In a challenging funding environment for biopharma, the nonprofit Orphan Therapeutics Accelerator (OTXL) is pioneering an innovative approach to rescue abandoned therapies for ultra-rare diseases through unconventional funding models and strategic partnerships.
Novel Funding Strategy Addresses Ultra-Rare Disease Treatment Gap
The development of treatments for ultra-rare diseases has long faced significant economic hurdles. While these therapies can be profitable, they often fail to deliver the returns demanded by traditional investors, leaving promising treatments shelved despite positive clinical data.
"Often therapies with excellent Phase I/II data are inaccessible to patients because they're not profitable enough. From a humanitarian lens, we don't find that to be acceptable," explains Deanna Portero, Vice President of Partnerships and Innovation at OTXL.
The organization's approach centers on leveraging its nonprofit status to access non-dilutive capital sources, including venture philanthropy and social impact investments. This strategy is particularly timely as rising interest rates and policy uncertainties around drug pricing have caused a pullback in investor interest for rare disease programs.
Strategic Partnerships Form Foundation of New Model
OTXL recently announced foundational partnerships with pharmaceutical companies Chiesi Group and BIAL, along with collaborations with Landmark Bio, Uncommon Cures, DVLP Medicines, and Vibe Bio. These relationships will provide critical funding and expertise to evaluate and advance 2-3 lead programs initially.
"There is a lot of promising science sitting on the sidelines that could be benefitting children and others facing rare diseases," said Smitha Jagadish, Head of Rare Diseases at BIAL. "Our aim in supporting this bold effort is to get more of these treatments back into clinical trials so they may deliver meaningful impact for patients."
The accelerator has developed an ecosystem of strategic partnerships with contract development and manufacturing organizations (CDMOs) and contract research organizations (CROs) under innovative risk-sharing agreements. These arrangements defer costs until later revenue-generating phases, making ultra-rare disease development economically viable.
Sustainable Model Aims for Long-Term Impact
What distinguishes OTXL's approach is its focus on sustainability. The organization expects to become self-sustaining within 4-6 years by reinvesting a portion of the revenue generated from out-licensing or commercializing programs back into the accelerator to fund additional programs.
"We've seen the ebbs and flows and know that this recent stretch isn't merely a 'market correction,' it's a sea change that we need to radically adjust our thinking to confront," stated Craig Martin, Founder and CEO of OTXL. "We are laser-focused on aggressively addressing the need, at scale."
This model creates a buffer against market fluctuations for ultra-rare disease therapies, potentially enabling dozens of needed treatments to reach patients more rapidly and efficiently than would be possible through traditional development pathways.
Industry-Wide Implications for Rare Disease Development
The approach pioneered by OTXL may have broader implications for the pharmaceutical industry. Some commercial entities are already exploring similar models, with BridgeBio notably implementing risk-sharing agreements with CDMOs.
Jim Geraghty, OTXL Board Chair, noted: "The landscape for rare diseases has evolved considerably over the past 40 years, but there's still a great need for new ways to advance promising ultra-orphan therapies."
The current environment presents both challenges and opportunities. Untapped manufacturing capacity in the CDMO sector provides leverage for organizations like OTXL, which typically require less substance and work than programs targeting larger indications.
Regulatory Considerations Critical to Success
The FDA's priority review voucher program for rare pediatric diseases remains a critical economic component for ultra-rare disease development. This program allows smaller therapeutic developers to sell vouchers to larger pharmaceutical companies, effectively creating a subsidy mechanism that costs taxpayers very little.
"That's a program that we feel is truly make-or-break about the economic viability of many ultra-rare diseases," Portero emphasized. The vouchers provide capital that can be distributed to partners in risk-sharing agreements and influence the types of in-licensing deals companies are willing to consider.
OTXL is also engaged in dialogue with organizations like Every Cure that focus on drug repurposing for rare and common diseases. The accelerator supports extending orphan drug exclusion provisions in the Inflation Reduction Act for drugs repurposed for orphan indications.
Patient-Centered Approach Drives Mission
At its core, OTXL's model centers the patient in ways that traditional pharmaceutical development often cannot. While commercial entities must prioritize opportunities with the greatest potential return on investment, OTXL can make patient access an equal consideration to financial sustainability.
"A group like ours thinks about sustainability, we centre the patient, and we're most concerned with making sure patients with unmet clinical needs are ultimately accessing therapies," Portero explained.
This patient-centered approach, combined with innovative funding strategies and strategic partnerships, positions OTXL to potentially transform the landscape for ultra-rare disease treatment development at a time when traditional funding models are increasingly strained.
