4 Rare Disease Stocks

 |  Includes: CELG, GEVA, IONS, SHPG
by: Jessica King Holden

February 29th, Leap Day, is arguably a "rare" day, coming once every four years, though not nearly as rare an occasion as some devestating diseases. The connection is enough however, as Rare Disease Day, is recognized internationally on February 29th. Across the world, 2/29 is a day to focus on the 5,000 - 8,000 debilitating and life threatening disorders which affect less than 1/2,000 individuals worldwide or less than 200,000 Americans. In the U.S., the day is commemorated with an NIH Symposium on Rare Diseases. Other countries and companies host fundraiser and patient advocacy seminars. Pharmaceutical companies have increased their hand in this arena more so in recent years.

A majority of rare diseases, some 80%, have a genetic basis. The science behind the cause of these diseases is often simplistically frustrating despite the complex complications of diseases and attractive to some of the best minds in science attempting to fix the mutations inherited by suffers of these diseases. Rare diseases often attract the attention of science, but financially speaking, the limited revenue stream of rare diseases only used to attract academia and smaller biotech companies looking to carve a niche or partner with a larger pharmaceutical.

To attract research and development of rare diseases, both the FDA and EU offer financial grant incentives for drugs with orphan status. The U.S. Orphan Drug Act, passed in 1983, helps support tax breaks for rare disease drug develops with tax breaks and incentives. The following are publicly traded companies developing orphan drugs for rare diseases and we want to take a moment to recognize their work.

Shire plc (SHPGY) has been publicly recognized for its support of Rare Disease day with fundraisers and awareness in addition to its science. Shire supports the RARE project and its Global Genes Project ™ "Wear that you Care" initiative. Shire applies a successful strategy to attack severe and rare diseases that is necessary in the volatile biotech industry. The company has a wide array of revenue generating products in the arenas of GI drugs, psychiatric medications and many in development in Phase II and III clinical trials. The $19 billion market cap company invests in developing and acquiring pipeline drugs for rare diseases through its Human Genetic Therapies division.

SynaGeva BioPharma (NASDAQ:GEVA) - This company's unique platform uses avian (chicken) vectors to produce human proteins in the egg white from transgenic hens. SynaGeva's platform is used for its own drug development and that of others. As for its connection to rare diseases, the company specializes in enzyme therapy for lysosomal disorders. GEVA's main drug, SBC-102 works to treat Lysosomal Acid Lipase (LAL) deficiency. The deficiency is a recessive genetic condition. The lack of the enzyme causes a fatty build up in organs and blood vessels which can lead to various cholesterol problems and liver disorders. This SBC-102, which has orphan status, is currently in clinical trials.

With some twist of fate, GEVA closed on Wednesday with one of the highest volume percentage increases of any NASDAQ stock, up 274%. This company, which is in partnership with Eisai (OTCPK:ESALY) for development of cancer drugs, also shares royalties with Roche (OTCQX:RHHBY) on FUZEON® an HIV fusion inhibitor developed by merger with Trimeris in 2011. With a market cap of $653 million and a platform that is applicable across the therapeutic protein spectrum, this company looks to stay financially afloat in order to treat rare diseases.

Isis Pharmaceuticals (ISIS) - Isis, another rare diseases player, released good news on earnings Wednesday. Most of the hype and hope is over Kynamro, the company's cholesterol medication with partner Genzyme/Sanofi (NYSE:SNY) awaiting FDA approval possible later this year. The company's antisense epigenetic platform works to turn on and off genes, which is at the root of many rare diseases. With Kynamro floating the ship hopefully for years to come, the company's severe and rare pipeline drugs range from Spinal Muscular Atrophy to Amyotrophic Lateral Sclerosis. The company has 2 orphan drugs in Phase I clinical trials showing positive results with partner GlaxoSmithKline (NYSE:GSK). ISIS-TTRRx and ISIS-AATRX are intended to treat TTR Amyloidosis and AAT-Associated Liver Disease, respectively, by altering protein production of the mutated genes at the root of the diseases.

Financially, the company looks stable even with some potential delays in Kynamro success, though this is the blockbuster hope of both Isis and its partner Genzyme. The conservative R&D budget for the next year as Kynamro's expenses in clinical trials is winding down will help buffer possible bumps in the road. The company currently subsists on milestone payment revenue and a big deal signed with Biogen Idec (NASDAQ:BIIB) for $299 million possibly with $29 million up front - just the latest in Isis' long history of successful partnerships in its development stage. The stock closed Wednesday up nearly 6% on high volume after an earnings release. With orphan status, a possible blockbuster drug, solid partnerships and science, Isis may actually tackle some rare diseases.

Celgene, Inc. (NASDAQ:CELG) was featured in an article released Wednesday, in concert with BIOTECanada and the Canadian Organization for Rare Disorders (CORD), championing the need for improved availability of safe and effective treatments for severe and rare diseases in the country. It appears Canada's Common Drug Review holds more scrutiny towards these drugs, leading to a lowered approval rate for some 3.2 million Canadians living with rare diseases.

Celgene is buoyed by sales of its top cancer drugs (some of which had orphan status for rare forms of blood cancer) including Revlimid, Istodax and Vidaza to support its ambitious pipeline. It is currently conducting Phase III trials for the treatment of myelofibrosis, a rare form of blood cancer using its array of Immunomodulatory drugs (IMiDs®) compounds which target the root biologics of diseases as opposed to symptoms. This class of drug is significant IP for which the company has patent applications in the U.S. and Europe.

This $32 billion market share company is a money maker in a tough field. Near its 52 week high and up nearly 10% YTD, CELG was given a nod by Morgan Stanley February 10 when it stated that the company was one that "offers a 15-20% upside" and an "attractive combination of positive drivers". Celgene is a reminder that big companies can still develop robust pipelines with IP dedicated to both big business and individual need.

While long clinical trials and insurance issues are sticking points for individual patients, this pharmaceutical companies are buying into incentives to develop rare disease treatments. February 29 was a good day to celebrate the, albeit incentivized, altruism of biotech.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.