Oct 30 2009
Human Genome Sciences, Inc. (Nasdaq:HGSI) today announced financial results for the quarter ended September 30, 2009, and provided highlights of recent key developments.
“In the third quarter, we made outstanding progress on the path to commercialization of our late-stage products and substantially improved our financial strength,” said H. Thomas Watkins, President and Chief Executive Officer. “The positive Phase 3 results we have seen for both BENLYSTA for systemic lupus and ZALBIN for chronic hepatitis C suggest that each of these products represents a significant therapeutic and commercial opportunity. Assuming the second Phase 3 trial of BENLYSTA is successful, we believe it could become the first new drug approved for lupus in more than 50 years.”
FINANCIAL RESULTS
HGS reported that revenues for the quarter ended September 30, 2009, increased to $18.8 million, compared with revenues of $11.7 million for the same period in 2008. Revenues included $8.7 million from manufacturing and development services, $8.9 million recognized from the ZALBIN agreement with Novartis, and $1.0 million recognized from the BENLYSTA agreement with GSK.
Net loss for the quarter ended September 30, 2009, decreased to $49.0 million ($0.32 per share), compared with a net loss for the third quarter of 2008 of $74.2 million ($0.55 per share). The lower net loss for the quarter was due primarily to higher revenues from manufacturing and development services and lower research and development and general and administrative expenses.
For the first nine months of 2009, HGS reported revenues of $222.8 million, compared with revenues of $35.5 million for the same period of the previous year. Revenues included $162.4 million recognized upon the sale and delivery of raxibacumab to the U.S. Strategic National Stockpile in the first and second quarters of 2009, $18.7 million from manufacturing and development services other than raxibacumab, $26.6 million recognized from the ZALBIN agreement with Novartis, a $9.0 million milestone recognized from the Syncria® agreement with GSK in the first quarter of 2009, and $3.7 million recognized from the BENLYSTA agreement with GSK.
The Company reported net income of $15.4 million ($0.11 per share) for the nine months ended September 30, 2009, compared with a net loss of $207.0 million ($1.53 per share) for the same period of the previous year. The net income for the nine months was due primarily to revenue from the sale and delivery of raxibacumab, revenue from manufacturing and development services, a gain on extinguishment of debt, and lower research and development and general and administrative expenses.
Cash increased by $326.3 million during the third quarter as a result of the successful public offering of common stock completed in August 2009. As of September 30, 2009, cash and investments totaled $697.2 million, of which $627.6 million was unrestricted and available for operations. This compares with cash and investments totaling $372.9 million as of the end of December 31, 2008, of which $303.6 million was unrestricted and available for operations.
“From a financial perspective, the third quarter of 2009 was another strong quarter for HGS,” said Tim Barabe, Senior Vice President and Chief Financial Officer. “We were particularly pleased by the market’s strong response to our public offering of common stock. With the proceeds from the offering, our cash position is even stronger and is now more than sufficient to take us through the filing of marketing applications and the launch of our late-stage products, while also enabling continued investment in our earlier-stage pipeline.”
HIGHLIGHTS OF RECENT PROGRESS
BENLYSTA™ Becomes First Lupus Drug to Achieve Positive Results in a Phase 3 Trial; Full Presentation of BLISS-52 Results at ACR Annual Scientific Meeting; Topline Results of BLISS-76 Expected November 2nd
In July 2009, HGS and GSK announced that BENLYSTA (belimumab) met the primary efficacy endpoint of superiority versus placebo at Week 52 in BLISS-52, the first of two pivotal Phase 3 trials in seropositive patients with systemic lupus erythematosus (SLE) – thus becoming the first drug for lupus to achieve positive results in a Phase 3 trial.
On October 20, 2009, HGS provided a full presentation of BLISS-52 results at the late-breaker session of the 73rd Annual Scientific Meeting of the American College of Rheumatology (ACR) in Philadelphia. The data showed that BENLYSTA plus standard of care achieved a clinically and statistically significant improvement in patient response rate as measured by the SLE Responder Index at Week 52, compared with placebo plus standard of care. In BLISS-52, BENLYSTA significantly reduced SLE disease activity, disease flare rates and fatigue; significantly delayed time-to-first SLE disease flare; reduced prednisone use and improved health-related patient quality of life. Study results also showed that belimumab was generally well tolerated, with adverse event rates comparable between belimumab and placebo treatment groups.
In September 2009, an article in the peer-reviewed journal, Arthritis Care & Research, described the development and use of the SLE Responder Index selected as the primary endpoint of both pivotal Phase 3 trials of BENLYSTA as a potentially significant advance in lupus drug development. This primary endpoint was accepted by the FDA under a Special Protocol Assessment for the Phase 3 trials.
HGS will host a conference call to discuss topline 52-week results of the second Phase 3 trial of BENLYSTA, BLISS-76, on Monday, November 2, 2009, at 8:15 AM Eastern. Investors may listen to the call by dialing 800-753-9057 or 913-312-0718, passcode 9331404, five to 10 minutes before the start of the call. A replay of the conference call will be available within a few hours after the call ends. Investors may listen to the replay by dialing 888-203-1112 or 719-457-0820, confirmation code 9331404.
Assuming the 52-week results from BLISS-76 are positive, HGS and GSK plan to submit marketing applications in the United States, Europe and other regions in the first half of 2010. BENLYSTA is being developed by HGS and GSK under a co-development and commercialization agreement entered into in August 2006.
New Order Received from U.S. Government for Raxibacumab; $152 Million in Revenue Expected over Three-Year Period; Completion of BLA Review Pending
In July 2009, HGS announced that the U.S. Government exercised its option to purchase 45,000 additional doses of raxibacumab for the Strategic National Stockpile, to be delivered over a three-year period, beginning near the end of 2009. HGS expects to receive approximately $152 million from this award as deliveries are completed. This order is in addition to the 20,000 doses that were delivered to the Stockpile earlier this year. HGS is developing raxibacumab under a contract entered into in 2006 with the Biomedical Advanced Research and Development Authority (BARDA), Office of the Assistant Secretary for Preparedness and Response, U.S. Department of Health and Human Services.
In May 2009, a biologics license application (BLA) was submitted to the FDA. The application was subsequently accepted and granted priority review. On October 27, 2009 the Anti-Infective Drugs Advisory Committee to the FDA met to discuss certain aspects of the BLA. HGS continues to work with the FDA towards a successful completion of the review.
$75 Million Development Milestone Earned for ZALBIN™ Progress; Submission of Global Marketing Applications Planned for Fourth Quarter 2009
On October 19, 2009, HGS announced that it has earned a $75 million milestone payment from Novartis, related to successful completion of the Phase 3 development program and the decision to submit applications seeking regulatory approval to market ZALBIN™ (albinterferon alfa-2b) for the treatment of chronic hepatitis C.
HGS and Novartis have completed pre-submission meetings with the FDA and European regulatory agencies, and plan to submit marketing applications for albinterferon alfa-2b in the fourth quarter of 2009. ZALBIN will be the brand name for albinterferon alfa-2b in the United States. JOULFERON® will be the brand name in the rest of the world. These brand names will be subject to confirmation by health authorities at the time of product approval.
Net Proceeds of Public Offering Total $356.5 Million
In August 2009, HGS completed the public offering of 26,697,250 shares of common stock at $14.00 per share. The Company’s net proceeds from the offering were approximately $356.5 million after the underwriting discount and estimated offering expenses.
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