Enzon Reports First Quarter Results; Product Sales Increase 10% Over Prior Year and Comprise Nearly 70% of Revenues.BRIDGEWATER, N.J. -- Enzon Pharmaceuticals, Inc. (Nasdaq:ENZN) today announced its financial results for the quarter ended September 30, 2004, the first quarter of Enzon's fiscal year (FY) 2005. Several recent corporate highlights are as follows: --A collaboration was formed with Pharmagene to engineer a PEG enhanced version of Pharmagene's drug candidate PGN PGN Portable Game Notation (chess) PGN Procuraduria General de la Nación (Spanish) PGN Philadelphia Gay News PGN Parameter Group Number PGN Phi Gamma Nu (business fraternity) 0052 for clinical development. PGN0052 is being initially investigated as a treatment for cystic fibrosis cystic fibrosis (sĭs`tĭk fībrō`sĭs), inherited disorder of the exocrine glands (see gland), affecting children and young people; median survival is 25 years in females and 30 years in males. and is currently being evaluated in a Phase 2a proof of concept trial. Under this agreement, Enzon has the option to either jointly develop and commercialize the product or receive future royalties and certain co-marketing rights. --Enzon and Inex Pharmaceuticals Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension : INX INX Information Exchange INX Increment Index Register INX Ion Exchange INX Internet Exchange INX Increment Register Pair ) announced that MARQIBO(R) (vincristine sulfate vin·cris·tine sulfate n. The sulfate salt of a dimeric alkaloid obtained from a plant of the genus Vinca that exhibits antineoplastic activity similar to that of vinblastine sulfate and is used especially in the treatment of lymphocytic liposomes Liposomes Aqueous compartments enclosed by lipid bilayer membranes; liposomes are also known as lipid vesicles. Phospholipid molecules consist of an elongated nonpolar (hydrophobic) structure with a polar (hydrophilic) structure at one end. injection) will be reviewed at the FDA's Oncologic Drugs Advisory Committee (ODAC ODAC Old Dominion Athletic Conference ODAC Oracle Data Access Components ODAC Oil Depletion Analysis Centre ODAC Oncologic Drugs Advisory Committee ODAC Open Democracy Advice Centre ODAC Open Document Architecture Consortium ODAC Old Dominion Aquatic Club ) session scheduled for December 1, 2004. 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. is currently reviewing a New Drug Application (NDA (Non Disclosure Agreement) An agreement signed between two parties that have to disclose confidential information to each other in order to do business. In general, the NDA states why the information is being divulged and stipulates that it cannot be used for any ) for MARQIBO for patients with relapsed aggressive non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma (NHL NHL Non-Hodgkin's lymphoma, see there ) previously treated with at least two combination chemotherapy regimens Chemotherapy regimens are often identified with acronyms, identifying the agents used in combination. Unfortunately, the letters used are not consistent across regimens, and in some cases (for example, "BEACOPP") the same letter is used to represent two different treatments. . Inex and Enzon expect a response on the NDA by January 15, 2005. --Jeffrey Buchalter was named Enzon's Non-Executive Chairman of the Board marking an important first step in formalizing Enzon's leadership for its next stage of growth. Mr. Buchalter brings extensive industry experience to Enzon's Board of Directors. --Eyetech Pharmaceuticals Inc. (Nasdaq: EYET) presented Macugen(TM) (pegaptanib sodium injection pegaptanib sodium injection Macugen Pharmacologic class: Selective vascular endothelial growth factor (VEGF) antagonist Therapeutic class: Ophthalmic agent Pregnancy risk category B ) to the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Food and Drug Administration's (FDA) Dermatologic and Ophthalmic Drugs Advisory Committee. Eyetech has licensed PEGylation technology for use in Macugen from Nektar Therapeutics (Nasdaq: NKTR). Under a strategic alliance formed in 2002, Enzon licensed proprietary PEGylation technology to Nektar and will receive a share of Nektar's royalties or profits if and when Macugen is approved. Macugen is being jointly developed by Eyetech and Pfizer (NYSE NYSESee: New York Stock Exchange : PFE 1. (text, editor) PFE - Programmer's File Editor. 2. (language) PFE - Portable Forth Environment. ). The product has received a priority review designation by the FDA and the Prescription Drug User Fee Act The Prescription Drug User Fee Act (PDUFA) was a law passed by the United States Congress in 1992 which allowed the Food and Drug Administration (FDA) to collect fees from drug manufacturers to fund the new drug approval process. (PDUFA PDUFA Prescription Drug User Fee Act of 1992 (USA) ) date is December 17, 2004. --PEG-INTRON(R) received marketing approval in Japan for use in combination with REBETOL(R) 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. PEG-INTRON and REBETOL combination therapy is the first and only PEGylated interferon-based combination therapy approved in Japan. An estimated 1 to 2 million Japanese are chronically infected with 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. . PEG-INTRON uses proprietary PEG technology developed by Enzon. Schering-Plough holds an exclusive worldwide license and Enzon is entitled to royalties on worldwide product sales. Financial Results The Company reported an adjusted net loss of $113,000 or $0.00 per diluted share for the first quarter of FY 2005, versus adjusted net income of $3.0 million or $0.07 per diluted share for the first quarter of FY 2004. The decrease in adjusted net income versus the prior year was primarily due to a $3.7 million decline in royalties, which are predominately made up of royalties from sales of