Savient reloads to go it alone

Savient Pharmaceuticals Inc. traded up last week after raising $230 million in a bumped up offering of convertible debt. The deal removed the financing overhang that had dragged down the shares after the company failed to sell itself following last September's approval of Krystexxa pegloticase for gout.

Last week's financing now will give the company the wherewithal to launch Krystexxa on its own in the U.S. At Sept. 30, Savient had $78.1 million in cash and no debt, with a nine-month operating loss of $40.3 million.

The stock gained $0.27 to $9.65 on the week, not far above its 52-week low of $9.06 and a close of $9.26 on June 12, 2009, the day FDA released positive briefing documents for Krystexxa. By contrast, the shares are far below the nearly $23 reached last September after the agency approved the drug.

By Oct. 26, 2010, the stock had fallen to $11.51 after Savient said it was unable to sell itself (see BioCentury, Nov. 1, 2010).

Savient had originally targeted $125 million for the offering. The company netted $222.5 million from the 4.75% notes due in 2018, including the overallotment.

Investors won't need too much of an uptick in the stock to make money on a conversion; the initial conversion price on the notes is $11.54.

Now the focus will move to showing "decent sales," according to one fund manager whose firm was a major investor in Savient at Sept. 30. The investor, who did not want to be identified, said he doesn't expect to "see much in sales for the first six months, given reimbursement hurdles" and expects it will take four to five years for Krystexxa to reach peak

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