UNITED STATES
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): February 4, 2004
ENZON PHARMACEUTICALS, 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: (908) 541-8600
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 5. Other Events and Required FD Disclosure.
Enzon Pharmaceuticals, Inc. (NASDAQ:ENZN) announced today its financial results
for the quarter ended December 31, 2003, the second quarter of Enzon's fiscal
year (FY) 2004. The Company's net income for the second quarter of FY 2004 was
$2.3 million, or $0.05 cents per diluted share, as compared to a net loss of
$15.2 million or $0.35 cents per diluted share for the second quarter of FY
2003. The net loss for the second quarter of FY 2003 included a non-cash charge
of $27.2 million, related to the write down of the carrying value of the
Company's investment in Nektar Therapeutics.
Total product sales for the four products marketed by the Company, ABELCET(R),
ADAGEN(R), DEPOCYT(R), and ONCASPAR(R), increased by $19.9 million or 255% to
$27.7 million, as compared to $7.8 million for the prior year's comparable
quarter. This increase was primarily driven by an increase in North American
ABELCET sales to $18.0 million for the second quarter of FY 2004, as compared to
$589,000 for the second quarter of FY 2003. In November 2002, Enzon acquired the
North American ABELCET business from Elan Corporation, plc. During the quarter,
the Company also recorded $2.2 million in manufacturing revenue related to the
ABELCET business.
ADAGEN sales for the second quarter of FY 2004 were $4.0 million versus $4.1
million in the second quarter of FY 2003. Sales of ONCASPAR for the second
quarter of FY 2004 increased by $1.3 million or 42% to $4.4 million, as compared
to $3.1 million for the second quarter of FY 2003. Sales of DEPOCYT were $1.3
million for the second quarter of FY 2004. In January 2003, the Company
in-licensed the North American rights to DEPOCYT from SkyePharma PLC.
Total royalties for the second quarter of FY 2004 decreased by $11.4 million or
50%, to $11.5 million, as compared to $22.9 million for the second quarter of FY
2003. Total royalties for the quarter were made up principally of royalties from
sales of PEG-INTRON marketed by Schering-Plough. The decrease was due to the
introduction of a competing pegylated alpha interferon product, as well as the
prior year benefiting from previously wait-listed patients initiating therapy.
Research and development expenses increased by $1.7 million or 30% to $7.4
million in the second quarter of FY 2004, as compared to $5.7 million for the
same quarter of FY 2003. The increase was due to the continued advancement of
the Company's internal R&D programs, including the Company's two late-stage
programs, Pegamotecan (previously referred to as PEG-camptothecin) and ATG
Fresenius S, as well as earlier stage programs. Recently, patient dosing was
initiated in a clinical trial designed to evaluate Pegamotecan as a
single-agent, second-line therapy for the treatment of gastric and
gastroesophageal junction cancers. This study was initiated based on the
positive interim data yielded from the Company's ongoing Phase 2 trial for the
treatment of gastric and gastroesophageal cancers. The Company believes that if
this trial yields results that are similar to the interim Phase 2 data,
Pegamotecan may be eligible for accelerated approval under Subpart H of the Food
and Drug Act for the treatment of these cancers.
Selling, general, and administrative expenses increased to $11.5 million in the
second quarter of FY 2004 versus $7.4 million for the second quarter of FY 2003.
This increase was due to the Company's acquisition of the North American rights
to ABELCET in November 2002, which included the hiring of a North American sales
force.
