UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

S	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009 OR
£	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 0-15313

SAVIENT PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 13-3033811
(I.R.S. Employer
Identification No.)

One Tower Center, 14th Floor, East Brunswick, New Jersey 08816
(Address of Principal Executive Offices)

(732) 418-9300
(Registrant’s Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES S NO £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES £ NO £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer S Accelerated filer £ Non-accelerated filer £
(Do not check if a smaller reporting company) Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES £ NO S

The number of shares outstanding of the issuers’ Common Stock, par value $.01 per share, as of August 10, 2009 was 61,621,985.

Explanatory Note

This amendment to Savient Pharmaceuticals, Inc.’s (the “Company”) Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009, filed with the Securities and Exchange Commission on August 10, 2009, clarifies certain disclosures in the Risk Factors regarding the remediation of deficiencies identified during the U.S. Food and Drug Administration’s (the “FDA”) pre-approval inspection of BTG-Israel's manufacturing facility, our third-party pegloticase drug substance manufacturer, as required by the FDA’s July 31, 2009 complete response letter to the Company’s Biologic License Application for its product candidate, KRYSTEXXA™ (pegloticase).

Except as identified in the immediately preceding paragraph, no other items included in the original Form 10-Q have been amended. This Amendment No. 1 on Form 10-Q/A does not modify or attempt to update the financial statements, footnotes or any other disclosures as contained in the original Form 10-Q.

Part II - Other Information

ITEM 1A. RISK FACTORS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future results of operations, future cash flows, projected costs, financing plans, product development, possible strategic alliances, competitive position, prospects, plans and objectives of management, are forward- looking statements. We often use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “may,” “predict,” “will,” and “would,” and similar expressions, to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

• our efforts to reduce our burn rate and conserve cash,

• potential FDA marketing approval for KRYSTEXXA™ (pegloticase),

• a meeting with the FDA to discuss the complete response letter,

• the reversion to and revalidation of the Phase 3 manufacturing process,

• the terms of a REMS program,

• the timing of a resubmission to the FDA in response to the complete response letter, and

• the efficacy and safety of KRYSTEXXA.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward- looking statements that we make. We have included important factors in various cautionary statements in this Quarterly Report on Form 10-Q that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

We undertake no obligation to publicly update forward-looking statements. We provide the following cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to our businesses.

These are important factors that, individually or in the aggregate, we think could cause our actual results to differ materially from expected and historical results. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider the following to be a complete discussion of all potential risks or uncertainties.

You should carefully consider the following risk factors in addition to other information included in this Quarterly Report on Form 10-Q, and in our Annual Report on Form 10-K, in evaluating us and our business. If any of the following risks occur, our business, financial condition and operating results could be materially adversely affected. The following risk factors restate and supersede the risk factors previously disclosed in Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2008.

The following risk factors have been updated to reflect developments subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2008, and we have denoted with an asterisk (*) in the following discussion those risk factors that are new or materially revised.

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Risks Relating to Development of KRYSTEXXA and Our Ability to Accomplish Our Future Business Objectives

* Our business depends on our success in gaining approval of KRYSTEXXA, which requires that we and our third-party manufacturer address several deficiencies raised by the FDA. If these issues are not addressed, we will not gain approval of KRYSTEXXA, and our business will be materially harmed.

On July 31, 2009, the FDA notified us that it would not approve the BLA for KRYSTEXXA unless and until:

• deficiencies with the chemistry, manufacturing and controls, or CMC, section of the BLA are addressed,

• facility inspection observation remediation actions are adequately taken by our primary third-party manufacturer,

• we implement a Risk Evaluation and Mitigation Strategy, or REMS, and

• we provide a follow-up safety update to the FDA.

In particular, the FDA concluded that the comparability data we submitted for the material manufactured using the proposed commercial manufacturing process for KRYSTEXXA was not adequate to demonstrate that it was representative of the material used to establish the safety and efficacy of KRYSTEXXA in the Phase 3 clinical trials. The FDA stated that we have the option of either reverting to and validating the manufacturing process used to produce pegloticase for the Phase 3 clinical trials or conducting additional comparability clinical trials to support the use of pegloticase in KRYSTEXXA manufactured using the proposed commercial manufacturing process. We currently expect that we will address this issue by reverting to and revalidating the manufacturing process used to produce pegloticase in KRYSTEXXA for the Phase 3 clinical trials.

The FDA also requested that we tighten manufacturing parameters and narrow analytical specifications associated with the commercial production processes. Many of these additional requests were previously discussed with the FDA during the review and inspection process and were to be addressed as post-approval commitments if approval was granted on or before August 1, 2009. However, given the delay, these additional matters have now been incorporated into the complete response letter and will be addressed in our resubmission of the BLA.

In addition, the FDA is requiring that our third-party pegloticase drug substance manufacturer, BTG-Israel, or BTG, correct certain deficiencies noted in the FDA’s inspection of its manufacturing facility before KRYSTEXXA can be approved. BTG has issued a work plan and timeline to the FDA to address these concerns, however, it is uncertain at this time whether the BTG facility will need to be reinspected by the FDA upon completion of this remediation work.

Addressing each of these issues will require additional expenditures of funds and time to complete, and there can be no guarantee that we, or BTG, as the case may be, will adequately address the FDA’s concerns such that our BLA is ultimately approved without further delays, if at all. If our BLA is not approved, our business will be materially harmed.

* The manufacture and packaging of pharmaceutical products such as KRYSTEXXA are subject to the requirements of the FDA and similar foreign regulatory bodies. If we or our third-party manufacturers fail to satisfy these requirements, our product development and commercialization efforts may be materially harmed.

The manufacture and packaging of pharmaceutical products, such as KRYSTEXXA, are regulated by the FDA and similar foreign regulatory bodies and must be conducted in accordance with the FDA’s cGMP and comparable requirements of foreign regulatory bodies. Failure by us or our third- party manufacturers to comply with applicable regulations, requirements, or guidelines could result in sanctions being imposed on us, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approval of our products, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect our business.

Our third-party manufacturers and testing facilities, including BTG, Enzon and PPD, underwent pre-approval inspections by the FDA. As a result of these pre-approval inspections, the FDA identified deficiencies in its pre-approval inspection of our pegloticase drug substance manufacturer, BTG, and has required that these deficiencies be corrected prior to the approval of the

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KRYSTEXXA BLA. BTG has submitted a work plan and a timeline to the FDA for correction of these deficiencies cited by the FDA, and some of these items have already been corrected and the remainder are expected to be addressed in the third quarter of 2009. However, a satisfactory inspection report for the remediation of such deficiencies is required prior to the approval of the KRYSTEXXA BLA, and it is uncertain whether the FDA may require a reinspection of the BTG facility. Failure by BTG to adequately and timely remediate these deficiencies may delay the issuance of the regulatory approvals that are necessary to market KRYSTEXXA, and if a reinspection by the FDA of the BTG facility is necessary this may cause further delays in the approval of the KRYSTEXXA BLA. If BTG, or any of our third-party manufacturers do not pass such FDA or other regulatory inspections for any reason, including equipment failures, labor difficulties, failure to meet stringent manufacturing, quality control or quality assurance practices, or natural disaster, our ability to commercialize KRYSTEXXA will be jeopardized.

