SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1997 Commission File No. 0-12957
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2372868
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
20 Kingsbridge Road, Piscataway, New Jersey 08854
(Address of principal executive offices) (Zip Code)
(732) 980-4500
(Registrant's telephone number, including area code:)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No ___
The number of shares of common stock, $.01 par value, outstanding as of February
4, 1998 was 31,130,417 shares.
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
ENZON, INC AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
December 31, 1997 and June 30, 1997
<TABLE>
<CAPTION>
December 31, June 30,
ASSETS 1997 1997
------------- -------------
(unaudited) *
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,719,548 $ 8,315,752
Accounts receivable 2,735,867 2,433,762
Inventories 671,523 859,873
Other current assets 264,111 87,732
------------- -------------
Total current assets 12,391,049 11,697,119
------------- -------------
Property and equipment 15,052,998 15,676,525
Less accumulated depreciation and amortization 12,878,551 12,923,802
------------- -------------
2,174,447 2,752,723
------------- -------------
Other assets:
Investments 74,416 78,293
Other assets, net 41,484 34,575
Patents, net 1,365,329 1,442,568
------------- -------------
1,481,229 1,555,436
------------- -------------
Total assets $ 16,046,725 $ 16,005,278
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,340,289 $ 1,910,737
Accrued expenses 3,646,667 3,504,966
------------- -------------
Total current liabilities 4,986,956 5,415,703
------------- -------------
Accrued rent 806,693 870,012
Royalty advance - RPR 625,947 1,177,682
------------- -------------
1,432,640 2,047,694
------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock-$.01 par value, authorized 3,000,000 shares:
issued and outstanding 108,000 shares at December 31,
1997 and 109,000 shares at June 30, 1997 (liquidation
preference aggregating $2,700,000 at December 31, 1997
and $2,725,000 at June 30, 1997) 1,080 1,090
Common stock-$.01 par value, authorized 60,000,000 shares:
issued and outstanding 31,030,167 shares at December
31, 1997 and 30,797,735 shares at June 30, 1997 310,302 307,977
Additional paid-in capital 122,052,916 121,426,159
Accumulated deficit (112,737,169) (113,193,345)
------------- -------------
Total stockholders' equity 9,627,129 8,541,881
------------- -------------
Total liabilities and stockholders' equity $ 16,046,725 $ 16,005,278
============= =============
</TABLE>
*Condensed from audited financial statements.
The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.
2
<PAGE>
ENZON, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Three Months and Six Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Sales $ 4,139,841 $ 3,553,975 $ 6,604,475 $ 6,274,566
Contract revenue 107,500 5,010 2,312,609 1,099,309
----------- ----------- ----------- -----------
Total revenues 4,247,341 3,558,985 8,917,084 7,373,875
----------- ----------- ----------- -----------
Costs and expenses
Cost of sales 1,134,682 994,325 1,739,390 1,980,314
Research and development expenses 1,985,738 1,980,063 4,132,707 4,409,834
Selling, general and administrative expenses 1,498,242 1,453,545 2,826,684 2,729,612
----------- ----------- ----------- -----------
Total costs and expenses 4,618,662 4,427,933 8,698,781 9,119,760
----------- ----------- ----------- -----------
Operating income (loss) (371,321) (868,948) 218,303 (1,745,885)
----------- ----------- ----------- -----------
Other income (expense)
Interest and dividend income 150,763 162,770 265,563 319,911
Interest expense (4,467) (4,847) (10,905) (11,600)
Other (1,783) 180 (1,845) 8,115
----------- ----------- ----------- -----------
144,513 158,103 252,813 316,426
----------- ----------- ----------- -----------
Net income (loss) ($ 226,808) ($ 710,845) $ 471,116 ($1,429,459)
=========== =========== =========== ===========
Basic earnings (loss) per common share ($ 0.01) ($ 0.03) $ 0.01 ($ 0.05)
=========== =========== =========== ===========
Diluted earnings (loss) per common share ($ 0.01) ($ 0.03) $ 0.01 ($ 0.05)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.
