Orphan Neurological Diseases
Wed, 09/05/2007 - 14:21 — Zangani
Executive Summary


An orphan disease is defined in the US as a condition that affects fewer than 200,000 people nationwide. This includes diseases as familiar as cystic fibrosis, Lou Gehrig's disease, and Tourette's syndrome, and as unfamiliar as Hamburger disease, Job syndrome, and acromegaly, or "gigantism." Some diseases have patient populations of <100 subjects. Collectively, however, these diseases affect as many as 25 million Americans, according to the National Institutes of Health (NIH), and that makes them a serious public health concern.

New rare diseases are discovered every year. Most are inherited and caused by genetic mutations. Others can be acquired as a result of environmental and toxic conditions. As disparate as these disorders are, patients share many common frustrations. For example, 30% of people with a rare disease must wait up to 5 years to get an accurate diagnosis. Patients often must travel long distances to visit the few doctors knowledgeable about their illnesses, and the costs involved with diagnosis, treatment, and other related expenses can be exorbitant.

Before the passage of rare disease laws in the US, patients diagnosed with a rare disease were denied access to effective medicines because prescription drug manufacturers rarely could make a profit from marketing drugs to such small groups. Consequently, the prescription drug industry did not adequately fund research for orphan product development. Other potential sources, such as research hospitals and universities, also lacked the capital and business expertise to develop treatments for small patient groups. Despite the urgent health need for these medicines, they came to be known as orphans because companies were not interested in adopting them. This changed in 1983 when Congress passed the Orphan Drug Act (ODA). The ODA created financial incentives for drug and biologics manufacturers, including tax credits for costs of clinical research, government grant funding, assistance for clinical research, and a seven-year period of exclusive marketing given to the first sponsor of an orphan-designated product who obtains market approval from the FDA for that indication. Concomitantly, federal programs at the FDA and the NIH began encouraging product development, as well as clinical research for products targeting rare diseases. Thus far, the FDA has approved nearly 300 orphan drugs.

Europe has not been far behind. Within the last five years, 450 applications for orphan designation status (drugs for the treatment of rare diseases) have been submitted in the EU; 270 are currently being evaluated by the European Agency for the Evaluation of Medicinal Products (EMEA). 22 new orphan medicines for the treatment of life-threatening diseases have already received marketing authorization. Already, more than a million patients are estimated to have derived benefit from the 22 new orphan medicines.

We believe the total market for orphan drugs in 2006 reached ~$40 billion and could exceed $70 billion by 2010. In this sector, the current market for drugs aimed at treating orphan neurological indications could be as large as $7 billion. Given the projected increase in focus on niche disorders as the blockbuster business model wanes, we estimate that the total market for orphan drugs targeting neurological indications could exceed $15 billion by 2010. In the near-term, we expect the areas of narcolepsy, amyotrophic lateral sclerosis (ALS) and peripheral neuropathy to receive the greatest attention. We expect companies concentrating on targeting the pathological mechanisms underlying neurodegeneration in various disorders to record the greatest success. Among these firms, we believe that Cortex Pharmaceuticals (COR, Market Outperform), CytRx Corporation (CYTR, Market Perform) and Medivation (MDVN, Market Perform) are likely to become key players. Their platforms aim to increase cerebral arousal, reduce protein misfolding and attenuate mitochondrial dysfunction respectively, all of which are crucial aspects that impact neurological decline in a wide array of nervous system disorders. The orphan neurology therapeutic market could evolve to encompass approximately 20% of the total orphan drug market, with a wide range of smaller firms becoming involved. We believe that this market represents the best opportunity for emerging neurology-focused companies that have innovative insights into the molecular basis of rare neurological diseases. The opportunity could be lucrative, given the past history of orphan drugs and the proven richness of such products, with examples such as Cerezyme in Gaucher’s disease marketed by Genzyme (GENZ, Market Perform) attaining blockbuster status.

Cortex’s CX717, CytRx’s arimoclomol, and Medivation’s Dimebon? all represent novel agents with different mechanisms of action that are being developed to treat niche CNS disorders. These candidates could be the first new drugs to be approved in the near-term; as the harbingers of a new paradigm in CNS disease therapy, they could herald a new generation of therapeutics with a focus on rare diseases, which target the pathological mechanisms underlying such disorders at the cellular and molecular level. Promising privately held companies are also likely to achieve successes in the niche CNS disease sector. Private firms such as Antipodean Pharmaceuticals, EnVivo Pharmaceuticals, Faust Pharmaceuticals, Hunter-Fleming, and Trophos are all developing therapeutics for little-known diseases such as Friedreich’s ataxia, muscular dystrophy and ALS. These companies will likely generate significant interest, should their unique approaches towards the rare neurological diseases prove effective, and will bear watching.




Key Points
Orphan neurological diseases collectively represent a significant unmet medical need
Worldwide, orphan diseases currently afflict nearly 60 million people
Rare neurological disorders comprise nearly 20 million of the above, in our view
The current therapeutics market for orphan disorders exceeds $40 billion
We estimate that therapies for rare neurological diseases could represent a $7 billion market currently, rowing to over $15 billion by 2010
Rare neurological disorders are still underserved in terms of drug development
As the traditional ‘blockbuster’ drug development model loses steam, the ‘nichebreaker’ model will gain in prominence
Orphan-designated drug candidates have an approximately 20% average probability of approval, compared to the overall probability of only 10% for all drug candidates
Nearly 300 orphan drugs have been approved since the 1983 advent of the Orphan Drug Act
In the quarter-century since the Orphan Drug Act came into being, nearly twice as many orphan drugs as non-orphan drugs have been approved
On average, orphan drugs are approved 40% faster than non-orphan drugs
In this report, we discuss the current landscape of orphan drug legislation, the rare neurological diseases and highlight companies with drugs in advanced development
Finally, we examine in detail the firms with novel experimental drugs that address disease-specific pathways
In this report, we take a close look at who the winners could be . . . and highlight our "magic 20" - 10 publicly held firms and 10 private companies - to keep an eye on

To view the entire report, click here.
http://www.zangani.com/node/922