Here's a new name in biotech with strong supporters, a good cash position, and dedication to treating rare, highly debilitating diseases. Retrophin, Inc. (RTRX.OB), conceived by former shareholder activist Martin Shrkeli out of a desire to treat human genetic disorders after witnessing the plight of a colleague's son, is moving quickly to develop and test treatments for diseases the rest of the industry has forgotten. Timing is perfect - recently the FDA overhauled its policy for orphan drug approval with the Food and Drug Administration Safety and Innovation Act (FDASIA), introducing a 'Breakthrough Therapy Designation' that would radically speed up commercialization for life-threatening conditions.
Retrophin launched last year with private funding and high-profile investors - Fred Hassan, former head of Schering-Plough, Brent Saunders, CEO of Bausch & Lomb, and James MacDonald, formerly involved in Schering's preclinical program and now advising Retrophin on its regulatory path. Last month the company raised $10 million in an equity private placement that should give it enough distance to show late clinical results for its lead candidate.
Their work with orphan diseases is led by trials for focal segmental glomerulosclerosis (FSGS), where scarring of the kidney's filtration system causes high levels of albumin to leave the body through the urine, a condition called proteinuria that raises considerably risk for end-stage renal disease. There is no specific FDA-approved drug for FSGS. Corticosteroids, immunosuppressives, and antihypertensives may be used as treatment but chronic kidney failure within 10 years is common and the first two drug classes have significant side effects.
The origin of the disease is largely unknown and may range from genetic predisposition, to obesity, to environmental factors. Incidence and prevalence for (FSGS) is hard to pinpoint, particularly in pediatric patients that do not routinely undergo renal biopsy, although nephrotic syndrome, a nonspecific kidney disorder with similar symptoms, strikes about 600 children yearly in the US, with another 4,800 already suffering annually. FSGS tends to be under-diagnosed as 20% respond to steroids although reports show its frequency to be increasing dramatically, possibly because detection has improved.
Preventing the progress of FSGS involves reversing the high rate of proteinuria, assuming that reducing urine protein can best be accomplished with more complete hormonal blockage of the renin angiotensin system that regulates kidney blood pressure. The commercial availability of angiotensin receptor blockers (ARBs) for systemic hypertension - common, well-tolerated drugs like Cozaar made by Merck & Co. (MRK) - led to knowledge that the kidney's regulation of blood responded as well; thus, ARBs are indicated for diabetic nephropathy and other kinds of chronic kidney disease.
Retrophin adds to this science through manipulation of the peptide endothelin implicated in vasoconstriction via an endothelin receptor agonist (ERA), using an in-licensed compound, (DARA), or dual-acting receptor antagonist of both angiotensin and endothelin. DARA is a heavily-researched small molecule drug discovered by Bristol Myers Squibb (BMY), passed on to Pharmacopeia and finally through acquisition to Ligand Pharmaceuticals (LGND) where it underwent a Phase IIb trial of 260 patients with significant results in reducing blood pressure versus high-dose irbesartan, or Avapro, marketed jointly by Bristol Myers and Sanofi (SNY). Ligand did not pursue development of DARA for a hypertension indication presumably because the ARB market is crowded and most are now generic.
DARA reborn is RE-021, blocking both angiotensin receptors (as an ARB) and endothelin receptors (as an ERA) in one molecule to reduce proteinuria; clinical evidence is plentiful showing that urine protein is minimized using ARBs and that ERAs work effectively in decreasing the rate of proteinuria.
Retrophin's FONT-3 clinical trial has been registered with the FDA as a randomized, double-blind, dose-escalating exploration into the safety and efficacy of RE-021 in 72 FSGS patients.
The primary outcome is the change in excreted albumin (protein) at four different milligram doses of RE-021 versus Avapro after 12 weeks. Secondary measures will be the percentage of patients with proteinuria reduction of 30% or greater and 50% or greater, from baseline, at 12 weeks. The FDA has apparently already communicated to Retrophin that its primary proteinuria outcome would be considered for accelerated marketing approval under Subpart H. Retrophin targets sometime in the first half of 2013 for trial commencement.
