Surging Biotech M&A Reaffirms Massive Opportunity In Rare Disease Drug Development (CRDL,JAZZ, NVO, AZN, SNY)

For such a large cohort of drugs to still be growing at a double-digit pace is impressive and shows that continued investment into the unmet need of rare diseases is warranted. That explains why there has been a surge in M&A activity among orphan drug developers over the past couple of years.

Compared to their non-orphan counterparts, orphan drugs have consistently outpaced growth and have become a major part of pharma’s mainstream business. The U.S. FDA’s orphan drug designation, established under the Orphan Drug Act of 1983, encourages the development of treatments for rare diseases affecting fewer than 200,000 people in the U.S. by providing incentives to offset the small market size.

Last year, sales from orphan drugs soared to $168 billion, accounting for about 17% of the industry’s total and just shy of the entire oncology therapeutic category at $194 billion. This year, these drugs are on track to generate an impressive $185 billion and are projected to hit around $270 billion by 2028.

For such a large cohort of drugs to still be growing at a double-digit pace is impressive and shows that continued investment into the unmet need of rare diseases is warranted.

That explains why there has been a surge in M&A activity among orphan drug developers over the past couple of years.

For instance, when novel cannabidiol-based drug Epidiolex successfully treated rare forms of child onset epilepsy, GW Pharmaceuticals more than doubled its market value. The 120-patient trial showed patients taking Epidiolex achieved a median reduction in monthly convulsive seizures of 39% compared with a reduction on placebo of 13%.

GW Pharmaceuticals went on to be acquired by Jazz Pharmaceuticals (NASDAQ:JAZZ) for $7.2 billion in 2021, representing a premium of approximately 50% over GW’s closing stock price at the time.

Clearly, there is a significant opportunity in orphan drug development, which is why these four stocks have been generating substantial investor interest.

Cardiol Therapeutics (NASDAQ:CRDL) is a Canadian biotech drug developer focused on developing their novel ultrapure cannabidiol formulation, CardiolRx™, for rare inflammatory heart diseases, specifically recurrent pericarditis and acute myocarditis.

Pericarditis is characterized as inflammation of the pericardium, layers of tissue that surround the heart, that affects about 165,000 people in the U.S. annually and has no first-line FDA-approved treatment. Among those treated for acute pericarditis, 15% to 30% may experience recurrent pericarditis.

Currently, anti-inflammatory drugs such as colchicine are prescribed for pericarditis treatment in cases of chronic or recurrent pericarditis. If the patient with pericarditis disease does not respond to anti-inflammatory medications, corticosteroids such as prednisone are prescribed.

More recently, Kiniksa Pharmaceuticals’ ARCALYST® (rilonacept) became the first and only FDA-approved treatment indicated for the treatment of recurrent pericarditis and the reduction in risk of recurrence in adults and children 12 years and older.

ARCALYST is a weekly subcutaneous injection, whereas CardiolRx™ is an oral drug taken twice daily which is a major advantage as the idea of weekly injections could not be as appealing to patients.

Cardiol Therapeutics’ (NASDAQ:CRDL) pre-clinical models showed that by inhibiting activation of the NLRP3 inflammasome pathway, cannabidiol may help resolve the symptoms of pericarditis.

This approach has already demonstrated incredible potential, as the company was granted Orphan Drug Designation (ODD) by the U.S. FDA for the treatment of pericarditis, which includes recurrent pericarditis. 

Cardiol Therapeutics followed this major achievement with completing enrollment in its Phase 2, open-label MAvERIC-Pilot study investigating the tolerance, safety, and effect of CardiolRx™ in patients with recurrent pericarditis. The primary endpoint of the trial is the change in patient-reported pericarditis pain using an 11-point numeric rating scale (NRS) from baseline to week 8 with topline results expected in early June.

Not only that, Cardiol Therapeutics recently presented its concurrent Phase II ARCHER trial design at the annual congress of the Heart Failure Association of the European Society of Cardiology. This demonstrated the high level of interest from the cardiology community in novel approaches to treat acute myocarditis, for which there are currently no therapies approved by European and US regulatory authorities.

