Orphan drug potential

You probably can guess what Orphan drug means. An orphan drug is a medication that has been developed specifically to treat a rare medical condition, the condition itself being referred to as an orphan disease. Due to the rarity of such patients, there is usually not many companies willing to put money into developing them. However, in the US and EU it is easier to gain marketing approval for an orphan drug, and there are usually other financial incentives, such as extended exclusivity periods, to encourage the development of orphan drugs. The price tags for such orphan drugs are often quite high. With easier approval (less costy), longer patent protection, and high prices, orphan drugs have become more and more attractive to companies. Alexion is one of the most successful orphan drug companies. Its only approved drug has a price tag for over $440,000 per year per patient. The market cap for Alexion is over $10 billion with only one drug on the market and its stock price is over $150 at the moment. While I think the stock is too inflated, you can see how far it can go when a pricy orphan drug is in the market without much competition. I know many friends working in Alexion and many of them have become very rich via its stock options and stocks. Good for them!

I found another orphan drug company which may have a similar potential. It is called Aegerion Pharmaceuticals (AEGR), which develops the drug Juxtapid that treats homozygous familial hypercholesterolemia (HoFH), a rare genetic condition that usually affects children. Patients with this disease can have the cholesterol level to ridiculously dangerous levels, and very high cholesterol can cause heart attacks, even in children as young as two. I used to have a colleague who also had this disease. At age around 40, she got a heart attack during vacation and almost died. Fortunately she survived. This disease is so rare that it only affects about 2,000 people in the United States, but the drug costs approximately $250,000 per year, per person. Of course I don't know if Aegerion will become another Alexion but its potential is certainly there. If you are interested in orphan drug companies, you may consider this one.