While revenue in the first quarter also included payments from partnerships for reaching milestones -- as it usually does for HGS -- this time nearly 87 percent of it stemmed from its AbThrax anthrax treatment sales to the federal government. The biotech company is under contract to deliver 27,000 doses of the drug for the U.S. Strategic National Stockpile, which the government would use in the event of a national emergency like a flu outbreak, terrorist attacks or earthquakes that are severe enough to cause local supplies to run out.

The stock is surging 35 percent today, but investors may be jumping ahead of themselves as the positive numbers are probably temporary. HGS was under contract this quarter, but it delivered most of the doses and expects a much smaller payment in the next quarter. HGS is trying to get another contract from the government, but so far, no specific word on that.

Meanwhile, the company is continuing to develop the drugs that should be the main growth drivers going forward: Hepatitis C drug Albuferon, lupus drug LymphoStat-B, and Syncria for type-2 diabetes, all in different stages of Phase 3 trials:

• Albuferon, which previously disappointed investors by not performing as well as hoped in trials despite achieving efficacy comparable to rivals with half the injections, could be the first HGS product approved by the FDA, perhaps by the second half of 2010.
  
• Analysts are also concerned about LymphoStat-B as data from clinical trials is still unknown and will be released this July and November. GlaxoSmithKline (GSK) paid $1.6 as per agreements for the LymphoStat-B drug.
• Syncria received a $9 million payment from GSK for achieving the milestone of Phase 3 initiation.
  

Of course, H. Thomas Watkins , President and CEO feels differently about Albuferon, saying, "We reported positive results from the second of two pivotal trials of Albuferon in chronic hepatitis C, and we plan global marketing applications in fall 2009." That, of course, remains to be seen.