In addition, changes in the manufacturing process or procedure, including a change in the location where KRYSTEXXA is manufactured or a change of a third-party manufacturer, may require prior FDA review or approval or revalidation of the manufacturing process and procedures in accordance with the FDA’s cGMP. There may be comparable foreign requirements. This review or revalidation may be costly and time consuming and could delay or prevent the launch of KRYSTEXXA. In particular, the FDA concluded in its complete response letter the comparability data submitted for the material manufactured using the proposed commercial manufacturing process for pegloticase drug substance in KRYSTEXXA was not adequate to demonstrate that it was representative of the material used to establish the safety and efficacy of KRYSTEXXA in the Phase 3 clinical trials. The FDA stated that we have the option of either reverting to and validating the manufacturing process used to produce pegloticase in KRYSTEXXA for the Phase 3 clinical trials or conducting additional comparability clinical trials to support the use of KRYSTEXXA manufactured using the proposed commercial manufacturing process. We currently expect that we will address this issue by reverting to and revalidating the manufacturing process used to produce pegloticase drug substance in KRYSTEXXA for the Phase 3 clinical trials. If the revalidation is not successful or proves to be more difficult than we expect, we may have to conduct the comparability clinical trials, which will result in further significant delays and expenses.

In addition, we have engaged Diosynth, which is located in North Carolina, as a secondary source supplier of the pegloticase drug substance used in KRYSTEXXA. As a result, we and BTG have begun to transfer the relevant manufacturing technology to Diosynth. This is a detailed, expensive and time consuming process that we have not completed. In connection with this technology transfer, Diosynth will be required to produce validation batches of pegloticase drug substance to demonstrate that the materials produced at Diosynth are of the same quality as those produced at BTG. If the FDA approves BTG as a manufacturer of pegloticase drug substance in KRYSTEXXA, and if we cannot establish that the pegloticase drug substance manufactured at Diosynth is equivalent to the drug substance manufactured at BTG to the satisfaction of the FDA, we may not be permitted to use pegloticase drug substance manufactured by Diosynth in the formulation of KRYSTEXXA. We do not expect this technology transfer process and the subsequent FDA approval of the Diosynth manufacturing facility to be completed until the second half of 2010 at the earliest.

If we elect to manufacture products in our own facility or at the facility of another third-party, we would need to ensure that the new facility and the manufacturing process are in substantial compliance with cGMP. Any such new facility would also be subject to a pre-approval inspection by the FDA and would necessitate a successful technology transfer and subsequent validation by the FDA. Any delays or failures to satisfy these requirements would harm our business.

Even if the FDA approves KRYSTEXXA for marketing, our success will depend on our ability to commercialize it. If we are unable to commercialize KRYSTEXXA, our business will be materially harmed.

We have invested a significant portion of our efforts and financial resources in the development of KRYSTEXXA. Other than Oxandrin and oxandrolone sales, which have significantly declined in recent years and which we expect to remain flat or continue to decline, our ability to generate near- term revenue depends on the success of our KRYSTEXXA product candidate. The commercial success of KRYSTEXXA will depend on many factors, including:

• the successful resolution of the issues raised by the FDA regarding our BLA,

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• receipt and timing of marketing approvals and final product labeling from the FDA and similar foreign regulatory authorities,

• receiving FDA and other foreign regulatory approvals of the third-party manufacturing facilities used to produce pegloticase drug substance and other ingredients used in KRYSTEXXA, as well as for facilities used by our third-party fill and finish service provider,

• successful completion of our OLE study and any other clinical trials we may undertake, or are requested by the FDA,

• producing batches of pegloticase drug substance and other ingredients used in KRYSTEXXA in commercial quantities through a validated process,

• maintaining and, as appropriate, entering into, additional commercial manufacturing arrangements for KRYSTEXXA,

• launching commercial sales of the product, whether alone or in collaboration with others,

• acceptance of the product by physicians, patients, health care payors and others in the medical community, and

• our ability to raise substantial additional capital.

Prescription pharmaceutical products may not be commercially marketed in the United States without prior approval from the FDA, and then can only be marketed for the indications and claims approved by the FDA, which may effect the commercial potential of such products.

Based on the results of our Phase 3 clinical trials for the use of KRYSTEXXA, we filed a BLA with the FDA seeking marketing approval for KRYSTEXXA for the treatment of patients with chronic gout refractory to conventional treatment. We believe that the Phase 3 results warranted this filing and proposed indication. Clinical data are difficult to interpret and are susceptible to varying interpretations. For example, we have conducted extended multi-faceted reviews of our Phase 3 data in recent months which have led to continued evaluations of the relative safety and efficacy of KRYSTEXXA and further clarification on its most appropriate uses. As a result, we filed major amendments to our previously submitted BLA, and in turn one was considered by the FDA as a major amendment which led to a delay by three months to August 1, 2009, its consideration of the BLA. On June 16, 2009, the FDA-appointed Arthritis Advisory Committee recommended by a vote of 14 to 1 that KRYSTEXXA be granted marketing approval by the FDA for the treatment of chronic gout in patients refractory to conventional treatment. On July 31, 2009, the FDA notified us that it would not approve the BLA for KRYSTEXXA unless and until the issues discussed above are adequately addressed. While we intend to address each of the issues, and in some cases have already begun to do so, the FDA and similar foreign regulatory authorities may not grant marketing approval for KRYSTEXXA. If we are not successful in obtaining regulatory approvals for and commercializing KRYSTEXXA, or are significantly delayed in doing so, our business will be materially harmed and we may need to curtail or cease operations.

Even if the FDA approves KRYSTEXXA for marketing, it may only be approved for indications that are not as broad as we intend, and the FDA may require us to conduct supplemental large post-marketing clinical trials. In addition, we may elect to perform additional clinical trials for other indications or in support of applications for regulatory marketing approval in jurisdictions outside the United States. These supplemental trials could be costly and could result in findings inconsistent with or contrary to our historic United States clinical trials.

Draft label language was included in the FDA’s July 31, 2009 complete response letter for our KRYSTEXXA BLA. However, this language is subject to final approval, and in the event that the FDA provides marketing approval for KRYSTEXXA, final approval may not be for indications that are as broad as set forth in the draft language. Additionally, the final label could prescribe safety limits or warnings that reduce the market for the product or increase the costs associated with the marketing and sale of the product. We may be required, or we may elect, to conduct additional clinical trials or pre-clinical animal studies for such narrow indications or for other indications. In addition, we may seek marketing approval from regulatory authorities in jurisdictions outside the United States, such as the EMEA, and they may require us to submit data from supplemental large clinical trials or pre- clinical animal studies in addition to data from the clinical trials that supported

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our United States filings with the FDA. Any requirements to conduct supplemental trials would add to the cost of developing KRYSTEXXA and we may not be able to complete such supplemental trials. Additional trials could also produce findings that are inconsistent with the trial results we have previously submitted to the FDA, in which case we would be obligated to report those findings to the FDA. This could result in additional restrictions on KRYSTEXXA marketing approval or, if and when it is approved, could force us to stop selling KRYSTEXXA altogether. Inconsistent trial results could also lead to delays in obtaining marketing approval in the United States for other indications for KRYSTEXXA, could cause regulators to impose restrictive conditions on marketing approvals and could even make it impossible for us to obtain marketing approval. Any of these results could materially impair our ability to generate revenues and to achieve or maintain profitability.

In addition, if the FDA approves our BLA we will be required to implement a REMS program to minimize the potential risks of KRYSTEXXA treatment, which includes a medication guide for patients and a communication plan for health care providers, and an assessment plan to monitor and assess their effectiveness. The REMS program is subject to further negotiation and final approval by the FDA, and may impose significant additional obligations and commitments on us in the future, thereby limiting the commercial success of KRYSTEXXA and resulting in lower than expected future revenues.

