Savient third quarter net loss decreases to $27.4 million

Nov 3 2011

Savient Pharmaceuticals, Inc. (NASDAQ: SVNT) reported financial results for the three and nine months ended September 30, 2011, which reflect the Company's continuing investment in the U.S. launch of KRYSTEXXA® (pegloticase). Savient ended the quarter with $202.7 million in cash and short-term investments, a decrease of $37.6 million for the quarter.  For the third quarter of 2011, the Company had a net loss of $27.4 million, or $0.39 per share, on total revenues of $2.6 million, compared with a net loss of $59.4 million, or $0.89 per share, on total revenues of $1.0 million for the same period in 2010.  The net loss for the first nine months of 2011 was $71.2 million, or $1.02 per share, on total revenues of $5.9 million, compared with a net loss of $72.7 million, or $1.09 per share, on total revenues of $3.1 million for the same period in 2010.

"As pioneers in the refractory chronic gout market, we have spent the last several quarters building the foundation to support the commercialization of this one-of-a-kind treatment," said John H. Johnson, Chief Executive Officer and President.  "Through the validation of the importance of our Phase III clinical data published in JAMA and our expanding education programs, we are increasing awareness and understanding of KRYSTEXXA and beginning to change the lives of patients suffering from refractory chronic gout."

Operational Highlights:

• Data from two pivotal KRYSTEXXA (pegloticase) Phase III clinical trials in patients with refractory chronic gout (RCG) were published in The Journal of the American Medical Association.  The  data published demonstrated that treatment with KRYSTEXXA resulted in significant and sustained reductions in uric acid levels along with clinical improvements in a substantial proportion of RCG patients for six months, a timeframe for demonstrating clinical improvement that is unique in randomized controlled studies of urate-lowering therapies.  
• Total accounts ordering KRYSTEXXA increased to 329, a gain of 189 for the quarter.
• A comprehensive market research study of the U.S. refractory chronic gout market was completed that demonstrated a significant market for KRYSTEXXA.
• Four abstracts were accepted for presentation at the American College of Rheumatology Congress.
• The executive management team expanded with the addition of a very experienced Chief Medical Officer and Chief Financial Officer.

Financial Results of Operations for the Three Months Ended September 30, 2011

Total revenues increased to $2.6 million, or 161%, for the three months ended September 30, 2011, as compared to $1.0 million for the three months ended September 30, 2010.  The higher net sales for the three months ended September 30, 2011 were the result of the Company's launch of KRYSTEXXA, which generated approximately $1.9 million in revenue for the quarter.    

Cost of sales increased by $4.2 million to $4.6 million for the three months ended September 30, 2011, from $0.4 million for the three months ended September 30, 2010.  The increase for the three months ended September 30, 2011 was substantially due to a $3.4 million charge against income to reserve for excess KRYSTEXXA inventory that had expiration dates such that it was unlikely the product would be sold.

Research and development expenses decreased by $3.1 million, or 35%, to $5.9 million for the three months ended September 30, 2011, from $9.0 million for the three months ended September 30, 2010.  The decrease for the three months ended September 30, 2011 was primarily due to costs incurred in the prior year related to commercial batches of KRYSTEXXA that were expensed as research and development expense prior to the U.S. FDA approval.  All manufacturing costs for KRYSTEXXA after FDA approval are recorded as inventory as opposed to research and development prior to approval.

Selling, general and administrative expenses increased $15.0 million to $22.3 million for the three months ended September 30, 2011, from $7.3 million for the three months ended September 30, 2010.  The higher expenses for the three months ended September 30, 2011 were primarily due to increased selling and marketing expenses associated with the full commercial launch of KRYSTEXXA.  

Interest expense on the Company's convertible notes was $3.4 million for the three months ended September 30, 2011.