Biotechnology: Orphan Drugs Offer A Chance For Biotech Startups
Payoffs can be huge for small companies with the right stuff
By Gary Haber
The (Wilmington, Del.) News Journal
With a new management team in place and a focus on a market largely ignored by big pharmaceutical companies, a tiny biotech company started by two researchers from the University of Delaware is ramping up operations.
Orphagenix Inc. doesn't plan on slugging it out with behemoths such as AstraZeneca PLC and Merck & Co. in developing drugs for widespread conditions, such as diabetes or high cholesterol.
Instead, this 2-year-old startup plans to use a novel gene-repair therapy developed by its founders, Eric Kmiec, a UD professor, and Hetal Parekh-Olmedo, a UD senior research associate, to develop what are known as orphan drugs.
Orphan drugs target diseases that affect 200,000 patients or fewer. The phrase comes from "The Orphan Drug Act," the law Congress passed in 1983 to encourage drug makers to develop treatments for relatively rare, but sometimes deadly, diseases the big drug makers were overlooking.
Two of the diseases Orphagenix is pursuing are sickle cell anemia and spinal muscular atrophy, says Michael Herr, who joined the company this year as president and CEO.
Sickle cell anemia is an inherited blood disorder that affects about 70,000 people in the United States, mostly blacks. Spinal muscular atrophy is a motor-neuron disorder that affects about 1 in 6,000 newborns.
It's the biggest genetic cause of death among children younger than age 2, according to Families of Spinal Muscular Atrophy, an advocacy group.
Big Payoffs
Herr, who came to Orphagenix from the University City Science Center, a Philadelphia incubator for early-stage life science and technology companies, says both diseases are well suited to the gene-replacement process Kmiec and Parekh-Olmedo developed.
The promising process is what attracted Herr to join the company from the Science Center, where he helped biotech start-ups develop business plans and find funding.
"I was blown away by the elegance, the simplicity, the thoroughness of the work they were doing here," he says.
Orphagenix licenses the technology it uses from the University of Delaware, which holds the patents. The university will share in the profits from any drug developed using the process.
The payoff could be huge.
Merck & Co. recently paid $1.1 billion to acquire Sirna Technologies, a California biotech that is developing drugs using a gene technology called RNAi, or RNA interference, that can switch off genes that cause various diseases, such as cancer.
Kmiec said he realized that if he wanted the company to grow, he needed someone with business expertise to turn the research into a commercially viable product.
"You've got to be willing to hand the ball off," says Kmiec, 51, who, along with Parekh-Olmedo, remains as a consultant to the company. "The science is done. It's now the applications side."
Herr, already a biotech veteran at the age of 30, is helping Orphagenix decide which diseases it should target.
"We've got the tool box full," he says. "Now we can actually build something with it."
The Orphan Drug Act provides a host of incentives, from a streamlined review process to a tax credit that allows companies to recoup as much as 50 percent of their research-and-development costs.
Perhaps the biggest carrot the law provides is seven years of market exclusivity, meaning that if the Food and Drug Administration grants a company's drug an "orphan drug status," it would prohibit other companies from selling a competing drug during that period.
The law has resulted in what Maria Hardin, vice president of patient services for the National Organization for Rare Diseases, calls "a paradigm shift" in the drug industry, causing biotech companies to pursue orphan drugs with vigor.
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