Usually confirmatory phase 3 trials don't cause 40% gains
in a stock. Especially after the first one resulted in a
crazy500%-plus gain.
Then again, most drugs don't treat lupus.
There was still a lot of skepticism --
mine included-- going into today's data release for
Human Genome Sciences ' (Nasdaq: HGSI) lupus
treatment Benlysta. The drug
passedits first phase 3 trial, which would normally give
investors a lot of confidence that Benlysta would work in
this trial, too. But that incremental addition in confidence
doesn't bring you very high when your confidence in the drug
started out so low; lupus is one tricky disease to treat.
Turns out the skeptics had nothing to worry about. In the
second trial, Benlysta showed a statistically significant
improvement in symptoms compared with the placebo. The
results weren't quite as good as the first trial -- including
missing three secondary goals at the highest dose -- but
having two trials that passed their primary test should
satisfy the regulators. It looks like Benlysta will be the
first drug approved specifically to treat lupus in 50 years,
succeeding where drugs from
Biogen Idec (Nasdaq: BIIB),
Teva Pharmaceutical (Nasdaq: TEVA),
BioMarin Pharmaceutical (Nasdaq: BMRN), and
others have failed.
So is Human Genome worth buying now that the fear of
failure has subsided? Unfortunately, the
awesome biotech returnshave passed because much of the
potential sales are already priced into the company, which
now has a market cap of more than $3 billion.
Human Genome receives revenue for sporadic sales of its
anthrax treatment and has a hepatitis C drug candidate,
Zalbin, that's expected to hit regulators' desks this
quarter. The lackluster trial results from Zalbin, which is
partnered with
Novartis (NYSE: NVS), should be good enough
to gain Zalbin marketing approval, but will make it difficult
for the drug to compete against current offerings from Roche
and
Schering-Plough -- soon to be
Merck (NYSE: MRK).
That leaves most of the company's value tied up in
Benlysta. Human Genome and marketing partner
GlaxoSmithKline (NYSE: GSK) expect to file
marketing applications in the first half of next year, which
puts an approval about a year away.
Even if Benlysta is the blockbuster everyone expects it to
be, that's an awfully long time to wait with so much of the
revenue already priced in.
This article was originally published as
Finally Convinced? Benlysta Works!on
Fool.com
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