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UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2006ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number 0-15313
 SAVIENT PHARMACEUTICALS,
    INC.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

13-3033811(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)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
  Securities registered pursuant to Section 12(b) of the
    Act:
  Common Stock, $.01 par
    value

Nasdaq Global Market(Title of class)

(Name of each exchange on which
    registered)   Securities registered pursuant to Section 12(g) of the
    Act:
    None (Title of each
    class)
  þ o
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2 þ o
  o þ o
  Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS  PART IITEM 1. BUSINESSOUR EXECUTIVE OFFICERSITEM 1A. RISK FACTORSITEM 2. PROPERTIESITEM 3. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSPART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESITEM 6. SELECTED CONSOLIDATED FINANCIAL DATAITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAReport of Independent Registered Public Accounting FirmSAVIENT PHARMACEUTICALS, INC. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)SAVIENT PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)SAVIENT PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (In thousands)SAVIENT PHARMACEUTICALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)SAVIENT PHARMACEUTICALS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTSSchedule II  Valuation and Qualifying AccountsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSUREITEM 9A. CONTROLS AND PROCEDURESITEM 9B. OTHER INFORMATIONPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEITEM 11. EXECUTIVE COMPENSATIONITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULESSIGNATURESEX-10.8: AMENDED AND RESTATED SAVIENT PHARMACEUTICALS, INC. 1998 EMPLOYEE STOCK PURCHASE PLANEX-10.18: AMENDMENT TO THE EMPLOYMENT AGREEMENT WITH ZEBULUN D. HOROWITZ, M.D.EX-10.19: FORM OF SENIOR MANAGEMENT INCENTIVE STOCK OPTION AGREEMENTEX-10.20: FORM OF SENIOR MANAGEMENT NON-QUALIFIED STOCK OPTION AGREEMENTEX-10.21: FORM OF SENIOR MANAGEMENT RESTRICTED STOCK AGREEMENTEX-10.22: FORM OF SENIOR MANAGEMENT PERFORMANCE SHARE AGREEMENTEX-10.23: FORM OF BOARD OF DIRECTORS NON-QUALIFIED STOCK OPTION AGREEMENTEX-10.24: LICENSE AGREEMENTEX-10.25: SUPPLY AGREEMENTEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF GRANT THORNTON LLPEX-23.2: CONSENT OF MCGLADREY & PULLEN LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents  
  PART I
 
  ITEM 1.
    BUSINESS  Overview
    ®
  ® in-licensing co-promotion co-development
  Bio-Technology (BTG-Israel).
    BTG-Israel
  Bio-Technology
  Our
    Products
  Oxandrin
    and oxandrolone
   1




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Our Drug
    Development Activities
  Puricase
   2




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3




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follow-on
    Manufacturing,
    Supply and Distribution Arrangements
  Oxandrin
    Oxandrolone
   4




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Puricase
  BTG-Israel, BTG-Israel
  last-to-expire
  Sales and
    Distribution
    Research
    and Development
      Governmental
    Regulation
  Regulatory
    Compliance
   5




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pre-clinical pre-clinical
    
    Phase 1 clinical trials are conducted in a small number of
    volunteers or patients to assess the early tolerability and
    safety profile, and the pattern of drug absorption, distribution
    and metabolism;
    Phase 2 clinical trials are conducted in a limited patient
    population afflicted with a specific disease in order to assess
    appropriate dosages and dose regimens, expand evidence of the
    safety profile and evaluate preliminary efficacy; and
    Phase 3 larger scale, multicenter, well-controlled clinical
    trials are conducted on patients with a specific disease to
    generate enough data to statistically evaluate the efficacy and
    safety of the product for approval, as required by the FDA.       6




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FDA-initiated
  head-to-head
    Pricing
    Controls
    Patents
    and Proprietary Rights
     7




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Oxandrin
    and oxandrolone
  HIV-positive
  Puricase
    Competition
      
    capabilities of our collaborators;
    product safety and efficacy;
    timing and scope of regulatory approval;
    product availability;
    marketing and sales capabilities;
    reimbursement coverage from insurance companies and others;
    the amount of clinical benefits and side effects of our products
    relative to their cost;
    the method of administering a product; 8




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
    price; and
    patent protection.      Employees
    Available
    Information
    http://www.savientpharma.com. Form 10-K, Form 10-Q, Form 8-K Form 10-K.
   9




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##### Table of Contents



OUR
    EXECUTIVE OFFICERS
    Name

Age


PositionsChristopher Clement


51


President and Chief Executive
    OfficerPhilip K. Yachmetz


50


Executive Vice President and Chief
    Business OfficerPaul Hamelin


52


Senior Vice President, Commercial
    OperationsBrian J. Hayden


55


Senior Vice President, Chief
    Financial Officer and TreasurerZebulun D. Horowitz, M.D.


55


Senior Vice President, Chief
    Medical OfficerRobert Lamm


52


Senior Vice President, Quality and
    Regulatory Affairs   Christopher Clement
  Philip K. Yachmetz
  Paul Hamelin
  Brian J. Hayden
  Zebulun Horowitz, M.D.
 10




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Robert Lamm, Ph.D.
 
  ITEM 1A.
    RISK
    FACTORS  Our Annual Report on
    Form 10-K
    contains statements which constitute forward-looking statements
    within the meaning of the Private Securities Litigation Reform
    Act of 1995, including statements that set forth anticipated
    results based on managements plans and assumptions. From
    time to time, we also provide forward-looking statements in
    other materials we release to the public as well as oral
    forward-looking statements. Such statements discuss our
    strategy, expected future financial position, results of
    operations, cash flows, financing plans, development of
    products, strategic alliances, intellectual property,
    competitive position, plans and objectives of management. We
    often use words such as anticipate,
    estimate, expect, project,
    intend, plan, believe,
    will and similar expressions to identify
    forward-looking statements. In particular, the statements
    regarding our new strategic direction and its potential effects
    on our business and the development of our lead drug candidate
    Puricase are forward-looking statements. Additionally,
    forward-looking statements include those relating to future
    actions, prospective products or product approvals, future
    performance, financing needs, liquidity or results of current
    and anticipated products, sales efforts, expenses, interest
    rates, foreign exchange rates and the outcome of contingencies,
    such as legal proceedings, and financial results.
  We cannot guarantee that any forward-looking statement will
    be realized. Achievement of future results is subject to risks,
    uncertainties and potentially inaccurate assumptions. Should
    known or unknown risks or uncertainties materialize, or should
    underlying assumptions prove inaccurate, actual results could
    differ materially from past results and those anticipated,
    estimated or projected. You should bear this in mind as you
    consider forward-looking statements.
  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.
  Risks
    Relating to Our Strategic Direction
  We have repositioned our company to focus on product
    development, particularly Puricase. If we are unable to develop
    and commercialize this product candidate or any other product
    candidate that we may pursue in the future, or if we experience
    significant delays or unanticipated costs in doing so, our
    business will be materially harmed.
   11




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
    successfully completing clinical trials;
    successfully partnering to manufacture fully comparable clinical
    and commercial drug supplies;
    receiving marking approvals from the FDA and similar foreign
    regulatory authorities;
    establishing commercial manufacturing arrangements with third
    party manufacturers;
    launching commercial sales of the product, whether alone or in
    collaboration with others; and
    acceptance of the product in the medical community and with
    third party payors and consumers.      
    identifying products that fit within our product
    portfolio; and
    successfully competing for early and late-stage development
    products.   12




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Puricase, and any other product candidate that we may
    develop in the future, must satisfy rigorous standards of safety
    and efficacy before it can be approved for sale. To satisfy
    these standards, we must engage in expensive and lengthy
    clinical trials and extensive manufacturing quality assessments
    to obtain regulatory approval.
        
    regulators or institutional review boards may not authorize us
    to commence a clinical trial or conduct a clinical trial at a
    prospective trial site;
    our clinical trials may produce negative or inconclusive
    results, and we may decide, or regulators may require us, to
    conduct additional preclinical testing or clinical trials or we
    may abandon projects that we expect to be promising;
    enrollment in our clinical trials may be slower than we
    currently anticipate, or participants may drop out of our
    clinical trials at higher rates than we currently anticipate;
    we might have to suspend or terminate our clinical trials if the
    participating patients are being exposed to unacceptable health
    risks;
    regulators or institutional review boards may require that we
    hold, suspend or terminate clinical research for various
    reasons, including noncompliance with regulatory requirements;
    the cost of our clinical trials may be greater than we currently
    anticipate;
    we may encounter difficulties or delays in obtaining sufficient
    quantities of product candidate materials or other materials
    necessary for the conduct of our clinical trials;
    any regulatory approval we ultimately obtain may be limited or
    subject to restrictions; and
    the effects of our product candidates may not be the desired
    effects or may include undesirable side effects or the product
    candidates may have other unexpected characteristics.      
    be delayed in obtaining marketing approval for our product
    candidates;
    not be able to obtain marketing approval;
    obtain approval for indications that are not as broad as
    intended; or 13




