SVNT some DD
From First Quarter 2012 Financial Results
Savient ended the quarter with approximately $131.0 million in cash and short-term investments. On May 7, 2012, Savient entered into definitive financing and restructuring agreements with certain of its existing convertible note-holders, which will raise approximately $44.0 million in net proceeds and extend maturity on a significant portion of its debt. Subsequent to the closing of the financing and restructuring agreements, Savient believes that its cash, cash equivalents and short-term investments will be sufficient to fund anticipated levels of operations for at least the next two years.
Net sales for KRYSTEXXA were $3.1 million for the first quarter of 2012. For the first quarter of 2012, the Company had a net loss of $34.2 million, or $0.49 per share, on total revenues of $3.5 million, compared with a net loss of $13.5 million, or $0.19 per share, on total revenues of $1.3 million for the same period in 2011.
David Y. Norton, Interim Chief Executive Officer of Savient said, "We have a strong foundation for growth in place and are leveraging the heightened awareness of Refractory Chronic Gout ("RCG") and KRYSTEXXA to augment the reach of the drug as we move forward into 2012. While KRYSTEXXA sales reflect a modest increase from the previous quarter, we gained solid momentum in the later part of the quarter and are encouraged by the upward sales trend we have seen in March and April. We look forward to building on this momentum as we address the unmet need for this debilitating condition and expect to see continued solid and steady growth going forward."
Operational Highlights:
Announced that KRYSTEXXA became available in the European Union through a Named Patient basis sponsored by Savient's wholly-owned subsidiary, Savient Pharma Ireland Limited.
Published data on RCG and the use of pegloticase in the International Journal of Clinical Rheumatology.
Announced that nine abstracts were accepted at the European League Against Rheumatism (EULAR) 2012 Annual Congress, one as an oral presentation.
Instituted a new KRYSTEXXA Patient Initiation Program (KPIP), which provides patients suffering with RCG with a limited offer of two free doses of KRYSTEXXA.
Financial Results of Operations for the Three Months Ended March 31, 2012
Total revenues increased $2.2 million to $3.5 million for the three months ended March 31, 2012, from $1.3 million for the three months ended March 31, 2011, as a result of the continued sales momentum of KRYSTEXXA. We expect KRYSTEXXA sales to continue to increase in future periods as our marketing and promotion efforts take effect.
Cost of goods sold increased $1.3 million to $1.7 million for the three months ended March 31, 2012, from $0.4 million for the three months ended March 31, 2011. The increase is primarily due to royalty and sales-based milestone payments pursuant to our third party licenses and other agreements and as a result of the commercialization and higher sales of KRYSTEXXA.
Research and development expenses increased $3.5 million to $7.2 million for the three months ended March 31, 2012, from $3.7 million for the three months ended March 31, 2011. The increase is primarily due to our post marketing clinical studies for KRYSTEXXA.
Selling, general and administrative expenses increased $7.7 million to $24.3 million for the three months ended March 31, 2012, from $16.6 million for the three months ended March 31, 2011. The increase is primarily due to increased selling and marketing expenses associated with the commercial launch of KRYSTEXXA as we continue our marketing efforts for the product.
Interest expense on our 2018 Convertible Notes of $4.4 million for the three months ended March 31, 2012 reflects $2.7 million of interest expense from the 4.75% coupon and $1.7 million of non-cash accretion of the discount on the Convertible Notes.
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Law360, Wilmington (July 23, 2012, 11:16 PM ET) -- A Delaware judge Monday squelched a bid led by Tang Capital Partners LP to force a receiver on Savient Pharmacueticals Inc., ruling the drugmaker's noteholders lacked standing to bring such a suit under the terms of the indenture.
After hearing arguments from both side Monday, Vice Chancellor Sam Glasscock III dismissed Tang Capital's primary claim, stating that the language of the indenture clearly barred noteholders from bringing a receiver motion unless certain conditions has been met.
Moreover, Tang's assertion that one of those conditions — a default — had been triggered after its action had been pending for 30 days without dismissal or stay was an invalid end-run around the terms of the agreement, he ruled.
Since Tang Capital had no standing to bring the suit, Glasscock said, ruling otherwise “would allow the party to avoid the no-claim clause by violating its very requirements.”
Holder of $39 million in Savient notes, Tang Capital launched a derivative suit April 30 requesting the appointment of a receiver to liquidate what it claimed was a doomed company. The complaint, later joined by five other noteholders, accused Savient management of burning through cash at an alarming rate in a futile attempt to salvage the company after the failed launch of its flagship gout drug Krystexxa.
Savient fired back in June 8, claiming Tang Capital willfully ignored the indenture's no-action clause in a dubious ploy to drum up a default and force the company into bankruptcy, based on the timing of its own complaint.
Thad Davis, attorney for Tang Capital, argued that a default had indeed occurred, since the plaintiffs had met the preconditions of the indenture by commencing a proceeding, which according to chancery law was defined as the act of filing.
