Three Biotechs Raise $850 Million in Follow-on Offerings to Advance Their Rare Disease Pipelines

Banking on strong investor interest in their pipelines, three rare disease focused companies—Ultragenyx, Allakos, and Scholar Rock—have raised a combined $850 million in follow-on public offerings to fill their coffers.  

Ultragenyx Pharmaceutical priced an underwritten public offering of 4.4 million shares of its common stock at $90 a share for gross proceeds of $400 million. The rare and ultra-rare disease focused company markets three approved products for rare metabolic disorders, and has recently pushed into gene therapy, with two candidates in mid-stage development.

Ultragenyx recently struck a deal with Solid Biosciences to use its microdystrophin construct in a gene therapy targeting Duchenne muscular dystrophy. And just a couple of days ago, a collaborative trial with GeneTx testing an experimental therapy in Angelman syndrome was put on hold after five patients receiving the highest or second highest dose experienced serious adverse events. Even then, the companies said preliminary results from these patients indicated substantial improvements in at least two disease domains.

Allakos priced an underwritten public offering of 3 million shares of its common stock at $82 a share for gross proceeds of $250 million. Allakos is developing lead experimental antibody candidate AK002 for the treatment eosinophil and mast cell related diseases.

In 2019 the company reported that AK002 met all the prespecified primary and secondary endpoints in a phase 2 study in patients with eosinophilic gastritis and/or eosinophilic gastroenteritis, severe orphan inflammatory diseases characterized by the presence of high levels of eosinophils in the stomach or duodenum that result in severe abdominal pain, nausea, diarrhea, bloating, cramping, early satiety, loss of appetite, vomiting, dysphagia, and weight loss.

Finally, Scholar Rock raised $200 million in an underwritten public offering two days after reporting positive proof-of-concept data from an interim analysis of an ongoing phase 2 trial of its antibody therapy in patients with type 2 and type 3 spinal muscular atrophy (SMA), a rare, and often fatal, genetic disorder that typically manifests in young children.

The company priced 2.95 million shares of its common stock at $39 a share, and, in lieu of common stock to certain investors, pre-funded warrants of 2.2 million shares of its common stock at $38.9999 per pre-funded warrant, equal to the public offering price per share of the common stock less the $0.0001 exercise price per share of each pre-funded warrant.

Scholar Rock will use the proceeds from the offering to advance SRK-015 into late stage trials, as well as SRK-181 in cancer immunotherapy, development of its preclinical and discovery programs, as well as for working capital and other general corporate purposes.

SMA is caused by insufficient production of the SMN (survival of motor neuron) protein, essential for the survival of motor neurons, and is encoded by two genes, SMN1 and SMN2. The disease is characterized by the loss of motor neurons, atrophy of the voluntary muscles of the limbs and trunk and progressive muscle weakness. While there has been progress in the development of therapeutics that address the underlying SMA genetic defect, there continues to be a high unmet need for therapeutics that directly address muscle atrophy.

SRK-015 is a selective inhibitor of the activation of myostatin, which Scholar Rock believes may promote a clinically meaningful increase in muscle strength. The interim analysis of the phase 2 trial demonstrated motor function improvements for all three SRK-015 treatment cohorts in the primary efficacy endpoints (Hammersmith scale scores) at six-months, and top-line data from the 12-month treatment period are anticipated in the second quarter of 2021.