There are two U.S. Food & Drug Administration hearings coming up this week that highlight the reasons why the biotech industry is increasingly focused on developing drugs for very rare diseases.
Tomorrow, an advisory committee of independent experts will hear evidence about NPS Pharmaceutical’s (NASDAQ: NPSP) experimental drug for short bowel syndrome, a debilitating condition that prevents patients from absorbing food, and affects only about 10,000 patients in the U.S. The following day an advisory committee will convene for Aegerion Pharmaceuticals’ (NASDAQ: AEGR) treatment for Homozygous Familial Hypercholesterolemia, an even rarer inherited disease that causes very high cholesterol levels, leading to almost certain death from heart disease. The condition afflicts only one person out of a million, amounting to about 6,000 people in the U.S. and Europe.
Both of these drugs are part of a growing trend by biotechs to develop treatments for conditions affecting only a few thousand, or even a few hundred, patients—often called “ultra-orphan” diseases. Although their markets are beyond tiny, these drugs are usually placed on a fast track toward consideration by the FDA, which requires only a few hundred patients for a clinical trial, making their development financially feasible for a startup biotech. And they are getting approved. The success of ultra-orphan drugs before the FDA stands in stark contrast to medications for much more common diseases, such as obesity or diabetes, which have had one failure after another.
The Orphan Drug Act of 1983 granted developers of drugs for diseases that afflict less than 200,000 people special tax considerations and an extra seven years of protection from competition, making these rare diseases a feasible market opportunity. Some 380 orphan drugs have been approved by the FDA since 1983, compared with 38 prior to the act.
A market analysis issued by Thomson Reuters in August, “The Economic Power of Orphan Drugs,” found that many orphan drugs are as economically viable as medicines for far more common diseases. According to Thomson Reuters there are some 25 million people in the U.S. alone suffering from rare diseases, and the worldwide value of the orphan drug market will be slightly more than $50 billion at the end of this year, about six percent of total pharmaceutical sales.
NPS, based in Bedminster, NJ, already got some good news on Friday when the FDA posted its briefing document indicating that FDA staffers think the company’s drug, teduglutide (Gattex), is effective and its safety issues manageable, even though three patients in a clinical trial developed cancer. The drug helps rehabilitates the intestinal lining, allowing patients to absorb nutrients when their bowels have been damaged by surgery or disease. Currently such patients must receive nutrition intravenously 10-12 hours a day; those treated with the drug were able to significantly reduce their dependence on intravenous feeding, in some cases forgoing it completely. Given the huge advantage teduglutide may offer patients, the FDA is willing to entertain some risk in return for efficacy. In fact, a study released last year by the National Organization for Rare Disorders determined that the FDA showed flexibility in its review procedures for two out of every three orphan drugs that came before it.
Cambridge, MA-based Aegerion’s oral drug, lomitapide, is also widely expected to get a positive FDA staff and advisory committee review, again because the FDA is inclined to look favorably on drugs for very rare diseases that can clearly save lives. People with Homozygous Familial Hypercholesterolemia have four to ten times the normal levels of LDL cholesterol, often called “bad” cholesterol, and most die of heart disease before age 30. Aegerion reported in January that in a phase III clinical trial enrolling 29 patients, lomitapide reduced average LDL levels by 40 percent during the efficacy phase, a level sustained over the remainder of the 78-week study. Industry analysts expect that lomitapide will be approved by year end, possibly as soon as November.
Despite the small markets, these ultra-orphan drugs can be very lucrative, due to sky-high prices that can sometimes even turn them into blockbusters. Alexion Pharmaceuticals (NASDAQ: ALXN), in Cheshire, CT, won FDA approval for its drug eculizumab (Soliris) in 2007 for a rare life-threatening blood disease that afflicts between 4,000 and 6,000 people in the U.S. The drug costs $409,000 and is expected to generate more than $1 billion in sales this year.
Aegerion and NPS should also do well. Industry analysts expect Aegerion to charge around $250,000 a year for its drug, and estimate that peak sales could reach $450 million a year. NPS has said it expects to bring in $350 million in revenues for teduglutide.
Those kinds of successes are attracting new players to the ultra-orphan market. On Friday Intercept Pharmaceuticals (NASDAQ: ICPT), based in New York, went public, selling 5 million shares for $15 each and raising $75 million in gross proceeds. Intercept’s shares ended their first day up 29.3 percent, at $19.40 per share. The IPO came just two months after Intercept raised $30 million in a Series C funding round. The biotech firm is developing therapeutics for rare forms of chronic liver disease. Its lead product, obeticholic acid, targets primary biliary cirrhosis, and Intercept says about 30,000 people are eligible for the treatment. The drug is currently in a Phase III clinical trial and the results are expected to be available by mid-2014.
According to the National Organization for Rare Disorders, there are nearly 7,000 known orphan diseases, with more discovered every year, but only about 200 have FDA-approved treatments. With that magnitude of unmet need, the search for ultra-orphan disease treatments is certain to continue to drive the biotech industry.
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