Interesting Leerink report on why Orphan Drug companies (think CELG) are the "Golden Child of Biotec | CELG Message Board Posts

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Msg  163441 of 213064  at  10/12/2011 9:56:13 AM  by

Rob Cos

Strong Buy

Interesting Leerink report on why Orphan Drug companies (think CELG) are the "Golden Child of Biotech"

Huge 64 page report - here is summary. CELG is fiting on all cylinders and is in the right business - orphan cancer drugs and owns 100% of the rights of their drugs just as MAJOR markets not available to DNA when it hit 100 billion market cap - Turkey, Russia, Poland, Mexico, Brazil and of course China....
October 12, 2011

Reason for report:




Future of Orphan Drugs: The Golden Child of Biotech

Bottom Line: We believe that orphan drugs have advantages over

non-orphan "mass-market" drugs, providing unique opportunities

for companies and investors. We have found that orphan drugs have

faster development time lines, lower R&D expenses, and a higher

likelihood of clinical and regulatory success. Once on the market, they

tend to have less competition, lower marketing costs, and a longer

life-cycle with less risk of generic erosion. Orphan drug products are also

generally more innovative than non-orphan drugs as evidenced by a high

number of new molecular entities (NMEs).

As a result, orphan drug company stocks have outperformed their

mass-market drug company peers and benchmark indices over the

past 10 years. The stocks of classic orphan companies have done the

best, whereas cancer and MS orphan companies appear to have different

competitive factors influencing their performance. In this report, we outline

10 factors of interest for investors in orphan drugs: Stock performance,

business models, regulatory hurdles, clinical success, launch

performance, large pharma interest, geographic considerations, pricing

and reimbursement, future growth trends, and upcoming FDA guidance.

Within our coverage universe, we believe AEGR, BMRN, FOLD and

UTHR are poised to benefit from clinical & regulatory developments.

We include a compendium of other interesting public and private

companies in this report to reference as well. For AEGR, which expects to

file the NDA/MAA for lomitapide in 1Q12, we see encouraging precedent

from the approval of other orphan drugs on the basis small uncontrolled

data sets, suggesting that a 23-patient single-arm open-label trial could be

sufficient. We believe BMRN has multiple exciting pipeline opportunities

such as GALNS for MPSIVa, which is expected to report Phase III data in

late 2012, and FOLD has designed its Phase III for miglastat to maximize

the likelihood of successful data in mid-2012. UTHR has demonstrated

mixed clinical data; however, we believe it can continue to execute well on

the regulatory/commercial front as it has historically for the inhaled and

SQ forms of Remodulin, which faced uncertain odds of approval.

Release of FDA guidance no later than 12/27/11 on the

requirements for orphan drug approval could potentially remove

another layer of uncertainty for innovators and investors, and solidify

orphan drugs as a core place to invest in health care. Recently, the

National Organization for Rare Disorders (NORD) submitted a citizen

petition (CP) to the FDA requesting "that a documented policy be

established regarding the review of potential treatments for people with

rare diseases." NORD requests that the FDA's guidance explicitly include

"a statement that it will now be FDA official policy to afford special

flexibility to the regulatory review of submissions for all orphan drugs."

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