In rare diseases, a previously approved drug with modest results can lower the efficacy benchmark for newcomers. Palvella Therapeutics' drug for a rare skin disease may only need ~30% efficacy for approval, as a competitor's drug (Hiftor) was approved with just a 23% patient responder rate, creating a low bar for a clinical win.
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The pharmaceutical industry's focus on rare diseases has intensified, with 57% of all novel drugs approved in 2025 designated as orphan treatments. This is a continued increase from prior years, indicating a strategic shift towards smaller patient populations with high unmet needs, as exemplified by three different drugs for Hereditary Angioedema (HAE) being approved within ten weeks.
When a competitor (Beijing) presented similar positive data for its BTK degrader, the CEO of Neurix viewed it as a positive reinforcement for the entire drug class. In a novel field, parallel success from independent companies de-risks the underlying biological mechanism for investors, partners, and clinicians.
Instead of competing directly with an established drug, companies can target a non-overlapping, genetically defined patient population. Idea Biosciences' drug for uveal melanoma is for HLA A2-negative patients, while the approved drug KimTrac is for HLA A2-positive patients. This strategy allows for market entry without a head-to-head battle.
Despite the landmark approvals of two complex gene therapies for sickle cell disease, their commercial rollout has been slow. An effective, easy-to-administer pill from Fulcrum Therapeutics could completely disrupt the market by offering a simpler, more accessible alternative, demonstrating how 'good enough' technology can beat a more complex breakthrough.
Tirzepatide is a rare "once in a blue moon" drug because it is both more potent and better tolerated than its main competitor. This paradoxical profile—achieving superior efficacy with fewer side effects—has established it as the "king of the hill" in the obesity market and created an extremely high bar for any challenger.
When comparing drugs with the same mechanism, like Alkermes' and Takeda's orexin agonists, a wider therapeutic index is a crucial differentiator. This superior safety-to-efficacy ratio allows for higher, more effective dosing without significant side effects, creating a competitive advantage and potential for broader market use.
A competitor's positive clinical trial data can validate a shared mechanism of action, increasing investor confidence across the board. EyePoint's stock is expected to rise on positive data from competitor Ocular Therapeutics because it would de-risk the TKI-based approach for wet AMD, benefiting both companies despite different trial designs.
The FDA's current leadership appears to be raising the bar for approvals based on single-arm studies. Especially in slowly progressing diseases with variable endpoints, the agency now requires an effect so dramatic it's akin to a parachute's benefit—unmistakable and not subject to interpretation against historical data.
The GLORA-IV trial is designed with a dual endpoint, evaluating both patient response rate and overall survival. This structure creates an alternative pathway for regulatory approval based on response rates, which can be assessed faster than survival, strategically de-risking the lengthy and expensive trial process.
Ron Cooper highlights a key disconnect: Wall Street values the highest efficacy ("more is better"), but community physicians, who treat most patients, weigh three factors equally: efficacy, tolerability, and ease of administration. A drug that seamlessly integrates into their practice flow can win significant market share without best-in-class efficacy.
