The Roller-Coaster Stock That Keeps on Giving

Savient Pharmaceuticals (NASDAQ:SVNT) investors' wild ride continues. Shares previously rose from a low of less than $3 to more than $16, on the excitement of a positive Food and Drug Administration advisory panel meeting for Savient's gout treatment, Krystexxa. Now the stock's down 24% as I write today, after the FDA issued the company a complete response letter.

Welcome to the world of biotech, Fools. Euphoria doesn't guarantee success.

The FDA's letter had a lot of bad news, but at least Savient won't have to run any additional clinical trials to prove the drug's safety or effectiveness. However, it'll still take the company until early 2010 to address the agency's concerns:

• The need for a Risk Evaluation and Mitigation Strategy (REMS). Given the side effect profile, this isn't unexpected.
• Tighter chemistry, manufacturing, and controls (CMC). The FDA wants less variation between lots, which shouldn't be a problem for approval, but theoretically could force Savient to throw out production runs.
• Comparability between product used in clinical trials and the drug that will be sold commercially. Savient changed its manufacturing process after the clinical trials; the agency isn't so sure it's the same stuff.

The comparability issue has tripped up quite a few drugmakers recently. Bristol-Myers Squibb (NYSE:BMY) and Eli Lilly (NYSE:LLY) had to delay their application to expand Erbitux for use in lung cancer patients because the clinical trial was run using product manufactured by their European partner, Merck KGaA -- not the product sold in the United States. Genzyme (NASDAQ:GENZ) had problems getting approval to manufacture Myozyme at a larger scale; the FDA even required the company to give the product a different name. Amylin Pharmaceuticals (NASDAQ:AMLN) built a new plant to manufacture its once-weekly Byetta, but smartly skirted around the comparability issue by putting the subjects in the maintenance phase of its clinical trial on the new product.

Apparently the new manufacturing procedure wasn't all that important to Savient, because it plans to revert back to the old procedure rather than run a clinical trial to prove that the new procedure yields an equivalent product. That's probably a good move, considering that time is money -- especially for drugmakers with limited patent time.

I think it's likely that Savient can get the issues cleared up, but there' probably no rush to buy in at this point. The rollercoaster ride may not end today, and it seems likely there will be plenty more dips ahead, should investors wish to grab cheaper shares.

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