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Human Genome Sciences - Racing To Cure Lupus

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It has been over 50 years since the FDA approved a drug for lupus, a chronic autoimmune disease, in which the body's immune system attacks its own cells and tissues, damaging the organs. The disease affects various body parts, including joints, skin, blood, and kidneys.

Developing a drug for lupus remains challenging and according to researchers, one drawback in lupus drug development is that the drug may prove beneficial for one organ but may turn out to damage another.

Genelabs Technologies' Prestara, Aspreva's CellCept, La Jolla Pharmaceutical Co's (LJPC) Riquent and Biogen Idec Inc.'s (BIIB) cancer drug Rituxan have all met with disappointment in lupus studies. This leaves Human Genome Sciences Inc. (HGSI) at the forefront of gaining approval to market a lupus drug IF trial results pan out the way they are expected.

LymphoStat-B (belimumab), being developed by Human Genome Sciences and GlaxoSmithKline plc (GSK) under a co-development and commercialization agreement signed in August 2006, is under phase III testing for lupus. The company remains on track to release the results of its two late-stage trials of LymphoStat-B in July and November 2009.

LymphoStat-B is a human monoclonal antibody that specifically recognizes and inhibits the biological activity of the naturally occurring protein B-lymphocyte stimulator, or BLyS that was discovered by Human Genome Sciences. In lupus, rheumatoid arthritis and certain other autoimmune diseases, elevated levels of BLyS are believed to contribute to the production of antibodies that attack and destroy the body's own healthy tissues.

On June 11, at the 2009 Congress of the European League Against Rheumatism, or EULAR, Human Genome Sciences will be giving a poster presentation titled "4-year experience of Belimumab, a fully human monoclonal antibody, in the treatment of Systemic Lupus Erythematosus, or SLE".

Turning Adversity Into Opportunity

The phase II trial results of LymphoStat-B released in October 2005 proved disappointing as the drug failed to achieve the primary efficacy goal of significantly delaying flare-ups or lessening symptoms of the disease.

The phase II study was a randomized, double-blind, placebo-controlled, dose-ranging superiority trial to evaluate the safety, tolerability and efficacy of LymphoStat-B plus standard of care, versus placebo plus standard of care. Participants were randomized to receive one of three different doses of LymphoStat-B or placebo (1, 4 or 10 mg/kg) administered intravenously over a 52-week treatment period, in addition to standard-of-care therapy.

Nonsteroidal anti-inflammatory drugs, anti-malarial drug Hydroxycholorquine, and synthetic corticosteroid drug Prednisone are approved by the FDA to treat lupus. Organ transplant drugs Azathioprine and Mycophenolate mofetil, rheumatoid arthritis and non-Hodgkins lymphoma drug, Rituxan, and cancer drug Methotrexate are some of the drugs used for off-label treatment of lupus.

Though LymphoStat-B failed to achieve the primary efficacy goal, it significantly reduced the signs and symptoms of the disease at 52 weeks in a subgroup of patients who were seropositive, which represented 75% of the 449 patients enrolled in the study. Results also showed that LymphoStat-B was well tolerated with no clinically significant differences from placebo in adverse events.

The original endpoint of the trial was an improvement in SELENA SLEDAI criteria alone, which the drug failed to meet in 2005. (SELENA SLEDAI score is a measure of disease activity and the score ranges between 0 and 105, with higher scores representing increased disease activity).

The investigators then applied the new SLE Responder Index criteria, a new validated measure of lupus activity, to the data and continued the study to gather additional data. In the 3-year extension phase of a phase II study, roughly half of all patients with serologically active SLE had a significant improvement in symptoms as measured by the SLE Responder Index.

In consultation with the FDA, Human Genome Sciences designed the phase III trials of LymphoStat-B, which included a primary efficacy endpoint that emerged directly from the results of its Phase II clinical trial. Each of the two phase III studies enrolled 810 patients and as mentioned, results of the studies are expected in July and November 2009.

LymphoStat-B was assigned a fast-track product designation by the FDA for its potential use in treating SLE in April 2003.

Market Potential

An estimated 1.5 million Americans and at least five million people worldwide are said to suffer from lupus. The federal government, the pharmaceutical and biotechnology industries are the largest sources of funding for lupus research.

The company believes that LymphoStat-B could become a breakthrough treatment for Systemic Lupus Erythematosus, or SLE, if the positive results of the phase II trials are confirmed in Phase III also.

