During the three months ended September 30, 2009, we had export sales and royalties on export sales of $18.4 million, of which $11.5 million were in Europe. This compares to $17.5 million of export sales in the comparable three-month period of 2008, of which $11.4 million were in Europe.
We had export sales and royalties on export sales of $54.4 million and $58.2 million, of which $32.9 million and $39.2 million were in Europe, for the nine months ended September 30, 2009 and 2008, respectively.
n.m. – not meaningful
For the three months ended September 30, 2009, research and development expenses increased 3 percent to $11.4 million as compared to $11.2 million for the three months ended September 30, 2008. For the nine-month period ended September 30, 2009, research and development expenses increased 11 percent to $34.3 million. We initiated a Phase II study for our PEG-SN38 in metastatic colorectal cancer patients that opened for enrollment in June. We also continue to evaluate dosage in our Phase I studies for the HIF-1 alpha antagonist and Survivin antagonist. The second quarter of 2008 spending included $2.0 million in milestone payments related to the LNA platform. We continue to advance our research and development programs in areas such as PEG-SN38, the HIF-1 alpha antagonist and other LNA- and PEGylation- based programs. We anticipate increased levels of research and development expenses for the full year 2009 when compared to 2008 due in part to the recognition of a $2.0 million milestone payment which is expected to become payable as well as increased clinical activities during the fourth quarter of 2009.
General and administrative expense decreased to $7.7 million for the three months ended September 30, 2009 from $10.7 million in the three months ended September 30, 2008. The third-quarter 2008 amounts were higher than usual due to approximately $2.7 million of expenses related to strategic initiatives being pursued at that time. This included the then considered spin-off of our biotechnology business and sale of our specialty pharmaceuticals business, including our manufacturing facility. Benefiting 2009, we are experiencing some efficiencies from our recent restructuring initiatives. For the nine months ended September 30, 2009, general and administrative spending decreased to $27.1 million from $29.8 million in the comparable prior-year period. The nine-month 2008 cost of strategic initiatives amounted to approximately $3.8 million. These strategic initiative costs were not experienced during the nine months ended September 30, 2009, thus improving the period-over-period comparison. There were, however, some partially offsetting legal costs incurred
during 2009 associated with a proposed shareholder consent solicitation and related litigation. Current-year general and administrative spending is lower due in part to the benefits derived from the first-quarter 2009 restructuring. Offsetting these improvements were the cost of certain organizational and administrative enhancements, including the establishment of a business development function and the post-implementation costs of a newly developed enterprise resource planning (ERP) computer software system. In addition, costs associated with the site at South Plainfield, New Jersey have begun to be recognized in general and administrative expense (previously included in cost of sales) since production activities at that location ceased in late 2008. Such costs include security, utilities, insurance and monthly rental related to the South Plainfield facility.
Restructuring.
Corporate restructuring costs associated with the 2009 workforce reduction amounted to $0.7 million during the first quarter of 2009. This represents severance and related costs of terminated employees in general and administrative areas as well as research and development. We may experience additional restructuring charges associated with the South Plainfield lease or its termination prior to its contractual expiration in October 2012.
Other (income) expense.
Other (income) expense includes: net investment income, interest expense and other income or expense. Other (income) expense for the three months ended September 30, 2009 was net expense of $1.5 million, as compared to net expense of $1.8 million for the three months ended September 30, 2008. On a year-to-date basis, 2009 other (income) expense items resulted in net expense of $0.5 million, compared to $4.8 million of net expense in 2008.
Net investment income was largely unchanged for the quarter ended September 30, 2009 at $1.2 million compared to $1.3 million the year earlier. On a year-to-date basis, net investment income declined 28 percent to $3.3 million. In general, year-to-date investment returns are lower because of reduced average investment holdings resulting from retirements and repurchases of notes payable over the past two years coupled with overall market conditions. Investment income in the nine months ended September 30, 2008 was adversely affected by the second-quarter 2008 impairment write-down of an auction rate security of $0.6 million.
Interest expense, which includes amortization of deferred debt issue costs, was $2.8 million and $8.8 million for the three-month and nine-month periods ended September 30, 2009 compared to $3.0 million and $9.6 million for the three-month and nine-month periods ended September 30, 2008, respectively. The reduction in interest expense resulted from the declining balance of 4% Convertible Senior Notes due in 2013 and elimination of the 4.5% Convertible Subordinated Notes that came due in July 2008.
