-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AtkSFmNwFkTd5f0ImIVHYfoGblNTTZiou+K3qfkn6NNnqkdC/HIf901eQBBqkLNG xUvdrPbTKQeg7GIS3WW3Qw== 0001125282-04-005646.txt : 20041112 0001125282-04-005646.hdr.sgml : 20041111 20041112080857 ACCESSION NUMBER: 0001125282-04-005646 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20041108 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041112 DATE AS OF CHANGE: 20041112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAVIENT PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000722104 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] IRS NUMBER: 133033811 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15313 FILM NUMBER: 041135197 BUSINESS ADDRESS: STREET 1: ONE TOWER CENTER CITY: EAST BRUNSWICK STATE: NJ ZIP: 08816 BUSINESS PHONE: 7324189300 MAIL ADDRESS: STREET 1: ONE TOWER CENTER CITY: EAST BRUNSWICK STATE: NJ ZIP: 08816 FORMER COMPANY: FORMER CONFORMED NAME: BIO TECHNOLOGY GENERAL CORP DATE OF NAME CHANGE: 19920703 8-K 1 b402244_8k.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): November 8, 2004 Savient Pharmaceuticals, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) Delaware 0-15313 13-3033811 - -------------------------------------------------------------------------------- (State or other juris- (Commission (IRS Employer diction of incorporation File Number) Identification No.) One Tower Center, 14th Floor East Brunswick, New Jersey 08816 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (732) 418-9300 Not applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the obligation of the registrant under any of the following provisions: |_| Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2{b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On November 8, 2004, Savient Pharmaceuticals, Inc. ("Savient") announced its financial results for the quarter ended September 30, 2004. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In addition, on November 8, 2004, Savient held a publicly available live webcast discussion of its financial results for the quarter ended September 30, 2004. The transcript of the November 8, 2004 conference call is furnished as Exhibit 99.2 to this Current Report on Form 8-K. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS (c) Exhibits 99.1 Press release dated November 8, 2004 99.2 Transcript dated November 8, 2004 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: November 12, 2004 SAVIENT PHARMACEUTICALS, INC. By: /s/ Philip K. Yachmetz --------------------------------------- Philip K. Yachmetz Senior Vice President, General Counsel and Secretary EX-99.1 2 b402244_ex991.txt PRESS RELEASE Exhibit 99.1 [SAVIENT PHARMACEUTICALS, INC. LOGO] CONTACT COMPANY CONTACT Don Weinberger Beata Smith Wolfe Axelrod Weinberger Associates Savient Pharmaceuticals, Inc. 212-370-4500 732- 565-4708 FOR IMMEDIATE RELEASE SAVIENT PHARMACEUTICALS, INC. REPORTS IMPROVED REVENUES AND NARROWER LOSSES FOR THIRD QUARTER 2004 EAST BRUNSWICK, N.J. - November 8, 2004 -- Savient Pharmaceuticals, Inc. (NASDAQ:SVNT) today reported improved revenues and narrower losses for the three and nine months ended September 30, 2004. For the three months ended September 30, 2004, total revenues were $26.4 million, down 22% from a year ago but up 50% from the immediately preceding quarter. The net loss for the quarter of $4.5 million, or a negative 7 cents per share, compares to net income of $4.4 million, or 7 cents per share, a year ago and a net loss of $31.9 million, or a negative 53 cents per share, in the second quarter. For the nine months ended September 30, 2004, total revenues were $77.6 million, down 16% from a year ago. The net loss of $35.1 million, or a negative 59 cents per share, compares to net income of $9.9 million, or 17 cents per share, a year ago. "Our results for the recently completed quarter signaled a comeback from the previous quarter," said Christopher Clement, President and Chief Executive Officer of Savient. "Earnings improved. Demand for Oxandrin continued to improve as did sales volume before consideration of the provisions taken for current and future returns of expired product. Sales of Rosemont, our oral liquids business in the U.K. also showed strong year-over-year gains. Finally, our clinical programs to advance our two lead drug candidates are proceeding according to plan." QUARTER ENDED SEPTEMBER 30, 2004 Revenues o Total revenues for the three months ended September 30, 2004 were $26.4 million compared to $33.8 million in the three months ended September 30, 2003, due primarily to lower product sales. o Net product sales for the third quarter of 2004 were $24.4 million compared to $32.1 million in the third quarter of 2003 and $14.3 million in the immediately preceding quarter. Sales of Oxandrin(R), the Company's largest selling brand, were $10.3 million, down from $16.9 million in 2003. The decline in Oxandrin net product sales versus a year ago was largely driven by the effects of returns of expired product and an increase in the provision for future product returns. Prescriptions for Oxandrin were down 2% percent versus the same quarter a year ago and registered their second successive quarter of growth, up 3% and 2% in the second and third quarters, respectively. Other product sales were reduced by the reintroduction in March 2004 of a generic version of Delatestryl(R) and lower sales of human growth hormone and BioLon(R), partially offset by a 27% increase in U.S. dollar sales of the Company's U.K.