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-Dara's victory could garner attention from Big Pharma HUGE for DARA

Feb 26, 2014, 9:35am EST
Dara's victory could garner attention from Big Pharma

Jason deBruyn
Staff Writer-
Triangle Business Journal

When Dara BioSciences received the “orphan drug” designation Tuesday, it was as though the dealer stocked their bargaining kitty with a fresh stack of strong chips.

The U.S. Food and Drug Administration reviews drugs before companies may sell them. In certain cases, it awards a potential new drug the orphan drug designation, meaning that drug would treat a disease found in fewer than 200,000 people.

This is huge for Dara (Nasdaq: DARA) because it means this drug will have seven years of market exclusivity, a very strong bargaining chip when discussing a deal with potential partners.

Big Pharma likes owning orphan drugs because no other company may compete for those exact patients. Without competition, companies can keep prices high. In some cases, the price of a drug can drop as much as 90 percent after patent expirations.

Small companies like Dara typically work on potential new drugs in smaller trials, but can’t afford larger studies or later development because costs can run into the hundreds of millions. So, they often will look to partner with a larger drug company. In those deals, the large company takes on responsibility of developing, testing and filing a new drug application with the FDA, but agrees to pay the small company certain milestones and royalties if that drug reaches the market.

The orphan drug designation not only makes the Dara product more appealing for a deal in the first place, but when big drug companies compete against each other for a deal, it can mean higher milestone or royalty payments for Dara.

“For U.S. partners, this creates a lot of interest,” says Dara CEO Dr. David Drutz. “Some have told us they might be particularly interested if we get the (orphan drug) designation.”

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