ROCKVILLE, Md., Nov. 6 /PRNewswire-FirstCall/ -- Human Genome Sciences,
Inc. (Nasdaq: HGSI) today announced financial results and key developments for
the quarter ended September 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080416/HGSLOGO )
"Albuferon, LymphoStat-B and our oncology program all continued to make
substantial progress during the third quarter. In addition, we entered into
an exclusive agreement with Hospira that will enable HGS to generate revenue
in the coming years by leveraging our process development and manufacturing
capabilities," said H. Thomas Watkins, President and Chief Executive Officer,
HGS. "We are on track to report our first Phase 3 data for Albuferon in
December 2008. We are on track to report our first Phase 3 data for
LymphoStat-B by mid-2009. We have also met every milestone under our contract
to supply ABthrax to the U.S. Strategic National Stockpile. We will soon
complete production, and we are currently awaiting authorization to begin
delivery. However, it now appears that the timing of this authorization is
likely to cause the ABthrax sales we previously expected to recognize in 2008,
to be recognized instead in 2009. We are updating our 2008 financial guidance
accordingly. We continue to believe that ABthrax offers a significant step
forward in the treatment of inhalational anthrax and could play an important
role in strengthening America's arsenal against bioterrorism."
FINANCIAL RESULTS
HGS reported increased revenues for the quarter ended September 30, 2008
of $11.7 million, compared with revenues of $11.1 million for the same period
in 2007. Revenues included $8.9 million recognized from the Albuferon
agreement with Novartis, and $1.6 million in revenue recognized from the
LymphoStat-B agreement with GlaxoSmithKline (GSK).
The Company reported a net loss for the quarter ended September 30, 2008
of $68.1 million ($0.50 per share), compared with a net loss for the second
quarter of 2007 of $67.3 million ($0.50 per share). The net loss for the
quarter includes a charge of $6.0 million ($0.04 per share) for impaired
investments, and a decrease in investment income, partially offset by
decreased research and development expenses related to Phase 3 trials for
Albuferon.
For the first nine months of 2008, HGS reported increased revenues of
$35.6 million, compared with revenues of $29.3 million for the same period of
the previous year. Revenues included $26.6 million recognized from the
Albuferon agreement and $4.9 million recognized from the LymphoStat-B
agreement.
The Company reported a net loss of $189.3 million ($1.40 per share) for
the nine months ended September 30, 2008, compared with a net loss of $169.6
million ($1.26 per share) for the same period of the previous year. The
increased net loss for the nine months was due primarily to increased research
and development and general and administrative expenses, in addition to the
$6.0 million ($0.04 per share) charge for impaired investments, partially
offset by a one-time gain of $32.5 million ($0.24 per share) resulting from
the sale of CoGenesys, Inc. stock to Teva Pharmaceutical Industries, Ltd.
Net cash burn for the nine months ended September 30, 2008 totaled $186.9
million. (For information on the calculation of this non-GAAP financial
measure, visit http://www.hgsi.com/images/Q32008Results/netcashburn.pdf). As
of September 30, 2008, cash and investments totaled $432.8 million, of which
$360.3 million is unrestricted and available for operations. This compares
with cash and investments totaling $603.8 million, of which $532.9 million was
unrestricted and available for operations, as of December 31, 2007.
"Our cash position remains strong and is sufficient to take us through the
availability of Phase 3 data and the filing of marketing applications for our
lead products, while also fueling development of our product pipeline," said
Tim Barabe, Senior Vice President and Chief Financial Officer, HGS. "We are
updating our financial guidance to reflect the change in expected timing of
ABthrax sales."
HIGHLIGHTS OF RECENT PROGRESS
Albuferon(R) on Track for First Phase 3 Data in December 2008
As of July 2008, treatment has been completed in both Phase 3 trials of
Albuferon (albinterferon alfa-2b. HGS remains on track to have the first
Phase 3 data for Albuferon - from the ACHIEVE 2/3 trial - in December 2008.
ACHIEVE 2/3 is being conducted in patients with genotypes 2 and 3 chronic
hepatitis C. Data from ACHIEVE 1, which is being conducted in patients with
genotype 1 chronic hepatitis C, are expected by spring 2009. Assuming success
in Phase 3, global marketing applications are planned by fall 2009. Albuferon
is being developed by HGS and Novartis under an exclusive worldwide
co-development and commercialization agreement entered into in June 2006.
LymphoStat-B(R) on Track for First Phase 3 Data in Mid-2009
As of August 2008, enrollment and initial dosing have been completed in
both of the Phase 3 trials of LymphoStat-B (belimumab) in patients with active
systemic lupus erythematosus (SLE). HGS expects to have the first Phase 3
data for LymphoStat-B by mid-2009, from the BLISS-52 trial, with results from
BLISS-76 anticipated in fall 2009. Assuming positive results from both
studies, HGS expects to file a BLA in the United States in the first half of
2010. LymphoStat-B is being developed by HGS and GlaxoSmithKline (GSK) under a
co-development and commercialization agreement entered into in August 2006.
