4 Orphan Drugs Making Waves in 2013: Sanofi SA (ADR) (SNY) and More

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Orphan drugs — medications meant for small patient populations with rare, dangerous diseases — can be a rewarding business for biotech firms that strike gold. Drugs can cost hundreds of thousands of dollars, and even with potential patients only numbering in the thousands, rather than hundreds of thousands, millions, or more like with some blockbusters — the dollars can add up. Small biotech firms have used orphan drugs to catapult them from speculative play to established player.

Which companies — and orphan drugs — should you be watching out for throughout the year?

Sanofi SA (ADR) (NYSE:SNY)NPS’s Gattex is ready to roll out
One of the most exciting orphan drugs to watch in 2013 won FDA regulatory approval back in December. NPS Pharmaceuticals, Inc. (NASDAQ:NPSP)‘ Gattex, its first successful drug and approved to treat short bowel syndrome, hasn’t helped the company’s stock so far this year despite the victory. Although shares are down more than 13% so far in 2013, NPS — and Gattex — deserve your attention.

Short bowel syndrome, or SBS, impacts the lives of 10,000 to 15,000 Americans. Patients afflicted with the disease rely on parenteral nutrition — intraveneous feeding — due to their bowel’s inability to absorb adequate nutrients, a costly treatment. Gattex helps reduce the reliance on that, and while it’s costly in its own regard — NPS priced the drug at $295,000 annually — the impact on patient quality of life makes it an attractive treatment.

It’s good enough that the company has projected peak sales of $350 million for Gattex. For a company that had previously relied on sales royalties for revenue, that’s just what NPS needs to secure its place in the biotech industry. It’s possible that Gattex could be approved for other, more widespread bowel-related indications as well; don’t count on such approvals, but their possibility means even more potential upside for this drug.

NPS has another orphan drug, Natpara, in its pipeline, and this company’s future looks strong. Keep a watch on Gattex’s rollout this year as NPS enjoys its first year of real sales. Predictions vary for 2013, but some analysts have pegged possible revenue this year at more than $21 million.

Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) squares off with Genzyme and Isis
Not all orphan drug firms are success stories like NPS, however. Aegerion Pharmaceuticals scored a big victory when the FDA approved Juxtapid, its orphan drug pill for rare cholesterol disorder homozygous familial hypercholesterolemia, or HoFH. Good news, right? Not when another biotech company barges into the same market.

First, the good news for Aegerion: Its FDA approval back in December gives the company its first drug on the market. Juxtapid won’t be cheap; Aegerion’s pricing the drug at more than $200,000 per year. It will need every dollar it can get, however, because the market for HoFH fits the definition of “orphan drug” to the letter.

Estimates on how many patients suffer from HoFH in the U.S., but they range from as few as 400 to as many as Aegerion’s own estimate of up to 3,000. The company expects to get 250-300 patients on Juxtapid by the end of 2013, bringing in revenue between $15 million to $25 million. However, the company’s job got a whole lot harder in late January.

The FDA approved another orphan drug for HoFH on Jan. 29, ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS)‘ and Genzyme’s Kynamro. The drug is a lot bigger for Isis than Genzyme as the latter is a subsidiary of major pharmaceutical firm Sanofi SA (ADR) (NYSE:SNY); nonetheless, it also brings in a significant direct competitor to Aegerion’s own lofty goals.

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