Enzon Reports First Quarter 2007 Results.Company continues its transformation BRIDGEWATER, N.J. -- Enzon Pharmaceuticals, Inc. (Nasdaq: ENZN) today announced its financial results for the first quarter of 2007. For the three months ended March 31, 2007, Enzon reported a net loss of $1.9 million or $0.04 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared to net income of $21.7 million or $0.50 per diluted share for the same quarter in 2006. First quarter results in 2006 were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the $13.8 million gain from the sale of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has . "Our results this quarter are very much in line with our stated goal of investing in novel development programs, particularly in oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. ." said Jeffrey H. Buchalter, chairman and chief executive officer of Enzon. "We are building an impressive pipeline, utilizing cutting-edge technology that we hope will transform tomorrow's therapeutic options for cancer patients." Recent Highlights: * The PEG-SN38 IND was approved by the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) * The HIF-1 alpha antagonist antagonist /an·tag·o·nist/ (an-tag´o-nist) 1. a substance that tends to nullify the action of another, as a drug that binds to a cell receptor without eliciting a biological response, blocking binding of substances that could IND was approved by the FDA, and the Phase 1 solid tumors and lymphoma lymphoma, a cancer of the tissue of the lymphatic system. There are two categories of lymphomas. One type is termed Hodgkin's disease, the other, non-Hodgkin's lymphoma (see lymphoma, non-Hodgkin's). See also neoplasm. study is currently enrolling patients * The FDA granted DepoCyt([R]) a full approval for the treatment of patients with lymphomatous lymphomatous pertaining to, or of the nature of, lymphoma. meningitis meningitis (mĕnĭnjī`tĭs) or cerebrospinal meningitis (sĕr'əbrōspī`nəl), acute inflammation of the meninges, the membranes that cover and protect the brain and spinal cord. . DepoCyt was previously granted approval under the FDA's Sub Part H regulation * The Company announced its plan to consolidate its manufacturing facilities to its Indianapolis, Indiana “Indianapolis” redirects here. For other uses, see Indianapolis (disambiguation). Indianapolis (IPA: [ˌɪndiəˈnæpəlɪs]) is the capital city of the U.S. site * The Company retired $4.0 million in convertible debt due in July 2008. Financial Results For the three months ended March 31, 2007, Enzon reported an adjusted net loss of $1.9 million or $0.04 per diluted share, as compared to an adjusted net income of $7.9 million or $0.18 per diluted share for the three months ended March 31, 2006. Revenues The following table reflects the revenues generated by product and segment for each of the three-month periods ended March 31, 2007 and 2006. [TABLE OMITTED] Products Segment Products segment sales, comprised of sales of Oncaspar([R]), DepoCyt([R]), Abelcet([R]) and Adagen([R]), were $22.7 million for the three months ended March 31, 2007, compared to $24.3 million for the three months ended March 31, 2006. The Company continues to experience growth in its oncology products, Oncaspar and DepoCyt. The decrease in sales for the product segment this quarter is mainly attributable to the continued competitive environment for Abelcet. Oncaspar sales grew to $7.5 million or 16 percent for the three months ended March 31, 2007, as compared to $6.4 million for the three months ended March 31, 2006. Oncaspar is a PEG-enhanced version of the naturally occurring enzyme L-asparaginase, and is used as a component of a multi-agent chemotherapeutic regimen regimen /reg·i·men/ (rej´i-men) a strictly regulated scheme of diet, exercise, or other activity designed to achieve certain ends. reg·i·men n. 1. for the first-line treatment A first-line treatment or first-line therapy is a medical therapy recommended for the initial treatment of a disease, sign or symptom, usually on the basis of empirical evidence for its efficacy. of patients with acute lymphoblastic leukemia acute lymphoblastic leukemia n. Abbr. ALL Lymphoblastic leukemia occurring mainly in older adults, characterized by rapid onset and progression of symptoms. Also called acute lymphocytic leukemia. (ALL). The growth in Oncaspar this quarter was related to its continued adoption in certain protocols by hospitals and cooperative groups resulting in an increase in demand for the product. The July 2006 approval by the FDA of Oncaspar for the first-line treatment of patients with ALL has facilitated this trend. Enzon's Phase 1 study investigating Oncaspar in combination with gemcitabine in patients with solid tumors and lymphoma continued to enroll patients this quarter. As recently announced, the FDA granted full approval of DepoCyt, a sustained-release formulation of the chemotherapeutic agent chemotherapeutic agent An agent used to treat CA, administered in 'regimens'-one or more 'cycles' that combine 3 or more agents over wks; CAs are toxic to any cell with a high rate of