(Source: PRNewswire-FirstCall)
EAST BRUNSWICK, N.J., Aug. 10 /PRNewswire-FirstCall/ -- Savient Pharmaceuticals, Inc. today reported financial results for the three and six months ended June 30, 2009, ending the quarter with $76.6 million in cash and short-term investments, a reduction of $2.0 million from December 31, 2008. Excluding the receipt of the $29.0 million in cash from our registered direct offering in April 2009, our cash burn for the six months ended June 30, 2009 was $31.0 million, or approximately $5.0 million per month.
The net loss for the second quarter of 2009 was $54.8 million or $0.92 per basic and diluted share on total revenues of $0.7 million, compared with a net loss of $24.2 million or $0.45 per basic and diluted share on total revenues of $0.4 million for the second quarter of 2008. A significant portion of our net loss for the three months ended June 30, 2009 resulted from a non-cash charge of $35.8 million due to a valuation adjustment relating to warrants that we issued in connection with our April 2009 registered direct offering. On a non-Generally Accepted Accounting Principles (GAAP) basis, excluding the $35.8 million non-cash charge due to the valuation adjustment, our net loss for the second quarter of 2009 was $19.0 million, or $0.32 per basic and diluted share, compared with a GAAP net loss for the second quarter of 2008 of $24.2 million, or $0.45 per basic and diluted share.
As part of our April 2009 registered direct offering, we issued to investors 5.9 million shares of common stock and warrants to purchase up to 5.0 million shares of common stock. We account for the warrants as a liability and are required to record a mark-to-market valuation adjustment at the end of each financial reporting period. Because the value of our common stock price increased between the issuance of the warrants and the end of the quarter, the fair value of the warrants also increased, and we were required to record a non-cash charge of $35.8 million due to the valuation adjustment, in other expense, net, within our consolidated statements of operations.
The net loss for the first six months of 2009 was $76.8 million or $1.35 per basic and diluted share on total revenues of $1.8 million, compared with a net loss of $41.8 million or $0.78 per basic and diluted share on total revenues of $1.5 million for the same period in 2008. On a non-GAAP basis, excluding the $35.8 million non-cash charge due to the valuation adjustment on our warrants, our net loss for the first six months of 2009 was $41.0 million, or $0.72 per basic and diluted share, compared with a GAAP net loss of $41.8 million for the second quarter of 2008, or $0.78 per basic and diluted share.
"Given the delay in a potential approval of our Biologics License Application (BLA) for KRYSTEXXA(TM) (pegloticase), our biologic PEGylated uricase enzyme, we have begun implementing immediate measures to further conserve cash and reduce our cash burn, while we concentrate our efforts to remedy the chemistry, manufacturing and controls (CMC) issues identified in the complete response letter received from the Food and Drug Administration (FDA) on July 31, 2009," said Paul Hamelin, President of Savient. "We will suspend many of our pre-launch commercialization activities and are able to do so without jeopardizing our launch readiness in light of the significant interactions we have already engaged in with the FDA on our package insert which has enabled us to bring to near conclusion many of our pre-launch commercialization activities. Until we regain greater certainty regarding the timing of a potential approval of KRYSTEXXA, our spend on commercialization activities will be reduced to the minimum needed to generally maintain our current state of launch readiness."
Operational Key Events: -- Raised $31.0 million from a registered direct offering that yielded $29.0 million in cash, net of $2.0 million of offering costs -- Elected Ginger D. Constantine, M.D. to the Company's Board of Directors -- FDA appointed Arthritis Advisory Committee recommended marketing approval for KRYSTEXXA -- Presented six abstracts (two oral presentations and four posters) about KRYSTEXXA at the European League Against Rheumatism (EULAR) 2009 Annual Congress addressing various aspects of treatment failure gout. -- Received a complete response letter from the FDA on July 31, 2009 stating that the FDA cannot at this time approve the BLA for KRYSTEXXA as a treatment for chronic gout in patients refractory to conventional therapy. The complete response letter cited deficiencies with the CMC section of the BLA and also provided the current draft of the proposed labeling and further guidance regarding a Risk Evaluation and Mitigation Strategy (REMS). We expect to resubmit our BLA to the FDA in early 2010 to respond to the FDA's complete response letter. -- Received notification from the FDA of a tentative meeting date scheduled for mid-September 2009 to discuss the complete response letter issued by the FDA in response to the "Type A" Meeting request filed by the Company. Financial Results of Operations for the Three Months Ended June 30, 2009
Total revenues for the second quarter of 2009 were $0.7 million compared with $0.4 million for the second quarter of 2008, an increase of $0.3 million. The increase is primarily the result of higher product sales of oxandrolone, our authorized generic product that promotes weight gain following involuntary weight loss due to disease or medical condition, due to increased market share achieved by our authorized generic distributor.
Cost of goods sold for the second quarter of 2009 was $0.4 million, compared with $0.2 million for the second quarter of 2008, an increase of $0.2 million. The increase in cost of goods sold resulted primarily from higher gross sales of oxandrolone.
Research and development expenses for the second quarter of 2009 were $11.6 million, compared with $15.7 million for the second quarter of 2008, a decrease of $4.1 million. The decrease was primarily due to lower technology transfer expenses of $2.1 million as we near the completion of the technology transfer related to developing our secondary source supplier of pegloticase active pharmaceutical ingredient (API). In addition, manufacturing capacity reservation fees paid to our primary third-party manufacturer of API, BTG-Israel (BTG), clinical trial expenses and manufacturing-related process development expenses decreased by $2.1 million, $0.7 million, and $0.6 million, respectively, as the majority of our research and development activities associated with the development of KRYSTEXXA were incurred in prior years. Partially offsetting the lower expenses was an increase in severance expense of $1.0 million recorded during the current quarter and $0.6 million in consulting expenses related to our preparation for the FDA Arthritis Advisory Committee meeting held on June 16, 2009.
Selling, general and administrative expenses for the second quarter of 2009 were $7.4 million, compared with $10.5 million for the second quarter of 2008, a decrease of $3.1 million, primarily due to lower legal fees as the prior year results reflect expenses for Oxandrin-related patent infringement litigation.
Investment income, net, decreased $0.4 million to an expense of $27,000 for the second quarter of 2009, from income of $0.4 million for the second quarter of 2008. The decrease was primarily attributable to lower dividend and interest income from lower cash, cash equivalent and investment balances.
Other expense, net, increased $35.9 million primarily as a result of a non-cash charge relating to the mark-to-market valuation adjustment to our warrant liability during the second quarter of 2009.
