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Savient shares rally as FDA approves gout drug
September 15, 2010 / 1:19 PM / 7 years ago

Savient shares rally as FDA approves gout drug

Sept 15 (Reuters) - Shares of Savient Pharmaceuticals Inc SVNT.O jumped 27 percent on Wednesday, a day after the company’s gout drug Krystexxa got U.S. regulatory approval making it the first approved treatment for gout in adults who do not improve with conventional therapies.

The approval is also expected to trigger a renewed interest in the company that has been looking for a strategic deal, and some analysts expect a deal within three to four months.

“We assume that discussions have been ongoing, and that the label has been distributed together with term sheets: we would not be surprised to see a sale of the company by the end of the quarter,” Roth Capital Partners analyst Andrew Vaino said in a note.

Companies with a rheumatology exposure and sales force could see Savient as a meaningful fit and Abbott Laboratories Inc (ABT.N), Bristol-Myers Squibb (BMY.N), Roche Holding AG ROG.VX, Amgen Inc (AMGN.O), Johnson & Johnson (JNJ.N) and Pfizer Inc (PFE.N) were named as potential suitors.

On a conference call with analysts Wednesday, Savient said it was still looking to sell the company but did not disclose any other details.

Krystexxa, which was denied approval last year by the U.S. Food and Drug Administration citing manufacturing issues, was approved on Tuesday with a “black-box” warning -- a strong label warning -- regarding allergic and infusion reactions.

East Brunswick, New Jersey-based Savient is also required to do a post-approval study in 500 patients to further evaluate the frequency and severity of infusion and allergic reactions.

The boxed warning did not come as a surprise given the adverse cardiovascular events that were seen during the trials, and analysts said the required risk evaluation and mitigation strategy was “mild” and would not impact the drug’s usage or adoption.

“We continue to believe Krystexxa could become a best-in-class therapy with its differentiated profile and represent a new treatment paradigm for this unmet need to warrant a $400 million peak potential by 2013,” Global Hunter Securities analyst Kimberly Lee said.

According to Thomson Reuters data, the drug is expected to reach sales of $173 million and capture a 23 percent market share by 2014.

About 5 million Americans suffer from gout, in which a build up of uric acid causes swollen joints. Of those, about 40,000 to 60,000 see no improvement with other therapies, according to the company.

“For the pricing of the drug, the Street expects up to $100,000 (per patient per year), whereas our survey shows about $25,000 to be cost-prohibitive for Krystexxa use,” Jefferies and Co analyst Eun Yang said.

Savient expects the drug to be available by prescription in the United States later this year and said it was well advanced in its preparations for the U.S. launch.

Krystexxa was also granted an orphan drug designation by the FDA in 2001 that can provide the drug seven years of market exclusivity.

In September last year, Savient had said it planned to cut 26 jobs, or about 38 percent of its workforce, to reduce costs and focus on the resubmission of marketing application for the drug. [ID:nBNG448440]

Other U.S. companies developing gout treatments are Regeneron Pharmaceuticals Inc (REGN.O), Ardea Biosciences Inc RDEA.O and BioCryst Pharmaceuticals Inc (BCRX.O). Swiss drugmaker Novartis AG NOVN.VX is also developing a treatment for gout.

Savient shares, which have gained 22 percent over the past three months in anticipation of a FDA nod for the drug, were up 27 percent at $18.75 in premarket trade. They closed at $14.76 Tuesday on Nasdaq. (Reporting by Esha Dey in Bangalore; Editing by Maju Samuel)

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