We have limited marketing and sales capabilities. If we are unable to expand our sales and marketing capabilities or enter into sales and marketing agreements with third parties, we may be unable to generate product sales revenue from sales to customers.

To achieve commercial success for KRYSTEXXA, we must either develop a sales and marketing organization, outsource these functions to third parties, enter into a collaboration with a third-party to jointly commercialize KRYSTEXXA or enter into a worldwide partnership with a third party to commercialize KRYSTEXXA. We currently have limited marketing and sales capabilities. Because we intend to minimize our pre-approval sales and marketing expenditures, if we obtain marketing approval for KRYSTEXXA, and if we independently launch and market KRYSTEXXA in the United States, we will need to rapidly expand our sales and marketing organization. This will be difficult, expensive and time consuming, and we may not be able to attract, hire, train and retain qualified sales and marketing personnel to build a significant or effective marketing and sales force for sales of KRYSTEXXA. Alternatively, we may seek to enter into sales and marketing arrangements with third parties, which may not be on terms favorable to us. In addition, such third parties may not successfully perform such functions for us.

If we are not successful in our efforts to rapidly expand our internal sales and marketing capability or to enter into third-party sales and marketing arrangements, our ability to market and sell KRYSTEXXA will be impaired. If we do establish sales and marketing capabilities and the commercial launch of KRYSTEXXA is delayed as a result of FDA requirements or other reasons, we would incur related expenses too early relative to the product launch. This may be costly, and our sales and marketing investment could be lost.

The commercial success of KRYSTEXXA will depend upon the degree of market acceptance by physicians, patients, health care payors and others in the medical community.

Even if we are able to bring KRYSTEXXA to market, it may not gain or maintain market acceptance by physicians, patients, health care payors or others in the medical community. We believe the degree of market acceptance of KRYSTEXXA, if approved for commercial sale, will depend on a number of factors, including:

• the prevalence and severity of any side effects,

• the efficacy and potential advantages over alternative treatments,

• the ability to offer KRYSTEXXA for sale at competitive prices,

• the final labeling language,

• the terms of the final REMS program,

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• the relative convenience and ease of administration of KRYSTEXXA compared with other alternatives,

• the timing of the release of KRYSTEXXA to the public compared to alternative products or treatments,

• the willingness of the target patient population to try KRYSTEXXA and of physicians to prescribe it,

• the strength of marketing and distribution support, and

• the level of third-party coverage or reimbursement.

For example, Uloric (febuxostat) is a new treatment for gout that received FDA approval in February 2009. Febuxostat lowers uric acid levels by inhibiting uric acid formation through the same mechanism of action as allopurinol. While febuxostat is labeled for the chronic management of hyperurecemia in patients with gout, we may experience delayed uptake of KRYSTEXXA in the event febuxostat is used to treat patients who failed on or contraindicated to allopurinol, or if patients are otherwise treated with febuxostat prior to being treated with KRYSTEXXA. If KRYSTEXXA does not achieve an adequate level of acceptance, we may not generate sufficient additional revenues to achieve or maintain profitability, and we may be required to curtail or cease operations.

Our business may be harmed if we do not adequately predict the market size or customer demand for KRYSTEXXA.

The market size, and the timing and amount of customer demand, for KRYSTEXXA will be difficult to predict. Based on the results of our Phase 3 trials and interim OLE study data and the draft labeling for KRYSTEXXA, we have conducted internal and commissioned external market research to forecast the size of the market for KRYSTEXXA. Ultimately, if we are able to bring KRYSTEXXA to market, the size of the market and demand for KRYSTEXXA will be based on the final approved label language, which may be different than the draft language provided by the FDA. If the FDA provides marketing approval for KRYSTEXXA, but with labeling that is materially different than the current draft labeling, the market for KRYSTEXXA could be significantly smaller than we expect. In addition, our REMS program is subject to final approval, and could limit our commercial success and result in lower than expected future revenues.

In addition, demand for KRYSTEXXA may be harmed as a result of the introduction of new products in the field of gout. Moreover, if the actual rate at which physicians prescribe KRYSTEXXA is lower than we have forecasted, our revenues would also be lower than expected.

If we overestimate market size or customer demand, we could incur significant unrecoverable costs from creating excess capacity. In addition, if we do not successfully develop and commercialize KRYSTEXXA, we may never require the production capacity that we currently have available. In this case, we would not be excused from our existing product production commitments. In addition, KRYSTEXXA will have a limited shelf life at the time of the product launch and we will incur lost revenues to the extent that any manufactured product is not sold and administered prior to its expiration.

* We face substantial competition, and our competitors may develop or commercialize alternative technologies or products more successfully than we do.

The pharmaceutical and biotechnology industries are intensely competitive. We face competition with respect to our product candidate, KRYSTEXXA, as well as for Oxandrin and oxandrolone, from major pharmaceutical companies and biotechnology companies worldwide. Potential competitors also include academic institutions and other public and private research institutions that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. Our competitors may develop products that are safer, more effective, have fewer side effects, are more convenient or are less costly than any

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products that we may develop. Our competitors may also obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours.

We are seeking approval for KRYSTEXXA for the treatment of chronic gout in patients refractory to conventional therapy, an orphan segment of the broader gout patient population. By far the most prevalent treatment for gout today is allopurinol, which can lower uric acid values by inhibiting uric acid formation. A small number of gout patients are treated with probenecid, which can lower uric acid values by promoting excretion of uric acid. Neither of these products is actively promoted at this time. Because the anticipated approved label for KRYSTEXXA will target only chronic gout patients who have failed to normalize serum uric acid and whose signs and symptoms are inadequately controlled with xanthine oxidase inhibitors at the maximum appropriate dose or for whom these drugs are contraindicated, we do not expect KRYSTEXXA to face competition from these existing treatments.

While febuxostat is labeled for the chronic management of hyperuricemia in patients with gout, we may experience delayed uptake of KRYSTEXXA in the event febuxostat is used to treat patients who failed on or contraindicated to allopurinol.

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Smaller or early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring products, product candidates and technologies complementary to, or necessary for, our programs or advantageous to our business.

* Unless we are successful in consummating a worldwide partnership for the commercialization of KRYSTEXXA or a broader strategic transaction, we may need to raise substantial additional capital to develop and commercialize KRYSTEXXA. Such financing may only be available on terms unacceptable to us, or not at all. If we are unable to obtain financing on favorable terms, our business, results of operations and financial condition may be materially adversely affected.

As of June 30, 2009, we had $76.6 million in cash, cash equivalents and short-term investments (including restricted investments), as compared to $78.6 million as of December 31, 2008. As of June 30, 2009, we had an accumulated deficit of $228.4 million. On April 8, 2009, we completed an offering of our common stock and warrants to purchase our common stock for net proceeds to us of approximately $29.0 million. However, the development and commercialization of pharmaceutical products requires substantial funds and we currently have no committed external sources of capital. In recent periods, we have satisfied our cash requirements primarily through product sales and the divestiture of assets that were not core to our strategic business plan. However, our product sales of Oxandrin have decreased significantly in recent years and they continue to decrease as a result of generic competition. Although we may consider divesting Oxandrin, any proceeds of that divestiture would not significantly improve our capital position, and we do not have further non-core assets to divest. Historically, we have also obtained capital through collaborations with third parties, contract fees, government funding and equity financings. These financing alternatives might not be available in the future to satisfy our cash requirements.

