Rare Disease Therapy Developers Saw Investment Jump 28% in 2021

Marisa Wexler, MS avatar

by Marisa Wexler, MS |

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Investment in companies developing treatments for Lambert-Eaton myasthenic syndrome (LEMS) and other rare diseases increased by 28% in 2021 compared with the previous year, according to a new report from the rare disease nonprofit Global Genes.

“Rare diseases continue to have a strong allure to investors, as evidenced by the significant capital raised in 2021 to advance companies and pipelines focused on rare conditions,” Craig Martin, CEO of Global Genes, said in a press release.

The report, which will be published in its entirety next month, showed that companies working to develop therapies for rare diseases raised a total of $22.9 billion in 2021 through public and private equity, as well as debt financing. By comparison, in 2020, rare disease developers raised $18 billion — about 27% less investment.

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In terms of venture capital financing, which refers to money investors provide to companies that are thought to have strong long-term growth potential, the rare disease sector raised a record of $8.8 billion in 2021. That investment was an increase over the $7.2 billion in venture capital financing raised in 2020. Furthermore, for the year, 29 rounds of venture financing raised $100 million or more, compared with 22 in 2020, and just six in 2018.

The average venture funding for rare disease therapy developers was $83.2 million in 2021, up from $74.7 million the previous year.

The total number of partnering deals related to rare diseases increased from 135 in 2020 to 180 in 2021. The total value of such partnering deals was $59.7 billion in 2021, up from $35.2 billion in 2020.

Companies developing therapies to treat rare diseases were the subject of 48 merger and acquisition (M&A) transactions in 2021, one less than in the previous year. These included 32 deals with disclosed values totaling $53.2 billion — most of which was paid upon closing of the deals.

In the broader biopharma industry, there were 167 M&A transactions totaling $98.3 billion. As such, M&A transactions involving rare disease therapy developers accounted for 29% of the total number of M&A biopharma transactions in 2021, and for 54% of all reported deal values on that same year.

The only area that rare disease fundraising declined slightly last year was in initial public offerings (IPOs), which is when a company first makes stock available for the public to buy. Rare disease developers raised $4.3 billion from 23 IPOs in 2021, down from the $4.5 billion in 25 IPOs the year prior.

“We hope and expect that the sector will continue to be strengthened by the vast array of opportunities to advance promising biotechnologies, under expedited review, that can address the tremendous burdens and underlying causes of thousands of rare, genetic conditions currently without approved treatments,” Martin said.