The management of Enzon will be hosting a conference call today, February 4,
2004 at 5:00 PM EST. All interested parties can access the live call using the
following information:
Domestic Dial-In Number: 888-428-4480
International Dial-In Number: 612-288-0318
Access Code: 716656
Enzon's conference call will also be webcast in a "listen only" mode via the
Internet at http://www.vcall.com. Additionally, for those parties unable to
listen at the time of Enzon's conference call, a rebroadcast will be available
following the call from Wednesday, February 4 2004 at approximately 10:15 PM
EST. This rebroadcast will end on Wednesday, February 11, 2004 at midnight. The
rebroadcast may be accessed using the following information:
Domestic Dial-In Number: 800-475-6701
International Dial-In Number: 320-365-3844
Access Code 716656
Enzon Pharmaceuticals is a biopharmaceutical company dedicated to the discovery,
development and commercialization of therapeutics to treat life-threatening
diseases. The company has developed or acquired a number of marketed products,
including PEG-INTRON(R), marketed by Schering-Plough, and ABELCET(R),
ONCASPAR(R), ADAGEN(R), and DEPOCYT(R), which are all marketed in North America
by Enzon's hospital and oncology sales forces. Enzon's science-focused strategy
includes an extensive drug development program that leverages the Company's
macromolecular engineering technology platforms, including PEG modification and
single-chain antibody (SCA(R)) technologies. Internal research and development
efforts are complemented by strategic transactions that provide access to
additional products, projects, and technologies. Enzon has several drug
candidates in various stages of development, independently and with partners.
There are forward-looking statements contained herein that are not based on
historical fact, including without limitation statements containing the words
"believes," "may," "plans," "will," "estimates," "continue," "anticipates,"
"intends," "expects," 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 discussed above. Such factors include the
risk that Onco-TCS may not receive regulatory approval from the FDA, as well as
those described in Enzon's Form 10-K and Forms 10-Q on file with the SEC, such
as Enzon's ability to successfully launch and market Onco-TCS, Enzon's ability
to sustain profitability and positive cash flow; risks in obtaining and
maintaining regulatory approval for indications and expanded indications for
Enzon's products; market acceptance of and continuing demand for Enzon's
products; timing and results of clinical trials, including, without limitation,
the ongoing clinical trials of Pegamotecan for the treatment of gastric and
gastroesophageal cancers; the risk that the FDA may not deem Pegamotecan
eligible for accelerated approval under Subpart H of the Food and Drug Act; and
the impact of competitive products and pricing. These factors should be
considered carefully and readers are cautioned not to place undue reliance on
such forward-looking statements. All information in this press release is as of
February 4, 2004 and the Company undertakes no duty to update this information.
For further information regarding this press release, please go to Enzon's
website at http://www.enzon.com and to Enzon's Investor Relations webpage at
http://enzon.com/shareholders.html.
# # #
(Financial statements to follow)
ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended December 31, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
December 31, December 31,
2003 2002
------------------------------
Revenues:
Net sales $ 27,711 $ 7,811
Manufacturing revenue 2,187 733
Royalties 11,547 22,903
Contract revenue 253 50
------------- -------------
Total revenues 41,698 31,497
------------- -------------
Costs and expenses:
Cost of sales and manufacturing revenue 11,825 4,265
Research and development expenses 7,388 5,692
Selling, general and administrative expenses 11,478 7,397
Amortization of acquired intangibles 3,358 1,293
Write-down of carrying value of investments -- 27,237
------------- -------------
Total costs and expenses 34,049 45,884
------------- -------------
Operating income (loss) 7,649 (14,387)
------------- -------------
Other income (expense):
Investment income, net 706 4,345
Interest expense (4,957) (4,957)
Other income, net 101 --
------------- -------------
(4,150) (612)
------------- -------------
Income (loss) before taxes 3,499 (14,999)
Income tax provision 1,180 245
------------- -------------
Net income (loss) $ 2,319 ($15,244)
============= =============
Basic earnings (loss) per common share $ 0.05 ($0.35)
============= =============
Diluted earnings (loss) per common share $ 0.05 ($0.35)
============= =============
Weighted average number of common shares issued
and outstanding - basic 43,307 43,011
============= =============
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,586 43,011
============= =============
ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months ended December 31, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
December 31, December 31,
2003 2002
-----------------------------
Revenues:
Net sales $ 52,672 $ 14,377
Manufacturing revenue 3,791 733
Royalties 25,358 41,321
Contract revenue 521 134
------------- -------------
Total revenues 82,342 56,565
------------- -------------
Costs and expenses:
Cost of sales and manufacturing revenue 22,737 6,779
Research and development expenses 13,939 9,754
Selling, general and administrative expenses 22,687 11,305
Amortization of acquired intangibles 6,716 1,328
Write-down of carrying value of investments -- 27,237
------------- -------------
Total costs and expenses 66,079 56,403
------------- -------------
Operating income 16,263 162
------------- -------------
Other income (expense):
Investment income, net 1,180 7,798
Interest expense (9,914) (9,914)
Other income, net 408 --
------------- -------------
(8,326) (2,116)
------------- -------------
Income (loss) before taxes 7,937 (1,954)
Income tax provision 2,814 506
------------- -------------
Net income (loss) $ 5,123 ($2,460)
============= =============
Basic earnings (loss) per common share $ 0.12 ($0.06)
============= =============
Diluted earnings (loss) per common share $ 0.12 ($0.06)
============= =============
Weighted average number of common shares issued
and outstanding - basic 43,298 42,995
============= =============
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,591 42,995
============= =============
Item 12. Results of Operations and Financial Condition.
