BioCryst is profitable. Now it wants to buy more rare disease drugs

BioCryst expects up to $645 million in 2026 sales from its HAE drug Orladeyo, giving it capital to pursue external deals. As large drugmakers prioritize multibillion dollar assets, small and midsize biotech companies are increasingly stepping in to develop and acquire rare disease drugs.

The science behind rare disease drug development is changing fast, and with it, so is the financial engine that drives it all. This month saw the launch of Rare Ventures — a new venture philanthropy-based accelerator lead by EB Research Partnership CEO, Michael Hund. The launch comes thanks to an investment of up to $25 million from the Richard K. Mellon Foundation, and with the hope that the funding model that contributed to the successful development of 3 FDA approved treatments for epidermolysis bullosa can be applied to other rare diseases — which has been a long-term goal of Hund and EBRP's founders, Jill and Eddie Vedder.

Rare Ventures will initially focus on funding the development of new treatments for seven different rare conditions. The accelerator will work on de-risking promising treatments for those disorders and making them more appealing for commercial development. As new investors look to buy or license those assets, the fund will reinvest any returns into its other programs. If the model works, Hund says Rare Ventures will expand to include more diseases and potentially fund more treatments. But its not just philanthropy pushing the science forward. The last year has seen a groundswell of M&A activity focused on rare disease, and dozens of deals to purchase, license or fund new treatments for the rare community. For more stories like this, sign up for the CNBC Cures newsletter. And increasingly, it's the small and midsize players that are driving that activity. So what's behind it all?

When we talk about the struggles faced by small to midsize biotech companies, there are a number of recurring themes that come up: the difficulty getting a new drug approved, dwindling cash reserves and stock volatility, just to name a few. So when the CEO of a biotech with a market cap that's under $5 billion says his biggest challenge is deciding how to spend his excess capital, you sit up and take notice. That's the conversation taking place inside the offices at BioCryst Pharmaceuticals, where CEO Charlie Gayer is in the enviable position of having an approved product capable of keeping the coffers full. Gayer's primary concern now is figuring out how to grow the company in an efficient and sustainable way.

In 2020, the FDA approved Orladeyo, BioCryst's treatment for hereditary angioedema, or HAE — a rare genetic disorder that causes sudden, severe swelling that can be fatal. Since then,...