Enzon Reports Fourth Quarter and Full Year 2012 Results

Enzon Reports Fourth Quarter and Full Year 2012 Results 
PISCATAWAY, NJ -- (Marketwire) -- 03/18/13 --  Enzon Pharmaceuticals,
Inc. (NASDAQ: ENZN) today announced its financial results for the
fourth quarter and full year 2012. For the three months ended
December 31, 2012, Enzon reported a loss from continuing operations
of $5.2 million, or $0.11 per diluted share, compared to a loss from
continuing operations of $5.0 million, or $0.10 per diluted share,
for the three months ended December 31, 2011. For the full year ended
December 31, 2012, Enzon reported a loss from continuing operations
of $2.8 million, or $0.06 per diluted share, compared to a loss from
continuing operations of $20.8 million, or $0.40 per diluted share,
for the full year ended December 31, 2011. For the year ended
December 31, 2012, Enzon recorded $11.3 million of non-cash
impairment charges primarily related to leasehold improvements
representing the Company's process development laboratory and related
equipment. The charges were considered necessary in view of the
Company's December 2012 announcement of plans to suspend all clinical
development activities. Consistent with this announcement, the
Company has substantially suspended all clinical development
activities with a goal of conserving capital. 
Summary of Financial Results 
Royalty Revenue 
Revenues received from the Company's royalty products for the three
months ended December 31, 2012 were $10.5 million, compared to $9.8
million for the three months ended December 31, 2011. For the full
year 2012, royalty revenues were $41.5 million, compared to $40.9
million for the full year 2011. Royalties on PEGINTRON, marketed by
Merck & Co., Inc., continued to comprise the majority of the
Company's royalty revenue in 2012, and royalties on PEGINTRON in 2012
were flat compared to 2011. The increase in total royalty revenue in
2012 was driven almost entirely by a 65% increase in royalties on
CIMZIA, which is marketed by UCB, compared to 2011. Royalty revenue
on OMONTYS, marketed by Affymax, Inc. and Takeda Pharmaceutical
Company Ltd., was recorded for the first time in 2012 and totaled
$0.3 million. On February 23, 2013, Affymax and Takeda announced a
nationwide voluntary recall of all lots of OMONTYS (peginesatide)
injection to the user level as a result of new postmarketing reports
regarding serious hypersensitivity reactions, including anaphylaxis,
which can be life-threatening or fatal. This recall will negatively
affect the Company's future royalty revenues from OMONTYS. 
Research and Development 
The Company's pipeline research and development expenses were $4.4
million for the three months ended December 31, 2012, compared to
$9.1 million for the three months ended December 31, 2011. For the
full year 2012, research and development expenses were $20.9 million,
compared to $40.2 million in 2011. 
General and Administrative 
General and administrative expenses decreased to $3.2 million for the
three months ended December 31, 2012, compared to $3.5 million for
the three months ended December 31, 2011. For the full year 2012, the
Company incurred general and administrative expenses of $14.5
million, compared to $17.3 million for the full year 2011. The
decline in 2012 from 2011 was largely the result of a continued
restructuring program. 
Taxes 
Income tax benefit in 2012 was primarily comprised of a state income
tax benefit of $4.2 million related to the sale of New Jersey net
operating losses and research and development credits. 
Cash and Investments 
Cash, cash equivalents and marketable securities totaled $196.7
million as of December 31, 2012, compared to $323.3 million as of
December 31, 2011. The decrease of $126.6 million was primarily
attributable to $87.3 million used to pay a special cash dividend of
$2.00 per share of common stock in December 2012, $31.9 million,
inclusive of transaction costs, used to repurchase shares of common
stock during 2012, and $13.9 million used to retire $13.6 million in
principal amount of the Company's outstanding 4% convertible notes,
which mature on June 1, 2013. The share repurchases were made
pursuant to the Company's $200.0 million share repurchase program. In
light of our sale review process announced in December 2012, we have
suspended repurchases under the share repurchase program and do not
currently intend to resume repurchases under the share repurchase
program. 
About Enzon 
Enzon Pharmaceuticals, Inc. is a biotechnology company that had been
dedicated to the research and development of innovative therapeutics
for patients with high unmet medical needs. Enzon receives royalty
revenues on seven marketed products that utilize its proprietary
Customized PEGylation Linker Technology (Customized Linker
Technology(R)) platform, namely PegIntron(R), Sylatron(R),
Macugen(R), CIMZIA(R), OMONTYS(R), Oncaspar and Adagen. 
In December 2012, the Company announced that its Board of Directors
retained Lazard Freres & Co. LLC ("Lazard") to act as financial
advisor in a review of the possible sale or disposition of one or
more corporate assets or a sale of the Company and that its Board of
Directors established a special committee to oversee the sale review
process. In connection with the sale review process, Enzon has
substantially suspended all clinical development activities with a
goal of conserving capital and maximizing value returned to its
stockholders. The sale review process entails numerous significant
risks and uncertainties. There can be no assurance that Enzon's sale
review process will result in any transaction. 
Further information about Enzon and this press release can be found
on the Company's website at www.enzon.com.  
Forward-Looking Statements  
This press release contains, or may contain, forward-looking
statements within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. All statements contained in
this press release, other than statements that are purely historical,
are forward-looking statements, 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, including statements regarding the
effect of the OMONTYS recall on Enzon's future royalty revenues and
statements regarding Enzon's sale review process.  
Such forward-looking statements are based upon management's present
expectations, objectives, anticipation, plans, hopes, beliefs,
intentions or strategies regarding the future and are subject to
known and unknown risks and uncertainties that could cause actual
results, events or developments to be materially different from those
indicated in such forward-looking statements. Such risks and
uncertainties include, but are not limited to, risks relating to the
OMONTYS recall and other factors affecting the commercial potential
of OMONTYS, uncertainty regarding the timetable for the sale review
process, the risk that the sale review process will not lead to any
transaction, the risk that any transaction that is consummated would
neither deliver anticipated benefits nor enhance stockholder value,
the risk that the sale review process will disrupt Enzon's management
from its day-to-day responsibilities, the expectation that Enzon will
incur significant costs, expenses and fees in connection the sale
review process or any transaction that might result from the sale
review process, the risk that the sale review process may result in
Enzon's inability to retain key employees or business partners, the
risk that the market price of Enzon's common stock may significantly
fluctuate in response to developments in the sale review process or
market speculation regarding such developments, and other risks and
uncertainties that are contained in Enzon's filings with the U.S.
Securities and Exchange Commission. 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. 


