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Linear Growth Isn't Enough

After investors got through the shock that Human Genome Sciences' (Nasdaq: HGSI  ) Benlysta wouldn't be an instant blockbuster, the theory became that the lupus drug would be like a try-it-before-you-buy-it infomercial product. Doctors would try it with a few patients, and then when they saw results, they'd increase their prescription habits, leading to accelerated growth.

That's not happening quite yet.


Q2 2011

Q3 2011

Q4 2011

Benlysta Net Sales (in millions) $7.8 $18.8 $25.7
Quarter-Over-Quarter Growth N/A 141% 37%

Source: Company releases. N/A = not applicable.

HGS broke down the sales by month, but I'm not sure what to do with the data. During the quarter, gross sales went from about $9.2 million in the first four weeks to $8.4 million to $10 million. There's improvement from the first to the third period, but the middle month shows there's still variation in the sales. Was the $10 million a trend up, or just some of that variation?

Working in HGS and marketing partner GlaxoSmithKline's (NYSE: GSK  ) favor, the middle month was November, which contained not only Thanksgiving, but the American College of Rheumatology annual meeting, so many rheumatologists weren't in their offices seeing patients. Still, an 8.7% weekly increase from the first to the third four-week period is nothing to get overly excited about, especially since Christmas was in the bonus 13th week, so it didn't bring down the average directly; there could have been some pre-Christmas vacations in the last week, though.

Blaming lackluster sales on holidays sounds like an excuse, but it's a necessary evil of doing quarter-over-quarter comparisons. The quarter-over-quarter growth of Dendreon's (Nasdaq: DNDN  ) Provenge also slowed sequentially in the fourth quarter. Until they have meaningful year-over-year comparisons, there will be a little fudging.

On the other hand, there's Regeneron Pharmaceuticals (Nasdaq: REGN  ) , which launched its macular degeneration dug Eylea at the end of November and ended up with sales of around $24 million through the end of the year. A little of that is sitting in inventory, but it still appears that eye doctors are more excited to try Eylea than rheumatologists are to try Benlysta.

I'm not sure investors should give up on HGS just yet. Accelerated growth tends to come on without warning. But investors should keep the company on a short leash.

Human Genome Sciences might not have had the best 2011, but Fool analysts think this company will have a great 2012. Click here to grab your copy of the new free report.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Dendreon. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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