UPDATE 3-Human Genome lupus drug success is classic biotech

* 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 (Reuters) - 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 percent.

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 successful."

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 impaled.

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 spectacular.

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 Weisel's Somaiya.