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) August 13, 2002
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification)
685 Route 202/206, Bridgewater, New Jersey 08807
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code: (732) 980-4500
NA
(Former name or former address, if changed since last report)
Item 5. Other Events
On August 13, 2002 Enzon, Inc. announced its financial results for the
quarter and fiscal year (FY) ended June 30, 2002. Excluding the recognition of
an $8.8 million net income tax benefit, the Company's fully diluted earnings per
share for the fourth quarter of FY 2002 was $0.27. The Company's net income for
the fourth quarter of FY 2002 grew to $20.8 million or $0.47 per diluted share,
as compared to $3.3 million or $0.08 per diluted share, for the same period in
FY 2001.
The increase in net income was principally due to increased royalties
earned on sales of PEG-INTRON(TM). Total royalties increased to $19.6 million
during the fourth quarter of FY 2002, as compared to $4.5 million for the same
period in FY 2001. In October 2001, our marketing partner, Schering-Plough
launched PEG-INTRON and REBETOL combination therapy in the U.S. for the
treatment of chronic hepatitis C. The PEG-INTRON and REBETOL treatment regimen
is the only pegylated interferon-based combination therapy approved in the
United States.
Combined sales of the Company's other two FDA approved products,
ONCASPAR(R) and ADAGEN(R), decreased by 5 percent to $5.5 million in the fourth
quarter of FY 2002, as compared to $5.8 million for the same period in FY 2001
primarily due to the timing of ONCASPAR shipments.
Research and development expenses for the fourth quarter of FY 2002
increased by $1.7 million or 39 percent to $5.9 million, as compared to $4.2
million for the fourth quarter of FY 2001. The increase was due primarily to
increased research and development expenditures related to the advancement of
the Company's preclinical and clinical PEG product pipeline, as well as
increased personnel and related expenditures.
Enzon is currently conducting Phase II clinical trials for PROTHECAN(R)
(PEG-camptothecin) in three oncology indications: small cell lung, pancreatic,
and non-small cell lung cancers. Phase I clinical trials for PEG-paclitaxel and
preclinical studies for other PEG products are also ongoing. The Company expects
to initiate additional Phase II trials for PROTHECAN as both a single agent and
in combination with other oncolytics. Research and development expenses are
expected to continue to increase significantly as the Company continues the
clinical
2
advancement of its PEG product pipeline and continues to strengthen its internal
development capabilities.
Selling, general and administrative expenses for the fourth quarter of FY
2002 increased by $800 thousand or 23 percent to $4.4 million, as compared to
$3.6 million for the fourth quarter of FY 2001. This increase was primarily due
to increases in payroll and related personnel expenditures.
During the fourth quarter of FY 2002, interest income increased to $3.9
million, as compared to $2.0 million for the fourth quarter of FY 2001 as a
result of increased interest-bearing investments. Interest expense increased to
$5.0 million for the fourth quarter of FY 2002, as compared to $275 thousand for
the comparable period in FY 2001. The increases in interest-bearing investments
and interest expense are due to the issuance of $400 million of 4.5% convertible
subordinated notes during June 2001. As of June 30, 2002 Enzon had total cash
and interest-bearing investments of $485 million.
During the quarter ended June 30, 2002, the Company recognized a net tax
benefit of $8.8 million, primarily related to the Company's net operating losses
expected to be utilized in FY 2003.
The Company's pre-tax and post-tax earnings per diluted share are
summarized within the following selected financial information:
Three Months Ended Twelve Months Ended
-------------------------------------------------------
06/30/02 06/30/01 06/30/02 06/30/01
-------------------------------------------------------
Income before taxes $12,003,959 $3,374,264 $36,682,935 $11,013,417
Pre-tax earnings per diluted
share $0.27 $0.08 $0.83 $0.25
Income tax benefit (expense) $8,759,563 ($65,956) $9,123,408 $511,647
Net income $20,763,522 $3,308,308 $45,806,343 $11,525,064
Diluted earnings per share $0.47 $0.08 $1.04 $0.26
Fully diluted shares 43,839,982 43,956,840 44,025,783 43,606,194
For the fiscal year ended June 30, 2002, Enzon's net income was $45.8
million or $1.04 per diluted share, compared to net income of $11.5 million or
$0.26 per diluted share for the year
2
ended June 30, 2001. The increase in net income for FY 2002 was primarily due to
increased royalties related to products that utilize Enzon's PEG technology.
