Savient hammered after hedge fund claims it’s bankrupt

Posted under Blog, Companies, Dendreon, Diagnostics, Funding, John Johnson, Krystexxa, Medical Devices, Medical Supply, Pharmaceuticals, Provenge, Savient Pharmaceuticals, Startups, Tang Capital, Universities, Videos by john

John Johnson has a good reason today to be thankful for his new job at Dendreon: He won't have to face the music at Savient, where his former colleagues will be grappling with a high-profile lawsuit from a West Coast hedge fund claiming that the company is being looted by an executive team that has badly fumbled a drug launch and bankrupted the developer.

Shares of Savient ($SVNT) skidded down 25% on Tuesday after the company filed notice at the SEC that Tang Capital has asked a court in Delaware to declare Savient insolvent and appoint a receiver to liquidate assets and divvy up the cash among creditors. Savient, for its part, says there's no merit to the suit and intends to fight.

When John Johnson moved from the top post at Savient to the helm at troubled Dendreon ($DNDN), there was considerable speculation about just what he had learned from the launch of the gout drug Krystexxa that would help him with Provenge. Tang officials would likely suggest it wasn't much, based on the gleeful coverage by TheStreet's Adam Feuerstein, who snagged a copy of the lawsuit and quoted from it extensively. 

Tang--which wants $100 million in damages--insisted that Krystexxa's 5-quarter track record demonstrate that it was not only an "abject failure," but the least successful new drug launch in the industry's history. And it was just as bitter about management:

"The Company's officers and Director Defendants are incentivized to maintain the status quo and continue to pursue a hopeless drug launch while ignoring the fact that it has already failed," says the Tang suit. "While recognizing failure and drastically cutting head count and expenses would preserve value for creditors, it would also mean an end to officers' and Director Defendants' lucrative cash compensation and would extinguish any chance, however remote, of recognizing any value from their out-of-the-money stock options."

- here's the Bloomberg report
- get the story from TheStreet

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Gold out, Johnson in as troubled Dendreon aims for a turnaround

Posted under Blog, cancer vaccine, Companies, Dendreon, Diagnostics, Funding, Krystexxa, Medical Devices, Medical Supply, Pharmaceuticals, Provenge, Savient Pharmaceuticals, Startups, Universities, Videos by John Carroll

In the course of one short year, Dendreon CEO Mitch Gold went from biotech hero to zero as the long-anticipated rollout of the groundbreaking cancer vaccine Provenge stumbled badly out of the gate. This morning Gold is out as he moves up to the executive chairman's job for a few months and makes way for Savient CEO John Johnson (pictured), who's had his own travails in 2011 with the troubled launch of the gout drug Krystexxa. Chairman Richard Brewer is out immediately.

Investors responded positively to the change, boosting Dendreon's shares ($DNDN) by 5% this morning.

Provenge's pratfall has been well documented in a series of provider surveys as doctors recoiled from the sticker shock of a $93,000 drug, fretted about their patients' ability to pay increasingly popular co-insurance charges and often concluded that the marginal gain in median survival wasn't worth the expensive effort. New treatments like Zytiga further complicated the picture as Medivation ($MDVN) appears to be hot on Dendreon's heels with a promising new treatment of its own, though the biotech did see a spike in Provenge sales in the fourth quarter of last year. Now Dendreon board member Johnson--who gained credibility after helping in the post-scandal ImClone  turnaround--will be expected to help patch up the marketing end of the business as Dendreon seeks to expand the use of the treatment.

Johnson, though, spent much of 2011 wrestling with Savient's launch of Krystexxa, with only marginal revenue coming in initially. Early on, he created sales teams that offered special support to speed reimbursements from payers. And later he shifted gears, moving past specialists to the broader primary care market. Both Krystexxa and Provenge now offer key cautionary tales for any biotech looking to make the transition from developer to marketer. Those marketing mistakes, and the moves made to overcome them, will be studied closely by developers looking to do better when their turn comes.  

Dendreon has also been working at expanding the use of Provenge, looking for more data to back up its use before patients reach an advanced stage of the disease. Its investigators have just concluded new data analysis that supported its drive to get the treatment used in earlier-stage patient populations.

- read the press release from Dendreon
- get the release from Dendreon on the Provenge data analysis

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