UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): May 6, 2011
ENZON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-12957 | 22-2372868 |
| (State or other jurisdiction of | (Commission File Number) | (IRS Employer Identification No.) |
| incorporation) |
| 20 Kingsbridge Road, Piscataway, New Jersey | 08854 | |
| (Address of principal executive offices) | (Zip Code) |
(732) 980-4500
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On May 6, 2011, Enzon Pharmaceuticals, Inc. issued a press release reporting certain financial and other information for the quarter ended March 31, 2011. A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated by reference into this Item 2.02.
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, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, nor shall such information be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise stated in that filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
The following exhibit is furnished herewith:
| Exhibit No. | Description | |
| 99.1 | Press Release of Enzon Pharmaceuticals, Inc. dated May 6, 2011 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ENZON PHARMACEUTICALS, INC. | |||
| (Registrant) | |||
| Date: May 6, 2011 | By: /s/ Andrew Rackear | ||
| Name: | Andrew Rackear | ||
| Title: | Vice President and General Counsel | ||
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release of Enzon Pharmaceuticals, Inc. dated May 6, 2011 |
Exhibit 99.1
 |
For Immediate Release | |
| Investor Contact: | Andrea Rabney | |
| Argot Partners | ||
| 212.600.1902 | ||
| andrea@argotpartners.com | ||
| Media Contact: | Meghan Feeks | |
| Argot Partners | ||
| 212.600.1902 | ||
| meghan@argotpartners.com | ||
ENZON REPORTS 1ST QUARTER 2011 RESULTS
--Investments in R&D translating to continued progress with oncology pipeline--
PISCATAWAY, NJ – May 6, 2011 – Enzon Pharmaceuticals, Inc. (Nasdaq: ENZN) today announced its financial results for the first quarter of 2011.
For the first quarter of 2011, Enzon reported income from continuing operations of $431 thousand, or $0.01 on a diluted per-share basis, as compared to income from continuing operations of $20.8 million, or $0.29 per diluted share for the first quarter of 2010. First quarter 2011 results included a $5.0 million milestone earned upon the approval of a supplemental Biologic License Application (sBLA) for the manufacture of the active ingredient for Oncaspar. Included in the results of continuing operations for the first quarter of 2010 is revenue of $40.9 million from the sale of in-process research and development associated with Oncaspar and Adagen, two of the specialty products sold.
“We have had a productive start to 2011, as we completed our transformation to an R&D organization and successfully executed our strategy focused on the development of our high-value oncology pipeline,” stated Alex Denner, Chairman of the Board. “Our clinical progress, reflected in the initiation of our Phase I trial for our Androgen Receptor antagonist and the presentation of encouraging data from our portfolio of mRNA antagonists, was complemented by our continued commitment to return value to our shareholders through our share repurchase program.”
First Quarter 2011 and Recent Highlights
-
At the 2011 American Association of Cancer Research (AACR) Annual Meeting in April, Enzon presented data from preclinical and clinical studies of four investigational messenger RNA (mRNA) antagonists, demonstrating the compounds’ potential to inhibit key tumor targets that antibodies and small molecules have limited ability to control and access.
-
In January, Enzon announced the FDA had accepted its Investigational New Drug (IND) application for its Androgen Receptor (AR) mRNA antagonist. Following this approval, the Company enrolled and treated the first patient in its Phase I trial of the AR antagonist in castration-resistant prostate cancer.
-
In April, the Company received notice that the U.S. Food and Drug Administration (FDA) granted firtecan-pegol (EZN-2208) orphan drug designation for the treatment of neuroblastoma. Orphan drug designation provides for marketing exclusivity for that indication in the U.S., an expedited review process, a reduction in associated application fees and certain other benefits.
-
During the first quarter of 2011, Enzon repurchased 3.9 million shares of outstanding common stock, totaling $41.5 million. As of April 30, 2011, the Company had purchased a total of 5.7 million shares of outstanding common stock for a cumulative cost of $62.2 million.
