Stars Align for Rare Disease Investment

By Lucy Parkinson, Research Manager, LSN

Why have rare diseases and orphan drug development attracted so much investor interest?  That’s one question we sought to answer at the Redefining Early Stage Investments Conference on Monday 24th March.

Our orphan and rare disease panelists – Michael Draper of Sanofi, Deb Geraghty of Cydan Development, Debra Miller of CureDuchenne Ventures, and Jean-Marc Quach of The Alpha-1 Project, with David Sendak of Accelerate Brain Cancer Cure moderating the panel – collectively represent the breadth of interests in the space.  For rare diseases, a diversity of parties can come together to achieve a result far greater than what any one group could achieve alone.  There’s the potential for small biotechs to make huge scientific advances, and for patient groups to maximise the impact of the funding they provide.  While these investors talked about the challenges of the space – such as limited markets, the difficulty of finding sufficient clinical trial participants, and concerns for the safety of child patients who may be dependent on medications for the rest of their lives – all expressed a lot of hope for patients suffering from rare diseases.

So what does the rare disease space offer to investors?

Highly engaged patients, said Deb Geraughty of orphan drug accelerator Cydan Development Inc.  In a rare disease field, a well-organized patient group can supply developers with a network of scientific expertise and patients who will do what they can to bring cures to market – such as donating funds and taking part in clinical trials.

Clear targets, said Jean-Marc Quach of the Alpha-1 Project.  A drug that homes in on the starting point of a biological process (such as inflammation) might find its most direct path to market in a rare disease space.  The eventual market for these technologies may be far bigger than the rare indication; Michael Draper of Sanofi pointed out that orphan drug designation can serve as a gateway to validate a technology which could later be repurposed for use in much larger markets.  This path shows promise for neuroprotective agents, for example, and provides a great opportunity for big pharma to engage with breakthrough discoveries.

For nonprofits, the equation is different but the result is the same.  Jean-Marc said, “We funded tons of basic research to uncover new knowledge, but the logical next step is to take matters in our own hands and push the cure.”

And as Debra Miller said, if a patient group is supporting a for-profit company, it only makes sense to take an equity stake and be sure of seeing some return on investment that can be used to continue funding new research.  “All nonprofits should take a look at this.”

So how do you get orphan drug status for your asset?  According to Deb, “Apply as early as possible, with the data to support it.”  And the investment dollars are out there. “[Investors] want to be educated in how to make money by investing in rare diseases,” she told us. The key as an entrepreneur is communicating clearly, directly, and making your opportunity obviously compelling.