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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For 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
 o
 
 Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE:




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TABLE OF CONTENTS
 PART I
    
    
    3ITEM 1. BUSINESS
    
    
    3OUR EXECUTIVE OFFICERS
    
    
    12ITEM 1A. RISK FACTORS
    
    
    14ITEM 2. PROPERTIES
    
    
    27ITEM 3. LEGAL PROCEEDINGS
    
    
    27ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    28PART II
    
    
    29ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    29ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
    
    
    31ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
    
    
    32ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    48ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    49Report 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 DISCLOSURE
    
    
    97ITEM 9A. CONTROLS AND PROCEDURES
    
    
    97ITEM 9B. OTHER INFORMATION
    
    
    97PART III
    
    
    98ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    98ITEM 11. EXECUTIVE COMPENSATION
    
    
    98ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    
    
    98ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
    
    
    98ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
    
    
    98PART IV
    
    
    98ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    98SIGNATURESEX-10.8: 1998 EMPLOYEE STOCK PURCHASE PLAN AMENDED AND RESTATEDEX-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
  2




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PART I
 
 ITEM 1. BUSINESS
 Overview
      ®
    3




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Pegloticase
       4




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Oxandrin and oxandrolone
    5




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Manufacturing, Supply and Distribution Arrangements
 Pegloticase
 BTG-Israel
  Diosynth RTP, Inc.
  NOF Corporation
  Enzon Pharmaceuticals
  6




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Mountain View Pharmaceuticals, Inc. and Duke University
   Oxandrin
  Oxandrolone
  Sales and Distribution
  Research and Development
  7




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Governmental Regulation
 Regulatory Compliance
    
    
    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, to establish the overall benefit-risk relationship of
the drug and to provide adequate information for the labeling of the drug.
   8




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New Legislation
  9




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Pricing Controls
  Patents and Proprietary Rights
     Pegloticase
  10




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Competition
   
    
    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,
    
    price,
    
    patent protection, and
    
    capabilities of partners with whom we may collaborate.
    Employees
  11




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Available Information
  http://www.savientpharma.com.
  
 OUR EXECUTIVE OFFICERS
  Name
    
    Age
    
    PositionsChristopher Clement
    
    
    52
    
    
    President and Chief Executive OfficerPhilip K. Yachmetz
    
    
    51
    
    
    Executive Vice President and Chief Business OfficerPaul Hamelin
    
    
    53
    
    
    Senior Vice President, Commercial OperationsBrian J. Hayden
    
    
    56
    
    
    Senior Vice President, Chief Financial Officer and
TreasurerZebulun D. Horowitz, M.D.
    
    
    56
    
    
    Senior Vice President, Chief Medical OfficerRobert Lamm
    
    
    53
    
    
    Senior Vice President, Quality and Regulatory
Affairs
 Christopher Clement
 Philip K. Yachmetz
 12




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Paul Hamelin
 Brian J. Hayden
 Zeb Horowitz, M.D.
 Robert Lamm, Ph.D.
 13




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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 pegloticase, 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.
 You should carefully consider the following risk factors, in addition to other
information included in this annual report on Form 10-K , in evaluating us and our
business. If any of the following risks occur, our business, financial condition and
operating results could be materially adversely affected. The following risk factors
restate and supersede the risk factors previously disclosed in Item 1A. of our
Annual Report on form 10-K for the year ended December 31, 2006 and our Quarterly
Reports on Form-10-Q for the quarters ended March 31, 2007, June 30, 2007 and September
30, 2007.
 Risks Relating to Our Business
 Our
company focuses primarily on the development of a single product, pegloticase.
If we are unable to complete the development of and commercialize Puricase, which we refer to as pegloticase, or if
we experience significant delays or unanticipated costs in doing so, our ability to
generate product revenue and our likelihood of success will be materially harmed.
   
    
    successfully completing the analysis of our Phase 3 clinical trial
results,
    
    successfully manufacturing drug supplies,
    
    receiving marketing approvals from the FDA and similar foreign regulatory
authorities,
    
    maintaining commercial manufacturing arrangements with third-party
manufacturers,
    
    launching commercial sales of the product, whether alone or in
collaboration with others,
    
    acceptance of the product in the medical community and with third-party
payers and consumers, and
    
    successfully completing future clinical trials.
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Pegloticase, 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.
    15




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
    
    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, which will not be known to us prior to our
pre-BLA meeting with the FDA in April 2008,
    
    regulators or institutional review boards may require that we hold,
suspend or terminate clinical research for various reasons, including a
finding that subjects are being exposed to an unacceptable health risk or
non-compliance with regulatory requirements,
    
    the cost of our clinical trials may be greater than we anticipate,
    
    we may encounter difficulties or delays in obtaining sufficient
quantities of clinical products 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,
    
    not obtain marketing approval before other companies are able to bring
competitive products to market, or
    
    be required to conduct post-approval clinical trials or registry studies.
  We may not be successful in establishing strategic alliances, which could
adversely affect the implementation of our strategic business plan.
   
    
    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 a steady supply of essential raw materials from
vendors.
 16




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Our
strategic business plan includes a licensing initiative to collaborate with
a partner for the development and commercialization of pegloticase outside the United
States and Canada. If we are not successful in our efforts to partner pegloticase, then
the full potential of pegloticase may not be realized.
  If we do not successfully recruit and train qualified sales and marketing
personnel and build a marketing and sales infrastructure, our ability to
independently launch and market pegloticase will be impaired. We will be required to
incur significant costs and devote significant efforts to establish a direct sales
force.
   Our
strategic business plan 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 product portfolio in this manner.
  
    
    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.
  17




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The full development and commercialization of pegloticase 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.
  .
 We incurred an operating loss from continuing operations for the year ended
December 31, 2007 and anticipate that we may incur operating losses from continuing
operations for the foreseeable future, particularly as a result of decreasing
Oxandrin sales, which in the past accounted for a significant portion of our
revenues. If we are unable to obtain regulatory approval for or commercialize
pegloticase or any other product candidates we may pursue, we may never achieve
operating profitability.
     18




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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.
  We rely on
third parties to conduct our clinical development activities for
pegloticase and those third parties may not perform satisfactorily.
   Manufacturing
our products requires us to meet stringent quality control and
quality assurance standards. In addition, we depend on third parties to manufacture
pegloticase and intend to rely on third parties to manufacture and supply any future
products. If these third-party manufacturers and suppliers, and particularly our
sole source supplier for pegloticase, fail to meet applicable regulatory requirements
or to supply us for any reason, our revenues and product development efforts may be
materially adversely affected.
  19




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
    
    reliance on the third-party for regulatory compliance and quality control
and 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.
   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.
    20




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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.
     Our sales depend on payment and reimbursement from third-party payers and a
reduction in the payment or reimbursement rate could result in decreased use or
sales of our products.
   21




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If we fail to attract and retain 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.
  Tax requirements and audits could impact our results of operations.
  22




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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.
   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.
   23




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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.
  
    
    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, our contract manufacturers, suppliers and contract research organizations,
are subject to stringent governmental regulation, and our or their failure to comply
with applicable regulations could adversely affect our ability to conduct our
business.
  24




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Recently enacted legislation may make it more difficult and costly for us to
obtain regulatory approval of our product candidates and to produce, market and
distribute products after approval.
   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.
 25




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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 payer 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.
  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.
   26




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ITEM 2. PROPERTIES
    
 ITEM 3. LEGAL PROCEEDINGS
 Intellectual Property-Related Litigation
    27




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Other Litigation
 In re Bio-Technology General Corp. Securities
Litigation
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  28




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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
    
    
    
    6.692007First Quarter
    
    $
    15.51
    
    
    $
    11.66Second Quarter
    
    
    14.48
    
    
    
    11.49Third Quarter
    
    
    15.44
    
    
    
    10.92Fourth Quarter
    
    
    23.70
    
    
    
    11.81
   29




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STOCK PERFORMANCE GRAPH
   COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 12/31/02 in stock or index-including reinvestment of dividends. 
Fiscal year ending December 31. 12/02
    
    
    6/03
    
    
    12/03
    
    
    6/04
    
    
    12/04
    
    
    6/05
    
    
    12/05
    
    
    6/06
    
    
    12/06
    
    
    6/07
    
    
    12/07Savient Pharmaceuticals, Inc.
    
