Enzon Pharmaceuticals (ENZN) 10-Q 9 May 16 2016 Q1 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2016	May. 05, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Entity Registrant Name	ENZON PHARMACEUTICALS, INC.
Entity Central Index Key	727,510
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	ENZN
Entity Common Stock, Shares Outstanding		44,214,603

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 9,735	$ 11,672
Other current assets	44	107
Total current assets	9,779	11,779
Deferred tax assets, net	10,083	11,111
Total assets	19,862	22,890
Current liabilities:
Accounts payable	0	90
Accrued expenses and other current liabilities	256	205
Accrued lease termination costs	0	4,506
Total current liabilities	$ 256	$ 4,801
Commitments and contingencies
Stockholders’ equity:
Preferred stock - $0.01 par value, authorized 3,000,000 shares; no shares issued and outstanding at March 31, 2016 and December 31, 2015	$ 0	$ 0
Common stock - $0.01 par value, authorized 170,000,000 shares; issued and outstanding 44,214,603 shares at March 31, 2016 and December 31, 2015	441	441
Additional paid-in capital	96,914	96,914
Accumulated deficit	(77,749)	(79,266)
Total stockholders’ equity	19,606	18,089
Total liabilities and stockholders’ equity	$ 19,862	$ 22,890

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Mar. 31, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	3,000,000	3,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	170,000,000	170,000,000
Common stock, shares issued	44,214,603	44,214,603
Common stock, shares outstanding	44,214,603	44,214,603

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Revenues:
Royalties	$ 3,224	$ 5,205
Miscellaneous income	42	56
Total revenues	3,266	5,261
Operating expenses:
General and administrative	721	583
Total operating expenses	721	583
Operating income and income before income tax expense (benefit)	2,545	4,678
Income tax expense (benefit)	1,028	(2,495)
Net income	$ 1,517	$ 7,173
Earnings per common share:
Basic (in dollars per share)	$ 0.03	$ 0.16
Diluted (in dollars per share)	$ 0.03	$ 0.16
Weighted-average shares outstanding - basic	44,214	44,181
Weighted-average shares outstanding - diluted	44,214	44,227

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Cash flows from operating activities:
Net income	$ 1,517	$ 7,173
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Deferred tax expense (benefit)	1,028	(2,498)
Changes in operating assets and liabilities	(4,482)	(10)
Net cash (used in) provided by operating activities	(1,937)	4,665
Cash flows used in financing activities:
Withholding taxes - stock-based compensation	0	(6)
Common stock dividend	0	(4,417)
Net cash used in financing activities	0	(4,423)
Net (decrease) increase in cash	(1,937)	242
Cash beginning of period	11,672	34,562
Cash end of period	$ 9,735	$ 34,804

Description of Business

Description of Business	3 Months Ended
	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations [Text Block]	(1) Description of Business Enzon Pharmaceuticals, Inc. (together with its subsidiaries, “Enzon” or the “Company”) receives royalty revenues from existing licensing arrangements with other companies primarily related to sales of four marketed drug products, namely, PegIntron ®, Sylatron ®, Macugen ® and CIMZIA ®. The Company also had previously received royalty revenues from licensing arrangements related to sales of Oncaspar and Adagen until the Company’s rights to receive royalties on sales of these products expired in 2014. In addition, the Company’s rights to receive royalties on sales of Macugen and CIMZIA expired in the U.S. and Great Britain in 2014. The primary source of the Company’s royalty revenues is sales of PegIntron, which is marketed by Merck & Co., Inc. (“Merck”). The Company currently has no clinical operations and limited corporate operations. The Company 73 90 80 The Company was previously dedicated to the research and development of innovative therapeutics for patients with high unmet medical needs. Beginning in December 2012, the Company’s Board of Directors (the “Board”), with outside consultants, began a review of the possible sale or disposition of one or more corporate assets or a sale of the Company. At that time, the Company suspended substantially all clinical development activities with a goal of conserving capital and maximizing value returned to the Company’s stockholders. By April 2013, the review did not result in a definitive offer to acquire the Company or all or substantially all of the Company’s assets. At the same time, the Company announced that its Board intended to distribute excess cash, expected to arise from ongoing royalty revenues, in the form of periodic dividends to stockholders. Effective June 25, 2015, the Company and Sigma-Tau Pharmaceuticals, Inc., Defiante Farmaceutica, S.A. and Sigma-Tau Finanzaria, S.P.A. (collectively “Sigma-Tau”) agreed to settle, for $ 526,128 826,128 300,000 In June 2015, the Company delivered notice to Nektar Therapeutics, Inc. (“Nektar”) asserting a breach of its Cross-License and Option Agreement with Nektar for Nektar’s failure to pay an immunity fee that the Company believes became payable to it under such agreement with respect to certain of the Company’s patents that would be infringed by Nektar’s products (or those of Nektar’s licensees). To date, Nektar has disputed the Company’s claim to an immunity fee. On August 14, 2015, the Company filed a summons and complaint against Nektar in the Supreme Court of New York for breach of contract (the “Complaint”). On October 23, 2015, Nektar filed a motion to dismiss the Complaint. As such, no amounts have been recorded as of March 31, 2016. The Company wound down its remaining research and development activities during 2013 On February 4, 2016, the Company’s Board of Directors adopted a Plan of Liquidation and Dissolution (the “Plan of Liquidation and Dissolution”), pursuant to which the Company would, subject to obtaining requisite stockholder approval, be liquidated and dissolved in accordance with Sections 280 and 281(a) of the General Corporation Law of the State of Delaware. As announced in the Company’s Current Report on Form 8-K filed on March 21, 2016, the Company’s Board of Directors has postponed seeking stockholder approval of the Plan of Liquidation and Dissolution until a later time to be determined by the Company’s Board of Directors.