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
    not obtain marketing approval before other companies are able to
    bring competitive products to market.    We rely on third parties to conduct our clinical trials of
    Puricase and those third parties may not perform satisfactorily,
    including failing to meet established deadlines for the
    completion of such trials.
      Our strategic focus includes a licensing initiative to
    partner our Puricase product candidate outside the United
    States. We may not be successful in our efforts to partner our
    Puricase product candidate.
    Our strategic focus includes an initiative to in-license
    or partner other novel compounds to build our development
    portfolio. We may not be successful in our efforts to expand our
    portfolio of products in this manner.
   14




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
    we may be unable to identify suitable products or product
    candidates within our areas of expertise;
    we may be unable to license or acquire the relevant technology
    on terms that would allow us to make an appropriate return on
    our investment in the product; or
    companies that perceive us to be their competitors may be
    unwilling to assign or license their product rights to us.    The full development and commercialization of our
    development drug products and execution of our strategic
    business plan will require substantial capital, and we may be
    unable to obtain such capital. If we are unable to obtain
    additional financing, our business, results of operations and
    financial condition may be adversely affected.
      Risks
    Related to Our Business
  We incurred an operating loss from continuing operations
    for the year ended 2006 and anticipate that we may incur
    operating losses from continuing operations for the foreseeable
    future. If we are unable to commercialize Puricase or any other
    product candidates, we may never achieve operating
    profitability.
   15




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A significant portion of our revenues was attributable to
    sales of Oxandrin in 2006. The 2006 launch of generic
    competition to Oxandrin will likely cause a significant decrease
    in Oxandrin sales in 2007 and future years and may render our
    existing Oxandrin inventory obsolete. In addition, Oxandrin
    sales in particular reporting periods may be affected by
    wholesalers buying patterns and product returns. Future
    returns of Oxandrin, our authorized generic of Oxandrin or other
    products could also affect our results of operations.
          If third parties on which we rely for distribution of our
    generic version of oxandrolone do not perform as contractually
    required or as we expect, our results of operations may be
    harmed.
  (C-III),
 16




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We operate in a highly competitive market. Our competitors
    may develop alternative technologies or safer or more effective
    products before we are able to do so.
            Manufacturing our products requires us to meet stringent
    quality control standards. In addition, we depend on third
    parties to manufacture our products and plan to rely on third
    parties to manufacture any future products. If these third party
    suppliers, and particularly our sole source supplier for
    Puricase, fail to
 17




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supply us for any reason, our revenues and product
    development efforts may be materially adversely affected.
        
    reliance on the third party for regulatory compliance and
    quality control assurance;
    the possible breach of the manufacturing agreement by the third
    party or the inability of the third party to meet our production
    schedules because of factors beyond our control, such as
    shortages in qualified personnel; 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.      The manufacture and packaging of pharmaceutical products
    are subject to the requirements of the FDA and similar foreign
    regulatory bodies. If we or our third party suppliers fail to
    satisfy these requirements, our business operations may be
    materially harmed.
     18




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We may not be successful in establishing strategic
    alliances, which could adversely affect our ability to develop
    and commercialize products and services.
        
    strategic alliance agreements are typically for fixed terms and
    are subject to termination under various circumstances,
    including, in many cases without cause;
    we may rely on collaborators to manufacture the products covered
    by our alliances;
    the areas of research, development and commercialization that we
    may pursue, either alone or in collaboration with third parties,
    may be limited as a result of non-competition provisions of our
    strategic alliance agreements; and
    failure to establish steady supply of essential raw materials
    from vendors.  Our sales depend on payment and reimbursement from third
    party payors and a reduction in the payment or reimbursement
    rate could result in decreased use or sales of our
    products.
   19




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If we fail to attract and keep senior management and key
    scientific personnel, we may be unable to successfully develop
    or commercialize our product candidates.
    We may incur substantial costs related to product
    liability.
      The ultimate outcome of pending securities litigation is
    uncertain.
     20




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Tax requirements and audits could impact our results of
    operations.
    Risks
    Related to Previous Weaknesses in our Internal
    Controls
  We have previously identified material weaknesses in our
    internal controls over financial reporting. Although these
    material weaknesses have been fully remediated we may experience
    additional material weaknesses in the future. Any material
    weaknesses in our internal control over financial reporting or
    our failure to remediate such material weaknesses could result
    in a material misstatement in our financial statements not being
    prevented or detected and could adversely affect investor
    confidence in the accuracy and completeness of our financial
    statements, as well as our stock price.
  Form 10-K.
  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.
    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.
   21




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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.
    If we infringe or are alleged to infringe intellectual
    property rights of third parties, our business may be adversely
    affected.
        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.
   22




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
    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.    Regulatory
    Risks
  We are subject to stringent governmental regulation, and
    our failure to comply with applicable regulations could
    adversely affect our ability to conduct our business.
     23




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Risks
    Relating to an Investment in Our Common Stock
  Our stock price is volatile, which could adversely affect
    your investment.
    
    our ability to successfully implement our strategic business
    plan;
    announcements of technological innovations or new commercial
    products by us or our competitors;
    announcements by us or our competitors of results in
    pre-clinical testing and clinical trials;
    regulatory developments;
    patent or proprietary rights developments;
    public concern as to the safety or other implications of
    biotechnology products;
    changes in our earnings estimates and recommendations by
    securities analysts;
    period-to-period
    fluctuations in our financial results; and
    general economic, industry and market conditions.   24




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We expect our quarterly results to fluctuate, which may
    cause volatility in our stock price.
    
    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;
    increased competition from new or existing products, including
    generic products;
    the timing of the introduction of new products;
    the timing and realization of milestone and other payments from
    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.  period-to-period
  Effecting a change of control of our company could be
    difficult, which may discourage offers for shares of our common
    stock.
    
    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 goes past 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.   25




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ITEM 2.
    PROPERTIES     
  ITEM 3.
    LEGAL
    PROCEEDINGS  Patent
    Related Litigation
    Savient Pharmaceuticals, Inc. v. Barr Laboratories,
    Inc.
     26




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Non-Patent
    Related Litigation
  In re Bio-Technology
    General Corp. Securities Litigation Form 8-K
   
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   27




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PART II
 
  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    High


Low2006First Quarter

$
5.33


$
3.77Second Quarter


6.01



5.02Third Quarter


6.54



5.10Fourth Quarter


12.18



6.692005First Quarter

$
3.31


$
2.40Second Quarter


4.41



2.61Third Quarter


4.58



3.41Fourth Quarter


3.97



3.02      28




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ITEM 6.
    SELECTED
    CONSOLIDATED FINANCIAL DATA    Year Ended December 31,2002(1)


2003(1)


2004(1)


2005(1)


2006(1)(In thousands, except per share data)Statement of Operations
    Data:Product sales, net

$
60,226


$
68,909


$
59,401


$
48,043


$
47,351Other revenues


4,399



5,048



2,952



1,452



163Total revenues


64,625



73,957



62,353



49,495



47,514Cost of goods sold and expenses


67,280



74,753



81,969



63,975



64,519Operating loss


(2,655
)


(796
)


(19,616
)


(14,480
)


(17,005
)Other income (expense), net and
    investment income


2,189



105



(734
)


14,157



15,566Income tax expense (benefit)


2,267



(153
)


13,063



146



25Loss from continuing operations


(2,733
)


(538
)


(33,413
)


(469
)


(1,464
)Income from discontinued operations


11,412



12,992



5,898



6,437



61,789Net income (loss)

$
8,679


$
12,454


$
(27,515
)

$
5,968


$
60,325Loss per common share from
    continuing operations:Basic

$
(0.05
)

$
(0.01
)

$
(0.56
)

$
(0.01
)

$
(0.03
)Diluted

$
(0.05
)

$
(0.01
)

$
(0.56
)

$
(0.01
)

$
(0.03
)Earnings per common share from
    discontinued operations:Basic

$
0.20


$
0.22


$
0.10


$
0.11


$
1.06Diluted

$
0.20


$
0.22


$
0.10


$
0.11


$
1.06Earnings (loss) per common share:Basic

$
0.15


$
0.21


$
(0.46
)

$
0.10


$
1.03Diluted

$
0.15


$
0.21


$
(0.46
)

$
0.10


$
1.03Weighted average number of common
    and common equivalent shares:Basic


58,480



59,194



60,066



60,837



58,538Diluted


58,480



59,194



60,066



60,837



58,538    (1)
    
    Selected consolidated financial data includes retrospective
    reclassifications from continuing operations to discontinued
    operations as a result of certain divestitures (BTG-Israel in
    2005 and Rosemont in 2006) as disclosed in the footnotes to
    our consolidated financial statements. 29




