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): November 4, 2004
ENZON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
(State or other jurisdiction (Commission (IRS Employer
of 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 2.02 Results of Operations and Financial Condition
On November 4, 2004, Enzon Pharmaceuticals, Inc. issued a press release to
report its results of operations and financial condition for the completed
fiscal quarter ended September 30, 2004. A copy of this press release is
included as Exhibit 99.1 to this Form 8-K and incorporated into this Item 2.02
by reference.
The information in this Item 2.02, 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.
Item 9.01 Financial Statements and Exhibits
Exhibit 99.1 Press Release dated November 4, 2004
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: November 4, 2004
By: /s/ Kenneth J. Zuerblis
-----------------------------
Kenneth J. Zuerblis
Vice President, Finance and
Chief Financial Officer
Exhibit 99.1
ENZON
PHARMACEUTICALS For Immediate Release
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PRESS RELEASE
Contact: Kenneth J. Zuerblis
Executive Vice President, Finance & CFO
908-541-8717
Euro RSCG Life NRP
Mark R. Vincent, Media Relations
212-845-4239
ENZON REPORTS FIRST QUARTER RESULTS
Product Sales Increase 10% Over Prior Year and Comprise Nearly 70% of Revenues
BRIDGEWATER, NJ - November 4, 2004 - Enzon Pharmaceuticals, Inc. (Nasdaq:ENZN)
today announced its financial results for the quarter ended September 30, 2004,
the first quarter of Enzon's fiscal year (FY) 2005. Several recent corporate
highlights are as follows:
o A collaboration was formed with Pharmagene to engineer a PEG
enhanced version of Pharmagene's drug candidate PGN0052 for clinical
development. PGN0052 is being initially investigated as a treatment
for cystic fibrosis and is currently being evaluated in a Phase 2a
proof of concept trial. Under this agreement, Enzon has the option
to either jointly develop and commercialize the product or receive
future royalties and certain co-marketing rights.
o Enzon and Inex Pharmaceuticals Corporation (TSX: INX) announced that
MARQIBO(R) (vincristine sulfate liposomes injection) will be
reviewed at the FDA's Oncologic Drugs Advisory Committee (ODAC)
session scheduled for December 1, 2004. The FDA is currently
reviewing a New Drug Application (NDA) for MARQIBO for patients with
relapsed aggressive non-Hodgkin's lymphoma (NHL) previously treated
with at least two combination chemotherapy regimens. Inex and Enzon
expect a response on the NDA by January 15, 2005.
o Jeffrey Buchalter was named Enzon's Non-Executive Chairman of the
Board marking an important first step in formalizing Enzon's
leadership for its next stage of growth. Mr. Buchalter brings
extensive industry experience to Enzon's Board of Directors.
o Eyetech Pharmaceuticals Inc. (Nasdaq: EYET) presented Macugen(TM)
(pegaptanib sodium injection) to the United States Food and Drug
Administration's (FDA) Dermatologic and Ophthalmic Drugs Advisory
Committee. Eyetech has licensed PEGylation technology for use in
Macugen from Nektar Therapeutics (Nasdaq: NKTR). Under a strategic
alliance formed in 2002, Enzon licensed proprietary PEGylation
technology to Nektar and will receive a share of Nektar's royalties
or profits if and when Macugen is approved. Macugen is being jointly
developed by Eyetech and Pfizer (NYSE: PFE). The product
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
has received a priority review designation by the FDA and the
Prescription Drug User Fee Act (PDUFA) date is December 17, 2004.
o PEG-INTRON(R) received marketing approval in Japan for use in
combination with REBETOL(R) for the treatment of chronic hepatitis
C. PEG-INTRON and REBETOL combination therapy is the first and only
PEGylated interferon-based combination therapy approved in Japan. An
estimated 1 to 2 million Japanese are chronically infected with
hepatitis C. PEG-INTRON uses proprietary PEG technology developed by
Enzon. Schering-Plough holds an exclusive worldwide license and
Enzon is entitled to royalties on worldwide product sales.