proliferation–the CA itself, the GI tract–causing N&V, cytarabine arabinoside, or ara-C, for the treatment of lymphomatous meningitis. Sales of DepoCyt increased 14 percent to $2.4 million for the three months ended March 31, 2007, as compared to $2.1 million for the three months ended March 31, 2006. Given the small number of patients treated with DepoCyt, quarterly sales variability will likely continue. Sales of Abelcet in the U.S. and Canada for the three months ended March 31, 2007 were $7.7 million, down 27 percent as compared to $10.5 million for the three months ended March 31, 2006. This decrease was due to the continued competitive conditions in the antifungal antifungal /an·ti·fun·gal/ (-fung´gal) 1. destructive to fungi, or suppressing their reproduction or growth; effective against fungal infections. 2. an agent that so acts. market. Enzon continues to make select investment in the sales and marketing of this product to address these competitive challenges. Sales of Adagen, an enzyme replacement therapy Enzyme replacement therapy is a medical treatment replacing an enzyme in patients in whom that particular enzyme is deficient or absent. Usually this is done by giving the patient an intravenous (IV) infusion containing the enzyme. used to treat adenosine deaminase adenosine deaminase /aden·o·sine de·am·i·nase/ (ADA) (de-am´i-nas) an enzyme that catalyzes the hydrolytic deamination of adenosine to form inosine, a reaction of purine metabolism. (ADA Ada, city, United States Ada (ā`ə), city (1990 pop. 15,820), seat of Pontotoc co., S central Okla.; inc. 1904. It is a large cattle market and the center of a rich oil and ranch area. ) deficiency in patients with severe combined immunodeficiency disease Noun 1. severe combined immunodeficiency disease - a congenital disease affecting T cells that can result from a mutation in any one of several different genes; children with it are susceptible to infectious disease; if untreated it is lethal within the first year or , were $5.1 million, a decrease of 4 percent for the three months ended March 31, 2007, as compared to $5.3 million for the three months ended March 31, 2006. This market has a very small number of patients so quarter-to-quarter variability is not uncommon. Royalties Segment Revenues from the Company's Royalties segment for the three months ended March 31, 2007 were $16.3 million, as compared to $17.2 million for the three months ended March 31, 2006. The reduction in royalties from the prior year was due primarily to expected competition for Macugen in the U.S. The majority of royalties is comprised of royalty revenue the Company receives on sales of PEG-INTRON, which remained relatively stable this quarter. Contract Manufacturing Segment The Company's revenues from its Contract Manufacturing segment were $2.5 million for the three months ended March 31, 2007, as compared to $3.2 million in the corresponding period of the prior year. The contract manufacturing segment includes contract manufacturing revenues related to services the Company provides for a number of customers who require injectable in·ject·a·ble adj. Capable of being injected. Used of a drug. n. A drug or medicine that can be injected. products. The decrease in contract manufacturing revenue was primarily attributable to the timing of shipments to its customers. Cost of Product Sales and Contract Manufacturing The Company's cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold was $11.5 million for the three months ended March 31, 2007, as compared to $10.5 million for the three months ended March 31, 2006. This increase is associated with the timing of production of certain products, as well as the additional amortization of the payment made to secure the supply of L-asparaginase. Research and Development The Company's research and development (R&D) expenses were $13.2 million for the three months ended March 31, 2007, as compared to $7.0 million for the three months ended March 31, 2006. This significant increase in R&D was expected and was attributable to the multiple programs underway to build the Company's product pipeline. This includes research and development programs for rhMBL, PEG-SN38, Oncaspar, the HIF-1 alpha antagonist and other LNA- and PEGylation-based programs. Enzon remains committed to its objective of delivering long-term value by creating a differentiated oncology pipeline. Selling, General and Administrative Selling, general and administrative expenses increased to $16.2 million for the three months ended March 31, 2007, as compared to $15.8 million for the three months ended March 31, 2006. Selling, General and Administrative expenses remained relatively constant. The Company continues to make selective investments in selling, marketing, and other initiatives to further its objective of delivering long-term value. Restructuring Charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. The Company announced in February 2007 plans to consolidate its manufacturing site in South Plainfield South Plainfield, borough (1990 pop. 20,489), Middlesex co., NE N.J.; inc. 1926. It is the seat of