Human Genome Sciences (HGS) starts at the molecular level for good health. Using its expertise in human genetics, the biopharmaceutical discovery and development firm is working on therapies for infectious and autoimmune diseases, cardiovascular disease, and cancer. In 2011 lead candidate Benlysta gained FDA approval to treat systemic lupus and has since been extended into international markets. The company's only other commercial product is raxibacumab, an antibody treatment for inhaled anthrax. In addition, the company provides contract research and manufacturing services to other biotechs. Benlysta was developed through a partnership with GlaxoSmithKline (GSK). In 2012 HGS was acquired by GSK.
Partner GSK had decided it wanted full rights to Benlysta and other candidates and made an unsuccessful, unsolicited offer to buy HGS for some $2.6 billion, or $13 a share, in cash. After GSK enriched its offer to $14.25 per share, or $3 billion, HGS agreed to the deal, and the acquisition was finalized in 2012.
HGS has high hopes that Benlysta will skyrocket it into the big leagues among biopharma companies. Benlysta is expected to become a blockbuster seller (reaching over $1 billion in sales), as it is the first new lupus drug approved by the FDA in more than 50 years. To support the drug's launch, HGS built up a sales organization to market Benlysta in the US and Europe, where it co-markets the drug with GSK. In other global markets, GSK has full commercial responsibilities. Aimed first at treating lupus, the drug may eventually be used to treat a variety of immune disorders and to help kidney transplant patients.
HGS earned its first revenues from sales of a product in 2009 when it delivered 20,000 doses of anthrax treatment raxibacumab to the US government for its bioterrorism stockpile. The company reported $154 million in revenues that year related to raxibacumab. Also in 2009, the government ordered another 45,000 doses to be delivered over a three-year period; the company earned $47 million product revenues in 2010 and another $52 million in 2011 related to the order. HGS is also pursuing FDA approval to market raxibacumab in the US commercial market.
Outside of its commercial programs, the company has a number of other drugs in research and development stages. In addition to Benlysta, HGS and GSK are working on heart disease, metabolic, and neurology candidates. The company regularly evaluates collaborative and licensing partnership opportunities for its other proprietary development candidates, which include several anticancer drugs. In addition, HGS seeks to add new candidates to its pipeline through internal development programs, as well as via partnerships or potential acquisitions.
However, as with all drug development firms, sometimes candidates have to be dropped from the pipeline when they don't meet trial goals or make it through the FDA approval process. For instance, in late 2010 HGS dropped development of hepatitis C candidate Zalbin, which it had been developing with Novartis, when the drug's application to the FDA was turned down.
The key to developing and marketing biological drugs is having a manufacturing facility that can brew up the finicky potions in sufficient quantity, quality, and speed. HGS currently manufactures all of its drugs at its facility in the US, where it also conducts limited biologic contract manufacturing operations for other drugmakers. However, to expand its capacity in preparation for Benlysta's approval, it entered an agreement in 2010 to transfer its technology to contract biologics manufacturer Lonza to conduct larger-scale manufacturing of Benlysta by mid-2013.
Despite doubling its total product sales figures in 2011 due to the launch of Benlysta, the company experienced an overall 17% decrease in revenues to some $131 million due to the loss of the partnership income from Novartis (from the failed Zalbin candidate). The decreased partnership revenues, as well as increased commercialization and manufacturing expenses (largely related to the launch of Benlysta), caused HGS to report a $381 million net loss in 2011 (down from a $233 million loss in 2010); the firm hopes that continued successful commercialization of Benlysta and other drug candidates will help it achieve profitability in the future.