Human Genome Sciences, Inc. (HGSI”>HGSI) recently announced that it expects net sales of its lupus drug, Benlysta, to improve by approximately 34% sequentially to $25.7 million in the final quarter of 2011. Net sales of Benlysta for full-year 2011 are expected to come in at $52.3 million. The company announced the preliminary Benlysta sales at the 30th annual healthcare conference of JPMorgan (JPM”>JPM).
Human Genome co-developed Benlysta, which has blockbuster potential, with GlaxoSmithKline (GSK”>GSK). The drug, launched in the US in March 2011 for treating adults suffering from active, autoantibody-positive systemic lupus erythematosus (SLE) who are being treated with the standard therapy, is the first lupus drug to hit the market in more than 50 years.
Human Genome and partner Glaxo are leaving no stones unturned to improve the sales potential of Benlysta. Subsequent to the US launch, the drug has also been launched in Canada and certain EU countries such as Germany and Spain. Benlysta is under review for the SLE indication in many other nations.
Human Genome, which aims to turn profitable by 2014 driven by Benlysta, expects to end 2011 with cash and investments in the range of $875 – $885 million. The company expects research & development (R&D) expenses for 2011 in the range of $195 – $205 million. Selling, general and administrative (SG&A) expenses for 2011 are expected in the range of $155-$165 million.
In a move aimed at improving efficiencies, Human Genome announced its decision to trim its work force by approximately 150 employees.
Peek Into 2012
Apart from announcing preliminary sales of Benlysta for the fourth quarter and full year 2011, Human Genome also announced its goals for 2012. The company intends to ensure increased US sales of Benlysta for 2012. Moreover, Human Genome and partner Glaxo intend to continue their efforts to get Benlysta approved and launched in additional markets.
The companies are also developing Benlysta for additional indications. Human Genome and Glaxo are developing a subcutaneous formulation of the candidate. Moreover, the candidate is also being evaluated in the vasculitis and active lupus nephritis indications. Human Genome intends to continue with its efforts toward achieving the objective of expanding the label of Benlysta.
Apart from providing an update regarding its goals for Benlysta, Human Genome also announced its goals regarding another potentially strong candidate ABthrax (raxibacumab) for treating inhalation anthrax. Human Genome is under contract to deliver doses of ABthrax to the US Strategic National Stockpile.
During 2009, Human Genome received an order from the US government to sell an additional 45,000 doses of ABthrax for the Strategic National Stockpile, over a three-year period. This order is in addition to the 20,000 doses delivered to the Stockpile earlier.
Human Genome expects to receive approximately $142 million from the second award as deliveries are completed of which $52.5 million were recognized in 2011. Human Genome intends to deliver 8,000 doses in 2012 thereby recognizing $25 million during the year.
We note that ABthrax is not yet approved by the FDA. The FDA issued a complete response letter for the candidate in 2009 due to insufficiency of data. The company, which is eligible to receive $20 million under the contract with the US Strategic National Stockpile on ABthrax’s FDA approval, is in discussions with the US regulatory body regarding the issue. Moreover, Human Genome intends to continue developing its other pipeline candidates during 2012.
On the expense front, Human Genome expects R&D expenses for 2012 in the range of $150 – $180 million and SG&A expenses in the range of $160-$180 million.
Our Recommendation
Currently, we have a Neutral stance on Human Genome in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run.
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