    
    100.00
    
    
    
    145.89
    
    
    
    144.02
    
    
    
    77.48
    
    
    
    84.66
    
    
    
    137.77
    
    
    
    116.84
    
    
    
    164.01
    
    
    
    350.20
    
    
    
    388.00
    
    
    
    717.59S&P SmallCap 600
    
    
    100.00
    
    
    
    112.93
    
    
    
    138.79
    
    
    
    152.73
    
    
    
    170.22
    
    
    
    173.28
    
    
    
    183.30
    
    
    
    197.40
    
    
    
    211.01
    
    
    
    229.06
    
    
    
    210.38NASDAQ Composite
    
    
    100.00
    
    
    
    120.37
    
    
    
    149.34
    
    
    
    152.96
    
    
    
    161.86
    
    
    
    154.00
    
    
    
    166.64
    
    
    
    165.14
    
    
    
    186.18
    
    
    
    201.06
    
    
    
    205.48NASDAQ Pharmaceutical
    
    
    100.00
    
    
    
    136.86
    
    
    
    144.23
    
    
    
    149.37
    
    
    
    159.47
    
    
    
    138.14
    
    
    
    159.95
    
    
    
    153.20
    
    
    
    162.76
    
    
    
    156.57
    
    
    
    152.73NASDAQ Biotechnology
    
    
    100.00
    
    
    
    136.81
    
    
    
    146.39
    
    
    
    155.24
    
    
    
    163.20
    
    
    
    151.77
    
    
    
    184.87
    
    
    
    171.78
    
    
    
    182.56
    
    
    
    183.35
    
    
    
    184.28S & P SmallCap 600 Biotechnology
    
    
    100.00
    
    
    
    127.45
    
    
    
    159.33
    
    
    
    136.27
    
    
    
    125.88
    
    
    
    118.66
    
    
    
    119.66
    
    
    
    138.96
    
    
    
    155.00
    
    
    
    167.74
    
    
    
    229.86S & P SmallCap 600 Pharmaceuticals, Biotechnology & Life Sciences
    
    
    100.00
    
    
    
    123.10
    
    
    
    149.19
    
    
    
    160.03
    
    
    
    159.27
    
    
    
    146.11
    
    
    
    154.30
    
    
    
    159.52
    
    
    
    176.61
    
    
    
    197.51
    
    
    
    208.90
 30




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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
  Year Ended December 31, (1)2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except per share data)Statement of Operations Data:Product sales, net
    
    $
    13,825
    
    
    $
    47,351
    
    
    $
    48,043
    
    
    $
    59,401
    
    
    $
    68,909Other revenues
    
    
    199
    
    
    
    163
    
    
    
    1,452
    
    
    
    2,952
    
    
    
    5,048Total revenues
    
    
    14,024
    
    
    
    47,514
    
    
    
    49,495
    
    
    
    62,353
    
    
    
    73,957Cost of goods sold and expenses
    
    
    83,198
    
    
    
    64,519
    
    
    
    63,975
    
    
    
    81,969
    
    
    
    74,753Operating
loss from continuing operations
    
    
    (69,174
    )
    
    
    (17,005
    )
    
    
    (14,480
    )
    
    
    (19,616
    )
    
    
    (796
    )Other income (expense), net and
investment income
    
    
    8,212
    
    
    
    15,566
    
    
    
    14,157
    
    
    
    (734
    )
    
    
    105Income tax expense (benefit)
    
    
    (11,807
    )
    
    
    25
    
    
    
    146
    
    
    
    13,063
    
    
    
    (153
    )Loss from continuing operations
    
    
    (49,155
    )
    
    
    (1,464
    )
    
    
    (469
    )
    
    
    (33,413
    )
    
    
    (538
    )Income from discontinued operations
    
    
    487
    
    
    
    61,789
    
    
    
    6,437
    
    
    
    5,898
    
    
    
    12,992Net income (loss)
    
    $
    (48,668
    )
    
    $
    60,325
    
    
    $
    5,968
    
    
    $
    (27,515
    )
    
    $
    12,454Loss per common share from
continuing operations:Basic
    
    $
    (0.94
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.56
    )
    
    $
    (0.01
    )Diluted
    
    $
    (0.94
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )
    
    $
    (0.56
    )
    
    $
    (0.01
    )Earnings per common share from
discontinued operations:Basic
    
    $
    0.01
    
    
    $
    1.06
    
    
    $
    0.11
    
    
    $
    0.10
    
    
    $
    0.22Diluted
    
    $
    0.01
    
    
    $
    1.06
    
    
    $
    0.11
    
    
    $
    0.10
    
    
    $
    0.22Earnings (loss) per common share:Basic
    
    $
    (0.93
    )
    
    $
    1.03
    
    
    $
    0.10
    
    
    $
    (0.46
    )
    
    $
    0.21Diluted
    
    $
    (0.93
    )
    
    $
    1.03
    
    
    $
    0.10
    
    
    $
    (0.46
    )
    
    $
    0.21Weighted average number of common
and common equivalent shares:Basic
    
    
    52,461
    
    
    
    58,538
    
    
    
    60,837
    
    
    
    60,066
    
    
    
    59,194Diluted
    
    
    52,461
    
    
    
    58,538
    
    
    
    60,837
    
    
    
    60,066
    
    
    
    59,194
 
 (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. 31




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##### Table of Contents



As of December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands)Balance Sheet Data(2):Cash, cash equivalents
and short-term
investments
    
    $
    142,422
    
    
    $
    179,396
    
    
    $
    75,372
    
    
    $
    25,282
    
    
    $
    22,801Accounts receivable, net
    
    
    1,490
    
    
    
    3,517
    
    
    
    11,716
    
    
    
    25,078
    
    
    
    33,375Inventories, net
    
    
    2,636
    
    
    
    4,203
    
    
    
    9,419
    
    
    
    17,090
    
    
    
    18,622Total current assets
    
    
    158,934
    
    
    
    194,858
    
    
    
    105,863
    
    
    
    71,700
    
    
    
    84,180Goodwill
    
    
    
    
    
    
    
    
    
    
    40,121
    
    
    
    40,121
    
    
    
    40,121Other intangibles, net
    
    
    
    
    
    
    
    
    
    
    67,638
    
    
    
    71,688
    
    
    
    75,743Total assets
    
    
    167,173
    
    
    
    197,893
    
    
    
    222,691
    
    
    
    257,205
    
    
    
    290,747Total current liabilities
    
    
    19,184
    
    
    
    20,164
    
    
    
    20,866
    
    
    
    43,664
    
    
    
    48,806Long-term liabilities
    
    
    8,924
    
    
    
    43
    
    
    
    
    
    
    
    
    
    
    
    5,903Accumulated deficit
    
    
    (67,445
    )
    
    
    (14,316
    )
    
    
    (41,519
    )
    
    
    (47,487
    )
    
    
    (19,972
    )Stockholders equity
    
    
    139,065
    
    
    
    177,686
    
    
    
    181,394
    
    
    
    174,384
    
    
    
    199,389
 
 (2)
    
    Selected consolidated balance sheet data includes BTG-Israel and
Rosemont for year ends prior to their date of divestiture. 
 ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Overview
  ®
    ®
 32




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Discontinued Operations
   33




---



##### Table of Contents



Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Revenues from discontinued operations
    
    $
    
    
    
    $
    24,224
    
    
    $
    51,088Operating income from discontinued operations
    
    $
    
    
    
    $
    5,415
    
    
    $
    9,851Income from discontinued operations
    
    $
    487
    
    
    $
    61,789
    
    
    $
    6,437
      Critical Accounting Policies and Estimates
   Product revenue recognition. Revenue Recognition in Financial Statements
 34




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##### Table of Contents



Revenue Recognition When Right of Return Exists, or SFAS No. 48.
 
    
    persuasive evidence of an arrangement exists,
    
    delivery has occurred or services have been rendered,
    
    the sellers price to the buyer is fixed and determinable, and
    
    collectability is reasonably assured.
  
    
    the sellers price to the buyer is substantially fixed or determinable
at the date of sale,
    
    the buyer has paid and the obligation is not contingent on resale of
the product,
    
    the buyers obligation to the seller would not be changed in the event
of theft or physical destruction or damage of the product,
    
    the buyer acquiring the product for resale has economic substance
apart from that provided by the seller,
    
    the seller does not have significant obligations for future
performance to directly bring about resale of the product by the
buyer, and
    
    the amount of future returns can be reasonably estimated.
  Allowances for returns.
 Product
    
    Expiration (in years)Oxandrin and oxandrolone 2.5 mg
    
    
    5Oxandrin and oxandrolone 10 mg (1) (2)
    
    
    3 - 4Delatestryl (3)
    
    
    5
 
 (1)
    
    In 2006, we determined, based on our review of stability data, that
the Oxandrin 10 mg dosage form demonstrated stability over a
three-year shelf life and thus we modified the products label to
indicate a three-year expiration date. Product with three-year
expiration dating was first sold to our customers in May 2006.(2)
    
    In 2007, we determined, based on our review of stability data, that
the Oxandrin and oxandrolone 10 mg dosage form demonstrated stability
over a four-year shelf life and thus we modified the products label
to indicate a four-year expiration date. Oxandrolone product with
four-year expiration dating was first sold to our customers in August
2007. Oxandrin product with four-year expiration dating has not yet
been sold to our customers.(3)
    
    On January 9, 2006, we completed our 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. 35




---



##### Table of Contents




    
    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.
    