-based oral liquid pharmaceutical products (14% in local currency). Product Returns o Prior to this year, the Company experienced virtually no returns of Oxandrin 2.5-mg because of its five-year shelf life. In the first six months of this year, Company management became aware that retail customers of the Company's wholesalers were preparing to return expiring Oxandrin 2.5-mg product as well as 10-mg product, which currently has a two-year shelf life. Through June 2004, the Company issued credits and recorded reserves for returned product (primarily Oxandrin) totaling $4.7 million as an offset to sales. In the third quarter, the Company issued additional credits and recorded additional reserves totaling $6.7 million for an aggregate provision of $11.4 million year to date. As of September 30, 2004, the remaining reserve for future returns is $8.1 million. Expenses o Operating expenses in the third quarter of 2004 were $29.7 million, compared to $30.9 million in the third quarter of 2003. Lower research and development costs, attributable to the completion of Prosaptide toxicology studies and the expense for the production of clinical supplies for both Puricase(R) and Prosaptide, and lower general and administrative expense were substantially offset by higher cost of sales. o Cost of sales as a percentage of product sales increased from 15% in the third quarter last year to 39% in the most recent quarter. The increase is principally attributable to (i) reductions in net product sales as a result of returned goods credits and provisions; (ii) $1.7 million in reserves against Delatestryl inventories that were deemed in excess of projected demand for the product following the re-introduction of a generic competitor; (iii) $1.2 million in expenses related primarily to the validation and qualification of the Company's new manufacturing facility in Israel; (iv) $0.9 million in loss contract reserves; and (v) $0.6 million in depreciation expense since the new Israeli manufacturing facility began operations in January of this year. Net Loss o The Company recorded a net loss in the three months ended September 30, 2004 of $4.5 million, or a negative 7 cents per share, compared to net income of $4.4 million, or 7 cents per share in the corresponding period a year ago. Balance Sheet o The Company had cash, cash equivalents, and short-term investments of $24.7 million at September 30, 2004, compared to $26.4 million at June 30, 2004 and $22.8 million at the prior year end. NINE MONTHS ENDED SEPTEMBER 30, 2004 Revenues o Total revenues for the nine months ended September 30, 2004 were $77.6 million compared to $92.7 million a year ago, due primarily to lower product sales. o Net product sales for the nine months ended September 30, 2004 were $71.0 million compared to $87.1 million for the same period in 2003. Sales of Oxandrin(R), the Company's largest selling brand, were $28.9 million, down from $42.9 million in 2003. The decline in Oxandrin net product sales versus a year ago was largely driven by the effects of returns of expired product, an increase in the provision for future product returns and reductions in wholesaler inventory levels primarily in the second quarter of this year. However, prescriptions for Oxandrin were down just 6% percent versus a year ago after two quarters of successive gains. Other product sales were reduced by the reintroduction in March 2004 of a generic version of Delatestryl(R) and lower sales of human growth hormone and BioLon(R), partially offset by a 30% increase in U.S. dollar sales of the Company's U.K.-based oral liquid pharmaceutical products (16% in local currency). Expenses o Operating expenses for the nine months ended September 30, 2004 were $93.8 million, compared to $82.1 million for the same period in 2003. Lower research and development costs, attributable to the completion of Prosaptide toxicology studies and the expense for the production of clinical supplies for both Puricase and Prosaptide, were more than offset by higher general and administrative expense, primarily in support of the implementation of provisions of the Sarbanes-Oxley Act, one-time retirement expense for the Company's former CEO and higher cost of sales. o Cost of sales as a percentage of product sales increased from 17% for the nine months of 2003 to 36% for the nine months of 2004. The increase is principally attributable to (i) reductions in net product sales as a result of returned goods credits and related provisions; (ii) $1.7 million in reserves against Delatestryl inventories that were deemed in excess of projected demand for the product following the re-introduction of a generic competitor; (iii) $6.0 million in expenses related primarily to the validation and qualification of the Company's new manufacturing facility in Israel; (iv) $0.9 million in loss contract reserves; and (v) $2.2 million in depreciation expense since the new Israeli manufacturing facility began operations in January of this year. Net Loss o The Company recorded a net loss for the nine months ended September 30, 2004 of $35.1 million, or a negative 59 cents per share, compared to net income of $9.9 million, or 17 cents per share in the corresponding period a year ago. OUTLOOK COMMENT FROM SAVIENT PHARMACEUTICALS' PRESIDENT AND CHIEF EXECUTIVE OFFICER CHRISTOPHER CLEMENT: "We continue to believe that the market significantly undervalues the assets of Savient's business. Together with our advisors, UBS Investment Bank, we are taking the steps necessary to recapture that value. "First, we are proceeding with the process for exploring the divestiture of our Israeli business operations, including our subsidiary, Bio-Technology General (Israel) Ltd. We have distributed to interested parties a confidential information memorandum on the business and are encouraged by the initial expressions of interest. "Second, we are taking the steps to enhance the value of our free-standing oral liquid pharmaceutical business, Rosemont. Earlier this year, we completed several major modifications to our U.K.