Human Genome Sciences Announces Third Quarter 2009 Financial Results and Key Developments

http://www.businesswire.com/news/home/20091029006254/en

BENLYSTA Becomes the First Drug for Lupus to Achieve Positive Results in a Phase
3 Trial

$75 Million Development Milestone for ZALBIN Progress Earned from Novartis

Successful Public Equity Offering Nets $356.5 Million in Cash
ROCKVILLE, Md.--(Business Wire)--
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.

About Human Genome Sciences

The mission of HGS is to apply great science and great medicine to bring
innovative drugs to patients with unmet medical needs. The HGS clinical
development pipeline includes novel drugs to treat lupus, hepatitis C,
inhalation anthrax and cancer.

The Company`s primary focus is rapid progress toward the commercialization of
its two lead drugs, BENLYSTA (belimumab) for lupus and ZALBIN (albinterferon
alfa-2b) for hepatitis C. BENLYSTA has successfully met its primary endpoint in
the first of two Phase 3 trials in systemic lupus erythematosus, and results of
the second BENLYSTA Phase 3 trial are expected on November 2, 2009. ZALBIN has
now completed Phase 3 development, and the submission of global marketing
applications is planned in fourth quarter 2009.

In May 2009, HGS submitted a Biologics License Application to the FDA for
raxibacumab for the treatment of inhalation anthrax. In July 2009, the Company
secured a new purchase order for 45,000 doses of raxibacumab to be delivered to
the U.S. Strategic National Stockpile over a three-year period, beginning near
the end of 2009. The Company also has several drugs in earlier stages of
clinical development for the treatment of cancer, led by the TRAIL receptor
antibody HGS-ETR1 (mapatumumab) and a small-molecule antagonist of IAP
(inhibitor of apoptosis) proteins. In addition, HGS has substantial financial
rights to certain products in the GSK clinical pipeline including darapladib,
currently in Phase 3 development in patients with coronary heart disease, and
Syncria (albiglutide), currently in Phase 3 development in patients with type 2
diabetes.

For more information about HGS, please visit the Company`s web site at
www.hgsi.com. Health professionals and patients interested in clinical trials of
HGS products may inquire via e-mail to medinfo@hgsi.com or by calling HGS at
(877) 822-8472.

HGS, Human Genome Sciences, BENLYSTA, and ZALBIN are trademarks of Human Genome
Sciences, Inc.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking statements are
based on Human Genome Sciences` current intent, belief and expectations. These
statements are not guarantees of future performance and are subject to certain
risks and uncertainties that are difficult to predict. Actual results may differ
materially from these forward-looking statements because of Human Genome
Sciences` unproven business model, its dependence on new technologies, the
uncertainty and timing of clinical trials, Human Genome Sciences` ability to
develop and commercialize products, its dependence on collaborators for services
and revenue, its substantial indebtedness and lease obligations, its changing
requirements and costs associated with facilities, intense competition, the
uncertainty of patent and intellectual property protection, Human Genome
Sciences` dependence on key management and key suppliers, the uncertainty of
regulation of products, the impact of future alliances or transactions and other
risks described in the Company`s filings with the SEC. Existing and prospective
investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of today`s date. Human Genome Sciences
undertakes no obligation to update or revise the information contained in this
announcement whether as a result of new information, future events or
circumstances or otherwise.

(See selected financial data on following pages)

HUMAN GENOME SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended September 30, Nine months ended September 30,
2009 2008(a) 2009 2008(a)
(dollars in thousands, except share and per share amounts)
Revenue:
Product sales $ - $ - $ 136,381 $ -
Manufacturing and development services 8,668 - 45,294 -
Research and development collaborative agreements 10,166 11,674 41,117 35,516
Total revenue 18,834 11,674 222,792 35,516
Costs and expenses:
Cost of product sales - - 14,569 -
Cost of manufacturing and development services 7,331 - 17,239 -
Research and development expenses 34,794 54,322 131,379 194,605
General and administrative expenses 14,673 15,662 41,754 46,005
Facility-related exit costs - - 11,434 -
Total costs and expenses (b) 56,798 69,984 216,375 240,610
Income (loss) from operations (37,964 ) (58,310 ) 6,417 (205,094 )
Investment income 3,137 5,989 10,354 18,584
Interest expense (14,409 ) (15,811 ) (43,958 ) (46,966 )
Charge for impaired investments - (6,049 ) (1,250 ) (6,049 )
Gain on extinguishment of debt - - 38,873 -
Gain on sale of long-term equity investment - - 5,259 32,518
Other income (expense) 233 - (295 ) -
Income (loss) before taxes (49,003 ) (74,181 ) 15,400 (207,007 )
Provision for income taxes - - - -
Net income (loss) $ (49,003 ) $ (74,181 ) $ 15,400 $ (207,007 )
Basic net income (loss) per share $ (0.32 ) $ (0.55 ) $ 0.11 $ (1.53 )
Diluted net income (loss) per share $ (0.32 ) $ (0.55 ) $ 0.11 $ (1.53 )
Weighted average shares outstanding, basic 154,513,251 135,486,677 142,104,996 135,371,579
Weighted average shares outstanding, diluted 154,513,251 135,486,677 145,537,847 135,371,579

(a) HGS adopted new guidance related to accounting for convertible debt instruments effective January 1, 2009, which required restatement of prior periods, as applicable.
Research and development expenses, interest expense, net loss and net loss per share as previously reported for the three months ended September 30, 2008 were $54,185,
$9,880, $68,113 and $0.50 per basic and diluted share, respectively. Research and development expenses, interest expense, net loss and net loss per share as previously
reported for the nine months ended September 30, 2008 were $194,194, $29,589, $189,219 and $1.40 per basic and diluted share, respectively.

(b) Includes stock-based compensation expense of $3,226 ($0.02 per basic and diluted share) and $4,644 ($0.03 per basic and diluted share) for the three months ended
September 30, 2009 and 2008, respectively. Includes stock-based compensation expense of $9,547 ($0.07 per basic and diluted share) and $13,948 ($0.10 per basic and
diluted share) for the nine months ended September 30, 2009 and 2008, respectively.

CONSOLIDATED BALANCE SHEET DATA:

As of As of

September 30, 2009
December 31, 2008 (c)
(dollars in thousands)

Cash, cash equivalents and investments (d) $ 697,227 $ 372,939
Total assets (d) 998,857 686,832
Convertible subordinated debt (e) 344,366 417,597
Lease financing 248,118 246,477
Total stockholders` equity (deficit) 281,584 (136,304 )

(c) As noted in footnote (a) above, the adoption of new accounting guidance required restatement of prior periods. Total assets, convertible subordinated debt, and total stockholders` deficit as previously reported were $674,164, $510,000, and $(241,375) as of December 31, 2008.

(d) Includes $69,578 and $69,360 in restricted investments at September 30, 2009 and December 31, 2008, respectively.

(e) Convertible subordinated debt is net of unamortized debt discount of $59,484 and $92,403 as of September 30, 2009 and December 31, 2008, respectively. Convertible subordinated debt at face value is $403,850 and $510,000 as of September 30, 2009 and December 31, 2008, respectively.

Human Genome Sciences
Media Contact:
Jerry Parrott
Vice President, Corporate Communications
301-315-2777
or
Investor Contact:
Peter Vozzo
Senior Director, Investor Relations
301-251-6003

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