Human Genome Sciences Reports Financial Results for Full Year and Fourth Quarter 2005 - Progress Toward Commercialization -



    ROCKVILLE, Md., Feb. 9 /PRNewswire-FirstCall/ -- Human Genome Sciences,
 Inc. (Nasdaq:   HGSI) announced financial results for the quarter and full-year
 periods ended December 31, 2005, and reiterated guidance for financial results
 anticipated for 2006.
     (Logo:  http://www.newscom.com/cgi-bin/prnh/20010612/HGSLOGO )
     The Company's net loss for 2005, in accordance with Generally Accepted
 Accounting Principles (GAAP), was $239.4 million, or $1.83 per share. This
 compares to the net loss for 2004 of $242.9 million, or $1.87 per share. The
 decrease in the net loss is due to increased revenues and the absence of
 restructuring charges, partially offset by increased operating expenses and
 reduced net investment income.
     The Company's pro forma net loss for 2005 was $238.2 million, or $1.82 per
 share, which compares to its pro forma net loss for 2004 of $229.9 million, or
 $1.77 per share.  The Company's pro forma net loss for 2005 excludes a loss on
 extinguishment of debt of $1.2 million, or $0.01 per share.  The Company's pro
 forma net loss for 2004 excludes a restructuring charge of $15.4 million, or
 $0.12 per share, which was partially offset by a gain of $2.4 million, or
 $0.02 per share, on the extinguishment of debt. The increase in the net loss
 on a pro forma basis is due primarily to increased operating expenses and
 reduced net investment income, partially offset by increased revenues.
     Revenues for the year ended December 31, 2005 were $19.1 million, compared
 to $3.8 million for the year-earlier period. The increase in revenues in 2005
 versus 2004 is due primarily to the receipt and recognition of milestone
 payments from GlaxoSmithKline (GSK) related to the Company's October 2004
 outlicensing agreement for GSK716155 (Albugon(TM)).
     For the quarter ended December 31, 2005, the Company's net loss, in
 accordance with GAAP, was $69.5 million, or $0.53 per share.  This compares to
 the net loss of $66.7 million, or $0.51 per share, for the year-earlier
 period.  The increase in the net loss is due to increased operating expenses
 and reduced net investment income, partially offset by increased revenues and
 the absence of restructuring charges.
     For the quarter ended December 31, 2005, the Company's pro forma net loss
 was $69.2 million, or $0.53 per share.  This compares to the pro forma net
 loss of $65.0 million, or $0.50 per share, for the year-earlier period.  The
 Company's pro forma net loss for the quarter ended December 31, 2004 excludes
 a restructuring charge of $4.1 million, or $0.03 per share, and a gain on the
 extinguishment of debt of $2.4 million, or $0.02 per share.  The increase in
 the net loss on a pro forma basis is due primarily to increased operating
 expenses and reduced net investment income, partially offset by increased
 revenues.
     Revenues for the quarter ended December 31, 2005, were $9.3 million,
 compared to $0.8 million for the year-earlier period.  As noted above, the
 increase is due to increased amounts recognized from GSK and others in 2005
 versus 2004.
     At December 31, 2005, cash and short-term investments totaled $646.2
 million, including $220.2 million of restricted investments.  This compares to
 $952.7 million, including $215.2 million of restricted investments at December
 31, 2004.
     As of December 31, 2005, there were approximately 131 million shares of
 Human Genome Sciences common stock outstanding.
     H. Thomas Watkins, President and Chief Executive Officer, said, "Progress
 toward commercialization was our priority focus throughout 2005, and we expect
 to accelerate our progress in 2006.  Our lead products are moving towards
 Phase 3 clinical development, and we are making progress on our partnering
 objectives.  We reported positive Phase 2 results for Albuferon in hepatitis C
 in 2005.  A larger Phase 2b trial of Albuferon in combination with ribavirin
 compared to Pegasys is currently underway.  We plan to initiate Phase 3
 development of Albuferon by year-end 2006, assuming that data emerging from
 the Phase 2b study in the first half of the year are positive.  We are also
 considering a number of collaboration opportunities for Albuferon this year.
 We completed Phase 2 clinical trials of LymphoStat-B in both systemic lupus
 erythematosus (SLE) and rheumatoid arthritis (RA), and we expect to initiate
 Phase 3 development of LymphoStat-B in SLE in 2006.  We are also working to
 secure an order from the U.S. Government to supply ABthrax for the Strategic
 National Stockpile under our current contract.
     "GlaxoSmithKline (GSK) has advanced relacatib, the small-molecule
 cathepsin K inhibitor that GSK discovered using HGS technology, to Phase 2
 trials in the treatment of bone metastases.  GSK has also filed an
 Investigational New Drug application seeking to initiate Phase 1 trials of
 GSK716155 (formerly Albugon) in diabetes.  HGS received $12 million in
 payments during 2005 related to the progress of GSK716155.  We expect to
 complete the CoGenesys transaction in 2006, and we will continue to explore
 additional ways to monetize less critical assets that we are unlikely to
 develop internally.  We will concentrate our efforts in 2006 on accelerating
 our progress toward commercialization, while at the same time remaining
 committed to ensuring the highest standards of quality throughout our
 Company."
 