-based manufacturing facility to prepare it for the manufacture of products for the U.S. market. Later this year, we plan to submit to FDA our first U.S. marketing application for a product of Rosemont, Soltamax, an oral liquid form of tamoxifen. Gaining access to the U.S. market should significantly enhance the value of our oral liquids business and open new opportunities to realize it alone or with strategic partners. "Lastly, our programs to advance our two lead drug candidates, Puricase and Prosaptide are proceeding toward the completion of our ongoing Phase 2 clinical trials. We should have the results for Puricase in the first quarter of next year. The results for Prosaptide should be available by the third quarter of next year. Both product candidates and their associated development programs are directed toward diseases with serious unmet medical needs. With the results of the ongoing clinical trials known, we can better assess our strategic options for their further development alone or with strategic partners. "Together, these three initiatives should pave the way for unlocking the value of Savient's under appreciated assets. "In summary, with the bad news behind us and a clear path ahead, we are proceeding with the implementation of our new strategic plan." SAVIENT WILL OFFER A LIVE WEBCAST DISCUSSION OF THE EARNINGS AND THE COMPANY'S BUSINESS OUTLOOK, HOSTED BY CHRISTOPHER CLEMENT, PRESIDENT AND CEO, ON MONDAY, NOVEMBER 8, 2004, AT 11:00 A.M. ET. THE WEBCAST CAN BE ACCESSED AT WWW.SAVIENTPHARMA.COM, AND WILL BE ARCHIVED THROUGH NOVEMBER 15, 2004. AN AUDIO REPLAY WILL ALSO BE AVAILABLE THROUGH NOVEMBER 15, 2004 AND CAN BE ACCESSED BY DIALING 888-203-1112 (IN THE U.S.) OR 719-457-0820 (OUTSIDE THE U.S.); PASSCODE NUMBER IS 864474. ABOUT SAVIENT PHARMACEUTICALS, INC. Savient Pharmaceuticals, Inc. is engaged in developing, manufacturing, and marketing pharmaceutical products that address unmet medical needs in both niche and wider markets. Products marketed by Savient's sales force in the United States are Oxandrin(R) (oxandrolone, USP) and Delatestryl(R) (testosterone enanthate). The Company's subsidiary, Rosemont Pharmaceuticals Limited, develops, manufactures, and markets through its own sales force oral liquid formulations of prescription products for the UK pharmaceutical market. The Company's Israeli subsidiary, Bio-Technology General (Israel) Ltd., manufactures and markets in Israel Bio-Tropin(TM) (recombinant human growth hormone), BioLon(R) (sodium hyaluronate), Bio-Hep-B(R) (hepatitis B vaccine), and Arthrease(TM) (sodium hyaluronate for osteoarthritis). Products marketed by Savient's licensees are Mircette(R) (oral contraceptive), and BioLon(R) in the United States, and Bio-Tropin(TM), BioLon(R), Bio-Hep-B(R), Silkis(R) (vitamin D derivative), and recombinant human insulin, in international markets. Savient's news releases and other information are available on the Company's website at www.savientpharma.com. Puricase is a registered trademark of Mountain View Pharmaceuticals, Inc. ##### This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this report regarding the Company's strategy, expected future financial position, results of operations, cash flows, financing plans, discovery and development of products, strategic alliances, competitive position, plans and objectives of management are forward-looking statements. Words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "will" and other similar expressions help identify forward-looking statements, although not all forward-looking statements contain these identifying words. In particular, the statements regarding the Company's new strategic direction and its potential effects on the Company's business are forward-looking statements. These forward-looking statements involve substantial risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the Company's business and the biopharmaceutical and specialty pharmaceutical industries in which the Company operates. Such risks and uncertainties include, but are not limited to, delay or failure in developing Prosaptide, Puricase and other product candidates; difficulties of expanding the Company's product portfolio through in-licensing; disruption of management and costs associated with the divestiture of the Company's operations in Israel; introduction of generic competition for Oxandrin; fluctuations in buying patterns of wholesalers; potential future returns of Oxandrin or other products; difficulties in obtaining financing; potential development of alternative technologies or more effective products by competitors; reliance on third-parties to manufacture, market and distribute many of the Company's products; economic, political and other risks associated with foreign operations; risks of maintaining protection for the Company's intellectual property; risks of an adverse determination in on-going or future intellectual property litigation; and risks associated with stringent government regulation of the biopharmaceutical and specialty pharmaceutical industries. The Company may not actually achieve the plans, intentions or expectations disclosed in its forward-looking statements, and you should not place undue reliance on the Company's forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that the Company makes. The Company's forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that the Company may make. The Company does not assume any obligation to update any forward-looking statements. ##### TABLES TO FOLLOW SAVIENT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands except per share data)
