Savient Pharmaceuticals Inc. (NASDAQ: SVNT) is feeling the wrath of the trading gods today. Shares are down some 74% at $2.95 in close to 10-times normal trading volume. The culprit for today’s biotech implosion is the safety profile of its key gout drug candidate Puricase in additional Phase III study data. Interestingly enough, the drug does appear to work. One reason this has so many followers is because Jim Cramer called this one his #1 Speculative Stock last year. With so few new gout treatment alternatives, this news and this stock is worth a look.
The company released follow-on data after the injection treatmentshowed its ability to remove uric acid from the blood, which causespain and swollen joints if not removed. The company noted that theemerging safety profile was consistent with prior six month resultsfrom double-blind studies with no new apparent safety concerns. At theend of 2007, the drug trials had met target objectives.
Cowen & Co. downgraded the company based upon adversecardiovascular side effects. In the data presented, there were sevendeaths with three of those being deemed as cardiovascular events. Italso showed that other patients had heart issues but they kept takingthe drug and saw successful treatment.
While other analysts are also cautious because of side effects, itseems that there is a consensus that Puricase will be approved nextyear.
Today’s interim data will be included in the Biologics LicenseApplication which Savient plans to file with the FDA by the end of themonth. There is also some controversy here because much of the gouttarget group has little to no remedy. Dr. Zeb Horowitz, Chief MedicalOfficer for Savient said, "Many of these patients have suffered fromdebilitating, sometimes crippling gout symptoms for many years alongwith serious co-morbidities and are considered to be difficult totreat. Currently, there are no alternative treatment options availablefor these patients. The information presented this week from ourpegloticase studies further demonstrate a compelling treatment effectnot only for the control of uric acid, but more importantly for theamelioration of the signs and symptoms of disease. If approved,pegloticase would be an important new therapy for patients living withthe debilitating effects of treatment-failure gout."
There is an obvious fear here. Thecompany could have to present further data based upon new and expandedstudies. With a $164 million market cap, with close to $120 million inliquidity at its last quarter, and a cash burn rate of about $10million per quarter, that would become a concern for a company whosestock has already been beaten and bruised.
Around $3.00, this stock is back to 2005 lows before the stock ran up so much.
Jon C. Ogg
October 27, 2008