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Human Genome Sciences Inc. Reports Operating Results (10-K)

February 24, 2011 | About:
10qk

10qk

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Human Genome Sciences Inc. (HGSI) filed Annual Report for the period ended 2010-12-31.

Human Genome Sciences Inc. has a market cap of $4.75 billion; its shares were traded at around $25.15 with and P/S ratio of 17.2. Hedge Fund Gurus that owns HGSI: Steven Cohen of SAC Capital Advisors, Louis Moore Bacon of Moore Capital Management, LP, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns HGSI: RS Investment Management.

Highlight of Business Operations:

We continue to deliver raxibacumab to the U.S. Strategic National Stockpile (SNS) for emergency use in treating inhalation anthrax. In 2009, we completed the delivery of 20,001 doses of raxibacumab to the SNS under an initial order and as a result recognized $162.5 million in product sales and manufacturing and development services revenue. In July 2009, the U.S. Government (USG) exercised its option to purchase 45,000 additional doses of raxibacumab, with delivery to be completed over a three-year period. HGS expects to receive approximately $142.0 million from this second order as deliveries are completed, $64.9 million of which has been recognized as revenue through December 31, 2010. In May 2009, we submitted a Biologics License Application (BLA) to the FDA for raxibacumab for the treatment of inhalation anthrax. We received a Complete Response Letter in November 2009, and we will continue to work closely with the FDA to obtain approval. HGS will receive approximately $20.0 million from the USG upon FDA licensure of raxibacumab.

We are developing raxibacumab under a contract entered into in 2006 with BARDA. The U.S. Government is currently our only customer for raxibacumab and has the right to terminate our contract for convenience at any time. In 2010, HGS continued delivery of raxibacumab to the U.S. Strategic National Stockpile. In July 2009, the U.S. Government exercised its option to purchase 45,000 additional doses of raxibacumab for the Stockpile for emergency use in treating inhalation anthrax, with delivery to be completed over a three-year period. HGS expects to receive approximately $142.0 million from this second order as deliveries are completed. In 2010, we recognized $47.2 million in raxibacumab product sales revenue. Also under our contract, HGS submitted a BLA to the FDA for raxibacumab for the treatment of inhalation anthrax in May 2009. We received a Complete Response Letter in November 2009, and we will continue to work closely with the FDA to obtain approval. HGS will receive approximately $20.0 million from the U.S. Government upon FDA licensure of raxibacumab. Raxibacumab revenue accounted for 31% and 65% of our total revenue for 2010 and 2009, respectively.

Albiglutide is a biological product generated from the fusion of human albumin and modified human GLP-1 peptide, and is designed to act throughout the body to help maintain normal blood-sugar levels and to control appetite. GSK currently has eight Phase 3 trials in progress to evaluate the long-term efficacy, safety and tolerability of albiglutide as monotherapy and add-on therapy for patients with type 2 diabetes mellitus. Albiglutide was created by HGS using its proprietary albumin-fusion technology, and the product was licensed to GSK in 2004. We are entitled to fees and milestone payments that could amount to as much as $183.0 million including $33.0 million received to date in addition to single-digit royalties on worldwide sales if albiglutide is commercialized.

expenses were $196.4 million, $173.7 million and $243.3 million for 2010, 2009, and 2008, respectively. These expenses are net of amounts reimbursed by our collaboration partners.

BENLYSTA. In 2006, we entered into an agreement with GSK for the co-development and commercialization of BENLYSTA. GSK is a world leader that brings global pharmaceutical development and marketing capabilities to the BENLYSTA program. Under the BENLYSTA agreement, we and GSK share Phase 3 and 4 development costs, sales and marketing expenses, and profits equally. HGS has primary responsibility for bulk manufacturing. We have received an execution fee of $24.0 million under this agreement and have recognized this payment ratably over the development period. We recognized revenues of $3.4 million in 2010 and $4.7 million in 2009. The BENLYSTA agreement includes cost-sharing provisions under which we and GSK share clinical development costs. We recorded cost reimbursement from GSK under this provision of $62.0 million in 2010 and $43.1 million in 2009, which was reflected as a reduction in expenses. This agreement will expire three years after the later of (i) the expiration date of certain patent rights related to BENLYSTA and (ii) a period of 10 years after the first commercial sale of BENLYSTA. These certain patent rights are expected to expire by 2023, with the potential for later expiration that may result from any issuance of additional patent and/or patent term extensions. GSK may terminate the agreement if (i) upon the basis of competent scientific evidence or data regarding commercial potential, GSK determines BENLYSTA does not merit incurring additional development or marketing expenses or (ii) BENLYSTA is not approved by the FDA or EMA. In addition, either party may terminate if the other party commits a material breach of the agreement or if the other party is bankrupt or insolvent.

Albiglutide. In February 2009, GSK initiated a Phase 3 clinical trial program to evaluate the efficacy, safety and tolerability of albiglutide in the long-term treatment of type 2 diabetes mellitus. Albiglutide was created by HGS using its proprietary albumin-fusion technology, and the product was licensed to GSK in 2004. HGS is entitled to fees and milestone payments that could amount to as much as $183.0 million including $33.0 million received to date. We are also entitled to single-digit royalties on worldwide sales if albiglutide is commercialized.

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