NEW YORK, N.Y., February 18, 2004 On a visit to his doctor, Gary Jacob received distressing news not about himself, but a friend of the doctor's.

While playing with one of his children, the doctors friend fell and broke a rib. That was bad enough, but during the examination at the hospital, the father was hit with a startling and totally unexpected diagnosis he had a disease known as multiple myeloma, a bone marrow blood cancer.

The diagnosis was nothing less than a death sentence.

Jacob knew of the anguish of multiple myeloma patients. The disease is incurable and nearly always fatal, one of the rare diseases that have few, if any, available treatments. They are known as "orphan" diseases, shunned by most drug-makers because the patient populations are small and commercial development of a drug is seen as economically unattractive.

Mr. Jacob was aware because, as Chief Executive Officer of Callisto Pharmaceuticals, Inc., a small Manhattan-based biopharmaceutical company, he is leading a scientific effort to develop a new orphan drug called "Atiprimod" for multiple myeloma patients.

"The father's disease brought home to me that what we are doing is really important," says Mr. Jacob. "Everyone agrees we need more drugs to treat multiple myeloma. There are people out there dying without real hope because of a lack of effective treatment for all patients."

In steadily increasing numbers, orphan drugs are providing new doses of hope where little or none at all existed. In the decade before the inception of the federal Food and Drug Administration's orphan drug program, 10 drugs were developed by pharmaceutical companies for orphan diseases. In the decades since, the FDA says nearly 250 new drugs were developed and approved, and hundreds more are in the pipeline.

Atiprimod is one of those wending its way toward the marketplace. Callisto recently obtained orphan drug designation from the FDA, providing the company with financial incentives to continue the costly development process.

The program covers drugs for orphan diseases with patient populations under 200,000.

The National Organization for Rare Disorders reports about 25 million people in the United States suffer from an estimated 6,000 orphan diseases.

Diseases such as cystic fibrosis, complications affecting HIV-infected people, Gaucher's disease, hemophilia and rare forms of cancer were among the orphans without effective medicines until the FDA program went into effect in 1983 and paved the way for new drugs for patients with these diseases.

Large drug-makers have been largely missing from the efforts.

According to the orphan drug program's deputy director, Dr. John McCormick, only 15% of applications for orphan drug designation have come from the larger pharmaceutical companies.

The reason: expectations of unfavorable investment returns.

The FDA orphan drug incentives grants, seven years of marketing exclusivity and tax breaks have drawn small pharmaceutical companies with promising drug candidates into the breach.

While the future is brighter, the task is still daunting to develop drugs for orphan diseases.

Amyotrophic lateral sclerosis (ALS), or Lou Gehrig's disease, affects 30,000 Americans with 8,000 new cases diagnosed annually; Huntington's disease also affects about 30,000 patients.

Some diseases affect fewer than 100 patients, according to the National Institutes of Health.

An estimated 50,000 patients have multiple myeloma with 15,000 new patients diagnosed each year. Last year, the FDA approved a new drug Velcade for patients with the disease. However, there are still a number of multiple myeloma patients with no treatment available.

Dr. Kenneth C. Anderson, who played a major role in the preclinical development and clinical trials of Velcade and is now a member of Callisto's Medical Advisory Board, is among the experts who see a need for more drugs to treat multiple myeloma.

"He is excited to see Atiprimod enter clinical trials for evaluation in multiple myeloma patients," Jacob said of Anderson. "He believes it has an opportunity to help patients who have not responded to other drugs. "

Dr. Anderson is director of the Jerome Lipper Multiple Myeloma Center of the Dana-Farber Cancer Institute in Boston, MA, and Professor of Medicine at Harvard Medical School.

The Phase I/IIa trials for Atiprimod are slated to begin later this month.

Dr. Donald Picker, Callisto's Senior Vice President of Drug Development, said studies of Atiprimod in collaboration with scientists at the National Cancer Institute have been very promising.

"In essence, we've shown in these early studies that Atiprimod has the potential to intervene with cancer cells and tumors in three ways by inhibiting their formation, by programming their death and by limiting their ability to grow blood vessels necessary for their survival. Taken together, these findings suggest that Atiprimod could potentially represent a novel class of compounds for development for therapeutic intervention in human cancers," said Dr. Picker.