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As of December 31,2002


2003


2004


2005


2006(In thousands)Balance Sheet
    Data(2):Cash, cash equivalents and
    short-term investments

$
16,547


$
22,801


$
25,282


$
75,372


$
179,396Accounts receivable, net


35,764



33,375



25,078



11,716



3,517Inventories, net


16,271



18,622



17,090



9,419



4,203Total current assets


76,942



84,180



71,700



105,863



194,858Goodwill


40,080



40,121



40,121



40,121



Other intangibles, net


79,878



75,743



71,688



67,638



Total assets


285,520



290,747



257,205



222,691



197,893Total current liabilities


49,558



48,806



43,664



20,866



20,164Long-term liabilities


12,222



5,903











43Accumulated deficit


(32,426
)


(19,972
)


(47,487
)


(41,519
)


(14,316
)Stockholders equity


182,502



199,389



174,384



181,394



177,686    (2)
    
    Selected consolidated balance sheet data includes BTG-Israel and
    Rosemont for year ends prior to their date of divestiture. 30




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ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Overview
    ®
  ®
          Specialty
    Pharmaceuticals
   31




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Impact of
    Oxandrin Generic Competition
       32




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Discontinued
    Operations
        Year Ended December 312004


2005


2006(In thousands)Revenues from discontinued
    operations

$
61,542


$
51,088


$
24,224Operating income from discontinued
    operations

$
6,600


$
9,851


$
5,415Income from discontinued operations

$
5,898


$
6,437


$
61,789        33




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Critical
    Accounting Policies and Estimates
    Form 10-K,
  Product revenue recognition. Revenue Recognition in Financial
    Statements Revenue
    Recognition When Right of Return Exists.
                         34




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Allowances for returns.
  Product

Expiration (in years)Oxandrin and oxandrolone
    2.5 mg


5Oxandrin and oxandrolone
    10 mg(1)


3Delatestryl(2)


5     (1)
    
    In 2006, the Company determined, based on its review of
    stability data, that the Oxandrin 10 mg dosage form
    demonstrated stability over a three-year shelf life and thus the
    Company modified the products label to indicate a
    3 year expiration date. Product with three-year expiration
    dating was first sold to our customers in May 2006.(2)
    
    On January 9, 2006, the Company completed its sale of
    Delatestryl to Indevus Pharmaceuticals, Inc. We continue to
    evaluate product returns on sales of Delatestryl that occurred
    prior to the sale date to Indevus.    
    Actual return rates  We track actual returns
    by product and analyze historical return trends. We use these
    historical trends as part of our overall process of estimating
    future returns.
    The level of product manufactured  The level
    of product produced has an impact on the valuation of that
    product. For productions that exceed anticipated future demand,
    a valuation adjustment will be required. Generally, this
    valuation adjustment occurs as an offset to gross inventory.
    Currently, we have mandated that product with less than twelve
    months of expiry dating will not be sold into the distribution
    channel.
    Level of product in the distribution channel 
    We review wholesaler inventory and third-party prescription data
    to ensure that the level of product in the distribution channel
    is at a reasonable level. Currently, the level of product in the
    distribution channel appears reasonable for five-year and
    three-year expiration product. The five-year expiration product
    currently has higher levels of inventory in the distribution
    channel as compared to historical trends.
    Estimated shelf life  Product returns
    generally occur due to product expiration. Therefore, it is
    important for us to ensure that product sold into the
    distribution channel has excess dating that will allow the
    product to be sold through the distribution channel without
    nearing its expiration date. Currently we have mandated that
    product with less than twelve months of expiry dating will not
    be sold into the distribution channel. We have taken the
    appropriate measures to enforce this policy, including setting
    up certain controls with our third party distributor. In
    addition, we entered into a distributor service agreement with
    one of our large wholesalers which limits the level of product
    at the wholesaler. The terms of this agreement are consistent
    with the industrys movement toward a
    fee-for-service
    approach which we believe has resulted in better distribution
    channel inventory management, higher levels of distribution
    channel transparency, and more consistent buying and selling
    patterns. Since a majority of our sales flow through three large
    wholesalers, we expect that these industry changes will have a
    direct impact on our future sales to wholesalers, inventory
    management, product returns and estimation capabilities.
    Current and projected demand  We analyze
    prescription demand data provided by industry standard
    third-party sources. This data is used to estimate the level of
    product in the distribution channel and to determine future
    sales trends. 35




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##### Table of Contents




    Product launches and new product
    introductions  For future product launches, we
    will analyze projected product demand and production levels in
    order to estimate return and inventory reserve allowances. New
    product introductions, including generics, will be monitored for
    market erosion and adjustments to return estimates will be made
    accordingly.                                Expense Provisions


Actual DeductionsBalance


Related to


Related to


Related to


Related to





Balance atBeginning


Current


Prior


Current Year


Prior


Other


End ofDescription

of Period


Year Sales


Period Sales


Sales


Period Sales


Deductions


Period(In thousands)Allowance for sales returns:2005

$
3,259



1,808











(2,179
)





$
2,8882006

$
2,888



1,309



1,065







(2,810
)





$
2,452   Allowances for Medicaid and other government
    rebates.
 36




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##### Table of Contents



Expense Provisions


Actual DeductionsBalance


Related to


Related to


Related to


Related to





Balance atBeginning


Current


Prior


Current Year


Prior Period


Other


End ofDescription

of Period


Year Sales


Period Sales


Sales


Sales


Deductions


Period(In thousands)Allowance for rebates:2005

$
3,360



5,541



(27
)


(3,051
)


(3,332
)





$
2,4912006

$
2,491



2,516



(171
)


(1,263
)


(2,320
)





$
1,253   Inventory valuation.
        Share Based Compensation. Share-Based
    Payment Accounting for Stock
    Issued to Employees Accounting for Stock-Based Compensation.
     37




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##### Table of Contents



Results
    of Operations
      
    the timing and amount 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;
    increased competition from new or existing products, including
    generic products;
    the timing of the introduction of new products;
    the timing and realization of milestone and other payments from
    licensees;
    the timing and amount of expenses relating to research and
    development, product development and manufacturing activities;
    the extent and timing of costs of obtaining, enforcing and
    defending intellectual property rights; and
    any charges related to acquisitions.    Year Ended December 31,2004


2005


2006(Dollars in thousands)Oxandrin

$
53,520



90.1
%

$
44,405



92.4
%

$
46,965



99.2
%Oxandrolone(1)


















469



1.0Delatestryl(2)


5,881



9.9



3,638



7.6



(83
)


(0.2
)$
59,401



100.0
%

$
48,043



100.0
%

$
47,351



100.0
%     (1)
    
    On December 29, 2006, we launched our authorized generic of
    Oxandrin®
    which is distributed through Watson Pharmaceuticals.(2)
    
    On January 9, 2006, we completed the sale of Delatestryl to
    Indevus Pharmaceuticals, Inc. 38




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##### Table of Contents




    maintaining or increasing business with our existing products;
    expanding into new markets; and
    commercializing additional products.  Results
    of Operations for the Years Ended December 31, 2006 and
    December 31, 2005
  Revenues
      
    Sales of Oxandrin were $47.0 million and $44.4 million
    for the years ended December 31, 2006 and 2005,
    respectively, an increase of $2.6 million, or 6%. This
    increase was primarily attributable to price increases
    instituted during 2006, stronger sales and marketing programs,
    and a reduction in the level of Medicaid rebates due in part to
    the initiation of Medicare Part D program and with Oxandrin
    being one of numerous products placed upon greater restriction
    for reimbursement in Florida. Partially offsetting these
    increases in sales was the impact of lower total prescription
    volume of 18% for 2006 versus 2005. This compares with an
    overall decline in the involuntary weight loss market of 1%.
    With Oxandrin now experiencing generic competition, we expect
    that sales will decline in future periods. This level of decline
    will be dependent on factors including the pricing of generic
    products and the number of generic products in the marketplace.
    Sales of Delatestryl decreased $3.7 million for the year
    ended December 31, 2006 versus 2005. On January 9,
    2006, we completed the sale of Delatestryl to Indevus
    Pharmaceuticals, Inc. which terminated our sales of this
    product. As part of the Delatestryl sale agreement, we receive
    royalty payments on net sales generated by Indevus.
    On December 29, 2006, we launched authorized generic
    product via our distribution partner, Watson Pharmaceuticals.
    Sales of oxandrolone, authorized generic product, which was
    launched by Watson in December 2006, were $0.5 million for
    the year ended December 31, 2006. As Oxandrin is now
    experiencing generic competition, we expect Oxandrin branded
    sales to drop and sales of our generic from Watson to increase
    in future periods.    Cost of
    goods sold
   39




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##### Table of Contents



Research
    and development expenses
    Selling
    and marketing expenses
    General
    and administrative expenses
  FAS 123-R.
  Commissions
    and royalties expenses
    Investment
    income
    Other
    income (expense), net
   40




