Should Investors Take A Chance On Savient?

Savient (Nasdaq:SVNT) shareholders have been on a wild ride of late. While the stock languished for months in the low-to-mid teens as this company navigated the tricky FDA approval process for its gout drug Krystexxa, formal FDA approval sent the stock rocketing up into the low-$20s. Now the roller coaster is taking another swoop down, though, as the company announced that it was unsuccessful in its efforts to auction itself off.

The Deal That Could Have Been
Savient management had made no secret of its intention to try to sell the company upon receiving approval for Kyrstexxa. Although the drug could be quite profitable, Savient has no sales force and no pipeline. That made the decision to seek a sale of the company a quite rational decision on the part of management.

Unfortunately, however rational it might have been, there were no takers - or at least no takers at a price that the board deemed acceptable. Investors will probably never know all of the details of the process, but it was widely thought that both Novartis (NYSE:NVS) and Bristol-Myers Squibb (NYSE:BMY) had some level of interest. Clearly a deal could not be struck, though, and the stock has responded poorly to the news. (For related reading, check out Stocks On Drugs: What It takes To Get High.)

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Can Savient Soar On One Specialty Drug?

Getting Food and Drug Administration approval for a new drug is usually a slam-dunk piece of good news for a company. For Savient Pharmaceuticals (Nasdaq:SVNT), though, it is only part of the story. While approval of the company's new gout treatment is absolutely a major positive development for shareholders, the ultimate fate of the company is still up in the air.  (Learn about some of the most profitable drugs of all time in Stocks On Drugs: What It Takes To Get High.)  


A Specialty Drug for a Rare Indication
Although gout is thought of as a disease from yesteryear, it still occurs in the Western world. For whatever reason, there is a modest percentage of gout patients who do not respond to current therapies, and Savient's drug (Krystexxa) could be a new option for them.

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