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Human Genome Upped to Neutral - Analyst Blog

We are upgrading our recommendation on Human Genome Sciences, Inc . ( HGSI ) to Neutral from Underperform since we believe that the sales of the company's potential blockbuster lupus drug Benlysta will pick up in the coming quarters, thereby strengthening the top line.

Benlysta performed disappointingly in the third quarter of 2011, recording sales of only $18.8 million. Benlysta has been co-developed by Human Genome with GlaxoSmithKline ( GSK ). We note that the third quarter of 2011 was Benlysta's first full quarter in the US market.

We remind investors that Benlysta was cleared by the US Food and Drug Administration (FDA) in March 2011. The drug, which costs $35,000 annually, was subsequently launched in the US. The drug has also hit the Canadian market.

The lupus drug has been launched in several European nations, including Germany, Austria, Denmark, Finland, Hungary, Norway and Sweden, following the European Commission's clearance in July this year. Benlysta is under review in many other markets. Human Genome is also developing Benlysta for other indications.

Human Genome is developing a subcutaneous formulation of the candidate and also evaluating in vasculitis and post-renal transplant. Approval for additional indications would boost the company's top line further. Management is leaving no stone unturned to make Benlysta a success.

The company is working towards increasing the number of doctors who prescribe the drug through its sales force. Moreover, the J-code becomes effective for Benlysta from the beginning of 2012. J code is a product specific billing code which should ease the reimbursement process.

The company is also making efforts to develop its other pipeline candidates.We note that Human Genome possesses substantial financial rights to multiple candidates from the pipeline of GlaxoSmithKline notably darapladib and Syncria. We believe that the successful development of the candidates would generate substantial revenues for Human Genome.

These encouraging developments have caused us to revert to a Neutral stance on the stock.

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HUMAN GENOME ( HGSI ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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