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SEC Filings, Earing Reports, Press Releases
Enzon Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 4, 2010 03:38PM
Enzon Inc. (ENZN) filed Quarterly Report for the period ended 2010-09-30.
Highlight of Business Operations:
During the three months ended September 30, 2010, we had royalties on export sales of $8.9 million, of which $3.1 million were in Europe. This compares to $10.9 million of export sales in the comparable three-month period of 2009, of which $4.6 million were in Europe. On a nine-month basis, we had royalties on export sales in 2010 of $28.6 million, of which $10.0 million were in Europe and $32.8 million of royalties on export sales in 2009, of which $13.0 million were in Europe.
Research and development. The total amount of expense related to our pipeline programs was $14.2 million in the third quarter of 2010, including $3.0 million of milestone payments. This compares to $11.4 million expended in the third quarter of 2009. On a year-to-date nine-month basis, research and development spending on our pipeline programs totaled $35.8 million in 2010, including $5.0 million of milestone payments. Nine-month spending in 2009 amounted to $34.3 million. The pipeline consists of the following programs: PEG-SN38, HIF-1 alpha antagonist, survivin antagonist, and additional mRNA antagonists utilizing the LNA technology.
The cost associated with the preclinical and clinical activities for the mRNA antagonists using the LNA technology was $8.2 million in the third quarter of 2010, which included $3.0 million of milestone payments. In the three months ended September 30, 2009, we incurred $8.0 million for the mRNA antagonist programs. For the nine months, we expended $19.3 million in 2010, including $5.0 million of milestone payments, and $22.2 million in 2009. The 2009 costs included a $1.0 million milestone payment and were elevated due to the purchase and manufacturing of additional clinical drug supply for the ongoing Phase I studies. We are continuing enrollment in Phase I clinical trials for the HIF-1 alpha and Survivin antagonists, as well as preclinical studies for additional mRNA antagonist-directed oncology targets which are known to play an important role in cancer cell growth.
During the three months and nine months ended September 30, 2010, we recorded a net tax benefit of $0.1 million and $0.3 million, respectively, which includes $0.1 million related to the American Recovery and Reinvestment Act of 2009 which extends the temporary benefit for businesses to accelerate historic alternative minimum tax or research and development credits in lieu of bonus deprecation in 2009. The net tax benefit for the nine months ended September 30, 2010 includes a $0.2 million refund due from the Canadian taxing authority. During both the three months and nine months ended September 30, 2009, we recorded a net tax benefit of $0.5 million related to the Housing Assistance Act of 2008 that contained a provision allowing corporate taxpayers to make an election to treat certain unused research and alternative minimum tax credit carryforwards as refundable in lieu of claiming bonus and accelerated depreciation for eligible qualified property placed in service through the end of 2008.
The amount reported as discontinued operations for the nine months ended September 30, 2010 is comprised of the results of operations of the specialty pharmaceutical business for the period January 1 through January 29, 2010 of $3.6 million plus the gain realized on the sale of the specialty pharmaceutical business of $175.4 million. The cash purchase price was $300.0 million, working capital adjustments were approximately $8.0 million, and transaction costs amounted to $5.0 million. We allocated $40.9 million of the total purchase price to the sale of in-process research and development. The net proceeds attributable to discontinued operations of $262.6 million, less the net carrying value of assets sold of $87.2 million, yielded the $175.4 million gain. Under the terms of the asset purchase agreement, we are entitled to receive up to an additional $27.0 million if certain milestones are met. It now appears unlikely that one of the milestones, which would have resulted in a $5.0 million payment to us, will be met. There can be no assurance that we will receive any of the milestone payments. Furthermore, we may receive royalties of five to ten percent on incremental net sales above the baseline 2009 amount from the marketed specialty pharmaceutical products through 2014.
Net cash used in financing activities was $9.4 million in the first nine months of 2010 compared to net cash used in financing activities of $15.9 million in the first nine months of 2009. Proceeds from the exercise of employee stock options generated approximately $30.5 million of cash inflow during the first nine months of 2010. This inflow was more than offset by $36.4 million of expenditures in the nine-month period to repurchase shares of the Companys common stock on the open market as part of the share repurchase program initiated in December of 2009. In the first quarter of 2009, $15.6 million of cash was expended to repurchase $20.5 million principal amount of our 4% notes.