Rare Disease Drug Development Urgently Needs More Funding, Experts Say

Rare diseases currently afflict 300 million people worldwide and 30 million people in the U.S. alone. However, 95% of these diseases lacked an FDA-approved treatment as of January 2023. One reason, industry leaders say, is cost.

A 2019 study estimated that orphan drug trials cost researchers $166 million per approved drug. Prices for drugs that hit the market in 2023 were 35% higher than those commercialized in 2022, a change that a Reuters analysis attributed to rare disease therapies that aren’t “big sellers” because of their limited target population. Pharmaceutical companies maintain that restricting drug prices will harm innovation, especially for rare diseases, but health economists argue it is possible to both lower prices and foster innovation by investing in companies and research.

On Rare Disease Day, BioSpace looks at some of these investments, as well as the status of the treatment pipeline and what is required to bring more treatments to the market.

Industry and Government Investment

There has been considerable recent investment in rare disease treatments—from small molecule drugs to antibodies and cell and gene therapies. In July 2023, Biogen acquired Reata Pharmaceuticals and its small molecule Friedreich’s ataxia drug Skyclarys for $7.3 billion. And according to the Alliance for Regenerative Medicine (ARM), around $11.7 billion was invested in cell and gene therapies worldwide in 2023, and five gene therapies were approved for rare disorders last year. Other industry players include Chiesi Ventures, which specifically invests in companies focused on rare diseases, and Deerfield Management, which in 2023, partnered with Invitae to develop genetic treatments for rare diseases.

Many early-stage investments in research and development come from the U.S. government. The Orphan Drug Act, passed by Congress in 1983, incentivizes companies to develop treatments for rare diseases using tax credits and grants.

State governments can play an important role as well. The California Institute for Regenerative Medicine (CIRM) funds research, clinical trials and drug development for a variety of rare conditions such as ADA-SCID, a very rare condition where patients lack virtually all immune protection from infectious bacteria, viruses and fungi. CIRM is a member of the Bespoke Gene Therapy Consortium (BGTC), a public-private partnership including the NIH, FDA, patient advocacy groups (PAG), venture funds and pharmaceutical companies. The consortium aims to streamline the regulatory process for adeno-associated virus (AAV) vector–based therapies and has acquired $97 million in commitments since it launched in 2021.

CIRM’s involvement has allowed the BGTC to address more rare diseases than it had originally planned, said P.J. Brooks, consortium co-chair and deputy director of the Division of Rare Diseases Research Innovation at the NIH’s National Center for Advancing Translational Sciences.

“[CIRM has] really stepped up and we’ve been able to develop a partnership with them that I think is quite novel because they are also a major funder of research,” Brooks told BioSpace.

Earlier this month, CIRM granted $4 million to Elpida Therapeutics, another BGTC member, to develop an AAV therapy for Charcot-Marie-Tooth disease type 4J, a rare, progressive neurologic disorder involving muscle weakness. CMT4J is one of eight rare diseases the consortium is prioritizing for clinical trials.

Elpida is “optimistic” it will be able to launch a clinical trial within the next year, CEO Terry Pirovolakis told BioSpace in an email. The company has registered a clinical trial to study the natural history of CMT4J.

Patient Groups Drive R&D, Investment

Patient advocate groups (PAG) also play a key role in supporting research for rare diseases. In addition to being experts on their conditions, they may also raise funds for studies and trials. In addition to reviewing research proposals and helping partners find patients for clinical trials, the National Organization for Rare Disorders (NORD) and its member organizations help raise funds for researchers, Pamela Gavin, the organization’s chief operating officer, recently told BioSpace. PAGs helped bring the first targeted therapies for progeria and Friedreich’s ataxia to the market.

Pirovolakis founded Elpida after his son was diagnosed with spastic paraplegia 50, a progressive neurological disorder that is also part of the BGTC portfolio. The company’s SPG50 drug Melpida is currently in clinical trials.

“Since treating my son, between CureSPG50 and Elpida Therapeutics, we’ve been able to treat three more children,” Pirovolakis noted. It is “undeniably a challenging period” for rare disease drug developers, he added, especially for those targeting conditions that affect children.

Although biotech investment in rare diseases increased between 2020 and 2021, investment decreased overall in 2022. Additionally, while children make up half of rare disease patients in the U.S., only a third of orphan drug indications approved between 2010 and 2018 targeted pediatric patients.

Brooks estimated that in the future, “entities that are different from what we think of as pharmaceutical companies” will be more involved in the commercialization of these drugs. He said novel business models that take advantage of the “platform capacity” of gene editing and gene therapy, for example, could be what ultimately brings forward drugs for “very, very rare diseases.”

A Healthy Pipeline

Several biopharma companies are on the case. In 2021, the Rare Disease Company Coalition launched to advocate for policies that will help bring more treatments to market. There are more than 700 rare disease treatments in the pipeline, according to the Pharmaceutical Research and Manufacturers of America (PhRMA). Large companies such as Takeda, Sanofi and Genethon are among the leaders, with each company possessing at least 10 investigational drugs.

And there were 1,329 ongoing cell and gene therapy trials involving rare diseases as of December 2023, according to data collected by ARM, with about 44% of those trials in Phase I. The same data indicate that later-stage trials are less likely to be sponsored by non-industry entities.

Brooks noted that one of the challenges in making rare disease treatments more accessible is actually getting them to market.

“There’s a big difference between [research] and then actually filing the license that will allow you to sell the drug,” he said. “There’s a whole . . . step in the regulatory process there that is a much bigger step than I was aware of, and taking that next step takes a lot of money.”

Pirovolakis noted that while there has been an increase in families pursuing treatments, there has been a decrease in companies focusing on these diseases and a greater number of programs being discontinued. “Currently, rare diseases affecting pediatric patients are severely underfunded, including in the realm of biotech investment,” he said. “To drive progress in treating these diseases, essential support from governments, philanthropists and the biotech investment community is urgently needed.”

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