|Savient shares at 52 week high following chatter|
|By Patrick Crutcher|
|Thursday, 23 September 2010 00:34|
Rumors about potential suitors for Savient Pharmaceuticals Inc.(NASDAQ:SVNT) began to crop up following a Reuter’s article on SVNT.SVNT recently received FDA approval of KRYSTEXXA™ (pegloticase), a PEGylated uric acid specific enzyme indicated for the treatment of chronic gout in adult patients refractory to conventional therapy. It has been suggested that Abbott Laboratories (ABT), Pfizer (PFE) and Amgen (AMGN) are the most likely suitors given their existing rheumatology franchise. Initial offer price could be in the high $20’s, but could go higher if there are bidders. Shares are currently at a 52 week high in after-hours trading at $22.81.
SVNT announced back in May that a sale of the company post-approval would be the best way to realize the full commercial potential of Krystexxa on a global basis. With approval, they are certainly an attractive acquisition for a larger pharmaceutical that has the sales and marketing power to really put Krystexxa in the market. Some of the big benefits of acquiring Krystexxa are the orphan drug status(7 years of marketing exclusivity), patent protection until 2026, and it is the only approved drug for chronic gout.
Now the real question for an acquirer becomes how much is Krystexxa/SVNT worth given the market for the drug? At $30 per share, it would be a roughly $2B deal, which seems reasonable based on market estimates for Krystexxa. The market exclusivity SVNT has will be a great negotiating point for some of these larger pharmaceuticals, given the pending “patent cliff” that some larger pharmas need to be concerned about(PFE, in particular). Analysts believe SVNT could be able to generate peak sales of $500M in the US, but a potentially more established company could turn it into a billion($1B or more) dollar product. At this point, it is unclear how close a deal is, but SVNT will most likely be acquired at a premium above current prices.