Enzon Pharmaceuticals (ENZN) 10-Q 10 Nov 16 2016 Q3 Quarterly report Financial data

Document And Entity Information

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
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	Sep. 30, 2016	Dec. 31, 2015	[1]
Current assets:
Cash	$ 12,896	$ 11,672
Other current assets	234	107
Total current assets	13,130	11,779
Deferred tax assets, net	8,610	11,111
Total assets	21,740	22,890
Current liabilities:
Accounts payable	0	90
Accrued expenses and other current liabilities	163	205
Accrued lease termination costs	0	4,506
Total current liabilities	163	4,801
Commitments and contingencies
Stockholders’ equity:
Preferred stock - $0.01 par value, authorized 3,000,000 shares; no shares issued and outstanding at September 30, 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 September 30, 2016 and December 31, 2015, respectively	441	441
Additional paid-in capital	96,914	96,914
Accumulated deficit	(75,778)	(79,266)
Total stockholders’ equity	21,577	18,089
Total liabilities and stockholders’ equity	$ 21,740	$ 22,890
[1]	Derived from the audited December 31, 2015 consolidated balance sheet

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - $ / shares	Sep. 30, 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		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Royalties	$ 1,965	$ 3,766	$ 7,461	$ 14,068
Miscellaneous income	21	73	63	224
Total revenues	1,986	3,839	7,524	14,292
Operating expenses:
General and administrative	376	213	1,533	1,312
Lease termination costs	0	4,552	0	4,552
Total operating expenses	376	4,765	1,533	5,864
Operating income (loss) and income (loss) before income tax expense (benefit)	1,610	(926)	5,991	8,428
Income tax expense (benefit)	674	888	2,503	(712)
Net income (loss)	$ 936	$ (1,814)	$ 3,488	$ 9,140
Earnings (loss) per common share
Basic	$ 0.02	$ (0.04)	$ 0.08	$ 0.21
Diluted	$ 0.02	$ (0.04)	$ 0.08	$ 0.21
Weighted-average shares - basic	44,214	44,182	44,214	44,182
Weighted-average shares - diluted	44,214	44,182	44,214	44,214

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016		Sep. 30, 2015
Cash flows from operating activities:
Net income	$ 3,488		$ 9,140
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax benefit	2,501		(848)
Changes in operating assets and liabilities	(4,765)		3,915
Net cash provided by operating activities	1,224		12,207
Cash flows from financing activities:
Withholding taxes - stock based compensation	0		(6)
Common stock dividend	0		(26,508)
Net cash used in financing activities	0		(26,514)
Net increase (decrease) in cash	1,224		(14,307)
Cash at beginning of period	11,672	[1]	34,562
Cash at end of period	$ 12,896		$ 20,255
[1]	Derived from the audited December 31, 2015 consolidated balance sheet

Description of Business

Description of Business	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Nature of Operations [Text Block]	(1) Description of Business Enzon Pharmaceuticals, Inc. (together with its subsidiary, “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 ®. 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. Royalty revenues from sales of PegIntron accounted for approximately 61 83 70 80 80 79 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. The Company ended its remaining research and development activities during 2013 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. The case was remanded to the trial court for further proceedings. As such, no amounts have been recorded as of September 30, 2016. On February 4, 2016, the Company entered into (i) an agreement with the landlord (the “Landlord”) of our leased property at 20 Kingsbridge Road, Piscataway, New Jersey (the “Leased Property”) and the Company’s subtenant and (ii) a letter agreement with the Landlord (the “Letter Agreement”). Pursuant to a Surrender and Release Agreement, (i) our lease agreement (the “Prime Lease”) with the Landlord terminated effective as of February 4, 2016 (the “Termination Date”) and (ii) our sublease agreement with the subtenant became a direct lease between the Landlord and the subtenant effective as of the Termination Date. Pursuant to the Letter Agreement, from and after the Termination Date, the Landlord agreed to perform all of the Company’s obligations under the sublease, the Landlord waived all claims against the Company in connection with the lease, the sublease or the Leased Property and the Landlord has released the Company from all liability in connection with the lease and the sublease and, in exchange therefor, on the Termination Date, the Company paid $ 4.25 204,000 Commencing on March 1, 2016, the Company changed the location of its principal executive offices to 20 Commerce Drive, Suite 135, Cranford, New Jersey, 07016. The Company entered into an office service agreement with Regus Management Group, LLC (“Regus”) for use of office space at this location effective March 1, 2016. The term of the agreement will continue until February 28, 2017 2,418 1,209 On February 4, 2016, the Board 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 Board has postponed seeking stockholder approval of the Plan of Liquidation and Dissolution until a later time to be determined by the Board. The Company’s common stock was delisted from Nasdaq on May 20, 2016 because the Company no longer met the requirement to maintain a minimum bid price of $ 1.00