THREE MONTHS ENDED SEPTEMBER 30, 2004 2003 ------------------ --------------- REVENUES: Product sales, net $ 24,408 $ 32,112 Contract fees 222 327 Royalties 1,044 855 Other 697 487 ------------------ --------------- TOTAL REVENUES 26,371 33,781 ------------------ --------------- EXPENSES: Research and development 6,265 11,528 Cost of sales 9,624 4,876 Marketing and sales 5,175 5,412 General and administrative 5,999 6,343 Commissions and royalties 1,620 1,704 Amortization of intangibles 1,013 1,013 ------------------ --------------- TOTAL EXPENSES 29,696 30,876 ------------------ --------------- Operating (loss) income (3,325) 2,905 Other (expense) income, net 13 3,517 ------------------ --------------- (Loss) income before income taxes (3,312) 6,422 Income taxes 1,150 2,064 ------------------ --------------- NET (LOSS) INCOME $ (4,462) $ 4,358 ================== =============== (LOSS) EARNINGS PER COMMON SHARE: Basic $ (0.07) $ 0.07 ================== =============== Diluted $ (0.07) $ 0.07 ================== =============== WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES: Basic 60,182 59,339 ================== =============== Diluted 60,182 60,164 ================== ===============
SAVIENT PHARMACEUTICALS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (in thousands except per share data)
NINE MONTHS ENDED SEPTEMBER 30, 2004 2003 ------------------ ---------------- REVENUES: Product sales, net $ 71,041 $ 87,110 Contract fees 672 1,070 Royalties 4,848 2,425 Other 991 2,088 ------------------ ---------------- TOTAL REVENUES 77,552 92,693 ------------------ ---------------- EXPENSES: Research and development 21,811 25,384 Cost of sales 25,857 14,556 Marketing and sales 17,709 17,390 General and administrative 18,766 17,839 Retirement 2,110 - Commissions and royalties 4,530 3,935 Amortization of intangibles 3,038 3,038 ------------------ ---------------- TOTAL EXPENSES 93,821 82,142 ------------------ ---------------- Operating (loss) income (16,269) 10,551 Other (expense) income, net (683) 3,938 ------------------ ---------------- (Loss) income before income taxes (16,952) 14,489 Income taxes 18,136 4,636 ------------------ ---------------- NET (LOSS) INCOME $ (35,088) $ 9,853 ================== ================ (LOSS) EARNINGS PER COMMON SHARE: Basic $ (0.59) $ 0.17 ================== ================ Diluted $ (0.59) $ 0.17 ================== ================ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES: Basic 59,961 59,076 ================== ================ Diluted 59,961 59,555 ================== ================
SAVIENT PHARMACEUTICAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
SEPTEMBER 30, DECEMBER 31, 2004 2003 ------------------- ------------------ ASSETS: Cash, cash equivalents and short-term investments $ 24,720 $ 22,801 Accounts receivable, net 13,093 33,375 Inventories 21,573 20,216 Other current assets 4,011 7,051 ------------------- ------------------ TOTAL CURRENT ASSETS 63,397 83,443 Property and equipment, net 67,665 70,426 Intangible assets 72,700 75,743 Goodwill 40,121 40,121 Other long term-assets 6,550 20,807 ------------------- ------------------ TOTAL ASSETS $ 250,433 $290,540 =================== ================== LIABILITIES AND STOCKHOLDERS' EQUITY: Current portion of long-term debt $ 7,040 $ 7,020 Other current liabilities 37,751 37,510 Long-term debt 621 5,903 Other long-term liabilities and deferred items 51,638 52,677 Stockholders' equity 153,383 187,430 ------------------- ------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 250,433 $290,540 =================== ==================
EX-99.2 3 b402244_ex99-2.txt PRESS RELEASE Exhibit 99.2 SAVIENT PHARMACEUTICALS, INC. Q3 2004 SAVIENT PHARMACEUTICALS, INC. EARNINGS CONFERENCE CALL EVENT DATE: 2004-11-08T16:00:00 UTC CORPORATE PARTICIPANTS: DONALD WEINBERGER; WOLFE AXELROD WEINBERGER ASSOCIATES; INVESTOR RELATIONS CHRISTOPHER CLEMENT; SAVIENT PHARMACEUTICALS, INC.; PRESIDENT AND CEO LAWRENCE GYENES; SAVIENT PHARMACEUTICALS, INC.; CFO, SVP AND TREASURER ZEB HOROWITZ; SAVIENT PHARMACEUTICALS, INC.; SVP, CMO CONFERENCE PARTICIPANTS: JASON ARYEH; JALAA EQUITIES; ANALYST SERGIO WEINSTEIN; PSCGOD; ANALYST OPERATOR RICHARD MANSOURI; PARA PARTNERS; ANALYST Presentation Operator: Good morning and welcome to the Savient Pharmaceuticals Third Quarter Earnings Release Conference Call. This call is being recorded. At this time I would like to turn the call over to Mr. Don Weinberger. Please go ahead. Donald Weinberger: Thank you Jake. Good morning. I am Don Weinberger of the Investor Relations firm of Wolfe Axelrod Weinberger Associates and I thank you for joining us today. Before I introduce Mr. Clement, please bear with me as I provide the requisite "Safe Harbor" statement. Statements in this discussion concerning our business outlook for the future economic performance, product developments, anticipated profitability, revenues expenses, earnings or other financial items. Statements concerning