Report Explores Ways to Finance, Repurpose Rare Disease Drugs

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Study describes how biotech startups can avoid competing with large pharma companies for financing.

A paper published in the Orphanet Journal of Rare Diseases1 concludes that repurposing existing compounds provides various advantages that could directly help early-stage biotech startups—including Unravel Biosciences—with better aligning their business and financing issues with their scientific and medical objectives, enter a space that is not occupied by larger pharmaceutical companies, and accelerate the validation of their drug development platform.

According to the Orphan Drug Act of 1983,2 rare or orphan diseases are defined as conditions that affect fewer than 200,000 individuals in the United States. Although any single orphan disease affects a small number of individuals, the argument could be made that in aggregate, there are more patients suffering from a rare disease than from more common ones. There are currently more than 7000 rare diseases identified, with the total population of Americans living with a rare disease estimated at approximately 25-30 million.3 For context, 19 million new cancer cases are detected each year worldwide, and in 2021, 1.9 million individuals4 were diagnosed with cancer in the United States.

The Orphan Drug Act was designed to alleviate the challenges of drug development for rare diseases—such as delays in diagnosis due to a lack of public awareness and medical expertise—via incentives such as tax benefits, a 7-year minimum period of market exclusivity, and waivers of Prescription Drug User Fee Act (PDUFA) fees.5 Despite this, the paper reports that large pharma companies continue to prioritize diseases with much larger patient populations, leaving early-stage biotech companies as key participants in the R&D process for rare diseases,6,7 which created a significant obstacle in financing rare disease drug development.

However, a possible solution that investigators said may help to tackle the rising cost and low probability of success (PoS) in developing new drugs has emerged over the past two decades. Drug repurposing, or drug repositioning,8 is a concept that identifies new indications for existing, abandoned, or shelved drugs, or for candidates under development.9-11 This process can help lower development costs, shorten development time, and increase the PoS, while also maximizing the potential impact of drug compounds for a broader population of patients.12,13

In short, Unravel Biosciences has proposed two lead compounds to treat Rett syndrome. Because these compounds qualify as repurposed compounds, Unravel plans follow the 505(b)(2) path toward FDA approval,14which gives the company the ability to use previously completed research as part of their FDA application, an approach that is typically cheaper and faster than following a traditional new drug application (NDA) path—the 505(b)(1) path—or an abbreviated NDA path, the 505(j) path. Thus, the researchers consolidate all preclinical development through phase 1 into a single phase. The breakdown, including the PoS, can be viewed in the aforementioned Orphanet Journal of Rare Diseases,1 but the researchers also selected the lower (upper) bound estimate of 14.8% (33.7%) by reducing (increasing) the PoS for the combined discovery, preclinical, and phase 1 development by 5 percentage points, reducing (increasing) the PoS for phase 2 and 3 by 10 percentage points, and leaving the PoS for FDA approval unchanged.


1. Financing Repurposed Drugs for Rare Diseases: A Case Study of Unravel Biosciences. Orphanet Journal of Rare Diseases. September 12, 2023. Accessed November 3, 2023.

2. US Food and Drug Administration (FDA). Orphan drug act—relevant excerpts. 2018. Accessed November 3, 2021.

3. Schieppati A, Henter J, Daina E, Aperia A. Why rare diseases are an important medical and social issue. Lancet. 2008;371:2039–41.


4. Siegel RL, Miller KD, Fuchs HE, Jemal A. Cancer statistics, 2021. CA Cancer J Clin. 2021;71(1):7–33.

5. Fagnan DE, Yang NN, McKew JC, Lo AW. Financing translation: analysis of the NCATS rare-diseases portfolio. Sci Transl Med. 2015;7(276):276ps3.

6. O’Neil DA. A better fit? Biotech versus big pharma in orphan/rare disease drug research. Expert Opin Orphan Drugs. 2014;2(4):317–9.

7. Sharma A, Jacob A, Tandon M, Kumar D. Orphan drug: development trends and strategies. J Pharm Bioallied Sci. 2010;2(4):290.

8. Langedijk J, Mantel-Teeuwisse AK, Slijkerman DS, Schutjens M-HDB. Drug repositioning and repurposing: terminology and definitions in literature. Drug Discov Today. 2015;20(8):1027–34.

9. Naylor S, Schonfeld JM. Therapeutic drug repurposing, repositioning and rescue part I: overview. Drug Discovery World. 2014. Accessed November 3, 2023.

10. Naylor S, Kauupi DM, Schonfeld JM. Therapeutic drug repurposing, repositioning and rescue part II: business model. Drug Discovery World. 2015. Accessed November 3, 2023.

11. Naylor S, Kauupi DM, Schonfeld JM. Therapeutic drug repurposing, repositioning and rescue part III: market exclusivity using Intellectual Property and regulatory pathways. Drug Discovery World. 2015. Accessed 27 Apr 2021.

12. Pushpakom S, Iorio F, Eyers PA, Escott KJ, Hopper S, Wells A, Doig A, Guilliams T, Latimer J, McNamee C, et al. Drug repurposing: progress, challenges and recommendations. Nat Rev Drug Discov. 2019;18(1):41–58.

13. Barratt MJ, Frail DE. Drug Repositioning: Bringing New Life to Shelved Assets and Existing Drugs. 2013. New York: Wiley.

14. US Food & Drug Administration (FDA). Applications covered by Section 505(b)(2). Accessed November 3, 2023.