Placing Bets On Human Genome's Benlysta

• By the tickerspy.com Staff
• On 12:33 pm EST, Thursday November 5, 2009

There has been a lot of hype surrounding Human Genome Sciences' (NASDAQ: HGSI - News) lupus drug recently.

To those who bet on Human Genome Sciences before its mid-July leap, congratulations, you are now rich. Buyers who got in ahead of the latest spike at the end of October have also netted some healthy gains. Whether the stock will continue to rocket higher on developments related to its lupus drug remains to be seen, but based on high-end forecasts, there could be significant room to the upside.

Human Genome executives said Monday that 200,000 of the 325,000 Americans suffering from systematic lupus would be candidates for treatment using their Benlysta drug, according to coverage by The New York Times. With a price tag potentially upwards of $20,000 a year, that could mean over $4 billion in annual sales - not bad for a company currently worth $4.5 billion.

A look at the performance among components of the Cancer Stocks Index shows that there is significant risk when picking winners in the volatile sector. While Human Genome's drug has seen positive results in key trials - more than can be said for a number of other companies in the Index - the degree of its success will not be known for some time. The company plans to apply for marketing approval in the U.S. and Europe in the first half of 2010.

Investors looking for a safer play on Benlysta might opt for Human Genome's marketing partner GlaxoSmithKline (NYSE: GSK - News). Glaxo is on a roll this year, most recently benefitting from its swine flu vaccine and antiviral therapy Relenza.

A look at the Big Pharmaceutical Stocks Index's individual component performance over the last six months shows that only Merck (NYSE: MRK - News) has outperformed Glaxo for the period, during which both have appreciated by more than 30%.

Meanwhile, fellow pharmaceutical giants Amgen (NASDAQ: AMGN - News) and Wyeth (NYSE: WYE - News) are up by less than 20% in the last six months. As of this writing, Eli Lilly (NYSE: LLY - News) is fractionally negative for the period.

Thick-skinned investors, or traders looking to scalp short-term profits can sort any of tickerspy's 32 healthcare subsector Indexes by '% of Daily' to find stock-specific volume spikes. At the time of this writing, for example, Thoratec (NASDAQ: THOR - News) is up by 8% on a 740% surge in shares traded.

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