I have seen my name mentioned a few times, so I thought I would post something. I appreciate the sharing on this board.
Fwiw, I still have a long position. I read much of what is written here, but I just don't have much to add. I was also in a rebuilding mode and wanted cheap options, so I thought it best just to lay low and accumulate.
Frankly, I am very disappointed that something has not been announced with respect to partnership and/or buyout by now. When you trade options, timing is very important, and my timing has not been good since the huge bullish run last year. It is frustrating to have the CEO say things like "an interesting couple of months ahead" about six months ago and that there would be news "very shortly" a few weeks ago, followed by deafening silence. It was indicated more than once that they hoped/expected to have an EU partner by the time of approval and that did not happen. Ferrari spoke at one point about having a partner in place by the end of last year, and then later backed off that saying that even the first quarter of this year would be fine. I fully expect to hear "by mid-year" in the upcoming conference call.
The approval was anticipated for a long time. The medication is approved now in Europe and there really should be a drug launch in Europe with their partner right now.
Why the delay? It is probably because Savient has not been offered terms they find acceptable. It makes sense to me that if they are requiring any significant up front payment, which they could really use, that the partner would think - why not simply acquire at these levels? I mean why would you offer $50M to partner with a company whose market valuation is $70M? Just put up a bit more and own the rights worldwide.
It could be that there is simply no meaningful interest. I don't think that is the case, but there is certainly evidence that could be the situation. Ferrari has been misleading in his public statements.
Savient leadership seems to be consistently unrealistic in what they expect from this product, in terms of the size of the market and a plan to penetrate that market and more importantly in what terms they can get from an acquiring company. This is only speculation, but I truly believe they turned down a potential offer for more than 15 times what the company is valued at now (of course it may well have been for less than the company was trading at then). I could see them scoffing at reasonable offers now as well.... But really, they don't have much of an alternative. They have proven that they can't commercialize this successfully on their own. They certainly can't launch successfully on their own in Europe. The path they are on will lead either to bankruptcy or such massive dillution and debt as to really destroy the current shareholder's value. They MUST partner or sell out, and they need to do this sooner rather than later.
So, why am I long? I still believe that Krystexxa is a remarkable medication. I believe the label expansions are scientifically reasonable. I believe there is potential for different methods for delivery of the medication. I believe there is a significant patient population in the US and worldwide (although a difficult population to reach). In the right hands this is a serious moneymaker. This is a very good niche product, with additional potential. The stock is ridiculously priced based on the the product itself. Big Pharma needs approved medications in spaces where there is no competition. The recent additions to the BOD and leadership staff are also very good indicators that there is potential here. My business sense tells me that there almost has to be an acquisition at some point.
Will the ultimate buy out be after a reverse split and massive dilution as Savient continues to pretend they can do this on their own? I surely hope not, for my own sake and for the sake of the patients that need this medicine. There is no reason to think that continuing to burn through their cash reserves while modestly ramping sales will result in a better situation later. The shorts have such power with this ticker. They won't be beaten unless their is a huge uptick in sales or management makes the tough, but correct, decision to sell for what they can get right now.
I do like the risk/reward at these levels. I believe the stock could trade at a multiple of the current level on any given day with news of a meaningful partnership or outright buyout. Investors could also take a severe to total loss. The market is laying pretty heavy odds in favor of continued failure, so if you bet on relative success and are right you can get paid nicely. That is where I am at.
Good luck to all longs!
Sentiment: Strong Buy
Nice to hear from you again! It seems rather obvious you want SVNT "to sell for what they can get right now". I appreciate the reality we face but you seem quite down from your previous position on Savient. I hope you are not suggesting SVNT shareholders accept a buyout on the cheap at around a buck a share!
I disagree with you that Shorts have "such power" or "won't be beaten". The the stock right now is so rediculously cheap there's no room for it to run but up, or, it's a safe bet that there's a lot more room to run up than there is down!
Also, because SVNT already has a shareholder rights Poison Pill, how could a takeover candidate, as you say, "own the rights worldwide"? Doesn't the plan prevent a hostile takeover buying up the 71M Shrs outstanding at today's dirt cheap SP?
Can you please tell us what your current "relative success" position is in SVNT? How many shares do you currently own? Long or Short? Or Options? What's your "relative success" strategy right now (before the Feb 25th results are out)? Mine is SVNT's a Buy right now.
kg2931 (Long n Strong SVNT 20K Shrs @ $4.64 Shr since 2/11/1997)
I am long call options at various strike prices and dates. Most of my strikes are at $1.5, so they are worthless if the stock trades below that price through their expiration. This is a smaller position than I held previously, at times having over 10,000 call contracts as well as being short several thousand puts (controlling over a million shares at times with most contracts in the money). If nothing happens by Friday, my position will be smaller still, but I will probably add to my position by purchasing future strikes.
I would not suggest they accept a buy out for around $1, but if they could get a reasonable premium, I think that is exactly what they should do. I don't know what is on the table, but I think they should take anything above $3/share. I don't think they will consider anything below that - although if they can't get more than that they probably should.
