Orphan Drug Biotechs Do It Best

Source: The Motley Fool

By Terry Chrisomalis

There are many biotech stocks to choose from that have long-lasting value. Each one can potentially have huge value, but there is a group of biotech stocks that focus only on orphan drugs. You might ask why you should bother investing in this type of biotech stocks? Because these companies treat rare diseases with limited treatment options.

In my opinion, these biotech stocks perform better than their peers, and will do better for the foreseeable future. They have an advantage over other biotech stocks. The orphan drug biotechs that are leading the way in the sector are BioMarin Pharmaceutical (NASDAQ:BMRN), Alexion Pharmaceuticals (NASDAQ: ALXN), and Vertex Pharmaceuticals (NASDAQ: VRTX).

Advantages of Orphan Drugs

The first advantage of being an orphan drug biotech is that the Food and Drug Administration (FDA) allows drug makers to get seven years of exclusivity for their drugs. Also, they may obtain tax benefits in certain situations. Other drug biotechs only receive fives years of exclusivity for their drugs.

The second advantage is that there’s limited competition. To me this is one of the most important advantages. If you are the only biotech that treats a rare disease you have no competition. No competition means that the drug maker sets the price, and all money goes exclusively to it.

The final advantage is that the FDA is more lenient when it comes to the efficacy of the drug. The FDA may approve weak drugs because patients would have no therapy option otherwise. These several key advantages are why I think orphan drug biotech stocks have a better chance in the biotech sector.

Which companies have orphan drug status? Orphan drug companies have to treat diseases that affect fewer than 200,000 patients. Recently the market has gone up a lot, and it seems that these orphan drug biotech stocks have given investors many reasons to be happy.

BioMarin Pharmaceuticals

BioMarin has a pipeline of drugs that target unmet medical needs. The company has generated about $500 million dollars from its three approved drugs that treat rare genetic diseases. These drugs are Aldurazyme, Naglazyme, and Kuvan.

The CEO claims the company can be more profitable with more marketing, but is putting more effort into researching more drugs that treat rare diseases. I think this is good for the long term. The genetic disorder drugs that are approved by the FDA from BioMarin treat patients that have deformed bones or mental impairments.

BioMarin has a market cap of $8.6 billion dollars, and currently trades close to its 52-week high of $64.98 per share. Despite this, the company still has a huge pipeline of orphan drugs that it is currently working on. The company has an average 50-day volume of 1.2 million, so it is a very volatile stock to invest in. I think it is a strong buy because of the partnerships it has generated thus far, with Genzyme, Merck Serono, and Alliant Pharmaceuticals. These partnerships establish BioMarin as a strong buyout candidate. Investors should definitely keep an eye on this stock.

Vertex Pharmaceuticals

Vertex has done very well over the last few years, and it has many drugs in the pipeline. It targets a rare disease known as cystic fibrosis. Cystic fibrosis is a severe disease that causes young children and young adults to get a life threatening buildup of sticky mucus in the lungs. There are about 30,000 people in the United States with cystic fibrosis, and 70,000 people worldwide.

The drug that Vertex uses to target cystic fibrosis is called Kalydeco. Investors should take a look at scooping up some shares of Vertex, because analysts estimate that this company has a $4 billion market opportunity in cystic fibrosis.

Vertex had its cystic fibrosis drug approved by the FDA on Jan. 31, 2012. By the end of 2012, Vertex reported net product revenues for Kalydeco of $171.6 million, andKalydeco will generate good revenue over the next few years. The company has a market cap of $11.8 billion dollars. It is close to its 52-week high of $66.10 per share, but with its other drug Incivek for hepatitis C it still can go higher from here. Hepatitis C has a potential $20 billion market. Long term investors should check this biotech out for inclusion in their portfolios.

Alexion Pharmaceuticals

Another rare disease drug maker is Alexion. This company only has one approved drug, Soliris, but is approved for two indications. The FDA first approved Soliris for paroxysmal nocturnal hemoglobinuria (PNH) in 2007. PNH is a life-threatening disease that destroys red blood cells.

