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Companies Find Treatments, Profits in ‘Orphan’ Drug Research

A seminal breakthrough in the treatment of cystic fibrosis, a rare and devastating disease, began with a crack team of scientists at San Diego’s Aurora Biosciences Corp. This is a critical example of how private companies have begun to successfully, and profitably, target rare diseases with what are called “orphan drugs.”

Historically, big pharma has shied away from treating rare diseases, because they affect few and were viewed as economically unsound. But more and more biotechnology companies, many of which are in San Diego, are entering the niche field of rare disease study — and a network of ancillary support services are cropping up to aid these scientists in their search for cures.

“It’s an interesting question of society — do you want to literally change the trajectory of the next 60 years of a person’s life — which is the case with these rare diseases — or do you want to change the last six months?” said John Mendlein, a San Diego scientist who worked at Aurora and is now CEO of San Diego-based drug company aTyr Pharma Inc. “We spend a lot of money on cancer research and less on rare diseases like cystic fibrosis — but the fact is that we can create drugs that change a person’s entire life from the very beginning.”

Affect Less Than 200,000

Rare, or “orphan” diseases by definition affect less than 200,000 Americans. According to the National Institutes of Health, there are about 7,000 rare diseases known to science, but only about 350 have FDA-approved treatments. The number is, however, rapidly growing.

And a report from Thomson Reuters finds that the orphan drug market was worth $50 billion in 2011, and can be just as profitable as drugs targeting more common diseases.

The Aurora Biosciences story began in the late ’90s in San Diego. The Cystic Fibrosis Foundation, based in Bethesda, Maryland, approached several biotech companies around the country pledging a five-year, $46.9 million grant to fund research for a cure. The genetic disease makes it extremely difficult to breathe, and the life expectancy of a patient diagnosed with cystic fibrosis was until relatively recently only 10 years.

The hope from CFF President Robert Beall was that these smaller startups would be more willing than the larger pharmaceutical companies to study this rare disease that affects only about 30,000 Americans.

“Even after the CF gene was discovered in 1989,” Beall said, “pharmaceutical companies didn’t want to touch us. Their response was ‘First your disease is too small, and second, you’re a charity.’ We were up against tough odds, but we knew we had to try to find a way to reduce the risk of these companies to come into the field of CF.”

Aurora Biosciences

And one company rose to the challenge — Aurora Biosciences.

Aurora Biosciences was launched in 1995 by a team of UC San Diego scientists that included Roger Tsien, who won the 2008 Nobel Prize in chemistry. Other Aurora alums include aTyr Pharma’s Mendlein; Kleanthis Xanthopoulos, CEO of San Diego’s Regulus Therapeutics Inc.; David Nelson, CEO of La Jolla-based Epic Sciences Inc.; and Paul Grayson, CEO of La Jolla-based RuiYi Inc.

Aurora was acquired in 2001 by Boston-based Vertex Pharmaceuticals Corp. for $592 million — by which point it had more than 300 employees. Vertex scientists in San Diego ramped up research and just last year, a drug called Kalydeco was approved by the U.S. Food and Drug Administration. It has shown exceptional results.

“Kalydeco is a game-changer that has helped people breathe better, stay out of the hospital, gain weight and experience life in a whole new way,” Beall said. “Our goal is to find therapies like Kalydeco for all people with CF.”

Local researchers at Vertex continue to study the drug and its potential to help a larger population of cystic fibrosis patients — because the drug, based on a patient’s genetic makeup, only targets a small portion of an already small patient pool.

But it still pays off. The drug is effective in about 1,000 cystic fibrosis patients, but the price tag is quite high — the cost to treat one cystic fibrosis patient with Kalydeco is about $300,000 for a year. That said, insured cystic fibrosis patients generally only pay about $15 a month in copays — but the sticker price allows the company to begin recouping drug development costs.

Isis Pharmaceuticals

This homegrown success story is just one example of how the market for drugs that treat rare diseases is booming. For example, another San Diego company, Isis Pharmaceuticals Inc., received FDA approval this year for its orphan drug, Kynamro, which treats a rare form of high cholesterol. It costs $175,000 a year to treat a patient with Kynamro.

Agility Clinical Inc., a new contract research organization formed in Carlsbad about a year ago, is focusing its efforts primarily on the orphan drug market. It provides backup research support to companies that study rare disease.

The company’s founder and CEO is Ellen Morgan, who was the co-founder, president and CEO of Synteract, a large San Diego-based contract research organization. A cohort of former Synteract employees followed, including Marilyn Carlson, the company’s vice president of medical, regulatory and scientific affairs, who said the company’s core mission is to aid the study of rare disease.

“Orphan drugs — we see those as a real opportunity,” Carlson said. “It’s a challenge, because you have to identify a population, find a patient, and develop a regulatory strategy that requires creativity. We like that it’s like solving a puzzle and it has the motivation that you’re going to be doing the most good.”

Orphan Drug Act

This is the 30th anniversary of the Orphan Drug Act. In 1983, Congress passed legislation that provided incentives for companies to develop products that were limited to just a few patients. This includes speeding up the regulatory process, and guaranteeing that pharmaceutical companies that target orphans will have seven years of marketing exclusivity for their drugs.

Before the Orphan Drug Act, only 10 drugs were available on the market to treat rare diseases.

“Now, we have an opportunity to work on products that are not driven by the size of the market, but by the importance of the market,” Carlson said. “These therapies tend to be expensive, so even though the number of patients affected may be small, it’s definitely possible for companies to make a profit from targeting orphan disease.”

One such example is Rituxan, an orphan drug developed by Genentech — a large pharmaceutical company with some operations in San Diego. The drug was developed to treat a rare cancer, but it was discovered to be highly effective in treating rheumatoid arthritis and other autoimmune diseases— and its 2011 sales exceeded $3 billion.

Another company that is displaying interest in this niche is the The Assay Depot Inc., a new San Diego enterprise that bills itself as the “Amazon.com for Science.” The company has developed a fast-growing online marketplace that connects researchers and companies together, allowing them to outsource some of their lab processes by searching for vendors in more than 600 drug research areas.

The company has launched a “Rare Disease Challenge,” which offers awardees in-kind services from an array of Assay Depot vendors that are up to $500,000 in value. It has given these awards to 26 researchers, studying 26 rare diseases.

Assay Depot CEO Kevin Lustig said it’s because the pharmaceutical landscape is changing in both motivation and economics, and Assay Depot wants to aid in that transition.

“When you think of rare diseases, the motivation, and often the research, is probably going to come from independent scientists, patient advocates or academics,” Lustig said — the Aurora drug development case was, after all, sparked by a patient advocacy group in the form of the Cystic Fibrosis Foundation.

“That’s why we came up with the idea for a rare disease challenge — to try to get everyone else besides larger pharmaceutical companies to come together and promote research against a whole slew of rare diseases,” Lustig said. “It’s this unique collaboration between nonprofits, for-profits, consultants, universities and academics — we’re trying to bring together all the stakeholders in a way that would make them passionate about continuing research in this important area.”

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