Savient Pharma Shares Annihilated as Company Files Chapter 11

Andrew Klips |

Shares of specialty drugmaker Savient Pharmaceutical (SVNT) are trading as low as 6 cents in premarket activity on Tuesday after filing Chapter 11 bankruptcy in a Delaware court on Monday. Shares were off 89 percent from Monday’s close at 57 cents.

Bridgewater, New Jersey-based Savient also filed a motion asking for approval to sell the majority of its assets to Sloan Holdings C.V., a subsidiary of US WorldMeds, LLC, for approximately $55 million.  The proposal will serve as a “stalking horse” bid (the lowest amount the company would be sold for) in a court-supervised auction of Savient’s assets, including its flagship drug Krystexxa (pegloticase).

Krystexxa is approved for use in adult patients suffering from severe, chronic gout (a form of arthritis occurring because of excess uric acid accumulation) who are refractory or do not respond to other standards of care.  About 6 million people in the United States suffer from gout, according to the National Institute of Health.

Net sales of Krystexxa were $6.1 million in the second quarter, versus $4.0 million in the second quarter of 2012, bolstered mostly by raising the price of the drug, not higher sales volumes.  Net loss for the quarter, however, swelled to $25.4 million, or 35 cents per share, from a net loss of $16.4 million, or 23 cents per share, a year earlier.

"We are committed to an outcome that maximizes value and allows Krystexxa to remain commercially available in the U.S. to all of the patients who have come to rely on this life-changing therapy,” said said Stephen O. Jaeger, chairman of Savient.   Jaeger said that the company has “rigorously” explored all strategic options and the bankruptcy protection is the best possible solution.

Other filings have been made to the court to keep Savient operations running during the bankruptcy process.  Savient anticipates that a final sale and closing of the transaction to happen by the end of the year.

The court documents, case 13-12680, were filed with the U.S. Bankruptcy Court, District of Deleware (Wilmington) and can be viewed at Savient’s claims agent, Garden City Group.  The records show that Lazard Freres & Co. LLC has been shopping Savient since March, contacting 57 potential buyers, ranging from financial firms to large pharmaceutical companies.  17 companies entered non-disclosure agreements to explore the purchase, with five offering non-binding proposals that were eventually narrowed to two definitive proposals.  The US WorldMeds’ offer was the best one.

Savient reported $260 million in liabilities and $74 million in assets in the filings.  The largest holder of the company is Palo Alto Investors LLC with a 15-percent stake, followed by Franklin Templeton (8 percent) and Wellington Management Co. (7 percent).

Through Monday’s close, shares of SVNT were down about 46 percent in 2013.

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