Our certificate of incorporation also authorizes us to issue up
to 4 million shares of preferred stock in one or more
different series with terms fixed by our board of directors.
Stockholder approval is not necessary to issue preferred stock
in this manner. Issuance of these shares of preferred stock
could have the effect of making it more difficult for a person
or group to acquire control of us. No shares of our preferred
stock are currently outstanding. While our board of directors
has no current intention or plan to issue any preferred stock,
issuance of these shares could also be used as an anti-takeover
device.
ITEM 2.
PROPERTIES
Our corporate headquarters are located in East Brunswick, New
Jersey, where we lease approximately 53,000 square feet of
office space. The lease expires in March 2013 and has two
five-year renewal options. Effective as of March 1, 2006,
we have subleased approximately 12,400 square feet of our
corporate headquarters office space for an initial term of
5 years, terminable after 3 years at the option of the
subtenant.
We also lease an office in San Diego, California which is
utilized for research and development purposes. We lease this
office space on an annual basis at a base annual rental expense
of $10,200. The lease expires on May 1, 2007 with an option
to extend the term available for an additional one year period.
The extended term would renew at the current base rent plus a
seven percent increase.
ITEM 3.
LEGAL
PROCEEDINGS
Patent
Related Litigation
We are aware of patent applications filed by, or patents issued
to, other entities with respect to technology potentially useful
to us and, in some cases, related to products and processes
being developed by us. We cannot presently assess the effect, if
any, that these patents may have on our operations. The extent
to which efforts by other researchers have resulted or will
result in patents and the extent to which the issuance of
patents to others would have a materially adverse effect on us
or would force us to obtain licenses from others is currently
unknown. See “Item 1A. Risk Factors — Risks
Relating to Intellectual Property” for further discussion.
On September 26, 2006, the Company filed a lawsuit against
Barr Laboratories, Inc. (“Barr”), a wholly-owned
subsidiary of Barr Pharmaceuticals, Inc., for infringement of
certain of the Company’s patents related to various methods
of using Oxandrin. The action is pending under the caption
Savient Pharmaceuticals, Inc. v. Barr Laboratories,
Inc.
in the U.S. District Court for the District of New
Jersey. The suit was brought under the Hatch-Waxman Act in
response to Barr’s filing of an Abbreviated New Drug
Application with the FDA seeking approval to engage in the
commercial manufacture, use and sale of specified dosages of
oxandrolone tablets prior to expiration of the Company’s
patents, all of which are listed in Approved Drug Products with
Therapeutic Equivalence Evaluations for Oxandrin. Subsequent to
this, in February 2007 Barr notified us that they amended their
ANDA to carve out of their proposed labeling uses for the
generic oxandrolone tablet intending to avoid the particular
uses covered by our method of use. As a result, we have agreed
to dismiss the action without prejudice at this time.
On December 1, 2006, the Food and Drug Administration
denied two Citizens Petitions filed by us, which had been
pending since February 2004 and September 2005, requesting that
the Commissioner of Food and Drugs not approve any abbreviated
new drug applications (“ANDAs”) for generic oral
products containing oxandrolone until (i) agency adopted
bioequivalence standards and a requirement for any generic
product to have completed a trial determining whether it may
safely be used by patients who take the prescription blood
thinner warfarin are satisfied and (ii) prior to the
expiration of our exclusive labeling for geriatric dosing of
Oxandrin on June 20, 2008. Also on December 1, 2006,
the FDA approved the ANDAs previously filed by Sandoz for
2.5 mg and 10 mg, and Upsher-Smith for 2.5 mg,
dosage forms of generic oral products containing oxandrolone.
