Savient launches KRYSTEXXA in the U.S.

Feb 25 2011

Savient Pharmaceuticals, Inc. (Nasdaq: SVNT) announced the official full U.S. commercial launch of KRYSTEXXA™ (pegloticase), which has been approved by the U.S. Food and Drug Administration (FDA) for the treatment of chronic gout in adult patients refractory to conventional therapy.  KRYSTEXXA is now the first and only therapy available to address this unmet medical need.

"Since receiving FDA approval for KRYSTEXXA, we have focused on preparing for a successful U.S. launch," said John H. Johnson, Chief Executive Officer of Savient.  "Our sales force has completed very thorough and extensive training. We are excited to deploy this highly talented and biologics experienced team into their territories.  There has never been a more exciting time in the history of Savient, nor for the chronic gout patients, who have waited so long for a therapy that has the potential to change the course of their lives."

The Company has assembled the key components for a successful launch of KRYSTEXXA:

• Experienced Sales Team – Savient has an experienced sales force in place.  In addition, the Company has deployed regional medical scientists, managed care executives, regional business directors, nurse educators and area business solutions managers.  All of whom are dedicated to working with the Rheumatologists, Nephrologists, infusion centers, institutions and reimbursement staff to provide critical support to the market.
• Reimbursement Plan in Place – Savient has reimbursement specialists deployed in the field to assist physicians and office personnel as they work through the reimbursement process, in addition to the KRYSTEXXA Connexxions hotline and web based reimbursement support programs.  Discussions with payers are continuing.  To date, the Company believes that no patients have been denied reimbursement for KRYSTEXXA.  
• Staged Roll-out – During the first phase of the launch program, Savient sales teams will target  Rheumatologists and Nephrologists.  Savient anticipates the ramp-up to be slow in this initial phase as the Company conducts infusion center in-service education and works to speed the private and public payer reimbursement processes.  
• Expanding market opportunities – Savient is on track to complete the EU submission for KRYSTEXXA in the first quarter of 2011 or shortly thereafter.  The Company then expects to execute plans to file in other markets around the world, including Asia where the prevalence of gout is among the highest in the world.

Fourth Quarter and Year-End 2010 Financial Results

Savient also reported financial results for the three months and year ended December 31, 2010.  Savient ended the quarter with $64.9 million in cash and short-term investments, a decrease of $13.2 million for the quarter and $43.3 million since December 31, 2009.

For the fourth quarter 2010, the Company had a net loss of $0.5 million, or $0.01 per share, inclusive of a gain from a non-cash valuation adjustment of $18.1 million, relating to a previous warrant liability, on total revenues of $1.0 million.  This compares with a net loss of $0.2 million, or $0.00 per share, on total revenues of $0.9 million for the same period in 2009.

The net loss for the year ended December 31, 2010 was $73.1 million, or $1.08 per share, on total revenues of $4.0 million, compared with a net loss of $90.9 million, or $1.51 per share, on total revenues of $3.0 million in 2009.  Savient ended 2010 with 70.3 million shares outstanding.

Operational Highlights:

• Closed the sale, on February 4, 2011, of $230 million in aggregate principal amount of 4.75% Convertible Senior Notes due 2018.  Savient received net cash proceeds from the Notes after expenses of approximately $222.5 million.  On a pro forma basis, cash and short-term investments would have been $287.4 million as of December 31, 2010 if the sale of the Notes were included. 
• Announced the appointment of John H. Johnson as Chief Executive Officer and a member of Savient's board of directors.
• Announced the appointments of Louis Ferrari, Senior Vice President, North America Commercial; Christine Mikail, Senior Vice President, Corporate Development; and Stephen Davies, Chief Information Officer and Group Vice President.  
• Commenced shipments of KRYSTEXXA to specialty distributors on November 30, 2010.  The product became commercially available for prescription as of December 1, 2010.
• Announced the wholesale acquisition cost (WAC) of KRYSTEXXA priced at $2,300.00 per 8 mg vial for IV administration.
• Launched KRYSTEXXA reimbursement and pharmacovigilance hotline services for the benefit and use of prescribers and patients.
• Acceptance of three abstracts for poster presentation at the American College of Rheumatology Conference in November 2010 and an additional abstract accepted and granted podium presentation in a plenary session.

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

Total revenues increased $0.1 million, or 11%, to $1.0 million for the three months ended December 31, 2010, as compared to $0.9 million for the three months ended December 31, 2009.  The increased net sales resulted primarily from the Company's branded product Oxandrin®.  As expected, sales of KRYSTEXXA were minimal subsequent to its marketplace availability during the month of December 2010.  The objective of making the product available in the distribution channel was to provide access if there was an immediate medical need in this orphan population.

Research and development expenses increased $0.1 million, or 2%, to $9.8 million for the three months ended December 31, 2010, as compared to the three months ended December 31, 2009.  The increase in expenses related primarily to current year costs associated with a validation manufacturing campaign at a potential secondary source supplier of pegloticase drug substance.  The increase in costs year over year was offset by higher expenses in the prior year relating to the production of the first commercial batches of KRYSTEXXA.

Selling, general and administrative expenses increased $2.8 million, or 53%, to $8.2 million for the three months ended December 31, 2010, from $5.4 million for the three months ended December 31, 2009.  The higher expenses were primarily due to an increase in pre-launch selling and marketing expenses associated with preparation for the commercial launch of KRYSTEXXA on February 28, 2011.

Other income, net increased $6.0 million, or 49%, to $18.3 million for the three months ended December 31, 2010, from $12.3 million for the three months ended December 31, 2009, primarily as a result of the non-cash mark-to-market valuation adjustment to the Company's warrant liability.  

Financial Results of Operations for the Year Ended December 31, 2010

Total revenues increased $1.0 million, or 36%, to $4.0 million for the year ended December 31, 2010, as compared to $3.0 million for the year ended December 31, 2009.  The increase in revenues was primarily due to higher product sales of Oxandrin, partially offset by a decrease in sales for our authorized generic oxandrolone product.

Research and development expenses decreased by $19.3 million, or 37%, to $32.4 million for the year ended December 31, 2010, from $51.7 million for the year ended December 31, 2009.  The lower expenses partially resulted from a $7.0 million decrease in manufacturing development and technology transfer related expenses.  The lower costs also resulted from higher prior year expenses associated with preparation for the June 2009 FDA Advisory Committee meeting for KRYSTEXXA, coupled with the wind down of the open label extension clinical trial for KRYSTEXXA.  

Selling, general and administrative expenses decreased $5.8 million, or 19%, to $25.0 million for the year ended December 31, 2010, from $30.8 million for the year ended December 31, 2009.  The decrease was partially due to lower marketing costs, which included $2.1 million of lower expenses associated with the preparation for a possible commercial launch of KRYSTEXXA in 2009 and a decrease of $2.3 million in compensation related and severance expenses.

Other expense, net increased $5.2 million, or 43%, to $17.3 million for the year ended December 31, 2010 as compared to $12.1 million for the year ended December 31, 2009, primarily due to the variance in non-cash mark-to-market valuation adjustments to the Company's warrant liability in 2010 versus the prior year.