Although our strategic plan is to advance the development and regulatory review of KRYSTEXXA and to seek FDA approval of the BLA filing for this product, we believe that a worldwide partnership for the commercialization of KRYSTEXXA or a broader strategic transaction is needed to fully optimize shareholder value through the full exploitation of the commercial prospects of KRYSTEXXA in the U.S., Europe and internationally. If we are unsuccessful in consummating a worldwide partnership for the commercialization of KRYSTEXXA or broader strategic transaction, we intend to independently pursue the commercialization of KRYSTEXXA in the United States and will incur significant expenditures related to the launch of the product. Our future capital requirements will depend on many factors, including:

• the timing of, and the costs involved in, obtaining regulatory approvals for KRYSTEXXA,

• the cost of manufacturing activities,

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• the cost of commercialization activities, including product marketing, sales and distribution, and

• our ability to establish and maintain additional collaborative arrangements relating to the commercialization of KRYSTEXXA in the United States and internationally.

If the FDA does not approve our BLA, if the FDA materially delays its approval of KRYSTEXXA, or if we are not successful in consummating a worldwide partnership for the commercialization of KRYSTEXXA or a broader strategic transaction, our cash needs will increase, our business will be materially harmed and we may need to curtail or cease operations. If the FDA does approve our BLA, unless we have been successful in consummating a worldwide partnership for the commercialization of KRYSTEXXA or a broader strategic transaction, we will be required to make significant disbursements from our existing capital resources in connection with the commercialization of KRYSTEXXA, and we likely would be required to seek additional funding.

We may not be able to obtain additional funds or, if such funds are available, such funding may not be on terms that are acceptable to us, particularly in light of current macroeconomic conditions. If we raise additional funds by issuing equity securities, or if our outstanding warrants are exercised, dilution to our then-existing stockholders will result. If we issue preferred stock, it would likely include a liquidation preference and other terms that would adversely affect our securityholders. If we raise additional funds through the issuance of debt securities or borrowings, we may incur substantial interest expense and could become subject to financial and other covenants that could restrict our ability to take specified actions, such as incurring additional debt or making capital expenditures. If additional funds are not available on favorable terms, or at all, we may be required to curtail or cease operations.

* If we fail to attract and retain senior management and other key personnel, we may not be able to successfully develop or commercialize KRYSTEXXA.

We are dependent on key members of our management team. As a result of recent changes in our senior management, including the resignation of our former President and Chief Executive Officer on mutually agreed terms, the termination of our former Chief Financial Officer, and the resignation of our Senior Vice President, Chief Medical Officer, we are also dependent on our Board of Directors with respect to ongoing operational matters, particularly our Chairman, Stephen O. Jaeger, and Lee S. Simon. Since November 2008, Dr. Simon has been providing consulting services to us and chairs our BLA Oversight Committee, which has assumed oversight of all of our activities related to the FDA’s BLA review process, including the resubmission of the BLA which will incorporate responses to the FDA’s July 31, 2009 complete response letter. The loss of the services of any of these persons would harm our ability to develop and commercialize KRYSTEXXA and it might be difficult to recruit a replacement for any of their positions. We have employment agreements with the key members of our management team and a consulting agreement with Dr. Simon, but these agreements are terminable by the individuals on short or no notice at any time without penalty. In addition, we do not maintain, and have no current intention of obtaining, “key man” life insurance on any member of our management team.

Recruiting and retaining qualified scientific and commercial personnel, including clinical development, regulatory, and marketing and sales executives and field personnel, is also critical to our success. If we fail to recruit and then retain these personnel, our ability to pursue the development and commercialization of KRYSTEXXA may be compromised. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific personnel from universities and research institutions.

* If it is approved for sale, KRYSTEXXA could be subject to restrictions or withdrawal from the market and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with the product.

If we obtain marketing approval for KRYSTEXXA, it, along with the manufacturing processes, post-approval clinical data, labeling, advertising and promotional activities, and REMS program, will

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be subject to continual requirements of, and review by the FDA and other regulatory authorities, including thorough inspections of third-party manufacturing facilities.

These requirements include submission of safety and other post-marketing information and reports, registration requirements, cGMP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents, and recordkeeping. The FDA enforces its cGMP and other requirements through periodic unannounced inspections of manufacturing facilities. The FDA is authorized to inspect manufacturing facilities without a warrant at reasonable times and in a reasonable manner.

If, in connection with any future inspection, the FDA finds that we or any of our third-party manufacturers are not in substantial compliance with cGMP requirements, the FDA may undertake enforcement action against us.

Even if regulatory approval of KRYSTEXXA is granted, the approval may be subject to limitations on the indicated uses for which it may be marketed or to the conditions of approval, or contain requirements for costly post-marketing testing and surveillance to monitor its safety or efficacy. Later discovery of previously unknown problems with KRYSTEXXA or its manufacturing processes, or failure to comply with regulatory requirements, may result in:

• restrictions on the marketing or manufacturing of KRYSTEXXA,

• costly corrective advertising,

• warning letters,

• withdrawal of KRYSTEXXA from the market,

• refusal to approve pending applications or supplements to approved applications,

• voluntary or mandatory product recall,

• fines or disgorgement of profits or revenue,

• suspension or withdrawal of regulatory approvals, including license revocation,

• shutdown, or substantial limitations on the operations, of manufacturing facilities,

• refusal to permit the import or export of products,

• product seizure, and

• injunctions or the imposition of civil or criminal penalties.

If any of these events were to occur, our business would be materially harmed.

* We may not be able to commercialize KRYSTEXXA if the FDA does not accept that our clinical trials demonstrate safety and efficacy, or if we are required to conduct additional clinical trials.

The FDA will continue its evaluation of the safety data from our clinical trials before granting regulatory approval for the sale of KRYSTEXXA, and may conclude that additional clinical trials are necessary to demonstrate its safety and efficacy. Moreover, we must provide similar foreign regulatory authorities with clinical data to demonstrate that KRYSTEXXA is safe and effective. Clinical trials of KRYSTEXXA must comply with regulation by numerous federal, state and local government authorities in the United States, principally the FDA, and by similar agencies in other countries. We may decide, or be required by regulators, to conduct additional clinical trials or testing of KRYSTEXXA. Clinical testing is expensive, difficult to design and implement, can take many years to complete, is uncertain as to outcome and results are subject to differing interpretations. Success in pre-clinical testing and early clinical trials does not ensure that later clinical trials will be successful, and interim results of a clinical trial do not necessarily predict final results.

If we decide, or are required by regulators, to conduct additional clinical trials or other testing of KRYSTEXXA beyond those that we have completed and currently contemplate, if we are unable to successfully complete our clinical trials or other testing or if the results of these trials or tests are not positive, we may:

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• be delayed in obtaining marketing approval for KRYSTEXXA,

• not be able to obtain marketing approval,

• be subject to safety considerations that are more stringent than those that we have proposed, or

• obtain approval for indications that are not as broad as intended.

Our product development costs will also increase if we experience delays in testing or approvals. Such delays could also allow our competitors to bring products to market before we do and impair our ability to commercialize KRYSTEXXA. If any of these events occur, our business will be materially harmed and we may need to curtail or cease operations.

If we are unable to obtain adequate reimbursement from third-party payors, or acceptable prices, for KRYSTEXXA, our revenues and prospects for profitability will suffer.

Our future revenues and ability to become profitable will depend heavily upon the availability of adequate reimbursement for the use of KRYSTEXXA from governmental and other third-party payors. Reimbursement by a third-party payor may depend upon a number of factors, including the third- party payor’s determination that use of a product is:

• a covered benefit under its health plan,

• safe, effective and medically necessary,

• appropriate for the specific patient,

• cost effective, and

• neither experimental nor investigational.

