Biotech Values

[DewDiligence]

Human Genome Sciences Completes Transaction Establishing CoGenesys as an Independent Company

[This CoGenesys spinoff is a value-destroying transaction for HGSI’s shareholders, IMO.]

http://biz.yahoo.com/prnews/060612/nym174.html?.v=47

>>
Monday June 12, 7:01 am ET

ROCKVILLE, Md., June 12 /PRNewswire-FirstCall/ -- Human Genome Sciences, Inc. (Nasdaq: HGSI ) today announced that it has completed the transaction establishing its CoGenesys division as an independent company that will focus on the early development of selected gene-based product opportunities and the monetization of certain HGS intellectual property and technology assets. In a separate press release today, CoGenesys announced the completion of a $55 million Series A financing.

"Through this transaction, HGS will realize value from certain intellectual property assets and early-stage product opportunities that we do not plan to develop internally," said H. Thomas Watkins, President and Chief Executive Officer, Human Genome Sciences. "HGS will benefit in future years from its right to share in CoGenesys revenues and from its equity interest [this is somewhat disingenuous because HGSI’s equity stake in CoGenesys is only 13%]. HGS will maintain its focus on progress toward the commercialization of our lead products, Albuferon for hepatitis C and LymphoStat-B for lupus, both of which are expected to enter Phase 3 clinical trials before the end of 2006."

About the CoGenesys Transaction

As a result of the CoGenesys transaction, HGS will retain a 13% equity interest in the new company. HGS has granted CoGenesys exclusive rights to develop and commercialize biological products based on certain human genes discovered by HGS, and has granted CoGenesys a license to use its proprietary albumin-fusion technology to develop and commercialize certain albumin-fusion proteins. HGS is entitled to a portion of the revenue that CoGenesys receives from outlicensing or sales of certain therapeutic and diagnostic products successfully developed and commercialized. HGS also retains the right of first refusal prior to outlicensing by CoGenesys of several specific products that may be developed. In addition, HGS has the option to have CoGenesys perform pre-IND development work for up to two products per year, with reimbursement for expenses on a cost-plus basis; CoGenesys will be entitled to development milestone payments on any resulting products.

About CoGenesys

CoGenesys was created as a division of HGS in the first quarter of 2005. As an independent company, CoGenesys has assumed salary and benefits obligations for its approximately 70 employees, as well as responsibility for its 48,000 square-foot facility, along with equipment leases. As previously announced, Craig A. Rosen, Ph.D., formerly President, Chief Scientific Officer and a Director of HGS, has joined CoGenesys as Executive Chairman and Chief Scientific Officer. Steven C. Mayer, formerly Executive Vice President and Chief Financial Officer of HGS, has joined CoGenesys as Chief Executive Officer.

About Human Genome Sciences

The mission of Human Genome Sciences is to discover, develop, manufacture and market innovative drugs that serve patients with unmet medical needs, with a primary focus on protein and antibody drugs. For more information about Human Genome Sciences, please visit the Company's web site at www.hgsi.com.
<<