During the first quarter of 2009, we repurchased $20.4 million principal amount of our 4% notes at a discount to par yielding a gain of $4.8 million (reflected in nine-months Other, net year-to-date) exclusive of the write-off of related deferred debt offering costs of $0.3 million (reflected in interest expense).
Income taxes
During the three months and nine months ended September 30, 2009, we recorded a net tax benefit of $0.8 million and $0.7 million, respectively, which includes $0.5 million related to the Housing Assistance Act of 2008 which contained a provision allowing corporate taxpayers to make an election to treat certain unused research and alternative minimum tax credit carryforwards as refundable in lieu of claiming bonus and accelerated depreciation for “eligible qualified property” placed in service through the end of 2008. The net current year tax benefit also reflects a reduction of $0.4 million to foreign taxes payable due to a transfer price adjustment, Canadian tax liabilities and an adjustment to taxes payable. During the three months and nine months ended September 30, 2008, we recorded a net tax expense of $0.2 million and $0.5 million, respectively, representing state and Canadian tax liabilities as well as an adjustment to taxes payable due to a provision-to-return adjustment for 2007 final Federal tax filings. We did not recognize a U.S. Federal income tax provision for any of these periods as the estimated annual effective tax rate is zero.
Liquidity and Capital Resources
Total cash reserves, which include cash, cash equivalents, short-term investments and marketable securities, were $201.3 million as of September 30, 2009, as compared to $206.9 million as of December 31, 2008. In addition to purchases of property and equipment during the first nine months of the year, the
21
reduction in cash reserves resulted from the repurchase of $20.4 million principal amount of our 4% notes payable for $15.6 million and payment of a $5.0 million milestone obligation in January 2009 (see below). Net cash provided by operating activities partially offset these outflows. We invest our excess cash primarily in investment-grade corporate debt securities.
Operating activities constituted a source of cash of $11.8 million during the nine months ended September 30, 2009 as compared to a $23.2 million source of cash in the prior year nine-month period. Net income for the nine months ended September 30, 2009, adjusted for non-operating and noncash items such as depreciation, amortization and share-based compensation yielded approximately $17.0 million compared to approximately $19.4 million generated in the nine months ended September 30, 2008. In addition, changes in balance sheet operating assets and liabilities utilized approximately $5.2 million of cash in the first nine months of 2009 as contrasted with a $3.8 million source of cash in the first nine months of 2008. Inventory and accounts receivable balances were higher at September 30, 2009 than at December 31, 2008. Accounts receivable balances generally returned to more normal levels at September 30, 2009 after having been reduced significantly at December 31, 2008 due in large part to timing of Oncaspar shipments. The accounts receivable balance at September 30, 2009 is somewhat elevated due to certain wholesalers claiming prior period chargebacks through offsets against their current remittances to us. We dispute and are currently reviewing the wholesalers’ claims.
Cash was used in investing activities in the first nine months of 2009 in the approximate amount of $27.7 million due primarily to net investments in marketable securities and a payment of $5.0 million to Sanofi-Aventis in January 2009. The $5.0 million was a milestone payment accrued for in 2008 resulting from Oncaspar net sales in the U.S. and Canada having exceeded $35.0 million for two consecutive years. During the first nine months of 2008, $85.9 million was provided by investing activities as marketable securities matured or were liquidated primarily to enable the repurchase of our 4.5% notes payable (see financing activities below). In addition, in the nine-month periods ended September 30, 2009 and 2008, we invested $2.5 million and $6.2 million in plant and equipment, respectively.
Repurchase of $20.4 million principal amount of the 4% notes payable for a cash outlay of $15.6 million constituted the primary financing cash outflows during the first nine months of 2009. During the first nine months of 2008, repayment of $72.4 million principal amount of our 4.5% notes payable required a cash outlay of $72.0 million, again representing the majority of financing activities.
As of September 30, 2009, we had outstanding $250.0 million of convertible senior notes payable that bear interest at an annual rate of 4%. Interest is payable on June 1 and December 1. Accrued interest on the notes was $3.3 million and $0.9 million, respectively as of September 30, 2009 and December 31, 2008.
