Human Genome Sciences - Benlysta

The company: Human Genome Sciences
The drug: Benlysta
The disease: Lupus
Sales: $59 million in 2011

Human Genome Sciences got into trouble with Benlysta fast. After the first three quarters of sales were tallied at the end of 2011, HGS had only $59 million to show for the first new drug to treat lupus in 56 years--a long, long way from the $2.5 billion potential it once cited. And after being lauded by a long lineup of analysts eager to see the company's first new drug launch turn into a blockbuster, CEO Tom Watkins had to get out the budget ax and start chopping very early on.

Cutting at the top line, though, couldn't disguise the deep problems HGS had on the bottom line. One of the big problems that HGS ran into was sticker shock among the physicians expected to prescribe it, with the same kind of reimbursement fears that plagued the Provenge launch.

As analysts turned from optimistic to pessimistic, the company's share price quickly slid to a bargain basement price. That in turn set up an ideal scenario for GlaxoSmithKline ($GSK), HGS' longtime development partner. After initially offering a mere $2.6 billion for the company, HGS would eventually succumb to the only bidder at the table for $3 billion.

Through the lengthy standoff between the two companies, HGS had tried to confidently assure investors that it was worth far more than that. But by that time the biotech had largely lost everyone's confidence, making its protests all too easy to ignore. A final suggestion that Celgene ($CELG) was preparing a counter offer, picked up by some members of the business news elite, was laughed off as sheer nonsense.

When a drug developer-turned-marketer loses credibility, it's almost impossible to win it back. And the cost of that loss can run into the billions. For HGS, which reportedly shrugged off a $7 billion buyout offer at one point, investors will be counting the cost for some time.

For more:
The ax drops on hundreds at Human Genome Sciences in wake of GSK buyout
Biogen Idec cashes out royalties on Benlysta
GSK's Benlysta gets another shot at U.K. market
Glaxo nabs HGS for $3B after months of wrangling

Human Genome Sciences - Benlysta
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