In most cases, a biopharmaceutical company chooses to develop either high-priced orphan-designated drugs, or therapeutics to treat large patient populations. Yet one company in particular, Regeneron Pharmaceuticals Inc (NASDAQ:REGN), is crossing the line as a dual-threat developer of both kinds of drugs. Here’s why that might make it worthy of your investment.
The Difference In Therapeutic Approach
Drugs that earn orphan designations treat rare diseases. Orphan drugs are more expensive, have longer periods of exclusivity, and are harder to develop.
Essentially, orphan drug development starts from scratch. With rare diseases, there are no publications or FDA-approved drugs that can be used as guides in the drug’s development. For the most part, companies have to identify a targeted disease, and successfully become the first company to develop a drug to treat that disease.
This approach is much different from what Big Pharma practices with its pipeline. In recent years, Big Pharma has executed a pipeline approach where it looks at a disease, finds the best treatment, and then biologically/chemically modifies therapies to be better than the best treatment. At least, this is the goal; sometimes it works, and sometimes it does not.
One or the Other
In recent years, Big Pharma’s orphan drug development was nonexistent. But Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) traded higher last week in response to buyout interest from Roche. However, analysts believe the deal would lack synergy, since common disease drugs are marketed directly to physicians, while orphan drugs are often marketed directly to the patient.
Furthermore, companies who develop orphan drugs spend more of their resources on insurance reimbursement, patient education, and on R&D to expand indications for individual drugs. For common-disease drugs, the goal is mass marketing and building a strong sales team.
As a result, biopharmaceutical companies have elected to pursue one or the other — common-disease treatments or orphan drugs. Only one company, Regeneron Pharmaceuticals Inc (NASDAQ:REGN), successfully develops in both areas.
A Unique Therapeutic Approach
Regeneron Pharmaceuticals Inc (NASDAQ:REGN)’ leading orphan drug, Eylea, treats patients with a rare degenerative disease that causes blindness. Prior to Eylea’s FDA approval, patients would need shots in their eye weekly or monthly, but Eylea is only injected bi-monthly, thus giving it an advantage over other therapeutics.
Regeneron Pharmaceuticals Inc (NASDAQ:REGN) also has a colorectal cancer drug, ZALTRAP, which produced sales of more than $30 million in its first four months of launch. Zaltrap has peak sales of $500 million in the U.S. alone, but is not an orphan drug.
Lastly, Arcalyst is a genetic disease drug with an orphan designation and peak sales of $100 million.
Right away, you might notice that two of Regeneron Pharmaceuticals Inc (NASDAQ:REGN)’s products are orphan-designated, while the other is not. This makes Regeneron unique in this space, especially considering its success.