Orphan Drug Designation: Here's why it's a big deal for small cap biotechs

Orphan Drug Designation isn’t the green light for a drug to hit pharmacies but it is an important step at a far earlier stage.

An Orphan drug is a drug intended to treat a disease so rare that it would be uneconomical to develop without the benefits this designation provides.

The benefits differ between different jurisdictions. But these typically include tax credits, market exclusivity for several years after approval (seven in the US, 10 in the UK and Europe) and waiver of drug application fees.

“This ‘exclusivity’ can be more valuable than standard patents as it prevents any potential competitors from selling an ODD drug such as Bisantrene during this time,” Race Oncology’s (ASX:RAC) chief scientific officer Daniel Tillett explained to Stockhead.

“It is not uncommon for the ODD exclusivity to be greater than the remaining patent life of a new drug at the time of approval.”

Examples of companies with an orphan drug

Race has benefited hugely by securing this status for its Bisantrene drug.

Bisantrene had previously passed clinical trials in the 1980s and 90s but big pharmaceutical mergers left it discarded because the market was too small. But Race picked it up and obtained orphan drug status.

Ever since, the company has undertaken several studies for Bisantrene, particularly against acute myeloid leukemia and the company has grown from 5.5 cents to nearly $3 in a little over two years.

Race Oncology (ASX:RAC) share price chart

Dr Tillett told Stockhead Orphan Drug Status was and would continue to be a critical step for the company.

“It’s reasonable to expect that ODD will guide our path to market via a modestly sized and costed pivotal orphan disease trial that will allow Bisantrene’s use as a treatment in many other areas of oncology where it has shown past efficacy such as breast and ovarian cancer,” he explained.

Dr Tillett also said another benefit was that a drug could be used “off label” in other areas of medicine.

Other stocks with ODD

Dimerix (ASX:DXB) is another biotech that has obtained Orphan Drug Designation in the US and in Europe for its DMX-200 drug in treating Focal Segmental Glomerulosclerosis – a rare kidney disease.

In Europe this means in the event of commercialisation Dimerix will have 10-year market exclusivity – more generous than in the US which only provides 7 years. It also receives reduced fees during product development and direct access to centralised marketing authorisation.

Another stock that knows about orphan drugs is Neuren Pharmaceuticals (ASX:NEU).

It already has orphan drug designation for NNZ2591 in relation to Phelan-McDermid, Angelman and Pitt Hopkins syndromes in the US and Europe and yesterday told shareholders it was seeking it in relation to a new syndrome – Prader-Willi syndrome.

This followed positive results from a preclinical model that showed positive results.

Speaking with Stockhead earlier this week, CEO Jon Pilcher said while it wasn’t necessary to start human clinical trials, the commercial protections it offered meant this status is worth pursuing.

“It’s not necessary to get underway but it is a really important thing because it gives you this commercial protection,” he said.

Investigational New Drug Status

Orphan Drug Designation is not to be confused with Investigational New Drug (IND) status.

This is a necessary to start a human clinical trials – at least in the US – regardless of whether the disease is rare or common.

Neuren is preparing for Phase II trials in relation to the three syndromes it already had orphan drug status for.

However, Neuren’s Pilcher explained obtaining IND status is a simple process.

“It’s not like an application at the end of development. You show them [regulators] the data you’re collecting and tell them what you’re going to and they’ll give you approval to continue,” he said.