The ARCHER trial is expected to enroll 100 patients at pre-eminent cardiovascular research centers in the United States, Canada, France, Brazil, and Israel. Patient recruitment has been accelerating due in large part to the growing global awareness of myocarditis, and ARCHER has already exceeded 85% of target enrollment.

Cardiol Therapeutics (NASDAQ:CRDL) expects that results from the ARCHER trial will assist in furthering its understanding of the therapeutic potential of CardiolRx™ and will complement the more advanced MAvERIC-Pilot Phase II study in patients with recurrent pericarditis.

Just to put the opportunity here in context, Future Market Insights expects that the worldwide pericarditis treatment market is likely to be worth $ 6 billion by 2032. ARCALYST’s sales further reaffirm this considering that the drug’s 2023 net revenue grew 90% year-over-year to $233.1 million.

Several analysts have maintained their positive outlook on the company and have high hopes that the June data will further prove CardiolRx™ efficacy in treating recurrent pericarditis. In fact, Joe Gantoss of Chimera Research Group notes, “I won’t be surprised to see the price breaking out the 3-year high at $4.96 if the recurrent-pericarditis data show a clear success and open the path to move to the next stage with Phase-3 trial,” while analysts at H.C Wainwright & Co. issued a $9 price target for the stock.

Novo Nordisk (NYSE:NVO) announced that it was buying Phase II-stage heart failure drug developer Cardior Pharmaceuticals (private) for up to $1.11 billion as it moves to strengthen its pipeline of drugs to treat cardiovascular disease and expand into areas outside of its core diabetes and weight-loss markets.

The Denmark-based pharmaceutical giant is enjoying blockbuster success for its Wegovy and Ozempic obesity and diabetes treatments, which aren’t only proving highly effective at regulating blood sugar and helping patients lose weight, but are also yielding extra health benefits such as cutting the risk of stroke and heart attacks and slowing the progression of kidney disease.

Based on these findings, the company recently unveiled plans to build a portfolio of therapies in areas like cardiovascular diseases and emerging-therapy areas while strengthening its progress in the rare-disease pipeline.

CDR132L, Cardior’s lead compound, is designed to halt and reverse detrimental cardiac remodeling following myocardial infarction (MI) as the first-ever ncRNA-based therapy to enter clinical trials in heart disease. It is currently being investigated in the Phase 2 HF-REVERT clinical trial in 280 post-MI patients with cardiac dysfunction at more than 60 locations across Europe.

AstraZeneca (NASDAQ:AZN) also announced that it has entered into a definitive agreement to acquire Amolyt Pharma, a clinical-stage biotechnology company focused on developing novel treatments for rare endocrine diseases for $800 million. The deal also features $250 million in milestones tied to a regulatory event.

The proposed acquisition will bolster the Alexion, AstraZeneca Rare Disease late-stage pipeline and expand on its bone metabolism franchise with the notable addition of eneboparatide (AZP-3601), a Phase 3 investigational therapeutic peptide with a novel mechanism of action designed to treat hypoparathyroidism. 

In patients with hypoparathyroidism, a deficiency in parathyroid hormone (PTH) production results in significant dysregulation of calcium and phosphate, which can lead to life-altering symptoms and complications, including chronic kidney disease. It is one of the largest known rare diseases, affecting an estimated 115,000 people in the US and 107,000 people in the EU, approximately 80% of whom are women.

Eneboparatide is designed to produce sustained and stable levels of calcium, which falls to low levels in patients with hypoparathyroidism, while preventing kidney disease and restoring bone turnover.

Sanofi (NASDAQ:SNY) earlier this year agreed to buy the U.S. biotech Inhibrx Inc. for as much as $2.2 billion, giving the French drugmaker a potential therapy for a genetic disorder that affects the lungs and liver.

Inhibrx shareholders will get $30 per share as part of the deal, along with the right to receive $5 in cash if the experimental drug meets a regulatory milestone.

“The addition of INBRX-101 as a high potential asset to our rare disease portfolio reinforces our strategy to commit to differentiated and potential best-in-class products,” said Houman Ashrafian, Sanofi’s head of research and development. “With our expertise in rare diseases and growing presence in immune-mediated respiratory conditions, INBRX-101 will complement our approach to deploy R&D efforts in key areas of focus.”


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