WASHINGTON, DC – (October 26, 2023) – On Wednesday, October 25, the Rare Disease Company Coalition (RDCC) hosted a congressional briefing on Capitol Hill. The briefing unveiled a new white paper, “Rare Disease Companies in the Public Markets: Challenging Performance Against a Backdrop of Policy Uncertainty.” The study analyzes the financial risks of rare disease drug development and examines the impact of policies and proposals on critical capital investment in rare disease research and development.
“Rare and non-rare are two different universes,” said Neal Masia, CEO of Health Capital Group and author of the new white paper. “There are a lot of policy risks fueling investor concerns.”
The event brought together the policy, patient advocacy, investor, and industry communities for a panel discussion on the significance of the recent decline in rare disease funding and the urgency of acting to protect and build upon the progress made over the past 40 years since the adoption of the Orphan Drug Act (ODA).
“Even the smallest shift in public policy can leave our loved ones with no hope for treatment,” said Dorothea Lantz, Director of Community Engagement at the Prader-Willi Syndrome Association. “As a rare disease community, we understand the costs and the risk of rare disease research and development.”
Panelists agreed that policy plays an integral role in incentivizing investment in rare disease R&D and that recent fluctuations have made it difficult for companies to access critical capital. The study highlights this struggle, demonstrating that the market value of rare disease companies declined by nearly 7% per year over the past five years, versus an annual decline of 1.3% for non-rare disease companies. If a more stable policy environment does not prevail, rare disease companies will continue struggling to survive.
“Investors are forward-looking. They are thinking about what the environment is going to look like 10 years from now, and they’re pretty good at connecting the dots,” said Ritu Baral, Managing Director, Senior Biotechnology Analyst at Cowen and Company. “And what can happen to turn this around? Incentives are needed to provide a buffer for current laws.”
Concerns about the policy environment have already impacted rare disease company valuations and access to capital. Rare disease companies saw nearly $10 billion less in investment available for research in 2022, stemming from decreases in venture capital investments, the IPO market, and partnership revenues. Venture capital investments in rare disease were down over 41% in 2022 and rare disease IPOs were down 81%, marking a substantial reduction of investment in rare disease companies. In a period of such financial uncertainty, seemingly small policies and proposals can have hugely consequential impacts on the ability for rare disease companies to discover, develop, and deliver potentially life-changing treatments to patients.
“Research and development is the only way that our families are going to have a chance at a normal life,” continued Lantz. “We are here to make our voices heard, not just for Prader-Willi Syndrome, but for the whole rare disease community. We hope policymakers are listening.”