Savient Pharmaceuticals' total revenues reach $1.1M in first-quarter 2010

Savient Pharmaceuticals, Inc. (Nasdaq: SVNT) announced that its board of directors, with input from its financial advisors, has determined that a sale of Savient post-approval of KRYSTEXXA™ by the U.S. Food and Drug Administration (FDA) (assuming KRYSTEXXA is approved) would be the best way to realize the full commercial potential of KRYSTEXXA on a global basis and would be the optimal outcome for the Company's shareholders and other stakeholders.

Savient's board of directors made this determination after a careful evaluation of potential strategic alternatives for the Company. The Company does not plan to make any further announcements or engage in any discussions with analysts or stockholders regarding this effort unless and until a definitive agreement providing for the sale of Savient is executed.

Savient also reported financial results for the three months ended March 31, 2010.  For the first quarter of 2010, the Company had a net loss of $8.3 million, or $0.13 per basic and diluted share, on total revenues of $1.1 million compared with a net loss of $21.9 million, or $0.41 per basic and diluted share on total revenues of $1.1 million for the same period in 2009.  The Company ended the quarter with $95.0 million in cash and short-term investments, a decrease of $13.2 million since December 31, 2009.

Operational Highlights:

• Resubmitted the Biologics License Application (BLA) for KRYSTEXXA, a treatment for chronic gout in patients refractory to conventional therapy, to the FDA.

• The FDA agreed to file for review the resubmission of the BLA for KRYSTEXXA, deemed the resubmission a Class 2 response, and established September 14, 2010 as the Prescription Drug User Fee Act (PDUFA) action date.

Financial Results of Operations for the Three Months Ended March 31, 2010

Total revenues of $1.1 million for the three months ended March 31, 2010 were unchanged as compared to the three months ended March 31, 2009.  Net sales of our branded product Oxandrin® were higher by $0.3 million for the three month period ended March 31, 2010 versus the same period in 2009.  Offsetting the higher Oxandrin net sales were $0.3 million in lower net sales of our authorized generic oxandrolone product for the three month period ended March 31, 2010 versus the same period in 2009.

Research and development expenses decreased by $6.5 million, or 50%, to $6.3 million for the three months ended March 31, 2010, from $12.8 million for the three months ended March 31, 2009.  The lower expenses were primarily due to a $2.2 million decrease in manufacturing development related expenses associated with the production of commercial batches of pegloticase active pharmaceutical ingredient (API) by our third party manufacturer and technology transfer costs from our proposed secondary source supplier of pegloticase API. Additionally, compensation expense was lower by $1.4 million as a result of decreased headcount and severance costs recorded in the prior year, coupled with a decrease of $1.3 million in consulting service costs resulting from our preparation for the June 2009 FDA Advisory Committee meeting for KRYSTEXXA in the prior year.  

Selling, general and administrative expenses decreased $4.6 million, or 48%, to $4.9 million for the three months ended March 31, 2010, from $9.5 million for the three months ended March 31, 2009. The decrease was primarily due to $1.6 million in lower compensation related expenses resulting from decreased headcount. Additionally, the lower costs were due to $1.4 million in decreased marketing expenses in preparation for the commercial launch of KRYSTEXXA in the prior year and lower outside legal expenses of $0.5 million.

Other income, net increased $2.2 million in the three months ended March 31, 2010 versus the three months ended March 31, 2009.  This increase resulted primarily from the mark-to-market valuation adjustment to our warrant liability in the current year to record a non-cash gain due to the depreciation in fair market value of our warrant liability.  The depreciation in fair market value resulted primarily from a reduction in the remaining term of the warrants.

Use of Non-GAAP Measures

To supplement our consolidated financial statements presented in accordance with Generally Accepted Accounting Principles (GAAP), we use the following measures defined as non-GAAP financial measures by the Securities and Exchange Commission (SEC): non-GAAP net loss and non-GAAP loss per basic and diluted share. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. In addition, the non-GAAP financial measures included in this press release may be different from, and therefore not comparable to, similar measures used by other companies. Although certain non-GAAP financial measures used in this release exclude the accounting treatment of valuation adjustments associated with our outstanding warrants to purchase shares of our common stock, these non-GAAP measures should not be relied upon independently.

Partially offsetting our net loss for the quarter ended March 31, 2010 is a non-cash gain of $2.1 million due to a valuation adjustment relating to warrants that we issued in connection with our April 2009 registered direct offering.  On a non-GAAP basis, excluding the $2.1 million valuation adjustment, our net loss for the first quarter of 2010 was $10.4 million, or $0.16 per basic and diluted share, compared with a GAAP net loss for the first quarter of 2009 of $21.9 million, or $0.41 per basic and diluted share.  

Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our core business operating results. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and our competitors' operating results. We believe that these non-GAAP measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision-making.