‘Orphan’ drug status is offering these ASX pharma stocks a chance to turn a healthy profit – and give hope to those suffering rare conditions.
Rare or “orphan” diseases affect a small number of people globally, defined as less than 200,000 in the US and 10,000 in Australia.
Normally these conditions would be uneconomical to treat due to the limited market, because pharmaceutical companies would be concerned they’d be unlikely to recover their development and marketing costs – let alone profit.
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That’s where Orphan Drug Designation (ODD) comes in. It’s a financial incentive for pharmaceutical companies to develop and treat these rare diseases.
The benefits differ between different jurisdictions but typically include tax credits, market exclusivity for several years after approval (seven in the US, 10 in the UK and Europe – but we’ll get to that later) and waiver of drug application fees.
Orphan drug pricing key to profitability
One company taking advantage of ODD is Dimerix (ASX:DXB) in its Phase 3 clinical trial in focal segmental glomerulosclerosis, a rare disease of the kidneys which affects children as young as two years old, as well as adults. It causes inflammation and irreversible scarring, leading to permanent kidney damage and eventual end-stage kidney failure requiring dialysis or transplantation.
DXB has secured ODD in the US and in Europe for its DMX-200 drug.
To put that in context, in the US, the average orphan drug retails for around $US7000 a month or $US84,000 a year.
CEO and MD Dr Nina Webster says this pricing is a vital incentive for pharmaceutical companies who are going to the expense of developing a product for a small patient population.
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“A standard branded drug in the US is probably a fraction of orphan drug pricing, around $US500 per month, so you’ve got $US500 per month per patient, versus $US7000 per month per patient,” she said.
“Orphan drug pricing in the US is obviously more expensive than Europe, but both are very lucrative.
“If the average US branded product is $US500 per month, in Europe it’s about 10 per cent of that, which is the same as Australia, at around $US50.
“But orphan in Europe is around 50 per cent of US, so if it was $US7000 in the US, it’ll be about 3500 euros in Europe – which is a really attractive opportunity.”
Price per patient per month in thousands
One example Dr Webster points to is Neuren Pharmaceuticals (ASX:NEU), whose DAYBUE (trofinetide) drug was approved by the US FDA in March and is the first and only drug approved for the treatment of Rett syndrome, an “orphan” disease in children.
“They’re got their drug at $US175,000 per patient, so that’s a very, very attractive opportunity,” she said.
“Then you look in the space that we’re in, there’s nothing approved for FSGS but there’s another rare kidney disease called IGA Neuropathy (IgAN) and there’s been two drugs approved for that quite recently.
“The first one, Calliditas’ Tarpeyo drug is retailing at $US14,000 per patient per month, and the other one, Travere’s Sparsentan treatment, is retailing for $US9900 per patient per month.
“That is obviously higher than average, but again, it puts it into perspective that it’s a really attractive opportunity.”
Exclusivity period guarantees monopoly
The exclusivity is another element of ODD that makes developing an orphan drug commercially worthwhile, with most jurisdictions offering extra time for paediatric diseases.
“It’s a period of time that your patents cannot be challenged and a generic (version of the drug) cannot enter the market, so it’s a really great opportunity to get a monopoly on the market and get your money back on all of those expenses of developing the drug, as well as profit or return for shareholders,” Dr Webster said.
“And if you get a label that includes children, you get an extra two years in Europe and extra six months in the US.
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“Now, that might not sound much, but actually, when you think about that pricing of $US9900 per patient per month, that’s a lot – so those exclusivity periods are invaluable.”
Neuren CEO Jon Pilcher agrees that exclusivity is an attractive incentive, as the drug is commercially protected because the regulator won’t approve a generic for that time frame.
“They are quite lengthy periods and the importance of that is generic companies go and challenge patents and try to knock them out but that doesn’t matter, because if that was to happen, you would still have this protection for that period.”
Neuren’s North American partner, Acadia, has already made the first commercial sale of the drug in the US, with the company expecting a tidy $US40 million payment any day now.
The company is also eligible to receive ongoing royalties on net sales in North America, plus milestone payments of up to $US350 million if a series of four annual sales thresholds are achieved – a nice feather in its financial cap.
Potentially a faster path to market too
Another bonus is these incentives offer a faster approval time, which means a potentially quicker path to market.
“The advantage of having orphan drug designation means that we only have to do one single Phase 3 study, and we have built in two interim end points – so we don’t have to wait for the full study to know how it is progressing,” Dr Webster said.
“You can also get a review period that’s a lot shorter than the standard review periods for drug applications, so it all adds up.”
The first end point for DXB’s Phase 3 trial will be towards the first quarter of 2024, and after the second interim end point, or accelerated approval endpoint, it could mean the company can take the drug to market earlier.
“If successful, the second interim end point means we could go to market halfway through the study in some territories, with the study continuing to the end point in the background,” Dr Webster said.
Who else has orphan drug designation?
Race Oncology (ASX:RAC) has FDA orphan drug designation for its Phase 2/3 cancer drug Zantrene for acute myeloid leukaemia (AML) and recently received human ethics approval from the Hunter New England Human Research Ethics Committee for the observational stage of a planned Phase 1/2b cardioprotection trial.
The company is also exploring the drug as a new therapy for melanoma and clear cell renal cell carcinoma, and a recent report from Triangle Insights Group flagged that Zantrene is well-positioned for use as a cardioprotective and anti-cancer agent.
Antisense Therapeutics (ASX:ANP) also has ODD and Rare Pediatric Disease Designation in the US for its drug ATL1102 for the treatment of duchenne muscular dystrophy (DMD).
In the March quarter, the company nabbed approval from the Turkish Medicines and Medical Device Agency (TMMDA) to conduct a Phase IIb trial of ATL1102 in non-ambulant boys with DMD. It also received trial approval in Bulgaria in April – with results from the blinded phase of the trial expected in 1H 2024.
Prescient Therapeutics (ASX:PTX) was granted Orphan Drug Designation from the FDA for its PTX-100 drug for the treatment of all T cell lymphomas in March and is now working to schedule a Phase 2 trial.
Oncology company Kazia Therapeutics’ (ASX:KZA) paxalisib drug has ODD status for glioblastoma (the most common and most aggressive form of primary brain cancer in adults) and for diffuse intrinsic pontine glioma (DIPG), a rare, fast growing brain cancer in children, and for atypical teratoid/rhabdoid tumours (AT/RT).
Final data from the company’s Phase 3 trial for glioblastoma is expected in H2 CY23, with data from the Phase 2 international trial of paxalisib for DIPG expected in H1 FY23.
Alterity Therapeutics (ASX:ATH) has ODD in Europe and the US for ATH434 for the treatment of multiple system atrophy (MSA), a neurodegenerative disorder.
The Phase 2 clinical trial for the drug now has sites open for recruitment in five countries with participants in the US and Europe receiving their first dose in the March quarter.
Radiopharm Theranostics (ASX:RAD) has US ODD for its DUNP19 technology for the treatment of osteosarcoma, a type of bone cancer that primarily affects children, adolescents and young adults, along with ODD for its Ga68-Trivehexin technology for imaging of patients with pancreatic ductal adenocarcinoma (PDAC).
And AdAlta (ASX:1AD) has the status in the US for its AD-214 treatment of idiopathic pulmonary fibrosis, a condition where the lung tissue becomes scarred, with Phase 2 studies planned.
This content first appeared on stockhead.com.au
At Stockhead we tell it like it is. While Dimerix and Prescient Therapeutics are Stockhead advertisers, they did not sponsor this article.
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