- The Washington Times - Monday, December 22, 2003

Shares of Human Genome Sciences Inc. rallied yesterday after the Rockville pharmaceutical company announced a deal with pharmaceutical giant Pfizer Inc.

Pfizerlast week bought from Human Genome its rights for research, development and marketing of products based on gene sequences from Staphylococcus aureus, a spherical bacterium that causes a wide range of hospital infections.

The deal amends a 1996 agreement with Pharmacia & Upjohn Inc., which Pfizer acquired earlier this year. Human Genome will receive a one-time, undisclosed license fee while Pfizer is relieved of obligations under the prior deal.

Company shares closed on the Nasdaq Stock Market yesterday at $13.08, up 2 percent from a week earlier at $12.78.

The deal follows news that Human Genome is laying off 75 workers, or 7 percent of its work force, with redundant job duties.

Human Genome is hiring more employees for clinical development and manufacturing positions, a company spokeswoman said.

Although the Pfizer deal is not expected to greatly affect the bottom line, several analysts say, the agreement signifies the company’s plan to partner with other biotech firms for its more developed clinical programs.

“This is part of a refined focus on the development of later-stage programs rather than on early discovery programs that shows a maturing in the company,” said Edward Tenthoff, a senior research analyst with U.S. Bancorp Piper Jaffray, a Minneapolis securities firm.

Part of that focus shift includes letting go of some workers in early development programs to cut costs and eventually become profitable, Mr. Tenthoff said, rating the stock as outperforming the market.

Mr. Tenthoff does not own shares of Human Genome, but U.S. Bancorp is seeking a banking relationship with the company.

Yaron Werber, a biotech analyst for New York investment banking firm SG Cowen Securities Corp., said Human Genome still has a high spending rate and will require additional financing to become profitable.

Human Genome narrowed its loss for the third quarter ended Sept. 30 to $47.7 million (37 cents per share) from $75.1 million (58 cents) a year earlier. Revenue for the quarter slipped 33 percent to $1.2 million from $1.6 million in the 2002 third quarter.

Mr. Werber, who does not own Human Genome stock, projected the company would have a loss of $241 million for 2004, up from a $189 million loss expected for 2003. He rated the stock as outperforming the market because of Human Genome’s multiple drug programs that have advanced to human clinical trials.

SG Cowen does not have business with the company.

David Witzke, an analyst with SunTrust Robinson Humphrey Capital Markets, said the company’s main challenge will be getting Food and Drug Administration approval for drugs like ABthrax, an anthrax antidote.

Mr. Witzke said in a recent report that Human Genome may file for FDA approval of ABthrax next year and that “the company’s success does not hinge on any one program.” He rated the stock a “buy.”

Mr. Witzke does not own any stock in Human Genome, but SunTrust Robinson Humphrey, a division of Atlanta banking company SunTrust Banks Inc., does have a banking relationship with Human Genome.


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