3
<PAGE>
ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 471,116 ($ 1,429,459)
Adjustment for depreciation and amortization 650,404 886,729
Loss on retirement of equipment 1,845 --
Non-cash expense for issuance of common stock and stock options 111,882 121,838
Decrease in accrued rent (63,319) (47,577)
Decrease in royalty advance - RPR (871,146) (541,476)
Changes in assets and liabilities (401,219) (708,793)
------------ ------------
Net cash used in operating activities (100,437) (1,718,738)
------------ ------------
Cash flows from investing activities:
Capital expenditures (79,863) (602,700)
Proceeds from sale of equipment 83,129 --
------------ ------------
Net cash provided by (used in) investing activities 3,266 (602,700)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 502,250 8,032
Principal payments of obligations under capital leases (1,283) (1,139)
------------ ------------
Net cash provided by financing activities 500,967 6,893
------------ ------------
Net increase (decrease) in cash and cash equivalents 403,796 (2,314,545)
Cash and cash equivalents at beginning of period 8,315,752 12,666,050
------------ ------------
Cash and cash equivalents at end of period $ 8,719,548 $ 10,351,505
============ ============
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
condensed financial statements.
4
<PAGE>
ENZON, INC. AND SUBSIDIARIES
Notes To Consolidated Condensed Financial Statements
(Unaudited)
(1) Organization and Basis of Presentation
The unaudited consolidated condensed financial statements have been
prepared from the books and records of Enzon, Inc. and subsidiaries in
accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
only of normal and recurring adjustments) considered necessary for a fair
presentation have been included. Certain prior year balances were reclassified
to conform to the 1997 presentation. Interim results are not necessarily
indicative of the results that may be expected for the year, and as such, the
Company has not recorded a tax provision as it does not anticipate net income to
be recognized for the year ending June 30, 1998.
(2) Earnings (Loss) Per Share
Basic earnings (loss) per common share is based on the net income (loss)
for the relevant period, adjusted for cumulative undeclared preferred stock
dividends of $54,000 and $55,000 for the three months ended December 31, 1997
and 1996, and $108,000 and $109,000 for the six months ended December 31, 1997
and 1996, respectively, divided by the weighted average number of common shares
issued and outstanding during the period.
Diluted earnings per common share for the six months ended December 31,
1997 is based on net income, adjusted for cumulative undeclared preferred stock
dividends of $108,000 for the six months ended December 31, 1997, divided by the
weighted average number of common shares issued and outstanding during the
period, plus the exercise or conversion of all dilutive potential common shares.
Diluted loss per common share for the three months ended December 31, 1997
and 1996 and the six months ended December 31, 1996, is based on the net loss
for the relevant period adjusted for cumulative undeclared preferred stock
dividends of $54,000 and $55,000 for the three months ended December 31, 1997
and 1996, respectively, and $109,000 for the six months ended December 31, 1996,
divided by the weighted average number of common shares issued and outstanding
during the period. The exercise or conversion of all dilutive potential common
shares is not included, due to the net loss recorded for the three months ended
December 31, 1997 and 1996 and the six months ended December 31, 1996.
5
<PAGE>
ENZON, INC. AND SUBSIDIARIES
Notes To Consolidated Condensed Financial Statements, Continued
(Unaudited)
The following represents the weighted average number of common shares
outstanding for the three and six months ended December 31, 1997 and 1996
diluted earnings (loss) per common share calculation:
<TABLE>
<CAPTION>
Three months ended Six months ended
December 31, December 31, December 31, December 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average number of
common shares issued and
outstanding 30,975,856 27,882,828 30,918,228 27,794,716
Weighted average shares issued
upon the exercise of dilutive
options and warrants based on
the Treasury Stock Method -- -- 1,677,509 --
---------- ---------- ---------- ----------
Weighted average number of
common shares issued and
outstanding and dilutive potential
common shares 30,975,856 27,882,828 32,595,737 27,794,716
========== ========== ========== ==========
</TABLE>
(3) Inventories
The composition of inventories at December 31, 1997 and June 30, 1997 is as
follows:
December 31, June 30,
1997 1997
-------- --------
Raw materials $327,000 $269,000
Work in process 109,000 269,000
Finished goods 236,000 322,000
-------- --------
$672,000 $860,000
======== ========
(4) Cash Flow Information
The Company considers all highly liquid securities with original maturities
of three months or less to be cash equivalents. Cash payments for interest were
approximately $11,000 and $12,000 for the six months ended December 31, 1997 and
1996, respectively. There were no income tax payments made for the six months
ended December 31, 1997 and 1996.