 
                                                                            
                                                                            
                Enzon Pharmaceuticals, Inc. and Subsidiaries                
                Consolidated Statements of Comprehensive Loss               
             (Unaudited; In thousands, except per share amounts)            
                                                                            
                                  Three months ended        Year ended      
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Revenues:                                                                   
  Royalties                      $  10,493  $   9,782  $  41,504  $  40,923 
  Sale of in-process research                                               
   and development                       -          -          -      5,000 
  Contract research and                                                     
   development                         (10)        52        126      1,431 
  Miscellaneous revenue                164        177        970        718 
                                 ---------  ---------  ---------  --------- 
    Total Revenues                  10,647     10,011     42,600     48,072 
                                                                            
Operating Expenses:                                                         
  Research and development -                                                
   pipeline                          4,350      9,135     20,892     40,180 
  Research and development -                                                
   specialty and contracted                                                 
   services                            (10)        48        113        926 
  General and administrative         3,234      3,466     14,475     17,281 
  General and administrative -                                              
   contracted services                   -          1          -        115 
  Impairment of property and                                                
   equipment                        11,263          -     11,263          - 
  Restructuring charges                 43      1,376       (177)     6,025 
                                 ---------  ---------  ---------  --------- 
    Total Operating Expenses        18,880     14,026     46,566     64,527 
                                                                            
                                 ---------  ---------  ---------  --------- 
      Operating loss                (8,232)    (4,015)    (3,966)   (16,455)
                                                                            
Other Income (Expense)                                                      
  Investment income, net               191        484      2,578      1,735 
  Interest expense                  (1,275)    (1,490)    (5,330)    (5,929)
  Other, net                           (10)         -       (200)        91 
                                 ---------  ---------  ---------  --------- 
    Total Other Expense             (1,094)    (1,006)    (2,952)    (4,103)
                                                                            
                                 ---------  ---------  ---------  --------- 
(Loss) from continuing                                                      
 operations before taxes            (9,326)    (5,021)    (6,918)   (20,558)
Income tax (benefit) expense        (4,168)         -     (4,135)       205 
                                 ---------  ---------  ---------  --------- 
(Loss) from continuing                                                      
 operations                         (5,158)    (5,021)    (2,783)   (20,763)
                                 ---------  ---------  ---------  --------- 
                                                                            
