What's So Special About Soliris

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July 15 (Bloomberg) -- Bloomberg's Shannon Pettypiece and Meg Tirrell discuss deals in the drug industry with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)

Also, meighen terrell, covering biotech and pharmaceuticals.

Good to have you both with us.

What is this idea of an orphan drug act is one drug of -- that makes a lot of money.

They have one product the the that treats the extremely rare diseases, but that one drug sells for $400,000 a year.

$400,000 a year is a lot.

Soliris is the name of the drug.

What is it designed to do?

Gregg's the the -- it is for two very rare diseases.

They actually call them all drug-rare diseases.

Fewer than 20,000 patients in the entire world have these diseases.

One is pnh.

And the second indication is ahus.

That was approved in 2011. the idea with this drug is that it not just treat those two diseases, but it is being tested for five additional indications also very rare.

These are conditions with very poor quality of life, so they can demand these high prices because if patients don't survive, they have organ damage.

It is for a very small, niche population.

Everybody in pharmaceuticals suddenly gone into making these drugs for rare populations because they realize they could charge a ton of money.

In this case, four hundred thousand dollars.

May be only have 1000 people in the u.s. to have it.

In the past, big pharmaceuticals scoffed at that.

Then they got a lot of pricing pressure on things like cholesterol and blood pressure drugs.

These orphan drugs are rare and there is only one treatment and it is a small population, so they can charge whatever they want.

That is the incentive for the drug makers to develop these.

They're going after the cholesterol and other big indications.

These incentives are things like increased regulatory or lager pat lives on these drugs.

That is something big pharmaceuticals want.

You do not have to prove that you are superior to five other cholesterol drugs out there.

I think pnh was tested in something like 17 patients in order to prove that it could really work.

Is this a big area for the pharmaceuticals?

It is one that a lot of companies identified as one that they want to get into.

Two years ago there was a $20 billion deal, the second-biggest on the books, gaining two rare disease drugs.

And then you have the geely ad in deal and the bristol- myers deal.

Gilead playpaid $11 billion for a drug.

It is almost the flip side, but equally valuable.

What happens to alexia?

We should make clear that what we reported on friday, that roche is seeking a deal and it may not happen.

Right now, no offer has necessarily been made.

Just that roche is seeking financing to potentially make an offer.

Who else would want this?

There could be a lot of potential pharmaceutical bidders.

But if you're a $20 billion company with one product the that is worth $1 billion, the that is a big valuation.

Analysts are connolly rolling their eyes -- kind of rolling their idol but that roche would be interested.

But they can charge what they want and that is the lower.

This company has tripled in the last three years.

Wall street has been watching.

It and you are going to continue to watch this, too.

This text has been automatically generated. It may not be 100% accurate.

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