Beyond the Blueprint

Rethinking Due Diligence in Rare Disease Investments
San Godhania

The rare disease market is experiencing significant growth, Global Markets Insights data forecasts an 8.5% CAGR from 2022 to 2032, outpacing the 2.4% CAGR of conventional pharma. This burgeoning sector is dominated by start-ups, primarily based in the US and Europe, driving innovation in therapies for rare conditions.

These start-ups, often small and agile, possess the flexibility to pursue rare disease development where larger pharmaceutical companies may hesitate. To be more precise, 49.5% of these start-ups are located in the US, 24.1% are based in Europe, 17.3% in APAC, 5.7% in LATAM, and 3.4% stemming from the MENA region. Big Pharma, recognizing its limitations in this specialized field, is increasingly seeking collaborations and licensing opportunities with these nimble innovators. They've essentially started a war they can never win – a huge desire to be in the rare disease space, but an inability to truly compete with the agility of start-ups.

Start-ups often face significant challenges. Limited resources, coupled with a lack of experience in navigating the complexities of rare disease development and commercialization, can lead to roadblocks, increased costs, and limited patient access. The common approach of prioritizing FDA approval, while seemingly safe, can neglect the ethical considerations and broader market opportunities associated with global patient access. This seems safe, but let's be honest, it negates the true ethics of bringing such therapies to patients across the globe. This route means less treatment for fewer patients, loss of ethics, loss of opportunity, higher risk, lack of growth and value.

The Need for Specialized Expertise

The development and commercialization of rare disease therapies require specialized expertise and a unique skill set, particularly given the challenges of limited infrastructure, resources, and time. While patient-centricity is becoming a priority, a lack of knowledge and experience can hinder the effective delivery of therapies to patients globally.

Although more companies are prioritizing patient needs in their development strategies, they often lack the expertise to efficiently bring these therapies to market. This challenge is compounded by inadequate guidance on optimizing clinical trial design for global markets and navigating associated market access complexities. Despite these hurdles, the rare disease market remains attractive, and investments continue to flow.

Re-evaluating Due Diligence

The IRDiRC Task Force report highlights the dominance of Venture Capital (VC) funding in rare disease research. VC firms conduct extensive due diligence, evaluating the company, team, product, market, financials, and legal aspects. They scrutinize the team's expertise, the founder's experience, and the product's viability, market demand, and financial projections. This is in addition to standard financial, legal, regulatory, and background checks.

Despite this rigorous evaluation, many investments fail to meet expectations. Why do promising projects, seemingly well-vetted on paper, falter in reality or face significant delays? The answer may lie in the limitations of current research approaches, which often overlook crucial factors. Traditional methodologies may be insufficient for navigating the complexities of rare disease development, which requires a more nuanced understanding of:

Patient Populations

Their specific needs and challenges

Disease Mechanisms

The underlying biology of the condition.

Regulatory and Market Access Pathways

The evolving landscape of approvals and requirements.

Regional Idiosyncrasies

The unique characteristics of different healthcare systems and patient communities across the globe.

This last point, regional idiosyncrasies, is particularly crucial. Understanding the cultural, economic, and infrastructural nuances of different regions is essential for effectively developing and delivering therapies to patients worldwide.

The "FDA First" Fallacy

Start-ups, driven by limited resources and the need for rapid success, often default to an "FDA first" strategy. Europe, with its 30 countries (27 EU member states, plus Iceland, Lichtenstein, and Norway), 24 official languages, and 30 different legal systems, can seem daunting to navigate. This limited market approach, while understandable, sacrifices significant opportunities for growth and patient access. Start-ups typically consist of 1-10 people, max, who speak some form of English. With considerations given to the limited resources outlined above, plus the limited time, additional resources, and knowledge, it’s a given that they are only going to go for the FDA approval, "we'll tackle Europe later."

The Asia-Pacific (APAC) region represents a significant market for rare disease therapies, offering substantial opportunities for venture capital (VC) investment. However, despite considerable progress in recent years, many companies seeking VC funding still lack a comprehensive global strategy that effectively addresses the unique challenges of this market. Diverse regulatory frameworks and varying levels of healthcare infrastructure across the region pose unique challenges for those seeking to bring therapies to patients. While we won't delve into the specifics of APAC, MENA (where cultural sensitivities and data privacy considerations require careful navigation), or LATAM (where economic disparities and limited access to specialized care centres can hinder patient recruitment and treatment delivery) in detail, the challenges faced in navigating the FDA and EMA landscapes are largely transferable and applicable. VCs should be aware that many promising start-ups, despite possessing innovative therapies and strong teams, often focus primarily on FDA registration, neglecting the significant potential of these broader markets. This limited focus ultimately restricts patient access to potentially life-saving therapies and may hinder the return on investment for VCs.

