HGS Stock Falls as Rivals' Lupus Drug Fails

Human Genome Sciences' chief competitors in the race to develop the first new lupus drug in four decades said yesterday that their candidate to treat the debilitating disease failed in late-stage human testing.

Genentech and Biogen Idec, which are jointly developing the drug, saw their shares tumble 7 percent and 5 percent, respectively. But HGS's stock also slumped 4 percent, closing at $6.52, as some investors worried that its drug could face trouble, too.

Because the HGS drug and the other one are similar in nature, Mark Schoenebaum, a Bear Stearns analyst, said, "I think any reasonable observer has got to conclude that the probability of success has come down."

However, HGS officials brushed aside that suggestion.

"I don't conclude that," said David Stump, executive vice president of research and development at Rockville-based HGS. "Not at all."

About 1.5 million people -- most of them women -- suffer from lupus, a disease that develops when the body's immune system attacks the kidneys, joints, heart, lungs, brain, blood or skin. Typical lupus treatments employ high doses of steroids and cancer drugs that have toxic side effects and leave bones dangerously brittle. Anti-malarial drugs are also used.

Genentech and Biogen were testing Rituxan, a powerful drug that treats non-Hodgkins lymphoma and rheumatoid arthritis. Like Human Genome Sciences' lupus candidate, called LymphoStat-B, the Genentech/Biogen drug targets certain disease-fighting cells that can turn on the body and attack it. Rituxan depletes these cells. LymphoStat-B moderates them.

"Basically the drugs are not identical by any stretch, but they are similar," said Schoenebaum, who owns Genentech shares and rates HGS's stock positively.

Genentech, based in California, and Biogen Idec, based in Massachusetts, said yesterday that Rituxan had not done better than a placebo at 52 weeks of treating systemic lupus erythematosus, the most common form of the disease. The company said it will continue testing Rituxan in patients with lupus nephritis, a complication of the disease affecting the kidneys.

Human Genome Sciences has faced its share of troubles developing a lupus product. Its drug didn't pass muster as part of a key trial in 2005, and company executives decided to move ahead by targeting patients with active lupus. The company is in the final stage of testing and expects results next year.

Stump knows his company faces a steep challenge. "Lupus is hard," he said. "Unmet medical needs like this are unmet for a reason." One of the biggest problems in testing new drugs on lupus is that symptoms vary from patient to patient, making the measurement of success difficult.

"Demonstrating the impact of a treatment in a lupus clinical trial can be difficult, as lupus manifests itself differently in different people and can increase and decrease in severity from one day to another," Sandra C. Raymond, president the Lupus Foundation of America, said in a statement. "So while these new results are disappointing, they are not necessarily surprising."