No shocker here: Human Genome Sciences (Nasdaq: HGSI) announced today that Zalbin, which goes by the name of Joulferon in Europe, was rejected by the Food and Drug Administration. Human Genome Sciences and partner Novartis (NYSE: NVS) have decided to drop development of the hepatitis C treatment.
I'm surprised only that the rejection didn't come earlier. The agency took its fully allotted 10 months to review the drug, even though it told the companies in June that an approval looked unlikely.
Zalbin was designed to be more convenient to take than current hepatitis C treatments from Roche and Merck (NYSE: MRK), by cutting the number of injections -- and side effects -- in half. Unfortunately, the drug didn't work quite as well as the current treatments, which likely prompted the FDA's rejection.
Don't feel sorry for either company, though. Novartis can easily take a hit. The pharma giant also announced that it was dropping development of an antifungal drug, Mycograb; combined with the Zalbin decision, that will result in a $590 million charge in the third quarter. The hit will be somewhat offset by the sale of the U.S. rights for adult-incontinence medicine Enablex to Warner Chilcott (Nasdaq: WCRX), which will boost earnings by $390 million in the fourth quarter.
For Human Genome Sciences, the focus now rests squarely on its lupus treatment Benlysta, which is partnered with GlaxoSmithKline (NYSE: GSK). Calling a guaranteed approval isn't nearly as easy as guaranteeing a rejection, but I like Benlysta's chances. The drug passed both its phase 3 trials, and there hasn't been a drug approved specifically for lupus in the past 50 years, so the FDA should be a little more forgiving on the side-effect front.
Investors won't have to wait long for an approval. Expect a decision on Benlysta on or around Dec. 9.
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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of GlaxoSmithKline and has a disclosure policy.
