Enzon Pharmaceuticals’ (ENZN) second quarter 2010 net loss of 8 cents per share (excluding special items) compared favorably with the loss per share of 43 cents suffered in the year-ago quarter. The Zacks Consensus Estimate for the quarter indicated a loss of 6 cents. On a reported basis (including special items), the company reported a loss of 9 cents per share as against a loss of 11 cents in the year-ago quarter.
Total revenue for the quarter climbed 4.1% to $13.72 million. Bulk of the revenues (approximately 77%) came through royalties. However, royalty revenues in the reported quarter declined 19.7% to $10.6 million. Enzon earns a majority of its royalty revenues from the sales of Pegintron, marketed by Merck & Co. (MRK).
The quarter saw Enzon cut its total spending by 40% to $18.7 million. General and administrative (G&A) costs and specialty and contracted service research and development costs came down significantly from the year-ago period.
G&A costs in the reported quarter came down by approximately 43% to $5.8 million. The reduction was due to the cost cutting initiatives undertaken by the company. Expenses incurred to develop the company’s pipeline declined 14.4% in the reported quarter to $10.1 million.
In January 2010, Enzon sold its specialty pharmaceutical business to Sigma-Tau Pharmaceuticals for as much as $327 million. Enzon is also eligible to receive royalties of 5% -10% on incremental net sales (above a 2009 baseline amount) of cancer drug Oncaspar, fungal infection therapy Abelcet, meningitis treatment DepoCyt and Adagen, indicated to treat severe combined immunodeficiency disease, through 2014. Subsequent to the transaction, the purchaser assumed the responsibilities pertaining to the specialty pharmaceutical products.
The total cash reserves of the company jumped to $504 million at the end of the reported quarter from $199.7 million at the end of 2009 due to the sale of Enzon’s specialty pharmaceutical operations.
Our Take
The substantial improvement in Enzon’s liquidity position based on which the company reduced its debt burden and repurchased shares encourages us. Furthermore, the company’s collaboration with Santaris Pharma for the development of cancer therapies pleases us.
