Human Genome Sciences Inc. (HGSI) is expecting regulatory approval of its lupus drug in March, but Chief Executive Thomas Watkins is trying to make sure investors don't get too excited about the drug's launch.

Benlysta, a drug being develop by Human Genome and GlaxoSmithKline PLC (GSK), would be the first drug for the autoimmune disease in more than 50 years. After an earlier delay, the Food and Drug Administration is set to make a decision in March, and Wall Street generally expects sales to exceed $1 billion a year.

Watkins isn't worried about the drug selling--earlier this week, the company projected "multibillion-dollar annual revenues" by 2015--but he has become concerned about investor perceptions of the launch's speed in recent months.

"We've been trying to manage down expectations a bit," he said in an interview Wednesday at the J.P. Morgan healthcare conference in San Francisco.

"Often with drug launches, the expectations are so high that for the first couple of quarters it is almost impossible to meet the expectations," he said.

Companies such as Amgen Inc. (AMGN) and Dendreon Corp. (DNDN) faced Wall Street scrutiny in 2010 from slower-than-expected launches of new products that are expected to be blockbusters eventually.

The success of Benlysta has made Human Genome's stock a darling of the sector. It traded at 45 cents in early 2009 amid pessimism ahead of the two trial results for Benlysta. The shares recently traded at $27.02.

Cowen & Co. analyst Eric Schmidt said last month that the stock price of about $25 implies that peak sales of the drug need to reach $2.5 billion to $3 billion a year. He said that level was unlikely and predicts a peak of $1.7 billion in lupus-related sales, valuing the stock at $11 to $12.

Watkins declined to offer estimates, but he believes that the initial uptake may be gradual. It will take some time for managed-care companies to get the drug in their systems, he said. Watkins said managed-care companies will pay for the new drug, but that they typically drag their feet in setting up reimbursement for new, pricy biologic drugs.

He declined to comment on price but expects it to be somewhere between $20,000 and $45,000 a year.

Physicians will have to use the "buy-and-bill" method--meaning they acquire the drug and then bill an insurer--something that frequently delays physicians in immediately using the drug in a lot of patients. Physicians that would prescribe a drug like Benlysta are familiar with the process, but it can lead to a slow launch, Watkins said.

The drug's success in two large studies has produced consistent speculation that Glaxo or another large drug maker would acquire Human Genome. Watkins declined to comment on any interest from buyers but said he is focused on building the company to grow as an independent organization.

Part of that plan is to build the company's later-stage pipeline, which it plans to do through licensing and acquisitions in immunology and cancer.

Watkins declined to name a target, but he expects any deal will be below $1 billion and won't depend on the success of Benlysta. The company ended 2010 with about $950 million in cash, and Watkins is confident in tapping the credit markets.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com