Enzon Reports First Quarter Fiscal Year 2001 Earnings.Business & Health Editors PISCATAWAY, N.J.--(BUSINESS WIRE)--Nov. 8, 2000 Enzon, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ENZN) announced today its financial results for the first quarter of fiscal year (FY) 2001. For the quarter, the Company reported net earnings of $583,000 or $0.01 per share, as compared to a net loss of $1,950,000 or $0.05 per 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 the approved products, which utilize the Company's PEG technology, and increased interest income resulting from capital raised during the Company's public offering completed in FY 2000. The Company had total cash and interest-bearing investments of approximately $121.5 million as of September 30, 2000. Sales and royalties earned on sales of the approved products, which utilize the Company's PEG technology, for the quarter increased by approximately $2,077,000 or 72%, primarily due to increased ONCASPAR(R) sales. The increase in ONCASPAR sales was due to the lifting of some of the 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. distribution restrictions in place during the prior year's first quarter. These distribution restrictions were related to a previously disclosed manufacturing problem and resulted in prior year 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 the first half of calendar 2001. Resumption of normal distribution and labeling will result in lower revenues 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 Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight . Increased ADAGEN sales, as well as royalties earned on sales of PEG-INTRON, also contributed to the increase in sales for the quarter. PEG-INTRON was approved by the European Union European Union (EU), name given since the ratification (Nov., 1993) of the Treaty of European Union, or Maastricht Treaty, to the European Community in May 2000 and was launched in several European countries throughout the quarter. Additional launches of PEG-INTRON are ongoing and expected to occur throughout the remaining EU-Member States in the upcoming months. To date, PEG-INTRON has been launched in the following European countries: Austria, Finland, France, Germany, Portugal, Sweden and the United Kingdom. PEG-INTRON is a modified form of Schering-Plough's INTRON Intron In split genes, a portion that is included in ribonucleic acid (RNA) transcripts but is removed from within a transcript during RNA processing and is rapidly degraded. (R)A (interferon alfa-2b interferon alfa-2b, recombinant Intron A, Viraferon (UK) Pharmacologic class: Biological response modifier Therapeutic class: Antineoplastic, antiviral Pregnancy risk category C , 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.Cost of sales, as a percentage of sales, decreased to 20%, as compared to 41% for the comparable quarter of the previous year. The decrease was due to increased cost of sales incurred during the prior year's quarter related to the previously disclosed ONCASPAR manufacturing problems and the related inventory reserves that decreased the current year's cost of sales. Research and development expenses for the quarter ended September 30, 2000 increased by 59% to $2,637,000, as compared to $1,657,000 for the quarter ended September 30, 1999. The increase is primarily due to increased expenses related to the ongoing Phase I clinical trials Noun 1. phase I clinical trial - a clinical trial on a few persons to determine the safety of a new drug or invasive medical device; for drugs, dosage or toxicity limits should be obtained phase I for PROTHECAN(TM), as well as other PEG products in preclinical development. The Company currently plans to file an IND on another PEG anti-cancer compound before the end of calendar 2000. Research and development expenses are expected to continue to increase significantly as PROTHECAN moves into Phase II clinical trials Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II in early 2001 and additional compounds enter clinical trials. Selling, general and administrative expenses for the quarter ended September 30, 2000 increased by 32% to $3,074,000, as compared to $2,326,000 for the prior year. This increase was primarily due to increased legal fees associated with patent filing and defense costs. During September 2000, Enzon filed a lawsuit in Federal District Court in New Jersey against Hoffmann-LaRoche, Inc. and Roche Laboratories, Inc. (Roche) for infringement of Enzon's U.S. Patent 6,113,906 (`906). This patent, which has composition of matter claims directed to "branched PEG," a unique form of Enzon's high-molecular-weight pegylation technology, was issued to Enzon by the U.S. Patent and Trademark Office on September 5, 2000. Enzon licenses a different pegylation technology to Schering-Plough for use with PEG-INTRON(TM) (peginterferon alfa-2b peginterferon alfa-2b PEG-Intron, PegIntron (UK), ViraferonPeg (UK) Pharmacologic class: Immunomodulator Therapeutic class: Immunologic agent Pregnancy risk category C (monotherapy), X ), which is approved in the European Union and is currently undergoing FDA review for the treatment of hepatitis C Hepatitis C Definition Hepatitis C is a form of liver