assumptions made or expectations as to any future events, conditions, performance or other matters are "forward-looking statements" as that term is defined under the Federal Securities law. "Forward-looking statements" are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. Such risks, uncertainties and factors include but are not limited to the timing of the introduction of a generic version of Oxandrin(r), changes and delays in product and development plans and schedules, development, introduction or consumer acceptance of competing products, customer acceptance of new products, changes in pricing or other actions by competitors patent zoned or licensed by us and our competitors and general economic conditions as well as other risks detailed in our filings with the Securities and Exchange Commission. At this time, I would now like to introduce Christopher Clement, President and Chief Executive Officer of Savient Pharmaceuticals. Chris please proceed. Christopher Clement: Thank you Don. Good day to all and thank you for joining us. I would first like to take you through the quarter we just completed and then bring you up to date on several of our strategic initiatives. So let's go right to the third quarter results. The third quarter showed several good signs of a comeback from the disappointing second quarter. Earnings improved. Demand for Oxandrin(R) improved. Sales of Rosemont, our oral liquid pharmaceutical business in the UK, also posted healthy year-over-year gains. And finally, our clinical development programs to advance our two lead drug candidates, Puricase(R) and Prosaptide are proceeding according to plan. In the second quarter, we began the process of reducing wholesaler inventories and the processing of our first returns of expired Oxandrin. This process appears to have been completed here in the third quarter. Total revenues for the third quarter were a little over $26 million, still down from $34 million a year ago but up 50% from the immediately preceding quarter. The shortfall from last year was due primarily from lower product sales. Product sales from the third quarter were a bit over $24 million compared to $32 million a year ago. Sales of Oxandrin our largest selling brand were over $10 million but down from nearly $17 million last year. The decline in net product sales was largely driven by the affects of returns of expired products and an increase in reserves for future product returns. In the third quarter we issued credits and increased returns reserves by nearly $7 million. Since the first of this year, the credits and reserves for potential product returns totaled over $11 million. We are carrying forward from the third quarter reserves for future product returns of a little over $8 million. On the positive front, prescription volumes for Oxandrin were down only 2% from a year ago as we have now registered two successive quarters of growth since reconfiguring and reinvigorating our sales organization at the beginning of this year. We grew prescriptions 3% in the second quarter and another 2% in the third quarter. In fact, were it not for the nearly $7 million in reserves for the return of expired products, we would have approached the prior year levels of product sales and total revenues both of which suffered from the re-entry of a generic competitor to our other U.S. brand, Delatestryl(R), in the first quarter of this year. On another positive note, sales of our UK-based oral liquid pharmaceutical products grew 27% in U.S. dollars and 14% in pounds sterling. On the expense side. Total operating expenses in the third quarter were just shy of $30 million as compared to nearly $31 million a year ago. Prior year costs included the completion of toxicology studies for Prosaptide and the expense for the production of clinical supplies for both Puricase and Prosaptide. General and administrative costs were also down in the third quarter despite the continuing burden for the costs of complying with certain provisions of the Sarbanes-Oxley Act. On the negative side, the costs of product sales increased despite lower sales volumes due to the first year operating costs and a continuation of validation efforts to qualify our new Israeli manufacturing operation as well as certain reserves for excess inventories and contractual commitments primarily resulting from the unexpected re-entry of a generic form of Delatestryl. The aforementioned events net to a loss of $4.5 million or seven cents per share in the third quarter compared to a gain of seven cents last year, but up significantly from the 53 cents we lost in the second quarter of this year. Equally important, our cash position of nearly $25 million remains up from about $23 million at the beginning of the year. Next, I'll provide an update on several of our strategic initiatives. As you are well aware, we continue to believe that the market has significantly undervalued the key assets of our company. We continue to work with our outside advisors, UBS Investment Bank, to ensure that we are taking the appropriate steps today to realize the improvement in valuation tomorrow. We continue to expect generic competition for our top selling drug, Oxandrin. It was that threat and the lack of an immediate revenue replacement opportunity, coupled with the further realization that our assets were seriously undervalued, that prompted the change in strategic direction we communicated to you last July. We outlined three primary initiatives. The first of these initiatives is the potential sale of