Enzon Reports 2010 Results
Pipeline Development Continues to Advance as Transformation to a
"Divestiture of the specialty pharmaceutical business and the subsequent
operational restructuring in 2010 has enabled a return of value to
shareholders while positioning Enzon to build value through its focused
oncology development strategy," said
"In an effort to maximize operational efficiencies, we have implemented
a number of cost-saving measures including two strategic restructuring
initiatives and consolidating all operations from
2010 Highlights
- Completed transformation from a biopharmaceutical company with research and development, manufacturing and marketing operations to a biotechnology company focused on advancing the Company's PEG-SN38 and locked nucleic acid (LNA) research and development programs.
- Initiated enrollment in a Phase II PEG-SN38 study for patients with metastatic breast cancer.
- Investigational New Drug application (IND) for the androgen receptor (AR) antagonist was filed and accepted.
-
Entered into collaboration arrangement with the
National Cancer Institute for PEG-SN38 and hypoxia-inducible factor-1α (HIF-1α) antagonist programs. -
Completed a
$50.0 million common share repurchase program and initiated a$200.0 million share repurchase program. -
Awarded a
$1.2 million grant as part of the U.S. government's Qualifying Therapeutic Discovery Projects Program.
2011 Outlook and Goals
In 2011, Enzon will continue to focus on advancing the development of
its novel compounds. These efforts will include ongoing enrollment of
patients in the PEG-SN38 Phase II studies for colorectal and breast
cancer and the Phase I study evaluating PEG-SN38 in pediatric patients
with cancer. Enzon also will continue to advance and explore development
opportunities for LNA compounds, including the HIF-1α, Survivin and AR
antagonists. Enzon's transitional support activities to the purchaser of
the specialty pharmaceutical business are nearing completion. In
Summary of Financial Results
Revenues
The following table reflects the revenues for each of the three-month
and twelve-month periods ended
|
Three Months Ended
(in millions) |
Twelve Months Ended
(in millions) |
||||||||||||||||||||||
| December 31, |
% |
December 31, |
% |
||||||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||||
| Royalties | $ | 10.6 | $ | 12.2 | (13 | ) | $ | 44.9 | $ | 51.4 | (13 | ) | |||||||||||
|
Sale of |
|||||||||||||||||||||||
|
in-process R&D |
- |
- |
- |
40.9 |
- |
n.m. |
|||||||||||||||||
| Contract R&D (1) | 1.8 | - | n.m. | 9.3 | - | n.m. | |||||||||||||||||
| Miscellaneous (1) | 0.1 | - | n.m. | 2.7 | - | n.m. | |||||||||||||||||
| Total Revenues | $ | 12.5 | $ | 12.2 | n.m. | $ | 97.8 | $ | 51.4 | n.m. | |||||||||||||
| ___________________ | ||
| n.m. — not meaningful | ||
|
(1) |
Primarily revenues received in connection with transitional services related to the sale of the specialty pharmaceutical business. |
|
Royalty Revenue
Royalty revenue declined approximately 13 percent in 2010 compared to
2009 for both the quarter and the full year. This was primarily the
result of declining sales of PEGINTRON, marketed by
Research and Development
The Company's research and development expenses related to its current
portfolio were
General and Administrative
General and administrative expenses decreased to
Research and Development and General and Administrative Expenses Related to Divested Business
Prior to the sale of the specialty pharmaceutical business, the Company incurred research and development expenses related to the marketed products that were divested in the sale. Subsequently, the Company incurred expenses in support of the transitional services it was providing to the purchaser of the business for both research and development efforts and general and administrative support. Compensation for these services, including a mark-up, is reflected in revenues — contract research and development and miscellaneous income. The related expenses have been reported separately from those of the Company's research and development pipeline and ongoing general and administrative expenses as contracted services.
