Does IMMU's success mean HGSI's failure? (Updated) Print E-mail
By M.E.Garza   
Friday, 28 August 2009 03:46

Immunomedics got good news on Thursday... Really BIG news.
At the same instant, it seems, Human Genome Sciences may have gotten some really bad news.


Successful early data in treating lupus from Immunomedics (NASDAQ:IMMU) epratuzumab may actually bode well for HGSI after all according to a report from Dow Jones.

HGSI's BENLYSTA, which is further along in development, has a surprise in July but some risk remains in a key second study coming in November.

Leerink Swann, recognized as a leading investment bank to both emerging and established healthcare companies, is encouraged because epratuzumab's results support the notion
that a well designed trial can demonstrate the effects of a drug in lupus, which has proved tough in studies because of varying symptoms and inconsistant activity.

HGSI shares closed up to $19.80  +0.84 (+4.43%) and IMMU's shares closed down to $ 5.77  -1.07 (-15.64%) at the end of trading on Friday.
If you're not familiar with Immunomedics, they're a New Jersey-based biopharmaceutical company primarily focused on the development of monoclonal, antibody-based products for the targeted treatment of cancer, autoimmune and other serious diseases.

Along with their partner and co-developer, Belgium drugmaker UCB,  the company announced a mid-stage trial comparing their treatment to placebo for treating lupus over 12 weeks showed "meaningful treatment effect."  Shares soared on the news, as lupus is considered a notoriously hard-to-treat autoimmune disease and could be a huge market.

However, Immunomedics' good news had an almost immediate negative impact on shares of Human Genome Sciences (NASDAQ:HGSI) which has also been developing a treatment for lupus-- Benlysta. 

Shares of Human Genome Sciences ended the day down at $18.96 -1.54 (-7.51%).

HGSI's shares had been rising the last two sessions because of rumors about a possible takeover by GlaxoSmithKline PLC. The same company that has been working with HGSI on the development and clinical trials of Benlysta.

IMMU's lupus drug performed well in its second stage of human studies, giving a nearly 25 percent treatment advantage over placebo by the end of 12 weeks. That trial, conducted on 227 lupus patients, sets the stage for the two companies to plan their third phase of human tests on the drug, called epratuzumab and still years away from potential approval.

Those results appeared to best HGSI's, but a closer look shows that HGSI used a different measurement than Immunomedics. Investors pushed the panic button after rumors of Benlysta’s effectiveness came into question. HGSI's unexpectedly positive third phase of trials, 57.6 percent of patients responded well to Benlysta versus 43.6 percent for placebo.

Both drugs appear to targeting and weaken cell activity that helps produce the proteins that encourage a person’s immune system to start attacking itself- thereby causing lupus.

HGSI's Benlysta was projected by analysts to draw anywhere from $1.5 billion to $3 billion in peak annual sales revenue for Human Genome Sciences if it got approved by federal regulators, but this deveopment has definitely affected those estimates.

HGSI is still a very attractive company and definitely not a one trick pony and both these drugs are still a few steps away from FDA approval, but one has to wonder if GlaxoSmithKline PLC would still be as willing to pay the rumored $30 per share for HGSI.

For what it's worth, HGSI's shares started to rise again in after hours trading- the final tick put the price right at the same price level where shares were right before those takeover rumors hit days ago.



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