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##### Table of Contents



Income
    tax expense
    Results
    of Operations for the Years Ended December 31, 2005 and
    December 31, 2004
  Revenues
      
    Sales of Oxandrin were $44.4 million and $53.5 million
    for the years ended December 31, 2005 and 2004,
    respectively, a decrease of $9.1 million, or 17%. This
    decrease was primarily attributable to lower customer and
    prescription demand. Oxandrin total prescriptions declined 10%
    in 2005 as compared to 2004. As a comparison, the involuntary
    weight loss market declined by 1% for the same period.
    Sales of Delatestryl were $3.6 million and
    $5.9 million for the years ended 2005 and 2004,
    respectively, a decrease of $2.3 million, or 38%. The
    decrease in Delatestryl sales resulted primarily from the
    reintroduction of a competing generic product into the market in
    March 2004. We sold Delatestryl to Indevus Pharmaceuticals on
    January 9, 2006.    Cost of
    goods sold
    Research
    and development expenses
    Selling
    and marketing expenses
   41




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##### Table of Contents



General
    and administrative expenses
    Retirement
    expense
    Commissions
    and royalties expenses
    Investment
    income (loss)
    Other
    income (expense), net
    Income
    tax expense
    Liquidity
    and Capital Resources
  and/or
 42




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##### Table of Contents



2006
    Cash Flows
            2005
    Cash Flows
          Other
    Liquidity and Capital Resources
      
    the level of sales deterioration as a result of Oxandrin generic
    competition;
    continued progress in our research and development programs,
    particularly with respect to Puricase;
    the timing of, and the costs involved in, obtaining regulatory
    approvals, including regulatory approvals for Puricase, and any
    other product candidates that we may seek to develop in the
    future;
    the quality and timeliness of the performance of our third party
    suppliers and distributors;
    the cost of commercialization activities, including product
    marketing, sales and distribution;
    the costs involved in preparing, filing, prosecuting,
    maintaining, and enforcing patent claims and other patent
    related costs, including litigation costs and the results of
    such litigation;
    the outcome of pending legal actions and the litigation costs
    with respect to such actions;
    our ability to establish and maintain collaborative
    arrangements; and
    our ability to in-license other products or technology which
    will require marketing or clinical development resources. 43




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##### Table of Contents



Payments
    Due by Period
  Less Than








AfterContractual Obligations

Total


One Year


1-3 Years


4-5 Years


5 Years(In thousands)Capital lease obligations

$
78


$
14


$
28


$
28


$
8Operating lease obligations(1)


11,759



1,939



3,729



3,757



2,334Purchase commitment obligations


3,090



985



2,105







Total

$
14,927


$
2,938


$
5,862


$
3,785


$
2,342     (1)
    
    Includes rent commitments on a gross basis that are partially
    offset by proceeds recovered under a sublease arrangement in the
    Companys consolidated financial statements.    Off-Balance
    Sheet Arrangements
    Recently
    Issued Accounting Standards
  Share-Based Payment Accounting for Stock-Based
    Compensation
 44




---



##### Table of Contents



Form 10-K).
  Accounting Changes and Error
    Corrections  A replacement of APB Opinion No. 20
    and FASB Statement No. 3
    Fair Value Measurements (SFAS No. 157).
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
 45




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest
    Rate Risk
   46




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  Index to
    Consolidated Financial Statements
  PageReports of Independent Registered
    Public Accounting Firms


48-51Consolidated Financial Statements:Consolidated Balance Sheets as of
    December 31, 2005 and 2006


52Consolidated Statements of
    Operations for the years ended December 31, 2004, 2005 and
    2006


53Consolidated Statements of Changes
    in Stockholders Equity for the years ended
    December 31, 2004, 2005 and 2006


54Consolidated Statements of Cash
    Flows for the years ended December 31, 2004, 2005 and 2006


55Notes to Consolidated Financial
    Statements


56Schedule II 
    Valuations and Qualifying Accounts


86  47




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
                
    48




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
               49




---



##### Table of Contents



50




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
             Valuation and Qualifying
    Accounts
  
         51




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
  December 31,


December 31,2005


2006ASSETSCurrent Assets:Cash and cash equivalents

$
75,181


$
177,293Short-term investments


191



2,103Accounts receivable, net


11,716



3,517Notes receivable


6,635



644Inventories, net


9,419



4,203Prepaid expenses and other current
    assets


2,721



7,098Total current assets


105,863



194,858Property and equipment, net


6,144



1,139Goodwill


40,121



Other intangibles, net


67,638



Other assets


2,925



1,896Total assets

$
222,691


$
197,893LIABILITIES AND
    STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable

$
5,745


$
4,552Deferred revenues






416Other current liabilities


15,121



15,196Total current liabilities


20,866



20,164Other liabilities






43Deferred income taxes


20,431



Commitments and contingenciesStockholders Equity:Preferred stock 
    $.01 par value 4,000,000 shares authorized; no shares
    issued






Common stock 
    $.01 par value 150,000,000 shares authorized; issued
    and outstanding 61,523,000 in 2005; 52,309,000 in 2006


615



523Additional paid in capital


221,622



189,496Deferred compensation


(686
)


Accumulated deficit


(41,519
)


(14,316
)Accumulated other comprehensive
    income


1,362



1,983Total stockholders equity


181,394



177,686Total liabilities and
    stockholders equity

$
222,691


$
197,893    52




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 (In
    thousands, except per share data)
  Year Ended December 31,2004


2005


2006Revenues:Product sales, net

$
59,401


$
48,043


$
47,351Other revenues


2,952



1,452



16362,353



49,495



47,514Cost and expenses:Cost of goods sold


11,492



5,252



8,506Research and development


19,249



16,980



21,412Selling and marketing


16,957



14,774



10,683General and administrative


26,416



21,875



23,913Retirement expense


2,085







Commissions and royalties


5,770



5,094



581,969



63,975



64,519Operating loss from continuing
    operations


(19,616
)


(14,480
)


(17,005
)Investment income (loss), net


(624
)


776



7,233Other income (expense), net


(110
)


13,381



8,333Loss from continuing operations
    before income taxes


(20,350
)


(323
)


(1,439
)Income tax expense


13,063



146



25Loss from continuing operations


(33,413
)


(469
)


(1,464
)Income from discontinued
    operations, net of income taxes (includes gain (loss) on sale of
    discontinued operations) (Note 6)


5,898



6,437



61,789Net income (loss)

$
(27,515
)

$
5,968


$
60,325Loss per common share from
    continuing operations:Basic

$
(0.56
)

$
(0.01
)

$
(0.03
)Diluted

$
(0.56
)

$
(0.01
)

$
(0.03
)Earnings per common share from
    discontinued operations:Basic

$
0.10


$
0.11


$
1.06Diluted

$
0.10


$
0.11


$
1.06Earnings (loss) per common share:Basic

$
(0.46
)

$
0.10


$
1.03Diluted

$
(0.46
)

$
0.10


$
1.03Weighted average number of common
    and common equivalent shares:Basic


60,066



60,837



58,538Diluted


60,066



60,837



58,538    53




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  CONSOLIDATED
    STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (In
    thousands)
  Common Stock








AccumulatedAdditional








Other


TotalPar


Paid in


Deferred


Accumulated


Comprehensive


StockholdersShares


Value


Capital


Compensation


Deficit


Income


EquityBalance, December 31,
    2003


59,618


$
595


$
216,706


$



$
(19,972
)

$
2,060


$
199,389Comprehensive loss:Net loss


















(27,515
)






(27,515
)Unrealized loss on marketable
    securities, net






















(413
)


(413
)Currency translation adjustment






















919



919Total comprehensive loss


























(27,009
)Issuance of common stock


775



10



1,521















1,531Tax benefit of stock options










278















278Exercise of stock options


64



1



194















195Balance, December 31,
    2004


60,457



606



218,699







(47,487
)


2,566



174,384Comprehensive income:Net income


















5,968







5,968Unrealized gain on marketable
    securities, net






















20



20Currency translation adjustment






















(1,224
)


(1,224
)Total comprehensive income


























4,764Restricted stock grants


477



4



1,282



(1,286
)










Amortization of deferred
    compensation














282











282Forfeiture of restricted stock
    grants


(119
)


(1
)


(317
)


318











Non-cash compensation 
    stock options granted to non-employees










30















30Issuance of common stock


471



4



1,235















1,239Tax benefit of stock options










32















32Exercise of stock options


237



2



661















663Balance, December 31,
    2005


61,523



615



221,622



(686
)


(41,519
)


1,362



181,394Comprehensive income:Net income


















60,325







60,325Unrealized gain on marketable
    securities, net






















2,032



2,032Currency translation adjustment






















(1,411
)


(1,411
)Total comprehensive income


























60,946Transition effect of adoption of
    SFAS No. 123(R)










