Zacks_Analysts' Blog : Human Genome Evenly Poised - Analyst Blog

We are maintaining our Neutral recommendation on Human Genome Sciences Inc. (HGSI) with a target price of $16.00.

Human Genome, founded in 1992 and based in Rockville, Maryland, is a biopharmaceutical company. The US launch of Benlysta earlier in the year for treating patients suffering from systemic lupus erythematosus (SLE) is a huge positive for Human Genome.

The subsequent approvals of the drug in the European Union (EU) and Canada are also encouraging. The drug, which has blockbuster potential, has been co-developed with GlaxoSmithKline (GSK). Benlysta is the first new lupus drug to be cleared in more than 50 years.

Lupus is a potentially fatal autoimmune disease that is extremely difficult to treat. We believe that the approval of this potentially blockbuster candidate will drive Human Genome to profitability.

Benlysta is also approved in the EU and under review in many other countries such as Australia, Brazil, Colombia, Israel, the Philippines, Russia, Singapore, Switzerland and Taiwan. We believe that the approval of Benlysta in additional territories would spur top-line growth at Human Genome.

However, Human Genome has had its share of pipeline setbacks. Human Genome’s hepatitis C candidate, Zalbin (albinterferon alfa-2b) met a different fate. In October 2010, the FDA refused to approve the candidate at the current dosage and issued a complete response letter (CRL). Following the receipt of the CRL, Human Genome and partner Novartis (NVS) decided against continuing with the development of the candidate.

Moreover, in May 2009, Human Genome submitted a Biologics License Application (BLA) to the FDA for pipeline candidate ABthrax for treating inhalation anthrax. The agency issued a CRL to the company in November 2009. Currently, Human Genome is working with the FDA to obtain approval for the candidate.

Even though Benlysta’s launch in the US and the drug’s subsequent approvals in additional markets have given a huge boost to Human Genome, we prefer to remain on the sidelines until visibility is obtained regarding Benlysta’s commercial prospects. Consequently, we retain our Neutral stance on the stock.