PEG-INTRON. Additionally, earnings for the quarter ended September 30, 2004 were negatively impacted by the voluntary recall of certain batches of ONCASPAR(R), which drove a $381,000 decline in sequential ONCASPAR sales. ONCASPAR sales were $4.4 million for the first quarter of FY 2005 as compared to $4.7 million for the fourth quarter of FY 2004. The Company's adjusted net loss and adjusted net income for the first quarters of FY 2005 and FY 2004 excludes tax-adjusted other expense related to the Company's protective collar arrangement. The protective collar is a derivative hedging instrument, which the Company entered into to reduce its exposure associated with the 1.5 million shares of NPS NPS National Park Service NPS Naval Postgraduate School NPS Net Promoter Score (customer management) NPS Non-Point Source pollution NPS Native Plant Society NPS Norfolk Public Schools (Virginia) Pharmaceuticals Inc. (Nasdaq:NPSP NPSP New Parent Support Program NPSP National Polio Surveillance Project (India) NPSP Native Plant Stewardship Program (Washington Native Plant Society) NPSP Nonparametric Statistical Package ) common stock received under the merger termination agreement with NPS. Enzon has reported adjusted net income because the Company believes that it is representative of the underlying operations of its business and is relevant to gaining an understanding of the Company's trends and potential future performance. The Company has included a table reconciling its GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss and GAAP net income to its adjusted net loss and adjusted net income for the first quarter of FY 2005 and FY 2004 later in this release. On a reported basis, calculated 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), Enzon reported a net loss of $544,000 or $0.01 cents per diluted share for the first quarter of FY 2005, as compared to net income of $2.8 million or $0.06 cents per diluted share for the first quarter of FY 2004. Combined product sales for the Company's four internally marketed products (ABELCET(R), ONCASPAR, DEPOCYT(R), and ADAGEN(R)) increased by 10% to $27.5 million for the first quarter of FY 2005 versus $25.0 million for the prior year's comparable quarter. This increase was primarily attributable to increased ABELCET, DEPOCYT, and ONCASPAR sales. For the first quarter of FY 2005, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. sales of ABELCET were $16.5 million compared with $15.0 million for the first quarter of FY 2004. Sales of ONCASPAR for the first quarter of FY 2005 increased 7% to $4.4 million, as compared to $4.1 million for the first quarter of FY 2004. While the Company continues to experience strong demand for ONCASPAR, sales for the first quarter of FY 2005 were negatively impacted by the previously mentioned voluntary batch recalls that were implemented by Enzon. The voluntary recalls were due to the Company's previously disclosed manufacturing and stability problems in the manufacture of ONCASPAR as it uses Enzon's earlier stage PEGylation technology. Sales of DEPOCYT increased 82% to $2.3 million for the first quarter of FY 2005, as compared to $1.3 million for the first quarter of FY 2004. ADAGEN sales for the first quarter of FY 2005 decreased 7% to $4.3 million versus $4.6 million for the first quarter of FY 2004. Royalties for the first quarter of FY 2005 decreased 27% to $10.1 million versus $13.8 million for the first quarter of FY 2004. Royalties are principally comprised of royalties from sales of PEG-INTRON, which is marketed by Schering-Plough Corporation (NYSE: SGP SGP Singapore (ISO Country code) SGP Schering-Plough (stock symbol) SGP Stability and Growth Pact SGP Southern Great Plains SGP Staatkundig Gereformeerde Partij SGP Speedway Grand Prix ). The decrease in royalties from the prior year was primarily due to ongoing competition and a contracting market. PEG-INTRON utilizes Enzon's proprietary PEGylation technology and the Company receives royalties on worldwide sales of PEG-INTRON. Cost of sales and manufacturing revenue as a percentage of 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 and manufacturing revenue for the first quarter of FY 2005 improved to 36%, as compared to 41% for the first quarter FY 2004. The Company's investment in research and development increased 53% to $10.0 million in the first quarter of FY 2005 compared to $6.6 million for first quarter of FY 2004. This increase was primarily attributable to the advancement of the Company's proprietary product pipeline and the shared product development costs related to MARQIBO, which the Company shares with Inex. Selling, general, and administrative expenses increased 9% to $12.2 million for the first quarter of FY 2005 versus $11.2 million for the first quarter of FY 2004. This increase was primarily driven by increased selling expenditures within our oncology franchise, of which the majority are related to preparatory activities for the potential launch of MARQIBO in calendar 2005. The following table reconciles the Company's GAAP net income (loss) to adjusted net income (loss) for the three months ended September 30, 2004 and 2003:
Three Months Ended
(in thousands)
---------------------------
09/30/04 09/30/03
---------------------------
GAAP net (loss) income ($544) $2,804
Less: other expense, net (1) (431) (194)
---------------------------
Adjusted net (loss) income ($113) $2,998
===========================
(1) Adjusted net income for the first quarters of FY 2005 and FY 2004
exclude tax-adjusted investment expense related to the Company's
protective collar arrangement. The protective collar is considered a
derivative hedging instrument, which the Company formed to reduce its
exposure associated with the 1.5 million shares of NPS common stock
received under the merger termination agreement with NPS.