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Accounting [Text Block]	(2) Basis of Presentation Interim Financial Statements The accompanying condensed balance sheet as of December 31, 2015, which has been derived from the audited financial statements, and the interim 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. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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	9 Months Ended
	Sep. 30, 2016
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Description of New Accounting Pronouncements Not yet Adopted [Text Block]	(3) New Accounting Pronouncements In August 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In May 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients Revenue from Contracts with Customers (Topic 606) In January 2016, FASB issued Accounting Standards Update 2016-01 (ASU No. 2016-01) “ Recognition and Measurement of Financial Assets and Financial Liabilities.” In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes

Financial Instruments and Fair

Financial Instruments and Fair Value	9 Months Ended
	Sep. 30, 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 September 30, 2016 and December 31, 2015 due to their short-term nature.

Supplemental Cash Flow Informat

Supplemental Cash Flow Information	9 Months Ended
	Sep. 30, 2016
Supplemental Cash Flow Elements [Abstract]
Cash Flow, Supplemental Disclosures [Text Block]	(5) Supplemental Cash Flow Information During the nine months ended September 30, 2016, there was an estimated federal income tax payment of $ 135,000 1,500 135,000 During the nine months ended September 30, 2015, the Company made federal income tax payments of $ 137,000 There were no interest payments made during the nine months ended September 30, 2016 and 2015.

Income (Loss) Per Common Share

Income (Loss) Per Common Share	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Earnings Per Share [Text Block]	(6) Income (Loss) Per Common Share Basic earnings per common share is computed by dividing the income available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Restricted stock units (nonvested shares) are not considered to be outstanding shares until the vesting criteria (service and/or performance) have been satisfied. 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 Nine months ended 2016 2015 2016 2015 Income (Loss) Per Common Share – Basic: Net income (loss) $ 936 $ (1,814) $ 3,488 $ 9,140 Weighted-average common shares outstanding 44,214 44,182 44,214 44,182 Basic income (loss) per share $ 0.02 $ (0.04) $ 0.08 $ 0.21 Income (Loss) Per Common Share – Diluted: Net income (loss) $ 936 $ (1,814) $ 3,488 $ 9,140 Weighted-average common shares outstanding 44,214 44,182 44,214 44,182 Weighted-average incremental shares related to assumed exercise of stock options, vesting of nonvested shares, and ESPP - - - 32 Weighted-average common shares outstanding and common share equivalents 44,214 44,182 44,214 44,214 Diluted income (loss) per share $ 0.02 $ (0.04) $ 0.08 $ 0.21 As of September 30, 2016, there are no shares issuable, which could potentially dilute basic EPS in the future for vesting of nonvested shares.

Stock-Based Compensation

Stock-Based Compensation	9 Months Ended
	Sep. 30, 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 nine months ended September 30, 2016 and 2015, the Company incurred no stock-based compensation expense. No RSUs were outstanding as of September 30, 2016. Shares were withheld to pay approximately $ 6,000 There were no options granted during the nine months ended September 30, 2016 and 2015 and no nonvested shares granted during the nine months ended September 30, 2016 and 2015. The Company uses historical data to estimate forfeiture rates. Stock Options Outstanding at January 1, 2016 348 Granted - Exercised and vested - Expired and forfeited (348) Outstanding at September 30, 2016 - Options vested and expected to vest at September 30, 2016 - Options exercisable at September 30, 2016 -

Income Taxes

Income Taxes	9 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Income Tax Disclosure [Text Block]	(8) Income Taxes During the nine months ended September 30, 2016, the Company recorded $ 2,503,000 674,000 The Company continues to provide a partial valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that certain of 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 September 30, 2015, the Company recorded a tax provision of $ 888,000 During the nine months ended September 30, 2015, the Company recorded $ 712,000 2.5 1.78

Commitments and Contingent Liab

Commitments and Contingent Liabilities	9 Months Ended
	Sep. 30, 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.

