Recently, Human Genome Sciences Inc. (HGSI) received encouraging news when the European Medicines Agency’s (EMA) Committee for Medicinal Products for Human Use (CHMP) recommended approval of its lupus drug, Benlysta in the European Union. Benlysta, which has blockbuster potential, has been co-developed by Human Genome with GlaxoSmithKline (GSK).
CHMP has recommended approval of the drug in the EU as an additional therapy in adults suffering from active autoantibody-positive systemic lupus erythematosus (SLE) even after treatment with currently available medications. The positive opinion of the committee is based on data from two late-stage trials, BLISS-52 and BLISS-76.
The studies evaluated approximately 1700 adults suffering from autoantibody-positive active SLE. A decision from the European Commission is expected within 2-3 months of the opinion from the CHMP. The Marketing Authorization Application (MAA) seeking approval for Benlysta in Europe was filed with the EMA in June last year.
We remind investors that Benlysta was approved in the US in March 2011. The drug was subsequently launched in the US market.
The US approval of Benlysta for treating SLE patients makes it the first new lupus drug to be cleared in more than 50 years. Lupus is a potentially fatal autoimmune disease that is extremely difficult to treat.
We note that Benlysta is under review in Canada, Australia, Switzerland, Russia, Brazil, Israel, Columbia and the Philippines. We believe that the approval of Benlysta in additional territories would spur further top line growth at Human Genome.
Our Recommendation
Human Genome currently has a Zacks #4 Rank, which translates into a short-term 'Sell' rating. We are ‘Neutral’ on the stock over the long term. We believe that the approval of the lupus drug in the US has given a huge boost to Human Genome, which should help drive the company to profitability. Moreover, if the drug is approved in additional markets then it would boost the top line at Human Genome even further. However, we prefer to remain on the sidelines till visibility is obtained regarding Benlysta’s initial sales ramp.
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