Enzon Pharmaceuticals, Inc. has authorized a plan to spin-off its novel biotechnology business from Enzon in a transaction that will result in two independent and highly focused public companies.
"By separating these unique businesses into two focused companies, the opportunities for both the specialty pharmaceutical business and the biotechnology business could be substantially enhanced and greater value could be created than under the current structure," said Jeffrey H Buchalter, chairman, president and CEO. "Operating separately will allow each company to benefit from greater strategic and managerial focus and appeal to their own unique shareholders.
The separation will enable the two businesses to compete more effectively in their respective markets and optimize their business goals, research initiatives and capital requirements. We look forward to creating this opportunity for the shareholders," said Buchalter.
Upon completion of the spin-off, Buchalter will serve as chairman, president and CEO of the new biotechnology company and Craig Tooman, the current CFO of Enzon, will assume the role of president and CEO of Enzon. Each company will operate with independent management teams and additional details regarding management structure will be determined and disclosed at a later time.
Following the spin-off of the biotechnology company, Enzon will retain the current marketed products of Abelcet, Adagen, DepoCyt and Oncaspar, the rights to current PEG royalty revenues, including PEG-Intron, Cimzia and Hematide, and the manufacturing facility in Indianapolis. The Company expects that the functional support associated with these operations will continue at Enzon. In addition, Enzon's outstanding convertible notes would remain as obligations of the company.
"The specialty pharmaceutical business will continue its long-standing track record in providing life saving therapies for patients. The business has strong fundamentals, including stable revenue, cash flow, and strong assets," said Buchalter. "Upon completion of the spin-off, Enzon will have the resources to better focus its strategy and compete more effectively in the specialty pharmaceutical market."
The biotechnology company resulting from the spin-off will continue to leverage its customized PEGylation technology for licensing, collaboration and future royalty generation, and novel Locked Nucleic Acid (LNA) technology to develop promising therapeutics for oncology. Enzon expects to sufficiently capitalize the new company with approximately $150 million of cash, representing approximately two to three years of anticipated cash need to fund research and development efforts based on company projections.
"The spin-off of the biotechnology business will permit this entity to become a highly focused biotechnology company, strategically concentrating on its new PEGylation and novel LNA technology platforms to better develop progressive therapeutics, such as PEG-SN38, HIF1-alpha and rhMBL, for patients with life-threatening oncology conditions. With a better focus on our development efforts, the biotechnology business will be uniquely positioned to forge new paradigms of oncology therapy," said Buchalter.
Completion of the proposed spin-off is subject to numerous conditions, including final approval by Enzon's Board of Directors, the filing and effectiveness of a registration statement with the Securities and Exchange Commission (SEC) and any necessary third-party consents. Enzon is currently evaluating whether or not the proposed spin-off would qualify as a tax-free stock distribution. Enzon has retained Goldman, Sachs & Co. as financial advisor, Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor and Mercer as human capital consultant with respect to the spin-off transaction, which is expected to be completed in the fourth quarter of 2008.
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development, manufacturing, commercialization of important medicines for patients with cancer and other life-threatening conditions. Enzon has a portfolio of four marketed products, Oncaspar, DepoCyt, Abelcet and Adagen.