several research and consulting firms and has plants that make chemicals, plastics, spices and flavorings, cosmetics, rubber products, pigments, electrical machinery, , NJ into its Indianapolis site. As a result of this decision, the Company recorded a $0.6 million charge this quarter for related severance costs that will be paid at the completion of the consolidation. As reported, the Company expects to incur $8.0 million to $10.0 million in costs associated with the restructuring in 2007. In 2008, the Company expects to experience costs associated with lease and other asset write-offs of as much as $8.0 million. Other Income (Expense) Net other income (expense) is comprised of investment income, interest expense, and other non-operating expenses. The Company reported other expense of $1.9 million for the three months ended March 31, 2007, as compared to other income of $10.7 million in the same period in the prior year. The difference is due primarily to the gain of $13.8 million from the sale of Nektar shares in the first quarter of 2006. During the first quarter of 2007, the Company purchased $4.0 million of its outstanding convertible debt due in 2008. This purchase resulted in a small gain due to the purchase at a discount to par. Cash and Investments Total cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. decreased to $198.4 million as of March 31, 2007, as compared to $240.6 million as of December 31, 2006. Cash reserves include cash, cash equivalents, short-term investments, and marketable securities. The net decrease in cash reserves was primarily the result of payments communicated in February 2007 when the Company announced their results for the year ended December 31, 2006. These obligations, were included in the Company's December 31, 2006 financial statements, however the payments were made in the first quarter of 2007. These payments include the $5.0 million milestone for filing the HIF-1 alpha antagonist IND, the $17.5 million payment to Ovation to secure the long-term supply of L-asparaginase, and the $7.0 million payment for related legal services legal services n. the work performed by a lawyer for a client. associated with the new supply agreement. In addition, this quarter, the Company retired $4.0 million of its convertible notes. Reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income (loss) to adjusted net income (loss) The following table reconciles the Company's net (loss) income and net (loss) income per diluted share as determined in accordance with U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) to its adjusted net (loss) income and net (loss) income per diluted share for the three months ended March 31, 2007 and 2006, respectively: [TABLE OMITTED] Conference Call and Webcast Enzon will be hosting a conference call today, May 2, 2007 at 10:00 a.m. E.D.T. All interested parties may access the call by using the following information:
Domestic Dial-In Number: (866) 334-3876
International Dial-In Number: (416) 849-4292
Access Code: Enzon
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 telephone rebroadcast will be available following the call from May 2, 2007, at approximately 12:00 p.m. E.D.T. This rebroadcast will end on May 9, 2007, at approximately 11:59 p.m. E.D.T. The rebroadcast may be accessed using the following information:
Domestic Dial-In Number: (866) 245-6755
International Dial-In Number: (416) 915-1035
Access Code: 807365
About Enzon Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development, manufacturing, and commercialization of important medicines for patients with cancer and other life-threatening conditions. Enzon has a portfolio of four marketed products, Oncaspar([R]), DepoCyt([R]), Abelcet([R]) and Adagen([R]). The Company's drug development programs utilize several cutting-edge approaches, including its industry-leading PEGylation technology platform used to create product candidates with benefits such as reduced dosing frequency and less toxicity. Enzon's PEGylation technology was used to develop two of its products, Oncaspar and Adagen, and has created a royalty revenue stream from licensing partnerships for other products developed using the technology. Enzon also engages in contract manufacturing for several pharmaceutical companies to broaden the Company's revenue base. Further information about Enzon and this press release can be found on the Company's web site at www.enzon.com. Forward Looking Statements There are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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; the ability to obtain regulatory approval of products, market acceptance of, and continuing demand for, Enzon's products and the impact of competitive products and pricing. A more detailed discussion of these and other factors that could affect results is contained in our filings with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2006 and our quarterly reports on Form 10-Q Form 10-Q See 10-Q. . 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. [TABLE OMITTED] [TABLE OMITTED] |
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