Human Genome Sciences told investors Tuesday that sales of its flagship lupus drug continued to climb throughout the third quarter.
Net sales of the drug, called Benlysta, tallied $18.8 million for the three months ended Sept. 30. Executives remained bullish about the drug’s adoption among physicians, but also pushed back by a year the company’s expected profitability date to 2014.
The company sold $7.8 million worth of Benlysta last quarter, the drug’s first on the market. Executives said then they expected sales would climb as doctors become more comfortable prescribing the drug and insurance providers set reimbursement standards.
HGS operated at a net loss of $88.4 (45 cents per share) million for the three-month period ended Sept. 30, compared to a loss of $40.9 (22 cents) million the year before. Total revenue stood at $34 million, compared to $50.8 million the year before.
The company has seen its commercialization and sales expenses climb as it continues to market Benlysta, and continues to suffer in year-over-year comparisons because of payments it no longer collects from former drug partners.
Barry Labinger, executive vice president and chief commercial officer, told investors that to date the company’s marketing efforts have focused on selling directly to physicians. In the coming weeks HGS will also initiate campaigns that target scientists and patients.
The company’s sales data and earnings arrive amid renewed speculation that drug partner GlaxoSmithKline may be preparing to purchase the company. The United Kingdom’s Daily Mail reported a possible deal worth $25 per share.
HGS executives have said they do not comment on speculation.
GlaxoSmithKline is scheduled to post third-quarter earnings tomorrow. The biotechs also partner on two additional drugs under development at HGS.
Those rumors gave HGS stock a lift this week after a rough month in which the company saw shares decline in part because of doubts that the National Health Service, the United Kingdom’s health care arm, would cover the drug’s cost.
Ian Somaiya, a biotechnology analyst at Piper Jaffray, said such a response is not uncommon in the U.K. Officials there may require additional information from the company before agreeing to foot the bill.
Drugmakers must first get approval from European regulators for a new therapy, then convince individual countries to cover the cost. Benlysta was given the green light by regulators earlier this year.
The drug is already available in several European nations, including Germany, Norway and Sweden. Spain has agreed to pay for the drug and it should launch there later this year.
Executives said the U.S. market may be slower to adopt Benlysta because many physicians may be unfamiliar with the drug’s underlying science. The sales model also requires doctors to pay for the drug up front, then seek reimbursement from insurance providers.
“We all assumed the clinical experience would translate into the commercial windfall,” Somaiya said. “The reality is there are many physicians that were not involved in the clinical trials of Benlysta and for them it will be dipping their toes in the water before really jumping in.”
The U.S. Food and Drug Administration approved Benlysta in March despite concerns that some clinical data indicate the drug is less effective in African American patients and that its benefits wane over time.
The decision was hailed by executives and patient advocates at the time as a significant milestone in the treatment of systemic lupus, a chronic and often debilitating disease for which no new drugs had come to market in 50 years.
It also marked an arrival of sorts for HGS. The firm has long been listed among Maryland’s top-tier biotechnology houses, yet lacked the marquee product that turned companies such as MedImmune, Digene and Martek Biosciences into billion-dollar acquisition targets.
Somaiya contends Benlysta has not lost its blockbuster potential, but may take longer to realize it than some analysts initially anticipated.
“We still have a company where [sales and revenue] estimates need to come down for 2012 or 2013 for stock to ultimately succeed,” he said. “I don’t think we need to adjust our peak sales for Benlysta, I think we need to adjust our year when peak sales are realized.”