    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.
  
    
    the susceptibility of the product to significant external factors,
such as technological obsolescence or changes in demand,
    
    relatively long periods in which a particular product may be returned,
    
    absence of historical experience with similar types of sales of
similar products, or inability to apply such experience because of
changing circumstances, for example, changes in the selling enterprises
marketing policies or relationships with its customers, and
    
    absence of a large volume of relatively homogeneous transactions.
 36




---



##### Table of Contents




    
    significant increases in or excess levels of inventory in a
distribution channel,
    
    lack of visibility into or the inability to determine or observe the
levels of inventory in a distribution channel and the current level of
sales to end users,
    
    expected introductions of new products that may result in the
technological obsolescence of and larger than expected returns of current
products,
    
    the significance of a particular distributor to the registrants (or a
reporting segments) business, sales and marketing,
    
    the newness of a product,
    
    the introduction of competitors products with superior technology or
greater expected market acceptance, and
    
    other factors that affect market demand and changing trends in that
demand for the registrants products.
   Expense Provisions
    
    Actual DeductionsRelated toCurrent
    
    Related to
    
    
    
    
    
    Related toBalance
    
    Year
    
    Prior
    
    Related to
    
    Prior
    
    
    
    
    
    Balance atDescription
    
    Beginning of Period
    
    Sales
    
    Period Sales
    
    Current Year Sales
    
    Period Sales
    
    Other Deductions
    
    End of Period(In thousands)Allowance for sales
returns:2007
    
    $
    2,452
    
    
    
    115
    
    
    
    (308
    )
    
    
    
    
    
    
    (1,354
    )
    
    
    
    
    
    $
    9052006
    
    $
    2,888
    
    
    
    1,309
    
    
    
    1,065
    
    
    
    
    
    
    
    (2,810
    )
    
    
    
    
    
    $
    2,452
 Allowances for Medicaid and other government rebates.
 Expense Provisions
    
    Actual DeductionsRelated toCurrent
    
    Related to
    
    
    
    
    
    Related toBalance
    
    Year
    
    Prior
    
    Related to
    
    Prior
    
    
    
    
    
    Balance atDescription
    
    Beginning of Period
    
    Sales
    
    Period Sales
    
    Current Year Sales
    
    Period Sales
    
    Other Deductions
    
    End of Period(In thousands)Allowance for rebates:2007
    
    $
    1,253
    
    
    
    2,188
    
    
    
    (431
    )
    
    
    (1,001
    )
    
    
    (1,006
    )
    
    
    
    
    
    $
    1,0032006
    
    $
    2,491
    
    
    
    2,516
    
    
    
    (171
    )
    
    
    (1,263
    )
    
    
    (2,320
    )
    
    
    
    
    
    $
    1,253
 37




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##### Table of Contents



Inventory valuation.
   Share-Based
Compensation.
    38




---



##### Table of Contents



Research and development.
 Income taxes. Accounting for Uncertainty in Income Taxes, Accounting for Income Taxes
 Disclosures about Fair Values of Financial Instruments,
 Other-Than-Temporary Impairment Losses on Investments.
 39




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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 payer reimbursement policies for our
products,
    
    increased competition from new or existing products,
    
    the timing of the introduction of new products,
    
    the timing and amount of expenses relating to manufacturing
activities, and
    
    the extent and timing of costs of obtaining, enforcing and defending
intellectual property rights.
  Year Ended December 31,2007
    
    
    2006
    
    
    2005(Dollars in thousands)Oxandrin
    
    $
    8,425
    
    
    
    60.9
    %
    
    $
    46,965
    
    
    
    99.2
    %
    
    $
    44,405
    
    
    
    92.4
    %Oxandrolone(1)
    
    
    5,400
    
    
    
    39.1
    
    
    
    469
    
    
    
    1.0
    
    
    
    
    
    
    
    Delatestryl(2)
    
    
    
    
    
    
    
    
    
    
    (83
    )
    
    
    (0.2
    )
    
    
    3,638
    
    
    
    7.6$
    13,825
    
    
    
    100
    %
    
    $
    47,351
    
    
    
    100.0
    %
    
    $
    48,043
    
    
    
    100.0
    %
 
 (1)
    
    On December 29, 2006, we launched our authorized generic
of Oxandrin, which is distributed
through Watson.(2)
    
    On January 9, 2006, we completed the sale of Delatestryl to Indevus.  
    
    maintaining or increasing business with our existing products,
    
    expanding into new markets, and
    
    commercializing additional products.
   40




---



##### Table of Contents



Results of Operations for the Years Ended December 31, 2007 and December 31, 2006
 Revenues
    Cost of goods sold
  Research and development expenses
  Selling, general and administrative expenses
  Investment income
 
 Other income (expense)
  41




---



##### Table of Contents



Income tax expense
 
  Results of Operations for the Years Ended December 31, 2006 and December 31, 2005
 Revenues
       Cost of goods sold
  42




---



##### Table of Contents



Research and development expenses
  Selling, general and administrative expenses
  Commissions and royalties expenses
  Investment income
  Other income (expense), net
  Income tax expense
  43




---



##### Table of Contents



Liquidity and Capital Resources
  2007 Cash Flows
      2006 Cash Flows
    44




---



##### Table of Contents



Other Liquidity and Capital Resources
   
    
    continued progress in our research and development programs, particularly
with respect to pegloticase,
    
    the timing of, and the costs involved in, obtaining regulatory approvals,
including regulatory approvals for pegloticase, 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,
    
    the level of sales deterioration as a result of Oxandrin generic
competition,
    
    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.
   Subsequent Events
   45




---



##### Table of Contents



Payments Due by Period
 Less Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    Total
    
    
    One Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years(In thousands)Capital lease obligations
    
    $
    340
    
    
    $
    80
    
    
    $
    159
    
    
    $
    101
    
    
    $
    Operating lease obligations
    
    
    11,579
    
    
    
    2,197
    
    
    
    4,628
    
    
    
    4,232
    
    
    
    522Purchase
commitment obligations (1)
    
    
    14,396
    
    
    
    6,728
    
    
    
    7,668
    
    
    
    
    
    
    
    Other
Commitments (2)
    
    
    500
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    26,815
    
    
    $
    9,505
    
    
    $
    12,455
    
    
    $
    4,333
    
    
    $
    522
 
 (1)
    
    Purchase commitment obligations represent our contractually obligated
minimum purchase requirements based on our current manufacturing and
supply agreements in place with third parties. The table does not
include potential future purchase commitments for which the amounts
and timing of payments cannot be reasonably predicted.(2)
    
    Other commitments represent obligations related to potential
developmental milestone payments that we believe are probable to occur
during the pegloticase research and development process up through and
including regulatory submission. Developmental and sales based
milestone payments that occur upon or subsequent to regulatory
approval have not been included in the table due to the uncertainly of
achieving regulatory approval. In the event that pegloticase receives
regulatory approval, the resulting milestone payment obligation would
be approximately $0.8 million. If we successfully commercialize
pegloticase and achieve certain sales levels, sales based milestone
payments could reach approximately $1.8 million.   Off-Balance Sheet Arrangements
  46




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##### Table of Contents



Accounting Pronouncements Adopted
 Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements
 Accounting for Income Taxes
 Accounting Changes and Error
Corrections  A replacement of APB Opinion No. 20 and FASB Statement No. 3,
 Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
 Recently Issued Accounting Pronouncements
  47




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##### Table of Contents



Accounting for Collaborative Arrangements
 Fair Value
Measurements, ,
 Accounting
for Nonrefundable Advance Payments for Goods or Services to Be Used in Future
Research and Development Activities
 The Fair Value Option for
Financial Assets and Financial Liabilities
 
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  48




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Index to Consolidated Financial Statements
 PageReport of Management
    
    
    50Reports of Independent Registered Public Accounting Firms
    
    
    51-53Consolidated Financial Statements:Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    
    54Consolidated Statements of Operations for the years ended December 31, 2007, 2006 and 2005
    
    
    55Consolidated Statements of Changes in Stockholders Equity for the years ended
December 31, 2007, 2006 and 2005
    
    
    56Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2006 and 2005
    
    
    59Notes to Consolidated Financial Statements
    
    
    61Schedule II  Valuations and Qualifying Accounts
    
    
    96
 49




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##### Table of Contents



Report of Management
   
    
    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
    
    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
 Internal Control  Integrated
Framework
  50




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
       
 51




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
        
 52




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
      
 53




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##### Table of Contents



SAVIENT PHARMACEUTICALS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 December 31,
    
    
    December 31,2007
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    124,865
    
    
    $
    177,293Short-term investments ( including restricted investments)
    
    
    17,557
    
    
    
    2,103Accounts receivable, net
    
    
    1,490
    
    
    
    3,517Notes receivable
    
    
    644
    
    
    
    644Inventories, net
    
    
    2,636
    
    
    
    4,203Recoverable income taxes
    
    
    8,637
    
    
    
    Prepaid expenses and other current assets
    
    
    3,105
    
    
    
    7,098Total current assets
    
    
    158,934
    
    
    
    194,858Deferred income taxes, net
    
    
    3,558
    
    
    
    Property and equipment, net
    
    
    1,599
    
    
    
    1,139Other assets (including restricted cash and investments)
    
    
    3,082
    
    
    
    1,896Total assets
    
    $
    167,173
    
    
    $
    197,893LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable
    
    $
    3,758
    
    
    $
    4,552Deferred revenues
    
    
    1,298
    
    
    
    416Other current liabilities
    
    
    14,128
    
    
    
    15,196Total current liabilities
    
    
    19,184
    
    
    
    20,164Other liabilities
    
    
    8,924
    
    
    
    43Commitments 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 53,712,000 in 2007; 52,309,000 in 2006
    
    
    537
    
    
    
    523Additional paid in capital
    
    
    204,659
    
    
    
    189,496Accumulated deficit
    
    
    (67,445
    )
    
    
    (14,316
    )Accumulated other comprehensive income
    
    
    1,314
    
    
    
    1,983Total stockholders equity
    
    
    139,065
    
    
    
    177,686Total liabilities and stockholders equity
    
    $
    167,173
    
    
    $
    197,893
  54




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SAVIENT PHARMACEUTICALS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Revenues:Product sales, net
    
    $
    13,825
    
    
    $
    47,351
    
    
    $
    48,043Other revenues
    
    
    199
    
    
    
    163
    
    
    
    1,45214,024
    
    
    
    47,514
    
    
    
    49,495Cost and expenses:Cost of goods sold
    
    
    1,205
    
    
    
    8,506
    
    
    
    5,252Research and development
    
    
    50,870
    
    
    