Except for the historical information herein, the matters discussed in
this report 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 Company's Form 10-K, Form 10-Q's
and Form 8-K's on file with the SEC, including without limitation, regulatory
risks such as risks in obtaining and maintaining regulatory approval for
indications and expanded indications, risks that Enzon will not outperform the
sector, risks related to research and development costs and capabilities, market
acceptance of and continuing demand for Enzon's products and the impact of
increased competition, competitive products and pricing.
# # #
(Financial statements to follow)
3
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months ended June 30, 2002 and 2001
(unaudited)
June 30, June 30,
2002 2001
---- ----
Revenues:
Net sales $5,499,569 $5,803,935
Royalties 19,640,534 4,549,337
Contract revenue 75,000 109,924
------------ ------------
Total revenues 25,215,103 10,463,196
------------ ------------
Costs and expenses:
Cost of sales 1,854,584 1,003,692
Research and development expenses 5,878,563 4,222,177
Selling, general and administrative expenses 4,381,962 3,566,472
------------ ------------
Total costs and expenses 12,115,109 8,792,341
------------ ------------
Operating income 13,099,994 1,670,855
------------ ------------
Other income (expense):
Interest and dividend income 3,861,119 1,981,183
Interest expense (4,957,154) (275,049)
Other -- (2,725)
------------ ------------
(1,096,035) 1,703,409
------------ ------------
Income before taxes 12,003,959 3,374,264
Income tax benefit (expense) 8,759,563 (65,956)
------------ ------------
Net income $20,763,522 $3,308,308
============ ============
Basic earnings per common share $0.48 $0.08
============ ============
Diluted earnings per common share $0.47 $0.08
============ ============
Weighted average number of common
shares outstanding during the period 42,982,052 41,935,820
============ ============
Weighted average number of common
shares and dilutive potential common shares outstanding
during the period 43,839,982 43,956,840
============ ============
4
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months ended June 30, 2002 and 2001
(unaudited)
June 30, June 30,
2002 2001
---- ----
Revenues:
Net sales $22,182,704 $20,768,767
Royalties 53,329,494 8,251,234
Contract revenue 292,548 2,567,708
------------ ------------
Total revenues 75,804,746 31,587,709
------------ ------------
Costs and expenses:
Cost of sales 6,077,454 3,864,284
Research and development expenses 18,426,860 13,051,714
Selling, general and administrative expenses 16,687,365 11,795,398
------------ ------------
Total costs and expenses 41,191,679 28,711,396
------------ ------------
Operating income 34,613,067 2,876,313
------------ ------------
Other income (expense):
Interest and dividend income 18,680,908 8,401,526
Interest expense (19,828,918) (275,049)
Other 3,217,878 10,627
------------ ------------
2,069,868 8,137,104
------------ ------------
Income before taxes 36,682,935 11,013,417
Income tax benefit 9,123,408 511,647
------------ ------------
Net income $45,806,343 $11,525,064
============ ============
Basic earnings per common share $1.07 $0.28
============ ============
Diluted earnings per common share $1.04 $0.26
============ ============
Weighted average number of common
shares outstanding during the period 42,726,112 41,602,104
============ ============
Weighted average number of common
shares and dilutive potential common shares outstanding
during the period 44,025,783 43,606,194
============ ============
5
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: August 13, 2002
ENZON, INC.
----------------------------------------
(Registrant)
By: /s/ Kenneth J. Zuerblis
------------------------------------
Kenneth J. Zuerblis
Vice President,
Finance and Chief Financial Officer