Savient Pharmaceuticals Plans to Sell Assets in Bankruptcy Court
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Savient Pharmaceuticals Plans to Sell Assets in Bankruptcy Court

October 17, 2013

By: John Clark

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Savient Pharmaceuticals Inc., perhaps best known in the medical community for its development of a popular gout treatment, is filing for bankruptcy help in a Delaware court, according to a report from Bloomberg News.

In its bankruptcy papers, the company told the bankruptcy court that it had $74 million worth of assets, which simply wasn’t enough to make much of a dent in its overall debt load, which was roughly $260 million. But the company did not arrive in U.S. Bankruptcy Court without a plan.

Sources say the pharmaceutical firm hopes to sell its assets to US WorldMeds LLC for $55 million. This agreement, however, will need to be approved by the bankruptcy court.

The tentative agreement reportedly calls for one of US WorldMeds’ subsidiaries, Sloan Holdings CV, to purchase most of Savient’s key assets, including Krystexxa, the company’s gout-fighting medication.

Of course, the potential buyer, which is based in Lexington, Kentucky, has simply set the floor for the bidding for Savient at $55 million, and may have to compete with other bidders if the court finds other interested buyers.

Interestingly, the potential buyer’s largest shareholder, Palo Alto Investors LLC, owns 15 percent of Savient’s stock, suggesting that the buyer is very familiar with the company’s range of pharmaceutical products.

And if Sloan can avoid a bidding war during the bankruptcy process, it may be purchasing an asset with tremendous growth potential. Sources say as many as 6 million Americans suffer from gout, which is a form of arthritis that causes large deposits of uric acid to accumulate in joints.

This accumulation can cause severe stiffness and swelling, according to medical sources. Still, the potential purchase of the gout-fighting drug is far from a done deal.

The bankruptcy court has an obligation to listen to potential bids for the company because it still has a duty to try to recover some funds for creditors. But companies that file for bankruptcy typically enter the process with a clear idea of the best bidder.

In this case, Savient appears confident that the deal with Sloan Holdings will likely be approved by a bankruptcy judge. If so, the company’s drug will live on, but someone else will be reaping the profits.

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