• “Both a little scared, Neither one prepared, Beauty and the Beast”

    - Lyrics from “Beauty and the Beast”
    Writers: Tim Rice, Bruce Healey, Howard Elliott Ashman, Alan Menken

Posted: October 30th, 2013

There is a rather surprising but equally clear movement in the life sciences world these days towards the development of therapies for rare diseases. In the (not too distant) past, development of potential therapies to treat orphan indications, rare diseases and ultra rare diseases was the province of small University labs in conjunction with patient advocacy groups and a few small biotech companies here and there. But things are changing rapidly.

I recently attended a meeting of NORD (National Organization for Rare Diseases) which is an association for rare disease patient advocacy groups. One of the key panels was made up of venture capitalists (VC’s) who were talking about their move into funding companies that were focused on treatments for rare diseases. Now a VC only starts investing in a company to turn around and sell it, either to the public through an IPO, or more often to a pharmaceutical company that can commercialize the ultimate product(s) being developed. This implies that they (the VC’s) believe there is interest in the world of “big pharma” in small indications. Not long after this conference I saw this item about Roche in a Reuters article:

“Chief executive Severin Schwan told a news conference in Paris that Roche's main criteria in terms of disease was not the size of the patient population but how much additional value and medical benefit could be generated for the individual patient. Asked if that meant he did not exclude a move into rare diseases, he said: "We go where the science takes us, wherever it is, independent from the size of the patient population."

THAT is a sea change worth noting and trying to understand.  It is important of course to the patients and families who suffer from the thousands of rare diseases which remain untreated; and it is important to Neuralstem because many of our treatments in development are aimed at rare or orphan diseases. Our own experience confirms a noticeable increase in interest in our programs from “big pharma” as we move through our Phase II trial for ALS, an orphan indication. Most (but not all) of the indications we are developing our stem cell therapies for fall into this category.

For decades big pharma has routinely focused only on very large patient population diseases. Programs not capable of generating billion dollar blockbuster drugs were routinely shelved or licensed out to mid sized companies. A statement such as the Roche CEO’s above would have been considered blasphemy. So what is behind this sudden shift in policy?

I think that there are several forces at work here, all converging to create this movement. First, Genzyme was acquired by Sanofi, one of the world’s largest pharma’s and Genzyme proved that a company could create (literally) billions of dollars per year in revenue from therapies that treated rare and even ultra rare diseases. Second, we live in an era of ever increasing pressure on pricing (and therefore profits) for drugs. Almost every society across the globe is moving towards some form of price controls on medicines, and the move towards generic drugs and soon generic biologics is adding even more pressure on pricing. Rare disease therapies are inherently less affected by both of these trends. Because patient populations are small, the overall cost of treatments doesn’t tend to “move the needle” on insurers (private or government). Also, since the R&D is as expensive and difficult in small indications as would be for larger indications, allowance of higher prices is considered a sort of “incentive” to move science to help these communities which would otherwise be ignored.

This last piece is mostly a legislatively imposed carrot. And that is where another “trend” is converging. We now live in a very sophisticated world of social media, and patient advocacy groups have become adept at getting their stories out, and demanding attention from the scientific and legislative bodies that determine how R&D money is spent, and supporting the “pricing incentive” for the non-government R&D spending.

Finally, big pharma drug discovery itself is moving to adopt the methods and resources required to develop treatments for rare diseases. We have all heard about how genomics and “personalized” medicine was going to revolutionize healthcare. But where these tools are already hardest at work and being perfected is in the world of rare diseases. It is here that the identification of specific genomic errors and targeted methods to address the resulting problems are resulting in disease modifying treatments. This model (identify the problem at the genomic level, create a specific diagnostic that confirms a patient population that can be treated, and create a targeted treatment which lends itself to a biomarker for early detection of efficacy) will make drug development for all indications quicker, more robust, effective and profitable. This model is where the pharmaceutical industry wants to go. But almost each step along the way is antithetical to the way they do things now. There is a scene in the Disney Classic where the Beast cannot hold a dainty tea cup in his claws, he simply can’t do it despite his earnest intent. It is an apt analogy.

And so (I believe) we are going to see pharma do what they always do when they finally realize that they need something they don’t have, (and can’t easily steal). There is going to be a steady stream of joint ventures, partnerships and acquisitions with and of the people who do know how to do this. That is why venture capital funds are starting to think about forming companies that can develop treatments based on this model; they see their “exits” from these investments, the pharmas are incapable of creating this in house and are going to be buyers.

In the end, I believe it is win win for everyone. The biotech industry will eventually transform pharma, and patients will see therapies generations sooner than in the past and for hundreds of rare diseases, not dozens. But it is hard work, there will be failures as well as successes; and this marriage of very opposites will not be an easy one. Both a little scared, neither one prepared; Beauty and the Beast indeed.

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