    21,412
    
    
    
    16,980Selling, general and administrative
    
    
    31,123
    
    
    
    34,596
    
    
    
    36,649Commissions and royalties
    
    
    
    
    
    
    5
    
    
    
    5,09483,198
    
    
    
    64,519
    
    
    
    63,975Operating loss from continuing operations
    
    
    (69,174
    )
    
    
    (17,005
    )
    
    
    (14,480
    )Investment income
    
    
    8,755
    
    
    
    7,233
    
    
    
    776Other income (expense), net
    
    
    (543
    )
    
    
    8,333
    
    
    
    13,381Loss from continuing operations before income taxes
    
    
    (60,962
    )
    
    
    (1,439
    )
    
    
    (323
    )Income tax expense (benefit)
    
    
    (11,807
    )
    
    
    25
    
    
    
    146Loss from continuing operations
    
    
    (49,155
    )
    
    
    (1,464
    )
    
    
    (469
    )Income from discontinued operations, net of income taxes
(includes gain (loss) on sale of discontinued operations)
    
    
    487
    
    
    
    61,789
    
    
    
    6,437Net income (loss)
    
    $
    (48,668
    )
    
    $
    60,325
    
    
    $
    5,968Loss per common share from continuing operations:Basic
    
    $
    (0.94
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )Diluted
    
    $
    (0.94
    )
    
    $
    (0.03
    )
    
    $
    (0.01
    )Earnings per common share from discontinued operations:Basic
    
    $
    0.01
    
    
    $
    1.06
    
    
    $
    0.11Diluted
    
    $
    0.01
    
    
    $
    1.06
    
    
    $
    0.11Earnings (loss) per common share:Basic
    
    $
    (0.93
    )
    
    $
    1.03
    
    
    $
    0.10Diluted
    
    $
    (0.93
    )
    
    $
    1.03
    
    
    $
    0.10Weighted average number of common and common equivalent shares:Basic
    
    
    52,461
    
    
    
    58,538
    
    
    
    60,837Diluted
    
    
    52,461
    
    
    
    58,538
    
    
    
    60,837
  55




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'

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, 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
    
    
    $
    181,394
  56




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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, 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
  57




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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,
2006
    
    
    52,309
    
    
    $
    523
    
    
    $
    189,496
    
    
    $
    
    
    
    $
    (14,316
    )
    
    $
    1,983
    
    
    $
    177,686Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,668
    )
    
    
    
    
    
    
    (48,668
    )Unrealized loss on
marketable
securities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (669
    )
    
    
    (669
    )Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (49,337
    )Cumulative impact of
change in accounting
related to the
adoption of FIN 48
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,461
    )
    
    
    
    
    
    
    (4,461
    )Restricted stock grants
    
    
    633
    
    
    
    6
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1Amortization of
deferred compensation
    
    
    
    
    
    
    
    
    
    
    5,155
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,155Forfeiture of
restricted stock
grants
    
    
    (14
    )
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )Issuance of common
stock
    
    
    177
    
    
    
    2
    
    
    
    656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    658ESPP compensation
expense
    
    
    
    
    
    
    
    
    
    
    249
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249Stock option
compensation expense
    
    
    
    
    
    
    
    
    
    
    3,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,338Tax benefit of
share-based
compensation
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240Exercise of stock
options
    
    
    607
    
    
    
    6
    
    
    
    3,531
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,537Balance, December 31,
2007
    
    
    53,712
    
    
    $
    537
    
    
    $
    204,659
    
    
    $
    
    
    
    $
    (67,445
    )
    
    $
    1,314
    
    
    $
    139,065
  58




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SAVIENT PHARMACEUTICALS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net income (loss)
    
    $
    (48,668
    )
    
    $
    60,325
    
    
    $
    5,968Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities:Depreciation
    
    
    458
    
    
    
    1,433
    
    
    
    3,310Amortization of intangible assets
    
    
    
    
    
    
    2,417
    
    
    
    4,050Deferred income taxes
    
    
    (3,558
    )
    
    
    (755
    )
    
    
    (1,218
    )Unrecognized tax benefit liability
    
    
    4,240
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    4Gain on sale of Delatestryl
    
    
    
    
    
    
    (5,884
    )
    
    
    Proceeds from sale of trading securities
    
    
    
    
    
    
    1,129
    
    
    
    2,375Net realized (gains) losses
    
    
    (6
    )
    
    
    (520
    )
    
    
    289Loss on sales of fixed assets
    
    
    
    
    
    
    
    
    
    
    525Common stock issued as payment for services
    
    
    51
    
    
    
    135
    
    
    
    173Amortization of deferred compensation related to restricted
stock (including performance shares)
    
    
    5,155
    
    
    
    1,118
    
    
    
    282Stock option and ESPP compensation
    
    
    3,587
    
    
    
    1,343
    
    
    
    Changes in:Accounts receivables, net
    
    
    2,027
    
    
    
    2,343
    
    
    
    7,768Inventories, net
    
    
    1,567
    
    
    
    1,004
    
    
    
    1,489Recoverable income taxes
    
    
    (8,637
    )
    
    
    
    
    
    
    Prepaid expenses and other current assets
    
    
    3,993
    
    
    
    (7,577
    )
    
    
    (4,096
    )Accounts payable
    
    
    52
    
    
    
    (145
    )
    
    
    (2,688
    )Income taxes payable
    
    
    (846
    )
    
    
    552
    
    
    
    Other current liabilities
    
    
    (1,096
    )
    
    
    (268
    )
    
    
    (9,365
    )Deferred revenues
    
    
    882
    
    
    
    2,373
    
    
    
    (616
    )Net cash provided by (used in) operating activities
    
    
    (40,799
    )
    
    
    (18,726
    )
    
    
    8,250Cash flows from investing activities:Proceeds from the sale of oral liquid pharmaceutical business
    
    
    
    
    
    
    176,000
    
    
    
    Proceeds from sale of investment in Omrix
    
    
    
    
    
    
    
    
    
    
    1,625Proceeds from sale of global biologics manufacturing business
    
    
    
    
    
    
    
    
    
    
    51,844Proceeds from the collection of note receivable issued in
connection with the sale of global biologics manufacturing
business
    
    
    
    
    
    
    6,700
    
    
    
    Proceeds from sale of Delatestryl
    
    
    644
    
    
    
    5,531
    
    
    
    Purchases of available-for-sale securities (restricted)
    
    
    (20,140
    )
    
    
    
    
    
    
    Proceeds from sale of available-for-sale securities (restricted)
    
    
    1,785
    
    
    
    
    
    
    
    Proceeds from sales of available-for-sale securities
    
    
    436
    
    
    
    
    
    
    
    Capital expenditures
    
    
    (918
    )
    
    
    (2,679
    )
    
    
    (2,178
    )Severance pay funded
    
    
    
    
    
    
    
    
    
    
    (3,679
    )Changes in other long-term assets
    
    
    
    
    
    
    1,769
    
    
    
    1,697Net cash provided by (used in) investing activities
    
    
    (18,193
    )
    
    
    187,321
    
    
    
    49,309
  59




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SAVIENT PHARMACEUTICALS, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Cash flows from financing activities:Repurchase and retirement of common stock
    
    $
    
    
    
    $
    (69,317
    )
    
    $
    Repayment of long-term debt
    
    
    
    
    
    
    
    
    
    
    (5,903
    )Proceeds from issuance of common stock
    
    
    4,144
    
    
    
    1,771
    
    
    
    1,792Additional paid in capital excess tax benefit
    
    
    2,240
    
    
    
    296
    
    
    
    Changes in other long term liabilities
    
    
    180
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    6,564
    
    
    
    (67,250
    )
    
    
    (4,111
    )Effect of exchange rate changes
    
    
    
    
    
    
    767
    
    
    
    (714
    )Net increase (decrease) in cash and cash equivalents
    
    
    (52,428
    )
    
    
    102,112
    
    
    
    52,734Cash and cash equivalents at beginning of period
    
    
    177,293
    
    
    
    75,181
    
    
    
    22,447Cash and cash equivalents at end of period
    
    $
    124,865
    
    
    $
    177,293
    
    
    $
    75,181Supplementary InformationOther information:Income tax paid
    
    $
    139
    
    
    $
    23,847
    
    
    $
    4,352Interest paid
    
    $
    21
    
    
    $
    2
    
    
    $
    70
  60




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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






61



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##### Table of Contents



Translation of foreign currency
  Cash and cash equivalents
  Restricted cash
  Fair value of financial instruments
 Disclosures about
Fair Values of Financial Instruments,
 Investments
 , Accounting for Certain Investments
in Debt and Equity Securities,
 Restricted investments
   62




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##### Table of Contents



Other-Than-Temporary Impairment Losses on Investments.
  Accounts receivable, net
  Inventories, net
  Property and equipment, net of accumulated depreciation and amortization
  Intangible assets
  63




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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.
 
    
    a significant decrease in the market price of a long-lived asset (or asset
group),
    
    a significant adverse change in the extent or manner in which a long-lived
asset (or asset group) is being used or in its physical condition,
    
    a significant adverse change in legal factors or in the business climate
that could affect the value of a long-lived asset (or asset group), including
an adverse action or assessment by a regulator,
    
    an accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of a long-lived asset (or asset
group),
    
    a current-period operating or cash flow loss combined with a history of
operating or cash flow losses or a projection or forecast that demonstrates
continuing losses associated with the use of a long-lived asset (or asset
group), and
    
    a current expectation that, more likely than not, a long-lived asset (or
asset group) will be sold or otherwise disposed of significantly before the
end of its previously estimated useful life.
  Revenue recognition
 Product sales
 Revenue Recognition in Financial Statements, Revenue Recognition When Right of Return
Exists.
 
