Enzon Reports Third Quarter 2006 Results.Turnaround Makes Visible Progress BRIDGEWATER, N.J. -- Enzon Pharmaceuticals, Inc. (Nasdaq:ENZN) today announced its financial results for the third quarter of 2006. For the three months ended September 30, 2006, Enzon reported net income of $2.2 million or $0.05 per diluted share, as compared to a net loss of $5.8 million or $(0.13) per diluted share. "We are pleased to report another solid quarter, but more importantly, we are enthusiastic about the Company's momentum toward rebuilding the pipeline, maximizing our current brands and recruiting top talent to lead the organization in achieving the next level of success," said Jeffrey H. Buchalter, chairman and chief executive officer of Enzon. "Over the past year, we have been able to leverage and modernize the Company's core asset, PEGylation technology, by integrating it with novel oncology candidates, setting the stage for a new, innovative pipeline from the Company." Company Updates: * The Company's rhMBL program expands with the approval of an additional Investigational New Drug (IND) application for use in the prevention and treatment of severe infections in patients with low levels of MBL MBL Mobile MBL Marine Biological Laboratory MBL Macquarie Bank Limited MBL Mannose-Binding Lectin MBL Marine Boundary Layer MBL Member Business Lending (credit unions) MBL Movimiento Bolivia Libre undergoing liver transplant liver transplant Hepatic transplant Transplant surgery A procedure that replaces a cancer conquered, metabolically defeated, or substance subjugated liver with one no longer required by its owner, many of whom donate same after an MVA Diseases requiring transplant treatment. * The Company's Santaris Pharma A/S collaboration, which was established in July of this year, is on track and the Company anticipates filing an IND for 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 by the end of 2006. * The Company expects to have data presented at upcoming medical conferences on three of its research and development projects. These include: rhMBL, recombinant human Manose Binding Lectin lectin /lec·tin/ (lek´tin) any of a group of hemagglutinating proteins found primarily in plant seeds, which bind specifically to the branching sugar molecules of glycoproteins and glycolipids on the surface of cells. for immuno-suppressed patients, Oncaspar([R]), a PEG-enhanced version of a naturally occurring enzyme called L-asparaginase, and PEG-SN38, a PEGylated form of the active moiety moiety: see clan. of CPT-11 or Camptosar([R]). Financial Results Revenues The following table reflects the revenues generated by product and segment for each of the three-month periods ended September 30, 2006 and 2005. [TABLE OMITTED] Products Segment Sales from the products segment, comprised of Oncaspar([R]), Depocyt([R]),Abelcet([R]), and Adagen([R]), increased slightly to $25.3 million for the three months ended September 30, 2006, from $25.2 million for the three months ended September 30, 2005. Sales of Oncaspar grew to $7.4 million or 28 percent for the three months ended September 30, 2006, as compared to $5.8 million for the three months ended September 30, 2005. The growth of Oncaspar is mainly attributable to its adoption in certain protocols by hospitals and cooperative groups. On July 25, 2006, the Company announced the approval of Oncaspar for the first line treatment of 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). Sales 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 used for the treatment of lymphomatous meningitis, decreased to $2.0 million or 14 percent for the three months ended September 30, 2006, as compared to $2.3 million for the three months ended September 30, 2005. Sales of Abelcet in the U.S. and Canada, a lipid complex formulation of amphotericin B amphotericin B (ăm'fətĕr`ĭsĭn), antibiotic that halts the growth of several disease-causing fungi. Discovered in 1956, it is produced by bacteria of the genus Streptomyces. used primarily in the hospital to treat immuno-compromised patients with invasive fungal infections Fungal infections Several thousand species of fungi have been described, but fewer than 100 are routinely associated with invasive diseases of humans. , for the three months ended September 30, 2006 were $9.0 million, down 19 percent as compared to $11.1 million for the three months ended September 30, 2005. The decrease was primarily the result of expected competition from current and newly launched therapeutics in the anti-fungal market. 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 immuno-deficiency disease, increased 16 percent to $6.9 million for the three months ended September 30, 2006, as compared to $6.0 million for the three months ended September 30, 2005. 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 September 30, 2006 were $18.7 million, as compared to $15.4 million for the three months ended September 30, 2005, an increase of 21 percent. Royalties on PEG-INTRON, marketed by Schering-Plough, continue to comprise the majority of our royalty revenue. Schering-Plough has recently indicated that they anticipate a decline in PEG-INTRON sales in Japan as new patient enrollment moderates and competition increases. Contract Manufacturing Segment The Company's revenues from its Contract Manufacturing segment were $1.9 million for the three months ended September 30, 2006, as compared to $3.4 million in the corresponding period of the prior year. This includes contract manufacturing revenues related to services the Company provides for 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, such as Abelcet for markets outside of Canada and the U.S. During the quarter, the revenue reconciliation for two contract manufacturing products resulted in a reduction of revenue of $1.2 million. The timing of production of another product Enzon manufactures also resulted in lower revenues. Research and Development The Company's research and development expenses were $10.6 million for the three months ended September 30, 2006, as compared to $5.3 million for the three months ended September 30, 2005. The increase was attributable to initiation of programs in 2006. Research and development expenses last year was impacted by the restructuring that occurred in the second quarter of 2005. Enzon is committed to investing in research and development to build a leading oncology business through the continued development of its current portfolio, reinforcing its position as a scientific leader in PEGylation through its Customized Linker Technology[TM] platforms