Attached files

file filename
8-K - FORM 8-K - HUMAN GENOME SCIENCES INCc13105e8vk.htm
Exhibit 99
(HUMAN GENOME  LOGO)
PRESS RELEASE
     
Media Contacts:
  Investor Contacts:
Jerry Parrott
  Claudine Prowse, Ph.D.
Vice President, Corporate Communications
  Executive Director, Investor Relations
301-315-2777
  301-315-1785
 
   
Susannah Budington
  Peter Vozzo
Director, Corporate Public Relations
  Senior Director, Investor Relations
301-545-1062
  301-251-6003
HUMAN GENOME SCIENCES ANNOUNCES FOURTH-QUARTER AND FULL-YEAR FINANCIAL RESULTS AND KEY DEVELOPMENTS
    By a 13-2 vote in November 2010, the FDA Arthritis Advisory Committee recommended approval of BENLYSTA® for the treatment of systemic lupus erythematosus; the FDA decision is expected by March 10, 2011
 
    A decision from the European Medicines Agency on the BENLYSTA Marketing Authorization Application submitted in June 2010 is anticipated in the second half of 2011
 
    HGS ended 2010 with $933 million in cash and investments
ROCKVILLE, Maryland — February 24, 2011 — Human Genome Sciences, Inc. (Nasdaq: HGSI) today announced financial results for the quarter and full year ended December 31, 2010, and provided highlights of recent key developments.
“2010 was a pivotal year in Human Genome Sciences’ progress toward becoming a fully commercial organization with sustainable revenues and growth,” said H. Thomas Watkins, President and Chief Executive Officer. “The FDA Arthritis Advisory Committee recommended by a vote of 13-2 in November that FDA approve BENLYSTA for the treatment of systemic lupus. We now look forward to having the FDA’s decision by March 10, 2011. If the decision is favorable, BENLYSTA would be the first new drug approved for systemic lupus in more than fifty years for patients and those who treat them. The approval of BENLYSTA would open the door to a promising future.”

 

1


 

FINANCIAL RESULTS
HGS reported revenues of $157.4 million for the year ended December 31, 2010, compared with revenues of $275.7 million for 2009. Revenues for 2010 included $82.8 million recognized from the ZALBIN™ agreement with Novartis, including recognition of all remaining deferred revenue for payments previously received under the agreement; $47.2 million recognized from the sale and delivery of raxibacumab to the U.S. Strategic National Stockpile; and $21.3 million recognized from manufacturing and development services other than raxibacumab. The decrease in revenues for 2010 primarily reflected the higher level of raxibacumab revenue recognized in 2009, $180.2 million, partially offset by increased recognition of revenue from the ZALBIN agreement in 2010.
The Company reported a net loss for 2010 of $233.2 million ($1.24 per share), compared with net income of $5.7 million ($0.04 per share) for 2009. The change from net income to net loss was primarily due to lower product sales and manufacturing and development services revenue in 2010 versus 2009, in addition to a gain in 2009 of $38.9 million on the extinguishment of debt, partially offset by increased revenue recognized from the ZALBIN agreement with Novartis in 2010.
As of December 31, 2010, cash and investments totaled $933.4 million, of which $853.9 million was unrestricted and available for operations. This compares with cash and investments totaling $1.2 billion as of December 31, 2009, of which $1.1 billion was unrestricted and available for operations.
For the fourth quarter ended December 31, 2010, HGS reported revenues of $21.3 million, compared with revenues of $53.0 million for the same period in 2009. Fourth quarter 2010 revenues primarily included $13.2 million recognized from sales and deliveries of raxibacumab to the U.S. Strategic National Stockpile and $7.5 million recognized from manufacturing and development services other than raxibacumab.
The Company’s net loss for the quarter ended December 31, 2010 increased to $87.6 million ($0.46 per share), compared with a net loss of $9.7 million ($0.06 per share) for the fourth quarter of 2009. The increase in net loss was primarily due to the decrease described above in raxibacumab revenue, decreased ZALBIN revenue and increased expenses related to the potential launch of BENLYSTA.

 

2


 

“With more than $933 million in cash and investments, HGS has the financial strength required to support a world-class launch of BENLYSTA while continuing to advance and broaden our research and development pipeline,” said David Southwell, Executive Vice President and Chief Financial Officer.
HIGHLIGHTS OF RECENT PROGRESS
BENLYSTA®: FDA Approval Recommended by Advisory Committee; PDUFA Target Date for FDA Decision Extended to March 10, 2011; On Track for Launch Assuming Approval
In November 2010, the FDA Arthritis Advisory Committee voted 13-2 to recommend that the FDA approve BENLYSTA (belimumab) for the treatment of autoantibody-positive patients with active SLE who are receiving standard therapy. In December 2010, the FDA extended the Prescription Drug User Fee Act (PDUFA) target date for the priority review of BENLYSTA to March 10, 2011. HGS and GSK expect to receive a decision on European approval of BENLYSTA in the second half of 2011, and GSK also has submitted regulatory applications in Canada, Australia, Switzerland, Russia, Brazil and The Philippines. No new drug for lupus has been approved by regulatory authorities in more than 50 years. BENLYSTA is being developed by HGS and GSK under a co-development and commercialization agreement entered into in 2006.
In 2010, HGS substantially increased its investment in the commercial infrastructure, expertise and product manufacture required to launch and support BENLYSTA, assuming it receives regulatory approval as anticipated. In the U.S., the combined HGS and GSK team, including a U.S. sales force of approximately 150, will work closely together following approval to communicate the appropriate use of BENLYSTA to rheumatologists and other stakeholders. HGS and GSK also plan to support patients with reimbursement and access programs. In Europe, HGS is building its own commercialization team to work with GSK, with HGS headquarters in Switzerland and local organizations in Germany, France and Spain. Elsewhere outside the U.S., GSK will lead local implementation, with HGS sharing costs and profits equally with GSK.
During 2010, HGS also continued to manufacture BENLYSTA and build product inventory to meet global demand for BENLYSTA upon receiving regulatory approvals. HGS believes it currently has inventory available to meet global market needs for at least one year, and its large-scale manufacturing facility has sufficient capacity to provide worldwide supply for the first two to three years following launch. In July 2010, HGS announced an agreement with Lonza that will support future sales of BENLYSTA — eventually tripling capacity — with production expected to come on line in 2012.