Obtaining reimbursement approval for KRYSTEXXA from each government or other third-party payor will be a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost-effectiveness data for KRYSTEXXA’s use to each payor. We may not be able to provide data sufficient to gain acceptance with respect to reimbursement.

Even when a payor determines that a product is eligible for reimbursement, the payor may impose coverage limitations that preclude payment for some product uses that are approved by the FDA or similar authorities. Moreover, eligibility for coverage does not imply that any product will be reimbursed in all cases or at a rate that allows us to make a profit or even cover our costs. If we are not able to obtain coverage and profitable reimbursement promptly from government-funded and private third-party payors for our products, our ability to generate revenues and become profitable will be compromised.

Federal legislation enacted in December 2003 has altered the way in which physician-administered drugs and biologics covered by Medicare are reimbursed. Under the new reimbursement methodology, physicians are reimbursed based on a product’s “average sales price”. This new reimbursement methodology has generally led to lower reimbursement levels. The new federal legislation also has added an outpatient prescription drug benefit to Medicare, which went into effect in January 2006. These benefits will be provided primarily through private entities, which we expect will attempt to negotiate price concessions from pharmaceutical manufacturers.

Moreover, the Congress and state legislatures may propose changes to the regulation of the health care system, which, if enacted, could, among other things, increase pressure on drug pricing or make it more costly for patients to gain access to prescription drugs like KRYSTEXXA at affordable prices. This could lead to fewer prescriptions for KRYSTEXXA and could force individuals who are prescribed KRYSTEXXA to pay significant out-of-pocket costs or pay for the prescription entirely by themselves. As a result of such initiatives, market acceptance and commercial success of our product may be limited and our business may be harmed.

If the FDA provides marketing approval for KRYSTEXXA, this product may also be eligible for reimbursement under Medicaid. If state-specific Medicaid programs do not provide adequate coverage and reimbursement for KRYSTEXXA or any products we may develop in the future, it may have a negative impact on our operations.

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The scope of coverage and payment policies varies among third-party private payors, including indemnity insurers, employer group health insurance programs and managed care plans. These third-party carriers may base their coverage and reimbursement on the coverage and reimbursement rate paid by carriers for Medicare beneficiaries. Furthermore, many such payors are investigating or implementing methods for reducing health care costs, such as the establishment of capitated or prospective payment systems. Cost containment pressures have led to an increased emphasis on the use of cost-effective products by health care providers. If third-party payors do not provide adequate coverage or reimbursement for KRYSTEXXA or any products we may develop in the future, it could have a negative effect on our revenues and results of operations.

Failure to obtain regulatory approval in foreign jurisdictions would prevent us from marketing our products abroad.

We intend to have our products marketed outside the United States. In order to market our products in the European Union and many other foreign jurisdictions, we must obtain separate regulatory approvals and comply with numerous and varying regulatory requirements. While we have been unable to do so to date, if we are able to establish a development and commercialization partnership for KRYSTEXXA for markets outside of the United States, third parties may have responsibility to obtain regulatory approvals outside of the United States, and we will depend on them to obtain these approvals. The approval procedure varies among countries and can involve additional testing or pre-filing requirements such as a pediatric investigational plan, which we have been informed by the EMEA we must file prior to the filing of our Marketing Authorization Application. The time required to obtain approval may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. We and our collaborators may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our products in any market. The failure to obtain these approvals could materially adversely affect our business, financial condition and results of operations.

Foreign governments tend to impose strict price controls, which may adversely affect our revenues.

In some foreign countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take an additional six to twelve months after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval for KRYSTEXXA in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. The conduct of such a clinical trial would be expensive and result in delays in commercialization of KRYSTEXXA in such markets. If reimbursement is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

Legislation has been introduced in the U.S. Congress that, if enacted, would permit more widespread re-importation of drugs from foreign countries into the United States, which may include reimportation from foreign countries where the drugs are sold at lower prices than in the United States. Such legislation, or similar regulatory changes, could decrease the revenue we receive for any approved products, which, in turn, could adversely affect our operating results and our overall financial condition.

Product liability lawsuits could cause us to incur substantial liabilities.

We face an inherent risk of product liability exposure related to the sale of Oxandrin and oxandrolone, as well as the testing and, if approved by the FDA, future sale of KRYSTEXXA and any other products that we may develop. If we cannot successfully defend ourselves against claims that our products or product candidates caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

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• decreased demand for KRYSTEXXA, Oxandrin, oxandrolone or any product candidates or products that we may develop,

• injury to our reputation,

• withdrawal of clinical trial participants,

• withdrawal or recall of a product from the market,

• modification to product labeling which may be unfavorable to us,

• a requirement to conduct additional clinical trials which may be expensive and time consuming,

• costs to defend the related litigation,

• substantial monetary awards to trial participants or patients,

• loss of revenue, and

• the inability to commercialize any products that we may develop in the future.

We currently have product liability insurance coverage in place, which is subject to coverage limits and deductibles. The amount of insurance that we currently hold may not be adequate to cover all liabilities that may occur. Product liability insurance is difficult to obtain and increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost and we may not be able to obtain insurance coverage with policy limits that will be adequate to satisfy any liability that may arise.

* Our net operating loss carryforward may be limited if an “ownership change” is deemed to have occurred pursuant to Section 382 of the Internal Revenue Code.

In the event that it is determined that we have undergone an “ownership change” pursuant to Section 382 of the Internal Revenue Code, we may be limited in the amount of net operating loss carryforwards that we can use on an annual basis.

Risks Relating to Our Reliance on Third Parties

* We have no manufacturing capabilities and limited manufacturing personnel. We depend on third parties to manufacture KRYSTEXXA. If these manufacturers fail to meet our market requirements at acceptable quality levels and at acceptable cost, and if we are unable to identify suitable replacements, our product development and commercialization efforts may be materially harmed.

We have limited personnel with experience in, and we do not own facilities for, manufacturing any products. We depend on third parties to manufacture KRYSTEXXA. We have entered into commercial supply agreements with third-party manufacturers, NOF, BTG and Enzon respectively, to supply mPEG-NPC, a key raw material in the manufacture of the pegloticase drug substance, and to produce the pegloticase drug substance and KRYSTEXXA drug product. These companies represent single source of supply for the mPEG-NPC, the pegloticase drug substance and the drug product.

Although we have commenced the manufacture of launch quantities of pegloticase drug substance and finished drug, and have such quantities in the United States, our suppliers have not yet manufactured KRYSTEXXA on a consistent basis at the manufacturing intensity to support our market forecasts. In addition, in order to produce KRYSTEXXA in the quantities necessary to meet anticipated market demand if the product is approved, we and our contract manufacturers will need to increase the overall manufacturing capacity for the pegloticase drug substance. If we are unable to increase our manufacturing capacity or qualify an additional supplier, or if the cost of the increased capacity is uneconomical to us, we may not be able to produce KRYSTEXXA in a sufficient quantity to meet future demand, adversely affecting our projected revenues and gross margins.

BTG underwent a pre-approval inspection by the FDA in June 2009, as a result of which the FDA identified certain deficiencies and has required that these deficiencies be corrected prior to the approval of the KRYSTEXXA BLA. BTG has submitted a work plan and a timeline to the FDA

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for correction of these deficiencies cited by the FDA, and some of these items have already been corrected and the remainder are expected to be addressed this fall. A satisfactory inspection report for the remediation of such deficiencies is required prior to the approval of the KRYSTEXXA BLA, and it is uncertain whether the FDA may require a reinspection of the BTG facility. Failure by BTG to adequately and timely remediate these deficiencies may delay the issuance of the regulatory approvals that are necessary to market KRYSTEXXA, or they may not be obtained at all. If a reinspection by the FDA of the BTG facility is necessary this could cause further delays in the issuance of such regulatory approvals.

