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Orphanet Journal of Rare Diseases
Published in: Orphanet Journal of Rare Diseases 1/2017

Open Access 01-12-2017 | Research

Do investors value the FDA orphan drug designation?

Author: Kathleen L. Miller

Published in: Orphanet Journal of Rare Diseases | Issue 1/2017

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Abstract

Background

The Orphan Drug Act is an important piece of legislation that uses financial incentives to encourage the development of drugs that treat rare diseases. This analysis studies the effects of a portion of the Orphan Drug Act, the orphan drug designation. Specifically, it studies the value that investors place on the orphan drug designation, by investigating how investors react to companies’ announcing that their product has received the designation.

Results

The results, on average, show that the stock price of a company increases by 3.36% after the announcement of the designation, increasing the value of the company. The results are more pronounced for oncology drugs, and drugs being developed by the smallest companies.

Conclusion

The orphan designation appears to be successful at generating positive value for companies, as seen by the positive and significant average increases in stock price.
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Metadata
Title
Do investors value the FDA orphan drug designation?
Author
Kathleen L. Miller
Publication date
01-12-2017
Publisher
BioMed Central
Published in
Orphanet Journal of Rare Diseases / Issue 1/2017
Electronic ISSN: 1750-1172
DOI
https://doi.org/10.1186/s13023-017-0665-6

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