    
    persuasive evidence of an arrangement exists,
    
    delivery has occurred or services have been rendered,
    
    the sellers price to the buyer is fixed and determinable, and
    
    collectability is reasonably assured.
  
    
    the sellers price to the buyer is substantially fixed or determinable at
the date of sale,
    
    the buyer has paid the seller, or the buyer is obligated to pay the seller
and the obligation is not contingent on resale of the product,
    
    the buyers obligation to the seller would not be changed in the event of
theft or physical destruction or damage of the product,
    
    the buyer acquiring the product for resale has economic substance apart
from that provided by the seller,
    
    the seller does not have significant obligations for future performance to
directly bring about resale of the product by the buyer, and
    
    the amount of future returns can be reasonably estimated.
 64




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##### Table of Contents



Allowance for returns
 
    
    the susceptibility of the product to significant external factors, such as
technological obsolescence or changes in demand,
    
    relatively long periods in which a particular product may be returned,
    
    absence of historical experience with similar types of sales of similar
products, or inability to apply such experience because of changing
circumstances, for example, changes in the selling enterprises marketing
policies or relationships with its customers, and
    
    absence of a large volume of relatively homogeneous transactions.
  
    
    significant increases in or excess levels of inventory in a distribution
channel,
    
    lack of visibility into or the inability to determine or observe the
levels of inventory in a distribution channel and the current level of sales
to end users,
    
    expected introductions of new products that may result in the
technological obsolescence of and larger than expected returns of current
products,
    
    the significance of a particular distributor to the registrants (or a
reporting segments) business, sales and marketing,
    
    the newness of a product,
    
    the introduction of competitors products with superior technology or
greater expected market acceptance, and
    
    other factors that affect market demand and changing trends in that demand
for the registrants products.
   Allowances for Medicaid, other government rebates and other rebates
 Commercial discounts
 65




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##### Table of Contents



Distribution
fees
 Other revenues
   Share-based compensation
 Accounting for Stock Issued to Employees Accounting for Stock-Based
Compensation. Share-Based Payment
 Research and development
  Income taxes
  Accounting for Uncertainty in Income Taxes
  Accumulated other comprehensive income
  66




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Earnings (loss) per common share
 Earnings Per Share
  Year Ended December 31, 2007
    
    
    Year Ended December 31, 2006
    
    
    Year Ended December 31, 2005Per
    
    
    
    
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    
    
    
    
    PerIncome
    
    
    Shares
    
    
    Share
    
    
    Income
    
    
    Shares
    
    
    Share
    
    
    Income
    
    
    Shares
    
    
    Share(Numerator)
    
    
    (Denominator)
    
    
    Amounts
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amounts
    
    
    (Numerator)
    
    
    (Denominator)
    
    
    Amounts(In thousands, except per share data)Loss from
continuing
operations
    
    $
    (49,155
    )
    
    
    
    
    
    
    
    
    
    $
    (1,464
    )
    
    
    
    
    
    
    
    
    
    $
    (469
    )Basic EPSLoss from
continuing
operations
attributable to
common stock
    
    
    (49,155
    )
    
    
    52,461
    
    
    $
    (0.94
    )
    
    
    (1,464
    )
    
    
    58,538
    
    
    $
    (0.03
    )
    
    
    (469
    )
    
    
    60,837
    
    
    $
    (0.01
    )Effect of Dilutive
SecuritiesCommon stock
equivalents
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Diluted EPSLoss from
continuing
operations
attributable to
common stock and
common stock
equivalents
    
    $
    (49,155
    )
    
    
    52,461
    
    
    $
    (0.94
    )
    
    $
    (1,464
    )
    
    
    58,538
    
    
    $
    (0.03
    )
    
    $
    (469
    )
    
    
    60,837
    
    
    $
    (0.01
    )
  67




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##### Table of Contents



Use of estimates in preparation of financial statements
  Concentration of credit risk
  Accounting Pronouncements Adopted
 Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year Financial
Statements.
 Accounting for Uncertainty in Income Taxes Accounting for Income Taxes
 Accounting Changes and Error
Corrections  A replacement of APB Opinion No. 20 and FASB Statement No. 3
 68




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##### Table of Contents



Share-Based
Payment Accounting for Stock-Based
Compensation Accounting for
Stock Issued to Employees
 Recently Issued Accounting Pronouncements
  Accounting for Collaborative Arrangements
  Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in
Future Research and Development Activities
 69




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##### Table of Contents



Note 2  Investments
  2007Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)Equity Securities (1)
    
    $
    21
    
    
    $
    1,318
    
    
    $
    (4
    )
    
    $
    1,335Columbia Strategic Cash
Portfolio (restricted
short-term portion) (2)
    
    
    16,222
    
    
    
    
    
    
    
    
    
    
    
    16,222Total Short-term Investments
    
    
    16,243
    
    
    
    1,318
    
    
    
    (4
    )
    
    
    17,557Columbia Strategic Cash
Portfolio (restricted
long-term portion) (2)
    
    
    1,802
    
    
    
    
    
    
    
    
    
    
    
    1,802Total
    
    $
    18,045
    
    
    $
    1,318
    
    
    $
    (4
    )
    
    $
    19,359
 2006Gross
    
    
    GrossUnrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)Equity Securities (1)
    
    $
    120
    
    
    $
    1,983
    
    
    $
    
    
    
    $
    2,103
 
 (1)
    
    Equity securities are comprised of the Companys investments in shares of
Neuro-Hitech Pharmaceuticals, Inc and Antares Pharma, Inc. The fair values of these
investments are obtained from quoted prices in active markets.In 2003, the Company agreed to purchase up to an aggregate of $1.5 million in
Marco Hi-Tech JV, Ltd. (Marco) preferred stock and it acquired an option to
market Marcos Huperzine-A product candidate for the treatment of Alzheimers
disease. As of March 31, 2004, the Company had invested $1.0 million in Marco. In
the second quarter of 2004, the Company elected not to make the final $500,000
investment in Marco. As a result, the Companys holdings of Marco preferred stock
were converted into 654,112 shares of Marco common stock, or approximately 8% of
Marcos fully-diluted outstanding common stock, the option to market Huperzine-A
terminated and the Company wrote off its $1.0 million investment in Marco.On January 24, 2006, Marco entered into a merger agreement with Neurotech
Pharmaceuticals, Inc. which later changed its name to Neuro-Hitech, Inc.
(Neuro-Hitech). Pursuant to the terms of this merger agreement, each 70




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##### Table of Contents



share of Marco converted into .583033 common shares of Neuro-Hitech or
381,362 shares. Neuro-Hitech went public in February 2006 and trades on the Over
the Counter Bulletin Board. The Company has classified this investment as an
available for sale security as per SFAS No. 115, and the unrealized appreciation
of $1,983,000 was included in other comprehensive income within equity and does
not have an impact on cash flows from operations.(2)
    
    During the fourth quarter of 2007 the Company invested in the Columbia Strategic
Cash Portfolio (the portfolio) which is a privately offered investment fund designed
and managed for institutional investors seeking a higher yield potential relative to
most money market funds. During December 2007, Columbia Management (Columbia), a unit
of Bank of America (BOA), closed the portfolio to new investments and redemptions and
began an orderly liquidation and dissolution of the portfolios assets for distribution
to the unit holders, therefore restricting the Companys potential to invest in and
withdraw from the portfolio. Ninety percent of the Companys investment is expected to
be redeemed during 2008 with the remaining ten percent during 2009. At December 31, 2007, the
fair market value of the Companys investment in the portfolio was $18.0 million, $16.2
million and $1.8 million of which are classified in the Companys consolidated balance
sheets as restricted short-term investments and restricted other assets, respectively.
The Companys consolidated balance sheets did not contain restricted investments at
December 31, 2006.  Other-than-temporary impairments
    2007
    
    
    2006Net unrealized gains (losses) arising during the period
    
    $
    (663
    )
    
    $
    1,902Reclassification adjustment for (gains) losses included
in earnings
    
    
    (6
    )
    
    
    130Unrealized gains (losses) included in comprehensive income
    
    $
    (669
    )
    
    $
    2,032
 71




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##### Table of Contents



2007
    
    2006
    
    2005Proceeds
    
    $
    2,221
    
    
    $
    
    
    
    $
    Gross realized investment gains
    
    
    337
    
    
    
    
    
    
    
    Gross realized investment losses
    
    $
    21
    
    
    $
    
    
    
    $
    
 Note 3  Inventories
  December 31,2007
    
    
    2006(In thousands)Raw materials
    
    $
    2,875
    
    
    $
    4,501Work-in-process
    
    
    
    
    
    
    186Finished goods
    
    
    7,678
    
    
    
    7,821Inventory reserves
    
    
    (7,917
    )
    
    
    (8,305
    )Total
    
    $
    2,636
    
    
    $
    4,203
   72




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##### Table of Contents



Note 4  Property and Equipment, Net
 December 31,2007
    
    
    2006(In thousands)Office equipment
    
    $
    7,922
    
    
    $
    7,679Office equipment  capital leases
    
    
    313
    
    
    
    56Leasehold improvements
    
    
    1,536
    
    
    