     HIGHLIGHTS OF THE QUARTER
 
     PRODUCTS
     Human Genome Sciences' drugs in clinical development continued to advance.
     Albuferon(TM) (albumin-interferon alpha 2b):  In November 2005, HGS
 reported the interim results of a Phase 2 trial of Albuferon in combination
 with ribavirin in patients with chronic hepatitis C who failed to respond to
 previous interferon alpha-based treatment regimens.  The results to date
 demonstrate that Albuferon in combination with ribavirin was safe, well
 tolerated and showed antiviral activity in all treatment groups for which data
 are available (Albuferon doses ranging from 900-1200 mcg).  At Week 24, 30% of
 the patients had no detectable hepatitis C RNA viral load.  The primary
 efficacy endpoint of the study is sustained virologic response (SVR), defined
 as undetectable virus at 24 weeks after the end of 48 weeks of therapy.
 Antiviral activity was similar for the 14-day and 28-day Albuferon treatment
 cohorts.  HGS expects additional interim results, including data from higher
 dose cohorts, to be presented at an appropriate scientific meeting in the
 first half of 2006.
     Phase 2 results to date are strongly supportive of a Phase 2b comparative
 trial of Albuferon in combination with ribavirin, vs. Pegasys, in interferon-
 naive patients.  HGS completed enrollment, randomization and initial dosing of
 458 patients in the Phase 2b study in October 2005.  HGS expects to have 12-
 week data from the Phase 2b comparative combination trial of Albuferon
 available in Spring 2006.  HGS plans to initiate Phase 3 development of
 Albuferon in patients with chronic hepatitis C before year-end 2006, assuming
 that data emerging from the Phase 2b study in the first half of the year are
 positive.  HGS is also considering collaboration opportunities for Albuferon.
 
