SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 7, 2002
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-237286
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
20 Kingsbridge Road, Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 980-4500
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On January 7, 2002 the Registrant, together with Inhale Therapeutic
Systems, Inc. ("Inhale"), announced the formation of a broad strategic alliance
that will serve to enhance each company's business model. As more fully
described below, the most significant terms of the alliance are:
o The Registrant and Inhale will collaborate to develop three products
to be specified over time based on the Inhale Inhance(TM) pulmonary
delivery platform and SEDS(TM) supercritical fluids platform. The
collaboration will have a particular focus on the development of products
in the oncology field as the Registrant has a first option to designate a
product in this field until the three products have been specified or the
agreement otherwise terminates. The Registrant will be responsible for the
commercialization and clinical development while Inhale will be responsible
for the product development and manufacturing of the products.
o Inhale will be solely responsible for licensing the Registrant's PEG
patents, which includes over 40 U.S. patents, to third parties. Inhale will
also have the option to license the Registrant's PEG patents for use in
Inhale's proprietary products. The Registrant will receive a royalty or a
share of profits on final product sales of any products that are subject to
a license under the Registrant's PEG patents, including its branched PEG
patents. The Registrant retains the right to use its PEG technology for its
own proprietary products and those it may develop with co-commercialization
partners.
o The Registrant will have the option to license Inhale's PEGylation
patents for the Registrant's proprietary products and Inhale will receive
royalties on sales of any such products.
o The Registrant and Inhale will explore the development of
non-invasive delivery of single-chain antibody (SCA(R)) products via the
pulmonary route. Inhale will become the exclusive pulmonary technology
provider for the Registrant's single-chain antibody technology using
Inhale's proprietary Inhance pulmonary drug delivery technology for at
least three years assuming success in the initial proof of concept program.
o The Registrant purchased $40 million of newly issued Inhale
convertible preferred stock.
o The Registrant and Inhale have agreed to settlement of the patent
infringement litigation filed by the Registrant against Inhales's
Shearwater subsidiary.
Product Development Agreements
The Registrant and Inhale will jointly develop up to three products using
Inhale's platform technologies: the Inhance(TM) pulmonary delivery platform and
SEDS(TM) supercritical fluids platform. The two companies will collaborate to
identify product candidates. Inhale will be responsible for formulation
development, delivery system supply, and in some cases, early clinical
development. The Registrant will have responsibility for most clinical
development and for commercialization.
The two companies have agreed to collaborate on realizing the significant
therapeutic and competitive potential offered by single-chain antibody (SCA(R))
products when administered by the pulmonary route. The two companies will
initially focus on exploring the utility of the Inhale pulmonary
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platform for single-chain antibodies and then move to develop single-chain
products that will complement the current use of antibodies through the
injectable route. Single-chain antibodies are genetically engineered proteins
designed to expand on the therapeutic and diagnostic applications possible with
monoclonal antibodies. The Registrant retains all rights to its SCA products
while Inhale retains all rights to its own technology. Inhale will become the
exclusive pulmonary technology provider for the Registrant's single-chain
antibody technology using Inhale's Inhance pulmonary drug delivery technology
for at least the next three years assuming a successful initial proof-of-concept
program.
Technology Licensing
The Registrant will grant to Inhale the exclusive right to grant
sub-licenses under the Registrant's PEG patents to third parties. The Registrant
will receive a share of profits for certain products that currently incorporate
the Registrant's branched PEG technology and royalties on sales of products that
are subject to new sublicenses that Inhale grants to its partners under the
Registrant's PEG patents. For Pegasys, Inhale anticipates that the Registrant
will receive 0.5% or less of Roche's sales, which represents equal profit
sharing with Inhale on this product. Inhale has confirmed that there are certain
other products in Inhale's current product pipeline that use branched PEG
technology. Inhale has advised the Registrant that, with respect to such
products, it expects to receive a higher percentage of partner sales in the form
of royalty and manufacturing revenues than it is entitled to receive with
respect to Pegasys. For these products, Inhale will provide a profit-share to
the Registrant, but the percentage is expected to be considerably less than for
Pegasys, since Inhale anticipates receiving a higher percentage of its partner's
sales. The Registrant retains the right to use all of its PEG technology for its
own product portfolio, as well as for those products it develops in
co-commercialization collaborations with third parties. It is the intent of the
parties that Inhale will be responsible for marketing PEG services and the
Registrant and Inhale PEG technology to third parties.
The Registrant will have an option to license Inhale's PEGylation
technology for use with its own portfolio products. Inhale will receive
royalties on any sales of Registrant PEGylation products using Inhale
technology. The Registrant will have the ability to request PEGylation supply
and services from Inhale.
Certain drug molecules will be excluded from both the product collaboration
and PEG licensing agreements.
Stock Purchase Agreement
The Registrant purchased $40 million of Inhale non-voting convertible
preferred stock. The conversion price of the preferred stock is $22.79 per share
of common stock, which is based on a 25% premium to the average Inhale common
stock closing bid price over the last 20 trading days. In the event Inhale's
common stock price three years from the date of issuance of the preferred stock,
or earlier in certain circumstances, is less than $22.79, the conversion price
will be adjusted downward, although in no event will it be less than $18.23.
Conversion of the preferred stock into common can occur anywhere from 1 to 4
years following the issuance of the preferred stock or earlier in certain
circumstances. The Registrant has been granted certain registration rights for
the common stock issuable upon conversion.
Settlement Agreement
In addition to establishing this alliance, the two companies have agreed to
settle the patent infringement suit related to the Registrant's branched PEG
technology filed in 1998 by the Registrant against Inhale's subsidiary
Shearwater. Inhale will receive licensing access to the contested patents under
the cross-license agreement described above. The Registrant will receive a $3
million payment from Inhale to cover expenses incurred in connection with
defending the branched PEG patents that both companies will now commercially
exploit.
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Except for the historical information herein, the matters discussed in this
Form 8-K include forward-looking statements that may involve a number of risks
and uncertainties. Actual results may vary significantly based upon a number of
factors, which are described in the Registrant's Form 10-K, Form 10-Q's and Form
8-K's on file with the SEC, including without limitation, the outcome of
clinical trials, regulatory review, manufacturing capabilities and marketing
effectiveness.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 8, 2002
ENZON, INC.
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(Registrant)
By: /s/ Kenneth J. Zuerblis
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Kenneth J. Zuerblis
Vice President,
Finance and Chief Financial Officer
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