Included in our marketable securities at September 30, 2009 is an investment in auction rate securities carried at a fair value of $0.3 million. Difficulties in the auction rate securities marketplace have raised concerns about the liquidity of such investments. This investment has experienced failed auctions since late 2007 and was written down to its current book value of $0.9 million from its original cost basis of $1.5 million in 2008 by an impairment charge to earnings of $0.6 million. Upon adoption of ASC paragraph 320-10-65-1 (FSP FAS 115-2) in the second quarter of 2009, we estimated the expected cash flows from this investment holding and discounted the result to a present value using historical interest rates. We determined that there continues to be an other-than-temporary impairment of this investment as measured from its original cost basis and the amount previously recognized in earnings is a reasonable measure of the credit loss incurred. Accordingly, no further recognition of impairment loss was considered necessary at that time.
As of September 30, 2009, there is a $0.6 million unrealized loss measured from the book basis which is included as part of accumulated other comprehensive income. We will continue to monitor this instrument and the expected cash flows to be derived from it. It is reasonably possible that our estimate of expected cash flows to be received could change based on the financial condition of the issuer or macroeconomic conditions and some or all of the amount currently reported in accumulated other comprehensive income could be recognized in earnings as an expense at some future date. As of September 30, 2009, however, we do not consider it necessary to recognize any additional impairment loss in earnings. There has been no adjustment to or change in the amount of the credit loss associated with our holdings of auction rate securities since April 1, 2009 that would have affected earnings. We do not intend to dispose of this security before recovery of its cost basis nor is it more likely than not that we will be required to do so. This auction rate security is classified in long-term marketable securities based upon the Company’s intent.
22
Our current sources of liquidity are our cash reserves; interest earned on such cash reserves; product sales; royalties earned, which are primarily related to sales of PEGINTRON; and contract manufacturing revenue. Based upon our current planned research and development activities and related costs and our current sources of liquidity, we anticipate our current cash reserves and expected cash flow from operations will be sufficient to meet our capital and operational requirements for the near future. While we believe that our current sources of liquidity will be adequate to satisfy our capital and operational needs for the near future, we may enter into agreements with collaborators with respect to the development and commercialization of products that could increase our cash requirement or we may seek additional financing to fund future operations and potential acquisitions. We cannot assure you, however, that we will be able to obtain additional funds on acceptable terms, if at all.
Off-Balance Sheet Arrangements
As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPE), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of September 30, 2009, we were not involved in any SPE transactions.
Our 4% notes payable are convertible into shares of our common stock at a conversion price of $9.55 per share and pose a reasonable likelihood of potential significant dilution. The potential dilutive effect of conversion of the 4% notes is 26.2 million shares (in the absence of a fundamental change as defined in the indenture agreement). Notes payable are discussed in greater detail in Liquidity and Capital Resources above and in the notes to our condensed consolidated financial statements.
In addition, stock options to purchase 8.4 million shares of our common stock at a weighted average exercise price of $ 11.10 per share and 1.2 million restricted stock units were outstanding at September 30, 2009 that represent additional potential dilution.
Contractual Obligations
Our major outstanding contractual obligations relate to our operating leases, convertible debt and license agreements with collaborative partners.
In June 2009, we gave notice of intent to terminate our license agreement with Natimmune A/S for their compound, rhMBL, a protein therapeutic we had been developing for the prevention and treatment of severe infections in individuals undergoing chemotherapy or liver transplantation. There are no significant costs associated with this termination other than the wind-down and completion of previously initiated clinical trials.
During the first quarter of 2009, we repurchased $20.4 million principal amount of our 4% notes for $15.6 million.
Other than these events, there have been no material changes with respect to our contractual obligations as disclosed under Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2008.
Critical Accounting Policies and Estimates
A critical accounting policy is one that is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Our consolidated financial statements are presented in accordance with accounting principles that are generally accepted in the United States (GAAP). All accounting standards effective as of September 30, 2009 have been taken into consideration in preparing the consolidated financial statements. The preparation of the consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Some of those estimates are subjective and complex, and consequently, actual results could differ from those estimates. The following accounting policies have been highlighted as critical because changes to certain judgments and assumptions inherent in these policies could affect our consolidated financial statements.
23
We base our estimates, to the extent possible, on historical experience. Historical information is modified as appropriate based on current business factors and various assumptions that we believe are necessary to form a basis for making judgments about the carrying value of assets and liabilities. We evaluate our estimates on an ongoing basis and make changes when necessary. Actual results could differ from our estimates.
Revenues
Revenues from product sales are recognized when title passes to the customer, generally at the time product is received. For product sales, we record a provision at the time of shipment for estimated future credits, chargebacks, sales discounts, rebates and returns. These sales provision accruals, except for rebates which are recorded as a liability, are presented as a reduction of the accounts receivable balances.
