Enzon Inc. (ENZN, Financial) filed Quarterly Report for the period ended 2011-06-30.
Enzon Inc. has a market cap of $459.7 million; its shares were traded at around $8.58 with and P/S ratio of 4.7.
Research and development pipeline. During the second quarter of 2011, total spending on our research and development programs was unchanged at $10.1 million compared to the second quarter of 2010. However, included in the prior year quarter expenses was a $1.0 million milestone payment related to the HER 3 mRNA antagonist. There was no similar milestone payment in the current year quarter. Adjusting for this, spending increased by 10% or $1.0 million quarter over quarter. For the six months ended June 30, 2011, research and development spending was $20.6 million compared to $21.6 million for the first half of 2010. However, included in the first half 2010 expenses was the aforementioned $1.0 million HER 3 mRNA antagonist milestone payment as well as a $1.0 million milestone payment for the beta-catenin mRNA antagonist recorded in the first quarter of 2010. Adjusting for these two milestone payments in the prior year, spending for the current year to date increased by 5% or $1.0 million.
Interest expense was $1.5 million for the three months ended June 30, 2011 and 2010. Interest expense was $3.0 million for the six months ended June 30, 2011 versus $4.2 million for the first half of 2010. The prior year period includes a net effect related to the first quarter 2010 conversion of $115.6 million principal amount of our 4% notes subsequent to the sale of our specialty pharmaceutical business. The net effect of forgone interest and the write-off of a pro rata amount of deferred debt issuance costs amounted to $0.8 million and was charged to interest expense during the first quarter of 2010 at the time of the notes conversion. The $0.8 million was adjusted in the fourth quarter of 2010 to credit interest expense and charge additional paid-in capital to reflect the capital nature of the transaction. The noncash adjustment was not material to the first or fourth quarters nor to the full year 2010 results of operations. Additionally, the decline in interest expense is attributable to lower principal amounts outstanding in 2011 compared to 2010.
The cash proceeds received from the sale of the specialty pharmaceutical business, including a second-quarter 2010 working capital adjustment, amounted to approximately $309.0 million. Of this amount, $40.9 million was allocated to the sale of in-process research and development and included in continuing operations. The net proceeds then attributable to discontinued operations yielded a gain of $175.4 million. The results of operations of the specialty pharmaceutical business for the period in January 2010 preceding the sale amounted to income of $3.6 million comprising the remainder of the $179.0 reported in 2010 as income and gain from discontinued operations. The gain from discontinued operations was subsequently adjusted to $176.4 million in the fourth quarter of 2010 to recognize $1.0 million of currency translation gains that had been included in accumulated other comprehensive income but should have been recognized as part of the gain on sale.
For the six months ended June 30, 2011, cash used in operating activities of continuing operations was $5.0 million compared to $40.0 million of cash provided in the first half of 2010. The Company incurred a loss from continuing operations of $6.6 million in the first half of 2011. Adjustments for non-cash expenses and changes in various working capital accounts comprised the partially offsetting $1.6 million. The $40.0 million provided in the first half of 2010 was primarily attributable to the Companys sale of in-process research and development.
Net cash used in financing activities was $91.4 million in the first half of 2011 versus $3.7 million provided in the first half of 2010. During the first half of 2011, we utilized $96.3 million to repurchase shares of the Companys common stock on the open market as part of the program to repurchase up to $200.0 million of common stock initiated in December of 2010. Fees of approximately $0.3 million incurred to purchase the shares were reflected in cash flows from operating activities. The share repurchase program is designed as a means by which to return to shareholders value derived from the sale of the specialty pharmaceutical business.
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Enzon Inc. has a market cap of $459.7 million; its shares were traded at around $8.58 with and P/S ratio of 4.7.
Highlight of Business Operations:
During the three months ended June 30, 2011, we had royalties on export sales of $8.1 million, of which $2.9 million were in Japan and $2.7 million were in Europe. This compares to $9.0 million of royalties on export sales in the comparable three-month period of 2010, of which $2.9 million were in Japan and $3.4 million were in Europe. On a six-month basis, we had royalties on export sales in 2011 of $17.2 million, of which $6.2 million were in Japan and $5.6 were in Europe, and $19.7 million of royalties on export sales in 2010, of which $6.1 million were in Japan and $6.9 million were in Europe.Research and development pipeline. During the second quarter of 2011, total spending on our research and development programs was unchanged at $10.1 million compared to the second quarter of 2010. However, included in the prior year quarter expenses was a $1.0 million milestone payment related to the HER 3 mRNA antagonist. There was no similar milestone payment in the current year quarter. Adjusting for this, spending increased by 10% or $1.0 million quarter over quarter. For the six months ended June 30, 2011, research and development spending was $20.6 million compared to $21.6 million for the first half of 2010. However, included in the first half 2010 expenses was the aforementioned $1.0 million HER 3 mRNA antagonist milestone payment as well as a $1.0 million milestone payment for the beta-catenin mRNA antagonist recorded in the first quarter of 2010. Adjusting for these two milestone payments in the prior year, spending for the current year to date increased by 5% or $1.0 million.
Interest expense was $1.5 million for the three months ended June 30, 2011 and 2010. Interest expense was $3.0 million for the six months ended June 30, 2011 versus $4.2 million for the first half of 2010. The prior year period includes a net effect related to the first quarter 2010 conversion of $115.6 million principal amount of our 4% notes subsequent to the sale of our specialty pharmaceutical business. The net effect of forgone interest and the write-off of a pro rata amount of deferred debt issuance costs amounted to $0.8 million and was charged to interest expense during the first quarter of 2010 at the time of the notes conversion. The $0.8 million was adjusted in the fourth quarter of 2010 to credit interest expense and charge additional paid-in capital to reflect the capital nature of the transaction. The noncash adjustment was not material to the first or fourth quarters nor to the full year 2010 results of operations. Additionally, the decline in interest expense is attributable to lower principal amounts outstanding in 2011 compared to 2010.
The cash proceeds received from the sale of the specialty pharmaceutical business, including a second-quarter 2010 working capital adjustment, amounted to approximately $309.0 million. Of this amount, $40.9 million was allocated to the sale of in-process research and development and included in continuing operations. The net proceeds then attributable to discontinued operations yielded a gain of $175.4 million. The results of operations of the specialty pharmaceutical business for the period in January 2010 preceding the sale amounted to income of $3.6 million comprising the remainder of the $179.0 reported in 2010 as income and gain from discontinued operations. The gain from discontinued operations was subsequently adjusted to $176.4 million in the fourth quarter of 2010 to recognize $1.0 million of currency translation gains that had been included in accumulated other comprehensive income but should have been recognized as part of the gain on sale.
For the six months ended June 30, 2011, cash used in operating activities of continuing operations was $5.0 million compared to $40.0 million of cash provided in the first half of 2010. The Company incurred a loss from continuing operations of $6.6 million in the first half of 2011. Adjustments for non-cash expenses and changes in various working capital accounts comprised the partially offsetting $1.6 million. The $40.0 million provided in the first half of 2010 was primarily attributable to the Companys sale of in-process research and development.
Net cash used in financing activities was $91.4 million in the first half of 2011 versus $3.7 million provided in the first half of 2010. During the first half of 2011, we utilized $96.3 million to repurchase shares of the Companys common stock on the open market as part of the program to repurchase up to $200.0 million of common stock initiated in December of 2010. Fees of approximately $0.3 million incurred to purchase the shares were reflected in cash flows from operating activities. The share repurchase program is designed as a means by which to return to shareholders value derived from the sale of the specialty pharmaceutical business.
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