 

3


 

Raxibacumab: Deliveries to U.S. Strategic National Stockpile Continued under Second BARDA Order
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 million from this second award as deliveries are completed, including $64.9 million received through December 31, 2010. Raxibacumab is being developed under a contract entered into in 2006 with the Biomedical Advanced Research and Development Authority (BARDA) of the Office of the Assistant Secretary for Preparedness and Response (ASPR), U.S. Department of Health and Human Services (HHS).
FINANCIAL GUIDANCE
HGS expects cash and investments at year-end 2011 to total between $550 million and $650 million. Cash and investments were $933.4 million at year-end 2010.
ABOUT HUMAN GENOME SCIENCES
Human Genome Sciences exists to place new therapies into the hands of those battling serious disease.
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 medinfo@hgsi.com or by calling HGS at (877) 822-8472. HGS, Human Genome Sciences, BENLYSTA and ZALBIN are trademarks of Human Genome Sciences, Inc. Other trademarks referenced are the property of their respective owners.
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 Human Genome Sciences’ unproven business model, its

 

4


 

dependence on new technologies, the uncertainty and timing of clinical trials and regulatory approvals, Human Genome Sciences’ 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, Human Genome Sciences’ 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 SEC. 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.

 

5


 

HUMAN GENOME SCIENCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
                                 
    Three months ended December 31,     Twelve months ended December 31,  
    2010     2009     2010     2009  
    (dollars in thousands, except share and per share amounts)  
Revenue:
                               
Product sales
  $ 13,196     $ 17,693     $ 47,159     $ 154,074  
Manufacturing and development services
    7,517       5,360       22,695       50,653  
Research and development collaborative agreements
    549       29,904       87,497       71,022  
 
                       
Total revenue
    21,262       52,957       157,351       275,749  
 
                       
 
                               
Costs and expenses:
                               
Cost of product sales
    6,411       1,236       29,941       15,805  
Cost of manufacturing and development services
    7,652       976       15,016       18,215  
Research and development expenses
    45,039       42,330       196,370       173,709  
General and administrative expenses
    38,341       19,319       106,797       61,073  
Facility-related exit charges (credits) (a)
          (10,675 )           759  
 
                       
Total costs and expenses (b)
    97,443       53,186       348,124       269,561  
 
                       
Income (loss) from operations
    (76,181 )     (229 )     (190,773 )     6,188  
Investment income
    3,469       3,623       16,966       12,727  
Interest expense
    (15,091 )     (14,465 )     (59,500 )     (58,424 )
Gain on extinguishment of debt
                      38,873  
Gain on sale of long-term equity investment
                      5,259  
Other income (expense)
    171       56       76       (238 )
 
                       
Income (loss) before taxes
    (87,632 )     (11,015 )     (233,231 )     4,385  
Income tax benefit
          1,274             1,274  
 
                       
Net income (loss)
  $ (87,632 )   $ (9,741 )   $ (233,231 )   $ 5,659  
 
                       
Basic net income (loss) per share
  $ (0.46 )   $ (0.06 )   $ (1.24 )   $ 0.04  
 
                       
Diluted net income (loss) per share
  $ (0.46 )   $ (0.06 )   $ (1.24 )   $ 0.04  
 
                       
Weighted average shares outstanding, basic
    188,896,481       170,700,803       187,791,437       149,334,426  
 
                       
Weighted average shares outstanding, diluted
    188,896,481       170,700,803       187,791,437       155,053,473  
 
                       
     
(a)   Facility-related exit credits during the three months ended December 31, 2009 relate to the reversal of substantially all of an exit charge recorded during the three months ended June 30, 2009. HGS decided to resume production in certain previously-vacant space in order to support upcoming manufacturing activities.
 
(b)   Includes stock-based compensation expense of $7,627 ($0.04 per basic and diluted share) and $2,977 ($0.02 per basic and diluted share) for the three months ended December 31, 2010 and 2009, respectively. Includes stock-based compensation expense of $25,430 ($0.14 per basic and diluted share) and $12,524 ($0.08 per basic and diluted share) for the year ended December 31, 2010 and 2009, respectively.

 

6


 

CONSOLIDATED BALANCE SHEET DATA:
                 
    As of     As of  
    December 31, 2010     December 31, 2009  
    (dollars in thousands)  
Cash, cash equivalents and investments (c)
  $ 933,382     $ 1,191,660  
Total assets (c)
    1,315,029       1,530,630  
Convertible subordinated debt (d)
    372,851       349,807  
Lease financing
    250,516       248,628  
Total stockholders’ equity
    585,763       755,415  
     
(c)   Includes $79,510 and $88,437 in restricted investments at December 31, 2010 and December 31, 2009, respectively.
 
(d)   Convertible subordinated debt is net of unamortized debt discount of $30,989 and $54,043 as of December 31, 2010 and December 31, 2009, respectively. Convertible subordinated debt at face value is $403,840 and $403,850 as of December 31, 2010 and December 31, 2009, respectively.
# # #

 

7