We recognize revenues for Abelcet at the time of sale to the wholesaler. Sales of Oncaspar and DepoCyt are recorded when product shipped by our third-party distributor to the end-user is received. Adagen is sold directly to a specialty distributor that then sells the product to end-users. We recognize revenue for Adagen upon sale to the specialty distributor.
We provide chargeback payments to wholesalers based on their sales to members of buying groups at prices determined under a contract between us and the member. Administrative fees are paid to buying groups based on the total amount of purchases by their members. We estimate the amount of the chargeback that will be paid using (a) distribution channel information obtained from certain of our wholesalers which allows us to determine the amount and expiry of inventory in the distribution channel and (b) historical trends, adjusted for current conditions. The settlement of the chargebacks generally occurs within three months after the sale to the wholesaler. We regularly analyze the historical chargeback trends and make adjustments to recorded reserves for changes in trends.
In addition, state agencies that administer various programs, such as the U.S. Medicaid programs, receive rebates. Medicaid rebates and administrative fees are recorded as a liability and a reduction of gross sales when we record the sale of the product. In determining the appropriate accrual amount, we use (a) distribution channel information obtained from certain of our wholesalers which allows us to determine the amount and expiry of inventory in the distribution channel, (b) our historical rebate and administrative fee payments by product as a percentage of our historical sales and (c) any significant changes in sales trends. Current Medicaid rebate laws and interpretations, and the percentage of our products that are sold to Medicaid patients are also evaluated. Factors that complicate the rebate calculations are the timing of the average manufacturer pricing computation, the lag time between sale and payment of a rebate, which can range up to nine months, and the level of reimbursement by state agencies.
The following is a summary of gross-to-net sales reductions that are accrued on our consolidated balance sheets as of September 30, 2009 (in thousands):
| | | | | | | | | | | | | | | | | | | |
| | Chargebacks(1) | | Cash
Discounts(1) | | Other
(Including
Returns) | | Medicaid
Rebates(2) | | Medicaid
Administrative
Fees(2) | | Total | |
| |
| |
| |
| |
| |
| |
| |
Balance at December 31, 2008 | | $ | 2,468 | | $ | 192 | | $ | 2,359 | | $ | 2,165 | | $ | 37 | | $ | 7,221 | |
Provision related to sales made in current year(3) | | | 17,891 | | | 1,454 | | | 3,084 | | | 2,941 | | | 387 | | | 25,757 | |
Provision related to sales made in prior years(4) | | | 919 | | | — | | | — | | | — | | | — | | | 919 | |
Returns and credits(5) | | | (16,876 | ) | | (1,429 | ) | | (3,470 | ) | | (2,012 | ) | | (359 | ) | | (24,146 | ) |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Balance at September 30, 2009 | | $ | 4,402 | | $ | 217 | | $ | 1,973 | | $ | 3,094 | | $ | 65 | | $ | 9,751 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| |
| (1) Reported as a reduction of accounts receivable. |
| |
| (2) Reported as an accrued liability. |
| |
| (3) Approximately 79 percent relates to Abelcet. |
| |
| (4) Certain wholesalers have claimed recovery of chargebacks relating to prior years. We are attempting to gather more information in an effort to resolve these claims. Because of the potential that a portion of the claims will be shown to be valid, we have established a reserve as of September 30, 2009. The amount shown as relating to prior years is an estimate based on preliminary data. Upon final resolution of these disputed claims, adjustment will be made to this provision. |
| |
| (5) Relates to sales made in the current period. |
24
Other than as disclosed in footnote (4) above, there were no revisions to the estimates for gross-to-net sales adjustments that were material to income from operations for the nine months ended September 30, 2009.
Royalties under our license agreements with third parties are recognized when reasonably determinable and earned through the sale of the product by the licensee net of future credits, chargebacks, sales discount rebates and refunds and collection is reasonably assured. Notification from the third-party licensee of the royalties earned under the license agreement is the basis for royalty revenue recognition. This information is generally received from the licensees in the quarter subsequent to the period in which the sales occur.
Revenues from contract manufacturing are recognized when title passes to the customer, generally at time of shipment. At the request of the customer, certain contract manufacturing arrangements involve the transfer of title of the finished product to the customer prior to shipment. The product in question is manufactured to the unique specifications of the customer and cannot be used to fill other orders. If all necessary conditions are met, including: the product is complete and ready for shipment, the risks of ownership have passed to the customer and the customer pays for storage of the product at our facility, we will recognize revenue.