    1,1849,771
    
    
    
    8,919Accumulated depreciation
    
    
    (8,172
    )
    
    
    (7,808
    )1,599
    
    
    
    1,111Construction in progress
    
    
    
    
    
    
    28Total
    
    $
    1,599
    
    
    $
    1,139
  Note 5  Other Current Liabilities
 December 31,2007
    
    
    2006(In thousands)Salaries and related expenses
    
    $
    3,419
    
    
    $
    2,541Allowance for returns
    
    
    905
    
    
    
    2,452Accrued taxes other than income
    
    
    1,688
    
    
    
    1,310Allowance for rebates
    
    
    1,077
    
    
    
    1,253Litigation, legal and professional fee accruals
    
    
    1,078
    
    
    
    1,194Purchase commitment accrual
    
    
    
    
    
    
    2,010Pegloticase manufacturing accrual
    
    
    1,799
    
    
    
    1,729Clinical research expense accrual
    
    
    2,824
    
    
    
    1,041Other
    
    
    1,338
    
    
    
    1,666Total
    
    $
    14,128
    
    
    $
    15,196
 Note 6  Discontinued Operations
   73




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##### Table of Contents



Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Revenues:Product sales, net
    
    $
    
    
    
    $
    24,181
    
    
    $
    48,067Other revenues
    
    
    
    
    
    
    43
    
    
    
    3,021
    
    
    
    24,224
    
    
    
    51,088Cost and expenses:Cost of goods sold
    
    
    
    
    
    
    8,403
    
    
    
    19,707Research and development
    
    
    
    
    
    
    1,996
    
    
    
    4,331Selling and marketing
    
    
    
    
    
    
    4,092
    
    
    
    7,014General and administrative
    
    
    
    
    
    
    1,901
    
    
    
    6,077Amortization of intangibles
    
    
    
    
    
    
    2,417
    
    
    
    4,050Commissions and royalties
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    18,809
    
    
    
    41,237Operating income from discontinued operations
    
    
    
    
    
    
    5,415
    
    
    
    9,851Other income (expense), net
    
    
    298
    
    
    
    507
    
    
    
    (81
    )Gain on disposition of Rosemont
    
    
    
    
    
    
    77,174
    
    
    
    Loss on disposition of BTG-Israel
    
    
    
    
    
    
    
    
    
    
    (4
    )Income from discontinued operations before income taxes
    
    
    298
    
    
    
    83,096
    
    
    
    9,766Income tax expense (benefit)
    
    
    (189
    )
    
    
    21,307
    
    
    
    3,329Income from discontinued operations
    
    $
    487
    
    
    $
    61,789
    
    
    $
    6,437
  74




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##### Table of Contents



Note 7  Other Liabilities
  2007
    
    
    2006(In thousands)Unrecognized tax benefit (1)
    
    $
    8,701
    
    
    $
    Capital leases (2)
    
    
    223
    
    
    
    43Total
    
    $
    8,924
    
    
    $
    43
 
 (1)
    
    See Note 15 to the Financial Statements for further discussion of unrecognized
tax benefits resulting from FIN 48.(2)
    
The Company maintains capital leases for office equipment used at its
corporate headquarters in East Brunswick, New Jersey. The leases range in
terms from thirty-six to sixty months and have been entered into between 2002
and December 31, 2007. Note 8  Commitments and Contingencies
     ($ in thousands)2008
    
    $
    1,8142009
    
    $
    1,8142010
    
    $
    1,8542011
    
    $
    1,8672012
    
    $
    1,8672013
    
    $
    467
  75




---



##### Table of Contents



In
re Bio-Technology General Corp. Securities Litigation
   76




---



##### Table of Contents



Note 9  Stockholders Equity
   Note 10  Share-Based Compensation
    77




---



##### Table of Contents



Year EndedDecember 31,2005(In thousands)Net income as reported
    
    $
    5,968Deduct:Total share-based compensation expense
determined under fair value based method
for all awards, net of related tax effects
    
    
    1,396Pro forma net income
    
    $
    4,572Income per share:Basic  as reported
    
    $
    0.10Basic  pro forma
    
    $
    0.08Diluted  as reported
    
    $
    0.10Diluted  pro forma
    
    $
    0.08
 78




---



##### Table of Contents



Stock Options
  Year Ended December 31,2007
    
    2006
    
    2005Weighted-average volatility
    
    
    61
    %
    
    
    64
    %
    
    
    64
    %Weighted-average risk-free interest rate
    
    
    4.6
    %
    
    
    4.7
    %
    
    
    4.1
    %Weighted average expected life in years
    
    
    6.0
    
    
    
    6.1
    
    
    
    7.0Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Weighted average grant date fair value
    
    $
    8.33
    
    
    $
    5.23
    
    
    $
    2.15
   79




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##### Table of Contents



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, 2006
    
    
    3,314
    
    
    $
    6.29
    
    
    
    7.29
    
    
    $
    17,136Granted
    
    
    446
    
    
    
    13.78Exercised
    
    
    (607
    )
    
    
    5.83Cancelled
    
    
    (137
    )
    
    
    9.87Outstanding at December 31, 2007
    
    
    3,016
    
    
    $
    7.33
    
    
    
    7.17
    
    
    $
    47,176Exercisable at December 31, 2007
    
    
    1,687
    
    
    $
    5.54
    
    
    
    6.03
    
    
    $
    29,409
   Number of
    
    
    Weighted Average GrantShares
    
    
    Date Fair Value(In thousands)Nonvested at December 31, 2006
    
    
    1,606
    
    
    $
    4.60Granted
    
    
    446
    
    
    
    8.34Vested
    
    
    (669
    )
    
    
    4.40Forfeited
    
    
    (54
    )
    
    
    2.59Nonvested at December 31, 2007
    
    
    1,329
    
    
    $
    6.04
  80




---



##### Table of Contents



Restricted Stock
  Number of
    
    
    Weighted Average GrantShares
    
    
    Date Fair Value(In thousands)Nonvested at December 31, 2006
    
    
    488
    
    
    $
    6.65Granted
    
    
    458
    
    
    
    14.41Vested
    
    
    (204
    )
    
    
    6.43Forfeited
    
    
    (14
    )
    
    
    9.88Nonvested at December 31, 2007
    
    
    728
    
    
    $
    11.54
  Restricted Stock Awards that Contain Performance or Market Conditions
 Performance Conditions
  81




---



##### Table of Contents



Market Conditions
   Interest Rate
    
    HistoricalTerm
    
    Volatility
    
    Cost ofPeriod
    
    Structure
    
    Calculation
    
    Equity2.00 years
    
    4.87 %
    
    46.35 %
    
    14.87 %
  Number of
    
    
    Weighted Average GrantShares
    
    
    Date Fair Value(In thousands)Nonvested at December 31, 2006
    
    
    369
    
    
    $
    8.35Granted
    
    
    417
    
    
    
    11.82Vested
    
    
    (175
    )
    
    
    4.67Forfeited
    
    
    
    
    
    
    Nonvested at December 31, 2007
    
    
    611
    
    
    $
    11.77
  82




---



##### Table of Contents



Employee Stock Purchase Plan
  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
 4 01(k) Profit-Sharing Plan
  Note 12  Investment Income, Net
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Interest and dividend income from cash equivalents
    
    $
    8,749
    
    
    $
    6,808
    
    
    $
    984Realized and unrealized gains on short-term investments
    
    
    337
    
    
    
    555
    
    
    
    80Realized and unrealized losses on short-term investments
    
    
    (331
    )
    
    
    (130
    )
    
    
    (288
    )Total investment income, net
    
    $
    8,755
    
    
    $
    7,233
    
    
    $
    776
 83




---



##### Table of Contents



Note 13  Other Income (Expense), Net
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Novo Nordisk settlement
    
    $
    
    
    
    $
    500
    
    
    $
    3,000Ross commission repayment
    
    
    
    
    
    
    1,300
    
    
    
    Gain on sale of Delatestryl
    
    
    
    
    
    
    5,884
    
    
    
    Receipt of Omrix shares
    
    
    
    
    
    
    575
    
    
    
    Mircette settlement
    
    
    
    
    
    
    
    
    
    
    10,619Other legal settlements
    
    
    
    
    
    
    
    
    
    
    43Other non-operating income (expenses)
    
    
    (543
    )
    
    
    74
    
    
    
    (281
    )Total other income (expense), net
    
    $
    (543
    )
    
    $
    8,333
    
    
    $
    13,381
     84




---



##### Table of Contents



Note 14  Concentrations
    Note 15  Income Taxes
   Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)CurrentState
    
    $
    (39
    )
    
    $
    (31
    )
    
    $
    402Federal
    
    
    (11,210
    )
    
    
    56
    
    
    
    (384
    )Foreign
    
    
    
    
    
    
    
    
    
    
    128(11,249
    )
    
    
    25
    
    
    
    146DeferredFederal
    
    
    (558
    )
    
    
    
    
    
    
    Income tax expense
(benefit) from
continuing
operations
    
    $
    (11,807
    )
    
    $
    25
    
    
    $
    146
   85




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##### Table of Contents



As of December 31,2007
    
    
    2006Assets
    
    
    Liabilities
    
    
    Assets
    
    
    Liabilities(In thousands)Net operating loss carryforward
    
    $
    1,547
    
    
    $
    
    
    
    $
    2,239
    
    
    $
    State NOL carryforward
    
    
    3,314
    
    
    
    
    
    
    
