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Human Genome Sciences (HGSI) |
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WIKI ANALYSIS
Human Genome Sciences, Inc. (NYSE: HGSI) is a freshly minted commercial biotech company, with the approval of its flagship drug, Benlysta in 2011 to treat lupus. HGS uses three technologies to discover and develop drug candidates: gene-based functional protein technology, antibody technology (in-license from other companies) and albumin fusion technology.
HGSI has entered into relationships with a number of leading pharmaceutical and biotechnology companies. These collaborations have provided and will continue to provide research funding for the company. The Company's revenues are currently derived from license fees and milestone payments under collaboration agreements. The Company does not yet generate any revenues from product sales. In addition, HGSI partners with GlaxoSmithKline (GSK) for the commercialization of Benlysta.
HGSI's success will be significantly tied to Benlysta sales during the early days of its commercialization. In addition, HGSI may be a takeover candidate as big pharma looks to fill its ailing drug portfolio.
Business Growth
On March 9, 2011, HGSI received approval for Benlysta as the first new treatment for Lupus in 50 years. Until that point, HGSI had been a research-focused biotechnology company. However, this approval marks the first point in the company's history that it will earn revenue from the commercialization of a drug. In the first quarter since the FDA approval, HGSI's losses tripled to $131 million, as the company ramped up efforts toward full commercialization.
Pipeline[1][2]
- Benlysta: Is an injectable antibody treatment that inhibits a protein (BLyS) that is known to be elevated in certain immune system diseases including Lupus. Benlysta received FDA approval to treat Lupus in March of 2011, and is currently in Phase 2 clinical trials for post-kidney transplant patients and patients with vasculitis. In addition, HGSI is pursuing a more convenient delivery method of Benlysta for treating Lupus patients.
- Raxibacumab: Is an injectable antibody treatment that blocks the toxins that are released by the Anthrax bacteria. Current treatments available kill the bacteria itself, but are of little help once it has already released its toxins into patients. HGSI is responding to a complete response letter to the FDA requesting more information for approval to treat Antrax patients. HGSI has already earned revenue from the US Government, which has been buiding an emergency stockpile of the treatment.
Trends and Forces
The Commercial Success of Benlysta will Drive HGSI's Revenue
As Benlysta ramps up in sales, a vast majority of HGSI's will be attributed to Benlysta revenue. Benlysta, which HGSI shares commercialization rights with GlaxoSmithKline (GSK), is widely predicted to become a blockbuster drug, with over $1 billion in sales, and analysts predict a 2012 sales range of $300 to $700 million.[3] Exactly where Benlysta sales fall within the predicted ranges will significantly affect HGSI's overall revenue growth as well as their valuation.
HGSI is a Relatively Cheap Takeover Candidate for Big Pharma
As big pharma companies lose their biggest blockbuster medicines to generic competition, they increasingly look to acquisition of affordable companies to bolster their drug portfolio.[4] HGSI has a potential blockbuster in Benlysta as well as other relatively late stage drugs. With a market cap under $10 billion, HGSI is an affordable takeover target for big pharma companies.
Competition
HGSI competes with a few companies with products already on the market that suppress the immune system and have been used to used to treat lupus:[5]
- Biogen Idec (BIIB): Makes the lymphoma treatment, Rituxan.
- Roche Pharmaceuticals (RHHBY): Makes immuno-suppressant, CellCept.
There are also several drugs in the pipeline being developed to treat Lupus:
- Immunupharma: Is developing a phase III candidate, Lupuzor.
- Eli Lilly and Company (LLY): Has an antibody that inhibits an immune system protein (BAFF) in phase III clinical trials.
References
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