ABthrax(TM): Awaiting U.S. Government Authorization to Begin Delivery to
Strategic National Stockpile
HGS is currently awaiting U.S. Government authorization to begin delivery
of 20,000 doses of ABthrax (raxibacumab) to the Strategic National Stockpile.
ABthrax is being developed under contract with the Biomedical Advanced
Research and Development Authority (BARDA) of the U.S. Department of Health
and Human Services (HHS). HGS has met every milestone under its contract and
previously expected that authorization would be received and delivery to the
stockpile would commence in fall 2008 - in time to enable HGS to recognize
$100-120 million in ABthrax sales in the fourth quarter of 2008. It now
appears likely that these sales may instead be recognized in 2009, and the
Company is updating its 2008 financial guidance accordingly. HGS is confident
that it will receive $150 million in 2009 for delivery of 20,000 doses of
ABthrax to the U.S. Strategic National Stockpile, with an additional $15
million expected upon FDA licensure.
Enrollment and Initial Dosing Completed in Non-Small Cell Lung Cancer
Trial
In August 2008, HGS completed the enrollment and initial dosing of
patients in a randomized Phase 2 trial of HGS-ETR1 (mapatumumab) in
combination with the chemotherapy agents paclitaxel and carboplatin as first-
line therapy in advanced non-small cell lung cancer (NSCLC). HGS expects
initial data from this study in 2009. The results of the NSCLC trial, along
with the results of ongoing randomized Phase 2 studies of HGS-ETR1 in advanced
hepatocellular cancer and advanced multiple myeloma, will support a decision
on whether to advance HGS-ETR1 to Phase 3 development. A sufficiently positive
result from any one of the trials could also lead to a Phase 3 decision for
that specific indication.
Darapladib Demonstrates Promise in Phase 2; GSK Confirms Plan to Initiate
Phase 3 Development
In September 2008, results of the Integrated Biomarkers and Imaging Study-
2 (IBIS-2) showed that the use of darapladib, in addition to standard of care
treatment, prevented expansion of the necrotic core, a region within coronary
plaque associated with a high risk of rupture. Preventing expansion of the
necrotic core may reduce the risk of recurrent heart attack in patients with
coronary heart disease. The results of the Phase 2 study were presented at
the 2008 Congress of the European Study of Cardiology and simultaneously
published in the American Heart Association's journal, Circulation.
In its third quarter results press release issued October 22, 2008, GSK
said, "These data support our belief that Lp-PLA2 inhibition may be an
important therapeutic target and we plan to begin Phase 3 clinical studies
shortly." Darapladib was discovered by GSK based on HGS technology. HGS will
receive a 10% royalty on worldwide sales of darapladib if it is
commercialized, and has a 20% co-promotion option in North America and Europe.
Process Development and Manufacturing Alliance with Hospira will Enable
HGS to Generate Revenue from Available Manufacturing Capacity
In September 2008, HGS entered into an exclusive agreement with Hospira,
Inc., for manufacturing process development and commercial supply of select
Hospira biopharmaceutical products. In addition to the partnership with
Hospira, HGS entered into a marketing services agreement with Eden Biodesign
Ltd. in August 2008, under which Eden Biodesign will assist HGS in identifying
other clients interested in large-scale manufacturing and late-stage process
development. The Hospira alliance and similar agreements have the potential
to generate $30-60 million in revenue over the next three to four years.
2008 FINANCIAL GUIDANCE
HGS updated the financial guidance provided in late February 2008:
-- HGS expects 2008 net cash burn of $245 million to $265 million.
-- Revenue is expected to increase from $42 million in 2007 to a range of
$45-50 million in 2008.
-- HGS expects cash and investments at year-end 2008 to total $350 million
to $370 million, compared with approximately $604 million at the end of 2007.
HGS is confident that it will receive $150 million in 2009 for delivery of
20,000 doses of ABthrax to the U.S. Strategic National Stockpile, with an
additional $15 million expected upon FDA licensure.
CONFERENCE CALL
HGS management will hold a conference call to discuss this announcement
today at 5 PM Eastern. Investors may listen to the call by dialing 866-550-
6338 or 347-284-6930, passcode 6760480, five to 10 minutes before the start of
the call. A replay of the conference call will be available within a few hours
after the call ends. Investors may listen to the replay by dialing 888-203-
1112 or 719-457-0820, confirmation code 6760480. Today's conference call also
will be webcast and can be accessed at www.hgsi.com. Investors interested in
listening to the live webcast should log on before the conference call begins
to download any software required. Both the audio replay and the archive of
the conference call webcast will remain available for several days.