You are right about the poison pill making it difficult for a hostile takeover to succeed. The trading volume also would make that very difficult. It's not like if you wanted to you could acquire a majority of the shares for $1.50... it just wouldn't happen. Real purchases of this stock generate momentum quickly.
The surge from 50 cents to almost $3 last year was not due simply to the dismissal of the Tang lawsuit. There is interest in Savient. How much interest? By how many? What can management parlay that interest into? When? I wish I knew.
With respect to my change in tone... I don't feel as giddy as I did when my account was up several hundred thousand dollars. Losing those gains was the worst thing that has ever happened to me financially (thankfully so, if that is the worst I ever experience, I will be truly blessed). Also, I don't think Lou Ferrari has delivered on very specific expectations that he created with respect to a timeline for partnership. I bet big that he would come close to delivering despite the obvious skepticism reflected in the way the stock traded. I lost big time.
Objectively, I see this about the same as I always have. Significantly under priced for the product they control. Obvious buy out candidate. Heavily manipulated stock. I guess I have always been more bullish on Krystexxa than on Savient, and I still feel that way. I do think the recent additions to their leadership are positive ones, but they need to at least partner with a larger company to maximize success.
kg, you have more faith than me in Savient, and you have more experience following them. But, realize that with a larger company (or one with more working capital) at the helm all the expansion studies would be running. Research into injection as a delivery method would be underway. The drug would be being sold in Europe instead of given away for free to those interested. Applications would have been made for approval in Asia. Sales would most likely be significantly higher in the US. Overhead related to this drug would be lower. Etc. etc. It just makes business sense for that to begin happening at the very least through a partnership. Hopefully whatever happens will result in you making some money with this company!
Good luck to you!
Sentiment: Strong Buy
Hey Dan, good to hear from you again. I had a feeling you were still long because of a single post you made on this bd several wks ago. I totally concur with your assessment, in fact its almost word for word. My w.a.g. is the co. may have been approached with several more proposals than they had last Summer and that may be the reason for the delay. However, in light of the JP Morgan comments made by LF, it left me with the impression that agreeable terms have not been forthcoming and I even sensed a little frustration with the "go it alone" comment. That said, I remain an optomistic long for reasons I've stated on previous occasions, mainly I believe in the science and it represents a very attractive addition to Big Pharma's portfolio. Beyond that it's tough for me to speculate on what's going on behind the scenes but there does appear to be movement with the presence on Meeker, it's almost like LF is giving us a hint but can't yet commit anything beyond that. At least I'm hoping that's the case, but there does seem to be almost universal agreement that something has to materialize quickly. I've also stated IMO, that a partnership seems more unlikely than an outright buyout because of SVNT's current mkt cap, lack of marketing muscle & debt load, though the $100 mil cash lightens it up a bit. I'm sure we all would like to be a fly on the wall during the negotiations, but everything I'm seeing points to a sale and most assuredly what it "always" comes down to is: At What PRICE? When it comes down to "agreeable terms", it doesn't get more basic than that, does it?
Sentiment: Strong Buy
Nice to hear from you again, Dan. Personally I don't expect a partnership announcement prior to upcoming earnings (if then), and I didn't expect a rapid EU product launch. The key here is that their cash burn has declined to the point where operating capital exists to take them well into 2014. They are in the sweet spot where they can afford to grow revenues for a quarter or so without getting into panic mode.
I wouldn't look for a huge up-front payment from a partner. Savient's negotiating position isn't strong enough to warrant it. Ten to Fifteen Million wouldn't surprise me; much more than that would. I rather suspect that (sometime prior to 2018) there will be a secondary offering providing the pps goes up enough to warrant it, but I definitely don't think that it's a this year problem.
Can't say I'm thrilled with Ferrari's communication skills: the "go it alone" comment at the JP Morgan conference nearly sent me apoplectic. But his big jobs this year are to reduce costs and increase sales and so far he's getting the job done there. Maybe we'll all get a pleasant surprise at earnings.
Anyway, good to see you here. You've been missed.
"I rather suspect that (sometime prior to 2018) there will be a secondary offering"
I rather suspect that sometime in 2014, Savient will be no more. Either it will be bought out (note that David Meeker, M.D., President and Chief Executive Officer of Genzyme, a Sanofi Company, was elected to Savient's Board of Directors to serve until the 2013 annual shareholder meeting) or it will be totally owned by its creditors.
I believe since the market or everyone is short and they don't think there will be a turn around it is always good to take a shot on the other side. With some good news and for the amount of time for shorts needing to cover could turn out to be a pretty exciting couple days watching the stock climb while people are trying to finds shares to cover. Lets hope soon
Sentiment: Strong Buy
ibang, welcome and appreciate your comments. One thing I would add or change to your view: "they don't think there will be a turn around " Maybe some of the shorts & other bashers on this board feel that way but I don't think thats what Wall Street thinks. I think WS knows there has to be a turn around for K but many of the big boys have just gotten tired of waiting. It's still going to happen, soooner or later. My two cents. kg