A Headline to Remember: “Eagle swoops down to nab chunk of BARDA-backed Enalare Therapeutics”

Eagle Pharmaceuticals is making a $55-million equity investment in Enalare Therapeutics, reported Fierce Biotech in an article remarkably titled “Eagle swoops down to nab chunk of BARDA-backed Enalare Therapeutics.” The headline is noteworthy for how it pieces together two chunks of the fundraising puzzle: equity investment and non-dilutive funding.

Enalare is a clinical-stage privately-held biopharmaceutical company developing novel therapies for patients suffering from life-threatening acute respiratory and critical care conditions, and its lead compound ENA-001 is an investigational NCE designed as an agnostic respiratory stimulant. ENA-001 restores breathing drive and responsiveness, and it’s on target to be approved as a treatment for post-operative respiratory depression in 2026.

At the same time, ENA-001 is being developed for use in patients experiencing drug overdose in a community setting and as a potential medical countermeasure for mass casualty events in partnership with the Biomedical Advanced Research and Development Authority (BARDA) and with additional support through a grant from the National Institute on Drug Abuse (NIDA).

In other words, before Enalare succeed in gaining Eagle’s equity investment, it succeeded in winning two major funding awards which were non-dilutive, i.e., which did not dilute its equity, one from BARDA and one from NIDA. Indeed, in their press release, the companies specifically mention these non-dilutive awards.

How Non-dilutive Funding Awards are Linked to Later Equity Investment

To win a funding competition for a non-dilutive award, as Enalare did, twice, you need to have excellent science. Of course, excellent science is necessary for your company to succeed and to succeed in attracting investment. But beyond the necessity of good R&D, winning an award for your good R&D demonstrates to investors that your company has excellent science.

In fact, the Milken Institute showed that each $1 of non-dilutive funding from NIH translates into $8.38 of private sector investment in R&D.

Furthermore, non-dilutive funds allow companies to continue or expand their R&D. A grant can make the difference between completing the R&D necessary to bring a product to market and dropping in “Death Valley.” But beyond the immediate financial benefit of the funding award, as we see with Enalare, non-dilutive funding can allow a company to explore additional applications of their basic innovation.

The main use for which Enalare developed ENA-001 was post-operative respiratory depression, but the contract with BARDA made it possible for the company to explore applications in restoring breathing after opioid drug overdoses. Such additional applications make your company much more attractive to investors.

To summarize with a few words from Ram May-Ron, Founder and Managing Partner of FreeMind Investments, the venture capital arm of the FreeMind Group, “Companies which win non-dilutive funding from organizations such as BARDA, NIH, NSF, and CDMRP, are more likely to receive major equity investments.”