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HGS to drop its drug for hepatitis C

Human Genome Sciences Inc. has decided to drop one of its three late-stage development drugs after feedback from the U.S. Food and Drug Administration indicated it was not likely to be approved.

The company said Tuesday it would stop development of albinterferon alfa-2b for use in chronic hepatitis C, which it was developing with Novartis AG under the brand Zalbin. Human Genome had warned investors in June that it was “unlikely” to receive approval based on a preliminary FDA report.

The decision came after the FDA sent Human Genome Sciences a “complete response letter” this week formally letting it know the review period for Zalbin was complete and that the application was not yet ready for approval.

“Any time you discontinue a drug, it’s certainly not great news,” Christopher J. Raymond, an analyst with Robert W. Baird & Co., in Milwaukee, said Wednesday. “But, it was totally expected, was our take on it.”

Human Genome’s shares lost 88 cents, or nearly 3 percent, Wednesday to close at $28.91.

The company did not return calls seeking comment.

As one of three drugs in its pipeline, the loss of Zalbin will affect revenues for Human Genome. In its July earnings report, the company said it had received payments totaling $207.5 million through the end of June.

Human Genome and Novartis agreed in 2006 to share development costs, sales and marketing expenses and profits of Zalbin in the U.S. Novartis held the rights outside the U.S. and in April withdrew its regulatory application in Europe for the drug.

According to the U.S. Centers for Disease Control and Prevention, approximately 3.2 million people have chronic hepatitis C infections. Hepatitis C is a viral chronic blood-borne infection.

Some analysts said the decision to halt further spending on Zalbin would allow Human Genome to put more resources into Benylsta, its flagship treatment. Benlysta is aimed at suppressing the immune system’s response to lupus, which is an inflammatory disease prompting the body to attack its own tissue and organs. The drug has shown success over placebos in treating lupus during Phase III trial and is seen as the company’s best hope for future revenues.

“Benlysta is the driver of the store there, hands down,” Raymond said.

The third drug in late-stage development for Human Genome Science is raxibacumab, a treatment for inhalation anthrax.

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