Basis of Presentation

Basis of Presentation	3 Months Ended
	Mar. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting [Text Block]	(2) Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and footnotes required for complete annual financial statements. Interim results are not necessarily indicative of the results that may be expected for the full year. Interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated as part of the consolidation. The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ from these estimates.

New Accounting Pronouncements

New Accounting Pronouncements	3 Months Ended
	Mar. 31, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Description of New Accounting Pronouncements Not yet Adopted [Text Block]	(3) New Accounting Pronouncements During the first quarter of 2016, the FASB issued Accounting Standards Update 2016-01 (ASU No. 2016-01) “ Recognition and Measurement of Financial Assets and Financial Liabilities.” Also, d 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842)

Financial Instruments and Fair

Financial Instruments and Fair Value	3 Months Ended
	Mar. 31, 2016
Fair Value Disclosures [Abstract]
Fair Value Disclosures [Text Block]	(4) Financial Instruments and Fair Value The carrying values of cash, other current assets, accounts payable, accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheets approximated their fair values at March 31, 2016 and December 31, 2015 due to their short-term nature.

Supplemental Cash Flow Informat

Supplemental Cash Flow Information	3 Months Ended
	Mar. 31, 2016
Supplemental Cash Flow Elements [Abstract]
Cash Flow, Supplemental Disclosures [Text Block]	(5) Supplemental Cash Flow Information There were estimated federal income tax payments of $ 97,000 2,300 There were no income tax or interest payments made during the three months ended March 31, 2015.

Income Per Common Share

Income Per Common Share	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Earnings Per Share [Text Block]	(6) Income Per Common Share Basic income per common share is computed by dividing the net income by the weighted average number of shares of common stock outstanding during the period. Restricted stock awards and restricted stock units (collectively, nonvested shares) are not considered to be outstanding shares until the service or performance vesting period has been completed. The diluted income per share calculation would normally involve adjusting both the denominator and numerator as described here if the effect is dilutive. The denominator would include both the weighted average number of shares of common stock outstanding and common stock equivalents. Dilutive common stock equivalents potentially include stock options and nonvested shares using the treasury stock method and shares issuable under the employee stock purchase plan. For purposes of calculating diluted earnings per common share, the denominator includes both the weighted-average number of shares of common stock outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. Dilutive common stock equivalents potentially include stock options and nonvested shares using the treasury stock method and shares issuable under the employee stock purchase plan (ESPP). Three months ended March 31, 2016 2015 Income Per Common Share – Basic: Net income $ 1,517 $ 7,173 Weighted-average common shares outstanding 44,214 44,181 Basic income per share $ 0.03 $ 0.16 Income Per Common Share – Diluted: Net income $ 1,517 $ 7,173 Weighted-average common shares outstanding 44,214 44,181 Weighted-average incremental shares related to vesting of nonvested shares - 46 Weighted-average common shares outstanding and common share equivalents 44,214 44,227 Diluted income per share $ 0.03 $ 0.16 Shares issuable which could potentially dilute basic income per share in the future include 0.2

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	(7) Stock-Based Compensation Stock Options and Restricted Stock Units (RSUs or Nonvested Shares) During the quarter ended March 31, 2016, the Company incurred no stock-based compensation expense. No RSUs were outstanding as of March 31, 2016. During the quarter ended March 31, 2015, the Company incurred no stock-based compensation expense. Shares were withheld to pay approximately $ 6,000 There were no options granted during the three months ended March 31, 2016 and no nonvested shares granted or outstanding during the three months ended March 31, 2016. The Company uses historical data to estimate forfeiture rates. Stock Options Outstanding at January 1, 2016 348 Granted - Exercised and vested - Expired and forfeited - Outstanding at March 31, 2016 348 Options vested and expected to vest at March 31, 2016 348 Options exercisable at March 31, 2016 330

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2016
Income Tax Disclosure [Abstract]
Income Tax Disclosure [Text Block]	(8) Income Taxes During the three months ended March 31, 2016, the Company recorded $1,028,000 of income tax expense for U.S. federal income tax, substantially all of which related to a reduction of the Company’s net deferred tax assets. After reducing its deferred tax assets by approximately $1,028,000 during the three months ended March 31, 2016, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not its remaining deferred tax assets will not be realized. Management of the Company will continue to assess the need for this valuation allowance and will make adjustments to it when appropriate. During the three months ended March 31, 2015, the Company recorded $2,495,000 of income tax benefit for U.S. federal income tax provision for the first quarter of 2015, substantially all of which related to a reduction of a valuation allowance against the Company’s net deferred tax assets with a minimal offset attributable to minimum tax requirements and amounts due to a foreign jurisdiction.

