An orphan drug is a pharmaceutical agent that has been developed specifically to treat a rare medical condition. In the United States and the European Union, it is easier to gain marketing approval for an orphan drug, and there may be other financial incentives for companies, such as extended exclusivity periods, intended to encourage the development of drugs that might otherwise lack a large profit motive.
For many of the top biotech companies, orphan drugs have morphed into huge winners and even generated other streams of revenues as the medications have been proven effective to treat other conditions. A new research note from Credit Suisse acknowledges five top biotech companies that are filling the orphan multi-drug, multi-disease space in a big way.
Alexion Pharmaceuticals Inc. (NASDAQ: ALXN) is still a top stock to buy at many Wall Street firms, and it has been considered by some as a potential acquisition target. Some analysts see likely strong accretive near-term to an acquirer, given the very impressive $1.5 billion in company revenues that are big enough to be significant to a bigger company.
The FDA has granted an orphan drug designation to Alexion’s Soliris, its only marketed product, for the treatment of patients with myasthenia gravis, a rare neurological disorder, which reportedly affects an estimated 13,600 people in the United States. The Thomson/First Call consensus price target is $198.65. The stock closed Wednesday at $168.70 a share.
Alnylam Pharmaceuticals Inc. (NASDAQ: ALNY) engages in discovering, developing and commercializing novel therapeutics based on RNA interference. Many Wall Street analysts believe that the fourth quarter could be a catalyst bonanza time for the company. With multiple data presentations expected, and an intellectual property catalog of 125 patents, there are multiple avenues for success.
Alnylam said at its second-quarter earnings presentation that it expects research and development will increase slightly in the last half of the year as programs that are into late stage development are completed. With a significant amount of cash on hand, Alnylam is in very good shape. The consensus price target is $101, and shares closed Wednesday at $79.02.
BioMarin Pharmaceutical Inc. (NASDAQ: BMRN) is also often touted as a possible takeover target. Many on Wall Street think that media speculation of big-pharma interest in BioMarin is likely related to the company’s commercial success of its orphan drug model globally. The diversified and expanding pipeline could also provide significant strategic value to acquirers.
While some important phase 3 data were moved to next year, a successful Vimizim launch is key to the near-term success and momentum for the stock. Launched in mid-February, the drug is expected to have $60 million to $70 million in sales this year. The consensus price target is $83.53. Shares closed trading Wednesday at $72.61.
Isis Pharmaceuticals Inc. (NASDAQ: ISIS) recently announced that it has earned a $4 million milestone payment from Achaogen, earned on the initiation of a Phase 3 study on plazomicin, an aminoglycoside being developed for the treatment of patients suffering from serious multi-drug resistant, gram-negative bacterial infections. The phase 3 superiority study will compare the efficacy and safety of plazomicin to colistin in patients with bloodstream infections and nosocomial pneumonia caused by carbapenem-resistant enterobacteriaceae.
The company also said regarding its name and the Islamic terrorist group, that it will not rename itself, so the terrorists will have to do so. The consensus price target for the stock is $45.50. The shares closed trading on Wednesday at $41.48.
Vertex Pharmaceuticals Inc. (NASDAQ: VRTX) is a large cap biotech leader that has exploded. The company got on the biotechnology map with a blockbuster hepatitis C drug and now looks poised to get revenue growing again with its cystic fibrosis franchise. It already has one drug approved, but Kalydeco by itself is only appropriate for about 4% of cystic fibrosis patients. To have Celgene-type success, Vertex need drugs in its pipeline that are being tested with Kalydeco to be a success.
Many analyst on Wall Street expect the company to release Phase 2 VX-661 data. VX-661 combined with Kalydeco showed statistically significant improvements in lung function in earlier released data. If the second generation drug is successful, it could be larger than some are currently estimating. Vertex recently announced ir would be presenting 15 abstracts from its cystic fibrosis (CF) research and development program, which will be presented at the 28th Annual North American Cystic Fibrosis Conference (NACFC) in Atlanta in early October.
The consensus price target for Vertex stock is set at $110.68. Shares closed right above the target Wednesday, up over 6% at $111.98.
Orphan drug makers can bloom into huge success stories, one of the biggest being Vertex. Back in May of 2005, the stock was trading at $10. Investors that have stayed that long course hit the jackpot.
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