Late-stage Drug Candidates

In addition to LymphoStat-B, Human Genome Sciences has two other drugs in advanced stage - Albuferon for hepatitis C and ABthrax, which offers a new way to address the threat of inhalation anthrax, being developed under a contract with the U.S. Government.

Albuferon is being developed in partnership with Novartis AG (NVS). The company has completed two Phase III clinical trials of Albuferon -- ACHIEVE 1, which was conducted in patients with genotype 1 chronic hepatitis C, and ACHIEVE 2/3, which was conducted in patients with genotypes 2 and 3 chronic hepatitis C. In both the phase III trials, it has been proved that with half as many injections, Albuferon met its primary efficacy endpoint by achieving a rate of sustained virologic response comparable to Swiss drug giant Roche's Pegasys, which is the market leader worldwide in hepatitis C therapy.

In the second phase III trial dubbed ACHIEVE 1, patients were administered 900-micrograms of Albuferon once every two weeks or Pegasys once weekly with all patients receiving daily oral Ribavirin concomitantly.

The results of the late-stage trial released on March 9, 2009 showed that in the Albuferon treatment arm, 48.2% of patients achieved sustained virologic response, compared to 51% in the Pegasys arm.

The biweekly dosing strategy achieved by Albuferon, which according to Human Genome Sciences is "a very big benefit", failed to impress investors and analysts because of the numerically inferior efficacy. Following the release of the results, the stock got beaten down -- losing 68% of its value on a single day to close at $0.55 per share.

On a conference call to analysts, Barry Labinger, executive vice president and chief commercial officer of Human Genome Sciences said, "Over and over and over, we hear if you can give us a drug that does what Pegasys does with half the injections, that's enough to get leading market share." The company plans to file global marketing applications for Albuferon in fall 2009.

On May 21, the company submitted a Biologics License Application to the FDA for ABthrax. In the first quarter of 2009, under the contract, the company achieved its first product sales by initiating the delivery of 20,000 doses of ABthrax to the U.S. Strategic National Stockpile for emergency use in the treatment of inhalation anthrax. Upon FDA approval of ABthrax, the company will receive $10 million from the U.S. Government.

Human Genome Sciences also has substantial financial rights to two drugs that GlaxoSmithKline has advanced to late-stage development. In December 2008, GSK initiated the first Phase III clinical trial of Darapladib for chronic coronary heart disease. Darapladib was discovered by GSK based on Human Genome Sciences technology. A second large Phase III trial of Darapladib is expected to begin in late 2009. In February 2009, GSK initiated a Phase III clinical trial of Syncria in the long-term treatment of type 2 diabetes mellitus. Syncria was created using Human Genome Sciences' proprietary albumin-fusion technology, and was licensed to GSK in 2004.

Mid-stage pipeline

Human Genome Sciences has several novel drugs in earlier stages of clinical development for the treatment of cancer, led by its TRAIL receptor antibody HGS-ETR1 and a small-molecule antagonist of IAP (inhibitor of apoptosis) proteins.

Financial Scorecard - Worth a look

During the first-quarter ended March 31, 2009 Human Genome Sciences posted a profit of $129.8 million or $0.85 per share, compared to a loss of $52.72 million or $0.39 per share in the year-ago period. The quarterly revenue was $177.3 million, up from $12.3 million in the year-ago period. Of the total revenue generated in the first-quarter of fiscal 2009, $153.8 million or 87% was derived from ABthrax anthrax treatment sales to the U.S. government. However, for the remainder of 2009, ABthrax product sales under the current contract are expected to be significantly lower.

Credit Profile - Satisfactory

As of March 31, 2009, cash and investments totaled $396.9 million, compared to $372.9 million as of the end of December 31, 2008. The company has sufficient cash to take its late-stage products through the regulatory approval process of filing of marketing applications and launch. The company has also reduced its long-term debt by more than 20%.

Closing Thoughts

Lupus is a tough disease and tougher is the market for lupus drugs, given the string of failures. But, if the positive mid-stage trial results are confirmed in Phase III, LymphoStat-B has a decent chance of success and the company believes the drug could become a breakthrough treatment for lupus. Stay tuned.

HGSI, which has been trading in the range of $0.45 - $8 for the past twelve months, is currently up 5.14% at $2.25 on a volume of 1.82 million shares.

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