Cooking with the Genzyme Recipe: New Players Funding Rare Disease Drugs in Boston

4/12/10

Many people have probably never heard of some of the diseases that venture capitalists and drug company executives are swooning over lately. But regardless of how obscure a rare illness like X-linked hypohidrotic ectodermal dysplasia is, investments in developing drugs for such diseases are growing in popularity.

In Boston, both venture firms and pharma executives are getting in on the act. Third Rock Ventures has funded or formed three biotech startups in Cambridge, MA over the past two years that are developing drugs for rare genetic disorders (which are in some cases called orphan diseases). One of those companies, Alnara Pharmaceuticals, counts among its founders Christoph Westphal, a Cambridge-based executive who scouts for external business opportunities for London-based drug giant GlaxoSmithKline (NYSE:GSK).

These companies are ripping a page or two from the battletested playbook at Cambridge-based Genzyme (NASDAQ:GENZ). The company’s three best-selling treatments are for rare genetic diseases that affect fewer than 10,000 patients each. Still, Genzyme has been profitable because it can command hundreds of thousands of dollars per year for each patient treated with some of its drugs, and for years it has faced very little or no competition in these niche markets.

But the party’s getting more crowded nowadays. New York-based Pfizer (NYSE:PFE), the world’s biggest drug company, inked a deal announced in December to partner with Israel-based Protalix Biotherapeutics to develop and market Protalix’s rival drug to Genzyme’s top seller, imiglucerase (Cerezyme), an enzyme-replacement therapy for patients with Gaucher’s disease. Genzyme’s Gaucher drug brought sales last year of $793 million, way less than Pfizer makes from its top sellers like the heart pill atorvastatin (Lipitor). Despite the smaller markets for rare disease treatments, major pharma companies are investing in them as many of their multi-billion dollar drug franchises face greater competition from generic knockoffs.

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  • Jerry Jeff

    Well, here’s hoping for an end to these captive markets. All those billions come out of our health insurance premiums, after all. And what’s up with that picture?