Despite So-So Sales To Date, HGS Sees Promising Launch For Benlysta

Third quarter U.S. sales of $18.8 million disappoint some analysts, but HGS emphasizes growing patient base and multi-part commercialization plan still being implemented.

Several Wall Street analysts predicted blockbuster sales for Human Genome Sciences Inc./GlaxoSmithKline PLC's Benlysta (belimumab) when it became the first new drug approved for lupus in 50 years this past March. Nobody expected those sales projections to be achieved overnight, but the $18.8 million in third-quarter U.S. sales reported by HGS on Oct. 25 still disappointed some observers.

Specifically, Brian Skorney, a biotech analyst with Brean Murray, Carret & Co., decreased his rating of HGS' stock from "buy" to "hold" following the Benlysta sales update. Investors may have taken note, as HGS' share price declined sharply, by 22%, to close at $9.88 at the end of trading Oct. 26.

"I downgraded HGSI because the Benlysta sales trajectory does not seem to be on track to match current consensus estimates for the next year or so," Skorney said in an e-mail to "The Pink Sheet" DAILY. "I can't recommend investors buy the stock until expectations come down to levels that I believe are achievable."

Benlysta, a first-in-class monoclonal antibody that inhibits the B-lymphocyte stimulator (BLyS), obtained FDA approval March 9 for treatment of adult patients with active, autoantibody-positive systemic lupus erythematosus (SLE) who are receiving standard therapy, which includes corticosteroids, anti-malarials, immunosuppressives and non-steroidal anti-inflammatory drugs (Also see "HGSI/GSK's Benlysta Gets BLySfully Clean Labeling, Escaping Feared Restrictions" - Pink Sheet, 10 Mar, 2011.).

The two companies, which partnered around the antibody in 2006, launched Benlysta about two weeks later with HGSI booking sales in the U.S. and GSK booking sales in Europe. The drug has been launched in Germany, Austria, Denmark, Finland, Hungary, Norway and Sweden - as well as Canada - but HGS Chief Commercial Officer Barry Labinger said during an Oct. 25 investor call that it is too early to provide any substantive international sales data.

A biologic that must be infused on a monthly basis by a physician, Benlysta was launched with an annual price of about $35,000 in the U.S. HGS CEO Thomas Watkins said reimbursement efforts are proceeding well, despite the added complication that Benlysta is a "buy and bill" product that doctors purchase, use and then file an insurance claim to be reimbursed (Also see "With PDUFA Date Coming Up, HGSI Optimistically Outlines Launch Plans For Benlysta" - Pink Sheet, 3 Mar, 2011.).

While the U.K.' s National Institute of Clinical Excellence (NICE) earlier this month recommended against covering Benlysta as add-on therapy in SLE, due to concerns about the drug's incremental cost-effectiveness ratio, Labinger noted that Spain's Ministry of Health recently approved the drug's adoption in the country's public fund health care system at a list price of roughly $17,000 a year (Also see "GSK Gears Up To Fight NICE On Benlysta Setback" - Pink Sheet, 3 Oct, 2011.).

Not On Pace To Meet Street Sales Guidance For 2011

The $18.8 million in U.S. net sales for Benlysta during the third quarter was a healthy increase from $7.8 million in the second quarter. Total 2011 sales for the product are $26.6 million through the end of September, meaning Benlysta is unlikely to achieve analyst consensus sales of $85 million for the first year. Neither HGSI nor GSK has offered sales guidance for the drug.

Labinger, however, stressed an upward trend in the drug's sales pace. More than 3,000 SLE patients now are being treated with Benlysta, he said, with 1,800 new patients starting the drug in third quarter, up from 1,400 in the second quarter. In addition, about 90% of rheumatologists say they have used or intend to use the drug in their practices, he said.

"Our commercialization efforts are expressly designed to accelerate the translation of this high intent to use into action," Labinger told the call. "And then build upon the initial trial in the first few patients to maximize the use of Benlysta in all appropriate patients who could benefit."

Approximately 30% of key accounts tracked by the two companies have initiated Benlysta therapy to date, up from less than 10% in the first quarter and 20% midway through the third quarter, he added. HGS also is seeing rising use in both community-based accounts and key hospital accounts, he said, due to continued progress with formulary approvals.

" [Clinicians'] pre-existing concerns about reimbursement can only be fully overcome by real life experience in their own practices or that of their colleagues," Labinger said. "Once they do overcome all the obstacles to trying something new, they tend to start with a small number of patients. For some, that means one or two patients. For others, three to five. Once they're reassured by both the initial clinical responses and the reimbursement experience, they begin to incorporate Benlysta more routinely into their treatment patterns"

"This process takes a while," he added. "However, we do have some accounts that started early, have seen good results, both clinically and with reimbursement, and have begun to expand use substantially."

Watkins pointed out that the U.S. commercialization plan for Benlysta consists of three components, only one of which - a joint HGS/GSK sales force effort - is fully underway. Sales pace should improve as the other two components - physician education and consumer sales promotion - take flight, he asserted.

HGS completed speaker training in September that increased its speakers' bureau from 10 to 70 physicians. During the fourth quarter, HGS will conduct three times as many speaker programs as occurred during the second and third quarters combined, Labinger said.

He also noted the importance of patient demand, citing market research indicating that 90% of the time when an appropriate patient requests a specific drug, he or she receives that drug. Through consumer-targeted activities the company has conducted this year, HGS already has a database of 15,000 patients who have requested information about new SLE treatment alternatives, Labinger reported. HGS will launch an online and print advertising campaign for Benlysta during the fourth quarter.

"Fortunately, lupus patients are active information seekers and can be reached via a very targeted, efficient media plan," Labinger said. "Don't expect to see commercials on prime time [television] or the Super Bowl."

During its own third-quarter earnings call Oct. 26, GSK stated that it is satisfied with the progress Benlysta is making.

"I know there are lots of people on the outside of the company who have different forecasts for Benlysta," said CEO Andrew Witty. "We never gave any indication of what we believe the forecast would be ... It's tracking where we wanted it to track."

More Bullish Perspectives Follow Company Rationale

HGS' optimism and Witty's stated satisfaction also were reflected in a number of analyst notes that offered a more bullish perspective on the Benlysta launch than did Brean Murray's Skorney. In an Oct. 25 note, J.P. Morgan analyst Cory Kasimov said the drug's shortfall against consensus estimates "does not come as much of a surprise." He maintained an "overweight" rating for HGS shares.

"A meaningful bump in sales is likely needed to restore investor confidence in the stock," he wrote. "Admittedly, it is tough to extrapolate where sales will ultimately end up but we believe that over a longer period, Benlysta could still hit long-term expectations."

Kasimov projects peak-year worldwide sales of $2.75 billion for Benlysta in 2018.

-Joseph Haas ([email protected])