In 2011 Alexion was approved for Soliris treating aHUS, or Hemolytic Uremic Syndrome. This disease is life threatening, and can damage vital organs leading to stroke, heart attack, kidney failure, and death.

Alexion is a great company to invest in. Soliris is expected to keep generating more revenue over the next few years. For 2013, the company gives amazingly positive guidance–the company states that it will end 2013 with earnings per share in the range of $2.82 to $2.92 per share. Net product sales for its products are expected to be between $1.49 billion to $1.5 billion.

Alexion pharmaceuticals has a market cap of $18.8 billion. The stock currently trades at $96 per share, and has plenty of room to grow with its Soliris drug. It is trading at a high price-to-earnings ratio of 75, but given the fact that its approved drug has no competition it is still in good shape. It trades a little below its 52-week high of $119 per share, and therefore I think it is a good buy given the current price.

Final thoughts

Orphan drug companies are biotechs that are worth investing in for the long term. As described above, the risk is much less compared to other biotech stocks. This is because these biotech stocks get more leniency from the FDA. As we have seen over the last few years, orphan drug biotech stocks trade higher compared to other biotech stocks.

When considering a speculation play for your portfolio, I feel that you can’t go wrong in choosing one of the stocks above. They are already established, and the treatments they sell face hardly any competition, allowing them years of product revenues, and many years of market exclusivity. Plus, other drugs in their pipelines now have a chance to obtain accelerated approval, meaning that drugs can be approved earlier than ever. Orphan drug biotechs do it best in the biotech sector.

Infography by EvaluatePharma

Infographic-EvaluatePharma-Orphan-Drug-Report-2013

The Irony of Cottage Cheese

Dr. Ricki Lewis, author of The Forever Fix, and rare disease blogger, shed light on a sad truth about modern priorities in her latest post, Treat Cellulite, or Rare Diseases? The post describes a revolutionary new procedure that drastically reduces the appearance of bulging, uneven fatty tissue predominantly seen in women in the area of the thighs. This is also often refered to as a person having “cottage cheese” thighs. Dr. Lewis finds it shameful to think that there are many thousands of children suffering from many different rare diseases while people are paying over $2500 (American) for a procedure to reduce the fatty lumps on their legs. This article illustrates a truly tragic irony: money for research doesn’t always go to the most noble cause, but usually to the one which is most popular. Enjoy the post.

“Next, news that all women will want to hear!” teased the commentator on the increasingly imbecilic Today Show.
Soon I learned that, finally, we womenfolk need no longer suffer from the “horrible, dimpled ‘orange peel’ skin” of cellulite. The new miracle cure sounded like “cellulase,” an enzyme that breaks down wood.
Googling, I soon discovered that “Cellulaze” is instead a new laser technique that “pinpoints and disrupts dimpled pockets of herniated fat” and melts away the collagen cords that hold in place the vile lipid, while promoting formation of new collagen and elastin.  It joins a long list of cellulite remedies, including sound waves, radio waves, massage, retinol, red algae patches, and extracts from licorice roots, horse chestnut, and kola. The market is $2.3 billion.

The horrors of cellulite. (Photo credit: Cliff Lewis)

