Human Genome Sciences Down, But Not Out

Includes: GSK
by: EP Vantage

News that the seemingly infallible Benlysta failed to meet its secondary endpoint in a 76-week trial have sent shares in Human Genome Sciences (HGSI) tumbling by 10% in early trading Tuesday.

The fall does look slightly overdone given that the lupus drug has already met its primary endpoint at the 52-week stage with flying colours. It is this data, rather than the results reported yesterday, that regulatory approval in the US and Europe will be based on.

Keep calm and carry on

In a statement yesterday, both HGS and partner GlaxoSmithKline (NYSE:GSK) reiterated their commitment to submitting the drug in the second half of this year and said that they would include this data in the filing. While the endpoints were not met with clinical significance, a benefit was still shown above placebo at 76 weeks.

Given that the drug has FDA fast track designation this could see Benlysta on the market in the US before the end of the year, and European approval could follow in 2011. Although the weaker 76-week data could mean that the drug gets a little more scrutiny by any advisory committee that might be called.

So while being able to demonstrate longer-lasting efficacy would have been nice to have, it is not essential to the fortunes of Benlysta, which if approved is still likely to be one the biggest launches in the sector this year (Which of 2010's launches will be future blockbusters? January 19, 2010). At present 2016 forecasts for sales stand at an impressive $2.97bn, according to consensus data from EvaluatePharma.

Buying opportunity

As such, some in the market are seeing the weakness in HGS shares as a buying opportunity. The stock may also have been impacted by Novartis’ (NYSE:NVS) decision on Monday to withdraw its European marketing application for Zalbin (Joulferon), HGS’ treatment for chronic hepatitis C.

Another thing that should be borne in mind regarding the Bliss-76 data, is that it was unlikely that Benlysta was going to perform well for a particularly extended period of time, given that efficacy already looked as if it had reached a plateau from week 28 of the original 52-week Bliss-52 trial. This tailing off in Benlysta’s powers was also shown in the 52-week read out of the Bliss-76 trial (Human Genome Sciences wows again with Benlysta data November 2, 2009).

However, what the failure to show statistical benefits above placebo at 76 weeks might do is tempt insurers to limit coverage of what is bound to be an expensive drug to 52 weeks, according to Micheal Yee of RBC Capital Markets.

Unmet need

This tight fisted strategy might not work though, given that patients with other similarly hard to treat diseases often continue on therapies because there are no other options. With lupus there have been no new treatments approved in the last 50 years.

Also, the very variable nature of the disease should mean that physicians are likely to make their prescribing decisions on a patient by patient basis, making it hard for insurers to try to pull the plug on treatment.

With many believing that the drug’s prospects are very much alive and well and that sales in the billions can still be achieved, not to mention the rumours that HGS continues to be a potential takeover target for either partner Glaxo or the likes of Amgen (NASDAQ:AMGN) or Johnson & Johnson (NYSE:JNJ), this fall in HGS shares looks like it might only be a temporary thing.

Disclosure: No position