Following the FDA’s actions, on December 4, 2006 we
filed a lawsuit in the U.S. District Court for the District
of New Jersey (the “District Court”) against Sandoz
Pharmaceuticals Corp. (“Sandoz”) and Upsher-Smith
Laboratories, Inc. (“Upsher”) claiming that their
generic oxandrolone products infringe our patents
related to various methods of using Oxandrin. We also filed a
motion seeking a temporary restraining order and preliminary
injunction to restrain Sandoz and Upsher from marketing and
selling their generic formulations of Oxandrin. On
December 12, 2006 the United States Court of Appeals for
the Federal Circuit in Washington, D.C. (the “Federal
Circuit”) issued an order temporarily enjoining all sales
of generic oxandrolone tablets by Sandoz and Upsher-Smith until
the Federal Circuit had the opportunity to review this matter.
The order was issued by the Federal Circuit as a result of an
appeal filed that same day by us of the order on December 8 of
the District Court lifting its December 4 restraining order. On
December 28, 2006 the Court of Appeals denied our motion
for a preliminary injunction. Following this, we launched an
authorized generic of oxandrolone tablets, (USP) C-III, an
Oxandrin-brand equivalent product in both the 2.5 mg and
10 mg dosages in December 2006 which is distributed by
Watson Pharmaceuticals. The launch of oxandrolone is in response
to generic competition to Oxandrin from Sandoz and Upsher-Smith.
In the interim we filed a petition for reconsideration with the
FDA regarding their rejection of our citizen petitions on the
basis that FDA failed to adequately consider the significant
safety and legal issues raised by permitting approval of generic
oxandrolone drug products without the inclusion of labels that
contain full geriatric dosing and safety information. We have
not received a decision or other communication regarding this
petition for reconsideration to date.
Non-Patent
Related Litigation
On December 20, 2002, a purported shareholder class action
was filed against the Company and three of its former officers.
The action was pending under the caption
In re Bio-Technology
General Corp. Securities Litigation
, in the
U.S. District Court for the District of New Jersey.
Plaintiff alleged violations of Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and sought unspecified
compensatory damages. The plaintiff purported to represent a
class of shareholders who purchased shares of the Company
between April 19, 1999 and August 2, 2002. The
complaint asserted that certain of the Company’s financial
statements were materially false and misleading because the
Company restated its earnings and financial statements for the
years ended 1999, 2000 and 2001, as described in the
Company’s Current Report on
Form 8-K
dated, and its press release issued, on August 2, 2002.
Five nearly identical actions were filed in January and February
2003, in each instance claiming unspecified compensatory
damages. In September 2003, the actions were consolidated and
co-lead plaintiffs and co-lead counsel were appointed in
accordance with the Private Securities Litigation Reform Act.
The parties subsequently entered into a stipulation which
provided for the lead plaintiff to file an amended consolidated
complaint. Plaintiffs filed such amended complaint and the
Company filed a motion to dismiss the action. On August 10,
2005, citing the failure of the amended complaint to set forth
particularized facts that give rise to a strong inference that
the defendants acted with the required state of mind, the Court
granted the Company’s motion to dismiss the action without
prejudice and granted plaintiffs leave to file an amended
complaint. On October 11, 2005, the plaintiffs filed a
second amended complaint, again seeking unspecified compensatory
damages, purporting to set forth particularized facts to support
their allegations of violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 by the Company and its
former officers. On December 13, 2005, the Company filed a
motion to dismiss the second amended complaint. On
October 26, 2006, the United States District Court for the
District of New Jersey dismissed, with prejudice, the second
amended complaint. The district court declined to allow
plaintiffs to file another amended complaint. The plaintiffs
have filed an appeal in the United States Court of Appeals for
the Third Circuit, which is currently pending. We intend to
contest the appeal vigorously. We have referred these claims to
our directors and officers insurance carrier, which has reserved
its rights as to coverage with respect to this action.
From time to time we become subject to legal proceedings and
claims in the ordinary course of business. Such claims, even if
without merit, could result in the significant expenditure of
our financial and managerial resources.
ITEM 4.
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the
fourth quarter of 2006.
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