     LymphoStat-B(TM) (belimumab):  In October 2005, HGS announced that the
 results of a Phase 2 trial of LymphoStat-B in systemic lupus erythematosus
 (SLE) demonstrated that LymphoStat-B significantly reduced SLE disease
 activity at Week 52 in seropositive patients (patients who have certain
 biomarkers for SLE in their blood samples).  Seropositive patients represented
 more than 70% of the total study population.  The Phase 2 results also added
 significantly to existing preclinical and clinical evidence of LymphoStat-B's
 biological activity in SLE.  Signs of drug activity were observed across the
 range of doses studied, including the lowest dose of 1 mg/kg.  Results further
 showed that LymphoStat-B was well tolerated with no clinically significant
 differences from placebo in adverse events, serious adverse events, laboratory
 abnormalities or infection rates.  HGS expects that a full presentation of
 data from the Phase 2 trial of LymphoStat-B in SLE will take place at an
 appropriate scientific conference in the first half of 2006.  The Company
 plans to initiate Phase 3 development of LymphoStat-B in SLE in 2006.
     In November 2005, HGS presented the full results of a Phase 2 clinical
 trial of LymphoStat-B in patients with rheumatoid arthritis (RA).  The results
 demonstrated that LymphoStat-B met the study's primary safety and efficacy
 endpoints, and significantly reduced RA disease activity, as measured by ACR
 20 response at Week 24.  (ACR 20 is a commonly used index developed by the
 American College of Rheumatology to assess patient response to treatment for
 rheumatoid arthritis.)  The rate of improvement in ACR 20 response at Week 24
 in the groups treated with LymphoStat-B was approximately double the rate of
 improvement observed for the placebo group.  All participants in the study
 received standard-of-care therapy.  Results showed that LymphoStat-B was safe
 and well tolerated with no clinically significant differences from placebo in
 adverse events, serious adverse events or laboratory abnormalities.
 Biological activity data from the study suggest a potential role for
 LymphoStat-B in the treatment of RA, SLE and other autoimmune diseases. The
 results showed that additional Phase 2 evaluation of LymphoStat-B is warranted
 in RA.
 
     ABthrax(TM) (raxibacumab):  In October 2005, HGS announced that it has
 been awarded a two-phase contract to supply ABthrax to the U.S. Government.
 Under the first phase of the contract, HGS has supplied ABthrax to the U.S.
 Department of Health and Human Services (HHS) for comparative laboratory
 testing, and has received $1.5 million in payment, which HGS recognized as
 revenue in the fourth quarter of 2005.  Under the second phase of the
 contract, the U.S. Government has the option to place an order within one year
 to supply ABthrax for the Strategic National Stockpile for use in the
 treatment of anthrax disease.  The HHS comparative testing results, along with
 Human Genome Sciences' own preclinical and clinical study results, will form
 the basis of the U.S. Government's decision process for exercising its option
 for additional product for the Strategic National Stockpile.
 
     HGS-ETR1 (mapatumumab):  In November 2005, HGS reported the interim
 results of two Phase 1b trials of HGS-ETR1 in combination with chemotherapy.
 The data presented showed that HGS-ETR1 in combination with chemotherapy was
 well tolerated and could be administered safely and repetitively at the doses
 and schedules evaluated in patients with advanced solid tumors.  Partial
 response was observed in a number of patients in each of the studies.  These
 results support further evaluation of HGS-ETR1 in combination with
 chemotherapy in Phase 2 trials.  In December 2005, HGS presented the results
 of a Phase 2 trial of HGS-ETR1, which demonstrated that HGS-ETR1 was capable
 of producing clinical responses when administered as monotherapy in patients
 with advanced non-Hodgkin's lymphoma (NHL).  Among patients diagnosed with
 follicular lymphomas, clinical responses (1 complete response and 2 partial
 responses) were observed in 3 of 17 (18%) patients, and 11 of 17 (65%) of the
 patients with follicular lymphomas exhibited either response or stable
 disease.  Overall, clinical responses were observed in 3 of 40 (8%) of these
 heavily pretreated NHL patients.  Stable disease was observed in an additional
 30% (12/40) of the patients.  The results showed that HGS-ETR1 is well
 tolerated, with minimal toxicity, and can safely be administered intravenously
 every 21 days at doses up to 10 mg/kg.  The results of the Phase 2 trial in
 non-Hodgkin's lymphoma support further evaluation of HGS-ETR1 in combination
 with chemotherapeutic agents in hematologic malignancies.  HGS plans to
 initiate Phase 2 development of HGS-ETR1 in combination with chemotherapy in
 hematopoietic cancers in 2006.
 
