Enzons 10k is out. They earned 5 cents for the quarter. The bad news is that they have announced what some of us have suspected. They have ceased all operations other than collecting the royalties on their old products. The entire company now consists of 10 people. They have vacated their offices and manufacturing facility. It is officially a dead company.
The really bad news concerns those royalties. They collect roughly 95% of their royalties on one product. PegIntron. Merck has the exclusive worldwide rights to manufacture and distribute PegIntron. Sales are rapidly declining.
The following is from Mercks 1st quarter 2013 earning statement, page 35 -
"Worldwide sales of PegIntron, a treatment for chronic hepatitis C, declined 23% to $126 million in the first quarter of 2013 driven largely by lower sales in the United States and Japan. The Company believes that the sales decline in the United States was attributable in part to patient treatment being delayed by health care providers in anticipation of new therapeutic options becoming available"
It appears a replacement for PegIntron will be available very soon.
In any event, Enzons patents on PegIntron expire this year and 2015 anyway.
Sorry to be the bearer of bad news, but the facts are what they are.
It wasn't a great 10k, but not as bad as you make it out to be. First of all, Enzon only has to profit another 50 million to justify the current market cap. Unless pegintron is banned, 50 mill in profit should be no problem over the course of the next 5 years (when royalty payments will cease altogether). Also, the US market only accounts for a small percentage of overall royalty revenue. The patents may expire, but the royalties don't cease until 2018 (2015 in US, but longer elsewhere). On top of this, we don't know what the deal is with Belrose-- maybe more royalty revenues there from Hisun or elsewhere. Who knows. All in all this is a pretty conservative play with some potential for making money. With the PPS so low, it's not a sell, possibly a buy, definatly a hold.
1. There are 43 million shares out. If they earned 50 million dollars that would give you a price per share value of $1.16. You would not even break even, much less make any money. Plus, there is no guarantee of how much of that would make it back to the stockholders. I would not trust this company after the Belrose deal.
2. The sales figures from Merck are worldwide - down 23%. Total sales is what matters. Merck is the only company that can sell PegIntron.
3. I really have doubts about Belrose deal. It does not pass the smell test. Enzon had invested over 100 million dollars in that technology and sold it for less than a million. They already had some of it licensed and sold those rights to Belrose for 2 cents a share. Why allow another company to get in the middle of that deal if they expected to make money?
4. I do not think it is a conservative investment at all when Merck is putting out those kind of declining sales figures. You have to hope one of those other products may or may not hit at some point in the future. But that is not conservative investing, that is speculation.
5. I would expect there will be generic PegItron available in the next few years if there is still a market for it.