The management of Enzon will be hosting a conference call today, November 4, 2004 at 5:00 PM EST EST electroshock therapy. EST abbr. electroshock therapy . All interested parties can access the live call using the following information:
Domestic Dial-In Number: 866-233-3843
International Dial-In Number: 651-224-7472
Access Code: 751227
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 rebroadcast will be available following the call from Thursday, November 4, 2004 at approximately 11:00 PM. This rebroadcast will end on Thursday, November 11, 2004 at midnight. The rebroadcast may be accessed using the following information: -0 *T Domestic Dial-In Number:800-475-6701 International Dial-In Number: 320-365-3844 Access Code751227 *T About Enzon Enzon Pharmaceuticals is a biopharmaceutical company dedicated to the discovery, development and commercialization of therapeutics to treat life-threatening diseases. The Company has developed or acquired a number of marketed products, including PEG-INTRON(R), marketed by Schering-Plough, and ABELCET(R), ONCASPAR(R), ADAGEN(R), and DEPOCYT(R), marketed in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. by Enzon's specialized sales force. Enzon's science-driven strategy includes an extensive drug development program that leverages the Company's macromolecular mac·ro·mol·e·cule n. A very large molecule, such as a polymer or protein, consisting of many smaller structural units linked together. Also called supermolecule. engineering technology platforms, including PEG modification and single-chain antibody (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)) technologies. Internal research and development efforts are complemented by strategic transactions that provide access to additional marketed products and promising clinical compounds. Enzon has several drug candidates in various stages of development, independently and with partners, including MARQIBO(R) (formerly referred to as Onco TCS (Transportation Control System) A widely used integrated information system for railroad transportation developed by the Missouri Pacific Railroad Company in the late 1960s and early 1970s. It was later implemented by Union Pacific when the companies merged. ), for which a U.S. marketing application is currently being reviewed by the FDA for the treatment of relapsed aggressive non-Hodgkin's lymphoma. Further information about Enzon and this press release can be found on the Company's web site at www.enzon.com. There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words "believes," "may," "plans," "will," "estimates," "continue," "anticipates," "intends," "expects," and similar expressions. An example of this includes the quoted statement above regarding revenue growth, pipeline advancement and the identification of strategic opportunities. Such forward-looking statements are subject to 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 discussed above. Such factors include those described in Enzon'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. and Forms 10-Q on file with the SEC. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information in this press release is as of November 4, 2004 and the Company undertakes no duty to update this information. (Financial statements to follow)
Enzon Pharmaceuticals, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months ended September 30, 2004 and 2003
Dollars in Thousands (except per share amounts)
(Unaudited)
September 30, September 30,
2004 2003
---------------------------
Revenues:
Net sales $27,527 $24,961
Manufacturing revenue 2,513 1,604
Royalties 10,115 13,811
Contract revenue 299 268
---------- -----------
Total revenues 40,454 40,644
---------- -----------
Costs and expenses:
Cost of sales and manufacturing revenue 10,901 10,912
Research and development expenses 10,046 6,551
Selling, general and administrative
expenses 12,199 11,209
Amortization of acquired intangibles 3,358 3,358
---------- -----------
Total costs and expenses 36,504 32,030
---------- -----------
Operating income 3,950 8,614
---------- -----------
Other income (expense):
Investment income, net 770 474
Interest expense (4,957) (4,957)
Other (expense) income, net (670) 307
---------- -----------
(4,857) (4,176)
---------- -----------
(Loss) income before taxes (907) 4,438
Tax (benefit) provision (363) 1,634
---------- -----------
Net (loss) income ($544) $2,804
Basic (loss) earnings per common share ($0.01) $0.06
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Diluted (loss) earnings per common share ($0.01) $0.06
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Weighted average number of common shares
issued and outstanding - basic 43,470 43,290
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Weighted average number of common shares
issued and outstanding and dilutive
potential common shares outstanding 43,470 43,629
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