During the six months ended December 31, 1997, 1,000 shares of Series A
Cumulative Convertible Preferred Stock ("Series A Preferred Stock") were
converted to 2,272 shares of Common Stock. Accrued dividends of $15,000 on the
Series A Preferred Stock that converted during the six months ended December 31,
1997, were settled by issuing 1,358 shares of Common Stock and cash payments
totaling $10 for fractional shares. There were no conversions of Series A
Preferred Stock during the six months ended December 31, 1996. During the six
months ended December 31, 1996, 24,260 shares of Series B Convertible Preferred
Stock were converted into 1,287,213 shares of Common Stock.
6
<PAGE>
ENZON, INC. AND SUBSIDIARIES
Notes To Consolidated Condensed Financial Statements, Continued
(Unaudited)
A cash payment of $2.00 was made for fractional shares related to the
conversions. These transactions are non-cash financing activities.
(5) Non-Qualified Stock Option Plan
During the six months ended December 31, 1997, the Company issued 456,000
stock options at an average exercise price of $5.82 per share under the
Company's Non-Qualified Stock Option Plan, as amended, of which 80,000 were
granted to executive officers of the Company. None of the options granted during
the period are exercisable as of December 31, 1997. All options were granted
with exercise prices that equaled or exceeded the fair market value of the
underlying stock on the date of grant.
(6) Subsequent Events
During January 1998, the Company amended its long-term supply agreement for
unmodified L-asparaginase, one of the raw materials used in ONCASPAR produced
for the North American market. The amendment extended the term of the supply
agreement and the time for the Company to fulfill its remaining $1,300,000 in
minimum purchase commitments until December 31, 1999. In consideration for the
extension, the Company paid $75,000 and made an advance payment of $1,300,000
for the remaining minimum purchase commitment under the agreement. The supplier
will deliver the prepaid inventory at the Company's request through December 31,
1999. Any inventory that is not taken by the Company by December 31, 1999 will
be forfeited. These payments were made in January 1998.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Information contained herein contains "forward-looking statements" which can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy. No assurance can be given that the future results covered by the
forward-looking statements will be achieved. The matters set forth in Exhibit
99.0 to the Company's Annual Report on Form 10-K for the fiscal year ended June
30, 1997, which is incorporated herein by reference, constitute cautionary
statements identifying important factors with respect to such forward-looking
statements, including certain risks and uncertainties, that could cause actual
results to vary materially from the future results indicated in such
forward-looking statements. Other factors could also cause actual results to
vary materially from the future results indicated in such forward-looking
statements.
Results of Operations
Three months ended December 31, 1997 vs. Three months ended December 31, 1996
Revenues. Revenues for the three months ended December 31, 1997 increased by 19%
to $4,247,000 as compared to $3,559,000 for the same period in 1996. The
components of revenues are sales and contract revenues. Sales increased by 16%
to $4,140,000 for the three months ended December 31, 1997 as compared to
$3,554,000 for the same period in the prior year, due to increased revenues from
ONCASPAR(R), which is marketed in the U.S. by Rhone-Poulenc Rorer
Pharmaceuticals, Inc. ("RPR"), and increased ADAGEN(R) sales resulting from an
increase in patients receiving ADAGEN. ADAGEN sales for the three months ended
December 31, 1997 and 1996 were $2,800,000 and $2,328,000, respectively.
ONCASPAR revenues are comprised of manufacturing revenues as well as royalties
on sales of ONCASPAR by RPR. ONCASPAR revenues increased due to an increase in
royalties on sales of ONCASPAR by RPR which was partially offset by a decline in
manufacturing revenues resulting from the timing of ONCASPAR shipments made to
RPR. During the three months ended December 31, 1997 and 1996, the Company had
export sales of $642,000 and $589,000, respectively. Sales in Europe were
$489,000 and $479,000 for the three months ended December 31, 1997 and 1996,
respectively.
Cost of Sales. Cost of sales, as a percentage of sales, remained relatively
constant at 27% for the three months ended December 31, 1997 as compared to 28%
for the same period in 1996. During the quarter ended December 31, 1997, the
Company utilized approximately 10% of its manufacturing capacity for the
production of its approved products.
Research and Development. Research and development expenses for the three months
ended December 31, 1997 remained relatively flat at $1,986,000 as compared to
$1,980,000 for the same period in 1996.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended December 31, 1997 remained
relatively unchanged at $1,498,000, as compared to $1,454,000 for the same
period in 1996.