On February 4, 2004, Enzon Pharmaceuticals, Inc. issued a press release to
report its results of operations and financial condition for the second quarter
of fiscal year (FY) 2004 ended December 31, 2004. A copy of this press release
is included as Exhibit 99.1 to this Form 8-K and incorporated into this Item 12
by reference.
The information in this Item 12, including Exhibit 99.1, is being furnished and
shall not be deemed to be "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liability
of that Section, nor shall such information be deemed to be incorporated by
reference in any registration statement or other document filed under the
Securities Act of 1933 or the Exchange Act, except as otherwise stated in such
filing.
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: February 4, 2004
By: /s/ Kenneth J. Zuerblis
------------------------------------
Kenneth J. Zuerblis
Vice President, Finance and
Chief Financial Officer
Exhibit 99.1
[LOGO]ENZON
PHARMACEUTICALS For Immediate Release
================================================================================
PRESS RELEASE
Contact: Kenneth J. Zuerblis
VP Finance & CFO
908-541-8717
Euro RSCG Life NRP
Mark R. Vincent, Media Relations
212-845-4239
ENZON REPORTS SECOND QUARTER FINANCIAL RESULTS
Sales of Marketed Products Continue to Drive Revenue Growth
BRIDGEWATER, NJ - February XX, 2004 - Enzon Pharmaceuticals, Inc.
(NASDAQ:ENZN) announced today its financial results for the quarter ended
December 31, 2003, the second quarter of Enzon's fiscal year (FY) 2004. The
Company's net income for the second quarter of FY 2004 was $2.3 million, or
$0.05 cents per diluted share, as compared to a net loss of $15.2 million or
$0.35 cents per diluted share for the second quarter of FY 2003. The net loss
for the second quarter of FY 2003 included a non-cash charge of $27.2 million,
related to the write down of the carrying value of the Company's investment in
Nektar Therapeutics.
Total product sales for the four products marketed by the Company,
ABELCET(R), ADAGEN(R), DEPOCYT(R), and ONCASPAR(R), increased by $19.9 million
or 255% to $27.7 million, as compared to $7.8 million for the prior year's
comparable quarter. This increase was primarily driven by an increase in North
American ABELCET sales to $18.0 million for the second quarter of FY 2004, as
compared to $589,000 for the second quarter of FY 2003. In November 2002, Enzon
acquired the North American ABELCET business from Elan Corporation, plc. During
the quarter, the Company also recorded $2.2 million in manufacturing revenue
related to the ABELCET business.
ADAGEN sales for the second quarter of FY 2004 were $4.0 million versus
$4.1 million in the second quarter of FY 2003. Sales of ONCASPAR for the second
quarter of FY 2004 increased by $1.3 million or 42% to $4.4 million, as compared
to $3.1 million for the second quarter of FY 2003. Sales of DEPOCYT were $1.3
million for the second quarter of FY 2004. In January 2003, the Company
in-licensed the North American rights to DEPOCYT from
-more-
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
Q2 FY04/page 2
SkyePharma PLC.