and strategic in-licensing of innovative cancer programs, as demonstrated by the Company's strategic collaboration with Santaris reported last quarter. Selling, General and Administrative Selling, general and administrative expenses increased to $14.3 million for the three months ended September 30, 2006, as compared to $11.7 million for the three months ended September 30, 2005. The increase is mainly attributable to the costs associated with the Company's debt refinancing completed this quarter. The Company will continue to invest in selling, marketing, and other initiatives to further its objective of delivering long-term value, including improving its top-line performance by investing in its commercial operations. Amortization of Acquired Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. Amortization expense decreased by $3.1 million to $184 thousand for the three months ended September 30, 2006, as compared to $3.3 million for the three months ended September 30, 2005. The decrease is a result of the Abelcet intangible write-down which occurred in December 2005. Acquired In-Process Research and Development In August 2006, we paid $8.0 million for worldwide rights to develop and commercialize certain RNA RNA: see nucleic acid. RNA in full ribonucleic acid One of the two main types of nucleic acid (the other being DNA), which functions in cellular protein synthesis in all living cells and replaces DNA as the carrier of genetic antagonists antagonists, n muscles that counterbalance agonists during specific movements. opioid Neurology A pain-attenuating peptide that occurs naturally in the brain, which induces analgesia by mimicking endogenous opioids at opioid . During the third quarter of last year, the Company paid $10.0 million for the rights to the clinical development of recombinant human Mannose-Binding Lectin. Other Income (Expense) Net other income (expense) is comprised of investment income, interest expense, and other non-operating expenses. The Company reported other income of approximately $1.8 million for the three months ended September 30, 2006, as compared to other expense of nearly $6.3 million in the same period in the prior year. In July 2006, the Company completed its debt refinancing by repurchasing $137.6 million of the 4.5% notes due in 2008, which resulted in a gain of $4.8 million. This gain was offset by the write-off of $1.2 million in deferred offering costs associated with the 2008 convertible notes repurchased. In 2005, the Company reported a loss of $3.5 million related to the maturing of a financial instrument the Company formed to reduce its investment risk associated with 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. (NPS) common stock received in June 2003. Income Taxes For the three months ended September 30, 2006, the Company recognized a nominal amount of state and Canadian tax liabilities. For 2006, the estimated effective annual U.S. income tax rate is nominal due to the Company's projected taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. and availability of net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . 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. , which include cash, cash equivalents, short-term investments and 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 , were $240.4 million as of September 30, 2006, as compared to $226.6 million as of December 31, 2005. Positive operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. for the nine-month period ended September 30, 2006 and cash proceeds from the sale of Nektar common stock the Company owned contributed to the increase in cash. Offsetting these cash inflows was the January payment to Sanofi-Aventis of $35.0 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc a reduction of the Oncaspar royalty rate. Reconciliation of GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income (loss) to adjusted net income (loss) For the three months ended September 30, 2006, Enzon reported an adjusted net loss of $1.3 million or $(0.03) per diluted share, as compared to an adjusted net loss of $2.3 million or $(0.05) per diluted share for the three months ended September 30, 2005. The following table reconciles the Company's net income (loss) and net income (loss) 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 and adjusted net loss per diluted share for the three months ended September 30, 2006 and 2005: [TABLE OMITTED] [TABLE OMITTED] Conference Call and Webcast Enzon will be hosting a conference call November 2, 2006 at 9:00am E.S.T. All interested parties may access the call by using the following information:
Domestic Dial-In Number: (866) 585-6398
International Dial-In Number: (416) 849-9626
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 November 2, 2006, at approximately 12:00 p.m. E.S.T. This rebroadcast will end on November 9, 2006, at approximately 11:59 p.m. E.S.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: 80421
About Enzon Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and adjacent diseases. Enzon's specialized sales force markets Abelcet([R]), Oncaspar([R]), Adagen([R]), and Depocyt([R]) in 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. . In addition, Enzon also receives royalties on sales of PEG-INTRON([R]), marketed by Schering-Plough Corporation, and MACUGEN([R]), marketed by OSI Pharmaceuticals OSI Pharmaceuticals, Inc. is an American pharmaceutical company based in Long Island, New York with facilities in Colorado, New Jersey and the United Kingdom. They specialize in the discovery and development of molecular targeted therapies, and are listed in the NASDAQ and Pfizer Inc. Enzon's product-driven strategy includes an extensive drug development program that leverages its proprietary technologies, including a Customized Linker Technology(TM) PEGylation platform that utilizes customized linkers designed to release compounds at a controlled rate. Enzon complements its internal research and development efforts with strategic initiatives, such as partnerships designed to broaden its revenue base or provide access to promising new technologies or product development opportunities. The Company also engages in contract manufacturing opportunities with third parties to improve its efficiency. 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 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 transition 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 six-month period ended December 31, 2005 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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