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Shares of

Human Genome Sciences

(HGSI)

dropped Monday afternoon after the biotech company presented conflicting information about the value of its genetic database.

Human Genome Sciences said Monday that five drug companies are pursuing about 460 drug research projects based on approximately 280 genes found in its database. The drug companies were granted exclusive access to the database starting about eight years ago, an agreement that

ended Saturday.

But gauging the effectiveness of these drug development efforts -- and by proxy, the value of Human Genome's genetic database -- depends on how the numbers are interpreted. Skeptics are winning the argument so far. Shares of Human Genome traded flat all day, but plunged 3% soon after the company ended its afternoon conference call. The stock closed Monday down $1.45, or 2.4%, to $58.80, then drifted another 10 cents lower in after-hours trading.

Many Wall Street analysts were looking for Human Genome's drug company partners to claim 500 drug targets. Company executives insist that the 460 drug research projects meets those expectations, a point supported by some Wall Street analysts. But critics point to the fact that those projects -- many of which overlap -- are targeting only 280 genes, pushing today's disclosure into the "disappointing" category.

The bear case on HGS was bolstered by the fact that the company did not disclose any progress being made by its drug company partners. To date, only

GlaxoSmithKline

(GSK) - Get GlaxoSmithKline plc Sponsored ADR Report

-- the company's oldest partner -- has pushed a drug candidate from the database into early human testing.

During the conference call with analysts, Human Genome's CEO William Haseltine emphasized that the 460 drug research projects validated his company's technology and the value of the genetic database. HGS will receive milestone payments from its partners as the experimental drugs progress, as well as royalty payments if the drugs reach the market.

He re-emphasized the point in an interview with

TheStreet.com

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. "The most important number is the 460

drug research projects because each represents a potential drug," he says, adding that many potential drugs can work against a single gene. And Human Genome's partners did not choose these drug targets willy-nilly, but only after conducting extensive research.

"The companies started these programs only after doing enough validation to know that they would be useful in working against a disease," he says.

Banc of America Securities

analyst Jim Reddoch backed up Haseltine's view in a morning research note. "This total number of 460 programs compares favorably with our estimates of 500 for the number of targets claimed by pharma partners at the expiration date," he says. Reddoch rates HGS a buy, and his firm hasn't done banking for the company.

Robertson Stephens

analyst Mike King scoffs at the naysayers. "We're talking about pharma-quality drug targets here, not BS-quality biotech targets," he says. "I think you can assign a much higher success rate -- let's say one in 10 -- to these efforts, compared to a one in 150 success rate for most biotech research efforts." King rates HGS a strong buy, and his firm hasn't done underwriting for the company.

With the genetic database back under its control, Haseltine says the company's priority is to ramp up its own drug research efforts. The company will also negotiate new agreements with outside drug companies, but at more favorable terms. For instance, the company says it will trade access to specific drug targets in return for cash and stock payments, as well as "significant co-promotion rights that enable us to participate in the sale of successfully developed products."

"Our goal is to become a bio-pharmaceutical company," says Haseltine.

But skeptics saw something entirely different in today's announcement. One fund manager, an Human Genome bear but with no current position in the stock, believes drug companies are finding few tasty morsels in HGS' genetic candy store.

"The reason they cut off access to the database on Saturday and didn't announce any new agreements is because drug companies aren't interested anymore," he says, adding that if HGS' database was valuable, the company's partners would have reserved a higher number of genes.

The fund manager also has doubts about Human Genome's ability to actually develop drugs. So far, the company has just four potential drugs in very early human trials, and results from one of those drugs, presented last September, were mixed.

"If HGS' genetic database is so valuable, why aren't the company's partners further along with clinical trials? Why, after as long as eight years, are so many of these programs still in pre-clinical

pre-human testing stages," he asks.

On Monday, investors were asking similar questions, and didn't seem happy with the answers.