Human Genome Sciences Inc.’s (HGSI) fourth quarter 2011 loss of 41 cents per share was narrower than the Zacks Consensus Estimate of a loss of 42 cents and the year-ago loss of 46 cents. The narrower year over year loss was primarily attributable to higher revenues.

The Fourth Quarter in Details

Revenues in the reported quarter jumped 114% to $45.5 million, beating the Zacks Consensus Estimate of $42 million. Revenues were boosted by the presence of sales from lupus drug, Benlysta, which was absent in the year-ago quarter.

Benlysta, co-developed by Human Genome with GlaxoSmithKline (GSK), was launched in the US in March 2011. The drug has also hit the Canadian market. The lupus drug has been launched in several European nations, including Germany, Spain, Austria, Denmark, Finland, Hungary, Norway and Sweden following the European Commission’s clearance in July 2011. Net sales of Benlysta sales improved 36.7% sequentially to $25.7 million in the final quarter of 2011.

Revenues recognized from the sale and delivery of inhalation anthrax treatment ABthrax to the US Strategic National Stockpile came in at $13.6 million in the reported quarter as opposed to $13.2 million in the final quarter of 2010.

Human Genome has a contract for delivering doses of ABthrax to the US Strategic National Stockpile, for use in the event of an emergency to treat inhalation anthrax. Revenues from manufacturing and development services other than ABthrax came in at $5.2 million (down 30.6%).

While research & development (R&D) expenses declined 12.2% to $39.5 million, selling general & administrative (SG&A) expenses climbed 9.7% to $42.0 million. The increase in SG&A expenses was attributable to the costs incurred by Human Genome in connection with the marketing of Benlysta.

Annual Results

For the full year 2011, Human Genome suffered a loss of $1.98 per share (excluding facility-related exit credits) as against a loss of $1.24 in 2010. The higher loss incurred in 2010 was attributable to lower revenues and higher R&D and SG&A costs. The Zacks Consensus Estimate for 2011 indicated a loss of $1.97 per share on revenues of $124.0 million.

Our Recommendation

Currently, we have a Neutral stance on Human Genome in the long run. The company carries a Zacks #3 Rank (Hold rating) in the short run.

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