     HGS-ETR2 (human monoclonal antibody to TRAIL receptor 2):  In November
 2005, HGS reported the results of two Phase 1 trials of HGS-ETR2 in advanced
 solid tumors.  The results of the two studies demonstrated that HGS-ETR2 is
 well tolerated at doses as high as 10 mg/kg in patients with advanced solid
 tumors.  The DLT (dose-limiting toxicity) dose has been identified as 20
 mg/kg.  In each study for which data were presented, stable disease was
 observed in a number of patients.  Clinical and preclinical results to date
 support the additional clinical study of HGS-ETR2 in combination with
 chemotherapy.
 
     PARTNERSHIPS
     GlaxoSmithKline:  In January 2006, we announced that we received a $5.0
 million milestone payment related to GSK's filing of an Investigational New
 Drug (IND) application to begin Phase 1 clinical trials of GSK716155 (formerly
 known as Albugon) for use in the treatment of diabetes.  This milestone
 payment, which HGS recognized as revenue in the fourth quarter of 2005, brings
 the total amount of payments received from GSK related to the progress of
 GSK716155 to $12.0 million in 2005.  These milestone payments were made
 pursuant to an agreement announced in October 2004, under which GSK acquired
 exclusive worldwide rights to develop and commercialize Albugon for all human
 therapeutic and prophylactic applications.  Under the agreement, HGS received
 an upfront fee and is entitled to clinical development and commercial
 milestone payments that could amount to as much as $183 million, and
 additional milestones for other indications developed.  HGS also will receive
 royalties on the annual net sales of any products developed and commercialized
 under the agreement.
     In November 2005, GSK disclosed that it plans in 2006 to advance relacatib
 (GSK462795) to Phase 2 trials for the treatment of bone metastases.  Relacatib
 is a cathepsin-K inhibitor discovered by GSK through the use of HGS
 technology.  Under the terms of a 1996 agreement, HGS will receive a milestone
 payment if relacatib moves into registration, and will receive royalties if
 the compound is commercialized.  In addition, HGS has an option to co-promote
 in the North American and European markets.  Relacatib is also in development
 for the treatment of osteoporosis and osteoarthritis.
 
     PDL BioPharma:  In January 2006, HGS announced through its CoGenesys
 division that it has entered into a worldwide licensing agreement with PDL
 BioPharma that provides PDL certain exclusive rights to intellectual property
 for an undisclosed target antigen discovered by HGS.  Under terms of the
 agreement, CoGenesys has received an upfront licensing fee of $1.5 million,
 which HGS recognized as revenue in the fourth quarter of 2005, and is entitled
 to development milestone payments and royalties on future sales of antibody
 therapeutics developed by PDL against the target.  PDL also will provide
 CoGenesys with access to its antibody humanization technology platform, which
 will help enable CoGenesys' own internal discovery and development programs.
 
     Amgen:  HGS announced a license agreement with Amgen in January 2006,
 under which Amgen has acquired exclusive worldwide rights to develop and
 commercialize therapeutic biological products for human use based on a human
 gene discovered by HGS that may have potential applications in autoimmune
 diseases, immune deficiencies or suppression, and cancer.  Amgen also has
 acquired non-exclusive worldwide rights for the development and
 commercialization of diagnostic products for human use based on the same gene.
 Under the agreement, HGS received an upfront payment that was recognized as
 revenue in the fourth quarter of 2005, and is entitled to certain annual fees,
 as well as development milestone payments and royalties on annual net sales
 for therapeutic and diagnostic products successfully developed and
 commercialized using such rights.
 
     PEOPLE
     As of December 31, 2005, Human Genome Sciences had approximately 880
 employees.
 
