Slow February Sees Few Bright Spots for Rare Disease Focused Financing and Dealmaking

February was a slow month for rare disease focused financings, which at the end of February totaled $2.3 billion year-to-date, down 7.7 percent compared to the same period in 2022, according to data compiled by DealForma and Global Genes.

All financing categories remained well below comparable numbers in 2022 except for rare disease focused public financings. IPOs remained closed to therapeutics companies for the most part, even though two companies focused on chronic conditions managed to go public during the month. Structure Therapeutics raised $161 million to advance its program for type 2 diabetes and Mineralys raised $192 million to advance its experimental oral therapies for hypertension.

Rare disease focused total potential M&A deal values, although ahead of last year by 65 percent, were minimal for the month with only two small deals. Rhythm Pharmaceuticals bought Xinvento for $5 million upfront and $206 million in potential milestones. Xinvento is a Netherlands-based biotech company focused on developing therapies for congenital hyperinsulinism. GC Biopharma acquired three Catalyst Biosciences programs related to rare bleeding disorders for $6 million as part of Catalyst’s plans to maximize the value of its portfolio.

Total potential deal values for rare disease focused partnering deals is 53 percent below what it was for the same time period in 2022 and deal values at signing for these deals is off by 37 percent.

Capsida Biotherapeutics expanded its collaboration in neurodegenerative diseases to develop genetic medicines for eye diseases with high unmet need. AbbVie’s capabilities will be paired with Capsida’s novel adeno-associated virus (AAV) engineering platform and manufacturing capability to identify and advance three programs. Capsida received $70 million upfront in cash and a potential equity investment and is eligible to receive up to $595 million in option fees and milestones, with potential for further commercial milestones, plus royalties. Capsida’s AAV engineering platform is designed to generate capsids optimized to target specific tissue types and limits transduction of tissues and cell types that are not relevant to the target disease, allowing for improved efficacy and safety.

Antibody-drug conjugates developer ImmunoGen entered a global, multi-target license and option agreement with Vertex Pharmaceuticals granting it rights to conduct research using its ADC technology to discover novel targeted conditioning agents for use with gene editing that may have fewer side effects. ImmunoGen received $15 million upfront and is eligible to receive up to $337 million in option exercise fees and development and commercial milestone payments per target. Vertex is responsible for all research, development, and commercialization and related costs.

Access to capital remained tight with news on a daily basis of therapeutics startups reigning in expenses to extend their cash runway. Four rare disease drug developers announced they were cutting staff during the month: Magenta Therapeutics cut staff by 84 percent and is pursuing strategic alternatives; Graphite Bio cut staff by 50 percent as it discontinued its sickle cell gene therapy program and conducts a business review; Locanabio cut staff by 30 percent and will focus on its Duchenne gene therapy program; and Aristea Therapeutics discontinued its mid-stage program, dissolved the company and closed its doors.

Despite a continuing list of companies downsizing, a handful of rare disease drug developers raised money through public and private equity offerings, one bright spot during a slow month that was up 151 percent year-to-date at the end of the month compared to the same period in 2022.

Apellis Pharmaceuticals, which is focused on complement-mediated disorders, raised $402.5 million through the sale of common stock and warrants one week after receiving U.S. Food and Drug Administration approval for Syfovre for the treatment of geographic atrophy secondary to age-related macular degeneration. In November 2021 the FDA approved Empaveli as the first targeted C3 therapy, for treatment of adults with paroxysmal nocturnal hemoglobinuria, a rare, chronic, life-threatening blood disorder caused by an acquired mutation.

Travere Therapeutics raised $200 million in an underwritten public offering on the heels of the recent FDA approval of Filspari to reduce proteinuria in adults with primary IgA neuropathy. Disc Medicine raised $62.5 million through a registered direct offering to advance a clinical-stage pipeline focused on hematologic diseases. Finally, Spruce Biosciences raised $53.6 million in a private placement to advance a late-stage pipeline of experimental therapies for rare endocrine disorders and extend its cash runway into the first half of 2025.

Venture financings continue to lag for startups focused on rare disease and are down 43 percent compared to the same period in 2022 as deal flow slowed to just four financings for the month. Venture investors continue to pour money into companies developing genetic medicines and platforms that address the limitations of today’s delivery technologies. Case in point, Aera Therapeutics launched with $193 million to harness its proprietary delivery platform to unlock the potential of genetic medicines across a wide range of modalities and therapeutic areas. Hemab Therapeutics raised $135 million in an oversubscribed $135 million series B financing to advance a clinical-stage pipeline of prophylactic treatments for rare bleeding disorders and support its growth plans through 2025.

Rare cancer drug developer Oricell raised $45 million in a series B financing to expand clinical development of its pipeline, which includes a lead candidate for relapsed/refractory multiple myeloma,  in the United States. Finally, Thymmune Therapeutics raised $7 million in seed financing to advance development of its machine learning-enabled thymic cell engineering platform to restore normal immune function in aging and disease.