Savient attorney David J. Teklits called the plaintiffs' argument “circular, absurd reasoning” based on reading clauses of the indenture in isolation, whereas settled law plainly showed that contracts must be read in their entirety.
Teklits noted that besides common law and common sense, Elliott Associates LP v. Bio-Response Inc. — an 1989 chancery case in which the court dismissed a noteholder's bid for a receiver because it was barred by a no-action clause virtually identical to the one contained in plaintiff's indenture — provided a clear precedent.
Glasscock agreed that Vice Chancellor Carolyn Berger's reasoning in Elliott controls here.
Vice Chancellor Glasscock said the issues involved were fairly significant and deserved a memorandum opinion, which he promised to present within a week. Glasscock denied the plaintiffs' motion for reargument, as well as a request for an oral ruling that would allow them to begin to prepare their appeal.
The court had been set for the possibility of a two-day trial, but Glasscock's ruling on standing eliminated the need to delve into the additional claims in Tang Capital's complaint, which included breach of fiduciary duty and corporate waste on the part of Savient management.
The creditors that joined in original complaint are Knighthead Master Fund LP, RA Capital Healthcare Fund LP, IsZo Capital LP and Blackwell Partners LLC.
Savient and its board are represented by David J. Teklits, Kevin M. Coen and Shannon E. German of Morris Nichols Arsht & Tunnell LLP.
The noteholders are represented by Thad A. Davis, Kyle A. Withers and Geoffrey M. Atkins of Ropes & Gray LLP and Stephen E. Jenkins and Catherine A. Gaul of Ashby & Geddes PA.
The case is Tang Capital Partners LP et al. v. David Y. Norton et al., case number 7476, in the Delaware Court of Chancery.
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Law360, Wilmington (June 11, 2012, 4:17 PM ET) -- Savient Pharmaceuticals Inc. countersued Tang Capital Partners LP, its largest creditor, in Delaware state court on Monday, alleging the investment fund is falsely claiming that the drugmaker has defaulted on its debt.
On April 30, San Diego-based Tang Capital filed suit in Delaware Chancery Court seeking a receiver to liquidate Savient's assets. The disgruntled creditor — which holds $39 million in Savient notes — alleges Savient management is burning through cash at an alarming rate and refuses to accept that the company cannot be salvaged after the failed launch of its flagship gout drug Krystexxa.
But according to a countersuit filed by Savient in the same court, Tang Capital has drummed up a dubious event of default under the notes' indenture based on the timing of its own complaint.
"Tang Capital ... has acted in bad faith and contrary to the terms of the indenture by wrongfully attempting to manufacture an event of default under the indenture," the complaint said.
East Brunswick, N.J.-based Savient has moved to dismiss the receiver claim on the basis that a "no-action clause" in the indenture requires an event of default for a creditor to bring such a claim, among other conditions that Tang Capital has allegedly failed to meet.
According to the suit, Tang Capital sent the default notice last week to U.S. Bank NA, the indenture trustee for $122 million in notes, asserting that the pendency of its action for 30 days without dismissal or stay triggered a default.
But the creditor sprung the default notice without telling Savient's counsel or the court of its intent prior to the alleged May 31 default, Savient said. The suit claims the default notice has already harmed the company and seeks a declaration that an event of default has not occurred, along with unspecified damages for tortious interference.
"The notice not only triggered an obligation for the company to issue a Form 8-K disclosing the alleged default, it may also create an incorrect appearance of a cross-default with respect to the company's other rounds of financing," Savient said.
Thad Davis of Ropes & Gray LLP, an attorney for Tang Capital, did not immediately return a call seeking comment on Monday.
Tang Capital, which was later joined in the underlying suit by other noteholders, contends that Savient is plainly insolvent. The company has $193 million of assets against $259 million in liabilities, and racked up operating expenses of $35 million in the last quarter of 2011 — nearly 10 times its revenues for the period, according to the underlying complaint.
Other creditors that joined in the suit include Knighthead Master Fund LP, RA Capital Healthcare Fund LP and Blackwell Partners LLC.
The creditors describe the 2010 commercial launch of Savient's marquee drug as an "abject failure." Krystexxa — intended to treat gout in treatment-resistant patients — is currently being used by only about 300 patients nationwide, they said.
Despite these problems, Savient's management has wasted millions of dollars trying to resurrect Krystexxa and the company's fortunes, according to the suit. In addition to the appointment of a receiver, the suit seeks at least $100 million in damages on behalf of the company for breaches of fiduciary duty by the board.
A trial in the case is set to begin July 23 before Vice Chancellor Sam Glasscock III.
Tang Capital is represented by Thad A. Davis, Kyle A. Withers and Geoffrey M. Atkins of Ropes & Gray LLP and Stephen E. Jenkins and Catherine A. Gaul of Ashby & Geddes PA.
Savient and its board are represented by David J. Teklits, Kevin M. Coen and Shannon Elizabeth German of Morris Nichols Arsht & Tunnell LLP.
The case is Tang Capital Partners LP et al. v. David Y. Norton et al., case number 7476, in the Delaware Court of Chancery.