our Israeli biologics business. Early in the fourth quarter we circulated a "Confidential Information Memorandum" to a number of interested parties. There's likely to be a future need for additional biologics manufacturing capacity for those companies committed to this area as evidenced by the several initial expressions of interest we have received thus far. We are meeting with and making available to these interested parties additional diligence materials. The process is going smoothly and is on schedule for completion in the first half of next year. Next we are taking steps to enhance the value of our free-standing UK-based oral liquid pharmaceutical business called Rosemont. We acquired this business just two years ago. We paid $104 million for the business which continues to exceed our expectations. To further enhance the value of Rosemont, we completed earlier this year several modifications to the UK-based manufacturing facility to prepare it for the manufacture of products for the U.S. market. The product, Soltamax, is an oral liquid form of cancer treatment drug tamoxifen. We believe that the time and expense to open up access to the U.S. market to significantly enhance the value of our investment in this business as we create new opportunities to bring a multitude of already developed and marketed product formulations to the U.S. either alone or with strategic partners. In addition, we are exploring the entry of certain Rosemont products into additional European markets through potential strategic partners. Lastly, we are increasingly excited by the potential of our two lead drug candidates, Puricase for the treatment of refractory gout and Prosaptide for the treatment of HIV or AIDS related neuropathic pain. Each of these product candidates focuses on a serious unmet medical need. We recognize however that the marketplace has attributed little or potentially negative value to the development expense streams for these projects. With the results of our Phase II clinical trials only month away, we will have the opportunity to share the promise that each drug candidate might hold. Puricase results should be available in the first quarter of next year and Prosaptide results should be available in the third quarter of next year. With the results of those studies in hand, we can better assess our options for continuing their development alone or in partnership with others. As we pursue the potential sale of our biologics business, we continue to evaluate the options for maximizing the value of our oral liquid pharmaceutical and specialty pharmaceutical businesses. The three initiatives I have reiterated today are important to unlocking the value of Savient's underappreciated assets. But equally important is the team we are assembling to carry out the strategy for enhancing shareholder value. This past quarter we added as our Chief Financial Officer, Larry Gyenes who has joined me on this call today. Larry has over 30 years experience in financial and operational roles including CFO of two public companies and nearly 20 years experience in the pharmaceutical industry. Larry joins our relatively new but highly experienced management team including Dr. Dov Kanner our Chief Technical Officer; Dr. Zeb Horowitz our Chief Medical Officer and Philip Yachmetz our Secretary and General Counsel. Early in the fourth quarter, we took some tough but necessary actions to better align our resources, both human and financial, with the direction that we are going. We announced that we were reducing our workforce by nine percent. A few of these reductions would be offset by the addition of personnel in areas of critical strategic importance. The net effect of these reductions and add backs will be to save the company over $2.8 million per year with a one-time fourth quarter charge of $1.3 million. Depending upon the success of our drug development efforts, we will make further additions to the teams responsible for drug development and regulatory affairs. We believe that the bad news is behind us. We have a well defined and hopefully an increasingly understood path ahead of us with clearly stated and easily measured near term milestones. Successful achievement of those milestones should advance the company and further ensure the unlocking of value in Savient's underappreciated assets. Thank you and now I'd be very happy to answer any of your questions. Operator you may open up the phone line. Q&A Session Operator: Thank you Mr. Clement. Today's question and answer session will be conducted electronically. If you would like to ask a question you may do so by simply pressing the star key followed by digit one your touchtone telephone. If you are using a speakerphone, please make sure your mute function has been turned off to allow our signal to reach our equipment. Once again, star one to ask a question and we'll pause for just a moment. And we do have a question from Richard Mansouri, Para Partners. Richard Mansouri: Yes, good morning. Christopher Clement: Hi Richard. Richard Mansouri: Couple of questions. One, you make reference in the press release to having distributed this confidential information memorandum and are encouraged by initial expressions of interest. I was wondering does this imply that you've got theoretically multiple parties who could be interested? That's my first question and the second question, I'm wondering if you could discuss a little bit more the timing and potential market size for oral Tamoxifen or liquid Tamoxifen in the United