Stronger biological proof is reshaping how rare disease therapies are funded and developed

Rare disease drug development has long relied on bold bets. Often those bets were built on promising biological hypotheses, even when the supporting data were still limited. That approach is now changing. Across the rare disease ecosystem, investors and developers are placing greater weight on clear biological evidence before programs move forward.

The shift was a central theme during a panel discussion at BIO-Europe Spring, Discover the uncharted waters of rare diseases, moderated by Benjamin Folwell, director of business development and licensing at Evaluate.

Investor perspectives on rare disease investments have shifted over the years, with a clear understanding of a candidate’s mode of action becoming a central requirement.

For Hubert Birner, Managing Partner at TVM Life Science Management, the change reflects lessons learned over two decades of investing in rare diseases.

“We have now clearly decided to walk away from rare disease opportunities… where you really can’t link the molecule and its effect to a target.”

That focus on mechanism, meaning a clear understanding of how a therapy interacts with disease biology, is becoming a defining factor in investment decisions. In rare diseases, where patient numbers are small and trials are inherently constrained, early biological clarity can help reduce risk later in development.

The impact of this shift extends beyond investors.

Turning biological insight into workable trials

For developers, mechanistic clarity is not just a scientific milestone. It directly influences how programs are designed, how trials are structured, and how regulators evaluate success.

Hans Schambye, CEO of BOOST Pharma, described how developers must connect biological understanding with meaningful patient outcomes from the beginning.

“You need to fit your therapy to the disease and ask, where can you make a meaningful change? And can you agree with regulators that this would be clinically meaningful… and make a difference for patients,” he said.

That task becomes particularly challenging in rare diseases, where traditional large clinical trials are rarely possible. Instead, developers rely on smaller cohorts, carefully selected endpoints, and close collaboration with specialized treatment centres.

Patient communities themselves often play a central role in making these trials possible.

“In this space… parents that have children with severe orphan diseases are, of course, highly motivated,” Schambye said. “The thought of having an option for their child, they will jump through hoops.”

That level of engagement reflects the urgency many families feel. It also highlights how operational realities in rare disease research depend on trust between companies, clinicians, patients and parents.

Patient groups as scientific partners

Patient advocacy organizations are increasingly shaping the scientific foundations of rare disease research. Their role now extends well beyond recruitment and awareness.

Luis Oliveira, Executive Director of the v-ATPase Alliance, described how many patient groups have become active contributors to research infrastructure.

“Advocacy groups are becoming collaborators in the whole R&D pipeline,” he said. “We fund research… collect samples… [and support] early research and biomarkers.”

That work often includes building disease registries, supporting natural history studies, and enabling access to patient samples. These efforts help clarify disease biology and generate the early evidence that investors and regulators increasingly expect.

Organizations such as DEBRA Research, the research and drug development arm of DEBRA Austria supporting Epidermolysis bullosa (EB), illustrate how this model is taking shape. Unlike traditional patient advocacy groups, DEBRA Research focuses on translational research and clinical development activities intended to advance therapeutic programs for EB.

Beyond infrastructure support such as patient registries, its activities include funding research and drug development and making targeted (“impact”) investments. The organization also contributes scientific input and facilitates connections among clinicians, researchers, and patient communities involved in EB research.

Over time, coordinated research funding and patient-linked infrastructure contribute to improved understanding of disease progression and support the development of targeted therapeutic approaches. In practice, such infrastructure can enable companies to design more focused clinical trials, reduce study size requirements, and evaluate biological effects earlier in development.

In many cases, the first meaningful insights into disease biology no longer come solely from academic labs. They come from coordinated patient-driven data collection.

Mechanistic clarity as an investment anchor

The growing demand for biological proof is also influencing how venture firms build and support their portfolios.

AL-S Pharma, part of TVM’s portfolio, provides one example of how clearly defined disease biology can support sustained investment. The company focuses on targeting misfolded SOD-1 linked to amyotrophic lateral sclerosis (ALS). In these conditions, understanding how specific molecular changes contribute to disease progression is essential for designing therapies that can alter the course of illness.

For investors, that level of biological understanding can provide confidence even when early clinical datasets are still limited.

“It takes a fundamental belief that a drug candidate makes a difference,” Birner said. “But you have much less information… when you invest in early clinical rare disease.”

Programs supported by biomarker evidence, translational models, and clear disease mechanisms are increasingly viewed as more resilient in the face of clinical uncertainty.

A more selective future, with room for optimism

Despite the rising expectations around proof, the need for innovation in rare diseases remains immense. More than 300 million people worldwide live with over 6,000 rare diseases, and more than 90 percent of those conditions still have no approved therapy, according to Ben Falwell, Director at Evaluate.

That unmet need continues to drive research and investment, even as standards become more demanding.

The result is not necessarily fewer programs, but a shift toward programs built on stronger biological foundations. Developers are spending more time validating targets. Patient organizations are contributing data earlier. Investors are applying stricter criteria before committing capital.

These changes suggest that rare disease innovation is entering a more disciplined phase. The risks remain high, but the tools for managing those risks are improving. And in a field where patient populations are small and timelines are long, stronger biological proof may ultimately make the difference between promising science and meaningful therapies.