%0 Journal Article
%T Financing repurposed drugs for rare diseases: a case study of Unravel Biosciences.
%A Abouarab B
%A Bazarian C
%A Ben Chaouch Z
%A Lo AW
%A Mourenza Gonzalez G
%A Novak R
%A Vigneault F
%J Orphanet J Rare Dis
%V 18
%N 1
%D 2023 09 12
%M 37700316
%F 4.303
%R 10.1186/s13023-023-02753-y
%X We consider two key challenges that early-stage biotechnology firms face in developing a sustainable financing strategy and a sustainable business model: developing a valuation model for drug compounds, and choosing an appropriate operating model and corporate structure. We use the specific example of Unravel Biosciences-a therapeutics platform company that identifies novel drug targets through off-target mechanisms of existing drugs and then develops optimized new molecules-throughout the paper and explore a specific scenario of drug repurposing for rare genetic diseases.<BR>The first challenge consists of producing a realistic financial valuation of a potential rare disease repurposed drug compound, in this case targeting Rett syndrome. More generally, we develop a framework to value a portfolio of pairwise correlated rare disease compounds in early-stage development and quantify its risk profile. We estimate the probability of a negative return to be [Formula: see text] for a single compound and [Formula: see text] for a portfolio of 8 drugs. The probability of selling the project at a loss decreases from [Formula: see text] (phase 3) for a single compound to [Formula: see text] (phase 3) for the 8-drug portfolio. For the second challenge, we find that the choice of operating model and corporate structure is crucial for early-stage biotech startups and illustrate this point with three concrete examples.<BR>Repurposing existing compounds offers important advantages that could help early-stage biotech startups better align their business and financing issues with their scientific and medical objectives, enter a space that is not occupied by large pharmaceutical companies, and accelerate the validation of their drug development platform.