SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 8, 2001
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification)
20 Kingsbridge Road, Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (732) 980-4500
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
ENZON REPORTS THIRD QUARTER FISCAL YEAR 2001 EARNINGS
Total Revenues Increase by 74% Over Prior Year
Enzon, Inc. today reported net income of $5.5 million or $0.13 per diluted
share, for the third quarter of fiscal year (FY) 2001 as compared to a net loss
of $1.7 million or $0.04 per diluted share, for the same period in FY 2000. The
increase in earnings for the quarter was principally due to increased revenues
from marketed products, which utilize the Company's PEG technology.
Sales and royalties earned on sales of products, which utilize the
Company's PEG technology, increased by $3.2 million or 67 percent to $7.9
million during the quarter ended March 31, 2001, as compared to $4.7 million for
the same period in the prior year. The increase was primarily due to royalties
earned on sales of PEG-INTRON(TM) by Schering-Plough and increased sales of
ONCASPAR(R) by Enzon. Schering-Plough launched PEG-INTRON in the United States
as once-weekly monotherapy to treat chronic hepatitis C in February 2001.
PEG-INTRON received approval as a monotherapy in the European Union (EU) in May
2000. Additionally, in March 2001 PEG-INTRON and REBETOL received marketing
authorization in the EU as combination therapy for hepatitis C. PEG-INTRON is a
modified form of Schering-Plough's INTRON(R)A (interferon alfa-2b, 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.
The increase in ONCASPAR sales was due to the lifting of the FDA
distribution and labeling restrictions that had been in place during the prior
year. These restrictions were related to a previously disclosed manufacturing
problem and resulted in the lower sales in the prior year.
Contract revenues also increased by $1 million for the quarter ended March
31, 2001 as compared to the prior year's quarter due to the receipt of the final
milestone payment due under the Company's license agreement with
Schering-Plough.
Cost of sales, as a percentage of sales and royalties, decreased to 13
percent, as compared to 22 percent for the comparable quarter of the previous
year. The decrease was due to the royalty revenue
related to PEG-INTRON, which does not have a corresponding cost of sales.
Schering-Plough bears all manufacturing costs related to PEG-INTRON.
Research and development expenses for the quarter ended March 31, 2001
increased by $1.8 million or 92 percent to $3.7 million as compared to $1.9
million for the quarter ended March 31, 2000. The increase was due primarily to
increases in research personnel and increased expenses related to clinical and
preclinical activities for PROTHECAN(R) (PEG-camptothecin), PEG-paclitaxel, and
other PEG products in preclinical development. Recently, the Company began Phase
I clinical trials of PEG-paclitaxel, a PEG modified version of paclitaxel with
prodrug attributes. The Company's lead clinical candidate, PROTHECAN, is
expected to commence Phase II clinical trials in the near future. Research and
development expenses are expected to continue to increase significantly as
PROTHECAN and PEG-paclitaxel continue to advance in clinical development and
additional compounds enter clinical trials.
Selling, general and administrative expenses for the quarter ended March
31, 2001 decreased by 46 percent or $2.3 million to $2.6 million as compared to
$4.9 million for the same period in the prior year. This decrease was due
primarily to a one-time special charge of $2.6 million included in the prior
year, which was the result of a binding arbitration for a previously disclosed
lawsuit brought by a former financial advisor of the Company.
Interest and dividend income for the third quarter FY 2001 increased by
$1.8 million to $2.3 million, as compared to $483,000 for the prior year. This
increase was due to an increase in interest bearing investments. The Company had
total cash and interest-bearing investments of approximately $128 million as of
March 31, 2001.
During the quarter ended March 31, 2001, the Company recognized a net tax
benefit of $633,000. The tax benefit represents the sale of a portion of the
Company's state of New Jersey net operating loss carry-forwards partially offset
by a tax provision recorded for the three months ended March 31, 2001.
For the nine months ended March 31, 2001, the Company reported net income
of $8.2 million or $0.19 per diluted share, as compared to a net loss of $5.1
million or $0.14 per diluted share for the nine months ended March 31, 2000. The
earnings for the current year period were primarily due to increased revenues
related to products, which utilize the Company's PEG technology and increased
interest income as a result of increased interest-bearing investments.
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months ended March 31, 2001 and 2000
(Unaudited)
March 31, 2001 March 31, 2000
-------------- --------------
Revenues:
Net sales and royalties $ 7,867,260 $ 4,708,391
Contract revenue 2,064,494 1,014,726
----------- ------------
Total revenues 9,931,754 5,723,117
----------- ------------
Costs and expenses:
Cost of sales 988,380 1,041,749
Research and development expenses 3,684,268 1,921,442
Selling, general and administrative expenses 2,640,889 4,928,038
----------- ------------
Total costs and expenses 7,313,537 7,891,229
----------- ------------
Operating income (loss) 2,618,217 (2,168,112)
----------- ------------
Other income (expense):
Interest and dividend income 2,255,642 483,335
Interest expense -- (167)
Other 1,483 --
----------- ------------
2,257,125 483,168
----------- ------------
Income (loss) before taxes 4,875,342 (1,684,944)
Tax benefit 632,879 --
----------- ------------
Net income (loss) $ 5,508,221 ($ 1,684,944)
=========== ============
Basic earnings (loss) per common share $ 0.13 ($ 0.04)
=========== ============
Diluted earnings (loss) per common share $ 0.13 ($ 0.04)
=========== ============
Weighted average number of common
shares outstanding during the period 41,802,586 38,303,494
=========== ============
Weighted average number of common
shares and dilutive potential common shares
outstanding during the period 43,718,044 38,303,494
=========== ============
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Nine Months ended March 31, 2001 and 2000
(Unaudited)
March 31, 2001 March 31, 2000
-------------- --------------
Revenues:
Net sales and royalties $18,816,729 $ 11,325,294
Contract revenue 2,307,784 1,076,708
----------- ------------
Total revenues 21,124,513 12,402,002
----------- ------------
Costs and expenses:
Cost of sales 2,860,592 3,013,231
Research and development expenses 8,829,537 5,511,694
Selling, general and administrative expenses 8,228,926 10,064,447
----------- ------------
Total costs and expenses 19,919,055 18,589,372
----------- ------------
Operating income (loss) 1,205,458 (6,187,370)
----------- ------------
Other income (expense):
Interest and dividend income 6,420,343 1,082,557
Interest expense -- (4,051)
Other 13,352 (36,274)
----------- ------------
6,433,695 1,042,232
----------- ------------
Income (loss) before taxes 7,639,153 (5,145,138)
Tax benefit 577,603 --
----------- ------------
Net income (loss) $ 8,216,756 ($ 5,145,138)
=========== ============
Basic earnings (loss) per common share $ 0.20 ($ 0.14)
=========== ============
Diluted earnings (loss) per common share $ 0.19 ($ 0.14)
=========== ============
Weighted average number of common
shares outstanding during the period 41,490,866 37,190,902
=========== ============
Weighted average number of common
shares and dilutive potential common shares
outstanding during the period 43,509,342 37,190,902
=========== ============
Except for the historical information herein, the matters discussed herein
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/A, Form 10-Q's and Form
8-Ks on file with the SEC, including without limitation, risks in obtaining and
maintaining regulatory approval for indications and expanded indications, market
acceptance of and continuing demand for Enzon's products and the impact of
competitive products and pricing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: May 8, 2001
ENZON, INC.
-----------------------------------
(Registrant)
By: /s/ KENNETH J. ZUERBLIS
------------------------------------
Kenneth J. Zuerblis
Vice President, Finance and Chief
Financial Officer