Other Income/Expense. Other income/expense decreased to $145,000 for the three
months ended December 31, 1997 as compared to $158,000 for the same period last
year. The decrease was attributable to a decrease in interest income due to a
decrease in interest bearing investments.
Six months ended December 31, 1997 vs. Six months ended December 31, 1996
Revenues. Revenues for the six months ended December 31, 1997 increased by 21%
to $8,917,000 as compared to $7,374,000 for the same period in 1996. The
components of revenues are sales and contract revenues. Sales increased by 5% to
$6,604,000 for the six months ended December 31, 1997 as compared to $6,275,000
for the same period in the prior year, due to an increase in ADAGEN sales
resulting from an increase in patients receiving ADAGEN which was offset in part
by a decrease in ONCASPAR revenue. ONCASPAR revenues are comprised of
manufacturing revenues as well as royalties on sales of ONCASPAR by RPR.
ONCASPAR revenues decreased due to a decline in manufacturing revenue resulting
from the timing of ONCASPAR shipments made to RPR. The decrease in manufacturing
revenue was
8
<PAGE>
partially offset by increased royalties due to an increase in sales of ONCASPAR
by RPR. ADAGEN sales for the six months ended December 31, 1997 and 1996 were
$4,994,000 and $4,453,000, respectively. Contract revenue for the six months
ended December 31, 1997 increased to $2,313,000, as compared to $1,099,000 for
the same period in 1996. The increase was principally due to an increase in
milestone payments received under the Company's licensing agreement for
PEG-Intron A with Schering-Plough Corporation ("Schering-Plough"). During the
six months ended December 31, 1997, the Company recognized $2,200,000 in
milestone payments received as a result of Schering-Plough advancing PEG-Intron
A into a Phase III clinical trial. PEG-Intron A is a modified form of
Schering-Plough's INTRON(R)A (interferon alfa-2b, recombinant), developed by
Enzon to have longer-acting properties. INTRON A is a genetically engineered
anticancer and antiviral agent, developed and marketed worldwide by
Schering-Plough Corporation. INTRON A generated $524 million in sales in 1996.
The worldwide market for alpha interferon is in excess of $1 billion. Under the
Company's licensing agreement, Enzon is entitled to royalties on product sales
and has the option to become Schering-Plough's exclusive manufacturer of
PEG-Intron A for the U.S. market. During the prior year, the Company received a
$1,000,000 milestone payment under the licensing agreement with Schering-Plough.
During the six months ended December 31, 1997 and 1996, the Company had export
sales of $1,127,000 and $1,171,000, respectively. Sales in Europe were $848,000
and $991,000 for the six months ended December 31, 1997 and 1996, respectively.
Cost of Sales. Cost of sales, as a percentage of sales, decreased to 26% for the
six months ended December 31, 1997 as compared to 32% for the same period in
1996. The decrease was due primarily to the prior year's write-off of
approximately $200,000 in excess ONCASPAR raw material. During January 1998, the
Company amended its supply agreement for this material which extended the period
available to the Company to accept delivery of its remaining purchase commitment
through 1999, in exchange for the advance payment of the remaining purchase
commitment. While it is possible that the Company may incur similar losses on
its remaining purchase commitment under the supply agreement, the Company does
not consider such losses probable, nor can the amount of any loss which may be
incurred in the future presently be estimated due to a number of factors,
including, but not limited to, potential increased demand for ONCASPAR from RPR
or expansion into additional markets outside the U.S. If the Company does not
achieve increases in sales of ONCASPAR beyond current levels, a loss would be
incurred on the remaining purchase commitment.
Research and Development. Research and development expenses for the six months
ended December 31, 1997 decreased by 6% to $4,133,000 from $4,410,000 for the
same period in 1996. This decrease was primarily due to reductions in wage and
consulting expenses due to the Company's continued focus on key development
programs, principally in the clinical and scientific administration areas.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six months ended December 31, 1997 remained
relatively consistent at $2,827,000, as compared to $2,730,000 for the same
period in 1996.
Other Income/Expense. Other income/expense decreased by $63,000 to $253,000 for
the six months ended December 31, 1997 as compared to $316,000 for the same
period last year. The decrease was attributable to a decrease in interest income
due to a decrease in interest bearing investments.
In February 1997, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
Share". SFAS 128 establishes standards for computing and presenting earnings per
share. In accordance with the effective date of SFAS 128, the Company adopted
SFAS 128 as of December 31, 1997.
