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 7, 2001
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-237286
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
20 Kingsbridge Road, Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 980-4500
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N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
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ENZON REPORTS SECOND QUARTER FISCAL YEAR 2001 EARNINGS
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Enzon, Inc. announced today its financial results for the second quarter of
fiscal year (FY) 2001. For the quarter, the Company reported net earnings of
$2,137,000 or $0.05 per diluted share, as compared to a net loss of $1,510,000
or $0.04 per diluted share, for the same period in FY 2000. The earnings for the
quarter were principally due to increased sales and royalties earned on sales of
products which utilize the Company's PEG technology, and increased interest
income resulting from capital raised in the Company's public offering completed
in March 2000. The Company had total cash and interest-bearing investments of
approximately $122 million as of December 31, 2000.
Sales and royalties earned on sales of products which utilize the Company's
PEG technology, increased by approximately $2,255,000 or 60% during the quarter
ended December 31, 2000, as compared to the prior year, primarily due to
increased ONCASPAR(R) sales and the royalties earned on sales of PEG-INTRON.
PEG-INTRON was approved by the European Union in May 2000 and is now being sold
in Europe for the treatment of hepatitis C. PEG-INTRON received marketing
authorization from the United States Food and Drug Administration in January
2001 and is expected to be available in the United States beginning in February
2001. PEG-INTRON is a modified form of Schering-Plough's INTRON(R)A (interferon
alfa-2b, recombinant) that was developed using Enzon's PEG technology to have
longer-acting properties. Under the Company's licensing agreement with
Schering-Plough, Enzon is entitled to royalties on worldwide sales of PEG-INTRON
and milestone payments.
The increase in ONCASPAR sales was due to the lifting of the FDA
distribution and labeling restrictions that had been in place during the prior
year's second quarter. These restrictions were related to a previously disclosed
manufacturing problem and resulted in the prior year's sales being significantly
lower. During October 2000, the FDA gave final approval to the Company's
manufacturing changes to correct these manufacturing problems and removed all
previously imposed distribution and labeling restrictions. This will allow for
the resumption of normal distribution and labeling of this product by the
Company's marketing partner, Aventis Pharmaceuticals (formerly Rhone-Poulenc
Rorer Pharmaceuticals, Inc.), which is expected to take place in calendar 2001.
Resumption of normal distribution and labeling will result in lower revenues to
Enzon from this product in future quarters when Aventis resumes distribution of
the product and the Company's revenue stream reverts back to a 27.5% royalty
rate on net sales.
Cost of sales, as a percentage of sales, decreased to 15%, as compared to
21% for the comparable quarter of the previous year. The decrease was due to the
resolution of the previously disclosed ONCASPAR manufacturing problem which
resulted in prior year inventory reserves and manufacturing inefficiencies, as
well as the royalty revenue related to PEG-INTRON which does not have a
corresponding cost of sales. Schering-Plough bears all manufacturing costs
related to PEG-INTRON.
Research and development expenses for the quarter ended December 31, 2000
increased by 30% to $2,509,000, as compared to $1,933,000 for the quarter ended
December 31, 1999. The increase was due primarily to increases in research
personnel and increased expenses related to
clinical and preclinical activities for PROTHECAN(TM), PEG-paclitaxel, and other
PEG products in preclinical development. The Company filed an IND for
PEG-paclitaxel during December 2000 and is planning to begin Phase I clinical
trials during the first half of calendar 2001. Research and development expenses
are expected to continue to increase significantly as PROTHECAN and
PEG-paclitaxel advance further along in clinical development and additional
compounds enter clinical trials.
Selling, general and administrative expenses for the quarter ended December
31, 2000 decreased by 11% to $2,514,000, as compared to $2,810,000 for the prior
year. This decrease was primarily due to the timing of expenditures related to
legal fees associated with patent filing and litigation costs.
Interest and dividend income for the second quarter FY 2001 increased by
$1,756,000 to $2,055,000, as compared to $299,000 for the prior year. This
increase was due to an increase in interest bearing investments.
For the six months ended December 31, 2000, the Company reported net income
of $2,709,000 or $0.06 per diluted share, as compared to a net loss of
$3,460,000 or $0.09 per diluted share for the six months ended December 31,
1999. The earnings for the current year period were primarily due to increased
sales and royalties earned on sales of products which utilize the Company's PEG
technology and increased interest income as a result of increased
interest-bearing investments.
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended December 31, 2000 and 1999
(unaudited)
December 31, December 31,
2000 1999
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Revenues:
Sales and royalties $6,002,201 $3,746,768
Contract revenue 16,944 18,304
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Total revenues 6,019,145 3,765,072
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Costs and expenses:
Cost of sales 871,024 792,921
Research and development expenses 2,508,672 1,932,969
Selling, general and administrative expenses 2,513,810 2,810,438
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Total costs and expenses 5,893,506 5,536,328
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Operating income (loss) 125,639 (1,771,256)
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Other income (expense):
Interest and dividend income 2,055,488 298,725
Interest expense -- (926)
Other (22) (36,274)
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2,055,466 261,525
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Net income (loss) before taxes 2,181,105 ($1,509,731)
Provision for income taxes 43,622 --
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Net income (loss) after taxes $2,137,483 ($1,509,731)
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Basic earnings (loss) per common share $0.05 ($0.04)
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Diluted earnings (loss) per common share $0.05 ($0.04)
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Weighted average number of common shares
issued and outstanding 41,568,723 37,020,464
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Weighted average number of common shares issued
and outstanding and dilutive potential common shares 43,850,319 37,020,464
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ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months ended December 31, 2000 and 1999
(unaudited)
December 31, December 31,
2000 1999
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Revenues:
Sales and royalties $10,949,469 $6,616,903
Contract revenue 243,290 61,982
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Total revenues 11,192,759 6,678,885
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Costs and expenses:
Cost of sales 1,872,212 1,971,482
Research and development expenses 5,145,269 3,590,252
Selling, general and administrative expenses 5,588,037 5,136,409
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Total costs and expenses 12,605,518 10,698,143
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Operating loss (1,412,759) (4,019,258)
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Other income (expense):
Interest and dividend income 4,164,701 599,222
Interest expense -- (3,884)
Other 11,869 (36,274)
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4,176,570 559,064
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Net income (loss) before taxes 2,763,811 (3,460,194)
Provision for income taxes 55,276 --
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Net income (loss) after taxes $2,708,535 ($3,460,194)
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Basic earnings (loss) per common share $0.07 ($0.09)
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Diluted earnings (loss) per common share $0.06 ($0.09)
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Weighted average number of common shares
issued and outstanding 41,335,006 36,835,399
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Weighted average number of common shares issued and outstanding and
dilutive potential common shares 43,555,087 36,835,399
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Except for the historical information herein, the matters discussed in this
Form 8-K 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 Enzon's Form 10-K, Form 10-Q's and Form 8-K on
file with the SEC, including without limitation, risks in obtaining and
maintaining regulatory approval for Enzon's products and expanded indications
for such products, market acceptance of and continuing demand for Enzon's
products and the impact of competitive products and pricing.
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 13, 2000
ENZON, INC.
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(Registrant)
By: /s/ Kenneth J. Zuerblis
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Kenneth J. Zuerblis
Vice President, Finance and
Chief Financial Officer