Financial Results
The Company reported an adjusted net loss of $113,000 or $0.00 per diluted share
for the first quarter of FY 2005, versus adjusted net income of $3.0 million or
$0.07 per diluted share for the first quarter of FY 2004. The decrease in
adjusted net income versus the prior year was primarily due to a $3.7 million
decline in royalties, which are predominately made up of royalties from sales of
PEG-INTRON. Additionally, earnings for the quarter ended September 30, 2004 were
negatively impacted by the voluntary recall of certain batches of ONCASPAR(R),
which drove a $381,000 decline in sequential ONCASPAR sales. ONCASPAR sales were
$4.4 million for the first quarter of FY 2005 as compared to $4.7 million for
the fourth quarter of FY 2004.
The Company's adjusted net loss and adjusted net income for the first quarters
of FY 2005 and FY 2004 excludes tax-adjusted other expense related to the
Company's protective collar arrangement. The protective collar is a derivative
hedging instrument, which the Company entered into to reduce its exposure
associated with the 1.5 million shares of NPS Pharmaceuticals Inc. (Nasdaq:NPSP)
common stock received under the merger termination agreement with NPS. Enzon has
reported adjusted net income because the Company believes that it is
representative of the underlying operations of its business and is relevant to
gaining an understanding of the Company's trends and potential future
performance. The Company has included a table reconciling its GAAP net loss and
GAAP net income to its adjusted net loss and adjusted net income for the first
quarter of FY 2005 and FY 2004 later in this release.
On a reported basis, calculated in accordance with U.S. generally accepted
accounting principles (GAAP), Enzon reported a net loss of $544,000 or $0.01
cents per diluted share for the first quarter of FY 2005, as compared to net
income of $2.8 million or $0.06 cents per diluted share for the first quarter of
FY 2004.
Combined product sales for the Company's four internally marketed products
(ABELCET(R), ONCASPAR, DEPOCYT(R), and ADAGEN(R)) increased by 10% to $27.5
million for the first quarter of FY 2005 versus $25.0 million for the prior
year's comparable quarter. This increase was primarily attributable to increased
ABELCET, DEPOCYT, and ONCASPAR sales. For the first quarter of FY 2005, North
American sales of ABELCET were $16.5 million compared with $15.0 million for the
first quarter of FY 2004.
Sales of ONCASPAR for the first quarter of FY 2005 increased 7% to $4.4 million,
as compared to $4.1 million for the first quarter of FY 2004. While the Company
continues to experience
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
strong demand for ONCASPAR, sales for the first quarter of FY 2005 were
negatively impacted by the previously mentioned voluntary batch recalls that
were implemented by Enzon. The voluntary recalls were due to the Company's
previously disclosed manufacturing and stability problems in the manufacture of
ONCASPAR as it uses Enzon's earlier stage PEGylation technology.
Sales of DEPOCYT increased 82% to $2.3 million for the first quarter of FY 2005,
as compared to $1.3 million for the first quarter of FY 2004. ADAGEN sales for
the first quarter of FY 2005 decreased 7% to $4.3 million versus $4.6 million
for the first quarter of FY 2004.
Royalties for the first quarter of FY 2005 decreased 27% to $10.1 million versus
$13.8 million for the first quarter of FY 2004. Royalties are principally
comprised of royalties from sales of PEG-INTRON, which is marketed by
Schering-Plough Corporation (NYSE: SGP). The decrease in royalties from the
prior year was primarily due to ongoing competition and a contracting market.
PEG-INTRON utilizes Enzon's proprietary PEGylation technology and the Company
receives royalties on worldwide sales of PEG-INTRON.
Cost of sales and manufacturing revenue as a percentage of net sales and
manufacturing revenue for the first quarter of FY 2005 improved to 36%, as
compared to 41% for the first quarter FY 2004.