Some ERAs like ambrisentan and bosentan by Gilead Sciences (GILD) and Actelion Ltd. (ALIOF.PK), respectively, are for pulmonary hypertension and both carry an FDA black-box warning for potential liver toxicity. Two years ago Pfizer, Inc. (PFE) pulled trials of its ERA sitaxentan after two patient deaths due to hepatic failure; the compound was also being studied for pulmonary hypertension. Retrophin takes the stance that the state or progression of the disease should be considered when viewing the safety profile. Plans are to test children so contraindication leading to a nasty side effect spectrum can be minimized, allowing the FDA to rule in the drug's favor if its benefits outweigh risks. This thinking is supported by researchers of the drug avosentan for diabetic nephropathy, discontinued by NovartisAG (NVS) due to toxicity, when they wrote that ERAs should be used in proteinuria-producing kidney disease as early as possible to avoid such contraindications.
The company's pipeline extends to two other orphan diseases, both in early research. Pantothenate Kinase Associated Neurodegeneration (PKAN) is an ultra-rare genetic disorder related to vitamin B deficiency affecting young children, characterized by an excess buildup of iron in the brain. Symptoms include muscle spasms and limb rigidity that appear prior to adolescence; mortality is high and strikes within 10 years. Preclinical studies are being done at St. Jude Children's Research Hospital; recent results show restored functionality of a missing protein for replacement therapy proof-of-concept. Potential filings with the FDA are projected within two years but may be accelerated.
Duchenne muscular dystrophy (DMD) will be investigated by attempting to replace a missing protein with recombinant dystrophin (also the origin of the company's name). Key patents are in the process of being licensed and Mr. Shkreli had a hand in writing the genetic sequence for the re-engineered molecule. DMD has a prevalence of over 45,000 people in the US; symptoms of muscle weakness are typically seen before age six, progress rapidly, and oral treatment today consists only of steroids and certain vitamins. If preclinicals are successful, Phase I trials would start next year.
It's important to note that Retrophin will be using 'knock-out' animal models, or mice with a missing gene that codes a protein, to test drugs against PKAN and DMD. This way, it can quickly be shown whether the recombinant protein works or not. Development should progress faster, and it should be inexpensive to find human subjects because of the rarity of the illnesses.
Section 908 of FDASIA is particularly important for Retrophin because it creates a new priority review program for investigators of rare diseases in pediatrics. Other parts of the Act allow for more meaningful and productive communications with drug developers in Phase I and intensified consulting with rare disease specialists during review of the initial application to the FDA. This is critical for emerging drug firms that may lack experience maneuvering through the agency's multi-tiered bureaucracy.
There's a strong feeling in the industry that the FDA may look beyond a new drug application's stated indication to the potential for related illnesses when granting a progressive approval, thinking that fits well with Retrophin's first request to the agency for FSGS due to the fact it accounts for 15% to 20% of nephrotic syndrome, or severe kidney disease with resulting proteinuria, as it develops into later childhood. Also in line with the Act, DMD survival rate drops dramatically for those afflicted and living past the age of 24 carries only a 58% chance.
Drugs for orphan diseases tend to be expensive, yet state governments and insurance companies are not necessarily balking at high prices because only a small percentage of patients need such specialized treatment, so overall formulary cost is small. A high degree of effectiveness also loosens health care provider wallets. Alexion Pharmaceuticals' (ALXN) drug Soliris for rare anemia, despite treating only a few thousand patients, saw analysts project over $1 billion in its first full year of sales based on a list price of almost $500,000.
Markets beyond Retrophin's proposed disease indications clearly exist. If RE-021 is successful in limiting the rate of proteinuria, it could find its way in treating the more generalized nephrotic syndrome that has a variety of causes, the two largest being diabetes mellitus and hepatitis C with US market sizes of $100 billion and $9 billion, respectively. Dialysis for malfunctioning kidneys can run as much as $72,000 per year and the Center for Disease Control and Prevention estimates there are 20 million Americans with some level of chronic kidney disease. Retrophin's work in DMD could conceivably be applied to other types of muscular dystrophy of which there are nine major forms costing patients in the US over $30,000 per year.
Besides the common risks facing any new biotech in its development phase, Retrophin, if successful with RE-021, would need to surmount physician reticence to prescribe it over less expensive ERAs or ARBs used singly or in combination since it has been shown that all classes of antihypertensives have a positive effect in reducing proteinuria. There may also be reluctance for practitioners to order a renal biopsy to prove evidence of FSGS, making marketing of the newly approved drug a 'missionary sale'. More likely, doctors will embrace a chance to ward off for their young patients the inevitable progression to more severe forms of kidney problems.
In sum, newcomer Retrophin has a lot to offer investors - an intelligent approach to drug discovery, deep pharmaceutical connections, a compact pipeline of rare disease treatments and a research philosophy in line with current FDA thinking that should position the company well to dominate the orphan drug landscape.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.