    399
    
    
    
    Valuation of securities
    
    
    425
    
    
    
    
    
    
    
    443
    
    
    
    Reserve for returns and discounts
    
    
    382
    
    
    
    
    
    
    
    1,003
    
    
    
    Inventories
    
    
    5,714
    
    
    
    
    
    
    
    4,280
    
    
    
    Research and experimental credits
    
    
    23,505
    
    
    
    
    
    
    
    752
    
    
    
    Deferred revenues
    
    
    537
    
    
    
    
    
    
    
    166
    
    
    
    Foreign tax credits
    
    
    2,958
    
    
    
    
    
    
    
    130
    
    
    
    Accrued amounts
    
    
    693
    
    
    
    
    
    
    
    1,159
    
    
    
    Depreciation
    
    
    149
    
    
    
    
    
    
    
    103
    
    
    
    Employee based compensation
    
    
    2,861
    
    
    
    
    
    
    
    730
    
    
    
    Prepaids
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    State Tax Reserves
    
    
    1,561
    
    
    
    
    
    
    
    
    
    
    
    Bad debt allowance
    
    
    85
    
    
    
    
    
    
    
    
    
    
    
    State credits
    
    
    26
    
    
    
    
    
    
    
    375
    
    
    
    Other
    
    
    939
    
    
    
    
    
    
    
    
    
    
    
    (4
    )$
    44,696
    
    
    $
    (167
    )
    
    $
    11,779
    
    
    $
    (4
    )Valuation allowance
    
    
    (40,971
    )
    
    
    
    
    
    
    (11,775
    )
    
    
    Total deferred income tax assets/(liabilities)
    
    
    3,725
    
    
    
    (167
    )
    
    
    4
    
    
    
    (4
    )Net deferred income tax asset*
    
    $
    3,558
    
    
    
    
    
    
    $
    
 
 *
    
    As of December 31, 2007, $3.0 million of the net deferred tax asset is not
being recognized due to the recording of an unrecognized tax benefit reserve. 86




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##### Table of Contents



Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Income tax at US statutory rate
    
    $
    (21,337
    )
    
    $
    (503
    )
    
    $
    (110
    )State and local income taxes (net of federal benefit)
    
    
    (25
    )
    
    
    (20
    )
    
    
    265Non-deductible expenses
    
    
    382
    
    
    
    49
    
    
    
    82Research and experimental credits
    
    
    (13,454
    )
    
    
    
    
    
    
    Foreign taxes (net of foreign tax credits)
    
    
    (1,863
    )
    
    
    
    
    
    
    130State NOL and tax credits
    
    
    (3,046
    )
    
    
    
    
    
    
    Benefit for unrecognized tax benefits
    
    
    (1,561
    )
    
    
    
    
    
    
    Current year operations without tax benefit
    
    
    
    
    
    
    
    
    
    
    189Change in valuation allowance
    
    
    29,196
    
    
    
    529
    
    
    
    Effects of tax rate change
    
    
    
    
    
    
    (164
    )
    
    
    Provision for and settlement of tax examinations
    
    
    
    
    
    
    (27
    )
    
    
    (386
    )Employee share based compensation
    
    
    
    
    
    
    172
    
    
    
    Other
    
    
    (99
    )
    
    
    (11
    )
    
    
    (24
    )Income tax expense (benefit) from continuing operations
    
    $
    (11,807
    )
    
    $
    25
    
    
    $
    146
     87




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##### Table of Contents



Accounting for Uncertainty
in Income Taxes, Accounting for Income Taxes
    ($ in thousands)Unrecognized Tax Benefits  January 1, 2007
    
    $
    4,586Increases related to tax positions in prior period
    
    
    2,901Decreases related to tax positions in prior period
    
    
    (386
    )Increases related to tax positions in current period
    
    
    1,600Settlements
    
    
    Lapse of statute of limitations
    
    
    Unrecognized Tax Benefits  December 31, 2007
    
    $
    8,701
  88




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##### Table of Contents



Note 16  Segment Information
     Year Ended December 31, 2007Specialty
    
    
    DiscontinuedPharmaceutical
    
    
    Operations
    
    
    Total(In thousands)Revenues
    
    $
    14,024
    
    
    
    
    
    
    $
    14,024Operating loss before depreciation and amortization
    
    
    (68,716
    )
    
    
    
    
    
    
    (68,716
    )Less:Depreciation and amortization
    
    
    458
    
    
    
    
    
    
    
    458Operating loss as reported
    
    
    (69,174
    )
    
    
    
    
    
    
    (69,174
    )Other income, net
    
    
    8,212
    
    
    
    
    
    
    
    8,212Income tax benefit
    
    
    11,807
    
    
    
    
    
    
    
    11,807Loss from continuing operations
    
    
    (49,155
    )
    
    
    
    
    
    
    (49,155
    )Income from discontinued operations
    
    
    
    
    
    
    487
    
    
    
    487Net income (loss)
    
    $
    (49,155
    )
    
    
    487
    
    
    $
    (48,668
    )Segment assets
    
    $
    167,173
    
    
    
    
    
    
    $
    167,173Expenditures for segment assets
    
    $
    918
    
    
    
    
    
    
    $
    918
 89




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##### Table of Contents



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
 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
  90




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##### Table of Contents



Note 17  Quarterly Data (Unaudited)
  Quarter Ended March 31,2007
    
    
    2006(In thousands, except pershare data)Revenues:Product sales, net
    
    $
    6,381
    
    
    $
    9,503Other revenues
    
    
    45
    
    
    
    6,426
    
    
    
    9,503Cost and expenses:Cost of goods sold
    
    
    (356
    )
    
    
    858Research and development
    
    
    12,824
    
    
    
    3,248Selling general and administrative
    
    
    7,421
    
    
    
    10,740Commissions and royalties
    
    
    
    
    
    
    119,889
    
    
    
    14,847Operating loss from continuing operations
    
    
    (13,463
    )
    
    
    (5,344
    )Investment income, net
    
    
    2,370
    
    
    
    890Other income (expense), net
    
    
    (166
    )
    
    
    7,832Income (loss) from continuing operations before income taxes
    
    
    (11,259
    )
    
    
    3,378Income tax expense (benefit)
    
    
    (3,417
    )
    
    
    39Income (loss) from continuing operations
    
    
    (7,842
    )
    
    
    3,339Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    639Net income (loss)
    
    $
    (7,842
    )
    
    $
    3,978Earnings (loss) per common share from continuing operations:Basic
    
    $
    (0.15
    )
    
    $
    0.05Diluted
    
    $
    (0.15
    )
    
    $
    0.05Earnings per common share from discontinued operations:Basic
    
    $
    
    
    
    $
    0.01Diluted
    
    $
    
    
    
    $
    0.01Earnings (loss) per common share:Basic
    
    $
    (0.15
    )
    
    $
    0.06Diluted
    
    $
    (0.15
    )
    
    $
    0.06Weighted average number of common and common equivalent shares:Basic
    
    
    51,997
    
    
    
    61,212Diluted
    
    
    51,997
    
    
    
    62,107
 91




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##### Table of Contents



Quarter EndedJune 30,2007
    
    
    2006(1)(In thousands, except pershare data)Revenues:Product sales, net
    
    $
    3,098
    
    
    $
    13,760Other revenues
    
    
    31
    
    
    
    1003,129
    
    
    
    13,860Cost and expenses:Cost of goods sold
    
    
    645
    
    
    
    1,361Research and development
    
    
    11,194
    
    
    
    4,166Selling, general and administrative
    
    
    7,108
    
    
    
    8,539Commissions and royalties
    
    
    
    
    
    
    418,947
    
    
    
    14,070Operating loss from continuing operations
    
    
    (15,818
    )
    
    
    (210
    )Investment income, net
    
    
    2,300
    
    
    
    916Other income (expense), net
    
    
    (165
    )
    
    
    465Income (loss) from continuing operations before income taxes
    
    
    (13,683
    )
    
    
    1,171Income tax benefit
    
    
    (4,050
    )
    
    
    (35
    )Income (loss) from continuing operations
    
    
    (9,633
    )
    
    
    1,206Income from discontinued operations, net of income taxes
    
    
    
    
    
    
    2,036Net income (loss)
    
    $
    (9,633
    )
    
    $
    3,242Earnings (loss) per common share from continuing operations:Basic
    
    $
    (0.18
    )
    
    $
    0.02Diluted
    
    $
    (0.18
    )
    
    $
    0.02Earnings per common share from discontinued operations:Basic
    
    $
    
    
    
    $
    0.03Diluted
    
    $
    
    
    
    $
    0.03Earnings (loss) per common share:Basic
    
    $
    (0.18
    )
    
    $
    0.05Diluted
    
    $
    (0.18
    )
    
    $
    0.05Weighted average number of common and common equivalent shares:Basic
    
    
    52,419
    
    
    
    61,358Diluted
    
    
    52,419
    
    
    
    62,456
 92




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##### Table of Contents



Quarter EndedSeptember 30,2007
    
    
    2006(1)(In thousands, except pershare data)Revenues:Product sales, net
    
    $
    2,532
    
    
    $
    15,889Other revenues
    
    
    48
    
    
    
    322,580
    
    
    
    15,921Cost and expenses:Cost of goods sold
    
    
    
    
    
    
    1,351Research and development
    
    
    12,135
    
    
    
    5,519Selling, general and administrative
    
    
    6,782
    
    
    
    7,464Commissions and royalties
    
    
    