Non-refundable milestone payments that represent the completion of a separate earnings process are recognized as revenue when earned, upon the occurrence of contract-specified events. Non-refundable payments received upon entering into license and other collaborative agreements where we have continuing involvement are recorded as deferred revenue and recognized ratably over the estimated service period.
Income Taxes
Using the asset and liability method of accounting for income taxes, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance on net deferred tax assets is provided for when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We believe, based on future projections, that it is more likely than not that our net deferred tax assets, including our net operating losses from operating activities and stock option exercises, will not be realized. We recognize the benefit of an uncertain tax position that we have taken or expect to take on the income tax returns we file if it is more likely than not that we will be able to sustain our position.
Long-Lived Assets Impairment Analysis
Long-lived assets, including amortizable intangible assets are tested for impairment when impairment indicators are present. Impairment indicators are events or circumstances that may be indicative of possible impairment such as a significant adverse change in legal factors or in business climate, a current period operating loss combined with a history of operating losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group.
Testing for the recoverability of amortizable intangible assets is performed initially by comparing the carrying amount of the asset group to the future undiscounted net cash flows to be generated by the assets. If the undiscounted net cash flow stream exceeds the carrying amount, no further analysis is required. However, if this test shows a negative relationship, the fair value of the assets within the asset group must be determined and we would record an impairment charge for any excess of the carrying amount over the fair value. These evaluations involve amounts and forecasts that are based on management’s best estimates and judgment. Actual results may differ from these estimates.
Share-Based Payment
Compensation cost, measured by the fair value of the equity or liability instruments issued, adjusted for estimated forfeitures, is recognized in the financial statements as the respective awards are earned. The impact that share-based payment awards will have on our results of operations is a function of the number of shares awarded, vesting and the trading price of our stock at date of grant, combined with the application of the Black-Scholes valuation model. Fair value of share-based payments is determined using the Black-Scholes valuation model which employs weighted average assumptions for expected volatility of the Company’s stock, expected term until exercise of the options, the risk free interest rate, and dividends, if any. Expected volatility is based on historical Enzon stock price information.
25
Factors That May Affect Future Results
There are forward-looking statements contained herein, which can be identified by the use of forward-looking terminology such as the words “believes,” “expects,” “may,” “will,” “should”, “potential,” “anticipates,” “plans” or “intends” and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from the future results, events or developments indicated in such forward-looking statements. Such factors include, but are not limited to:
| |
• | The risk that we will not achieve success in our research and development efforts, including clinical trials conducted by us or our collaborative partners. |
| |
• | The risk that we will experience operating losses for the next several years. |
| |
• | The risk that there will be a decline in sales of one or more of our marketed products or products sold by others from which we derive royalty revenues. Such sales declines could result from increased competition, loss of patent protection, pricing, supply shortages and/or regulatory constraints. |
| |
• | The risk that we will be unable to obtain critical compounds used in the manufacture of our products at economically feasible prices or at all, or one of our key suppliers will experience manufacturing problems or delays. |
| |
• | Decisions by regulatory authorities regarding whether and when to approve our regulatory applications as well as their decisions regarding labeling and other matters could affect the commercial potential of our products or developmental products. |
| |
• | The risk that our internal manufacturing will experience failures in production, facility inspections or approvals that result in increased costs, delays in product manufacturing or product recalls. |
| |
• | The risk that we will fail to obtain adequate financing to meet our future capital and financing needs. |
| |
• | The risk that key personnel will leave the Company. |
A more detailed discussion of these and other factors that could affect our results is contained in our filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. No assurance can be given that the future results covered by the forward-looking statements will be achieved. All information contained herein is as of the date of this report and we do not intend to update this information.
26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The majority of our holdings of financial instruments consists of corporate debt securities classified as securities available-for-sale. Apart from custodial accounts related to the Executive Deferred Compensation Plan, we do not invest in portfolio equity securities. We do not invest in commodities or use financial derivatives for trading purposes. Our debt security portfolio represents funds held temporarily pending use in our business and operations. We manage these funds accordingly. We seek reasonable assuredness of the safety of principal and market liquidity by investing in rated fixed income securities while at the same time seeking to achieve a favorable rate of return. Our market risk exposure consists principally of exposure to changes in interest rates. Our holdings are also exposed to the risks of changes in the credit quality of issuers the majority of which are rated A1 or better. We typically invest the majority of our investments in the shorter-end of the maturity spectrum.
