Gout Uric Acid Crystals
From the Wall Street Journal and Reuters: Savient Pharmaceuticals
Wed Sep 15, 2010 9:15am EDT
(Reuters) - Shares of Savient Pharmaceuticals Inc jumped 27 percent on Wednesday, a day after the company's gout drug Krystexxa got U.S. regulatory approval making it the first approved treatment for gout in adults who do not improve with conventional therapies.
The approval is also expected to trigger a renewed interest in the company that has been looking for a strategic deal, and some analysts expect a deal within three to four months.
"We assume that discussions have been ongoing, and that the label has been distributed together with term sheets: we would not be surprised to see a sale of the company by the end of the quarter," Roth Capital Partners analyst Andrew Vaino said in a note.
Companies with a rheumatology exposure and sales force could see Savient as a meaningful fit and Abbott Laboratories Inc (ABT), Bristol-Myers Squibb (BMY), Roche Holding AG (RHHBY), Amgen Inc (AMGN), Johnson & Johnson (JNJ) and Pfizer Inc (PFE) were named as potential suitors.
Savient expects the drug to be available by prescription in the United States later this year and said it was well advanced in its preparations for the U.S. launch.Krystexxa was also granted an orphan drug designation by the FDA in 2001 that can provide the drug seven years of market exclusivity.In September last year, Savient had said it planned to cut 26 jobs, or about 38 percent of its workforce, to reduce costs and focus on the resubmission of marketing application for the drug. [ID:nBNG448440]
Other U.S. companies developing gout treatments are Regeneron Pharmaceuticals Inc (REGN), Ardea Biosciences Inc (RDEA) and BioCryst Pharmaceuticals Inc (BCRX). Swiss drugmaker Novartis AG (NVS) is also developing a treatment for gout.
Savient shares, which have gained 22 percent over the past three months in anticipation of a FDA nod for the drug, were up 27 percent at $18.75 in premarket trade. They closed at $14.76 Tuesday on Nasdaq.
On a conference call with analysts Wednesday, Savient said it was still looking to sell the company but did not disclose any other details.Krystexxa, which was denied approval last year by the U.S. Food and Drug Administration citing manufacturing issues, was approved on Tuesday with a "black-box" warning -- a strong label warning -- regarding allergic and infusion reactions.East Brunswick, New Jersey-based Savient is also required to do a post-approval study in 500 patients to further evaluate the frequency and severity of infusion and allergic reactions.
The boxed warning did not come as a surprise given the adverse cardiovascular events that were seen during the trials, and analysts said the required risk evaluation and mitigation strategy was "mild" and would not impact the drug's usage or adoption."We continue to believe Krystexxa could become a best-in-class therapy with its differentiated profile and represent a new treatment paradigm for this unmet need to warrant a $400 million peak potential by 2013," Global Hunter Securities analyst Kimberly Lee said.According to Thomson Reuters data, the drug is expected to reach sales of $173 million and capture a 23 percent market share by 2014.
About 5 million Americans suffer from gout, in which a build up of uric acid causes swollen joints. Of those, about 40,000 to 60,000 see no improvement with other therapies, according to the company."For the pricing of the drug, the Street expects up to $100,000 (per patient per year), whereas our survey shows about $25,000 to be cost-prohibitive for Krystexxa use," Jefferies and Co analyst Eun Yang said.
SEPTEMBER 15, 2010, 2:59 P.M. ET Wall Street Journal
The East Brunswick, N.J., drug maker had $89 million in cash at the end of the second quarter, but President Paul Hamelin said the company can move forward with launching Krystexxa without the need for more financing. Savient finally got Food and Drug Administration approval of the drug late Tuesday after the agency declined to approve the drug last summer with a request for more information.
"We are in the process of the early commercialization, but the central goal is to sell the company," Hamelin said. The company hasn't had a chief executive since late 2008.
Shares of Savient recently surged 35% to $19.95, their highest level in almost two years, on more than 20-times average daily volume.
Hamelin declined to comment on the state of talks or other details surrounding the sale process, but he said Savient expects to have Krystexxa available by year-end.
Despite the focus on cutting a deal, he said the company is "morally obligated" to make the drug available to patients.
He believes Krystexxa is an attractive asset because it is a biotech drug--meaning it is derived from biologic processes rather than chemical ones--and meets a significant unmet medical need. Biologic therapies tend to have high prices and are a development focus for many large pharmaceutical companies.
Savient hasn't yet determined the price of the drug, but company executives said on a conference call Wednesday that it would have a "significant premium or a multiple" above the anti-inflammatory biologics that command more than $20,000 a year.
Companies that could be interested in such a product include those that already sell drugs to rheumatologists for diseases like arthritis, such as Johnson & Johnson (JNJ), Abbott Laboratories (ABT), Pfizer Inc. (PFE) and Amgen Inc. (AMGN).
Abbott and Amgen declined to comment, citing policy. Officials from Pfizer and J&J weren't immediately available for comment.
Gout is a painful form of arthritis caused by excess uric acid, a waste product, accumulating in the body and crystalizing in joints. The condition is more common in men and occurs in episodes.
The standard care for gout attacks is anti-inflammatory medicines, but when attacks occur regularly, physicians widely use allopurinol, which blocks uric acid production, as a preventive measure. Krystexxa is the first drug approved in the U.S. for chronic gout patients who don't respond to standard therapy, a population that the company estimates at 170,000 in the U.S. and even more in Europe. That estimate contrasts with the FDA's own estimate of 90,000 patients in the U.S.
Estimates of the success of Krystexxa vary widely. Soleil Securities estimates that the drug will have peak annual sales of $900 million and Wedbush estimates eventual sales of $1.3 billion a year, while Jefferies sees just $170 million in 2014.
Formerly known as Bio-Technology General Corp., a specialty pharmaceutical company founded in 1980, Savient changed its name in 2003 and sold its global biologics-manufacturing business in 2005 and its Rosemont Pharmaceuticals unit in 2006.
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Disclosure: Long SVNT