Savient Pharmaceuticals can't be forced into receivership by a disgruntled creditor, a court ruled. But the company still has to face Tang Capital Partners' claims that it breached its fiduciary duties.
A Delaware judge quashed Tang's attempt to have Savient ($SVNT) declared insolvent, saying that the company's noteholders don't have standing to make the request under the terms of their debt. The judge also ruled that Savient hasn't defaulted on the debt as Tang claimed.
The ruling won't stop Savient's dramatic retrenching. Two weeks ago, the company appointed a new CEO and announced plans to slash 60 jobs, about 35% of its workforce. The reason: Its gout drug, Krystexxa, has faltered ever since its launch in late 2010. For the first quarter of 2012, the company reported just $3.1 million in net Krystexxa sales.
The company still faces allegations that it wasted money and that it breached its fiduciary duties to bondholders; it denies both. "Savient continues to believe that all outstanding claims...are without merit, and intends to vigorously defend this lawsuit," the company said in a statement, adding that its own claims against Tang are outstanding.
Savient is asking the court for damages; after Tang went public with its charges, Savient's stock plunged. It's now trading at around 62 cents, down from more than $8 last July.
- see the release from Savient
- read the Wall Street Journal story