Look Beyond the Botched Buyout Process for Savient's Value

Savient (OTC:SVNT) refused to provide information on the failed buyout process on its Tuesday conference call. So investors were left guessing at the interest level. On the one hand, it's understandable that management doesn't want to discuss details in order to not hurt their hand in future discussions. On the other hand, they need to do something better to support the stock price and shareholders. Management should provide some expectations on sales price, since they apparently aren't willing to sell the company to the highest bidder. The company is leaving too much open for interpretation and the market has spoken that it's not acceptable.

Having said that, I was pleased to hear the company has made a lot of progress towards the launch of [gout drug treatment] KRYSTEXXA. Savient already has the initial product labeled and ready. Marketing materials are waiting for approval from the FDA. One of the largest private payers has already agreed to include it as a reimbursable cost without knowing its price. The company also expects limited costs to develop the infrastructure needed for the launch.

All in all, the company appears ready for a December launch, which is probably the direction it should have taken all along. Going public with the desire to sell itself was never going to elicit the highest bids for Savient.

The stock price saw a limited bounce back Tuesday. As usual, traders are overly focused on a buyout and quick money. SVNT has an FDA-approved drug in high demand. Don't sell the stock short just because management didn't handle the buyout process well. The company has a lot more value then the current market cap around $820M. As I reported Monday, one analyst expects peak revenue to exceed that market cap; which is unheard of in the biotech sector.


  • The company will commence shipments in December with announcement of price

  • Available for prescription at time of shipment

  • Initial launch - ACR November 7-10th. It will use package insert material while awaiting FDA approval of marketing materials

  • Initially it will concentrate on infusion centers - 1,700+

  • A 60 person sales force to be ready and trained by January 2011

  • Doesn't require a lot of infrastructure costs due to the limited targeted population

  • Company has refused to discuss cash needed for launch

  • Filing EU application on January 4th, 2011. The review process takes about a year

  • One of the largest medical payers has already agreed to reimburse the cost without knowing the cost

  • Savient is still focused on 170K patients or 3% of the gout population

Disclosure: Long SVNT