resume their normal course of aging free from the debilitating effects of this progressive disease.

MiRecule granted Sanofi an exclusive worldwide license to intellectual property rights to the FSHD therapy and the companies will collaborate on research activities through lead candidate selection with Sanofi assuming sole responsibility for IND enabling studies and subsequent development and commercialization activities globally. MiRecule will receive up to $400 million in upfront and milestone payments and is eligible to receive tiered royalties on global net sales of the approved collaboration   product.

On the M&A front, gene therapy was the focus of two rare disease public biotech acquisitions, both of which were trading at lows to their IPO price. Ely Lilly paid $487 million upfront to acquire Akouos for its preclinical gene therapy for hearing loss, with another $123 million in potential contingent value rights. Investment firm Syncona paid acquired phase 2 ophthalmic gene therapy developer Applied Genetic Technologies for up to $73.5 million–$23.5 million upfront and $50 million in milestones.