Those selling cellulite cures call it “a modern epidemic,” but the fact that 85% of postpubertal women have cratered thighs suggests that the condition is normal. Actually, cellulite is more common in women due to differences in the pattern of collagen fibers in the fat beneath the skin: in men it’s a network, but in women the fibers align longitudinally, pushing bulging adipocytes up into the dermis. The difference may be Darwinian, a fat-storing adaptation of pregnancy.
One can diagnose cellulite with a “pinch test,” and then classify oneself using the Nurnberger-Mulle scale of advancing decrepitude. A stage 0 butt, thigh, or hip has inoffensive folds but no “mattress-like appearance,” whereas the dread stage 3 brings “spontaneous dimpling.”
Intrigued, I checked out Cellulaze. On the Patent and Trademark Office website I found two entries: a composite material, and cereal by-products. I had better luck with the FDA. The agency approved Cellulaze as a medical device in January 2012. It hails from Westford, MA-based CynoSure. Next I tracked down the article in the Aesthetic Surgery Journal describing the device, the invention of Barry DiBernardo, MD, of Montclair, NJ.
Dr. DiBernardo conducted the clinical trial for the “laser lipolysis” in his own clinic. Into one dimpled thigh of each of ten women, he slipped a fiberoptic tube bearing a laser that emits energy both straight ahead and to the side, an innovation called “side-firing technology.” The invasiveness – 4 small cuts — is what sets this anti-cellulite laser apart from earlier ones that simply shine light from the outside. I envisioned lifting the skin on a chicken and scraping out the fat below as I read the journal description: “When laser treatment was completed, the liquefied adipocytes were removed by gently squeezing the incision-point tissue.”
Judging from the ten human thighs displayed in the paper, photographed next to their untreated control mates, Cellulaze works, and the effect lasts at least a year. The procedure takes a little more than an hour, and the patient stays awake and recovers quickly.
But getting your cottage cheese deposits zapped away isn’t cheap – it costs $2,500 a “spot,” whatever that means. One plastic surgery practice on Park Avenue offers a “virtual consultation,” which evoked YouTube images of butt scans on copiers.
The more I thought about cellulite and its $2,500-a-pop treatment, the madder I got. That’s because since writing my book about gene therapy, The Forever Fix, I’ve met, on Facebook and in person, many families raising funds to help develop treatments for their children, all of whom have diseases so rare that they can’t wait for pharma to take an interest. So I have a suggestion.
Every post-pubertal woman considering spending thousands to blast away cottage cheese deposits should instead send the money to Hannah’s Hope Fund, or Canavan Research Illinois, or Families Curing Retinal Blindness Together or the Cystinosis Research Foundation, or any of the organizations listed at CheckOrphan or the National Organization for Rare Disorders.
The world is full of medical conditions much more serious than cellulite.”

To learn more about Dr. Ricki Lewis, click HERE.

To visit Dr. Lewis’s Blog, click HERE.

Dr. Lewis’s Twitter:  @rickilewis.

Rare Diseases: 5 Recent Reasons to Cheer

By Ricki Lewis

On Sunday morning, July 21, I faced a room of people from families with Leber congenital amaurosis (LCA), an inherited blindness caused by mutations in any of at least 18 genes. It was the final session of the Foundation for Retinal Research’s bi-annual LCA family conference, and I was there to discuss the history of gene therapy. But I zapped through that quickly, because the future is much more intriguing.

Leber's Congenital Amaurosis - Gavin

Exome sequencing identified the rare mutation that causes Gavin Stevens’ hereditary blindness (Leber congenital amaurosis, or LCA). (Jennifer Stevens)

The excitement pervading the room that day was palpable, following a day of scientific updates, and not only because those with young children were soon to visit Sesame World and the sights of Philadelphia.

Jennifer and Troy Stevens exemplified that hope. Two years earlier, at this conference, they’d learned that researchers had been unable to identify a mutation behind their toddler Gavin’s blindnessNow they know the name of their gene:NMNAT1. I’ll return to their story.

The star of the 2010 conference had been 10-year-old Corey Haas and an energetic young sheepdog, both cured of LCA with gene therapy. This weekend, the stars were the new programs and technologies that would allow other families to join Corey’s – and not just those with blindness.

The rare disease community in the US collectively belies its name: at least 30 million people suffer from 7,000+ diseases, many so rare that they hover beneath the radar of big pharma. But maybe not for long, thanks to the following recent reasons to cheer:

#1: GENE THERAPY PENDING APPROVAL

On July 20, the European Medicines Agency (EMA) announced impending first approval of a gene therapy in the western world.

It’s for lipoprotein lipase deficiency (LPLD). The enzyme normally breaks down tiny triglyceride-packed globules called chylomicrons, and its absence causes episodes of very painful pancreatitis that can be fatal. LPLD is an ultra-rare disease, striking 1-2 people per million. And the only treatment is a diet so low in fat that most patients can’t stick to it.

