* Human Genome drug Benlysta succeeds in clinical trial
* Success of drug shocks previously skeptical Wall St
* Stock price jumps 239 pct to $11.25
* Drug filing expected with FDA by early next year
(Updates with background, detail, analysis)
By Toni Clarke
BOSTON, July 20 Human Genome Sciences Inc
HGSI.O said on Monday that its experimental lupus drug
succeeded in a late-stage clinical trial, shocking many who had
written the product off, and sending the stock up more than 200
The results showed patients who took the drug, Benlysta,
demonstrated a statistically significant improvement in the
symptoms of their disease compared with those taking a placebo.
"This is a classic binary event in biotech," said Ian
Somaiya, an analyst at Thomas Weisel Partners. "You have a
disease that's difficult to treat, nothing's ever worked and
you have a unique scenario in that the trial was actually
The outcome makes Human Genome the latest in a series of
biotech companies to have caught investors flat-footed,
reinforcing the volatile nature of a sector where success and
failure depend largely on clinical trial data and on decisions
by the U.S. Food and Drug Administration.
Sometimes, reading the FDA is like trying to read smoke
signals. Earlier this year, the agency astounded Wall Street by
approving Vanda Pharmaceuticals Inc's (VNDA.O) schizophrenia
drug, pulling the company back from the brink of collapse after
even its most bullish supporters had thrown in the towel.
A wrong-way bet on a single trial can leave investors
As of Friday, about 10 percent of Human Genome's publicly
traded shares, or 13 million, had been sold short, meaning
those investors were betting the trial would fail.
On the other hand, for those who held on, the rewards were
As of March 31, when Human Genome's shares closed at 83
cents a share, the company's four biggest sharesholders --
Taube Hodson Stonex Partners, Fidelity, Barclays Global
Investors and T. Rowe Price -- held about 23 percent of the
company's outstanding shares, according to SEC filings.
Those who held their shares through this morning's opening,
generated a return of 1,200 percent.
"It really does take a healthcare specialist and devoted
biotech investor to get involved in these names," said Thomas
The odds of Human Genome's drug succeeding were, according
to most analysts, low. Results from an earlier trial had been
disappointing and other drugs, including Biogen Idec Inc
(BIIB.O) and Roche Holding AG's ROG.VX Rituxan, and La Jolla
Pharmaceutical Co's (LJPC.O) Riquent -- both failed in
late-stage lupus trials.
Yet, results of Human Genome's 52-week trial -- the first
of two requested by U.S. regulators -- showed 57.6 percent of
patients taking a high dose of Benlysta experienced an
improvement in their symptoms, compared with 43.6 percent who
took a placebo.
"Benlysta could be the first true disease-modifying therapy
for lupus patients -- a blockbuster opportunity," said Joseph
Schwartz, an analyst at Leerink Swann.
Of patients who took a low dose of the drug, which is
administered once a month by IV infusion, 51.7 percent showed
improvement in their symptoms, a figure that was also
statistically significant. [ID:N201399]
Benlysta's success moved the shares of other companies
trying to develop lupus drugs, such as Immunomedics Inc
(IMMU.O) and ZymoGenetics Inc ZGEN.O.
Shares of Immunomedics rose 12.5 percent to $3.43, while
shares of ZymoGenetics, which is developing a drug in
combination with Merck Serono, a unit of Germany's Merck KGaA
(MRCG.DE), rose more than 13 percent to $4.94.
Lupus is a complex disease that causes the immune system to
attack the body's own tissue and organs, including the joints,
kidneys, heart, lungs, brain, blood or skin. Symptoms include
achy joints, fever, arthritis, kidney damage, chest pain and
Data from the 867-person trial, known as BLISS-52, take the
company one step closer to being the first to have a new lupus
drug approved in 50 years. Multiple drugs are approved for
other indications and used to treat lupus, but none has been
approved specifically for the disease in decades.
The disease affects an estimated 1.5 million people in the
United States and 5 million worldwide, according to the Lupus
Foundation of America. [ID:N2083796]
Roughly 150,000 patients in the United States stand to
benefit from the drug, if it is approved, according to Thomas
Watkins, the company's chief executive.
While that may represent a small portion of the total
number affected by lupus, it is nonetheless an important
advance, and Watkins said that from a corporate perspective, it
represents a substantial revenue opportunity.
"A drug like this, with this kind of promise, has the
potential to be a blockbuster drug," he said.
Drugs are typically referred to as blockbusters when they
generate $1 billion or more in revenue. Profit would be split
between Human Genome and its partner, GlaxoSmithKline Plc
The second of the two late-stage trials is due to be
reported in November and the company aims to file for approval
of the drug by early 2010, according to David Stump, the
company's head of research and development.
If the agency gives it a priority review, the drug could be
on the market by the end of next year. Priority review is given
to drugs that meet unmet medical needs. Without priority
review, it could be on the market by early 2011.
Human Genome shares soared to an intra-day high of $11.29
on Nasdaq. Glaxo shares were up 2.5 percent in London.
(Additional reporting by Bill Berkrot in New York and Esha
Dey in Bangalore)
(Reporting by Toni Clarke; Editing by Richard Chang, Bernard
Orr and Lisa Von Ahn)