ABOUT HUMAN GENOME SCIENCES
The mission of HGS is to apply great science and great medicine to bring
innovative drugs to patients with unmet medical needs. The HGS clinical
development pipeline includes novel drugs to treat hepatitis C, lupus,
inhalation anthrax, cancer and other immune-mediated diseases. The Company's
primary focus is rapid progress toward the commercialization of its two key
lead drugs, Albuferon(R) (albinterferon alfa-2b) for hepatitis C and
LymphoStat-B(R) (belimumab) for lupus. Phase 3 clinical trials of both drugs
are ongoing.
ABthrax(TM) (raxibacumab) is in late-stage development for the treatment
of inhalation anthrax, and the Company is awaiting authorization to begin the
delivery of 20,000 doses of ABthrax to the Strategic National Stockpile under
a contract entered into with the U.S. Government in June 2006. HGS also has
three drugs in clinical development for the treatment of cancer, including two
TRAIL receptor antibodies and a small-molecule antagonist of IAP (inhibitor of
apoptosis) proteins. In addition, HGS has substantial financial rights to
certain products in the GSK clinical development pipeline.
For more information about HGS, please visit the Company's web site at
www.hgsi.com. Health professionals and patients interested in clinical trials
of HGS products may inquire via e-mail to clinical_trials@hgsi.com or by
calling HGS at (301) 610-5790, extension 3550.
HGS, Human Genome Sciences, ABthrax, Albuferon and LymphoStat-B are
trademarks of Human Genome Sciences, Inc.
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. The forward-looking
statements are based on Human Genome Sciences' current intent, belief and
expectations. These statements are not guarantees of future performance and
are subject to certain risks and uncertainties that are difficult to predict.
Actual results may differ materially from these forward-looking statements
because of the Company's unproven business model, its dependence on new
technologies, the uncertainty and timing of clinical trials, the Company's
ability to develop and commercialize products, its dependence on collaborators
for services and revenue, its substantial indebtedness and lease obligations,
its changing requirements and costs associated with facilities, intense
competition, the uncertainty of patent and intellectual property protection,
the Company's dependence on key management and key suppliers, the uncertainty
of regulation of products, the impact of future alliances or transactions and
other risks described in the Company's filings with the Securities and
Exchange Commission. In addition, the Company will continue to face risks
related to animal and human testing, to the manufacture of ABthrax and to FDA
concurrence that ABthrax meets the requirements of the ABthrax contract. If
the Company is unable to meet the product requirements associated with the
ABthrax contract, the U.S. government will not be required to reimburse the
Company for the costs incurred or to purchase any ABthrax doses. Existing and
prospective investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of today's date. Human Genome
Sciences undertakes no obligation to update or revise the information
contained in this announcement whether as a result of new information, future
events or circumstances or otherwise.
HUMAN GENOME SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
2008 2007 2008 2007
(dollars in thousands, except share and per share amounts)
Revenue - R&D contracts $11,674 $11,056 $35,516 $29,326
Costs and expenses:
Research and
development(a) 54,185 61,869 194,194 158,433
General and
administrative(b) 15,662 14,621 46,005 39,749
Lease termination and
restructuring credits - - - (3,673)
Total costs and
expenses 69,847 76,490 240,199 194,509
Income (loss) from
operations (58,173) (65,434) (204,683) (165,183)
Net investment income
(expense) (3,891) (1,823) (11,005) (4,372)
Charge for impaired
investments (6,049) - (6,049) -
Gain on sale of long-term
equity investment - - 32,518 -
Income (loss) before taxes (68,113) (67,257) (189,219) (169,555)
Provision for income taxes - - - -
Net income (loss) $(68,113) $(67,257) $(189,219) $(169,555)
Net income (loss) per share,
basic and diluted $(0.50) $(0.50) $(1.40) $(1.26)
Weighted average shares
outstanding, basic &
diluted 135,486,677 134,394,174 135,371,579 134,220,053
(a) Includes stock-based compensation expense of $2,603 ($0.02 per share)
and $3,474 ($0.03 per share) for the three months ended September 30, 2008 and
2007, respectively. Includes stock-based compensation expense of $7,837
($0.06 per share) and $9,824 ($0.07 per share) for the nine months ended
September 30, 2008 and 2007, respectively.
(b) Includes stock-based compensation expense of $2,041 ($0.02 per share)
and $2,261 ($0.02 per share) for the three months ended September 30, 2008 and
2007, respectively. Includes stock-based compensation expense of $6,111
($0.05 per share) and $6,606 ($0.05 per share) for the nine months ended
September 30, 2008 and 2007, respectively.
CONSOLIDATED BALANCE SHEET DATA:
As of As of
September 30, 2008 December 31, 2007
(dollars in thousands)
Cash, cash equivalents and investments (c) $432,833 $603,840
Total assets (c) 747,408 949,105
Total debt and lease financing 755,908 754,099
Total stockholders' equity (deficit) (198,980) (11,902)
(c) Includes $72,562 and $70,931 in restricted investments at September
30, 2008 and December 31, 2007, respectively.
