Editor

Human Genome Sciences Inc.'s $165 million deal with the feds for stockpiling of the anti-anthrax monoclonal antibody ABthrax chalked up headlines for the company - even if it's pretty much a one-shot (pun intended) deal, and HGS' Albuferon bid remains the key to showing an eventual profit.

Patients need multiple injections of the current anthrax vaccine to reach and maintain a level of protection, whereas ABthrax (raxibacumab) requires a single dose, once appropriate blood levels of the product are achieved. Not only that, but also ABthrax works against anthrax bacterial toxins, which antibiotics can't kill, and ABthrax might even work against antibiotic-resistant strains.

The government order calls for 20,000 courses of ABthrax from HGS, which must get licensed under an emergency use authorization and deliver the product to be paid 90 percent of the total. That's expected to happen in 2008, providing HGS with its first product sales.

"Just in time" might be too much to say, but the company could use a few bucks and with an annual burn rate of $250 million plus, probably faced some kind of financing if the ABthrax grant hadn't come through. HGS didn't say much about the margins provided in the government contract, but called them "commercially reasonable."

The company will make ABthrax in its manufacturing facilities in Rockville, Md., a 130,000-square-foot site where assays and a scalable purification process already are in place. ABthrax will be the fifth monoclonal antibody scaled-up there.

"It's a big contract," as Christopher Raymond, analyst with Robert Baird & Co., put it. "The problem is, it's a contract."

More lab and clinical testing required to support a biologics license application will be done at the facility, as well as work proving the value of ABthrax in patients with inhalational anthrax disease, in the event of an emergency before the drug is cleared by the FDA. Clinical tests will be done in several hundred people, including a confirmatory safety study in healthy volunteers and smaller trials to investigate interactions with antibiotics and vaccines.

HGS is hardly the first biotech firm to line up for gravy under the $5.6 billion Project BioShield Act of 2004 from the Department of Health and Human Services. Cangene Corp. this month disclosed a $362 million award for a botulism treatment. Cangene expects to make first deliveries to the stockpile in the next year to year and a half and then start getting payments. First, though, the product must win FDA approval.

ABthrax is in the same boat. Efficacy has been shown in animal models, with blood levels of the product above those needed to provide protection from anthrax toxin, and safety and tolerability proved good in a Phase I trial enrolling 105 healthy adult volunteers. The government reviewed those findings and conducted its own lab tests with ABthrax supplied by HGS in October.

Anthrax attacks in the U.S. five years ago spurred interest in a vaccine, and HGS' product - discovered and developed as part of a collaboration with Cambridge Antibody Technology plc - was the first to appear on the radar. The FDA has given ABthrax fast-track and orphan drug status.

But the star for HGS is Albuferon (albumin-interferon alpha 2b), expected to move into Phase III for chronic hepatitis C virus by the end of this year. Albuferon became the center of a potential $550 million deal with Novartis AG, earlier this month. The worldwide licensing arrangement covers all potential uses for the interferon which, by the time it's approved for HCV, could be competing in a crowded field.

A serious player in HCV, Novartis has a potential $750 million deal with Anadys Pharmaceuticals Inc. for ANA975 for the Toll-like receptor 7 agonist ANA975 and has placed chips on Idenix Corp.'s polymerase inhibitor NM283. Gaining still more ground in HCV, it also is buying out Chiron Corp.

Recombinant interferon alpha is approved for HCV and HBV, as well as a range of cancers, though data gathered so far suggest Albuferon might bring a better dosing schedule for HCV, since it stays in the blood longer than interferon alpha and pegylated interferon alpha (Pegasys, from F. Hoffmann-La Roche Ltd.), the current standard of care. With comparable efficacy and safety, Albuferon is dosed biweekly and could go monthly, as opposed to the pegylated interferons' weekly dosing schedule.

The deal with Novartis came despite a cloud that appeared this spring on the Albuferon horizon.

HGS offered interim Phase II data showing Albuferon given with ribavirin every other week, at 12 weeks worked as well as market leader Pegasys (pegylated interferon alfa-2a), but Wall Street didn't like the once-monthly results, which fell below those with Pegasys. HGS' stock took a 20 percent hit. (See BioWorld Financial Watch, March 20, 2006.)

Thomas Watkins, CEO of the company, expressed hope to investors during a conference call that the Phase III trial to begin this year will prove a better dosing schedule with similar efficacy for Albuferon. Novartis, apparently, is on board, even if most HCV attention lately has been going to Vertex Pharmaceuticals Inc.'s protease inhibitor, VX-950. Schering-Plough Corp. has a protease inhibitor, too - SCH7 - progressing somewhat ahead of VX-950.

More recently, Vertex reported results with VX-950 at the 41st annual meeting of the European Association for the Study of the Liver in Vienna, Austria. The compound was compared head to head in Phase II trials with Schering-Plough's product, and Vertex's came out well ahead pharmacokinetically, after male Sprague-Dawley rats were given the drugs orally at 5 mg/kg alone or with 5 mg/kg ritonavir. (See BioWorld Financial Watch, May 8, 2006.)

InterMune Inc. has a protease inhibitor as well: ITMN B, an oral protease inhibitor for hepatitis C virus, for which the company - taking the common "Europe first" route for HCV - plans to ask overseas permission for human studies later this year.

Albuferon, meanwhile, could snatch a good piece of the interferon market, if the price is right by comparison with Pegasys and with Schering-Plough's interferon alpha-2b (branded Intron A). And the ABthrax money from the government will help the push for Albuferon, which could reach the market in 2010.

"A lot of things could happen between now and then," Raymond said. "Usually when you see a situation like this, where you've got a couple of biologics with generally the same activity but are differentiated," a price war doesn't ensue, he added, using the example of beta interferons as "not a perfect analogy, but something that's useful." Biogen Idec Inc.'s Avonex is leading the way, with Betaseron from Berlex Laboratories Inc. and Rebif from Serono SA trailing.

HGS' news late last week regarding LymphoStat-B (belimumab) gave Raymond pause. The drug significantly reduced disease activity in Phase II patients with serologically active systemic lupus, exhibited clinically relevant bioactivity and was safe and well tolerated, according to two oral presentations in Amsterdam at the Annual European Congress of Rheumatology.

"They say they intend to go into a Phase III trial, but it looks like they'e talking about a novel endpoint - a composite - and we've yet to hear a sound-off from the FDA," Raymond said. "I'm struggling with this news. A lot of questions need to be answered."