Although the recent hostilities involving Israel have not adversely affected BTG’s ability to supply us with adequate quantities of pegloticase drug substance for KRYSTEXXA, future hostilities in Israel could harm BTG’s ability to supply us with pegloticase drug substance and could harm our commercialization efforts. Moreover, in the event the FDA requires a reinspection of the BTG facility prior to approval, the scheduling of such reinspection could be delayed in the event of future hostilities in Israel.

Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured products ourselves, including:

• reliance on the third party for regulatory compliance and quality assurance,

• the possible breach of the manufacturing agreement by the third party because of factors beyond our control, and

• the possibility of termination or non-renewal of the agreement by the third party, based on its own business priorities, at a time that is costly or inconvenient for us.

We may in the future elect to manufacture pegloticase drug substance in KRYSTEXXA in our own manufacturing facilities. We would need to invest substantial additional funds and recruit qualified personnel in order to build or lease and operate any manufacturing facilities.

If the company on which we plan to rely for fill and finish services for KRYSTEXXA is unable to perform these services for us, our business may suffer.

We have outsourced the operation for KRYSTEXXA fill and finish services to a single company, Enzon. We have not established internal redundancy for our fill and finish functions and currently have no substitute that can provide these services. If we successfully commercialize KRYSTEXXA and if Enzon is unable to perform these services for us, we would need to identify and engage an alternative company or develop our own fill and finish capabilities. Any new contract fill and finish company or capabilities that we acquire or develop will need to obtain FDA approval. Identifying and engaging a new contract fill and finish company or developing our own capabilities and obtaining FDA approval could involve significant cost and delay. As a result, we might not be able to deliver KRYSTEXXA orders on a timely basis and our business would be harmed.

We rely on third parties to conduct our clinical development activities for KRYSTEXXA and those third parties may not perform satisfactorily.

We do not independently conduct clinical development activities for KRYSTEXXA, including any additional clinical trials that may be required, or we may elect, to conduct in the future. We rely on third parties, such as contract research organizations, clinical data management organizations, medical institutions and clinical investigators to perform this function. We use multiple contract research organizations to coordinate the efforts of our clinical investigators and to accumulate the results of our trials. Our reliance on these third parties for clinical development activities reduces our control over these activities. We are responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us and third parties acting on our behalf to comply with GCP for conducting, recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Our reliance on third parties that we do not control does not relieve us of these responsibilities and requirements. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors.

If these third parties do not successfully carry out their contractual obligations, meet expected deadlines or conduct our clinical development activities in accordance with regulatory requirements or our stated protocols, we may not be able to obtain, or may be delayed in obtaining, regulatory

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approvals for KRYSTEXXA and may not be able to, or may be delayed in our efforts to, successfully commercialize KRYSTEXXA.

We also rely on third parties to store and distribute drug supplies for our clinical development activities. Any performance failure on the part of such third parties could delay regulatory approval or commercialization of KRYSTEXXA, causing us to incur additional expenses and harming our ability to generate additional revenue.

We are seeking a worldwide partner for the further development and commercialization of KRYSTEXXA, and we expect to continue to depend on collaborations with third parties. If we are not successful in these efforts, we may fail to meet our business objectives.

We currently depend on third parties in many aspects of the development and commercialization of KRYSTEXXA. Although we are seeking to establish a development and commercialization partnership for KRYSTEXXA as part of our strategic business plan, to date, we have not been able to enter into such a partnership. If we are unable to reach agreements with suitable partners, we may fail to meet our business objectives for KRYSTEXXA.

In addition, seeking new collaborations with corporate and academic collaborators for the research, development and commercialization of additional product candidates are important elements of our business strategy. We face significant competition in seeking appropriate partners. These arrangements may not be scientifically or commercially successful. The termination of any of these arrangements might adversely affect our ability to develop, commercialize and market our products.

The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Our collaborators will have significant discretion in determining the efforts and resources that they will apply to these collaborations. The risks that we face in connection with these collaborations include the following:

• collaboration agreements are generally for fixed terms and subject to termination under various circumstances, including, in many cases, on short notice without cause,

• we expect to be required in our collaboration agreements not to conduct specified types of research and development in the field that is the subject of the collaboration. These agreements may have the effect of limiting the areas of research and development that we may pursue, either alone or in cooperation with third parties,

• collaborators may develop and commercialize, either alone or with others, products and services that are similar to or competitive with our products that are the subject of the collaboration with us, and

• collaborators may change the focus of their development and commercialization efforts. Pharmaceutical and biotechnology companies historically have re-evaluated their priorities following mergers and consolidations, which have been common in recent years in these industries. The ability of our products to reach their potential could be limited if our collaborators decrease or fail to increase spending related to such products.

Collaborations with pharmaceutical companies and other third parties often are terminated or allowed to expire by the other party. Such terminations or expirations can adversely affect us financially as well as harm our business reputation.

Risks Relating to Intellectual Property

If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to our business.

We are party to various license agreements and we intend to enter into additional license agreements in the future. For example, we licensed exclusive worldwide rights to patents and pending patent applications that constitute the fundamental composition of matter and underlying manufacturing patents for KRYSTEXXA from Mountain View Pharmaceuticals, Inc., or Mountain View, and Duke University, or Duke. Under the agreement, we are required to use best efforts to bring to market and diligently market products that use the licensed technology. We also must

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provide Mountain View and Duke with specified information relating to the development of KRYSTEXXA. The agreement requires us to pay to Mountain View and Duke quarterly royalty payments within sixty days after the end of each quarter based on net sales we make in that quarter. The royalty rate for a particular quarter ranges between 8% and 12% of net sales based on the amount of cumulative net sales made by us or our sub-licensees. Under the agreement, we are also required to pay royalties of 20% of any revenues or other consideration we receive from sub-licensees during any quarter. As of June 30, 2009, we have made aggregate payments of approximately $1.7 million to Mountain View and Duke for the achievement of milestones under this agreement, and if we obtain regulatory approval in one of five major global markets, which includes FDA approval in the United States, we will be required to make aggregate milestone payments of approximately $0.8 million.

The agreement remains in effect, on a country-by-country basis, for the longer of ten years from the date of first sale of KRYSTEXXA in such country, or the date of expiration of the last-to-expire patent covered by the agreement in such country. The licensors may terminate the agreement with respect to the countries affected upon our material breach, if not cured within a specified period of time, or immediately after our third or subsequent material breach of the agreement or our fraud, willful misconduct or illegal conduct. The licensors may also terminate the agreement for our bankruptcy or insolvency. Upon a termination of the agreement in one or more countries, all intellectual property rights conveyed to us with respect to the terminated countries under the agreement, including regulatory applications and pre-clinical and clinical data, revert to Mountain View and Duke and we are permitted to sell off any remaining inventory of KRYSTEXXA for such countries.

If we fail to comply with our obligations under this agreement, we could lose the ability to develop and commercialize KRYSTEXXA, which could require us to curtail or cease our operations.

We expect that future licenses that we may enter into would impose additional requirements on us. If we fail to comply with these obligations, the licensor may have the right to terminate the license, in which event we might not be able to market any product that is covered by the licensed patents.

If we are unable to obtain and maintain protection for the intellectual property relating to our technology and products, the value of our technology and products will be adversely affected.