(686
)


686











Restricted stock grants


312



3



(3
)














Amortization of deferred
    compensation










1,118















1,118Forfeiture of restricted stock
    grants


(83
)


(1
)


1















Issuance of common stock


174



2



546















548Repurchase and retirement of common
    stock


(10,000
)


(100
)


(36,095
)






(33,122
)






(69,317
)ESPP compensation expense










192















192Stock option compensation expense










1,151















1,151Tax benefit of share-based
    compensation










296















296Exercise of stock options


383



4



1,354















1,358Balance, December 31,
    2006


52,309


$
523


$
189,496


$



$
(14,316
)

$
1,983


$
177,686    54




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
 (In
    thousands)
  Year Ended December 31,2004


2005


2006Cash flows from operating
    activities:Net income (loss)

$
(27,515
)

$
5,968


$
60,325Adjustments to reconcile net income
    (loss) to net cash provided by (used in) operating activities:Depreciation


6,696



3,310



1,433Amortization of intangible assets


4,050



4,050



2,417Deferred income taxes


17,500



(1,218
)


(755
)Gain related to receipt of Omrix
    shares










(575
)Gain on sale of oral liquid
    pharmaceutical business










(77,174
)Loss on sale of global biologics
    manufacturing business






4



Gain on sale of Delatestryl










(5,884
)Unrealized gain on trading
    securities


(539
)






(Gain) loss on sales of trading
    securities


(19
)


289



(520
)(Gain) loss on sales of fixed assets


504



525



Proceeds from sales of trading
    securities






2,375



1,129Common stock issued as payment for
    services


106



173



135Amortization of deferred
    compensation related to restricted stock (including performance
    shares)






282



1,118Provision for certain litigation
    settlements


3,000







Stock option and ESPP compensation










1,343Write down of investment


1,375







Provision for severance pay


773







Changes in:Accounts receivables, net


8,297



7,768



2,343Inventories, net


1,532



1,489



1,004Prepaid expenses and other current
    assets


(790
)


(4,096
)


(7,577
)Accounts payable


(7,462
)


(2,688
)


(145
)Income taxes payable










552Other current liabilities


882



(9,365
)


(268
)Deferred revenues


2,608



(616
)


2,373Net cash provided by (used in)
    operating activities


10,998



8,250



(18,726
)Cash flows from investing
    activities:Proceeds from the sale of oral
    liquid pharmaceutical business










176,000Proceeds from sale of investment in
    Omrix






1,625



Proceeds from sale of global
    biologics manufacturing business






51,844



Proceeds from the collection of
    note receivable issued in connection with the sale of global
    biologics manufacturing business










6,700Proceeds from sale of Delatestryl










5,531Proceeds from sales of short-term
    investments


3,729







Capital expenditures


(3,583
)


(2,178
)


(2,679
)Severance pay funded


(285
)


(3,679
)


Changes in short-term investments


(1,046
)






81Changes in other long-term assets


(104
)


1,697



1,688Net cash provided by (used in)
    investing activities


(1,289
)


49,309



187,321Cash flows from financing
    activities:Repurchase and retirement of common
    stock










(69,317
)Repayment of long-term debt


(7,020
)


(5,903
)


Proceeds from issuance of common
    stock


1,620



1,792



1,771Additional paid in capital excess
    tax benefit










296Net cash used in financing
    activities


(5,400
)


(4,111
)


(67,250
)Effect of exchange rate changes


919



(714
)


767Net increase in cash and cash
    equivalents


5,228



52,734



102,112Cash and cash equivalents at
    beginning of period


17,219



22,447



75,181Cash and cash equivalents at end of
    period

$
22,447


$
75,181


$
177,293Supplementary
    InformationOther information:Income tax paid

$
3,991


$
4,352


$
23,847Interest paid

$
302


$
70


$
2    55




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Note 1 
    Organization and Summary of Significant Accounting
    Policies
    ®
        Basis
    of consolidation
   56




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Translation
    of foreign currency
    Cash
    and cash equivalents
    Short-term
    investments
  available-for-sale , Accounting for Certain Investments in
    Debt and Equity Securities, available-for-sale
    Accounts
    receivable, net
   57




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Inventories,
    net
    December 31,2005


2006(In thousands)Raw materials

$
3,960


$
4,501Work-in-process


141



186Finished goods


13,058



7,821Inventory reserves


(7,740
)


(8,305
)Total

$
9,419


$
4,203           Property
    and equipment, net of accumulated depreciation and
    amortization
  Construction-in-progress
  Intangible
    assets
   58




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Long-lived
    assets
  Accounting for the Impairment or Disposal of Long-lived
    Assets Accounting for the Impairment of Long-lived Assets to
    be Disposed of.
                Revenue
    recognition
  Product
    sales
  Revenue Recognition in Financial Statements Revenue Recognition When
    Right of Return Exists.
         59




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
                   Allowance for returns
                   60




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
             Allowances for Medicaid, other government rebates and other
    rebates
  Commercial discounts
  Distribution fees
  Other
    revenues
      Share-based
    compensation
  Accounting for Stock Issued to
    Employees
 61




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting for Stock-Based Compensation. Share-Based Payment
  Research
    and development
    Income
    taxes
      Accumulated
    other comprehensive income
    Earnings
    per common share
      Year Ended December 31, 2004


Year Ended December 31, 2005


Year Ended December 31, 2006Income


Shares


Per Share


Income


Shares


Per Share


Income


Shares


Per Share(Numerator)


(Denominator)


Amounts


(Numerator)


(Denominator)


Amounts


(Numerator)


(Denominator)


Amounts(In thousands, except per share data)Loss from continuing
    operations

$
(33,413
)









$
(469
)









$
(1,464
)Basic EPSLoss from continuing operations
    attributable to common stock


(33,413
)


60,066


$
(0.56
)


(469
)


60,837


$
(0.01
)


(1,464
)


58,538


$
(0.03
)Effect of Dilutive
    SecuritiesCommon stock equivalents






























Diluted EPSLoss from continuing operations
    attributable to common stock and common stock equivalents

$
(33,413
)


60,066


$
(0.56
)

$
(469
)


60,837


$
(0.01
)

$
(1,464
)


58,538


$
(0.03
)  62




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Use of
    estimates in preparation of financial statements
    Fair
    value of financial instruments
    Concentration
    of credit risk
    New
    accounting pronouncements
  Share-Based Payment Accounting for Stock-Based
    Compensation
 63




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Accounting
    Changes and Error Corrections  A replacement of APB
    Opinion No. 20 and FASB Statement No. 3
    Fair Value Measurements
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
 64




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    The
    Fair Value Option for Financial Assets and Financial
    Liabilities
  Note 2 
    Short-Term Investments
  Investment
    in Omrix Biopharmaceuticals, Inc.
    lock-up
  Investment
    in Neuro-Hitech Pharmaceuticals, Inc.
     65




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Other-than-temporary
    adjustment
  other-than-temporary
  Note 3 
    Property and Equipment, Net
  December 31,2005


2006(In thousands)Office equipment

$
17,833


$
7,679Office equipment 
    capital leases






56Leasehold improvements


2,079



1,18419,912



8,919Accumulated depreciation


(13,768
)


(7,808
)6,144



1,111Construction in progress






28Total

$
6,144


$
1,139     Note 4 
    Acquired Intangible Assets
    December 31,2005


2006(In thousands)Amortized intangible assets:Developed products

$
76,700


$
Trademarks


3,300



Patents


1,559



Total gross carrying amount


81,559



Accumulated amortization


13,921



Net

$
67,638


$
Unamortized intangible assets:Goodwill

$
40,121


$
Amortization Expense:For the years ended
    December 31, 2005 and 2006

$
4,050


$
2,417    66




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 5 
    Other Current Liabilities
  December 31,2005


2006(In thousands)Salaries and related expenses

$
2,808


$
2,541Allowance for returns


2,888



2,452Accrued taxes


1,956



1,310Allowance for rebates


2,491



1,253Litigation, legal and professional
    fee accruals


1,507



1,194Purchase commitment accrual






2,010Puricase manufacturing accrual


282



1,729Clinical research organization
    accrual






1,041Royalties and commissions


1,362



Other


1,827



1,666Total

$
15,121


$
15,196   Note 6 
    Discontinued Operations
     67




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2004


2005


2006(In thousands)Revenues:Product sales, net

$
57,228


$
48,067


$
24,181Other revenues


4,314



3,021



4361,542



51,088



24,224Cost and expenses:Cost of goods sold


28,040



19,707



8,403Research and development


8,551



4,331



1,996Selling and marketing


6,641



7,014



4,092General and administrative


7,198



6,077



1,901Amortization of intangibles


4,050



4,050



2,417Commissions and royalties


462



58



54,942



41,237



18,809Operating income from discontinued
    operations


6,600



9,851



5,415Other income (expense), net


(22
)


