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Enzon Pharmaceuticals Inc. Message Board

  • grazeldathudpucker grazeldathudpucker May 2, 2013 8:26 PM Flag

    Closing shop?

    I am new to this company. I have a question for those that have been following Enzon. I took a look at the last few years of quarterly and annual reports. I have to wonder if they are planning to continue growing the business or just bail out. The first thing I noticed was their references to selling the business now. At an obvious low point. Would not seem like a good time to sell to me. Based on their comments, they were not able to find a buyer due to diminishing royalties and a product being recalled.

    At the end of 2011 they had about 197 million dollars in stockholder equity. With lots of cash for a company with a 140 million market cap.

    At end of 2012 that has dropped to 77 million in equity and they are about to pay 70 million of that out on the upcoming distribution. I assume they pay that dividend on the shares they personally own also. Insiders own about 5% of the shares. That would pay them about 3.5 million dollars out the distribution. That will pretty well finish off their liquid funds. Funds that could have gone back into product development.

    Their notes indicated they have suspended their stock buy back program indefinitely and have greatly reduced their development of new products. It seems the principles may be ready to move on and are just cashing out.

    My question is this, do you believe this company has a plan to grow beyond collecting diminishing royalties on their existing products or just let the clock run out?

    I'm not short or long. Just trying to figure which way to go if I invest. I would appreciate your thoughts.

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    • Kind of along these lines, this section in the 10-k had me thinking (on page 19): If our sale review process does not result in the sale of our company, our Board of Directors may decide to pursue a dissolution and liquidation of our company.

      WHat do you think of this? go read the whole section-- this is just the title.

      • 1 Reply to htgute
      • Thanks for the reply. I went back and read the 10k in detail. I am a value/dividend investor and ENZN popped up on a screen due to the special dividend. Normally, a special dividend indicates a strong company making tons of money and spreading it around. Unfortunately, that is not the case here. It appears they are cashing out prior to a dissolution. The 120 million in debt they owe will be paid off on June 1st and 70 million they have left will be distributed to shareholders on June 4th. That will spend all the cash they have. They will then be free to wrap up their affairs and shut down.

        Per the 10k -
        The entire company now consists of less than 2 dozen people - page 17
        They have "suspended all clinical development activities" (new products) - page 5
        Their patent for the original PEG process has expired - page 14
        Their patents for PegIntron (most of royalties) expires in 2013 & 2015 - page 17
        They rent their place of business and do not have any other substantial physical assets - page 25

        Based on the above, I believe they have already made the decision to dissolve the company. Personally, I will either look for opportunity on the short side or avoid.

    • graze, just to make sure you get some hospitality let me suggest that you take a few hours and 1) read the press releases starting in Nov 2012, then (skim) read the lates 10K. Then skim throught the post threads here from the past couple of weeks. Of course I'd recommend the threads I've started but there are many other pretty tuned in people operating on this board (aside: it's a little remarkable there aren't any nitwits or paid bashers here, as near as I can tell, let's keep our fingers crossed). Anyway, skim and open replys, etc., do some dd (despite there being a cat on this board with handle screwdd) and then offer an option, you'll get some in return, rest assured. And yeah, we're here because we think the action is worth it.

 
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