Orphan drugs -- medications meant for small patient populations with rare, dangerous diseases -- can be a rewarding business for biotech firms that strike gold. Drugs can cost hundreds of thousands of dollars, and even with potential patients only numbering in the thousands, rather than hundreds of thousands, millions, or more like with some blockbusters -- the dollars can add up. Small biotech firms have used orphan drugs to catapult them from speculative play to established player.

Which companies -- and orphan drugs -- should you be watching out for throughout the year?

NPS's Gattex is ready to roll out
One of the most exciting orphan drugs to watch in 2013 won FDA regulatory approval back in December. NPS Pharmaceuticals' (UNKNOWN:NPSP.DL) Gattex, its first successful drug and approved to treat short bowel syndrome, hasn't helped the company's stock so far this year despite the victory. Although shares are down more than 13% so far in 2013, NPS -- and Gattex -- deserve your attention.

Short bowel syndrome, or SBS, impacts the lives of 10,000 to 15,000 Americans. Patients afflicted with the disease rely on parenteral nutrition -- intraveneous feeding -- due to their bowel's inability to absorb adequate nutrients, a costly treatment. Gattex helps reduce the reliance on that, and while it's costly in its own regard -- NPS priced the drug at $295,000 annually -- the impact on patient quality of life makes it an attractive treatment.

It's good enough that the company has projected peak sales of $350 million for Gattex. For a company that had previously relied on sales royalties for revenue, that's just what NPS needs to secure its place in the biotech industry. It's possible that Gattex could be approved for other, more widespread bowel-related indications as well; don't count on such approvals, but their possibility means even more potential upside for this drug.

NPS has another orphan drug, Natpara, in its pipeline, and this company's future looks strong. Keep a watch on Gattex's rollout this year as NPS enjoys its first year of real sales. Predictions vary for 2013, but some analysts have pegged possible revenue this year at more than $21 million.

Aegerion squares off with Genzyme and Isis
Not all orphan drug firms are success stories like NPS, however. Aegerion Pharmaceuticals (NASDAQ:AEGR) scored a big victory when the FDA approved Juxtapid, its orphan drug pill for rare cholesterol disorder homozygous familial hypercholesterolemia, or HoFH. Good news, right? Not when another biotech company barges into the same market.

First, the good news for Aegerion: Its FDA approval back in December gives the company its first drug on the market. Juxtapid won't be cheap; Aegerion's pricing the drug at more than $200,000 per year. It will need every dollar it can get, however, because the market for HoFH fits the definition of "orphan drug" to the letter.

Estimates on how many patients suffer from HoFH in the U.S., but they range from as few as 400 to as many as Aegerion's own estimate of up to 3,000. The company expects to get 250-300 patients on Juxtapid by the end of 2013, bringing in revenue between $15 million to $25 million. However, the company's job got a whole lot harder in late January.

The FDA approved another orphan drug for HoFH on Jan. 29, Isis Pharmaceuticals' (NASDAQ:IONS) and Genzyme's Kynamro. The drug is a lot bigger for Isis than Genzyme as the latter is a subsidiary of major pharmaceutical firm Sanofi (NASDAQ:SNY); nonetheless, it also brings in a significant direct competitor to Aegerion's own lofty goals.

Genzyme priced Kynamro at just $176,000 annually, still a steep price but much cheaper than Juxtapid's cost. With hospital budgets under fire across the country, don't think that such a move won't matter to physicians (along with cost-wary patients), even with Kynamro's significant side effect problem. Genzyme and Isis's drug will have to carry a warning on its box regarding a serious risk of liver toxicity, and unlike Juxtapid's pill form, Kynamro is a less-preferable injection.

It should be an entertaining battle between the two drugs in the near future. I'd give the lead ever so slightly to Kynamro in an era where cost and dollars matter considerably, especially with Sanofi's massive apparatus backing it up. While Aegerion will have to spend more pushing its drug and competing with Kynamro for market share, Juxtapid's effectiveness in clinical trials and lack of Kynamro's dubious safety profile should give it some momentum.

Investors would be wise to temper their expectations in the short term with competition afoot, however.

BioMarin on the hunt for approval
Unlike Aegerion and NPS, biotech firm BioMarin (NASDAQ:BMRN) already boasts of drugs on the market. The company's orphan drug BMN-110 -- formerly known as GALNS -- is making things interesting after a successful phase 3 clinical trial, however.

BioMarin designed BMN-110 to treat Morquio-A syndrome, also known as MPSIVA, which affects around 1 out of every 200,000 people in the U.S., for a total domestic patient population of around 1,500. BMN-110 hit its primary endpoint in its phase 3 trial by improving results of patients in a six-minute walk test over a placebo. It may not sound glamorous, but the success was enough to convince many that BMN-110 is on its way to success.

BMN-110's safety record is strong, and BioMarin expects to submit the drug for FDA approval in the first quarter of 2013. Keep an eye on the approval process, which some experts expect to deliver the thumbs-up in the U.S. by the last quarter of the year. BioMarin expects to price BMN-110 at more than 250,000 per year, with analysts projecting $500 million or more in potential peak sales.

Who's ready to step up?
Which drug among these four will soar the furthest in 2013? BMN-110 isn't out yet and still awaits regulatory approval, so hold off on that one until the FDA gives the go-ahead. With the HoFH market a competitive one, however, look for NPS's Gattex to get things going this year. The drug will take time to warm up -- and don't expect massive sales so soon after approval -- but Gattex looks like a long-term winner.

And long-term investing, as smart investors know, is the best therapy around.