     FINANCES AND CAPITAL PROJECTS
     Financial Guidance for 2006.  Human Genome Sciences reiterated the
 following guidance regarding the financial results expected for the full year
 2006:
 
     Research and development expenses are expected to remain flat from 2005 to
 2006 (excluding expenses, offset by revenues, related to CoGenesys, and non-
 cash charges related to the new requirement for stock option expensing).
     General and administrative expenses are expected to remain flat from 2005
 to 2006 (excluding non-cash charges related to the new requirement for stock
 option expensing).
     The Company expects revenue to increase in 2006.
     Actual results may vary significantly depending on various factors,
 including, particularly, changes in the Company's revenues and additional
 expenses or charges, as well as changes in shares outstanding associated with
 or caused by future alliances, acquisitions, financing transactions or note
 conversions.  In addition, depending on market and interest rate conditions,
 the Company may explore and take actions to strengthen further its financial
 position.
 
     Capital Projects.  The Company completed construction of its Large-Scale
 Manufacturing facility in the quarter ended December 31, 2005, and expects to
 complete equipment and facility validation in mid-2006.
 
     FINANCIAL TRANSACTIONS
 
     Redemption of Remaining Outstanding Subordinated Notes Due 2007:  On
 December 1, 2005, Human Genome Sciences completed the redemption of all of its
 outstanding 3 3/4% Convertible Subordinated Notes Due 2007 and all of its
 outstanding 5% Convertible Subordinated Notes Due 2007. This completed the
 Company's planned repurchase of all of its remaining outstanding subordinated
 notes due 2007.
 
     Plan to Spin Off CoGenesys Division as Independent Company: In December
 2005, HGS announced that it has decided to spin off its CoGenesys division as
 an independent company that will focus on the early development of selected
 gene-based product opportunities and the monetization of certain HGS
 intellectual property and technology assets.  These assets were unlikely to be
 developed by HGS due to the Company's priority focus on commercialization of
 the compounds in its clinical development pipeline.  The spin-off is
 contingent on a successful completion of CoGenesys funding by no later than
 May 31, 2006.
     Under the agreement, HGS will provide CoGenesys with start-up funding of
 $10 million to be repaid either in cash or equity at the option of HGS,
 following completion of CoGenesys funding.  HGS will grant CoGenesys exclusive
 rights to develop and commercialize biological products based on certain human
 genes discovered by HGS, and will grant CoGenesys a license to use its
 proprietary albumin-fusion technology to develop and commercialize certain
 albumin-fusion proteins for therapeutic use.  HGS will have the right to
 retain an equity investment in CoGenesys, and will receive an upfront payment,
 either in cash or equity at the option of HGS, for the assets, intellectual
 property and technology licensed to CoGenesys.  HGS also is entitled to a
 portion of the revenue CoGenesys receives from outlicensing or sales of
 therapeutic and diagnostic products successfully developed and commercialized.
 HGS retains the right of first refusal prior to outlicensing by CoGenesys of
 several specific products that may be developed under the agreement.  In
 addition, HGS has the option to have CoGenesys continue to perform pre-IND
 development work for up to two Human Genome Sciences products per year, with
 reimbursement for expenses on a cost-plus basis; CoGenesys will be entitled to
 milestone payments as any resulting products advance through development.  As
 an independent company, CoGenesys will assume salary and benefits obligations
 for its approximately 60 employees, and will also assume responsibility for
 its 48,000 sq. ft. facility, along with relevant equipment leases.  We plan to
 complete the CoGenesys transaction in 2006.
 
     ABOUT HUMAN GENOME SCIENCES
     Human Genome Sciences is a company with the mission to discover, develop,
 manufacture and market innovative drugs that serve patients with unmet medical
 needs, with a primary focus on protein and antibody drugs.
     For more information about Human Genome Sciences, please visit the
 Company's web site at http://www.hgsi.com.  Health professionals interested in
 more information about clinical trials involving Human Genome Sciences
 products are encouraged to inquire via the Contact Us section of the web site,
 http://www.hgsi.com/products/request.html, or by calling (240) 314-4400,
 extension 3550.
 