"We are pleased to report continued execution on all fronts of our
business that we control," commented Arthur J. Higgins, Enzon's chairman and
chief executive officer. "We expect calendar 2004 to be a year of additional
forward progress with significant near-term milestones driven by the recent
addition of Onco TCS to our pipeline. Our ability to in-license one of the
industry's most exciting late-stage oncology compounds is a direct result of
Enzon's successful transformation from a royalty-based company into a fully
integrated biopharmaceutical company that is a partner of choice."
Total royalties for the second quarter of FY 2004 decreased by $11.4
million or 50%, to $11.5 million, as compared to $22.9 million for the second
quarter of FY 2003. Total royalties for the quarter were made up principally of
royalties from sales of PEG-INTRON marketed by Schering-Plough. The decrease was
due to the introduction of a competing pegylated alpha interferon product, as
well as the prior year benefiting from previously wait-listed patients
initiating therapy.
Research and development expenses increased by $1.7 million or 30% to $7.4
million in the second quarter of FY 2004, as compared to $5.7 million for the
same quarter of FY 2003. The increase was due to the continued advancement of
the Company's internal R&D programs, including the Company's two late-stage
programs, Pegamotecan (previously referred to as PEG-camptothecin) and ATG
Fresenius S, as well as earlier stage programs. Recently, patient dosing was
initiated in a clinical trial designed to evaluate Pegamotecan as a
single-agent, second-line therapy for the treatment of gastric and
gastroesophageal junction cancers. This study was initiated based on the
positive interim data yielded from the Company's ongoing Phase 2 trial for the
treatment of gastric and gastroesophageal cancers. The Company believes that if
this trial yields results that are similar to the interim Phase 2 data,
Pegamotecan may be eligible for accelerated approval under Subpart H of the Food
and Drug Act for the treatment of these cancers.
Selling, general, and administrative expenses increased to $11.5 million
in the second quarter of FY 2004 versus $7.4 million for the second quarter of
FY 2003. This increase was due to the Company's acquisition of the North
American rights to ABELCET in November 2002,
-more-
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
Q2 FY04/page 3
which included the hiring of a North American sales force.
The management of Enzon will be hosting a conference call today, February
4, 2004 at 5:00 PM EST. All interested parties can access the live call using
the following information:
Domestic Dial-In Number: 888-428-4480
International Dial-In Number: 612-288-0318
Access Code: 716656
Enzon's conference call will also be webcast in a "listen only" mode via
the Internet at http://www.vcall.com. Additionally, for those parties unable to
listen at the time of Enzon's conference call, a rebroadcast will be available
following the call from Wednesday, February 4 2004 at approximately 10:15 PM
EST. This rebroadcast will end on Wednesday, February 11, 2004 at midnight. The
rebroadcast may be accessed using the following information:
Domestic Dial-In Number: 800-475-6701
International Dial-In Number: 320-365-3844
Access Code 716656
Enzon Pharmaceuticals is a biopharmaceutical company dedicated to the
discovery, development and commercialization of therapeutics to treat
life-threatening diseases. The company has developed or acquired a number of
marketed products, including PEG-INTRON(R), marketed by Schering-Plough, and
ABELCET(R), ONCASPAR(R), ADAGEN(R), and DEPOCYT(R), which are all marketed in
North America by Enzon's hospital and oncology sales forces. Enzon's
science-focused strategy includes an extensive drug development program that
leverages the Company's macromolecular engineering technology platforms,
including PEG modification and single-chain antibody (SCA(R)) technologies.
Internal research and development efforts are complemented by strategic
transactions that provide access to additional products, projects, and
technologies. Enzon has several drug candidates in various stages of
development, independently and with partners.