(81
)


507Gain on disposition of Rosemont










77,174Loss on disposition of BTG-Israel






(4
)


Income from discontinued
    operations before income taxes


6,578



9,766



83,096Income tax expense


680



3,329



21,307Income from discontinued operations

$
5,898


$
6,437


$
61,789   non-U.S. customers.
  Note 7 
    Long-term Debt
    Note 8 
    Commitments and Contingencies
   68




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          ($ in thousands)2007

$
1,8142008

$
1,8142009

$
1,8142010

$
1,8542011

$
1,8672012  2013

$
2,333     In re Bio-Technology
    General Corp. Securities Litigation Form 8-K
 69




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               70




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Note 9 
    Stockholders Equity
      Note 10 
    Share-Based Compensation
       71




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Stock
    Options
  Accounting for Stock
    Issued to Employees Accounting for
    Stock-Based Compensation Share-Based Payment
    Year Ended December 31,2004


2005(In thousands)Net income (loss) as reported

$
(27,515
)

$
5,968Deduct:Total share-based compensation
    expense determined under fair value based method for all awards,
    net of related tax effects


2,707



1,396Pro forma net income (loss)

$
(30,222
)

$
4,572Income (loss) per share:Basic  as reported

$
(0.46
)

$
0.10Basic  pro forma

$
(0.50
)

$
0.08Diluted  as reported

$
(0.46
)

$
0.10Diluted  pro forma

$
(0.50
)

$
0.08      72




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2004


2005


2006Weighted-average volatility


63
%


64
%


64
%Weighted-average risk-free
    interest rate


4.1
%


4.1
%


4.7
%Weighted average expected life in
    years


7.0



7.0



6.1Dividend yield


0.0
%


0.0
%


0.0
%Weighted average fair market value

$
2.19


$
2.15


$
5.23       Weighted


AggregateWeighted


Average


IntrinsicAverage


Remaining


Value ofNumber of


Exercise


Contractual


In-the-MoneyShares


Price


Term (in yrs)


Options(In thousands, except weighted average data)Outstanding at December 31,
    2005


3,030


$
4.97



6.95Granted


1,276



8.27Exercised


(383
)


3.54Cancelled


(609
)


5.11Outstanding at December 31,
    2006


3,314


$
6.29



7.29


$
17,136Exercisable at December 31,
    2006


1,708


$
5.40



5.58


$
10,274   in-the-money
 73




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
     Number of


Weighted Average GrantShares


Date Fair Value(In thousands)Nonvested at December 31, 2005


1,206


$
2.20Granted


1,276



5.23Vested


(570
)


2.22Forfeited


(306
)


2.20Nonvested at December 31, 2006


1,606


$
4.60   Restricted
    Stock and Performance-Based Restricted Stock
    Number of


Weighted Average GrantShares


Date Fair Value(In thousands)Nonvested at December 31, 2005


358


$
2.70Granted


312



8.96Vested


(99
)


2.74Forfeited


(83
)


2.96Nonvested at December 31, 2006


488


$
6.65    74




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Additional
    Paid In Capital Excess Tax Benefit Pool
  Transition Election Related to Accounting for the Tax Effects
    of Share-Based Payment Awards
  Note 11 
    Employee Benefits
  Employee
    Stock Purchase Plan
    401(k)
    Profit-Sharing Plan
    Note 12 
    Investment Income (loss), Net
  Year Ended December 31,2004


2005


2006(In thousands)Interest and dividend income from
    cash equivalents

$
405


$
984


$
6,808Realized and unrealized gains on
    short-term investments


537



80



555Realized and unrealized losses on
    short-term investments


(1,566
)


(288
)


(130
)Total investment income (loss), net

$
(624
)

$
776


$
7,233  75




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 13 
    Other Income (Expense), Net
  Year Ended December 31,2004


2005


2006(In thousands)Novo Nordisk settlement

$



$
3,000


$
500Ross commission repayment










1,300Gain on sale of Delatestryl










5,884Receipt of Omrix shares










575Mircette settlement






10,619



Other legal settlements






43



Other non-operating expenses


(110
)


(281
)


74Total income (expense), net

$
(110
)

$
13,381


$
8,333   ® ®
         76




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   Note 14 
    Concentrations
        Note 15 
    Income Taxes
    Year Ended December 31,2004


2005


2006(In thousands)CurrentState

$
137


$
402


$
(31
)Federal


(5,301
)


(384
)


56Foreign


75



128



(5,089
)


146



25DeferredState


1,472







Federal


16,680







Foreign










18,152







Income tax expense from continuing
    operations

$
13,063


$
146


$
25  77




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2004


2005


2006(In thousands)Domestic

$
(20,350
)

$
(323
)

$
(1,439
)Foreign










Loss from continuing operations
    before income taxes

$
(20,350
)

$
(323
)

$
(1,439
)     Year Ended December 31,2004


2005


2006(In thousands)Income tax at US statutory rate

$
(7,122
)

$
(110
)

$
(503
)State and local income taxes (net
    of federal benefit)


1,045



265



(20
)Non-deductible expenses


308



82



49Research and experimental credits


(530
)






Foreign taxes






130



Employee share based compensation










172Valuation allowance against
    beginning of the year net deferred tax assets


18,152







Current year operations without
    tax benefit


2,705



189



Change in valuation allowance










529Effects of tax rate change










(164
)Provision for and settlement of
    tax examinations


(2,192
)


(386
)


(27
)Other


697



(24
)


(11
)Income tax expense from continuing
    operations

$
13,063


$
146


$
25  78




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2005


2006(In thousands)Net operating loss carryforward

$
9,416


$
2,239State NOL carryforward


753



399Valuation of securities


390



443Reserve for returns and discounts


1,168



1,003Inventories


3,055



4,280Research and experimental credits


5,155



752Deferred revenues






166Foreign tax credits


560



130Accrued amounts


1,436



1,159Depreciation


165



103Employee based compensation






730State credits






375Other


542



(4
)Deferred income tax assets


22,640



11,775Valuation allowance


(22,640
)


(11,775
)Net deferred income tax assets






Deferred income tax liabilities,
    net

$



$
           2002-2003
 79




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
         Note 16 
    Segment Information
  ®
        Year Ended December 31, 2006Specialty


DiscontinuedPharmaceutical


Operations


Total(In thousands)Revenues

$
47,514






$
47,514Operating loss before depreciation
    and amortization


(16,270
)






(16,270
)Less:Depreciation and amortization


735







735Operating loss as reported


(17,005
)






(17,005
)Other income, net


15,566







15,566Income tax expense


(25
)






(25
)Loss from continuing operations


(1,464
)






(1,464
)Income from discontinued operations






61,789



61,789Net income (loss)

$
(1,464
)

$
61,789


$
60,325Segment assets

$
197,893


$



$
197,893Expenditures for segment assets

$
457


$
2,222


$
2,679  80




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Year Ended December 31, 2005Specialty


DiscontinuedPharmaceutical


Operations


Total(In thousands)Revenues

$
49,495






$
49,495Operating loss before depreciation
    and amortization


(13,395
)






(13,395
)Less:Depreciation and amortization


1,085







1,085Operating loss as reported


(14,480
)






(14,480
)Other income, net


14,157







14,157Income tax expense


(146
)






(146
)Loss from continuing operations


(469
)






(469
)Income from discontinued operations






6,437



6,437Net income (loss)

$
(469
)

$
6,437


$
5,968Segment assets

$
92,791


$
129,900


$
222,691Expenditures for segment assets

$
101


$
2,077


$
2,178   Year Ended December 31, 2004Specialty


DiscontinuedPharmaceutical


Operations


Total(In thousands)Revenues

$
62,353






$
62,353Operating loss before depreciation
    and amortization


(18,312
)






(18,312
)Less:Depreciation and amortization


1,304







1,304Operating loss as reported


(19,616
)






(19,616
)Other expense, net


(734
)






(734
)Income tax expense


(13,063
)






(13,063
)Loss from continuing operations


(33,413
)






(33,413
)Income from discontinued operations






5,898



5,898Net income (loss)

$
(33,413
)

$
5,898


$
(27,515
)Segment assets

$
50,018


$
207,187


$
257,205Expenditures for segment assets

$
367


$
3,216


$
3,583    81




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Note 17 
    Quarterly Data (Unaudited)
    Quarter Ended March 31,2005


2006(In thousands, except per share data)Revenues:Product sales, net

$
11,762


$
9,503Other revenues


75



11,837



9,503Cost and expenses:Cost of goods sold


2,410



858Research and development


4,215



3,248Selling and marketing


3,300



2,833General and administrative


4,612



7,907Commissions and royalties


1,319



115,856



14,847Operating loss from continuing
    operations


(4,019
)


(5,344
)Investment income (loss), net


(97
)


890Other income, net


2,255



7,832Income (loss) from continuing
    operations before income taxes


(1,861
)