Our success will depend in large part on our ability to obtain and maintain protection in the United States and other countries for the intellectual property covering or incorporated into our technology and products. The patent situation in the field of biotechnology and pharmaceuticals is highly uncertain and involves complex legal and scientific questions. We may not be able to obtain additional issued patents relating to our technology or products. Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing similar products or limit the length or term of patent protection we may have for our products. Generic forms of our product Oxandrin were introduced to the market in late 2006. As a result, our results of operations have been harmed. The patents and, if issued, patent applications related to KRYSTEXXA, would expire between 2019 and 2028, unless patent term extensions are obtained. Changes in either patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection.

Our patents also may not afford us protection against numerous competitors with similar technology. Because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing, or in some cases not at all, and because publications of discoveries in the scientific literature often lag behind actual discoveries, neither we nor our licensors can be certain that we or they were the first to make the inventions claimed in issued patents or pending patent applications, or that we or they were the first to file for protection of the inventions set forth in these patent applications. In addition, patents generally expire, regardless of their date of issue, twenty years from the earliest claimed non-provisional filing date. As a result, the time required to obtain regulatory approval for a product candidate may consume

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part or all of the patent term. We are not able to accurately predict the remaining length of the applicable patent term following regulatory approval of any of our product candidates.

If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.

In addition to patented technology, we rely upon unpatented proprietary technology, processes and know-how. We seek to protect this information in part through confidentiality agreements with our employees, consultants and third parties. These agreements may be breached and we may not have adequate remedies for any such breach and any remedies we may seek may prove costly. In addition, our trade secrets may otherwise become known or be independently developed by competitors. If we are unable to protect the confidentiality of our proprietary information and know-how, competitors may be able to use this information to develop products that compete with our products, which could adversely affect our business.

If we infringe or are alleged to infringe intellectual property rights of third parties, our business may be adversely affected.

Our development and commercialization activities, as well as any product candidates or products resulting from these activities, may infringe or be claimed to infringe patents or patent applications under which we do not hold licenses or other rights. We are aware of patent applications filed by, or patents issued to, other entities with respect to technology potentially useful to us and, in some cases, related to products and processes being developed by us. Third parties may own or control these patents and patent applications in the United States and abroad. These third parties could bring claims against us, our licensors or our collaborators that would cause us to incur substantial expenses and, if successful, could cause us to pay substantial damages. Further, if a patent infringement suit were brought against us, our licensors or our collaborators, we or they could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the suit.

As a result of patent infringement claims, or in order to avoid potential claims, we, our licensors or our collaborators may choose or be required to seek a license from the third party and be required to pay license fees, royalties, or both. These licenses may not be available on acceptable terms, or at all. Even if we, our licensors or our collaborators were able to obtain a license, the rights may be non-exclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our collaborators are unable to enter into licenses on acceptable terms. This could harm our business significantly.

There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical and biopharmaceutical industries. In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference proceedings declared by the U.S. Patent and Trademark Office and opposition proceedings in the European Patent Office or in another patent office, regarding intellectual property rights with respect to our products and technology. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources.

Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could adversely affect our ability to compete in the marketplace. Patent litigation and other proceedings may also absorb significant management time.

In the future we may be involved in costly legal proceedings to enforce or protect our intellectual property rights or to defend against claims that we infringe the intellectual property rights of others.

Litigation is inherently uncertain and an adverse outcome could subject us to significant liability for damages or invalidate our proprietary rights and adversely impact our ability to develop and market KRYSTEXXA and any future product candidates. Legal proceedings that we initiate to

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protect our intellectual property rights could also result in counterclaims or countersuits against us. Any litigation, regardless of its outcome, could be time-consuming and expensive to resolve and could divert our management’s time and attention. Any intellectual property litigation also could force us to take specific actions, including:

• cease selling products or undertaking processes that are claimed to be infringing a third party’s intellectual property,

• obtain licenses to make, use, sell, offer for sale or import the relevant technologies from the intellectual property’s owner, which licenses may not be available on reasonable terms, or at all,

• redesign those products or processes that are claimed to be infringing a third party’s intellectual property, or

• pursue legal remedies with third parties to enforce our indemnification rights, which may not adequately protect our interests.

We have been involved in several lawsuits and disputes regarding intellectual property in the past. We could be involved in similar disputes or litigation with other third parties in the future. An adverse decision in any intellectual property litigation could have a material adverse effect on our business, results of operations and financial condition.

Risks Relating to Our Results of Operations and Your Investment in Our Common Stock

* We may not be able to achieve profitability. We have incurred operating losses from continuing operations since 2004 and anticipate that we will incur operating losses from continuing operations for the foreseeable future, particularly as a result of increasing expenses related to our development and, if our BLA is approved by the FDA, commercialization of KRYSTEXXA.

We continue to incur substantial operating losses from continuing operations. Our operating losses from continuing operations were $40.4 million for the six months ended June 30, 2009 and $89.0 million and $69.2 million for the years ended December 31, 2008 and 2007, respectively. Our operating losses from continuing operations are the result of two factors: increasing operating costs and decreasing product revenues. We have incurred and expect to continue to incur significant costs in connection with our research and development activities, including clinical trials, and from selling, general and administrative expenses associated with our operations. We have experienced and expect to continue to experience decreasing revenues from sales of Oxandrin and our authorized generic Oxandrin brand equivalent product, oxandrolone, on which our continuing operations have been substantially dependent. Sales of Oxandrin and, since December 2006, oxandrolone, accounted for 100% of our continuing net product sales. If the FDA does not approve our BLA, if we are not successful in commercializing KRYSTEXXA, or if the FDA materially delays its approval of KRYSTEXXA, our revenues will continue to decline significantly, and our results of operations will be materially adversely affected.

Our ability to achieve operating profitability in the future depends on the successful commercialization of KRYSTEXXA. If we do not receive regulatory approval for and are unable to successfully commercialize KRYSTEXXA or any other product candidate, or if we experience significant delays or unanticipated costs in doing so, or if sales revenue from any product candidate that receives marketing approval is insufficient, we may never achieve operating profitability. If we do receive regulatory approval for KRYSTEXXA and have not been successful in consummating a worldwide partnership for the commercialization of KRYSTEXXA or broader strategic transaction, we expect to incur significant expenditures in connection with its commercialization. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. If we are unable to successfully commercialize KRYSTEXXA or any other product candidate, or if we experience significant delays or unanticipated costs in doing so, or if sales revenue from any product candidate that receives marketing approval is insufficient, we may never achieve operating profitability. If we are not successful in consummating a significant collaboration or broader strategic transaction for the commercialization of KRYSTEXXA, we expect to incur

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significant expenditures in connection with its commercialization. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

We expect sales of Oxandrin and oxandrolone to remain flat or continue to decrease.

In addition to market erosion due to generic competition, our sales of Oxandrin and oxandrolone in the United States are affected by fluctuations in the buying patterns of the three major drug wholesalers to which we principally sell these products. In the past, wholesalers have reduced their inventories of Oxandrin and we expect that they may continue to reduce inventories as a result of generic competition, further decreasing our revenues from these products.

Sales of Oxandrin and oxandrolone have also decreased as a result of the elimination of reimbursement, or limited reimbursement practices, by some states under their AIDS Drug Assistance Programs via their state Medicaid programs for HIV/AIDS prescription drugs, including Oxandrin and oxandrolone. Other state formularies may follow suit. In addition, the implementation of the Medicare Part D program has created disruption in the market as patients switch to a variety of new prescription coverage programs in all states across the United States, further decreasing demand for Oxandrin and oxandrolone.

