SCHEDULE 14A
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SCHEDULE 14A INFORMATION
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ENZON PHARMACEUTICALS, INC.
(Name of registrant as specified in its charter)
DellaCamera Capital Master Fund, Ltd.,
DellaCamera Capital Fund, Ltd.,
DellaCamera Capital Management, LLC,
Ralph DellaCamera, Jr.,
Andrew Kurtz,
and
Vincent Spinnato
(Name of person(s) filing proxy statement, if other than the registrant)
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On June 10, 2009, DellaCamera Capital Master Fund, Ltd., DellaCamera Capital Management, LLC and certain of the other participants in their proposed solicitation of written consents of the stockholders of Enzon Pharmaceuticals, Inc. (“Enzon”) shared the following presentation with attendees at a meeting of Enzon stockholders and other invited guests held at the Grand Hyatt New York, Alvin Room – Conference Level, 109 East 42nd Street (at Grand Central Terminal), New York, New York at 11:00 a.m. E.S.T.:
June 2009
Investor Presentation by:
Forward-Looking Statements
This report contains forward-looking statements that involve risks and uncertainties. In some cases, you can
identify forward-looking statements by words such as “may,” “will,” “should,” “expects,” “plans,” “likely,”
“believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms and other comparable
terminology. You should not place undue reliance on these forward-looking statements, which speak only as
of the date made. You should also know that such statements are not guaranties of future performance and
are subject to risks, uncertainties and assumptions. Should any of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, actual results may differ substantially from those included
within these forward-looking statements. DellaCamera Capital Management, LLC (“DCM”) undertakes no
obligation to update or advise you of any revision to these forward-looking statements to reflect events or
circumstances occurring after the date they are made or to reflect the occurrence of unanticipated events.
THIS PRESENTATION IS PROVIDED IN CONNECTION WITH THE CONSENT SOLICITATION CONDUCTED BY
DELLACAMERA CAPITAL MASTER FUND LTD. PLEASE READ THE CONSENT SOLICITATION STATEMENT (the
“CONSENT SOLICITATION STATEMENT”) OF DELLACAMERA CAPITAL MASTER FUND, LTD. WHEN IT BECOMES
AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION INCLUDING INFORMATION ABOUT
INDIVIDUALS DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF CONSENTS OF STOCKHOLDERS OF
ENZON PHARMACEUTICALS, INC. YOU MAY OBTAIN THE CONSENT SOLICITATION STATEMENT, OR ANY
OTHER RELEVANT DOCUMENTS, FOR FREE AT WWW.SEC.GOV.
YOU MAY ALSO OBTAIN THE CONSENT SOLICITATION STATEMENT, OR ANY OTHER INFORMATION RELEVANT
TO THE SOLICITATION OF CONSENTS BY DELLACAMERA CAPITAL MASTER FUND, LTD., BY CONTACTING
MACKENZIE PARTNERS, INC., 105 MADISON AVENUE, NEW YORK, NY 10016 AT 800-322-2885. PRESENTLY,
A PRELIMINARY FORM OF THE CONSENT SOLICITATION STATEMENT IS PUBLICLY AVAILABLE.
DellaCamera Capital Management, LLC (“DCM”) is a private investment firm
whose three founders have a combined 70 years of investment experience
Value-oriented investment strategy
One of DCM’s investment strategies is to identify undervalued assets that
have the potential for meaningful appreciation, particularly if managed
appropriately
Strong belief in the rights of shareholders and the underlying principle
that it is the shareholders who own the company
Preference to work in a constructive manner with companies in which we invest
Who We Are
Shareholders of Enzon
Pharmaceuticals, Inc. (“Enzon” or
the “Company”) since July 2007
Approximately $30 million invested
8.3% beneficial ownership ¹
3rd largest beneficial shareholder
Repeated attempts to constructively
add value and improve corporate
governance have been dismissed by
Enzon’s leadership
Retained Moelis & Company LLC
(“Moelis”) as our financial advisor in
November 2008
Notes:
1 Based on 1,000 shares of Common Stock owned of record and 3,781,713 shares of Common Stock reported as being owned
beneficially (and not of
record) by DellaCamera Master Fund as of May 31, 2009; includes 209,424 shares of Common Stock into which 4% Convertible Senior Notes due 2012
