Aegerion Pharmaceuticals, Inc. (AEGR), ISIS Pharmaceuticals, Inc. (ISIS), BioMarin Pharmaceutical Inc. (BMRN): Orphan Drug Makers – Robust Investment Opportunities

The US pharmaceutical industry has been revolutionized by the emerging biotech companies which have discovered new ways to cure even the rarest of diseases. So the concept of an orphan drug is no more a mystery for the people who invest into pharmaceutical companies. According to the findings of Thomson Reuters, at the end of 2011 orphan drug sales attributed to 6% of the total pharmaceutical sales. Along with that the CAGR (compound annual growth rate) of orphan drugs from 2001 to 2010 was 25.8% compared to the 20.1% of the non-orphan drugs. Keeping that in mind and incorporating the increasing amount of FDA approvals being granted to orphan drugs, I think that the growth of orphan drugs will be way more than non-orphan drugs in the next 30 years. Thus I consider the following orphan drug makers as huge growth potential companies.

Aegerion takes a big leap

News came out this week that Needham increased the target price of Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) stock to a $100 per share. This was very much expected because of the recent success bagged by the company. In late 2012, the company’s first orphan drug i.e. Juxtapid received its FDA approval for the treatment of HoFH. Analysts believe that this will escalate the sales of the company by $15 to $25 million till the end of 2013. In 2014 sales are expected to spike up to $144 million, which ensures a positive outlook for the company’s future. Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is determined to reach out for over 200 to 300 patients of HoFH this year which should ignite revenue growth. But the long-term target is to get hold of over 4000 different patients of HoFH so that Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) can operate to its full potential.

The therapeutic focus of Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is Homozygous Familial Hypercholesterolemia (HoFH). It is a big name and if it seems scary to you then it is rightly so. This is because HoFH is a disease in which the cholesterol level in the blood increases due to a rare genetic disorder inherited from both parents. It can go as bad as turning your blood from red to dark shade of yellow. But it is a rare disorder and Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR)’s orphan drug Juxtapid has been granted a seven years exclusivity by FDA for the treatment of this ailment.

The patent portfolio of Juxtapid consists of 5 separate patents issued in US. Similarly it also has patents issued in EU, Canada and Australia. The patent which covers the composition of the matter of Juxtapid is scheduled to expire in 2015 but the company has already filled an application for an extension in the patent duration. Likewise the other patents would also ensure that Juxtapid is the only drug for the treatment of HoFH.

Competition

Juxtapid competes with ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) Kynamro. Kynamro is the flagship product of ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) which is being marketed by the drug giant Sanofi. Out of both, Juxtapid has the evident edge because it is taken orally while Kynamro has to be injected into the body. Moreover Juxtapid is said to have lesser side effects compared to its counterpart. But what impresses me about ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) is that unlike Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) it is not a one drug wonder. Instead it has a pipeline with over 28 different drugs out of which many are being worked on in collaboration with big names like GSK, Biogen and Sanofi. Most of these drugs would be available for treatment of various ailments in almost 4 to 5 years’ time. Which would obviously increase the revenues and profitability of the company. Thus I think that ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) too is a solid investing opportunity.

Talking about orphan drugs and huge pipelines, take a look at another large cap company which deals in orphan drugs. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) develops and markets drugs for serious and rare diseases. The company has 3 approved orphan drugs in US and 1 approved only in the EU. The company also has a solid pipeline of more than 6 drugs into various phases of clinical trials and almost all of them have been granted the orphan status by FDA. The company is also pouring extensively into its research and development budget; in fact it spent about 60% of the company’s revenue on R&D last year. So this orphan drug maker is also on my list of the companies with exceptional growth potential.

Final review

All in all I would say that the future outlook for orphan drug makers is quite bright. Aegerion will surely experience an uplift in its revenues in the coming years through its prime product Juxtapid. This should induce it to spend more on R&D and work on other therapeutic areas. So I think that the projection of Needham is quite spot on. As far as ISIS Pharmaceuticals, Inc. (NASDAQ:ISIS) and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) are concerned, the companies have huge product portfolios and are also stable enough to be trusted with your investment.

The article Orphan Drug Makers: Robust Investment Opportunities originally appeared on Fool.com and is written by Muhammad Abdullah Khan.

Muhammad Abdullah Khan has no position in any stocks mentioned. The Motley Fool recommends BioMarin Pharmaceutical (NASDAQ:BMRN). Muhammad is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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