We have considered the demand deterioration of Oxandrin and oxandrolone in estimating future product returns, however, our demand forecasts are based upon management’s best estimates. Future product returns in excess of our historical reserves could reduce our revenues even further and adversely affect our results of operations.

In addition, we do not have the ability to independently distribute our authorized generic version of oxandrolone tablets and depend on our distribution partner, Watson, to distribute this product for us. If Watson fails to carry out its contractual obligations, does not devote sufficient resources to the distribution of oxandrolone, or does not carry out its responsibilities in the manner we expect, our oxandrolone product may not compete successfully against other generics, and our results of operations could be further harmed.

Our stock price is volatile, which could adversely affect your investment.

Our stock price has been, and is likely to continue to be, volatile. Since January 1, 2008, our common stock has traded as high as $28.42 per share and as low as $2.80 per share. The stock market in general and the market for biotechnology companies in particular have recently experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price of our common stock may be influenced by many factors, including:

• our ability to sustain our operations with our existing cash reserves,

• whether we obtain regulatory approval for KRYSTEXXA, and the timing of such approval,

• if we obtain regulatory approval of KRYSTEXXA, whether it achieves market acceptance,

• whether KRYSTEXXA achieves market acceptance,

• the nature of post-marketing commitments,

• the disclosure of information relating to the efficacy or safety of KRYSTEXXA,

• announcements of technological innovations or developments relating to competitive products or product candidates,

• the costs of commercialization activities, including product marketing, manufacturing, sales and distribution,

• our ability to obtain adequate capital resources to execute our business strategy,

• market conditions in the pharmaceutical and biotechnology sectors and the issuance of new or changed securities analysts’ reports or recommendations,

• period-to-period fluctuations in our financial results,

• regulatory developments in the United States and foreign countries,

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• our issuance of additional shares of common stock in capital raising transactions, or upon the exercise of warrants to purchase shares of our common stock,

• general economic, industry and market conditions, and

• other factors described in this “Risk Factors” section.

The volatility of our common stock imposes a greater risk of capital losses on our stockholders than a less volatile stock would. In addition, volatility makes it difficult to ascribe a stable valuation to a stockholder’s holdings of our common stock.

We expect our quarterly results to fluctuate, which may cause volatility in our stock price.

Our revenues from product sales of Oxandrin and oxandrolone have in the past displayed and may in the future continue to display significant variations. These variations may result from a variety of factors, including:

• increased competition from new or existing products, including generic products,

• the amount and timing of product sales,

• changing demand for our products,

• our inability to provide adequate supply for our products,

• changes in wholesaler buying patterns,

• returns of expired product,

• changes in government or private payor reimbursement policies for our products,

• the timing of the introduction of new products,

• the timing and realization of milestone and other payments to licensees,

• the timing and amount of expenses relating to research and development, product development and manufacturing activities,

• the timing and amount of expenses relating to sales and marketing,

• the timing and amount of expenses relating to general and administrative activities,

• the extent and timing of costs of obtaining, enforcing and defending intellectual property rights, and

• any charges related to acquisitions.

In addition, our expenses have fluctuated and are likely to increase significantly in the near future in connection with our development and commercialization efforts related to KRYSTEXXA. As a result, any decrease in revenues or increase in expenses will be likely to adversely affect our earnings in a significant manner until revenues can be increased or expenses reduced. We expect that our revenues and earnings from sales of Oxandrin and oxandrolone will continue to decline. Because of fluctuations in revenues and expenses, it is possible that our operating results for a particular quarter or quarters will not meet the expectations of public market analysts and investors, which could cause the market price of our common stock to decline.

* Our outstanding warrants may be exercised in the future, which would increase the number of shares in the public market and result in dilution to our stockholders.

In connection with the registered direct offering we completed on April 8, 2009, we issued warrants to purchase up to 5,038,237 shares of our common stock.

The warrants are exercisable at any time on or after the date of issuance and expire on the earlier of November 2, 2010, and the date that is nine months after the date on which we publicly announce that we have addressed all items required by the FDA to be addressed before our BLA can be approved.

Pursuant to the terms of the warrants, the exercise price for the warrants will, from and after August 17, 2009, be equal to the dollar volume weighted-average price of the Company’s common

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stock for the five trading days immediately preceding such date. The exercise price per share may not exceed $10.46 or be less than $1.57. The Company may, at its or the warrant holder’s election, issue net shares in lieu of a cash payment of the exercise price by the warrant holder upon exercise.

In the event that we enter into a merger or change of control transaction, the holders of the warrants will be entitled to receive consideration as if they had exercised the warrant immediately prior to such transaction, or they may require us to purchase the warrant at the Black-Scholes value of the warrant on the date of such transaction.

Effecting a change of control of our company could be difficult, which may discourage offers for shares of our common stock.

Our certificate of incorporation and the Delaware General Corporation Law contain provisions that may delay or prevent a merger, acquisition or other change of control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions include the requirements of Section 203 of the Delaware General Corporation Law. Section 203 prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person that, together with its affiliates, owns or within the last three years has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless:

• our Board of Directors approves the transaction before the third party acquires 15% of our stock,

• the third party acquires at least 85% of our stock at the time its ownership exceeds the 15% level, or

• our Board of Directors and two-thirds of the shares of our common stock not held by the third-party vote in favor of the transaction.

Our certificate of incorporation also authorizes us to issue up to 4,000,000 shares of preferred stock in one or more different series with terms fixed by our Board of Directors. Stockholder approval is not necessary to issue preferred stock in this manner. Issuance of these shares of preferred stock could have the effect of making it more difficult for a person or group to acquire control of us. No shares of our preferred stock are currently outstanding. Although our Board of Directors has no current intention or plan to issue any preferred stock, issuance of these shares could also be used as an anti- takeover device.

* We are a party to a shareholder lawsuit regarding the adequacy of our public disclosure, which could have a material adverse affect on our business, results of operations and financial condition.

In November 2008, Richard Sagall, an alleged shareholder, commenced an action in the U.S. District Court for the Southern District of New York to certify a class of Shareholders who held Savient Securities between December 13, 2007 and October 24, 2008. The suit alleges that we made false and misleading statements relating to the GOUT1 and GOUT2 Phase 3 clinical trials and that we failed to disclose in a timely manner serious adverse events which occurred in five patients in these trials. A lead plaintiff was appointed in March 2009 resulting in the re-captioning of the action as Lawrence J. Koncelik, Jr. vs. Savient Pharmaceuticals, et al and an amended complaint was filed in this matter in April 2009. In June 2009 we filed a motion to dismiss the action. We intend to vigorously defend against this action.

We expect that the costs related to this suit will be significant and we can provide no assurance as to its outcome. If we are not successful in defending this action, we may be required to pay substantial damages to the plaintiffs and our business, results of operations and financial condition could be materially adversely affected. In addition, even if we are successful, the defense of these actions will continue to divert the attention of our management and other resources that would otherwise be engaged in operating our business.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SAVIENT PHARMACEUTICALS, INC.
(Registrant)

By:	/s/ PAUL HAMELIN Paul Hamelin President (Principal Executive Officer)
By:	/s/ DAVID G. GIONCO David G. Gionco Group Vice President, Chief Financial Officer & Treasurer (Principal Financial Officer)

Dated: August 11, 2009

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EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
31.2	Certification of the principal financial officer pursuant to Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934, as amended.
32.1	Statement pursuant to 18 U.S.C. §1350.
32.2	Statement pursuant to 18 U.S.C. §1350.

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