held by DellaCamera Master Fund may be convertible and 88,100 shares of Common Stock for which Jan 2010 $10.00 Call Options held by DellaCamera
Master Fund are exercisable
2 Per Enzon’s 4/13/09 DEF14A
DELLACAMERA CAPITAL MANAGEMENT
TOP 5 SHAREHOLDERS OF ENZON
Our History with Enzon
Enzon’s Potential…
Like many shareholders, DCM continues to believe in Enzon’s underlying value
Enzon is a misunderstood and undervalued company
This strong, cash flow generating potential stems from the Specialty Pharmaceuticals and Royalty
businesses which were here prior to the arrival of existing management
2009E operating cash flow prior to R&D expenses between $80 to $90 million¹
Specialty
Pharmaceuticals
(Marketed Products
& Contract
Manufacturing)
Royalty Business
Biotech Pipeline
2008 Revenue = $137.4mm
2008 Segment Profit = $27.3mm
2008 Revenue = $59.6mm
2008 Segment Profit = $59.6mm
PEG-SN38
LNA Platform (HIF-1 alpha,
Survivin, 6 other LNA targets)
VALUE DRIVERS
Diverse revenue streams and cash
flow generating potential from
marketed products
Strong cash flow generation from
royalty streams
Upside optionality from Biotech
pipeline
Note:
1 Derived from Enzon’s February 19, 2009 earnings release noting that the Company expects to remain
operating cash flow neutral with 2009 R&D expenditures expected to be in the range of $80 to $90 million
…Is Still Unrealized
Almost two years after our initial investment, Enzon’s stock continues to trade at a
significant discount to potential intrinsic value
CURRENT VALUE
THEORETICAL VALUE
Management is in its 5th year and still has no actionable plan to eliminate this perpetual discount
($ in millions)
($ in millions)
Notes:
1 As of May 8, 2009
2 As of March 30, 2009
3 As of May 7, 2009
1
2
3
Stock Price Performance Under
Jeffrey H. Buchalter
Since taking over at Enzon, Jeffrey Buchalter oversaw a ~60% decline in share
price through April 21, 2009¹
Enzon
(58%)
S&P 500
(23%)
Nasdaq Biotech
Index
(7%)
Source: Capital IQ and Nasdaq.com
Notes:
1 April 21, 2009 reflects the last trading day price prior to the filing of DCM’s preliminary consent solicitation
statement
2 NASDAQ Biotechnology Index includes securities of Nasdaq-listed companies classified according to the
Industry Classification Benchmark as either Biotechnology or Pharmaceuticals which also meet other
eligibility criteria; index contains over 133 companies including Enzon
Jeffrey Buchalter named Chairman
Jeffrey Buchalter named CEO/President
2005: $2.8mm ²
2006: $3.9mm (35% inc.)
2007: $5.3mm (36% inc.)
Jeffrey Buchalter has enjoyed significant increases in overall compensation over the past
four years while the Company’s share price has continued to fall
COMPANY PERFORMANCE VS. TOTAL CEO COMPENSATION ¹
Source: Company filings and Capital IQ
Notes:
1 Total compensation includes base salary, cash bonus, stock awards, option awards and other compensation
2 2005 data reflects the sum of half the fiscal year ended June 30, 2005 and the six-month transition period
ended December 31, 2005; option awards data unavailable for 2005
2008: $4.9mm (6% dec.)
Stock Price Performance vs.
Compensation
Recent Failed Efforts
In the last year, Jeffrey Buchalter has overseen a number of failed “strategic”
efforts:
Failed sale of Specialty Pharmaceuticals division
Ill-conceived and aborted Biotech spin-off
Woefully under-subscribed debt repurchase
These failed efforts cost the Company $5 million in additional G&A expenses
Example: Failed Sale of Specialty
Pharmaceuticals Business
Portfolio and pipeline expansion
1.5x
$1.3Bn
7/31/08
Geographic and market expansion
1.7x
$300mm
8/4/08
Pipeline expansion
3.2x
$91mm²
2/27/09
Geographic and pipeline expansion
4.4x
$900mm¹
2/9/09
Portfolio and pipeline expansion
2.4x
$95mm
9/16/08
Geographic and market expansion
3.2x
$1.3Bn
9/1/08
Portfolio expansion
8.8x
$1.4Bn
3/12/09
4/20/09
5/18/09
DATE ANNC’D
Portfolio expansion
4.0x
$3.6Bn¹
Portfolio expansion
2.6x
$150mm
REV. MULTIPLE
RATIONALE
TARGET / ACQUIROR
DEAL VALUE
On August 11, 2008, Enzon announced it had received indications of interest for the purchase of all or a
portion of the Specialty Pharmaceuticals business
On November 5, 2008, Enzon announced the conclusion of the process to sell the Specialty Pharmaceuticals