Income (Loss) Per Common Share

Income (Loss) Per Common Share (Tables)	9 Months Ended
	Sep. 30, 2016
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]	Earnings per common share information is as follows (in thousands, except per share amounts): Three months ended Nine months ended 2016 2015 2016 2015 Income (Loss) Per Common Share – Basic: Net income (loss) $ 936 $ (1,814) $ 3,488 $ 9,140 Weighted-average common shares outstanding 44,214 44,182 44,214 44,182 Basic income (loss) per share $ 0.02 $ (0.04) $ 0.08 $ 0.21 Income (Loss) Per Common Share – Diluted: Net income (loss) $ 936 $ (1,814) $ 3,488 $ 9,140 Weighted-average common shares outstanding 44,214 44,182 44,214 44,182 Weighted-average incremental shares related to assumed exercise of stock options, vesting of nonvested shares, and ESPP - - - 32 Weighted-average common shares outstanding and common share equivalents 44,214 44,182 44,214 44,214 Diluted income (loss) per share $ 0.02 $ (0.04) $ 0.08 $ 0.21

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	9 Months Ended
	Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Schedule of Share-based Compensation, Activity [Table Text Block]	Stock Options Outstanding at January 1, 2016 348 Granted - Exercised and vested - Expired and forfeited (348) Outstanding at September 30, 2016 - Options vested and expected to vest at September 30, 2016 - Options exercisable at September 30, 2016 -

Description of Business (Detail

Description of Business (Details Textual) - USD ($)

1 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

Mar. 01, 2016

Feb. 04, 2016

Sep. 30, 2016

Sep. 30, 2015

Jun. 30, 2015

Dec. 31, 2014

Sep. 30, 2016

Sep. 30, 2015

Dec. 31, 2015

Dec. 31, 2014

Aug. 09, 2016

Jun. 25, 2015

Description of Business [Line Items]

Royalty Revenues From Sales Percentage

61.00%

83.00%

70.00%

80.00%

80.00%

79.00%

Royalty Revenue, Total

$ 1,965,000

$ 3,766,000

$ 7,461,000

$ 14,068,000

Share Price

$ 1

Mortgage Lender [Member]

Description of Business [Line Items]

Payments For Contract Termination

$ 4,250,000

Landlord [Member]

Description of Business [Line Items]

Payments For Contract Termination

$ 204,000

Sigma Tau [Member]

Description of Business [Line Items]

Royalty Settlement Claim Amount

$ 526,128

Royalty Revenue, Total

$ 300,000

$ 826,128

Regus Management Group, LLC [Member]

Description of Business [Line Items]

Initial Service Retainer Fees Payable

$ 2,418

Lease Expiration Date

Feb. 28, 2017

Operating Leases, Rent Expense

$ 1,209

Supplemental Cash Flow Inform18

Supplemental Cash Flow Information (Details Textual) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016	Sep. 30, 2015
Dividends Payable [Line Items]
Income Taxes Paid	$ 135,000	$ 135,000	$ 137,000
Interest Paid, Net		0	$ 0
New Jersey Division of Taxation [Member]
Dividends Payable [Line Items]
Income Taxes Paid		$ 1,500

Income (Loss) Per Common Shar19

Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income (Loss) Per Common Share - Basic:
Net income (loss)	$ 936	$ (1,814)	$ 3,488	$ 9,140
Weighted-average common shares outstanding	44,214	44,182	44,214	44,182
Basic income (loss) per share (in dollars per share)	$ 0.02	$ (0.04)	$ 0.08	$ 0.21
Income (Loss) Per Common Share - Diluted:
Net income (loss)	$ 936	$ (1,814)	$ 3,488	$ 9,140
Weighted-average common shares outstanding	44,214	44,182	44,214	44,182
Weighted-average incremental shares related to assumed exercise of stock options, vesting of nonvested shares, and ESPP	0	0	0	32
Weighted-average common shares outstanding and common share equivalents	44,214	44,182	44,214	44,214
Diluted income (loss) per share (in dollars per share)	$ 0.02	$ (0.04)	$ 0.08	$ 0.21

Stock-Based Compensation (Detai

Stock-Based Compensation (Details) shares in Thousands	9 Months Ended
	Sep. 30, 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	(348)
Outstanding at September 30, 2016, Stock Options	0
Options vested and expected to vest at September 30, 2016, Stock Options	0
Options exercisable at September 30, 2016, Stock Options	0

Stock-Based Compensation (Det21

Stock-Based Compensation (Details Textual)	9 Months Ended
	Sep. 30, 2015USD ($)
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 ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Income Taxes [Line Items]
Deferred Tax Assets, Valuation Allowance		$ 1,780		$ 1,780	$ 1,780	$ 2,500
Income Tax Expense (Benefit)	$ 674	$ 888	$ 2,503	$ (712)