Commitments and Contingent Liab

Commitments and Contingent Liabilities	3 Months Ended
	Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies Disclosure [Text Block]	(9) Commitments and Contingent Liabilities The Company has been involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material effect on the Company’s consolidated financial position, results of operations, or liquidity.

Basis of Presentation (Policies

Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2016
Accounting Policies [Abstract]
Interim Financial Statements [Policy Text Block]	Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company in accordance with United States generally accepted accounting principles (U.S. GAAP) for interim financial information and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and footnotes required for complete annual financial statements. Interim results are not necessarily indicative of the results that may be expected for the full year. Interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
Consolidation, Policy [Policy Text Block]	Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated as part of the consolidation.
Use of Estimates, Policy [Policy Text Block]	Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ from these estimates.

Income Per Common Share (Tables

Income Per Common Share (Tables)	3 Months Ended
	Mar. 31, 2016
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Income per common share information is as follows (in thousands, except per share amounts) for the three months ended March 31, 2016 and 2015: Three months ended March 31, 2016 2015 Income Per Common Share – Basic: Net income $ 1,517 $ 7,173 Weighted-average common shares outstanding 44,214 44,181 Basic income per share $ 0.03 $ 0.16 Income Per Common Share – Diluted: Net income $ 1,517 $ 7,173 Weighted-average common shares outstanding 44,214 44,181 Weighted-average incremental shares related to vesting of nonvested shares - 46 Weighted-average common shares outstanding and common share equivalents 44,214 44,227 Diluted income per share $ 0.03 $ 0.16

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Share-based Compensation, Activity [Table Text Block]	Activity related to stock options and nonvested shares during the three months ended March 31, 2016 and related balances outstanding as of that date are reflected below (in thousands): Stock Options Outstanding at January 1, 2016 348 Granted - Exercised and vested - Expired and forfeited - Outstanding at March 31, 2016 348 Options vested and expected to vest at March 31, 2016 348 Options exercisable at March 31, 2016 330

Description of Business (Detail

Description of Business (Details Textual) - USD ($)	3 Months Ended				12 Months Ended
	Mar. 31, 2016	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Jun. 25, 2015
Description of Business [Line Items]
Royalty Revenues From Sales Percentage	73.00%		90.00%		80.00%	80.00%
Royalty Revenue, Total	$ 3,224,000		$ 5,205,000
Sigma Tau [Member]
Description of Business [Line Items]
Royalty Settlement Claim Amount							$ 526,128
Royalty Revenue, Total		$ 300,000		$ 826,128

Supplemental Cash Flow Inform19

Supplemental Cash Flow Information (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Dividends Payable [Line Items]
Income Taxes Paid	$ 97,000	$ 0
Interest Paid, Net		$ 0
New Jersey Division of Taxation [Member]
Dividends Payable [Line Items]
Income Taxes Paid	$ 2,300

Income Per Common Share (Detail

Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Per Common Share - Basic:
Net income	$ 1,517	$ 7,173
Weighted-average common shares outstanding	44,214	44,181
Basic income per share (in dollars per share)	$ 0.03	$ 0.16
Income Per Common Share - Diluted:
Net income	$ 1,517	$ 7,173
Weighted-average common shares outstanding	44,214	44,181
Weighted-average incremental shares related to vesting of nonvested shares	0	46
Weighted-average common shares outstanding and common share equivalents	44,214	44,227
Diluted income per share (in dollars per share)	$ 0.03	$ 0.16

Income Per Common Share (Deta21

Income Per Common Share (Details Textual) shares in Millions	3 Months Ended
	Mar. 31, 2016shares
Vesting Of Nonvested Shares [Member]
Earnings Per Common Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0.2

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) shares in Thousands	3 Months Ended
	Mar. 31, 2016shares
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Outstanding at January 1, 2016, Stock Options	348
Granted, Stock Options	0
Exercised and vested, Stock Options	0
Expired and forfeited, Stock Options	0
Outstanding at March 31, 2016, Stock Options	348
Options vested and expected to vest at March 31, 2016, Stock Options	348
Options exercisable at March 31, 2016, Stock Options	330

Stock-Based Compensation (Det23

Stock-Based Compensation (Details Textual)	3 Months Ended
	Mar. 31, 2016USD ($)
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Employee Service Share Based Compensation Tax Payments	$ 6,000

Income Taxes (Details Textual)

Income Taxes (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2016	Mar. 31, 2015
Income Taxes [Line Items]
Deferred Tax Assets, Valuation Allowance	$ 1,028,000
Income Tax Expense (Benefit)	$ 1,028,000	$ (2,495,000)