States? Christopher Clement: OK let me start out with the confidential information memorandum. Yes, that has gone out and we do have multiple expressions of interest. So as I'd mentioned, we are very encouraged by where we are at this particular point in time. Relative to - let me just stay on that for a minute. We did communicate also that we believe that we would be in a position to conclude that transaction during the first half of 2005 and we're still on that timetable. Relative to the market for Tamoxifen, this is a market that there are a number of generic products in the marketplace so it has suffered generic erosion, but there is no oral liquid product that's out there today. So the current market size is somewhere between $85 to $100 million including all of the generics that are out there. Tamoxifen continues to be widely used in the treatment of breast cancer and we think that having an oral liquid formulation will certainly find its niche in that particular marketplace. Richard Mansouri: Great, I appreciate it and just since I have you just one last question. Regarding Puricase, will you now say that you expect to have the results first quarter of next year. My understanding previously was that you might have had the results you know late this year. Should we interpret that as a negative? Christopher Clement: No I would not interpret it as a negative. Everything that we've talked about thus far is on target. There's been no further delays and in fact the process as you know this is an open label clinical trial. We're able to track real time the results of this product. So no, there's nothing that's really changed relative to the progress - the completion of that Phase II clinical trial. Richard Mansouri: OK good. Thank you everyone. Operator: I would like to remind you, it's star one if you have a question. And now we'll take a question from Jason Aryeh with Jalaa Equities. Jason Aryeh: Good morning, Chris. Christopher Clement: Good morning, Jason. Jason Aryeh: Can you quantify for us exactly not only what the investment in the Israeli facility has been by Savient but then do you expect to recoup all of that investment in just the facility alone and then I guess the more important question is, can you try to quantify for us the value of the add-ons per se to the facility as far as the small drugs that are being sold with it and I believe the rights and the partnership agreement with TEVA to the human growth hormone product? Christopher Clement: I'll do my best to try and answer your question here Jason. First of all, let me start out by saying the assets as they're on the books right now for building of the facility in Israel is in the range of $60 million- this is $60 million. Now I think as I've articulated before that we think the best way to maximize the value of the asset would be to sell not only the facility but some of the products that are manufactured there as well. If you look at the products that are manufactured going through the Israeli business let's say total revenue is somewhere in the range of around $20 million. So I think you know that's kind of what we're looking at in terms of that particular business because the value of those hard assets as well as the-- Jason Aryeh: So 20 on top of the 60? Christopher Clement: Well the 60 is what we put into building the facility and 20 is the revenues that are being manufactured there. Jason Aryeh: Is there any reason to believe that we would not receive every bit of the 60? Did we overspend for the product that we got out of the facility - or I mean what's your feeling on that? Christopher Clement: My part - I can't answer that question Jason. As I said, we're in the process of getting - determining the levels of interest in the business and this is a process that has to work its way through so I'm not in a position to answer your question. Jason Aryeh: Regarding Rosemont, you had in the press release obviously you have done a seemingly terrific job of enhancing the value of Rosemont. I guess its just unclear when you talk about options out for the facility are you - would you consider a sale of Rosemont? Obviously I realize it's cash flow positive and clearly helps the base business but would you consider other alternatives other than expanding revenue growth out of it by expanding to the U.S. et cetera? Christopher Clement: Right now we believe you're absolutely right. We're very pleased with the performance of Rosemont. They continue to do extremely well in the UK domestic market and if you go back to when the company first acquired Rosemont, one of the objectives there was to not only continue the growth of Rosemont in the UK but to expand the capabilities for this company outside of the U.S. and we feel that we're now enhancing value of Rosemont by adding additional markets so we've completed the work necessary in the UK to make it FDA acceptable for manufacturing for the U.S. and we'll be proceeding with that and we also believe that there are opportunities for Rosemont outside of the UK in other European markets. So, at this particular point in time, we think that this is one area where we'll continue to build value and enhance the value of Rosemont by exploiting these markets, both in the U.S. and in Europe. Jason Aryeh: OK. And my last question on Puricase. Obviously, as you said, it's an open-label trial. Can you discuss - I mean would - I would assume that the trial would be stopped if there was a significant antibody toxicity issue. Can you speak to what you're seeing because I