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Verastem, Inc. and Bellus Health received orphan drug designations for their product candidates. Orphan drugs are expected to show an ROI of 1.7 times that of non-orphan drugs by 2018.
What is an Orphan Drug?
Public health policies around the world, including in the United States, Japan and the European Union, have made the assignment of orphan status to drugs developed to treat rare medical conditions a lucrative potential revenue stream for pharmaceutical companies. “Kyprolis, a drug from Onyx Pharmaceuticals (NASDAQ:ONXX) for multiple myeloma, was the most promising new orphan drug in 2012, with U.S. sales expected to reach $897 million in 2017,” according to EvaluatePharma’s 2013 Orphan Drug Report.
Orphan drugs are quickly showing a better return on investment (ROI) potential than drugs targeting larger patient pools, the report shows, with an expected ROI of 1.7 times that of non-orphan drugs by 2018. The “Top 10 orphan drugs have 43% the sales potential of non-orphan drugs, but delivered at 29% of the Phase III trial costs,” states the report’s authors. In terms of research and development costs, Phase III orphan drug development costs are half that of non-orphan drugs, and potentially as low as 25 percent after U.S. tax breaks.
The report estimates that the compound annual growth rate for orphan drugs will be twice that of the overall drug market for a forecasted total of $127 billion in orphan drug sales by 2018.
Verastem’s defactinib granted orphan drug designation in US and EU
Verastem announced this week that its lead cancer stem cell inhibitor, defactinib, has received orphan drug designation from the FDA for the use in the treatment of mesothelioma, a rare form of lung cancer. “The designation provides eligibility for a seven-year period of market exclusivity in the U.S. after product approval, FDA assistance in clinical trial design, and an exemption from FDA user fees,” stated the press release.
The drug received orphan medicinal product designation from the European Commission in June. The designation provides up to 10 years of potential market exclusivity if the drug is approved for marketing in the EU and the drug candidate may also qualify for a reduction in regulatory fees among other benefits.
Verastem is planning a Phase II trial of defactinib in patients with malignant pleural mesothelioma and expects an enrollment of approximately 350 to 400 patients at clinical sites in 11 countries.
Earlier this month, Cantor Fitzgerald initiated coverage of Verastem with a BUY rating and a price target of $22.00.
Bellus Health receives orphan drug status in Japan for KIACTA™
Also this week, Bellus Health announced that Japan’s Ministry of Health, Labor and Welfare granted orphan disease drug status for KIACTA™, a drug candidate for the treatment of AA amyloidosis, a condition resulting in renal dysfunction that may lead to dialysis and death.
Benefits of the orphan disease drug status in Japan include priority review on submission of a new drug application for the product candidate as well as 10 years of market exclusivity for the treatment of AA amyloidosis patients if approved.
KIACTA™ is currently in a Phase III Confirmatory Study in which five clinical sites are currently participating. The National Institute of Biomedical Innovation has awarded C$500,000 toward clinical development expenses.
“KIACTA™ has previously received Orphan Disease Drug Status designation in the United States and Orphan Medicinal Product designation in Europe. In addition, KIACTA™ received Orphan Drug Designation in Switzerland,” stated the press release.
Last month, Bellus agreed to acquire Thallion Pharmaceuticals Inc. (TSXV:TLN) for $6.332 million. Thallion is currently developing Shigamabs®, a monoclonal antibody therapy being evaluated for the treatment of Shiga toxin-producing E. coli bacterial infections.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.