3,378Income tax expense


27



39Income (loss) from continuing
    operations


(1,888
)


3,339Income from discontinued
    operations, net of income taxes


1,411



639Net income (loss)

$
(477
)

$
3,978Earnings (loss) per common share
    from continuing operations:Basic

$
(0.03
)

$
0.05Diluted

$
(0.03
)

$
0.05Earnings per common share from
    discontinued operations:Basic

$
0.02


$
0.01Diluted

$
0.02


$
0.01Earnings (loss) per common share:Basic

$
(0.01
)

$
0.06Diluted

$
(0.01
)

$
0.06Weighted average number of common
    and common equivalent shares:Basic


60,545



61,212Diluted


60,545



62,107  82




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarter EndedJune 30,2005


2006(In thousands, except per share data)Revenues:Product sales, net

$
12,526


$
13,760Other revenues


764



10013,290



13,860Cost and expenses:Cost of goods sold


513



1,361Research and development


4,964



4,166Selling and marketing


4,516



2,136General and administrative


4,735



6,403Commissions and royalties


1,147



415,875



14,070Operating loss from continuing
    operations


(2,585
)


(210
)Investment income, net


82



916Other income (expense), net


(392
)


465Income (loss) from continuing
    operations before income taxes


(2,895
)


1,171Income tax expense


46



(35
)Income (loss) from continuing
    operations


(2,941
)


1,206Income from discontinued
    operations, net of income taxes


2,502



2,036Net income (loss)

$
(439
)

$
3,242Earnings (loss) per common share
    from continuing operations:Basic

$
(0.05
)

$
0.02Diluted

$
(0.05
)

$
0.02Earnings per common share from
    discontinued operations:Basic

$
0.04


$
0.03Diluted

$
0.04


$
0.03Earnings (loss) per common share:Basic

$
(0.01
)

$
0.05Diluted

$
(0.01
)

$
0.05Weighted average number of common
    and common equivalent shares:Basic


60,722



61,358Diluted


60,722



62,456  83




---



##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarter Ended September 30,2005(1)


2006(1)(In thousands, except per share data)Revenues:Product sales, net

$
11,082


$
15,889Other revenues


102



3211,184



15,921Cost and expenses:Cost of goods sold


1,222



1,351Research and development


4,029



5,519Selling and marketing


3,020



2,514General and administrative


5,610



4,950Commissions and royalties


1,316



15,197



14,334Operating income (loss) from
    continuing operations


(4,013
)


1,587Investment income, net


263



2,820Other income (expense), net


53



(28
)Income (loss) from continuing
    operations before income taxes


(3,697
)


4,379Income tax expense (benefit)


(70
)


1,022Income (loss) from continuing
    operations


(3,627
)


3,357Income from discontinued
    operations, net of income taxes(2)


1,669



58,512Net income (loss)

$
(1,958
)

$
61,869Earnings (loss) per common share
    from continuing operations:Basic

$
(0.06
)

$
0.06Diluted

$
(0.06
)

$
0.05Earnings per common share from
    discontinued operations:Basic

$
0.03


$
0.96Diluted

$
0.03


$
0.96Earnings (loss) per common share:Basic

$
(0.03
)

$
1.02Diluted

$
(0.03
)

$
1.01Weighted average number of common
    and common equivalent shares:Basic


60,934



60,433Diluted


60,934



61,174    (1)
    
    The Company had previously allocated interest between continuing
    operations and discontinued operations and has subsequently made
    certain reclassification adjustments that resulted in offsetting
    adjustments to income (loss) from continuing operations and
    income from discontinued operations which had no impact on net
    income (loss) for the three and nine months ended
    September 30, 2005 and 2006, respectively. The amounts that
    were reduced from income (loss) from continuing operations and
    income from discontinued operations include $0.4 million
    and $0.9 million, for the three months ended
    September 30, 2006 and 2005, respectively, and
    $2.2 million and $2.8 million, for the nine months
    ended September 30, 2006 and 2005, respectively.(2)
    
    Income from discontinued operations for the three months ended
    September 30, 2006 reflects the Companys sale of
    Rosemont which resulted in a pre-tax gain on disposition of
    approximately $77.2 million (see Note 6). 84




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Quarter Ended December 31,2005


2006(In thousands, except per share data)Revenues:Product sales, net

$
12,673


$
8,199Other revenues


511



3113,184



8,230Cost and expenses:Cost of goods sold


1,107



4,936Research and development


3,772



8,479Selling and marketing


3,938



3,200General and administrative


6,918



4,653Commissions and royalties


1,312



17,047



21,268Operating loss from continuing
    operations


(3,863
)


(13,038
)Investment income, net


528



2,607Other income, net


11,465



64Income (loss) from continuing
    operations before income taxes


8,130



(10,367
)Income tax expense (benefit)


143



(1,001
)Income (loss) from continuing
    operations


7,987



(9,366
)Income from discontinued
    operations, net of income taxes


855



602Net income (loss)

$
8,842


$
(8,764
)Earnings (loss) per common share
    from continuing operations:Basic

$
0.13


$
(0.18
)Diluted

$
0.13


$
(0.18
)Earnings per common share from
    discontinued operations:Basic

$
0.02


$
0.01Diluted

$
0.01


$
0.01Earnings (loss) per common share:Basic

$
0.15


$
(0.17
)Diluted

$
0.14


$
(0.17
)Weighted average number of common
    and common equivalent shares:Basic


60,130



51,774Diluted


61,743



51,774     Note 18 
    Restructuring Charges
   85




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##### Table of Contents



SAVIENT
    PHARMACEUTICALS, INC.
 
  Schedule II  Valuation and Qualifying
    Accounts
  Balance at


Charged to


Charged to





Balance atBeginning of


Costs and


Other





End ofDescription

Period


Expenses


Accounts


Deductions


Period(In thousands)Allowance for inventory
    obsolescence2004

$
2,210


$
4,204


$



$
(355
)

$
6,0592005


6,059



1,805







(124
)


7,7402006


7,740



2,657



(346
)


(1,746
)


8,305Allowance for sales
    returns(1)2004


4,706



2,248







(3,695
)


3,2592005


3,259



1,808







(2,179
)


2,8882006


2,888



2,374







(2,810
)


2,452Allowance for
    rebates(1)2004


3,168



6,917







(6,725
)


3,3602005


3,360



5,514







(6,383
)


2,4912006


2,491



2,345







(3,583
)


1,253Allowance for doubtful
    accounts2004


577



58







(135
)


5002005


500



769







(207
)


1,0622006


1,062



468



(435
)


(59
)


1,036Valuation allowance 
    Deferred income taxes short term2004






9,092











9,0922005


9,092



(3,646
)










5,4462006


5,446



559











6,005Valuation allowance 
    Deferred income taxes long term2004






14,100











14,1002005


14,100



3,094











17,1942006


17,194



(11,424
)










5,770     (1)
    
    Included within other current liabilities in the Companys
    consolidated balance sheets. 86




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##### Table of Contents



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE   
  ITEM 9A.
    CONTROLS
    AND PROCEDURES  (a).  Conclusion
    Regarding the Effectiveness of Disclosure Controls and
    Procedures
        Form 10-K, Rules 13a-15(e) 15d-15(e)
  (b).  Managements
    Report On Internal Control Over Financial Reporting
  Rule 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Company;
    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that receipts and expenditures of the
    Company are being made only in accordance with authorizations of
    management and directors of the Company; and 87




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##### Table of Contents




    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.    Internal Control  Integrated Framework
  Form 10-K.
  (c).  Remediation
    of December 31, 2005 Material Weaknesses
  Form 10-K
  
    Insufficient personnel resources that are in dedicated permanent
    positions within the finance function with sufficient skills and
    industry knowledge of GAAP and tax, which resulted in
    insufficient documentation and monitoring over the financial
    statement close and restatement of quarterly financial reporting
    attributed to (a) deficiencies in the analysis of estimates
    relating to product returns, inventory obsolescence and rebates
    and (b) errors in the income tax provision.          
    There were deficiencies in the income tax analysis consisting of
    (a) insufficient review of the U.K. tax provision by
    Rosemont management in the U.K. and by the corporate tax
    function, (b) insufficient monitoring of U.K. tax
    regulation changes and (c) inaccurate calculation of
    quarterly tax provision.   88




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##### Table of Contents




    There was insufficient communication at the intercompany and
    intradepartmental level and between us and our third-party
    service and data providers. At the intradepartmental level,
    inconsistent exchange of important financial information between
    our finance and operating functions led to errors in reporting.        
    There were insufficient controls over the Cash and Treasury
    process including (a) authorization, monitoring and
    segregation of duties over wire transfers, (b) non-timely
    revision of signature authority over our bank accounts and
    (c) monitoring and segregation of duties with respect to
    access to check stock at our U.K. subsidiary.      
    There was insufficient control over the authorization of the
    Employee Stock Purchase Plan purchases and accounting for pro
    forma stock-based compensation expense in accordance with
    SFAS No. 123, Accounting for Stock Based
    Compensation, the latter of which resulted in errors to and
    restatement of the historically reported pro forma stock-based
    compensation expense disclosures. The insufficient 89




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##### Table of Contents



coordination of data exchanged between us and certain third
    party service providers resulted in certain errors in the
    administration of the stock incentive award programs.    Management believes that changes necessary to fully remediate
    this weakness were successfully completed and in place by
    December 31, 2006.  Rules 13a-15(f) 15d-15(f)
  (d).  Reports
    of Independent Registered Public Accounting Firms
  Form 10-K.
 