inflammation that causes primarily a long-lasting (chronic) disease. Acute (newly developed) hepatitis C is rarely observed as the early disease is generally quite mild. . Enzon is a biopharmaceutical company developing advanced therapeutics for life-threatening diseases through the application of its proprietary drug delivery and targeting technologies, PEG Modification, Pro Drug/Transport technology and Single-Chain Antigen-Binding (SCA (Single Connector Attachment) An 80-pin plug and socket used to connect peripherals. With a SCSI drive, it rolls three cables (power, data channel and ID configuration) into one connector for fast installation and removal. (R)) protein technology. Three products are currently marketed which utilize Enzon's technology: PEG-INTRON marketed by Schering-Plough in Europe for hepatitis C, ONCASPAR(R) for 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), and ADAGEN(R) a treatment for a form of 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 (SCID SCID severe combined immunodeficiency (disease); see under immunodeficiency. SCID abbr. severe combined immunodeficiency SCID severe combined immunodeficiency disease. ), commonly known as the "Bubble Boy Disease." Schering-Plough submitted a Biologics License Application (BLA BLA abbr. Bachelor of Liberal Arts ) to the U.S. Food and Drug Administration (FDA) seeking marketing approval for PEG-INTRON for the treatment of chronic hepatitis Chronic hepatitis Long lasting inflammation of the liver due to viruses or other causes. Mentioned in: Tube Compression of the Esophagus and Stomach chronic hepatitis C in December 1999. In addition to three approved products, Enzon has several products in various stages of clinical development by itself and with partners, including additional indications for PEG-INTRON with Schering-Plough. Recently, Schering-Plough completed Phase III clinical trials for PEG-INTRON in combination with REBETOL for the treatment of hepatitis C. PEG-INTRON is in Phase III clinical trials conducted by Schering-Plough for the treatment of malignant melanoma Malignant Melanoma Definition Malignant melanoma is a type of cancer arising from the melanocyte cells of the skin. Melanocytes are cells in the skin that produce a pigment called melanin. and chronic myelogenous leukemia Chronic myelogenous leukemia (CML) Also called chronic myelocytic leukemia, malignant disorder that involves abnormal accumulation of white cells in the marrow and bloodstream. Mentioned in: Bone Marrow Transplantation . Enzon develops and markets products on its own and through strategic alliances, which in addition to Schering-Plough Corporation, include Alexion Pharmaceuticals, Inc., Baxter Healthcare Corporation, Bristol-Myers Squibb Bristol-Myers Squibb (NYSE: BMY), colloquially referred to as BMS, is a pharmaceutical corporation, formed by a 1989 merger between pharmaceutical companies Bristol-Myers Company, founded in 1887 by William McLaren Bristol and John Ripley Myers in Clinton, NY (both were Company, Eli Lilly Eli Lilly can refer to:
Except for the historical information herein, the matters discussed in this news release 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 the Company's 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. , Form 10-Q's and Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. on file with the SEC, including without limitation, risks in obtaining and maintaining regulatory approval for expanded indications, market acceptance of and continuing demand for Enzon's products and the impact of competitive products and pricing. This release is also available at http://www.enzon.com
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended September 30, 2000 and 1999
September 30, September 30,
2000 1999
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Revenues:
Sales and royalties $4,947,268 $2,870,135
Contract revenue 226,346 43,678
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Total revenues 5,173,614 2,913,813
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Costs and expenses:
Cost of sales 1,001,188 1,178,561
Research and development expenses 2,636,597 1,657,283
Selling, general and administrative
expenses 3,074,227 2,325,971
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Total costs and expenses 6,712,012 5,161,815
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Operating loss (1,538,398) (2,248,002)
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Other income (expense):
Interest and dividend income 2,109,213 300,497
Interest expense -- (2,958)
Other 11,891 --
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2,121,104 297,539
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Net earnings (loss) 582,706 ($1,950,463)
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Basic and diluted earnings (loss)
per common share $0.01 ($0.05)
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Weighted average number of common shares
issued and outstanding 41,101,289 36,650,335
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Weighted average number of common shares
issued and outstanding and dilutive
potential common shares 43,658,659 36,650,335
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