Rare Disease Investment Increased About 28% in 2021, Report Says

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by Patricia Inácio, PhD |

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Investment for rare diseases, such as cold agglutinin disease (CAD), has seen a growing interest by investors, outmatching that for biotech and other health segments, according to a recent analysis by Global Genes, a leading rare disease organization.

During 2021, a total of $22.9 billion was raised for the development of rare disease therapeutics via public, private equity, and debt financings, while in 2020 the total net was $18 billion — an increase of about 28%.

The outcomes of this new analysis will feature in Global Genes’ NEXT 2022 report, scheduled for publication in February.

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“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.

“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,” he added.

In 2021, venture capital financing for the rare disease therapeutic sector reached $8.8 billion, a new record and a marked increase — by 22% — from the previous year, which had raised $7.2 billion.

A total of 29 rare disease financing rounds exceeding $100 million took place in 2021, compared with 22 in the previous year and only six in 2018.

Last year, the series A financing round — typically the first round of venture capital financing — for rare disease therapeutic developers totaled $2.4 billion, up from the $2.2 billion raised in 2020. Series A financing accounted for almost a third (27.2%) of the total venture capital raised in 2021 by rare disease therapeutic developers.

In 2021, the average venture funding for developers of rare disease treatments peaked at $83.2 million. In the previous year it had raised a total of $74.7 million.

While venture capital flourished, initial public offering (IPO) initiatives by rare disease therapeutic developers declined in 2021. An IPO allows a company to raise capital from public investors. The total funds raised through IPOs in 2021 totaled $4.3 billion, down from the $4.5 billion seen in the previous year.

Rare disease therapeutic developers were the target of 48 merger and acquisition (M&A) transactions, which accounted for 29% of all biopharma therapeutic M&A deals in 2021. Of the 48 deals, 32 disclosed values totaling $53.2 billion. Seven of the 10 largest transactions in 2021 had a rare disease company as a target.

Partnering deals involving rare disease therapeutics also rose in 2021, totaling a potential value of $59.7 billion. In the previous year, it reached only $35.2 billion.