The gene therapy, Glybera, consists of adeno-associated virus type 1 delivering an overactive variant of the LPL gene, injected into a leg muscle during a single day. But not many people have had it.

wilson - leber's congeintal amaurosis

James Wilson, MD, PhD, developed the vector, AAV1, used in the lipoprotein lipase deficiency gene therapy. (University of Pennsylvania).

The research team, led by Daniel Gaudet, MD, PhD, a professor of medicine at the University of Montreal, with colleagues from Amsterdam Molecular Therapeutics (recently replaced by privately-held UniQure), reported a two-year follow-up of 14 adult patients receiving 100 billion to 1 trillion viruses. And it seems to have worked, depending upon how one assesses success.

“The triglycerides dropped, but after 60 days they trended back up. The primary endpoint had failed, but the secondary endpoint was recurring episodes of pancreatitis – and they found a statistically significant, or close to it, decrease,” explained James Wilson, MD, PhD, editor-in-chief of Human Gene Therapy and professor of pathology and laboratory medicine at the University of Pennsylvania, who developed the vector. Tracking a few more patients, work not yet published, may have led the EMA’s Committee for Medicinal Products for Human Use to finally recommend approval, after three rejections.

Tomas Salmonson, MD, acting chair of the committee, points to the new data as well as restricting use to the sickest patients in pushing the gene therapy forward. “Our established ways of assessing the benefits and risks of Glybera were challenged by the extreme rarity of the condition and also by uncertainties associated with data provided.”

For the additional study, the researchers looked at what was happening in the chylomicrons in the blood, and found that triglyceride level can fluctuate, contrary to assumptions of steady change. And that means something is happening that might explain the decrease in the painful episodes – a very real measurement. Summed up Jean Bennett, MD, PhD, leader of one of the LCA2 clinical trials at Penn, “It’s a huge vote of confidence for the entire field of gene transfer.”

Dr. Wilson agrees. The repercussions won’t be at the FDA, where scientists make decisions based on data, he said, but on the willingness of big pharma to invest in gene therapy. Despite recent successes – LCA2, hemophilia, adrenoleukodystrophy — the pharmaceutical industry has been hesitant to fund gene therapy because it has lacked an approval. “So-called regulatory uncertainty has been the biggest problem, and if there’s no precedent, they can continue to say no. Biopharma is not interested in the ultra orphans. But I have a feeling we’ll be seeing some activity,” he added.

#2: FINDING HOMES FOR STALLED DRUGS

By August 14, researchers can submit pre-applications to the National Center for Advancing Translational Sciences (NCATS) Discovering New Therapeutic Uses for Existing Molecules program. The idea is simple yet brilliant: match compounds that are languishing on company shelves to diseases with newly-discovered mechanisms. Such candidate drugs have passed initial safety tests but were dropped for business reasons, such as a tiny market, or because they didn’t treat what they were intended to.

corey and hannah - LCA2

Corey Haas and Hannah Sames are ambassadors for the rare disease community, here signing their photos in “The Forever Fix: Gene Therapy and the Boy Who Saved It.” Corey has LCA2, successfully treated with gene therapy, and Hannah, awaiting hers, is one of 54 people in the world who has giant axonal neuropathy. (Sandy Andersen)

Since the announcement in June, eight industry leaders have signed on, offering an initial 58 compounds to find new therapeutic homes. And the need is compelling: of the 4,500+ diseases with recently-revealed mechanisms, only about 250 have treatments. “If researchers funded through this effort can demonstrate new uses for the compounds, they could significantly reduce the amount of time it takes to get a treatment to patients in need,” said Kathy L. Hudson, PhD, NCATS acting deputy director.

Everyone wins.