Summary of Financial Results
Research and Development
The
Company’s pipeline research and development expenses were $10.5 million for the three months ended March 31, 2011, compared to $11.5
million for the three months ended March 31, 2010. The pipeline consists of the
following programs: PEG-SN38, Hypoxia-Inducible Factor-1α (HIF-1α),
Survivin and AR mRNA antagonists, and additional mRNA antagonists utilizing the
LNA technology. The expenses for the first quarter of 2011 included $5.6 million related to the ongoing Phase II and Phase I studies of PEG-SN38 and $4.6 million related to the development of the mRNA antagonists. This compared
to $4.2 million and $6.4 million, for PEG-SN38 and mRNA antagonists,
respectively, in first quarter 2010.
Revenues
Royalty Revenue
Revenues
received from the Company’s royalty products for the three months ended March 31, 2011 were $11.8 million, as compared to $12.9 million for the three months ended March 31, 2010. Royalties on PEGINTRON,
marketed by Merck & Co., Inc., continue to comprise the majority of the Company’s
royalty revenue and a reported decline in sales of PEGINTRON accounted for essentially
all of the decrease in royalty revenue.
Sale of In-process Research and Development (IPR&D)
During
the first quarter of 2011, the Company received a $5.0 million milestone
payment from the purchaser of the specialty pharmaceutical business resulting
from the approval of an sBLA for the manufacture of Oncaspar.
The Company recorded revenue of $40.9 million in the three-month period ended March 31, 2010 related to the sale of in-process research and development.
General and Administrative
General
and administrative expenses decreased approximately 49 percent to $5.1 million for the three months ended March 31, 2011, as compared to $9.9 million for the three months ended March 31, 2010. The decrease is due
in large part to management’s efforts to contain costs and to reduce the overhead necessary to support the current size and structure of the Company. Also, the first-quarter 2010 expenses included a noncash expense of $2.4 million related
to the acceleration of stock expense associated with the sale of the specialty pharmaceutical business and the resignation of the Company’s former CEO. The Company continues to identify and implement efficiencies to reduce ongoing general and
administrative expenses. Meanwhile, the effects of the fourth-quarter 2010 restructuring and the first-quarter 2011 consolidation of facilities at the Company’s
Piscataway location are expected to generate further savings over the remainder
of 2011.
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Contracted Services
As part of the specialty pharmaceutical sale, Enzon agreed to continue to assist in the development of the next-generation Adagen and Oncaspar programs on a contracted basis. In addition, Enzon agreed to perform ongoing general,
administrative, and selling services as requested by the purchaser. The transition service agreement supporting these activities provides for Enzon to be reimbursed at a cost plus an additional mark-up for all expenses incurred. The level of these
activities has diminished substantially over the period subsequent to the sale of the specialty pharmaceutical business and should decline significantly from 2010 levels throughout the remainder of 2011.
Restructuring Charges
During
the first quarter of 2011, the Company completed the planned relocation of its
corporate offices from Bridgewater, New Jersey to Piscataway, New Jersey. As
a result of having vacated the excess office space in Bridgewater, the Company
incurred a charge during the first quarter of 2011 in the amount of approximately $0.4 million. This amount represents the excess of committed lease costs over potential sublease income. The Company recognized $9.9 million
related to separation benefits in the first quarter of 2010. These expenses related to a workforce reduction involving 64 employees, primarily associated with the sale of the specialty pharmaceutical business and separation costs associated with the
resignation of the Company’s then CEO.
Cash and Investments
Total
cash reserves, which include cash, cash equivalents, short-term investments,
and marketable securities, were $418.9 million as of March 31, 2011, as compared to $460.1 million as of December 31, 2010. During the
first quarter of 2011, the Company expended approximately $41.5 million to purchase 3.9 million shares of its outstanding common stock. Since the inception of a $200 million share repurchase program in December 2010, the Company has
purchased a total of 5.7 million shares of its outstanding common stock for a cumulative cost of $62.2
million through April 30, 2011.
