Seeking Alpha

Stone Fox Capital's  Instablog

Stone Fox Capital
Send Message
Stone Fox Capital Advisors is a registered investment advisor founded in 2010. The firm offers portfolio management with a focus on opportunistic stocks providing secular growth trends at an affordable value. An emphasis is placed on fundamental analysis though charts are used for timing entry... More
My company:
Stone Fox Capital
My blog:
Out Fox The Street
  • Savient Pharma Finally Gets Approval for Gout Drug 0 comments
    Sep 15, 2010 9:40 AM | about stocks: SVNTQ, AMGN, ABT
    After Hours, the FDA finally approved the gout drug Krystexxa in what seemed like an eternity. Savient Pharma (SVNT) had originally gotten an FDA Panel recommendation by the count of 14-1 way back in , but final FDA approval was delayed in August 2009 principally due to manufacturing issues.

    Gout is a common type of arthritis in which deposits of uric acid build up around joints, causing pain, swelling and stiffness.Considering the general lack of modern drugs for gout it has been generally accepted that this drug would have little issue in being put to use by doctors. There is a huge market waiting on the approval of this drug.

    Though it seemed apparent that the drug would be approved today the stock has languished in the $15 range for months. It last traded up 20% to around $18 after hours. SVNT is a 2.7% position in the Growth Portfolio so Stone Fox has a keen issue in following the trading tomorrow.. Below are some details from analysts regarding buyout prices. Remember the company basically put themselves up for sale last year so an announcement is expected imminently. Any price in the $25 range would definitely draw us into selling. Something around $20 seems very low for drug with the potential of a $1B drug even if a realistic number is something north of $500M.

    Tomorrow should be interesting with a CC scheduled prior to the market opening. The number 1 question would be what is the offer price on a buyout.

    Acquisition Price via Bloomberg article:

    Savient may sell for $21 a share, an 42 percent premium over the most recent closing price, based on an estimate of $900 million in peak sales for Krystexxa, said Gene Mack, an analyst at Soleil Securities in New York. Eric Schmidt, of Cowen & Co., projects $600 million in peak sales and an acquisition price of $20 a share. Salveen Richter, of Collins Stewart, is looking for $700 million in drug sales and $25 per share.
    An offer of $25 a share would value Savient at $1.69 billion based on the company’s 67.6 million shares outstanding as of Aug. 3.

    “They’ve placed their bet,” Richter said in a telephone interview. “They need approval to move forward. The next question is how many buyers.”

    Novartis, of Basel, Switzerland, would be a logical suitor because its treatment for gout flares could be packaged with Krystexxa, Mack said. Amgen, based in Thousand Oaks, California; J&J, based in New Brunswick, New Jersey; or Abbott Laboratories of Abbott Park, Illinois, may also be interested because they have rheumatology products made from biotechnology, he said.


    Disclosure: Long SVNT
    Themes: Biotech, Krystexxa Stocks: SVNTQ, AMGN, ABT
Back To Stone Fox Capital's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

  • $KSS shocked this is down on such a big earnings beat.
    May 14, 2015
  • $HABT guess the market sees $MCD as less of a threat after today.
    May 4, 2015
  • still shocked to see the willingness to sell $ZOES
    Mar 23, 2015
More »

Latest Comments


Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.