Liquidity and Capital Resources
Enzon had $8,720,000 in cash and cash equivalents as of December 31, 1997.
The Company invests its excess cash in a portfolio of high-grade marketable
securities and United States government-backed securities.
The Company's cash reserves as of December 31, 1997 increased by $404,000
from June 30, 1997. The increase in cash reserves was principally due to net
income recorded for the six months ended December 31, 1997.
The Company's exclusive U.S. marketing rights license with RPR for ONCASPAR
provides for a payment of
9
<PAGE>
$3,500,000 in advance royalties which was received in January 1995. Under the
agreement, as amended, royalties will be offset against a credit of $5,970,000,
which represents the royalty advance plus reimbursement of certain amounts due
RPR under the previous agreement and interest expense, before cash payments will
be made under the agreement. The royalty advance is shown as a long term
liability with the corresponding current portion included in accrued expenses on
the consolidated condensed balance sheets and will be reduced as royalties are
recognized under the agreement. Through December 31, 1997, an aggregate of
$3,863,000 in royalties payable by RPR have been offset against the original
credit.
As of December 31, 1997, 941,808 shares of Series A Cumulative Convertible
Preferred Stock ("Series A Preferred Stock") have been converted into 3,095,683
shares of the Company's common stock (the "Common Stock"). Accrued dividends on
the converted Series A Preferred Stock in the aggregate of $1,807,000 were
settled by the issuance of 233,741 shares of Common Stock. The Company does not
presently intend to pay cash dividends on the Series A Preferred Stock. As of
December 31, 1997, there were $1,679,000 of accrued and unpaid dividends on the
Series A Preferred Stock. These dividends are payable in cash or Common Stock at
the Company's option and accrue on the outstanding Series A Preferred Stock at
the rate of $216,000 per year.
To date, the Company's sources of cash have been the proceeds from the sale
of its stock through public and private placements, sales of ADAGEN, sales of
ONCASPAR, sales of its products for research purposes, contract research and
development fees, technology transfer and license fees and royalty advances. The
Company's current sources of liquidity are its cash, cash equivalents and
interest earned on such cash reserves, sales of ADAGEN, sales of ONCASPAR, sales
of its products for research purposes and license fees. Management believes that
its current sources of liquidity will be sufficient to meet its anticipated cash
requirements, based on current spending levels, for approximately the next two
years.
Upon exhaustion of the Company's current cash reserves, the Company's
continued operations will depend on its ability to realize significant revenues
from the commercial sale of its products, raise additional funds through equity
or debt financing, or obtain significant licensing, technology transfer or
contract research and development fees. There can be no assurance that these
sales, financings or revenue generating activities will be successful.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
10
<PAGE>
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) An annual meeting of stockholders was held on December 2, 1997.
(b) The directors elected at the annual meeting were Randy H. Thurman and
A.M. "Don" MacKinnon. The term of office as a director for each of
Rolf A. Classon, Dr. Rosina B. Dixon, Robert LeBuhn and Peter G.
Tombros continued after the annual meeting.
(c) The matters voted upon at the annual meeting and the results of the
voting, including broker non-votes where applicable, are set forth
below.
(i) The stockholders voted 21,967,300 shares in favor and 127,057
shares against with respect to the election of Randy H. Thurman
as a Class II director of the Company and 21,958,668 shares in
favor and 135,689 shares against with respect to the election of
A.M. "Don" MacKinnon as a Class II director of the Company.
Broker non-votes were not applicable.
(ii) The stockholders voted 19,609,594 shares in favor, 2,484,763
shares against with respect to a proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized
shares of Common Stock from forty million (40,000,000) to sixty
million (60,000,000).
(iii)The stockholders voted 18,861,706 shares in favor and 817,777
shares against with respect to a proposal to approve an amendment
to the Company's Non-Qualified Stock Option Plan, as amended, to
conform the Plan to changes made to the rules under Section 16(b)
of the Securities and Exchange Act of 1934. Broker non-votes were
not applicable.
(iv) The stockholders voted 21,896,815 shares in favor and 197,542
against with respect to a proposal to ratify the selection of
KPMG Peat Marwick LLP to audit the Company's consolidated
financial statements for the fiscal year ending June 30, 1997.
Broker non-votes were not applicable.
11
<PAGE>
Item 6. Exhibit and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).
