Glaxo/HGSI Initiate New Study

Human Genome Sciences, Inc. (HGSI - Analyst Report) and partner GlaxoSmithKline (GSK - Analyst Report) recently announced the commencement of a late-stage study (BLISS-SC: n~816) to evaluate the subcutaneous (SC) formulation of their potential blockbuster drug Benlysta.

Adults suffering from systemic lupus erythematosus (SLE) will be evaluated in the multi-center, international, randomized, double-blind, placebo-controlled study.

The study will evaluate the safety, effectiveness and tolerability of the SC version of Benlysta (200 mg weekly) combined with the current standard of care (SOC) versus the combination of a placebo and the SOC. The study, whose initial duration is one year, will be followed by a 6-month long open-label extension phase. Data from the study is, however, not expected before the second half of 2014.

We note that Benlysta, as an intravenous therapy, is already available in the US, following its approval in March 2011, for the SLE indication. The drug, which costs $35,000 annually, is also available in Canada and several European nations including Germany, Austria, Denmark, Finland, Hungary, Norway and Sweden. Benlysta is under review in many other countries.

The successful development and subsequent commercialization of the subcutaneous version of Benlysta is expected to result in increased convenience for SLE patients.

Our Take & Recommendation

Even though the initial sales ramp of Benlysta has not been impressive, we believe sales will pickup in the coming quarters and drive growth at Human Genome. Management is leaving no stone unturned to make Benlysta a success.

The company is working toward increasing the number of doctors who prescribe the drug through its sales force. Moreover, the J-code becomes effective for Benlysta from the beginning of 2012. J-code is a product specific billing code, which should ease the reimbursement process. We are also encouraged by Human Genome’s efforts to expand Benlysta’s label and develop the other candidates in its pipeline.

We prefer to remain on the sidelines until more visibility is obtained on Benlysta’s commercial potential. Consequently, we have a Neutral stance on Human Genome in the long run. This is in line with the Zacks #3 Rank (Hold rating) carried by the stock in the short run.

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