Human Genome Sciences Inc. ( ) announced that it intends to sell up to 12.5 million shares to raise money for the development of its potential blockbuster lupus drug Benlysta and other business activities.

The net proceeds from the public offering will be used for general corporate purposes, which include the acquisition of additional manufacturing capacity and development of new indications for Benlysta. The underwriters of the offering have a 30-day option to purchase another 1.9 million shares to cover over-allotments.

Human Genome forecasted its operating expenses, after collaboration partner reimbursements, to increase from $250 million in 2009 to a range of about $325 million- $375 million in 2010. The increase is primarily attributable to the pre-launch manufacturing expenses associated with Benlysta coupled with increased sales and marketing expenses.

As a reminder, in November 2009, Human Genome and GlaxoSmithKline ( GSK - Analyst Report ) announced that Benlysta, which they agreed to co-develop and commercialize in August 2006, met the primary end-point in BLISS-76, a pivotal late-stage study, through 52 weeks. BLISS-76 is the second phase III trial in seropositive patients with systemic lupus erythematosus (SLE). Positive results from the first trial, BLISS-52, were announced earlier this year. Benlysta is a human monoclonal antibody that specifically recognizes and inhibits the biological activity of B-lymphocytestimulator (BLyS).

The positive data from the Bliss-76 study brings the company a step closer to being the first to have a new lupus drug approved in 50 years. Lupus affects about 1.5 million people in the United States and 5 million people worldwide. The company intends to file a Biologics License Application (BLA) in the United States in the first half of 2010. We expect US approval in early 2011. If approved, we expect Benlysta to become a blockbuster for the company.

Currently, we are Neutral on Human Genome Sciences.