Restructuring Charge
The Company incurred restructuring costs totaling
Other Income (Expense)
Net other income (expense) comprises investment income, interest
expense, and other non-operating items. The Company reported net other
income of approximately
Income Tax Benefit
During 2010, the Company recorded net tax benefits of
Cash and Investments
Total cash reserves, which include cash, cash equivalents, short-term
investments, and marketable securities, were
Discontinued Operations
Prior-year results of operations of the divested specialty
pharmaceutical business were reclassified and reported as discontinued
operations. The net gain on the sale, excluding
Adjusted Financial Results
For the twelve months ended
Reconciliation of GAAP Loss from Continuing Operations to Adjusted Loss from Continuing Operations
The following table reconciles the Company's loss and loss per diluted
share from continuing operations as determined in accordance with U.S.
generally accepted accounting principles (GAAP) to its adjusted loss and
loss per diluted share from continuing operations for the twelve months
ended
|
Twelve Months Ended |
Twelve Months Ended |
|||||||||||||||
|
12/31/10 |
12/31/09 |
|||||||||||||||
|
(In thousands, except |
(In thousands, except |
|||||||||||||||
|
per-share data) |
per-share data) |
|||||||||||||||
| Loss from | Loss from | |||||||||||||||
| continuing | Per diluted | continuing | Per diluted | |||||||||||||
| operations | share | operations | share | |||||||||||||
| GAAP loss from continuing operations |
$ (3,600) |
$(0.06) |
$(57,202) |
$ (1.26) |
||||||||||||
| Net adjustments to GAAP: (7) | ||||||||||||||||
| Sale of in-process research and development (1) |
(40,900) |
(0.70) |
- |
- |
||||||||||||
| Restructuring charges (2) | 14,026 | 0.24 | 693 | 0.01 | ||||||||||||
| QTDP Grant (3) | (1,222) | (0.02) | - | - | ||||||||||||
| Transition services revenues (4) | (11,711) | (0.20) | - | - | ||||||||||||
| Specialty and contracted services research and development expense (4) |
7,135 |
0.12 |
24,587 |
0.54 |
||||||||||||
| Contracted general and administrative expense (4) |
1,957 |
0.03 |
- |
- |
||||||||||||
| Net realized gain related to the repurchase of debt (5) |
- |
- |
(4,501) |
(0.10) |
||||||||||||
| Adjusted loss from continuing operations (6) |
$(34,315) |
$(0.59) |
$(36,423) | $ (0.81) | ||||||||||||
| Basic and diluted shares outstanding | 58,466 | 45,186 | ||||||||||||||
|
(1) |
Adjusted financial results exclude the sale of in-process research and development associated with the sale of the Company's specialty pharmaceutical business. |
|
|
(2) |
Adjusted financial results exclude restructuring charges incurred in both years primarily related to severance charges for employees terminated either directly or indirectly due to the sale of the specialty pharmaceutical business. Also included in the total for 2010 were severance paid to the former CEO and the write-off of certain leasehold improvements located in excess corporate office space. |
|
|
(3) |
Adjusted financial results exclude the award of a $1.2 million Qualifying Therapeutic Discovery Project Grant from the U.S. government. |
|
|
(4) |
Adjusted financial results exclude revenues received from the transition services agreement the Company has with the purchaser of the specialty pharmaceutical business, as they are not long-term in nature ($9,273 research and development and $2,438 general and administrative). For the same reason, the underlying expenses incurred by the Company in support of these transitional services are excluded, as are the expenses the Company incurred in 2009 and January 2010 in research and development related to divested products. |
|
|
(5) |
Adjusted financial results exclude gains related to the 2009 repurchase of the Company's 4% notes at a discount to par (plus accrued interest), partially offset by the write-off of related deferred debt issuance costs. |
|
|
(6) |
Adjusted loss and adjusted loss per diluted share from continuing operations, as the Company defines them, may differ from similarly named measures used by other entities and consequently could be misleading unless all entities calculated and defined such items in the same manner. The Company believes that investors' understanding of its performance is enhanced by disclosing adjusted loss and adjusted loss per diluted share from continuing operations reflecting adjustments for certain items that the Company deems to be non-recurring. |
|
|
(7) |
Adjustments have not been tax-effected due to an estimated annual effective tax rate of zero. |
Conference Call and Webcast
Enzon will be hosting a conference call on
|
Domestic Dial-In Number: |
(877) 561-2748 |
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|
International Dial-In Number: |
(720) 545-0044 |
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Access Code: |
Enzon |
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The call will also be available via live audio webcast on the Enzon
website, by going to the ‘Calendar of Events' page in the ‘Investors'
section. Listeners should go to the website at least fifteen minutes
before this event to download and install any necessary audio software.