Adjusted Financial Results
For
the three months ended March 31, 2011, Enzon reported an adjusted loss from continuing
operations of $4.2 million, or $(0.07) per diluted share, as compared to an adjusted loss from continuing operations of $10.3
million, or $(0.20) per diluted share, for the three months ended March 31,
2010.
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Reconciliation of GAAP income from continuing operations to adjusted loss from continuing operations
The following table reconciles the Company’s
income and income per diluted share from continuing operations as determined
in accordance with U.S. generally accepted accounting principles (GAAP) to its
adjusted loss and loss per diluted share from continuing operations for the three
months ended March 31, 2011 and 2010:
| Three Months Ended 3/31/11 | Three Months Ended 3/31/10 | |||||||||
| (In thousands, except | (In thousands, except | |||||||||
| per-share data) | per-share data) | |||||||||
| Per diluted | Per diluted | |||||||||
| Income (loss) | share (3 | ) | Income (loss) | share (3 | ) | |||||
| GAAP income from continuing | ||||||||||
| operations | $ 431 | $0.01 | $20,754 | $0.29 | ||||||
| Sale of in-process research and | ||||||||||
| development associated with | ||||||||||
| the specialty pharmaceutical | ||||||||||
| business(1) | (5,000 | ) | - | (40,900 | ) | - | ||||
| Restructuring charge(2) | 359 | - | 9,889 | - | ||||||
| Adjusted loss from continuing | ||||||||||
| operations (4) | ($4,210 | ) | ($0.07 | ) | ($10,257 | ) | ($0.20 | ) | ||
| (1) |
Adjusted financial results exclude the sale of in-process research and development associated with the sale of the Company’s specialty pharmaceutical business and the subsequent milestone payment. |
| (2) |
Adjusted financial results exclude restructuring charges associated with: on-going lease commitments for vacated corporate offices and severance associated with termination of employees involved with the Company’s specialty pharmaceutical business and certain general and administrative functions including the resignation of the former CEO. |
| (3) |
The diluted earnings per share computations involve inclusion of dilutive shares in the denominator and other adjustments to reflect an assumed conversion of notes payable. Such factors are not included in the computation of diluted loss per share. A per-share computation of the individual reconciling items in this display is not meaningful as a result of the two different bases of computation of the other elements. |
| (4) |
Adjusted loss and adjusted loss per diluted share from continuing operations, as the Company defines them, may differ from similarly named measures used by other entities and consequently, could be misleading unless all entities calculated and defined such items in the same manner. The Company believes that investors’ understanding of its performance is enhanced by disclosing adjusted net loss and adjusted net loss per diluted share reflecting adjustments for certain items that the Company deems to affect comparability between periods. |
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About Enzon
Enzon Pharmaceuticals,
Inc. is a biotechnology company dedicated to the research and development of
innovative therapeutics for cancer patients with high unmet medical needs. Enzon’s
drug-development programs utilize two platforms - Customized PEGylation Linker
Technology (Customized Linker Technology®)
and third-generation mRNA-targeting agents utilizing the Locked Nucleic Acid
(LNA) technology. Enzon currently has four compounds in human clinical development
and multiple novel LNA targets in preclinical research. Enzon receives royalty
revenues from licensing arrangements with other companies related to sales of
products developed using its proprietary Customized Linker Technology. Further
information about Enzon and this press release can be found on the Company’s
website at www.enzon.com.
Forward Looking Statements
There
are forward-looking statements contained herein, which can be identified by the
use of forward-looking terminology such as the words “believes,” “expects,” “may,” “will,”
“should,” “potential,” “anticipates,” “plans,” or “intends” 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 indicated in such forward-looking statements. Such factors include but are not limited to the timing, success and cost of clinical
studies for Enzon’s product candidates, the ability to obtain regulatory approval of Enzon’s product candidates, Enzon’s ability to obtain the funding necessary to develop its product candidates, market acceptance of and demand for
Enzon’s product candidates, and the impact of competitive products, pricing and technology. A more detailed discussion of these and other factors that could affect results is contained in Enzon’s filings with the U.S. Securities and
Exchange Commission, including Enzon’s most recent Annual Report on Form
10-K for the year ended December 31, 2010 . These factors should be considered
carefully and readers are cautioned not to place undue reliance on such forward-looking
statements. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. All information in this press release
is as of the date of this press release and Enzon does not intend to update this
information.
