HGS enters $507 million hepatitis drug deal


Human Genome Sciences Inc. yesterday announced a $507 million collaboration with Switzerland's Novartis to develop and commercialize the Rockville biotech's hepatitis C drug, Albuferon.

The announcement jolted trading of Human Genome's stock, with shares moving at more than five times the normal volume. Shares rose 41 cents, or 4 percent, to close at $10.60 on the Nasdaq yesterday.

Such partnerships are becoming more common in the drug development world. Smaller biotech concerns are often idea-rich, but cash-poor, while big pharmaceutical companies are often in the opposite camp, looking to partner with others to further their drug portfolio.

"This collaboration is a significant step forward in our company's progress toward commercialization," Human Genome's president and chief executive, H. Thomas Watkins, said in a prepared statement.

The 14-year-old company, which last year completed construction of a large-scale manufacturing facility, has yet to bring a drug to market, though two candidates are getting close: Albuferon, and the lupus treatment LymphoStat B, both of which are expected to enter late-stage clinical trials this year.

Under the agreement with Novartis, Human Genome will receive an upfront payment of $45 million, and another of $47.5 million when the first trial patient is dosed with Albuferon. Other payments, including development costs and milestone awards, could total as much as $507.5 million.

In a statement, Novartis' chief executive, Thomas Ebeling, said the collaboration will help the Swiss drugmaker reach its goal of "achieving a leadership position in infectious diseases."

Assuming Albuferon is approved by the U.S. Food and Drug Administration, the two companies plan to share commercialization costs and profits in the United States, while Novartis will bear the costs for selling the drug abroad and pay Human Genome Sciences royalty fees for the privilege.

The company estimates that as many as 170 million people worldwide and 4 million in the U.S. are infected with hepatitis C, which can lead to cirrhosis of the liver and liver cancer, according to the University of Maryland Medical Center. The infection is spread through contact with contaminated blood or sexual intercourse.


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