#3: SPEEDING FDA APPROVAL

On July 9, President Obama signed into law the FDA Safety and Innovation Act, which updates the 1983 Orphan Drug Act. The new law provides $6 billion over the next 5 years to assist the agency in evaluating new drugs and medical devices. The Act will speed access to new treatments and development of especially promising ones, and the Humanitarian Use Devices program will target those that treat rare diseases, giving priority to diseases of children. “Treatments are desperately needed because most are serious, many are life-threatening, and about two-thirds of the patients are children,” said Peter L. Saltonstall, president and CEO of the National Organization for Rare Disorders (NORD), which was critical in developing both acts.

The Act may be a lifesaver for people such as 8-year-old Hannah Sames, one of 54 people in the world known to have giant axonal neuropathy. The gene therapy trial that she will take part in is nearing phase 1, but the sponsoring not-for-profit, Hannah’s Hope Fund, is about to run out of money.

#4: EASING INSURANCE ACCESS

When the Supreme Court upheld the Affordable Care Act on June 28, I scrolled through the relieved statements from various rare disease organizations. Thanks to the ACA, children like Hannah Sames and Gavin Stevens will not be penalized for their pre-existing conditions, nor face annual or lifetime insurance caps.

#5: IDENTIFYING DISEASE GENES

Exome sequencing can identify mutations when single-gene tests don’t. The strategy sequences the protein-encoding part of the human genome in individuals, usually young children, whose syndrome has evaded recognition, searching for mutations passed silently from parents, with functions that could explain the symptoms. Once that’s known, researchers can develop new treatments, or repurpose existing ones.

New exome-derived discoveries are being reported nearly weekly, some appearing in the media before the technical papers are published. A recent news release about a 4-year-old named Maya with a neurological disease, for example, made its way into many news reports and blogs, with a touching story and accolades. Yet none named the gene or its precise function – the part I’m most interested in.

In contrast to the incomplete Maya story, when John Chiang, PhD, director of the Molecular Diagnostics Laboratory at the Casey Eye Institute in Portland, Oregon told me he’d discovered Gavin Stevens’ mutation among nearly 2,500 gene variants in the blind boy’s exome, he asked that I not report it. That was 8 months ago – the mutation is unveiled in a quartet of papers in the current Nature Genetics, after something of a turf war among four research groups.

Gavin’s parents had heard about Dr. Chiang at the Foundation for Retinal Research meeting two years ago, where Jennifer had called him, distraught, after learning that single-gene tests couldn’t explain their son’s blindness. Dr. Chiang, who described his skill as “I do the dirty work, I find the mutations,” had helped several families after existing tests had fruitlessly, but expensively, probed the most common parts of only the most common genes. Dr. Chiang had first developed larger gene testing panels, and when those still didn’t identify some families’ mutations, quietly sent their DNA off to the Beijing Genome Institute for whole exome sequencing.

Now that exome sequencing is commercially available in the U.S., Dr. Chiang cautions that it still doesn’t help all families, and that costs can greatly exceed the oft-mentioned $1,000 pricetag when considering analysis. “I would only recommend it as the last resort when all known genes are ruled out,” he advised.

CODA

Karen Poulakos, Leber congenital amaurosis patient smiling

Karen Poulakos has Leber congenital amaurosis, and does quite well in her world of shadows. Gene therapy may return the vision that she remembers from her childhood. (Ricki Lewis)

On Saturday at the retinal research conference last weekend, I watched Jennifer and Troy beam as Eric Pierce, MD, PhD, director of the Ocular Genomics Institute in Boston and co-author of one of the Nature Genetics papers, talked about their mutation. Discovery of the gene, which affects cellular energy (NAD synthesis), is a starting point for gene therapy, and this particular candidate is a great target. “The gene is small, and encodes an enzyme,” said Dr. Pierce.

The next day, as my talk about the history of gene therapy wound down, I took stock of my audience. Two young women with canes sat in the front row. A few rows back sat Karen Poulakos, also with a cane, whom I’d chatted with earlier.

Karen has Corey’s disease, LCA2, but, at age 63, had been deemed too old for the gene therapy clinical trial two years ago. But things had changed, she’d learned at the meeting, and she just might be eligible for the phase 3 trial coming up. Karen has lived a full life in her world of shadows, barely remembering when she could see better, and she’s now contemplating what it might be like to see again.