<TABLE>
<CAPTION>
Page Number
or
Exhibit Incorporation
Number Description By Reference
------ ----------- ------------
<S> <C> <C>
3(i) Certificate of Incorporation, as amended ^
3(ii) By-laws, as amended *(4.2)
3(iii) Certificate of Designations, Preferences and Rights of Series D Convertible
Preferred Stock ^^^^3(iii)
3(iv) Amendment to Certificate of Incorporation dated January 5, 1998 o
10.0 Employment Agreement dated March 25, 1994 with Peter G. Tombros #(10.17)
10.1 Form of Change of Control Agreements dated as of January 20, 1995 entered
into with the Company's Executive Officers ~(10.2)
10.2 Lease - 300-C Corporate Court, South
Plainfield, New Jersey ***(10.3)
10.4 Lease Termination Agreement dated March 31, 1995 for
20 Kingsbridge Road and 40 Kingsbridge Road, Piscataway, New Jersey ~(10.6)
10.5 Option Agreement dated April 1, 1995 regarding 20 Kingsbridge Road,
Piscataway, New Jersey ~(10.7)
10.6 Form of Lease - 40 Cragwood Road, South
Plainfield, New Jersey ****(10.9)
10.7 Lease 300A-B Corporate Court, South Plainfield, New Jersey +++(10.10)
10.8 Stock Purchase Agreement dated March 5, 1987
between the Company and Eastman Kodak Company ****(10.7)
10.9 Amendment dated June 19, 1989 to Stock Purchase
Agreement between the Company and
Eastman Kodak Company **(10.10)
10.10 Form of Stock Purchase Agreement between the Company
and the purchasers of the Series A Cumulative
Convertible Preferred Stock +(10.11)
10.11 Amendment to License Agreement and Revised License Agreement
between the Company and RCT dated
April 25, 1985 ++++(10.5)
10.12 Amendment dated as of May 3, 1989 to Revised License Agreement
dated April 25, 1985 between the Company and Research
Corporation **(10.14)
10.13 License Agreement dated September 7, 1989 between the Company and
Research Corporation Technologies, Inc. **(10.15)
10.14 Master Lease Agreement and Purchase Leaseback Agreement dated
October 28, 1994 between the Company and Comdisco, Inc. ##(10.16)
10.15 Employment Agreement with Peter G. Tombros dated as of
April 5, 1997 ^^^^(10.15)
10.16 Stock Purchase Agreement dated as of June 30, 1995 ~~~(10.16)
10.17 Securities Purchase Agreement dated as of January 31, 1996 ~~~(10.17)
10.18 Registration Rights Agreements dated as of January 31, 1996 ~~~(10.18)
10.19 Warrants dated as of February 7, 1996 and issued pursuant to the Securities
Purchase Agreement dated as of January 31, 1996 ~~~(10.19)
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
10.20 Securities Purchase Agreement dated as of March 15, 1996 ^(10.20)
10.21 Registration Rights Agreement dated as of March 15, 1996 ^(10.21)
10.22 Warrant dated as of March 15, 1996 and issued pursuant to the Securities Purchase
Agreement dated as of March 15, 1996 ^(10.22)
10.23 Amendment dated March 25, 1994 to License Agreement dated
September 7, 1989 between the Company and Research Corporation
Technologies, Inc. ^^(10.23)
10.24 Independent Directors' Stock Plan ^^(10.24)
10.25 Stock Exchange Agreement dated February 28, 1997, by and between the
Company and GFL Performance Fund Ltd. ^^^(10.25)
10.26 Agreement Regarding Registration Rights Under Registration Rights Agreement
dated March 10, 1997, by and between the Company and Clearwater Fund IV
LLC ^^^(10.26)
27.0 Financial Data Schedule o
99.0 Factors to Consider in Connection with Forward-Looking Statements ^^^^(99.0)
</TABLE>
o Filed herewith.
* Previously filed as an exhibit to the Company's Registration Statement
on Form S-2 (File No. 33-34874) and incorporated herein by reference
thereto.
** Previously filed as exhibits to the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1989 and incorporated herein by
reference thereto.
*** Previously filed as an exhibit to the Company's Registration Statement
on Form S-18 (File No. 2-88240-NY) and incorporated herein by reference
thereto.
**** Previously filed as exhibits to the Company's Registration Statement on
Form S-1 (File No. 2-96279) filed with the Commission and incorporated
herein by reference thereto.
