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, 2002
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-12957 22-2372868
(State or other jurisdiction of (Commission (IRS Employer
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
NA
(Former name or former address, if changed since last report)
Item 5. Other Events
On May 8, 2002 Enzon, Inc. announced its financial results
for the quarter ended March 31, 2002, the third quarter of Enzon's fiscal year
(FY) 2002. Our net earnings for the third quarter FY 2002 grew to
$12.2 million or $0.28 per diluted share, as compared to $5.5 million or $0.13
per diluted share, for the same period in FY 2001. Total revenues for the
quarter increased by $9.9 million, or 100 percent, to $19.8 million, as compared
to $9.9 million for the prior year's comparable period.
The increase in revenues for the quarter was principally due to increased
royalties earned on sales of PEG-INTRON(TM) by our marketing partner,
Schering-Plough Corporation or Schering-Plough. Total royalties on marketed
products that utilize our PEG technology increased to $14.1 million during the
third quarter of FY 2002, as compared to $2.4 million for the same period in FY
2001. In October 2001, Schering-Plough launched PEG-INTRON and REBETOL
combination therapy in the U.S. for the treatment of chronic hepatitis C. The
PEG-INTRON and REBETOL treatment regimen is the first and only pegylated
interferon-based combination therapy approved in the United States. We also
announced that Schering-Plough has indicated that would remove a large block of
patients from the PEG-INTRON Access Assurance Program wait list. This is the
third block of patients to come off the wait list since this program was
transitioned to a wait-list system in January 2002. Schering-Plough has
indicated that the wait-list system was put in place as a result of an
overwhelming response to the introduction of the PEG-INTRON combination therapy
for treating chronic hepatitis C to the U.S. market. The wait-list system will
remain in place. Schering-Plough has indicated that it anticipates the inbalance
between supply and demand for PEG-INTRON to be eliminated in the second half of
calendar year 2001 and patients will no longer be placed on wait list as current
manufacturing process improvements begin to ramp-up.
Combined sales of our other two FDA approved products, ONCASPAR(R) and
ADAGEN(R), increased by 6 percent to $5.7 million in the third quarter of FY
2002, as compared to $5.4 million for the same period in FY 2001 primarily due
to increased sales of ONCASPAR.
Research and development expenses for the third quarter of FY 2002
increased by $1.4 million or 37 percent to $5.1 million, as compared to $3.7
million for the third quarter of FY 2001. The increase was due primarily to
increased research and development expenditures related to the advancement of
the Company's preclinical and clinical PEG product pipeline, as well as
increased personnel and related expenditures.
We are currently conducting Phase II clinical trials for PROTHECAN(R)
(PEG-camptothecin), Phase I clinical trials for PEG-paclitaxel, and preclinical
studies for other PEG products in development. During the quarter ended March
31, 2002, we initiated patient
dosing in a Phase II clinical trial for PROTHECAN in patients with non-small
cell lung cancer. We expect to initiate additional Phase II trials for PROTHECAN
as both a single agent and in combination with other oncolytics. Research and
development expenses are expected to continue to increase significantly as we
continue the clinical advancement of our PEG product pipeline and continue to
strengthen our internal development capabilities.
Selling, general and administrative expenses for the third quarter of FY
2002 increased by $1.1 million or 39 percent to $3.7 million, as compared to
$2.6 million for the third quarter of FY 2001. This increase was primarily due
to increases in payroll and related expenditures.
During the third quarter of FY 2002, interest income increased to $3.9
million, as compared to $2.3 million for the third quarter of FY 2001 as a
result of increased interest-bearing investments. Interest expense increased to
$4.9 million for the third quarter of FY 2002. For the third quarter of FY 2001
we did not record any interest expense. The increases in interest-bearing
investments and interest expense are due to our issuance of $400 million of 4.5%
convertible subordinated notes during June 2001. As of March 31, 2002 we had
total cash and interest-bearing investments of $489 million.
Included in other income for the quarter ended March 31, 2002 is a
one-time payment of $3 million. This payment was related to the broad strategic
alliance that Enzon and Inhale Therapeutics, Inc. announced in January 2002 and
represents reimbursement for certain legal fees.
We also announce the resignation of Randy H. Thurman from our Board of
Directors.
Except for the historical information herein, the matters discussed in
this Form 8-K 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-Q's
and Form 8-K's on file with the SEC, including without limitation, regulatory
risks such as risks in obtaining and maintaining regulatory approval for
indications and expanded indications, risks that Enzon will not outperform the
sector, risks related to research and development costs and capabilities, market
acceptance of and continuing demand for Enzon's products and the impact of
competitive products and pricing.
# # #
(Financial statements to follow)
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months ended March 31, 2002 and 2001
(Unaudited)
March 31, March 31,
2002 2001
------------ -----------
Revenues:
Net sales $5,729,330 $5,382,060
Royalties 14,072,174 2,410,200
Contract revenue 42,649 2,139,494
------------ -----------
Total revenues 19,844,153 9,931,754
------------ -----------
Costs and expenses:
Cost of sales 1,376,450 988,380
Research and development expenses 5,062,732 3,684,268
Selling, general and administrative expenses 3,658,621 2,640,889
------------ -----------
Total costs and expenses 10,097,803 7,313,537
------------ -----------
Operating income 9,746,350 2,618,217
------------ -----------
Other income (expense):
Interest income 3,892,568 2,255,642
Interest expense (4,956,895) --
Other income 3,217,878 1,483
------------ -----------
2,153,551 2,257,125
------------ -----------
Income before taxes 11,899,901 4,875,342
Tax benefit 267,174 632,879
------------ -----------
Net income $12,167,075 $5,508,221
============ ===========
Basic earnings per common share $0.28 $0.13
============ ===========
Diluted earnings per common share $0.28 $0.13
============ ===========
Weighted average number of common shares
issued and outstanding - basic 42,969,222 41,802,586
============ ===========
Weighted average number of common shares issued
and outstanding and dilutive potential common
shares outstanding 43,933,865 43,718,044
============ ===========
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months ended March 31, 2002 and 2001
(Unaudited)
March 31, March 31,
2002 2001
------------ -----------
Revenues:
Net sales $16,683,135 $14,964,832
Royalties 33,688,960 3,701,897
Contract revenue 217,548 2,457,784
------------ -----------
Total revenues 50,589,643 21,124,513
------------ -----------
Costs and expenses:
Cost of sales 4,222,870 2,860,592
Research and development expenses 12,548,297 8,829,537
Selling, general and administrative expenses 12,305,403 8,228,926
------------ -----------
Total costs and expenses 29,076,570 19,919,055
Operating income 21,513,073 1,205,458
Other income (expense):
Interest income 14,819,789 6,420,343
Interest expense (14,871,764) --
Other income 3,217,878 13,352
------------ -----------
3,165,903 6,433,695
------------ -----------
Income before taxes 24,678,976 7,639,153
Tax benefit 363,845 577,603
------------ -----------
Net income $25,042,821 $8,216,756
============ ===========
Basic earnings per common share $0.59 $0.20
============ ===========
Diluted earnings per common share $0.57 $0.19
============ ===========
Weighted average number of common shares
issued and outstanding - basic 42,635,799 41,490,866
============ ===========
Weighted average number of common shares
issued and outstanding and dilutive potential
common shares outstanding 43,899,449 43,509,342
============ ===========
# # #
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, 2002
ENZON, INC.
---------------------------
(Registrant)