     ABthrax, Albuferon, LymphoStat-B, HGS and Human Genome Sciences are
 trademarks of Human Genome Sciences, Inc.
     The pro forma financial measures used in this press release are not
 prepared in accordance with generally accepted accounting principles (GAAP).
 Non-GAAP pro forma financial measures should not be considered as a substitute
 for, or superior to, measures of financial performance prepared in accordance
 with GAAP.  The Company's management refers to these non-GAAP pro forma
 financial measures in making operational decisions because they provide
 meaningful supplemental information regarding the Company's operational
 performance and facilitate management's internal comparisons to the Company's
 historical operating results. In addition, the Company has historically
 reported similar non-GAAP pro forma financial measures to investors and
 believes that the inclusion of comparative numbers provides consistency in its
 financial reporting.  Investors are encouraged to review the reconciliation of
 the non-GAAP pro forma financial measures used in this press release to their
 most directly comparable GAAP financial measure as provided with the financial
 results attached to this press release.
 
     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 planned 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.  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      Twelve months ended
                                      December 31,              December 31,
                                    2005        2004         2005        2004
                                   (dollars in thousands, except share and per
                                                  share amounts)
 
     Revenue -- R&D contracts     $9,272        $827      $19,113      $3,831
     Costs and expenses:
        Research and
         development              66,075      60,035      228,717     219,549
        General and
         administrative           15,351       9,993       42,066      35,728
        Charge for
         restructuring                 -       4,111            -      15,408
           Total costs and
            expenses              81,426      74,139      270,783     270,685
 
     Income (loss) from
      operations                 (72,154)    (73,312)    (251,670)   (266,854)
 
     Net investment income         2,952       4,173       13,435      21,523
     (Loss) gain on
      extinguishment of
      debt                          (306)      2,433       (1,204)      2,433
     Income (loss) before
      taxes                      (69,508)    (66,706)    (239,439)   (242,898)
     Provision for income
      taxes                            -           -            -           -
     Net income (loss) (a)      $(69,508)   $(66,706)   $(239,439)  $(242,898)
     Net income (loss) per
      share, basic
      and diluted (a)             $(0.53)     $(0.51)      $(1.83)     $(1.87)
 
     Weighted average shares
        outstanding, basic
        and diluted          130,953,948 130,371,044  130,772,233 130,041,071
 
     (a) The Company's net income (loss) for the three- and twelve-month
         periods of both years includes the gain or loss from the
         extinguishment of debt. The Company's net income for the three- and
         twelve-month periods ending December 31, 2004 includes restructuring
         charges. Excluding these items, pro forma net income (loss) is as
         follows:
 
     Net income (loss), per
      above                     $(69,508)   $(66,706)   $(239,439)  $(242,898)
     Charge for
      restructuring                    -       4,111            -      15,408
     Loss (gain) on
      extinguishment of debt         306      (2,433)       1,204      (2,433)
     Pro forma net income
      (loss)                    $(69,202)   $(65,028)   $(238,235)  $(229,923)
     Pro forma net income
      (loss) per share, basic
      and diluted                 $(0.53)     $(0.50)      $(1.82)     $(1.77)
     Weighted average shares
      outstanding, basic and
      diluted                130,953,948 130,371,044  130,772,233 130,041,071
 
 
 
     CONSOLIDATED BALANCE SHEET DATA:
 
                                                    As of              As of
                                                 December 31,      December 31,
                                                    2005               2004
                                                     (dollars in thousands)
 
     Cash, cash equivalents and
      investments (b)                            $646,220            $952,686
     Total assets (b)                             997,046           1,249,385
     Total debt and capital lease, less
      current portion                             510,000             505,131
     Total stockholders' equity                   416,966             656,047
 
     (b) Includes $220,171 and $215,236 in restricted investments at December
         31, 2005, and December 31, 2004, respectively.
 
 

SOURCE Human Genome Sciences, Inc.

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.