However, a growing number of drugmakers are looking for treatments because of the incentives being offered, potentially creating opportunities for investors who choose wisely.
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What Makes A Disease "Rare"?
Numerous sources, including a study published in the Orphanet Journal of Rare Diseases, state that there are more than 7,000 rare diseases, and only 5% of them have an effective treatment. The authors of the study estimate that about 30 million Americans live with rare diseases, which amounts to about one out of every 10 Americans.
Different agencies label diseases as "rare" in different ways. For example, the U.S. defines a rare disease as one that affects fewer than 200,000 people in the country. This definition was established in 1983 when Congress passed the Orphan Drug Act to incentivize the development of treatments for rare diseases.
Rare diseases are also referred to as orphan diseases because historically, pharmaceutical companies were generally uninterested in finding treatments for them due to the tiny addressable market, which translated into relatively miniscule sales and potentially a negative return on the investment required to develop the drug.
Most rare diseases affect children, and many are debilitating or lethal. Duchenne muscular dystrophy is one of these rare, lethal diseases, occurring in about one out of every 3,500 male births around the globe, according to the National Organization for Rare Disorders. While there are some treatments for DMD, they are severely lacking in effectiveness when it comes to slowing or stopping disease progression.
What Is Duchenne Muscular Dystrophy?
DMD is a rare genetic disorder that causes progressive muscle wasting. The disease primarily affects boys, although girls can be carriers and experience little or no symptoms. In most cases, DMD is diagnosed between the ages of three and six.
A mutation of the dystrophin gene on the X chromosome causes DMD. Dystrophin is an important protein for muscle function, so boys with DMD are unable to produce sufficient levels of dystrophin, resulting in muscle wasting. DMD is usually inherited, although it may occur spontaneously in a boy from a family with no history of the disease.
The first muscles to be affected in DMD are those of the pelvis and legs, followed by the shoulders and arms. As DMD progresses, it also affects the trunk and involves other muscles. Most boys who are diagnosed with the disease are wheelchair-bound by the time they are teenagers. Over time, the muscles of the heart and lung are adversely effected, and unfortunately, all boys with DMD will succumb to either respiratory or cardiac muscle failure.
Available Treatments For DMD
The first-line medications used in the treatment of Duchenne muscular dystrophy are corticosteroids like prednisolone and PTC Therapeutics' Emflaza, which are used to treat the inflammation in the muscles caused by the lack of dystrophin. Corticosteroids usually come with major safety concerns when used for long periods of time, as DMD requires, and patients taking corticosteroids continue to see their disease progress.
A second class of drugs used to treat boys suffering from DMD are the exon-skipping drugs designed to increase the levels of muscle dystrophin, including Amondys 45, Exondys 51 and Vyondys 53, all of which were developed by Sarepta Therapeutics. NS Pharma has also developed the drug Viltepso.
However, these drugs only treat boys with specific gene mutations. A study published in the journal Nature estimates that these exon-skipping drugs address only about 30% of DMD patients, leaving the other 70% of patients without an effective treatment.
Other treatments for Duchenne muscular dystrophy are in development. One drug that shows promise is ATL1102 from Australia-based Antisense Therapeutics, which could address the entire market of Duchenne's patients, including those with the gene mutations targeted by Sarepta's three drugs.
ATL1102 is an immunomodulatory and anti-inflammatory drug that demonstrated positive results in a clinical trial in non-ambulant DMD boys conducted in Australia. Antisense Therapeutics is preparing to start a trial in Europe.
If the trial results are sufficiently positive, they could allow the company to seek approval in the EU. The Australian study found that, after six months of treatment with ATL1102, the boys saw a mean improvement in the function and strength of their upper limbs compared to the baseline measured before they started receiving the drug.
"This was an exciting outcome for us," Antisense Therapeutics CEO Mark Diamond said in an interview. "Usually in DMD, we would see the boys' upper limb function and strength decline even when they are being treated with corticosteroids."
He explained that slowing the decline of the loss of function of the upper limbs is the main goal in the clinical development of an effective treatment for non-ambulant DMD boys.
"We were also very encouraged by MRI data, which showed that the fat levels in the boys' muscles had stabilized," Diamond said. "Increasing levels of fat in the muscle are a sign of disease progression where muscle cells die and are replaced by fat cells. In fact, their lean muscle mass had increased. We don't believe this has ever been seen in Duchenne's boys taking corticosteroids."
Investing In Companies That Make Orphan Drugs
Duchenne muscular dystrophy is only one of many rare diseases that orphan drug companies are researching, so the opportunities for investing in this space are extensive. When we look at how the development of drugs to treat DMD has progressed over the years, we can see the opportunities presented by this business model.
Some pharmaceutical companies, like the well-known Sarepta Therapeutics, have indeed made orphan drug development their business model. Estimates of the size of the orphan drug market vary. For example, Vantage Market Research estimated in November that the global orphan drug market will be worth $3.2 billion by 2028.
One of the opportunities enjoyed by orphan drug companies like the former hedge fund favorite Sarepta Therapeutics or Australia's Antisense Therapeutics is the wide array of incentives aimed at getting treatments for rare diseases onto the market.
Why Drugmakers Are Turning To Orphan Drug Development
Some drugmakers may turn to orphan drugs as a way to reduce the impact of revenue loss from expirations of patents on their most popular drugs. A study published in the National Library of Medicine suggests that orphan drugs "seem to offer the key to recovery and stability within the [pharmaceutical] market."
Clinical trials for orphan drugs are far less expensive than those for other diseases because they are much smaller, requiring many fewer patients than drugs to treat diseases that affect many more patients. Additionally, treatments for rare diseases generally attract premium pricing as a way of compensating for the cost of their development.
Further, some agencies like the U.S. Food and Drug Administration give grants and tax credits to drug companies to support development of orphan drugs. Orphan drug status also offers extended market exclusivity.
The FDA will also offer companies developing drugs for rare pediatric diseases such as DMD "Rare Pediatric Disease Designation," which entitles these companies to apply for a Pediatric Review Voucher (PRV). The company can use the PRV to secure accelerated approval or sell it to another drug developer that may wish to use it to accelerate approval of their own program. PRVs can trade for more than $100 million.
Antisense Therapeutics has been awarded Rare Pediatric Disease Designation for ATL1102 in DMD.
Final Thoughts
Orphan drug development presents an opportunity for drugmakers and investors alike. Of course, not all orphan drug developers are alike, but with a little research, investors can weigh the pros and cons of each and decide which have treatments are worth investing in.
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