Overall, this avoidance mirrors the hesitation observed with EMA expansion, where similar complexities and perceived barriers hinder market entry. To maximize the potential of rare disease investments, VCs should encourage and support portfolio companies in developing comprehensive global strategies that address the unique needs and challenges of diverse regions, including APAC, MENA, and LATAM. By fostering a global perspective, VCs can contribute to both patient well-being and the long-term success of their investments.

The Outsourcing Dilemma

Start-ups entering the rare disease space often rely on specialist consulting firms to bridge resource gaps. However, rigorous due diligence is essential. Despite appearances, many firms lack genuine rare disease experience. While often led by established industry veterans, their teams may comprise academics or individuals with limited practical expertise, even with relevant qualifications. This discrepancy can significantly hinder effective strategy and execution, as this field demands deep, specialized knowledge gained through real-world engagement. The rare disease domain operates by its own rules. While the development and commercialization continuum may appear similar to conventional pharma, it is fundamentally different. Compassionate use programs, expanded access, and the unique strategic considerations required at every stage underscore this distinction. Recent restructuring efforts at two blue chip companies, initially attempting to merge conventional and rare disease teams, only to later reverse course and separate them, further illustrate this point. True success in rare diseases demands a specialized, top-down approach with strategic execution informed by every data point. This level of expertise cannot be gleaned from textbooks or general industry experience; it requires deep, hands-on engagement—"carrying the bag" from the bench to the boardroom, within the rare disease space itself.

To put this into context, consider this:

Would you expect a mid-level employee to possess the same strategic vision and depth of understanding as a seasoned CEO? Especially one who has been immersed in the intricacies of the business from day one, rising through the ranks with hands-on experience and intimate knowledge of every facet? Just because a firm has undertaken a few rare disease projects, it does not make them true specialists.

This lack of genuine expertise within many consulting firms has direct implications for venture capitalists evaluating rare disease investments. Rare disease investments require a nuanced understanding that extends beyond traditional metrics. If your portfolio companies are encountering roadblocks, it may be due to a lack of specialized knowledge within their strategic advisory teams. True success in this domain demands advisors who have traversed the entire spectrum, from bench to boardroom, within the rare disease space itself. This deep, hands-on experience provides the foresight to anticipate hurdles, the wisdom to navigate complexities, and the strategic acumen to optimize your investments for success. Anything less is a gamble.

A Call for a Paradigm Shift

While VCs conduct extensive due diligence, their approach often mirrors the limitations of specialist consulting firms and startups, overlooking the crucial nuances of the rare disease landscape. You are essentially following a blueprint—a conventional structure of formalities that leads to commercialization. Each part is siloed, one comes after the other, and voilà…we have SUCCESS!!!

But why the slower-than-usual success? Why the possible failures?

I said it before, Rare is RARE!! If you're going to outsource, make sure it's to a company that is a TRUE specialist in rare diseases. Look at the team and their experience, not just the polished leader. Does the team ACTUALLY have rare disease experience? If so, how much? Are they truly from the industry, or "just a little bit" to make the stats look good? If so, what did they do, how long were they there, and what other functions within the rare disease organization or environment did they also experience?

Engaging 360° expertise is the only way to manage rare disease development and commercialization wholly, properly, and effectively for true and full success—for the start-up, investor, and most importantly, patients and families!

The Difference is Clear

Imagine a start-up backed by a genuine rare disease advisory firm, one with a team of seasoned industry veterans: C-suite executives, government advisors, biotech founders, patient advocates—all bringing a profound level of expertise within the rare disease domain. This team's expertise extends beyond borders, seamlessly navigating the complexities of Europe, the US, and APAC. They would guide the start-up towards a global strategy, optimizing trial designs for dual submissions, recognizing that a setback with one regulatory body doesn't preclude success with another. Wouldn't that inspire confidence? Wouldn't that signal a higher probability of success?

This is the power of true rare disease leadership, grounded in practical expertise. It's about comprehensive guidance, strategic mentoring, and leveraging an extensive network to access the best resources. It's about knowing the landscape so well that you can identify and bring in the ideal third-party vendors to ensure the best patient-reported outcomes and capabilities during development and commercialization. It's about securing optimal outcomes for both the company and the patients it serves. Such a company would present a lower risk profile for investors, with a global reach translating to faster returns and greater impact.

It's not enough to rely on conventional approaches; it's about navigating the unpredictable terrain, adapting to unforeseen challenges, and emerging with the wisdom that only direct experience can provide.

As an old Chinese proverb says, "To know the road ahead, ask those coming back."

Beyond the Stick Man

Understanding the Real-World Challenges

The success of a rare disease asset extends far beyond marketing authorization. It lies in reaching every patient, everywhere, as quickly as possible. This requires immense foresight, practical expertise, and an intimate knowledge of the road ahead. It demands the ability to anticipate and navigate hurdles at every stage, from clinical trial design to meeting diverse payer requirements across the globe. Ultimately, it's about maximizing patient access while securing optimal returns and minimizing risks for investors.

