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|  |  Enzon Reports First Quarter ResultsPress Release November 3, 2005 BRIDGEWATER, N.J.--(BUSINESS WIRE)--Nov 3, 2005 - Enzon Pharmaceuticals, Inc. (Nasdaq: ENZN) today announced its financial results for the quarter ended September 30, 2005, the first quarter of Enzon's six -month transition period ending on December 31, 2005. In January 2005, Enzon announced a change in its fiscal year end from June 30 to December 31. For the three months ended September 30, 2005, Enzon reported a net loss of $5.8 million or $0.13 per diluted share. The Company's financial results include investments related to the Company's ongoing initiatives to reshape its business, including a $10.0 million charge related to the previously announced acquisition of the rights to recombinant human Mannose-binding Lectin (rhMBL). "Over the past several months, Enzon's senior leadership team has rapidly advanced our goal of operating as a stronger, more focused organization that is aligned on delivering long-term value," said Jeffrey H. Buchalter, Enzon's chairman and chief executive officer. "We have made significant progress toward overcoming the near-term challenges we face, while simultaneously capitalizing on the intrinsic strengths that exist at Enzon today. Recent strides include refocusing our research and development investments, including acquiring the exciting oncology opportunity rhMBL, and better supporting our marketed brands through a number of new initiatives. We have also further strengthened our research and development organization with new leadership." The Company provided a summary of recent business developments, including: -- In September 2005, the Company deepened the pharmaceutical expertise of its executive management team with the appointment of Dr. Ivan Horak to the position of executive vice president of Research and Development and chief scientific officer. Having held a number of senior medical and scientific positions in the pharmaceutical industry as well as the National Cancer Institute, Dr. Horak is a long-standing leader in the oncology community and brings an impressive background in drug development to Enzon. -- In September 2005, Enzon advanced its objective of strengthening its product pipeline with promising clinical development opportunities by acquiring exclusive worldwide rights, excluding the Nordic countries, for the development, manufacture, and marketing of rhMBL from the Danish biotech company NatImmune A/S. Mannose-binding Lectin (MBL) is a naturally occurring human plasma protein that plays a key role in the immune system's first-line defense against infections. This program represents an exciting opportunity for Enzon to offer a clinical benefit to cancer patients undergoing chemotherapy who are MBL-deficient and susceptible to serious infections. -- In line with its commitment to drive growth by investing in its marketed brands, Enzon recently amended its agreement with members of the Sanofi-Aventis Group for its oncology product, ONCASPAR(R) (pegaspargase). The amendment, which will become effective in January 2006, includes a significant reduction in Enzon's royalty rate. The Company believes there is a strong growth opportunity for ONCASPAR and it is committed to investing in programs designed to optimize that potential. Mr. Buchalter commented further, "Looking ahead, we have defined a clear set of priorities for the remainder of 2005 and 2006. We will continue to focus our resources on five key strategic areas: growing our top line and investing in our commercial operations; reestablishing Enzon as a scientific leader in PEGylation; rebuilding our research and development pipeline; maximizing the return on our asset base; and establishing a high-performance, value-focused culture. We remain confident in the opportunities we see in each of these areas to build a stronger Enzon that is capable of delivering solid growth and increased value over the long term." Financial Results For the three months ended September 30, 2005, Enzon reported a net loss of $5.8 million or $0.13 per diluted share, as compared to a net loss of $0.9 million or $0.02 per diluted share for the three months ended September 30, 2004. Enzon's financial results for the three months ended September 30, 2005, include investments related to the Company's ongoing initiatives to reshape its business for the future, including the $10.0 million charge for in-process research and development related to its acquisition of rhMBL. Additionally, financial results for the quarter ended September 30, 2005 were negatively impacted by a decline in product sales associated with its intravenous antifungal product ABELCET. The Company's financial results for the quarter ended September 30, 2005 were favorably impacted by increased sales of Enzon's other marketed products, ADAGEN and ONCASPAR, increased royalties related to Schering-Plough's PEG-INTRON and Eyetech's MACUGEN, and the timing of expenditures related to internal research and development programs and sales and marketing initiatives. A summary of financial highlights for the quarter ended September 30, 2005 include: -- North American ABELCET sales for the three months ended September 30, 2005, were $11.1 million, as compared to $16.5 million for the three months ended September 30, 2004. The decline from the prior year is due to competitive market conditions in the intravenous antifungal market, as previously reported by the Company. -- Combined sales of ONCASPAR, ADAGEN, and DEPOCYT were $14.1 million for the three months ended September 30, 2005, versus $11.0 million for the three months ended September 30, 2004. The increase was primarily attributable to growth in sales of ADAGEN and ONCASPAR. -- Royalties of $15.2 million for the three months ended September 30, 2005, as compared to $10.1 million for the three months ended September 30, 2004, a 50% increase driven by Schering-Plough's December 2004 launch of PEG-INTRON combination therapy in Japan, and to a lesser extent the January 2005 launch of MACUGEN(R) in the U.S. -- $228.7 million in total cash reserves, which include cash, cash equivalents, short-term investments, and marketable securities, as of September 30, 2005, compared to $225.1 million as of June 30, 2005. The increase in cash reserves for the three months ended September 30, 2005 is due to proceeds from the sale of an equity-based investment partially offset by cash used in operating activities and capital expenditures. About Enzon Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development and commercialization of therapeutics to treat patients with cancer and other life-threatening diseases. Enzon's specialized sales force markets ABELCET(R), ONCASPAR(R), ADAGEN(R), and DEPOCYT(R) in North America. In addition, Enzon also receives royalties on sales of PEG-INTRON(R), marketed by Schering-Plough Corporation, and MACUGEN(R), marketed by Eyetech Pharmaceuticals and Pfizer Inc. Enzon's product-driven strategy includes an extensive drug development program that leverages its proprietary technologies, including a next-generation PEGylation platform that utilizes linkers designed to release compounds at a controlled rate. Enzon complements its internal research and development efforts with strategic initiatives, such as partnerships designed to broaden its revenue base or provide access to promising new technologies or product development opportunities. Further information about Enzon and this press release can be found on the Company's web site at www.enzon.com.
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