2009 is 'Zero Hour' for Human Genome Sciences

Human Genome Sciences (HGS) expects to announce a number of positive catalysts in 2009 and believes its current cash position should be sufficient to take the biopharmaceutical company at least through the filing of several marketing applications for products currently in Phase III clinical trials.The company is rapidly progressing toward the commercialization of its two key products in late-stage clinical development, Albuferon (albinterferon alfa-2b) for hepatitis-c and LymphoStat-B (belimumab) for systemic lupus erythematosus. In addition, HGS is awaiting authorization to begin the delivery of ABthrax (raxibacumab) for inhalation anthrax to the U.S. Strategic National Stockpile. Upon delivery and acceptance by the government, the company will record its first product sales (of at least $150 million).

HGS had a working capital shortfall of $57.0 million at September 30, 2008, but the company expects 2009 net cash burn of less than $25 million, compared with approximately $245 million in 2008. Although revenue for the next two years will likely be limited to ABthrax sales, the company could receive milestone payments and/or R&D reimbursement(s) under terms of collaborative and licensing agreements currently in place with Novartis and GlaxoSmithKline (GSK) for Albuferon and Lympho-Stat-B, respectively, according to a November 2008 registration statement:

1. Part of our business plan includes collaborating with others. For example, we entered into a collaboration agreement in 2006 with Novartis to co-develop and co-commercialize Albuferon. Under this agreement, we will co-commercialize Albuferon in the United States, and will share U.S. commercialization costs and U.S. profits equally. Novartis will be responsible for commercialization outside the U.S. and will pay us a royalty on those sales. Novartis and we share clinical development costs. Including a non-refundable up-front license fee, we are entitled to payments aggregating approximately $507.5 million upon successful attainment of certain milestones. As of September 30, 2008, we have contractually earned and received milestones aggregating $132.5 million including the up-front fee.
2. In 2006, we entered into a collaboration agreement with GSK with respect to LymphoStat-B and received a payment of $24.0 million. We and GSK share Phase 3 and 4 development costs, and will share equally in sales and marketing expenses and profits of any product that is commercialized.

HGS remains on track for its first LymphoStat-B Phase III clinical results by mid 2009 and to have all Phase III results ready for regulatory filings in the fall of 2009. Assuming the studies yield positive results, HGS anticipates filing a biological license application for LymphoStat-B in the United States in the first half of 2010.