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Enzon Pharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months ended March 31, 2011 and 2010
(In thousands, except per-share amounts)
(Unaudited)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2011 | 2010 | |||||||
| Revenues: | ||||||||
| Royalties | $ | 11,762 | $ | 12,901 | ||||
| Sale of in-process research and development | 5,000 | 40,900 | ||||||
| Contract research and development | 1,094 | 2,609 | ||||||
| Miscellaneous income | 166 | 1,843 | ||||||
| Total revenues | 18,022 | 58,253 | ||||||
| Operating expenses: | ||||||||
| Research and development – pipeline | 10,548 | 11,515 | ||||||
| Research and development – specialty and contracted services | 647 | 3,059 | ||||||
| General and administrative | 5,086 | 9,932 | ||||||
| General and administrative – contracted services | 58 | 1,400 | ||||||
| Restructuring charge | 359 | 9,889 | ||||||
| Total operating expenses | 16,698 | 35,795 | ||||||
| Operating income | 1,324 | 22,458 | ||||||
| Other income (expense): | ||||||||
| Investment income, net | 459 | 971 | ||||||
| Interest expense | (1,480 | ) | (2,676 | ) | ||||
| Other, net | 128 | 1 | ||||||
| Total other income (expense) | (893 | ) | (1,704 | ) | ||||
| Income from continuing operations before income tax provision | 431 | 20,754 | ||||||
| Income tax provision | - | - | ||||||
| Income from continuing operations | 431 | 20,754 | ||||||
| Income and gain from discontinued operations, net of income tax | - | 179, 053 | ||||||
| Net income | $ | 431 | $ | 199,807 | ||||
| Earnings per common share - continuing operations | ||||||||
| Basic | $ | 0.01 | $ | 0.40 | ||||
| Diluted | $ | 0.01 | $ | 0.29 | ||||
| Earnings per common share – discontinued operations | ||||||||
| Basic | $ | - | $ | 3.42 | ||||
| Diluted | $ | - | $ | 2.41 | ||||
| Earnings per common share – net income | ||||||||
| Basic | $ | 0.01 | $ | 3.82 | ||||
| Diluted | $ | 0.01 | $ | 2.70 | ||||
| Weighted-average shares - basic | 58,002 | 52,284 | ||||||
| Weighted-average shares - diluted | 58,736 | 74,242 | ||||||
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Enzon Pharmaceuticals, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, 2011 and December 31, 2010
(In thousands)
(Unaudited)
| March 31, | December 31, | ||||||
| 2011 | 2010 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and short-term investments | $ | 405,522 | $ | 428,700 | |||
| Other current assets | 4,589 | 5,916 | |||||
| Total current assets | 410,111 | 434,616 | |||||
| Property and equipment, net | 20,223 | 21,574 | |||||
| Other assets: | |||||||
| Marketable securities | 13,334 | 31,394 | |||||
| Other assets | 1,175 | 1,273 | |||||
| Total other assets | 14,509 | 32,667 | |||||
| Total assets | $ | 444,843 | $ | 488,857 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable and accrued expenses | $ | 14,529 | $ | 18,387 | |||
| Total current liabilities | 14,529 | 18,387 | |||||
| Notes payable | 134,499 | 134,499 | |||||
| Other liabilities | 4,355 | 4,114 | |||||
| Total liabilities | 153,383 | 157,000 | |||||
| Stockholders’ equity | 291,460 | 331,857 | |||||
| Total liabilities and stockholders’ equity | $ | 444,843 | $ | 488,857 | |||
| Common shares outstanding | 55,053 | 58,818 | |||||
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