The table below presents the principal amounts or adjusted cost basis and related weighted average interest rates of our marketable debt securities, excluding those related to our Executive Deferred Compensation Plan, by year of maturity (twelve-month intervals ending September 30 of the year indicated) as of September 30, 2009 (in thousands):
| | | | | | | | | | | | | | | | | | | |
| | 2010 | | 2011 | | 2012 | | After
2014 | | Total | | Fair Value | |
| |
| |
| |
| |
| |
| |
| |
Fixed Rate | | $ | 60,624 | | $ | 34,993 | | $ | 50,574 | | $ | — | | $ | 146,191 | | $ | 147,740 | |
Average Interest Rate | | | 5.76 | % | | 5.25 | % | | 4.72 | % | | — | | | 5.28 | % | | | |
Variable Rate | | | — | | | — | | | — | | | 870 | | | 870 | | | 319 | |
Average Interest Rate | | | — | | | | | | | | | 2.25 | % | | 2.25 | % | | | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| | $ | 60,624 | | $ | 34,993 | | $ | 50,574 | | $ | 870 | | $ | 147,061 | | $ | 148,059 | |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Our convertible notes payable outstanding have fixed interest rates. Accordingly, the fair values of the respective issues will fluctuate as market rates of interest rise or fall. Fair values are also affected by changes in the price of our common stock. Our 4% Convertible Senior Notes in the principal amount of $250.0 million at September 30, 2009 are due June 1, 2013 and have a fair value of $262.6 million at September 30, 2009.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
Our management, under the direction of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act)) as of September 30, 2009. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2009.
Changes in Internal Controls
There were no changes in our internal controls over financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
27
Part II OTHER INFORMATION
Item 6. Exhibits
(a) Exhibits required by Item 601 of Regulation S-K.
| | | | | | | | |
Exhibit
Number | | | Description | | | Reference
No. |
| | |
| | |
|
3(i) | | | Amended and Restated Certificate of Incorporation | | (1) | |
3(ii) | | | Amended and Restated By-laws | | (2) | |
4.1 | | | Rights Agreement dated May 17, 2002 between the Company and Continental Stock Transfer Trust Company, as rights agent | | (3) | |
4.2 | | | First Amendment to the Rights Agreement, dated as of February 19, 2003, between the Company and Continental Stock Transfer & Trust Company, as rights agent | | (4) | |
4.3 | | | Second Amendment to the Rights Agreement, dated as of January 7, 2008, between the Company and Continental Stock Transfer and Trust Company, as rights agent | | (5) | |
4.4 | | | Third Amendment to the Rights Agreement, dated as of July 23, 2009, between the Company and Continental Stock Transfer and Trust Company, as rights agent | | (6) | |
10.1 | | | Amendment No. 4 to License and Collaboration Agreement, dated July 8, 2009 by and between Santaris Pharma A/S and Enzon Pharmaceuticals, Inc. | | * | |
10.2 | | | Amendment No. 5 to License and Collaboration Agreement, dated October 2, 2009 by and between Santaris Pharma A/S and Enzon Pharmaceuticals, Inc. | | * | |
31.1 | | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | * | |
31.2 | | | Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | * | |
32.1 | | | Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | * | |
32.2 | | | Certification of Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | * | |
| | |
| * | Filed herewith. |
| | |
| Referenced exhibit was previously filed with the Commission as an exhibit to the Company’s filing indicated below and is incorporated herein by reference to that filing: |
| |
(1) | Current Report on Form 8-K filed May 19, 2006 |
| |
(2) | Current Report on Form 8-K filed January 21, 2009 |
| |
(3) | Form 8-A12G (File No. 000-12957) filed May 22, 2002 |
| |
(4) | Form 8-A12G/A (File No. 000-12957) filed February 20, 2003 |
| |
(5) | Current Report on Form 8-K filed January 8, 2008 |
| |
(6) | Form 8-A/A filed July 24, 2009 |
28
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 PHARMACEUTICALS, INC. |
| (Registrant) |
| | |
Date: November 3, 2009 | By: | /s/Jeffrey H. Buchalter |
| |
|
| | Jeffrey H. Buchalter, |
| | President and |
| | Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
Date: November 3, 2009 | By: | /s/Craig A. Tooman |
| |
|
| | Craig A. Tooman |
| | Executive Vice President, Finance and |
| | Chief Financial Officer |
| | (Principal Financial Officer) |
29