business with no sale consummated
Numerous specialty pharmaceuticals companies have been sold in the last year, many after Enzon
commenced its sale process
At 2.5x 2008 Specialty Pharmaceuticals revenue of $137.4 million, the implied value of the Specialty
Pharmaceuticals business is approximately $344 million. Thus, the value of the Specialty Pharmaceuticals
business alone may be close to the market value of the entire Company
Note:
1 Includes contingent payments
2 Based on February 27, 2009 exchange rate of 1 USD = 1.538 AUD
European
Assets
R&D Spending
Notes:
1 2005 data reflects the sum of half the fiscal year ended June 30, 2005 and the six-month transition period ended December 31, 2005
2 According to the Company, 2009 R&D expenses are expected to range between $80 million and $90 million
$272.7
$85.0 ²
$58.1
$54.6
$42.9
$32.1 ¹
R&D Expenses
Total
2009E
2008
2007
2006
2005
Management will have spent over $270 million in R&D by the end of 2009
($ in millions)
Source: Evivrus Form 10-12B/A, November 24, 2008
Note:
1 Data for pipeline spending only available through September 30, 2008
2 Evivrus Form 10-12B/A, “We currently have other products in preclinical programs and research. Other
products also include research and development candidates that have been discontinued and various
research and development overhead costs” (emphasis added)
PIPELINE SPENDING THROUGH 9/30/08 ¹
The category with the greatest expenditures is the “Other Costs” category ²
On February 10, 2009, Enzon announced the termination of its rhMBL program for failing to achieve
certain developmental thresholds
Through September 2008, Enzon has poured over $34 million into this program. Note that this
dwarfs the amount spent on PEG-SN38
Spending by Pipeline Project
Analyst View of Pipeline Value
Equity analysts value the pipeline at a small fraction of the total funds spent on building it
Buchalter’s chosen R&D projects have inspired little confidence from the analytical
community
Based on the potential value of the Specialty Pharmaceuticals business, Enzon’s current
enterprise value ascribes little value to the Royalty business and no value to the Biotech
pipeline, which implies that investors have even less confidence in the pipeline than
equity analysts
$75.0mm
Oppenheimer 3
$89.0mm
Cowen 2
$50.0mm
Caris 1
Notes:
1 May 8, 2009
2 May 7, 2009
3 March 30, 2009
Lack of Concrete Plan
Jeffrey Buchalter has not offered a concrete plan to increase the stock
price and eliminate the discount to intrinsic value, other than basically
asking for more time
4 ½ years is enough time
Shareholders are not being paid to wait
“…we're well positioned to deliver long-term shareholder value through the maturation of our pipeline”
– Jeffrey Buchalter (Earnings Call, May 7, 2009)
Jeffrey Buchalter, however, is being exceedingly well-paid to wait
“Enzon today is exactly what we sought to create.”
– Jeffrey Buchalter (Annual Meeting, May 21, 2009)
Runaway Compensation
Compensation lavished upon Jeffrey H. Buchalter:
Jeffrey Buchalter has profited handsomely while Enzon’s stock price has languished
Non-Cash Compensation
Cash Compensation
$16,858,911
Total
2,827,760
344,861
N/A
1,369,149
687,500
426,250
2005 ¹
3,886,874
155,313
1,385,352
624,094
1,050,000
672,115
2006
5,255,493
208,495
2,136,283
974,657
1,162,500
773,558
2007
$4,888,784
$178,974
$1,176,603
$1,568,436
$1,111,500
$853,271
2008
Total
Other
Option
Awards
Stock
Awards
Bonus
Salary
Year
Source: Company filings
Note:
1 2005 data reflects the sum of half the fiscal year ended June 30, 2005 and the six-month transition
period ended December 31, 2005; option awards data unavailable for 2005
Now Is the Time for Change
Change is needed, and it must start at the top
We believe shareholders have the right to initiate change
to protect their investment
Can this Board of Directors Effect
the Required Change?
Jeffrey H. Buchalter
Enzon Pharmaceuticals: President, CEO & Chairman of the Board since December 2004
Enzon Pharmaceuticals: Chairman of the Board since September 2004
ILEX Oncology, Inc.: CEO and President from January 2002 to December 2004
Pharmacia Corporation: Group Vice President and Head of the Worldwide Oncology Franchise from 1997 to 2001
Göran Ando, M.D.
