Human Genome Sciences Inc. (HGSI)
Q1 2012 Results Earnings Call
April 24, 2012 4:30 PM ET
Tom Watkins – President and CEO
Barry Labinger – Executive Vice President and Chief Commercial Officer
David Southwell – Executive Vice President and CFO
Dave Stump – Executive Vice President, Research and Development
Joe Schwartz – Leerink Swann
Cory Kasimov – JPMorgan
Chris Raymond – Robert Baird
Matthew Harrison – UBS
Les – ISI Group
Terence Flynn – Goldman Sachs
Charmaine Chan – RBC Capital Market
Nicholas Bishop – Cowen and Company
Jim Birchenough – BMO Capital
Laura Ekas – Canaccord
Liisa Bayko – JMP Securities
Ying Huang – Barclays
Echo He – Maxim Group
Previous Statements by HGSI
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Please standby. Good day, everyone. And welcome to Human Genome Sciences’ First Quarter 2012 Financial Results Conference Call and Webcast. Please note, today’s call is being recorded.
At this time, I will turn things over to Mr. Tom Watkins, President and Chief Executive Officer of Human Genome Sciences. Please go ahead, sir.
Thank you, Operator, and good afternoon, everyone. Before we begin, I would like to point out that we will be making forward-looking statements, which are based on our current intent, belief and expectations. These statements are subject to certain risks and uncertainties, and I encourage everyone to consult our SEC filings for additional detail.
We reported our first quarter financial results earlier this afternoon and the press release that we issued, as well as several slides that we will be discussing in this call are both posted on our website and that’s
Now we do not plan to take you through the financial results in today call. Although, we will take any questions that you may have on the first quarter later in this call.
So following my opening remarks, Barry Labinger, Executive Vice President and Chief Commercial Officer; David Southwell, our Executive Vice President and Chief Financial Officer, and other members of our senior management team will join me for the Q&A session.
So I’m going to refer a couple of points here to the slide number that is available and you can consult that. So slide three, in light of recent events, we plan to use this call today to refocus the conversation on the potential of BENLYSTA, the potential of darapladib and our other product candidates and other assets.
We are in a situation where our long-term partner GlaxoSmithKline has offered $13 per share for HGS. As you know, the HGS Board of Director in consultation with the independent financial and legal advisors has determined that this unsolicited offer does not reflect the value inherence in HGS.
However, based on this offer, it is clear that GSK shares are viewed that the market has been overly focused on the short-term sales results of our company. We also can conclude that GSK shares are viewed that there are significant value in BENLYSTA as it achieves it potential overtime.
We remain very confident in blockbuster potential of BENLYSTA or SLE. So on today’s call, we want to review our assessment of the SLE market. We want to discuss some new underlying trends we have seen since launch. It gave us confidence that BENLYSTA is gaining real traction in the marketplace.
We also want to address why we believe that HGS holds great potential to generate shareholder value beyond the BENLYSTA, including products in the GSK clinical pipeline to which we have substantial financial rights, as well as product candidates in our own internal product pipeline.
This is view we conclude GSK must also hear, since GSK controls the development of our several of our partnered pipeline programs, including darapladib for cardiovascular disease, albiglutide for type 2 diabetes, both of these in Phase 3 development and Rilapladib in Phase 2 development for Alzheimer’s disease.
Of the most notable of these assets is darapladib, which has the potential to be a future blockbuster and a significant value driver for our company. If successful approximately one-third of the value of darapladib will flow to HGS shareholders.
And I’ll point out, because there has been some confusion on this important point, I want to be clear. All of the rights and economics to these programs are fully transferrable should there be a change in control in ownership of our company.
As you know, our Board has authorized the exploration of strategic alternatives, including a potential sale of our company. We will not be commenting on the process that’s being undertaken in today’s call, and we’ll not be doing that unless and until a decision is being reached by our Board in that regard.
So I’m going to be referring now to items on slide number four. We remain very confident in the blockbuster potential of BENLYSTA for SLE, given its broad label and its benefit to patients. SLE is a unique and complex disease, and as we will explain shortly, we believe the unique complexity has impacted the more recent and slower rate of adoption by physicians.
We expect this to change going forward. Our conviction in BENLYSTA’s prospects is influenced by feedback we are receiving from physicians who are telling us how it is working in their patients.
All indicators from our market research point to increasing rates of adoption. 90% of rheumatologists we have surveyed intend to use BENLYSTA. Over 75% of physicians we surveyed have already prescribed the drug.
In addition, BENLYSTA has brought promise beyond its initial market entry in SLE and we continue to make significant investments in its full therapeutic and commercial potential. We have initiated Phase 3 study in another dosage form of BENLYSTA, the subcutaneous dosage form, which we believe will be advantageous to some patients. And as we have indicated before, we are on our track to start Phase 3 vasculitis and lupus nephritis studies in the second half of this year.