Discussion on Failure to Consummate a Deal

I'm curious as to others thoughts on why no deal (to date)?

I'm thinking that the 2 big issues are (1) market size potential (2) pricing. The discrepancy between what SVNT says (170K) and the FDA number (90K) is significant. Pricing becomes clearer on 11/30.

I also wonder if BMY, NVS or anyone else felt SVNT needs us more than we need them (for now). In other words, let SVNT twist in the wind a bit knowing the only other alternative is launch on their own. And then they play a game of watch and see what unfolds? Is the drug widely accepted? Do revenues ramp up quickly?

I also faxed the following to Paul Hamelin -- in part to release the frustration with this company and inability to get a deal done.

Mr. Hamelin:

Like many shareholders I was disappointed that no sale of the company has happened to date. A similar experience occurred in fall 2008, when Mr. Clement led shareholders to believe a strategic transaction would occur in Q3 of that year.

I am forwarding to you something I sent to Brian Hayden, ex-CFO of Savient, back in 2008 after the supposed deal for the sale of the company fell through.

Please give some thought to a multiple paypoint buyout of the company. For example, with FDA approval you determine that $15/share (as an example) is fair valuation. Then you set subsequent goals that reward shareholders over time. Perhaps filing the EU application is worth $1/share. And EU approval is worth another $6/share. By the time Krystexxa is (hopefully) approved in the EU there should be at least a year of sales in the US where an additional payment might result. Such an approach to a possible acquisition allows the buyer to not put 100% of the ultimate purchase price at risk upfront.

There is obviously disagreement between what SVNT sees as the TFG US market size (170K) and what the FDA sees (90K). I'm a bit surprised that you have chosen to not go into detail as to how the studies arrived at these numbers. Analysts and institutions seem skeptical of your estimates. And revenue estimates are also varied making fair valuation of the company more challenging.

Last, allow me to share some of the disappointments as a longer term shareholder.

• In 2006 Savient stated they expected to file the Puricase BLA in late 2007. It was finally successfully filed in 2010, a 2 ½ year delay.

• The 2004 FDA approval of Nuflexxa should have allowed for Savient to establish sales in the US and pave the way for Krystexxa. But Savient relinquished those rights and paid almost $18 million to Ferring.

• Savient Pharmaceuticals Enters Co-Promotion Agreement with Ferring for Nuflexxa; Savient to Establish Sales Force Targeting Rheumatologists Upon Sale of Global Biologics Manufacturing Business.
  Business Wire

• The lack of a sales force today (that would have existed w/ Nuflexxa) has clearly weakened your negotiating ability for a sale of the company.

• Two stock offerings in the past 1 ½ years has diluted shareholders almost 30%

• Five (5) years of restated financials and the possibility of delisting a few years ago

• Disaster after the 2008 ACR Conference

• Savient being a revolving door of CFO's (around 8 in the past decade)

• Chris Clement liquidating essentially all of Savient (BTGC plant & associated drugs, Rosemont, etc.)

• Mr. Clement, Hayden, Lamm and Horowitz all leaving the company and receiving considerable compensation

I fully agree with the Board of Directors that the sale of the company will maximize shareholder value. And I trust that you, the Board, along with Lazard and JP Morgan are exploring all strategies. I am surprised that you've been unable to consummate a deal given the revenue problems big pharma faces in the coming years with generic competition. I do hope you consider a multi-paypoint approach as a possible way to successfully sell Savient to a larger company who can maximize sales both in the US and worldwide. I know there are many creative ways to reach the desired end result and I trust you will.

Respectfully,