There are forward-looking statements contained herein that are not based
on historical fact, including without limitation statements containing the words
"believes," "may," "plans," "will," "estimates," "continue," "anticipates,"
"intends," "expects," and similar expressions. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors that may cause
-more-
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
Q2 FY04/page 4
actual results, events or developments to be materially different from the
future results, events or developments discussed above. Such factors include the
risk that Onco-TCS may not receive regulatory approval from the FDA, as well as
those described in Enzon's Form 10-K and Forms 10-Q on file with the SEC, such
as Enzon's ability to successfully launch and market Onco-TCS, Enzon's ability
to sustain profitability and positive cash flow; risks in obtaining and
maintaining regulatory approval for indications and expanded indications for
Enzon's products; market acceptance of and continuing demand for Enzon's
products; timing and results of clinical trials, including, without limitation,
the ongoing clinical trials of Pegamotecan for the treatment of gastric and
gastroesophageal cancers; the risk that the FDA may not deem Pegamotecan
eligible for accelerated approval under Subpart H of the Food and Drug Act; and
the impact of competitive products and pricing. These factors should be
considered carefully and readers are cautioned not to place undue reliance on
such forward-looking statements. All information in this press release is as of
February 4, 2004 and the Company undertakes no duty to update this information.
For further information regarding this press release, please go to Enzon's
website at http://www.enzon.com and to Enzon's Investor Relations webpage at
http://enzon.com/shareholders.html.
(Financial statements to follow)
# # #
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended December 31, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
December 31, December 31,
2003 2002
-----------------------------
Revenues:
Net sales $ 27,711 $ 7,811
Manufacturing revenue 2,187 733
Royalties 11,547 22,903
Contract revenue 253 50
------------- -------------
Total revenues 41,698 31,497
------------- -------------
Costs and expenses:
Cost of sales and manufacturing revenue 11,825 4,265
Research and development expenses 7,388 5,692
Selling, general and administrative expenses 11,478 7,397
Amortization of acquired intangibles 3,358 1,293
Write-down of carrying value of investments -- 27,237
------------- -------------
Total costs and expenses 34,049 45,884
------------- -------------
Operating income (loss) 7,649 (14,387)
------------- -------------
Other income (expense):
Investment income, net 706 4,345
Interest expense (4,957) (4,957)
Other income, net 101 --
------------- -------------
(4,150) (612)
------------- -------------
Income (loss) before taxes 3,499 (14,999)
Income tax provision 1,180 245
------------- -------------
Net income (loss) $2, 319 ($15,244)
============= =============
Basic earnings (loss) per common share $ 0.05 ($0.35)
============= =============
Diluted earnings (loss) per common share $ 0.05 ($0.35)
============= =============
Weighted average number of common shares issued
and outstanding - basic 43,307 43,011
============= =============
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,586 43,011
============= =============
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months ended December 31, 2003 and 2002
(In thousands, except per share data)
(Unaudited)
December 31, December 31,
2003 2002
-----------------------------
Revenues:
Net sales $ 52,672 $ 14,377
Manufacturing revenue 3,791 733
Royalties 25,358 41,321
Contract revenue 521 134
------------- -------------
Total revenues 82,342 56,565
------------- -------------
Costs and expenses:
Cost of sales and manufacturing revenue 22,737 6,779
Research and development expenses 13,939 9,754
Selling, general and administrative expenses 22,687 11,305
Amortization of acquired intangibles 6,716 1,328
Write-down of carrying value of investments -- 27,237
------------- -------------
Total costs and expenses 66,079 56,403
------------- -------------
Operating income 16,263 162
------------- -------------
Other income (expense):
Investment income, net 1,180 7,798
Interest expense (9,914) (9,914)
Other income, net 408 --
------------- -------------
(8,326) (2,116)
------------- -------------
Income (loss) before taxes 7,937 (1,954)
Income tax provision 2,814 506
------------- -------------
Net income (loss) $ 5,123 ($2,460)
============= =============
Basic earnings (loss) per common share $ 0.12 ($0.06)
============= =============
Diluted earnings (loss) per common share $ 0.12 ($0.06)
============= =============
Weighted average number of common shares issued
and outstanding - basic 43,298 42,995
============= =============
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,591 42,995
============= =============
###
================================================================================
685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com