For those unable to attend the live audio webcast, a replay will be
available beginning approximately one hour after the event.
Additionally, a telephonic rebroadcast also will be available following
the call. The rebroadcast will begin on
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Domestic Dial-In Number: |
(800) 642 - 1687 |
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International Dial-In Number: |
(706) 645 - 9291 |
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Conference ID: |
43332453 |
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About Enzon
Forward Looking Statements
There are forward-looking statements contained herein, which can be
identified by the use of forward-looking terminology such as the words
"believes," "expects," "may," "will," "should," "potential,"
"anticipates," "plans," or "intends" and similar expressions. Such
forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results, events or
developments to be materially different from the future results, events
or developments indicated in such forward-looking statements. Such
factors include but are not limited to the timing, success and cost of
clinical studies for Enzon's product candidates, the ability to obtain
regulatory approval of Enzon's product candidates, Enzon's ability to
obtain the funding necessary to develop its product candidates, market
acceptance of and demand for Enzon's product candidates, and the impact
of competitiive products, pricing and technology. A more detailed
discussion of these and other factors that could affect results is
contained in Enzon's filings with the
|
Enzon Pharmaceuticals, Inc. and Subsidiaries Consolidated Statements of Operations Three Months ended December 31, 2010 and 2009 (In thousands, except per-share amounts) (Unaudited) |
||||||||||
|
December 31, |
December 31, | |||||||||
|
2010 |
2009 | |||||||||
| Revenues: | ||||||||||
| Royalties | $ | 10,549 | $ | 12,193 | ||||||
| Contract research and development | 1,845 | - | ||||||||
| Miscellaneous income | 124 | - | ||||||||
| Total revenues | 12,518 | 12,193 | ||||||||
|
Operating expenses: |
||||||||||
| Research and development | 14,031 | 11,307 | ||||||||
| Research and development — specialty and contracted services | 1,120 | 5,137 | ||||||||
| General and administrative | 4,906 | 10,226 | ||||||||
| General and administrative — contracted services | 50 | - | ||||||||
| Restructuring charge | 2,974 | - | ||||||||
| Total costs and expenses | 23,081 | 26,670 | ||||||||
|
Operating loss |
(10,563 | ) | (14,477 | ) | ||||||
|
Other income (expense): |
||||||||||
| Investment income, net | 573 | 1,045 | ||||||||
| Interest expense | (1,480 | ) | (2,751 | ) | ||||||
| Other, net | 1,040 | (50 | ) | |||||||
| 133 | (1,756 | ) | ||||||||
| Loss from continuing operations before income tax benefit | (10,430 | ) | (16,233 | ) | ||||||
|
Income tax benefit |
(1 | ) | (1,629 | ) | ||||||
| Loss from continuing operations | (10,429 | ) | (14,604 | ) | ||||||
| Income from discontinued operations, net of income tax | - | 14,040 | ||||||||
| Net loss | $ | (10,429 | ) | $ | (564 | ) | ||||
|
Loss per common share — continuing operations —
basic and diluted |
$ |
(0.17 |
) |
$ | (0.32 | ) | ||||
|
Earnings per common share — discontinued operations —
basic and diluted |
$ |
(0.00 |
) |
$ |
0.31 |
|||||
| Net loss per common share — basic and diluted | $ | (0.17 | ) | $ | (0.01 | ) | ||||
| Weighted average shares — basic and diluted | 59,747 | 45,394 | ||||||||