+ Previously filed as an exhibit to the Company's Registration Statement
on Form S-1 (File No. 33-39391) filed with the Commission and
incorporated herein by reference thereto.
+++ Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1993 and incorporated herein by
reference thereto.
++++ Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1985 and incorporated herein by
reference thereto.
# Previously filed as an exhibit to the Company's Current Report on Form
8-K dated April 5, 1994 and incorporated herein by reference thereto.
## Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1994 and incorporated herein by
reference thereto.
~ Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1995 and incorporated herein by
reference thereto.
~~ Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1995 and incorporated herein by
reference thereto.
~~~ Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1995 and incorporated herein by
reference thereto.
13
<PAGE>
^ Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996 and incorporated herein by
reference thereto.
^^ Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended December 31, 1996 and incorporated herein by
reference thereto.
^^^ Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997 and incorporated herein by
reference thereto.
^^^^ Previously filed as an exhibit to the Company's Annual Report on Form
10-K for the year ended June 30, 1997 and incorporated herein by
reference thereto.
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENZON, INC.
(Registrant)
Date: February 13, 1998 By: /s/Peter G. Tombros
------------------------
Peter G. Tombros
President and Chief Executive
Officer
By: /s/Kenneth J. Zuerblis
------------------------
Kenneth J. Zuerblis
Vice President, Finance and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Enzon, Inc. and Subsidiaries Consolidated Condensed Balance Sheet as of December
31, 1997 and the Consolidated Condensed Statement of Operations for the three
and six months ended December 31, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1998
<PERIOD-END> DEC-31-1997 DEC-31-1997
<CASH> 8,719,548 $8,719,548
<SECURITIES> 0 0
<RECEIVABLES> 2,735,867 2,735,867
<ALLOWANCES> 0 0
<INVENTORY> 671,523 671,523
<CURRENT-ASSETS> 12,391,049 12,391,049
<PP&E> 15,052,998 15,052,998
<DEPRECIATION> 12,878,551 12,878,551
<TOTAL-ASSETS> 16,046,725 16,046,725
<CURRENT-LIABILITIES> 4,986,956 4,986,956
<BONDS> 0 0
0 0
1,080 1,080
<COMMON> 310,302 310,302
<OTHER-SE> 9,315,747 9,315,747
<TOTAL-LIABILITY-AND-EQUITY> 16,046,725 16,046,725
<SALES> 4,139,841 6,604,475
<TOTAL-REVENUES> 4,247,341 8,917,084
<CGS> 1,134,682 1,739,390
<TOTAL-COSTS> 4,618,662 8,698,781
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 4,467 10,905
<INCOME-PRETAX> (226,808) 471,116
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (226,808) 471,116
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (226,808) 471,116
<EPS-PRIMARY> (0.01) 0.01
<EPS-DILUTED> (0.01) 0.01
</TABLE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ENZON, INC.
* * * * * * * * * * * * *
Enzon, Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware (the ACorporation@), DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, at a meeting of its
members, adopted resolutions proposing and declaring advisable the following
amendments to the Certificate of Incorporation of said Corporation:
RESOLVED, that the first sentence of Article 4 of the Certificate of
Incorporation be amended to read in its entirety as set forth below:
"4. Number of Shares. The total number of shares of capital stock
which the Corporation shall have authority to issue is sixty-three
million (63,000,000) shares, of which sixty million (60,000,000)
shares shall be Common Stock, par value $.01 per share, and three
million (3,000,000) shares shall be Preferred Stock, par value $.01
per share."
SECOND: That the remainder of Article 4 of the Certificate of Incorporation
of said Corporation shall remain unchanged.
THIRD: That at the Annual Meeting of Stockholders of the Corporation, the
holders of a majority of the outstanding stock entitled to vote thereon voted in
favor of said amendments in accordance with the provisions of Section 215 of the
General Corporation Law of the State of Delaware.
FOURTH: That the aforesaid amendments were duly adopted in accordance with
the applicable provisions of Sections 242 and 216 of the General Corporation Law
of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, Enzon, Inc. has caused this certificate to be signed by
Peter G. Tombros, its President and attested to by John A. Caruso, Secretary of
the Corporation, this 18 of December, 1997.
By:/S/PETER G. TOMBROS
--------------------------
Peter G. Tombros
President
ATTEST:
By:/S/ JOHN A. CARUSO
---------------------------
John A. Caruso
Secretary
2