Enzon Pharmaceuticals: Director since November 2004; Chairman of the Compensation Committee;
initially identified by Buchalter
Pharmacia Corporation: Executive Vice President and President of R&D, employed at company from 1995 to 2003
Victor Micati
Enzon Pharmaceuticals: Director since November 2004; Lead “Independent” Director; Chairman of the Governance
and Nominating Committee; initially identified by Buchalter
ILEX Oncology, Inc.: Director of ILEX Oncology Inc. since May 2003
Pfizer Inc.: Executive Vice President of the Pharmaceutical Group, employed at company from 1965 to 1999
Robert Salisbury
Enzon Pharmaceuticals: Director since May 2005; Chairman of Finance and Audit Committee
Pharmacia & Upjohn, Inc.: Executive Vice President and CFO, employed at company from 1974 to 1998
Jeffrey Buchalter is Chairman of the Board and 3 out of 7 of Enzon’s non-executive Board Members have prior
connections to Jeffrey Buchalter and each has been named Chairman of a key committee on the Board
“Evergreen” provision effectively makes Jeffrey Buchalter perpetual CEO:
A highly unusual 12-month’s advance notice is required for non-renewal of contract
Board’s refusal to send a notice of non-renewal means Jeffrey Buchalter will hold power
well beyond December 31, 2009 unless shareholders remove him
Mandates that Jeffrey Buchalter serve as the Chairman in addition to President and CEO, an
arrangement that is increasingly under public attack
Source:
1 “How to Rein in the Imperial CEO," Wall Street Journal, 9 July 2008, p. A15
Highly unusual contract inherently allows for a lack of accountability
Buchalter’s Employment Agreement
Is Jeffrey Buchalter the textbook Imperial CEO?
“America's most serious corporate governance problem is the Imperial CEO – a leader who is both chairman
of the company's board of directors as well as its chief executive officer. Such a CEO can dominate his board
and is accountable to no one. This arrangement creates a conflict of interest…
The result of this conflict of interest is excessive CEO compensation and undeserved job security.
Entrenched management leads to empire-building, continued adherence to flawed business
strategies, resistance to change, the stifling of healthy debate in the boardroom, and destruction
of shareholder value.”
– Gary Wilson, Wall Street Journal (7/9/2008) ¹
Consent Solicitation
Proposal 1:
Amend bylaws to permit stockholders to remove Company’s Chief Executive Officer and/or
President from such office(s) and any other officer’s position
Proposal 2:
Remove Jeffrey H. Buchalter as Chief Executive Officer and President and from all officer’s
positions he holds
Proposal 3:
Amend bylaws to require unanimous vote of all Directors in order to amend proposal 1 or 3
DCM’s consent solicitation allows shareholders to exercise their rights and effect change
We believe that the only way to timely effect change is to remove Jeffrey Buchalter by shareholder consent
Disclaimer
DellaCamera Capital Management, LLC (“DCM”) prepared this presentation based on publicly available
information. DCM has not and does not intend to verify independently any of such information, all of which
DCM assumes is accurate and complete in all material respects. If this presentation contains projections,
forecasts or other forward-looking statements, DCM assumes that they were prepared based on the best
available estimates of the future events underlying such statements. This presentation speaks only as of its
date and DCM assumes no duty to update it or to advise any person that its conclusions or advice has
changed.
This presentation is solely for your information purposes only. Consider it along with all other facts, advice and
your own insights before making your own independent decisions. Do not provide a copy of this presentation
to any person without DCM’s prior consent. No other person should rely on it for any purpose. DCM does not
offer tax, accounting or legal advice.
This presentation is not an offer to sell or a solicitation of an indication of interest to purchase any security,
option, commodity, future, loan or currency. It is not a commitment to underwrite any security, to loan any
funds or to make any investment.
Legend
PLEASE READ THE CONSENT SOLICITATION STATEMENT OF DELLACAMERA CAPITAL MASTER FUND, LTD.
WHEN IT BECOMES AVAILABLE, BECAUSE IT CONTAINS IMPORTANT INFORMATION INCLUDING
INFORMATION ABOUT INDIVIDUALS DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF CONSENTS OF
ENZON PHARMACEUTICALS, INC. STOCKHOLDERS. YOU MAY OBTAIN THIS CONSENT SOLICITATION
STATEMENT, OR ANY OTHER RELEVANT DOCUMENTS, FOR FREE AT WWW.SEC.GOV. YOU MAY ALSO OBTAIN
THIS CONSENT SOLICITATION STATEMENT, OR ANY OTHER INFORMATION RELEVANT TO THE SOLICITATION
OF CONSENTS BY DELLACAMERA CAPITAL MASTER FUND, LTD., BY CONTACTING MACKENZIE PARTNERS,
INC., 105 MADISON AVENUE, NEW YORK, NY 10016 AT 800-322-2885. PRESENTLY, A PRELIMINARY FORM
OF THIS CONSENT SOLICITATION STATEMENT IS PUBLICLY AVAILABLE.