  ITEM 9B.
    OTHER
    INFORMATION   
  PART III
 
  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Directors
    Regulation S-K
  Executive
    Officers
  ur Executive Officers Form 10-K.
  Section 16(a)
    Compliance
    Code
    of Ethics
   90




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##### Table of Contents



Form 8-K
  Form 10-K
 
  ITEM 11.
    EXECUTIVE
    COMPENSATION  .
 
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT  .
 
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  .
 
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES.  .
 
  PART IV
 
  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES    Form 10-K.
      ExhibitNo.

Description2
.1

Agreement and Plan of
    Reorganization, dated as of February 21, 2001, by and among
    Bio-Technology General Corp., MYLS Acquisition Corp. and Myelos
    Corporation.*(1)2
.2

Share Purchase Agreement, dated
    September 20, 2002, relating to Rosemont Pharmaceuticals
    Ltd, between NED-INT Holdings Ltd, Akzo Nobel N.V. and
    Bio-Technology General Corp.*(2)2
.3

Share Purchase Agreement, dated
    March 23, 2005, between the Registrant and Ferring B.V.*(3)2
.4

Asset Purchase Agreement, dated
    March 23, 2005, between the Registrant and Ferring
    International Centre SA.*(3)3
.1

Certificate of Incorporation of
    the Registrant, as amended.*(4)3
.2

By-laws of the Registrant, as
    amended.*(5) 91




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##### Table of Contents



ExhibitNo.

Description4
.1

Rights Agreement, dated as of
    October 7, 1998, by and between Bio-Technology General
    Corp. and American Stock Transfer & Trust Company, as
    Rights Agent, which includes the form of Certificate of
    Designations setting forth the terms of the Series A Junior
    Participating Cumulative Preferred Stock, par value
    $0.01 per share, as Exhibit A, the form of Right
    Certificate as Exhibit B and the Summary of Rights to
    Purchase Preferred Shares as Exhibit C.*(5)4
.2

Certificate of Designations of the
    Series A Junior Participating Cumulative Preferred
    Stock.*(5)10
.1

Letter from the Chief Scientist to
    Bio-Technology General (Israel) Ltd.*(6)10
.2

Agreement, dated January 20,
    1984, between Bio-Technology General (Israel) Ltd., and the
    Chief Scientist with regard to certain projects.*(7)10
.3

Form of Indemnity Agreement
    between the Company and its directors and officers.*(8)10
.4

Bio-Technology General Corp. Stock
    Compensation Plan for Outside Directors, as amended.*(9)10
.5

Bio-Technology General Corp. Stock
    Option Plan for New Directors, as amended.*(9)10
.6

Bio-Technology General Corp. 1992
    Stock Option Plan, as amended.*(10)10
.7

Bio-Technology General Corp. 1997
    Stock Option Plan for Non-Employee Directors.*(10)10
.8

Savient Pharmaceuticals, Inc. 1998
    Employee Stock Purchase Plan Amended and Restated as of
    May 23, 2006.10
.9

Bio-Technology General Corp. 2001
    Stock Option Plan.*(11)10
.10

Employment Agreement, dated as of
    May 14, 2002, by and between Bio-Technology General Corp.
    and Christopher Clement.*(12)10
.11

Employment Agreement, dated
    March 23, 2003, by and between Bio-Technology General Corp.
    and Zebulun D. Horowitz, M.D.*(13)10
.12

Lease and Lease Agreement, dated
    as of June 11, 2002, between SCV Partners and
    Bio-Technology General Corp., as amended.*(14)10
.13

Severance Agreement, dated as of
    May 21, 2004, between Savient Pharmaceuticals, Inc. and Sim
    Fass.*(15)10
.14

Employment Agreement, dated as of
    May 28, 2004, between Savient Pharmaceuticals, Inc. and
    Philip K. Yachmetz.*(16)10
.15

Employment Agreement, dated as of
    February 15, 2006, by and between the Company and Robert
    Lamm.*(17)10
.16

Amendment, dated February 15,
    2006, to Employment Agreement, dated May 28, 2004, by and
    between the Company and Philip K. Yachmetz.*(17)10
.17

Amendment, dated July 12,
    2004, to Employment Agreement dated May 14, 2002, by and
    between the Company and Christopher Clement.*(17)10
.18

Amendment dated December 7,
    2006, to Employment Agreement dated March 23, 2003, by and
    between the Company and Zebulun D. Horowitz, M.D.10
.19

Form of Savient Pharmaceuticals,
    Inc. Senior Management Incentive Stock Option Agreement.10
.20

Form of Savient Pharmaceuticals,
    Inc. Senior Management Non-Qualified Stock Agreement.10
.21

Form of Savient Pharmaceuticals,
    Inc. Senior Management Restricted Stock Agreement.10
.22

Form of Savient Pharmaceuticals,
    Inc. Senior Management Performance Share Agreement.10
.23

Form of Savient Pharmaceuticals,
    Inc. Board of Directors Non-Qualified Stock Agreement.10
.24++

License Agreement, dated
    August 12, 1998, by and among Mountain View
    Pharmaceuticals, Inc., Duke University, and Bio-Technology
    General Corporation, as amended on November 12, 2001.10
.25++

Supply Agreement, dated as of
    June 12, 2006, by and between Watson Pharma Inc. and
    Savient Pharmacueticals, Inc.21
.1

Subsidiaries of Savient
    Pharmaceuticals, Inc.23
.1

Consent of Grant Thornton LLP.23
.2

Consent of McGladrey &
    Pullen LLP. 92




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##### Table of Contents



ExhibitNo.

Description31
.1

Certification of the Chief
    Executive Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
.2

Certification of the Interim Chief
    Financial Officer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32
.1

Certification by the Chief
    Executive Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.32
.2

Certification of the Interim Chief
    Financial Officer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.         ++
    
    Confidential treatment requested as to certain portions, which
    portions are omitted and filed separately with the Commission.*
    
    Previously filed with the Commission as Exhibits to, and
    incorporated herein by reference from, the following documents:(1)
    
    Companys Current Report on
    Form 8-K,
    dated March 19, 2001.(2)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2002.(3)
    
    Companys Current Report on
    Form 8-K,
    dated March 23, 2005.(4)
    
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1994.(5)
    
    Companys Current Report on
    Form 8-K,
    dated October 9, 1998.(6)
    
    Registration Statement on
    Form S-1
    (File
    No. 2-84690).(7)
    
    Registration Statement on
    Form S-1
    (File
    No. 033-02597).(8)
    
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended June 30, 1987.(9)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1991.(10)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 1997.(11)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2001.(12)
    
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended March 31, 2002.(13)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2003.(14)
    
    Companys Quarterly Report on
    Form 10-Q
    for the quarter ended September 30, 2002.(15)
    
    Companys Current Report on
    Form 8-K,
    dated May 25, 2004.(16)
    
    Companys Current Report on
    Form 10-Q,
    dated August 9, 2004.      Form 10-K.
  (17)
    
    Companys Annual Report on
    Form 10-K
    for the year ended December 31, 2005. 93




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##### Table of Contents



SIGNATURES
    
  By:
    /s/  Christopher
    G. Clement          Signature

Title

Date/s/  Christopher
    G. ClementChristopher
    G. Clement

President, Chief Executive
    Officer and Director

March 16, 2007/s/  Herbert
    ConradHerbert
    Conrad

Director

March 16, 2007/s/  Alan
    L. HellerAlan
    L. Heller

Director

March 16, 2007/s/  Stephen
    JaegerStephen
    Jaeger

Director

March 16, 2007/s/  Joseph
    Klein IIIJoseph
    Klein III

Director

March 16, 2007/s/  Lee
    S.
    Simon, M.D.Lee
    S. Simon, M.D.

Director

March 16, 2007/s/  David
    TendlerDavid
    Tendler

Director

March 16, 2007/s/  Virgil
    ThompsonVirgil
    Thompson

Director

March 16, 2007/s/  Faye
    WattletonFaye
    Wattleton

Director

March 16, 2007/s/  Brian
    J. HaydenBrian
    J. Hayden

Senior Vice President,
    Chief Financial Officer
    and Treasurer

March 16, 2007  94