|
Enzon Pharmaceuticals, Inc. and Subsidiaries Consolidated Statements of Operations Twelve Months ended December 31, 2010 and 2009 (In thousands, except per-share amounts) (Unaudited) |
||||||||||
|
December 31, |
December 31, | |||||||||
|
2010 |
2009 | |||||||||
| Revenues: | ||||||||||
| Royalties | $ | 44,940 | $ | 51,408 | ||||||
| Sale of in-process research and development | 40,900 | - | ||||||||
| Contract research and development | 9,273 | - | ||||||||
| Miscellaneous income | 2,752 | - | ||||||||
| Total revenues | 97,865 | 51,408 | ||||||||
|
Operating expenses: |
||||||||||
| Research and development | 49,883 | 45,639 | ||||||||
| Research and development — specialty and contracted services | 7,135 | 24,587 | ||||||||
| General and administrative | 25,439 | 37,582 | ||||||||
| General and administrative — contracted services | 1,957 | - | ||||||||
| Restructuring charge | 14,026 | 693 | ||||||||
| Total costs and expenses | 98,440 | 108,501 | ||||||||
|
Operating loss |
(575 | ) | (57,093 | ) | ||||||
|
Other income (expense): |
||||||||||
| Investment income, net | 3,465 | 4,312 | ||||||||
| Interest expense | (7,115 | ) | (11,514 | ) | ||||||
| Other-than-temporary investment impairment loss | (896 | ) | - | |||||||
| Other, net | 1,184 | 5,008 | ||||||||
| (3,362 | ) | (2,194 | ) | |||||||
| Loss from continuing operations before income tax benefit | (3,937 | ) | (59,287 | ) | ||||||
|
Income tax benefit |
(337 | ) | (2,085 | ) | ||||||
| Loss from continuing operations | (3,600 | ) | (57,202 | ) | ||||||
| Income and gain from discontinued operations, net of income tax | 179,002 | 57,885 | ||||||||
| Net income | $ | 175,402 | $ | 683 | ||||||
|
Loss per common share — continuing operations —
basic and diluted |
$ | (0.06 | ) | $ | (1.26 | ) | ||||
|
Earnings per common share — discontinued operations —
basic and diluted |
$ | 3.06 | $ | 1.28 | ||||||
| Net income per common share — basic and diluted | $ | 3.00 | $ | 0.02 | ||||||
| Weighted average shares — basic and diluted | 58,466 | 45,186 | ||||||||
|
Enzon Pharmaceuticals, Inc. and Subsidiaries Condensed Consolidated Balance Sheets December 31, 2010 and 2009 (In thousands) (Unaudited) |
||||||||
| December 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and short-term investments | $ | 428,700 | $ | 104,110 | ||||
| Other current assets | 5,916 | 6,928 | ||||||
| Current assets of discontinued operations | - | 34,174 | ||||||
| Total current assets | 434,616 | 145,212 | ||||||
| Property and equipment, net | 21,574 | 26,534 | ||||||
| Other assets: | ||||||||
| Marketable securities | 31,394 | 95,636 | ||||||
| Other assets | 1,273 | 2,863 | ||||||
| Noncurrent assets of discontinued operations | - | 62,504 | ||||||
| Total other assets | 32,667 | 161,003 | ||||||
| Total assets | $ | 488,857 | $ | 332,749 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 18,387 | $ | 11,728 | ||||
| Current liabilities of discontinued operations | - | 13,269 | ||||||
| Total current liabilities | 18,387 | 24,997 | ||||||
| Notes payable | 134,499 | 250,050 | ||||||
| Other liabilities | 4,114 | 4,419 | ||||||
| Total liabilities | 157,000 | 279,466 | ||||||
| Stockholders' equity | 331,857 | 53,283 | ||||||
| Total liabilities and stockholders' equity | $ | 488,857 | $ | 332,749 | ||||
| Common shares outstanding | 58,818 | 45,318 | ||||||
Investors:
andrea@argotpartners.com
or
Media:
meghan@argotpartners.com
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