As I collected my things, I marveled at the hope radiating from the faces in the room, sighted as well as not. And I thought that this is science at its very best. This is what it is all about, the molecules, the mice, the deciphering of nature’s mechanisms: helping people.

Ricki LewisAbout the Author: Ricki Lewis received her PhD in genetics from Indiana University. Her ninth book, The Forever Fix: Gene Therapy and the Boy Who Saved It, narrative nonfiction, was just published by St. Martin’s Press. Most of her other books are college life science textbooks, including “Human Genetics: Concepts and Applications,” (10th edition, 2012) from McGraw-Hill Higher Education. Routledge Press published “Human Genetics: The Basics” in 2010. Ricki has published thousands of magazine articles, from Discover to Playgirl, but mostly in The Scientist. She is a genetic counselor at CareNet Medical Group in Schenectady, NY and teaches “Genethics” online for the Alden March Bioethics Institute of Albany Medical College. Ricki is a hospice volunteer and a frequent public speaker (Macmillan Speaker’s Bureau). Ricki’s blog Genetic Linkage is at www.rickilewis.com and she tweets at @rickilewis. Follow on Twitter @rickilewis.
If you would like your blog posted on CheckOrphan’s blog, please send it to rare.diseases@checkorphan.org. Please visit www.checkorphan.org for daily news and information about rare diseases.

The Importance of Patient-Initiated Research

Sharonne N. Hayes, MD, from the Mayo Clinic, recently authored a blog, “The potential of patient initiated research in studying rare diseases,” where she described her experience with the rare disease SCAD–spontaneous coronary artery dissection. Katherine Leon had connected with other SCAD patients via the WomenHeart Inspire online community and over the years had collected information on 70 people. At a conference, she approached Dr. Hayes about how she could help spur more research into SCAD, and a partnership was born. At the conference Katherine also met SCAD patient Laura Haywood-Cory who helped recruit patients online and keep momentum going.

“Our research team’s success in conceiving, piloting, refining, obtaining funding and recruiting for SCAD research, including the development of a DNA biobank for future genetic investigations at Mayo Clinic,” wrote Dr. Hayes, “could not and would not have transpired without the active and ongoing participation and support of ‘SCAD ladies.’” Mayo has followed-up with another trial with 200 SCAD patients and an equal number of their close relatives.

“The people most highly motivated to support or to even initiate investigations of a rare condition are those personally affected and their close relatives,” noted Dr. Hayes. This is something we have seen many times at Siren through our 12 years working with rare disease patients. The SCAD research is just one highly visible case. Other rare disease patients and caregivers are not only recruiting for research but funding it themselves.

Running a virtual biotech from the kitchen table
Another amazing example of patient-initiated research is Lori and Matt Sames of Hannah’s Hope Fund. When their youngest daughter was diagnosed with giant axonal neuropathy (GAN) in 2008, they were told that it is a terminal disease and soon realized there was no ongoing research, no foundation, no fundraising. So they got to work. Using social media, they raised money and awareness. The Sames had a successful pre-IND meeting with the FDA and at the end of the year are scheduled to initiate clinical trials with 11 children with GAN at University of North Carolina at Chapel Hill. They need an additional $500,000 to pay for the cost of the trial.

Buying and developing a drug
After an Israeli biotech company stopped investigating a promising medication, the Seckler and Wicka families bought the therapy and decided to develop it themselves as a possible treatment for their children’s Duchenne muscular dystrophy. The company, Halo Therapeutics, has been granted orphan drug status for the therapy by the FDA.

The most famous example of patient-initiated research is John Crowley, who had a movie based on his efforts to find a treatment for his children with Pompe disease. As we move forward with increased collaboration within the scientific community, the proliferation of the use of social media and inspiring stories like the ones above, I think this trend of patient-initiated research will continue to grow. What do you think?

By Eileen O’Brien, Director of Search & Innovation at Siren Interactive

Send your blogs to rare.disease@checkorphan.org if you would like us to publish them. Visit CheckOrphan for more information