HGSI Completes Phase III Trials

HGSI: NDA for Albuferon Expected to be Filed This Fall

Waiting for 2 Phase III Results for Benlysta

NDA filing for Albuferon is expected in the fall for Hepatitis C
      
Albuferon is a novel long-acting form of interferon alpha. Recombinant interferon alpha is approved for the treatment of hepatitis C, hepatitis B and a broad range of cancers. Human Genome Sciences Inc. (HGSI - Analyst Report) modified interferon alpha to improve its pharmacological properties by using its albumin fusion technology.

HGSI has an exclusive worldwide agreement with Novartis (NVS - Snapshot Report) for the development and commercialization of Albuferon. The two companies are developing Albuferon as a potential treatment for chronic hepatitis C (HCV). Under this agreement, Novartis will co-develop and co-commercialize Albuferon and share equally in development costs, sales and marketing expenses and profits of any product that is commercialized in the U.S. Novartis will be responsible for commercialization outside the U.S. and will pay HGS a royalty on these sales.
         
HGSI has finished two pivotal phase III trials: ACHIEVE 1, the first pivotal phase III clinical trial of Albuferon in combination with ribavirin in treatment-naïve patients with chronic hepatitis C virus (HCV) and ACHIEVE 2/3, a second phase III clinical trial of Albuferon in combination with ribavirin in treatment-naïve patients with chronic hepatitis C genotypes 2 and 3. Both trials are randomized, open-label, active-controlled, multi-center, non-inferiority trials that will evaluate the efficacy, safety and impact on health-related quality of life of Albuferon in combination with ribavirin, versus PEGASYS in combination with ribavirin.

Both trials are designed to evaluate two doses of Albuferon administered every two weeks, versus an active-control arm in which patients will receive PEGASYS on a standard once-weekly regimen. ACHIEVE 1 is being conducted in patients with genotype 1 HCV, and the second trial, ACHIEVE 2/3, will be conducted in patients with genotype 2/3 HCV. The primary efficacy endpoint of both trials is sustained virologic response, defined as undetectable HCV RNA. The total duration of therapy in ACHIEVE 1 will be 48 weeks, with 24 weeks of follow-up. The total duration of therapy in ACHIEVE 2/3 will be 24 weeks, with 24 weeks of follow-up.

Both phase III trials achieved their primary endpoints of non-inferiority to peginterferon alfa-2a (Pegasys). The data demonstrated that, with half as many injections, in the two pivotal trials, Albuferon achieved efficacy which was comparable to Pegasys with a positive safety profile. The two studies treated a combined total of 2255 treatment-naive patients.

The submission of global marketing applications for Albuferon is planned in fall 2009, following discussions with the FDA and other regulatory authorities.

Although no safety concerns for 900 mcg Albuferon, the elimination of 1200 mcg will certainly reduce the drug’s market potential. Therefore we modified our sales estimate for Albuferon to reflect the change of the trials.
   
Data from two phase III trials for Benlysta is expected to be available in July and November, respectively
     
Benlysta is a human monoclonal antibody that specifically recognizes and inhibits the biological activity of B-lymphocyte stimulator (BLyS). BLyS is a naturally occurring protein discovered by HGSI that is required for the development of B-lymphocyte cells into mature plasma B cells.
   
HGS is co-developing Benlysta with GlaxoSmithKline (GSK - Analyst Report) as a potential treatment for systemic lupus erythematosus (SLE) and certain other autoimmune diseases.

In February and May 2007, HGS initiated BLISS-76 and BLISS-52, two pivotal phase III trials of Benlysta. Both phase III trials are double-blind, placebo-controlled, multi-center phase III superiority trials to evaluate the efficacy and safety of Benlysta plus standard of care, versus placebo plus standard of care, in the treatment of patients with active SLE.

The primary efficacy endpoint of both trials is the patient response rate at Week 52, as defined by a reduction from baseline in the SELENA SLEDAI score of at least 4 points, no worsening in Physician’s Global Assessment, and no worsening in BILAG. Important secondary endpoints will include the patient response rate at Week 76, the SF-36 Health Survey physical component summary score, fatigue measures, and the percentage of patients with reduction from baseline in average prednisone dose at Weeks 40-52.

Although the two trial designs are similar, the total duration of the studies will differ, at 76 weeks for BLISS-76 and 52 weeks for BLISS-52. The data from BLISS-76 will be analyzed after 52 weeks in support of a potential Biologics License Application (BLA). The phase III trial protocols were agreed upon with FDA by Special Protocol Assessment. In each of the two phase III trials, approximately 810 patients will be enrolled and randomized to 1 of 3 treatment groups (1 mg/kg BENLYSTA, 10 mg/kg BENLYSTA, or placebo). Patients will be dosed intravenously on Days 0, 14 and 28, then every 28 days for the duration of the study.

The FDA has provided a Special Protocol Assessment (SPA) agreeing to the BENLYSTA phase III clinical development program in patients with active SLE. Agreement has also been received from the European Agency for the Evaluation of Medicinal Products (EMEA) on the major components of the BENLYSTA phase III clinical development program, including the primary efficacy endpoint measures, target patient population, and dose selection.

HGS has completed the enrollment and initial dosing of 826 patients in BLISS-76 in August 2008. The company completed randomization and initial dosing of 867 patients in BLISS-52 in April 2008. Data from BLISS-52 and BLISS-76 are expected in July 2009 and November 2009 respectively. It is anticipated that a BLA will be filed in the US in 1H10.

Both Albuferon and Benlysta have the potential to become blockbusters, but we see Benlysta (formerly LymphoStat B) as a higher risk program.

We believe the risk/reward is balanced for HGSI at this point. Therefore, we maintain a Hold rating for HGSI. Our six-month price target is $3.50.