think everybody believes that the drug is very efficacious? But can you specifically talk to antibody toxicity concerns? Christopher Clement: Well, what I'm going to do here, Jason, is I'm going to let Dr. Zeb Horowitz address that question for you. Zeb Horowitz: Yes, I can't answer specifically about antibodies. I can tell you that the emerging safety profile looks very much like it would allow us to meet with the FDA for an end of Phase II meeting and present a plan for a Phase III program. There's nothing in the safety profile to date that would prevent us from moving forward. Jason Aryeh: OK. And Dr. Horowitz, who within the company is looking at the competitive position for Puricase? And maybe you can speak to it a little bit, not only in competitive with the one product, really, that's on the market now, but as far as other company's pipeline products, where do you see Puricase fitting in to the competitive landscape going forward? Zeb Horowitz: I'll answer that question this way. We, in the U.S. are designated orphan indication, which means that our sales have to be directed to a specified population, which gives us seven years of exclusivity for a drug of that class. That population is specifically those who have gout that is refractory to conventional therapy, which is basically allopurinol or inpatients who are intolerant of allopurinol. And that population today has very little option for therapy. Looking forward with new products on the market such as TAP's product ... Jason Aryeh: Right. Zeb Horowitz: ... that we are seeing a much more immediate and dramatic lowering of uric acid, which remains very low throughout our dosing interval. And I could see this, similar to what's done in cancer with induction therapy, where our patients might use our product for a year or so or longer to, in an attempt to remove the uric acid stored throughout the body, and so, maintain a low uric acid level. And after that's done, perhaps the patients would move onto a drug such as Febuxistat. There's no reason that combination therapy couldn't be used at the same time, although we're not studying that. Jason Aryeh: So, Dr. Horowitz, do you feel that the orphan designation, from a competitive perspective, really protects Puricase's market from these kind of next generation allopurinol? Zeb Horowitz: No, no, it doesn't do that. It only - the exclusivity specifically is for drugs of the same class. What protects the value of the product, in the long run, is its dramatic efficacy. There is no other - no xanthine oxidase inhibitor - that is, no drug that prevents the formation of uric acid has the potential over the short period of time to create observable disease modifying effects, which is what we hope to be able to demonstrate in our Phase III program. Jason Aryeh: OK. Great. And obviously, you're comparing that to some of the mid and later stage gout products that are in the clinic. Zeb Horowitz: To anything ... Christopher Clement: To anything that's out there, Jason. Jason Aryeh: OK. Wonderful. Thank you, gentlemen. Christopher Clement: Thank you. Operator: Now moving onto Sergio Weinstein with PSCGOD. Sergio Weinstein: Good day. I want to ask, please, do you have any plans to launch the human growth in the U.S.? I'm asking because I know that the pill of Nobonobif was withdrawn and you basically win - won this case. And I wonder why do you delay this launch? Thank you. Christopher Clement: OK. OK. Thank you for the question. No, we are not delaying the launch at all. We have a partner in the U.S. market for human growth hormone and that is Teva. And Teva is planning to launch human growth hormone before the end of this year. So, we, from the time that the decision was reached on the legal issue, Teva has been working to look at the market, to get their company ready for market introduction and for making product supplies available. But Teva will launch the product in the U.S. and they will launch it before the end of this year. Sergio Weinstein: And banking into the consideration that we are basically one month - one-and-a-half month before year-end, what impact do you expect this to be on your sales, because I suppose that Teva announce you what amount of material to prepare for this launch because there are no inventory in the market and - at least, I think so. At least, the first stages you have to be well prepared for a certain amount of supply. Christopher Clement: Well, I - yes. I think that because it is an end-of-the-year launch for human growth hormone, that the effect on this year will certainly be negligible. But I suggest that if you had any questions around the market, potential size, sales, those types of things, that you would be better placed to discuss those with Teva. Sergio Weinstein: OK. Thank you. Christopher Clement: Thank you. Operator: And one final reminder, if you have a question, star one. Mr. Clement, there are no further questions. We'll turn it back to you for some closing remarks. Christopher Clement: Thank you, operator. Thank you very much, everyone, for participating and, as we continue to execute against our strategic plan, we will, of course, continue to communicate with you as developments occur. Once again, thank you very much. Good day. Operator: If you access the replay for today's call, you may do so by dialing 888-203-1112 or international, 719-457-0820 with the passcode of 864474. This concludes today's conference. Thank you for your participation. You all may have a nice day. -----END PRIVACY-ENHANCED MESSAGE-----