The high costs associated with developing therapies for rare diseases, coupled with smaller patient populations, create unique obstacles for biopharma companies focused on this therapeutic segment. Fundraising is no different.
Let’s be honest, the past few years have offered more headwinds than opportunities for early-stage biopharma companies raising capital to fund research, innovation, clinical trials, and steps towards commercialization. While those clouds haven’t exactly lifted, some silver linings are among the grey.
Is the Rare Disease Sector Heading for Fair Weather or a Perfect Storm?
As we reach late 2025, rare disease companies have demonstrated considerable growth compared to the same period in 2024. With $785 million raised across 20 equity funding rounds during the first half of 2025, according to funding database Tracxn, the sector has experienced a substantial increase from the $446 million raised across 16 rounds during the same period last year. Despite ongoing market volatility and concerns, this surge in funding reflects several positive trends, including increased investor confidence, advancements in personalized medicine, and the emergence of novel therapeutic modalities, such as cell and gene therapies.
According to Morgan Lewis, the rare disease market is expected to grow at a compounded annual growth rate of approximately 9 percent through 2033. This projection highlights the sector’s potential for high returns, driven by the significant unmet needs of underserved patient populations.
To address funding gaps, innovative models have emerged that combine public and private investment with industry and academic resources, tackling the unique challenges of rare disease research. With traditional venture capital sources being elusive and the Trump administration’s cuts to scientific research funding for the National Institutes of Health (NIH) and other federal agencies, these hybrid funding approaches are critical for continued progress in the field.
Building Relationships with Rare Disease-Focused Funds
In recent years, there has been a rise in investment funds specifically targeting rare diseases. These funds recognize the importance of developing treatments for underserved patient populations and have a better understanding of the commercialization models that can lead to success. They accelerate the development of novel therapies by providing crucial capital, expertise, and strategic guidance.
Several venture capital and venture philanthropy funds, such as the Chiesi Ventures Fund and Sanofi Ventures, actively invest in early-stage biotech companies developing treatments for rare and orphan diseases. Rare disease biopharma companies may improve their chances of securing funding by forging strong connections with these specialized funds.
Leveraging Patient Advocacy Groups and Networks
Patient advocacy groups and networks are vital in supporting rare disease research and development. These groups can provide valuable insights into patients’ specific needs, help identify potential funding sources, and even connect companies with potential partners. By engaging with these organizations early in the development process, rare disease biopharma companies can tap into a wealth of resources and expertise that can be invaluable in securing funding.
- The Patient-Centered Outcomes Research Institute (PCORI) is actively seeking to fund research focused on rare diseases, highlighting the importance of clinical effectiveness and patient-centered outcomes. PCORI issued a funding announcement in August 2025 for patient-centered comparative clinical effectiveness research focused on rare diseases. This funding will support high-quality research proposals that involve patients and stakeholders in the research process.
- The National Bleeding Disorders Foundation (NBDF) established Pathway to Cures (P2C) as a venture philanthropy fund to accelerate the development of cures and therapies for all inheritable blood and bleeding disorders. P2C invests in innovative companies, leveraging NBDF’s resources and relationships to advance promising research. It operates on a venture philanthropy model, reinvesting profits from successful investments into the fund for continued impact.
- National Organization for Rare Disorders (NORD) offers various grant programs, including seed grants for translational or clinical studies on rare disease diagnostics or treatments. NORD also provides financial assistance programs for patients with rare diseases.
The Importance of Communicating a Clear Path to Commercialization
To attract funding, rare disease biopharma companies must demonstrate a well-defined path to commercialization for their therapies. This includes identifying a target patient population, estimating market size, and devising potential pricing and reimbursement strategies. Investors are more likely to commit funds when they see a comprehensive plan for bringing a therapy to market and generating revenue.
However, simply having a plan is not enough. Rare disease biopharmas must proactively communicate their vision and science to the marketplace through strategic communications channels, including industry and business media outlets like the Wall Street Journal and the New York Times, as well as finance and pharma partnering audiences on LinkedIn. By sharing their value proposition and the potential impact on patients and families affected by rare and orphan diseases, companies can enhance their visibility and attractiveness to investors.
While rare disease biopharma companies face a unique funding landscape, combining strategies can help them overcome these challenges. By fostering relationships with specialized investors, engaging with patient advocacy networks, pursuing non-dilutive funding sources, and articulating a clear path to commercialization, these companies can significantly improve their chances of securing capital and bringing life-changing therapies to patients in need.