      Net loss                   $  (5,158) $  (5,021) $  (2,783) $ (20,763)
                                 =========  =========  =========  ========= 
                                                                            
(Loss) per common share -                                                   
 continuing operations                                                      
  Basic                          $   (0.11) $   (0.10) $   (0.06) $   (0.40)
                                 =========  =========  =========  ========= 
  Diluted                        $   (0.11) $   (0.10) $   (0.06) $   (0.40)
                                 =========  =========  =========  ========= 
(Loss) per common share - net                                               
 (loss)                                                                     
  Basic                          $   (0.11) $   (0.10) $   (0.06) $   (0.40)
                                 =========  =========  =========  ========= 
  Diluted                        $   (0.11) $   (0.10) $   (0.06) $   (0.40)
                                 =========  =========  =========  ========= 
                                                                            
Weighted-average shares                                                     
 outstanding - basic                44,116     48,289     46,735     51,910 
                                 =========  =========  =========  ========= 
Weighted-average shares                                                     
 outstanding - diluted              44,116     48,289     46,735     51,910 
                                 =========  =========  =========  ========= 
Special cash dividend paid per                                              
 common share                    $    2.00          -  $    2.00          - 
                                 =========  =========  =========  ========= 
                                                                            
Other Comprehensive Income                                                  
 (Loss):                                                                    
Available-for-sale marketable                                               
 securities:                                                                
  Unrealized holding gains                                                  
   (losses) arising during                                                  
   period                              (33)       (70)     1,037       (671)
  Reclass. adj. (gains) losses                                              
   incl. in net income (loss)            3        (21)      (957)      (240)
                                 ---------  ---------  ---------  --------- 
    Total Other Comprehensive                                               
     Income (Loss)               $     (30) $     (91) $      80  $    (911)
                                                                            
                                 ---------  ---------  ---------  --------- 
      Comprehensive Income                                                  
       (Loss)                    $  (5,188) $  (5,112) $  (2,703) $ (21,674)
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                Enzon Pharmaceuticals, Inc. and Subsidiaries                
                        Consolidated Balance Sheets                         
       (Unaudited; In thousands, except share and per share amounts)        
                                                                            
                                                December 31,   December 31, 
                                                    2012           2011     
                                               -------------  ------------- 
Assets                                                                      
Current assets:                                                             
  Cash and cash equivalents                    $      77,348  $     104,324 
  Marketable securities                              119,391         58,188 
  Other current assets                                 1,904          2,749 
                                               -------------  ------------- 
    Total current assets                             198,643        165,261 
                                                                            
Property and equipment, net                            1,138         16,802 
Marketable securities                                      -        160,779 
Other assets                                               -            367 
                                               -------------  ------------- 
                                                                            
      Total Assets                             $     199,781  $     343,209 
                                               =============  ============= 
                                                                            
Liabilities and Stockholders' Equity                                        
Current liabilities:                                                        
  Accounts payable                             $         776  $       1,572 
  Accrued expenses and other current                                        
   liabilities                                         5,688         13,692 
  Notes payable                                      115,849              - 
                                               -------------  ------------- 
    Total current liabilities                        122,313         15,264 
Notes payable                                              -        129,499 
Other liabilities                                          -          1,265 
                                               -------------  ------------- 
      Total Liabilities                        $     122,313  $     146,028 
                                                                            
Stockholders' Equity:                                                       
  Preferred stock - $0.01 par value,                                        
   authorized 3,000,000 shares; no shares                                   
   issued and outstanding at December 31, 2012                              
   and December 31, 2011                       $           -  $           - 
  Common stock - $0.01 par value, authorized                                
   170,000,000 shares; issued and outstanding                               
   43,674,170 shares at December 31, 2012 and                               
   48,292,702 at December 31, 2011                       437            483 
  Additional paid-in capital                         224,796        341,760 
  Accumulated other comprehensive income                  83              3 
  Accumulated deficit                               (147,848)      (145,065)
                                               -------------  ------------- 
      Total Stockholders' Equity               $      77,468  $     197,181 
                                               -------------  ------------- 
                                                                            
      Total Liabilities and Stockholders'                                   
       Equity                                  $     199,781  $     343,209 
                                               =============  ============= 

  
Investor Contact: 
Andrea Rabney
Argot Partners 
212.600.1902 
andrea@argotpartners.com 
Media Contact:
David Pitts
Argot Partners 
212.600.1902 
david@argotpartners.com