    
    
    
    18,917
    
    
    
    14,334Operating income (loss) from continuing operations
    
    
    (16,337
    )
    
    
    1,587Investment income, net
    
    
    2,159
    
    
    
    2,820Other expense, net
    
    
    (93
    )
    
    
    (28
    )Income (loss) from continuing operations before income taxes
    
    
    (14,271
    )
    
    
    4,379Income tax expense
    
    
    294
    
    
    
    1,022Income (loss) from continuing operations
    
    
    (14,565
    )
    
    
    3,357Income from discontinued operations, net of income taxes(2)
    
    
    
    
    
    
    58,512Net income (loss)
    
    $
    (14,565
    )
    
    $
    61,869Earnings (loss) per common share from continuing operations:Basic
    
    $
    (0.28
    )
    
    $
    0.06Diluted
    
    $
    (0.28
    )
    
    $
    0.05Earnings per common share from discontinued operations:Basic
    
    $
    
    
    
    $
    0.96Diluted
    
    $
    
    
    
    $
    0.96Earnings (loss) per common share:Basic
    
    $
    (0.28
    )
    
    $
    1.02Diluted
    
    $
    (0.28
    )
    
    $
    1.01Weighted average number of common and common equivalent shares:Basic
    
    
    52,603
    
    
    
    60,433Diluted
    
    
    52,603
    
    
    
    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 year ended December 31, 2006.(2)
    
    Income from discontinued operations for the year ended December 31,
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. 93




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Quarter Ended December 31,2007
    
    
    2006(In thousands, except pershare data)Revenues:Product sales, net
    
    $
    1,814
    
    
    $
    8,199Other revenues
    
    
    75
    
    
    
    311,889
    
    
    
    8,230Cost and expenses:Cost of goods sold
    
    
    917
    
    
    
    4,936Research and development
    
    
    14,716
    
    
    
    8,479Selling, general and administrative
    
    
    9,812
    
    
    
    7,853Commissions and royalties
    
    
    
    
    
    
    25,445
    
    
    
    21,268Operating loss from continuing operations
    
    
    (23,556
    )
    
    
    (13,038
    )Investment income, net
    
    
    1,926
    
    
    
    2,607Other income (expense), net
    
    
    (119
    )
    
    
    64Loss from continuing operations before income taxes
    
    
    (21,749
    )
    
    
    (10,367
    )Income tax benefit
    
    
    (4,634
    )
    
    
    (1,001
    )Loss from continuing operations
    
    
    (17,115
    )
    
    
    (9,366
    )Income from discontinued operations, net of income taxes
    
    
    487
    
    
    
    602Net loss
    
    $
    (16,628
    )
    
    $
    (8,764
    )Loss per common share from continuing operations:Basic
    
    $
    (0.32
    )
    
    $
    (0.18
    )Diluted
    
    $
    (0.32
    )
    
    $
    (0.18
    )Earnings per common share from discontinued operations:Basic
    
    $
    0.01
    
    
    $
    0.01Diluted
    
    $
    0.01
    
    
    $
    0.01Loss per common share:Basic
    
    $
    (0.31
    )
    
    $
    (0.17
    )Diluted
    
    $
    (0.31
    )
    
    $
    (0.17
    )Weighted average number of common and common equivalent shares:Basic
    
    
    52,815
    
    
    
    51,774Diluted
    
    
    52,815
    
    
    
    51,774
 94




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Note 18  Subsequent Events
   95




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SAVIENT PHARMACEUTICALS, INC.
 
 Schedule II  Valuation and Qualifying Accounts
 Balance atBeginning
    
    Charged to
    
    Charged
    
    
    
    
    
    Balance atof
    
    Costs and
    
    to other
    
    
    
    
    
    End ofDescription
    
    Period
    
    Expenses
    
    Accounts
    
    Deductions
    
    Period(In thousands)Allowance for inventory obsolescence2007
    
    $
    8,305
    
    
    $
    67
    
    
    $
    
    
    
    $
    (455
    )
    
    $
    7,9172006
    
    
    7,740
    
    
    
    2,657
    
    
    
    (346
    )
    
    
    (1,746
    )
    
    
    8,3052005
    
    
    6,059
    
    
    
    1,805
    
    
    
    
    
    
    
    (124
    )
    
    
    7,740Allowance for sales returns(1)2007
    
    
    2,452
    
    
    
    (193
    )
    
    
    
    
    
    
    (1,354
    )
    
    
    9052006
    
    
    2,888
    
    
    
    2,374
    
    
    
    
    
    
    
    (2,810
    )
    
    
    2,4522005
    
    
    3,259
    
    
    
    1,808
    
    
    
    
    
    
    
    (2,179
    )
    
    
    2,888Allowance for rebates(1)2007
    
    
    1,253
    
    
    
    1,895
    
    
    
    (138
    )
    
    
    (2,007
    )
    
    
    1,0032006
    
    
    2,491
    
    
    
    2,345
    
    
    
    
    
    
    
    (3,583
    )
    
    
    1,2532005
    
    
    3,360
    
    
    
    5,514
    
    
    
    
    
    
    
    (6,383
    )
    
    
    2,491Allowance for doubtful accounts2007
    
    
    1,036
    
    
    
    175
    
    
    
    (699
    )
    
    
    (306
    )
    
    
    2062006
    
    
    1,062
    
    
    
    468
    
    
    
    (435
    )
    
    
    (59
    )
    
    
    1,0362005
    
    
    500
    
    
    
    769
    
    
    
    
    
    
    
    (207
    )
    
    
    1,062Valuation allowance  Deferred
income taxes short-term2007
    
    
    6,005
    
    
    
    (1024
    )
    
    
    
    
    
    
    
    
    
    
    4,9812006
    
    
    5,446
    
    
    
    559
    
    
    
    
    
    
    
    
    
    
    
    6,0052005
    
    
    9,092
    
    
    
    (3,646
    )
    
    
    
    
    
    
    
    
    
    
    5,446Valuation allowance  Deferred
income taxes long term2007
    
    
    5,770
    
    
    
    30,219
    
    
    
    
    
    
    
    
    
    
    
    35,9892006
    
    
    17,194
    
    
    
    (11,424
    )
    
    
    
    
    
    
    
    
    
    
    5,7702005
    
    
    14,100
    
    
    
    3,094
    
    
    
    
    
    
    
    
    
    
    
    17,194
 
 (1)
    
    Included within other current liabilities in the Companys consolidated balance sheets. 96




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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). Evaluation of Disclosure Controls and Procedures
   (b). Managements Report On Internal Control Over Financial Reporting
 (located within Item 8).
 (c). Changes in Internal Control Over Financial Reporting
  (d). Report of Independent Registered Accounting Firm
 (located within Item 8).
 
 ITEM 9B. OTHER INFORMATION
  97




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Directors
   Executive Officers
 ur Executive Officers
 Section 16(a) Compliance
  Code of Ethics
   
 ITEM 11. EXECUTIVE COMPENSATION
 .
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
  
 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
   98




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##### Table of Contents



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)4.1
    
    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)
 99




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##### Table of Contents



ExhibitNo.
    
    Description10.16
    
    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.*(18)10.19
    
    Form of Savient Pharmaceuticals, Inc. Senior Management Incentive Stock Option Agreement. *(18)10.20
    
    Form of Savient Pharmaceuticals, Inc. Senior Management Non-Qualified Stock Agreement. *(18)10 .21
    
    Form of Savient Pharmaceuticals, Inc. Senior Management Restricted Stock Agreement. *(18)10.22
    
    Form of Savient Pharmaceuticals, Inc. Senior Management Performance Share Agreement. *(18)10.23
    
    Form of Savient Pharmaceuticals, Inc. Board of Directors Non-Qualified Stock Agreement. *(18)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. *(18)10.25++
    
    Supply Agreement, dated as of June 12, 2006, by and between Watson Pharma Inc. and Savient Pharmaceuticals, Inc. *(18)21.1
    
    Subsidiaries of Savient Pharmaceuticals, Inc.23.1
    
    Consent of Grant Thornton LLP.23.2
    
    Consent of McGladrey & Pullen LLP.
 100




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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. (17)
    
    Companys Annual Report on Form 10-K for the year ended December 31, 2005.(18)
    
    Companys Annual Report on Form 10-K for the year ended December 31, 2006.
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##### Table of Contents



SIGNATURES
  SAVIENT PHARMACEUTICALS, INC.(Registrant)By: /s/ Christopher G. ClementChristopher G. ClementPresident and Chief Executive Officer(Principal Executive Officer)
   Signature
    
    Title
    
    Date/s/ Christopher G. Clement
    
    President, Chief Executive
    
    March 14, 2008Christopher G. Clement
    
    Officer and Director/s/ Herbert Conrad
    
    Director
    
    March 14, 2008Herbert Conrad/s/ Alan L. Heller
    
    Director
    
    March 14, 2008Alan L. Heller/s/ Stephen Jaeger
    
    Director
    
    March 14, 2008Stephen Jaeger/s/ Joseph Klein III
    
    Director
    
    March 14, 2008Joseph Klein III/s/ Lee S. Simon, M.D.
    
    Director
    
    March 14, 2008Lee S. Simon, M.D./s/ Virgil Thompson
    
    Director
    
    March 14, 2008Virgil Thompson/s/ Brian J. Hayden
    
    Senior Vice President,
    
    March 14, 2008Brian J. Hayden
    
    Chief Financial Officerand Treasurer