The Company's investment in research and development increased 53% to $10.0
million in the first quarter of FY 2005 compared to $6.6 million for first
quarter of FY 2004. This increase was primarily attributable to the advancement
of the Company's proprietary product pipeline and the shared product development
costs related to MARQIBO, which the Company shares with Inex.
Selling, general, and administrative expenses increased 9% to $12.2 million for
the first quarter of FY 2005 versus $11.2 million for the first quarter of FY
2004. This increase was primarily driven by increased selling expenditures
within our oncology franchise, of which the majority are related to preparatory
activities for the potential launch of MARQIBO in calendar 2005.
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
The following table reconciles the Company's GAAP net income (loss) to adjusted
net income (loss) for the three months ended September 30, 2004 and 2003:
Three Months Ended
-----------------------------
(in thousands)
-----------------------------
09/30/04 09/30/03
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GAAP net (loss) income ($544) $2,804
Less: other expense, net (1) (431) (194)
---------- ----------
Adjusted net (loss) income ($113) $2,998
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(1) Adjusted net income for the first quarters of FY 2005 and FY 2004 exclude
tax-adjusted investment expense related to the Company's protective collar
arrangement. The protective collar is considered a derivative hedging
instrument, which the Company formed to reduce its exposure associated
with the 1.5 million shares of NPS common stock received under the merger
termination agreement with NPS.
The management of Enzon will be hosting a conference call today, November 4,
2004 at 5:00 PM EST. All interested parties can access the live call using the
following information:
Domestic Dial-In Number: 866-233-3843
International Dial-In Number: 651-224-7472
Access Code: 751227
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 Thursday, November 4, 2004 at approximately 11:00 PM.
This rebroadcast will end on Thursday, November 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 751227
About Enzon
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), marketed in North America by Enzon's
specialized sales force. Enzon's science-driven 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
marketed products and promising clinical compounds. Enzon has several drug
candidates in various stages of development, independently
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com
and with partners, including MARQIBO(R) (formerly referred to as Onco TCS), for
which a U.S. marketing application is currently being reviewed by the FDA for
the treatment of relapsed aggressive non-Hodgkin's lymphoma. Further information
about Enzon and this press release can be found on the Company's web site at
www.enzon.com.
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. An example of this includes the
quoted statement above regarding revenue growth, pipeline advancement and the
identification of strategic opportunities. Such forward-looking statements are
subject to 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
those described in Enzon's Form 10-K and Forms 10-Q on file with the SEC. 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 November 4, 2004 and the Company undertakes no duty to update
this information.
(Financial statements to follow)
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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 September 30, 2004 and 2003
Dollars in Thousands (except per share amounts)
(Unaudited)
September 30, September 30,
2004 2003
---------- ----------
Revenues:
Net sales $27,527 $24,961
Manufacturing revenue 2,513 1,604
Royalties 10,115 13,811
Contract revenue 299 268
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Total revenues 40,454 40,644
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Costs and expenses:
Cost of sales and manufacturing revenue 10,901 10,912
Research and development expenses 10,046 6,551
Selling, general and administrative expenses 12,199 11,209
Amortization of acquired intangibles 3,358 3,358
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Total costs and expenses 36,504 32,030
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Operating income 3,950 8,614
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Other income (expense):
Investment income, net 770 474
Interest expense (4,957) (4,957)
Other (expense) income, net (670) 307
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(4,857) (4,176)
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(Loss) income before taxes (907) 4,438
Tax (benefit) provision (363) 1,634
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Net (loss) income ($544) $2,804
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Basic (loss) earnings per common share ($0.01) $0.06
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Diluted (loss) earnings per common share ($0.01) $0.06
========== ==========
Weighted average number of common shares issued
and outstanding - basic 43,470 43,290
========== ==========
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,470 43,629
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###
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685 Route 202/206
Phone: (908) 541-8600 Fax: (908) 575-9457
http://www.enzon.com