GSK/Human Genome Sciences - FT.com Small pharmaceutical companies have big opinions of themselves. Or so it seems. The US pharma group Human Genome Sciences rejected an unsolicited bid from GlaxoSmithKline on Thursday, only a day after Roche walked away from little Illumina after it convinced investors to reject the Swiss pharma group's terms. In offering $2.6bn for HGS (about a 50th of GSK's market capitalisation), the UK company would swap profit sharing and royalty agreements on some HGS drugs for full ownership. The hard part is evaluating whether the price - at $13 a share, 80 per cent above the undisturbed price - is fair. After all, HGS is loss making. So GSK is banking on HGS's pipeline of three main drugs. Sales of Benlysta, the lupus treatment launched last year, could reach $600m by 2015 - not exactly record breaking, and GSK already shares half the profits anyway. Benlysta added only half a per cent to GSK's total sales last year. Meanwhile, HGS's second drug - albiglutide for diabetes - would compete with Amylin Pharmaceutical's Byetta. Albiglutide could achieve annual sales of, say, $400m - half its competitor's. Darapladib, aimed at heart attacks, would compete with Bristol-Myers" Plavix, which dominates with annual sales of $8bn. On very optimistic forecasts (assuming a 60 per cent margin, a 30 per cent tax rate, cutting existing share agreements and gaining half of Plavix's market share) the drugs could add $2bn to GSK's bottom line by 2015. As with any pipeline-based deal, discounting the risk that these drugs will fail is tricky. Benlysta has had a poor start. And drugs for diabetes and heart attacks are doubly risky: dangerous side effects can emerge, and competition is rife. That might explain why HGS's shares doubled on Thursday. Its investors have more to gain than GSK has to lose.