ENZON 1st Q/2000 - fein

Enzon Reports First Quarter Fiscal Year 2001 Earnings

       
     WEDNESDAY, NOVEMBER 08, 2000 8:06 AM
     - BusinessWire

    PISCATAWAY, N.J., Nov 8, 2000 (BUSINESS WIRE) --

    Enzon, Inc.
    (NASDAQ:ENZN) announced today its financial results for the first
    quarter of fiscal year (FY) 2001. For the quarter, the Company
    reported net earnings of $583,000 or $0.01 per share, as compared to a
    net loss of $1,950,000 or $0.05 per share, for the same period in FY
    2000. The earnings for the quarter were principally due to increased
    sales and royalties earned on sales of the approved products, which
    utilize the Company's PEG technology, and increased interest income
    resulting from capital raised during the Company's public offering
    completed in FY 2000. The Company had total cash and interest-bearing

    investments of approximately $121.5 million as of September 30, 2000.
               Sales and royalties earned on sales of the approved products,
    which utilize the Company's PEG technology, for the quarter increased
    by approximately $2,077,000 or 72%, primarily due to increased
    ONCASPAR(R) sales. The increase in ONCASPAR sales was due to the
    lifting of some of the FDA distribution restrictions in place during
    the prior year's first quarter. These distribution restrictions were
    related to a previously disclosed manufacturing problem and resulted
    in prior year sales being significantly lower. During October 2000,
    the FDA gave final approval to the Company's manufacturing changes to
    correct these manufacturing problems and removed all previously
    imposed distribution and labeling restrictions. This will allow for
    the resumption of normal distribution and labeling of this product by
    the Company's marketing partner, Aventis Pharmaceuticals (formerly
    Rhone-Poulenc Rorer Pharmaceuticals, Inc.), which is expected to take
    place in the first half of calendar 2001. Resumption of normal
    distribution and labeling will result in lower revenues in future
    quarters when Aventis resumes distribution of the product and the
    Company's revenue stream reverts back to a 27.5% royalty rate on net
    sales. Increased ADAGEN sales, as well as royalties earned on sales of
    PEG-INTRON, also contributed to the increase in sales for the quarter.
    PEG-INTRON was approved by the European Union in May 2000 and was
    launched in several European countries throughout the quarter.
    Additional launches of PEG-INTRON are ongoing and expected to occur
    throughout the remaining EU-Member States in the upcoming months. To
    date, PEG-INTRON has been launched in the following European
    countries: Austria, Finland, France, Germany, Portugal, Sweden and the
    United Kingdom. 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 and milestone payments.
               Cost of sales, as a percentage of sales, decreased to 20%, as
    compared to 41% for the comparable quarter of the previous year. The
    decrease was due to increased cost of sales incurred during the prior
    year's quarter related to the previously disclosed ONCASPAR
    manufacturing problems and the related inventory reserves that
    decreased the current year's cost of sales.
               Research and development expenses for the quarter ended September
    30, 2000 increased by 59% to $2,637,000, as compared to $1,657,000 for
    the quarter ended September 30, 1999. The increase is primarily due to
    increased expenses related to the ongoing Phase I clinical trials for
    PROTHECAN(TM), as well as other PEG products in preclinical
    development. The Company currently plans to file an IND on another PEG
    anti-cancer compound before the end of calendar 2000. Research and
    development expenses are expected to continue to increase
    significantly as PROTHECAN moves into Phase II clinical trials in
    early 2001 and additional compounds enter clinical trials.
               Selling, general and administrative expenses for the quarter ended
    September 30, 2000 increased by 32% to $3,074,000, as compared to
    $2,326,000 for the prior year. This increase was primarily due to
    increased legal fees associated with patent filing and defense costs.
    During September 2000, Enzon filed a lawsuit in Federal District Court
    in New Jersey against Hoffmann-LaRoche, Inc. and Roche Laboratories,
    Inc. (Roche) for infringement of Enzon's U.S. Patent 6,113,906 (`906).
    This patent, which has composition of matter claims directed to
    "branched PEG," a unique form of Enzon's high-molecular-weight
    pegylation technology, was issued to Enzon by the U.S. Patent and
    Trademark Office on September 5, 2000. Enzon licenses a different
    pegylation technology to Schering-Plough for use with PEG-INTRON(TM)
    (peginterferon alfa-2b), which is approved in the European Union and
    is currently undergoing FDA review for the treatment of hepatitis C.
               Enzon is a biopharmaceutical company developing advanced
    therapeutics for life-threatening diseases through the application of
    its proprietary drug delivery and targeting technologies, PEG
    Modification, Pro Drug/Transport technology and Single-Chain
    Antigen-Binding (SCA(R)) protein technology. Three products are
    currently marketed which utilize Enzon's technology: PEG-INTRON
    marketed by Schering-Plough in Europe for hepatitis C, ONCASPAR(R) for
    Acute Lymphoblastic Leukemia (ALL), and ADAGEN(R) a treatment for a
    form of Severe Combined Immunodeficiency Disease (SCID), commonly
    known as the "Bubble Boy Disease." Schering-Plough submitted a
    Biologics License Application (BLA) to the U.S. Food and Drug
    Administration (FDA) seeking marketing approval for PEG-INTRON for the
    treatment of chronic hepatitis C in December 1999. In addition to
    three approved products, Enzon has several products in various stages
    of clinical development by itself and with partners, including
    additional indications for PEG-INTRON with Schering-Plough. Recently,
    Schering-Plough completed Phase III clinical trials for PEG-INTRON in
    combination with REBETOL for the treatment of hepatitis C. PEG-INTRON
    is in Phase III clinical trials conducted by Schering-Plough for the
    treatment of malignant melanoma and chronic myelogenous leukemia.
    Enzon develops and markets products on its own and through strategic
    alliances, which in addition to Schering-Plough Corporation, include
    Alexion Pharmaceuticals, Inc., Baxter Healthcare Corporation,
    Bristol-Myers Squibb Company, Eli Lilly & Company, and Aventis.

               Except for the historical information herein, the matters
    discussed in this news release 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 on file with the
    SEC, including without limitation, risks in obtaining and maintaining
    regulatory approval for expanded indications, market acceptance of and
    continuing demand for Enzon's products and the impact of competitive
    products and pricing.

               This release is also available at http://www.enzon.com