To what extent does your due diligence process delve into the complexities of the real world, the challenges that emerge after a product hits the market? Allow me to share an experience from my time working on the front lines for a rare disease company in the UK.

In the South West of England, a lack of awareness about a specific genetic disorder hindered proper diagnosis and treatment. This underscored the need for comprehensive education and standardized protocols to ensure accurate identification and timely care for patients.

This region presented numerous challenges: limited physician expertise, complex referral networks, and the need for specialized blood assay protocols. Each step required meticulous planning, cross-functional collaboration, and a deep understanding of the local healthcare landscape. To address these challenges, I initiated The South West Metabolic Study Day, an annual meeting that brought together every rare disease metabolic Healthcare Practitioner in the region, fostering knowledge sharing and ultimately improving patient care.

Another notable example involved a family who travelled from the Middle East to the UK for the birth of their child. The child was born with a rare inherited metabolic disorder, quickly diagnosed and treated within the UK healthcare system. The prescribed therapy was an expensive, orphan-designated drug, essential for the child's lifelong care.

Shortly after, the family returned to the Middle East. Despite extensive efforts, contact was lost. Concerns arose about the child's well-being, as the company's product was unavailable in the region, and specialized physicians were scarce at the time.

These individual stories underscore a systemic issue: the lack of comprehensive real-world considerations in due diligence processes. These cases highlight a critical blind spot in many due diligence processes. While investors may focus on clinical trial data and market authorization, they often overlook the real-world challenges of patient access and follow-up care, especially in diverse global settings.

Imagine investing in a promising rare disease therapy, only to discover that its reach is limited by geographical barriers, regulatory hurdles, or a lack of specialized healthcare infrastructure. This could significantly impact the investment's success, hindering patient access and limiting returns.

This is why comprehensive due diligence must extend beyond the clinical and regulatory aspects.

It requires a deep understanding of the real-world landscape, including:

Geographical variations in healthcare systems and access to treatment.

Cultural and socioeconomic factors that may influence patient adherence and outcomes.

The availability of specialized physicians and support networks.

By incorporating these real-world considerations into their due diligence process, investors can gain a more accurate picture of the investment's true potential and make more informed decisions. Partner Rare provides that crucial edge. We support you in uncovering the correct a roadmap to success, guiding your investments towards greater impact, faster returns, and lower risk.

To know the road ahead, ask those on their way back

— Old Chinese proverb

Partner Rare is uniquely positioned to enhance your due diligence process. We provide a comprehensive assessment of a startup’s real-world readiness, illuminating the complexities of each market and identifying potential roadblocks. This includes:

Gap Analysis
Identifying service provision gaps and areas for improvement

Service Redesign
Developing strategies for optimizing patient access and care pathways.

Feasibility Assessment
Determining the viability of implementing necessary changes.

This in-depth analysis provides a clear picture of the investment landscape, including:

Return on Investment
More accurate projections based on real-world factors.

Time to Market
Realistic timelines considering potential challenges.

Risk Mitigation
Proactive strategies to address potential roadblocks.

Let's Talk Rare, You'll Hear the Difference

By engaging Partner Rare, you gain access to a level of expertise that extends far beyond traditional consulting. We don't just provide a roadmap; we equip rare disease start-ups with the tools and guidance needed to navigate the complexities of the entire journey, from pre-clinical development to global commercialization.

Our team of seasoned industry veterans brings unparalleled real-world knowledge and is poised to support start-ups and VCs towards success from pre-clinical development to global commercialization. We are expertly positioned to develop robust global strategies, optimize trial designs, and navigate regulatory pathways, ensuring they are primed for success even before they reach the attention of investors.

This proactive approach translates to better commercial opportunities, lower risk profiles, and faster returns for your investments. We go beyond the outdated "maps and blueprints" approach, delving deep into the real-world landscape of each region, hospital, and patient pathway. This granular understanding allows us to identify potential roadblocks and develop tailored solutions, ensuring your investments are optimized for success. Each region, each patient pathway, presents a unique puzzle that demands a creative and adaptable approach, one that can only be cultivated through years of direct engagement in the rare disease space. This isn't just about having the experience and knowledge; it requires an entrepreneurial mindset to visualize and create truly bespoke solutions.

Partner Rare provides expert support at every stage, from due diligence and strategic planning to project management and execution. We empower start-ups to achieve their full potential while providing investors with the confidence and clarity needed to make informed decisions. We are here to help, in full or in part, with your due diligence, with supporting your current or future investments, to ensure that start-ups, Venture Capitalists, and patients all achieve the optimal outcome at every stage.

So,

Let's talk rare, you'll hear the difference.
San Godhania,
Founder | Chief Executive Officer.

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