Enzon Pharmaceuticals Inc plans to spin off its novel biotechnology business from Enzon and list it as a separate company. The board of directors of the company has authorised the transaction that will result in two independent and highly focused public companies, Enzon said in a release.
''By separating these unique businesses into two focused companies, the opportunities for both the specialty pharmaceutical business and the biotechnology business could be substantially enhanced and greater value could be created than under the current structure,'' said Jeffrey H. Buchalter, chairman, resident and CEO of Enzon Pharmaceuticals.
''Operating separately will allow each company to benefit from greater strategic and managerial focus and appeal to their own unique shareholders.... The separation will enable the two businesses to compete more effectively in their respective markets and optimize their business goals, research initiatives and capital requirements. We look forward to creating this opportunity for the shareholders,'' Buchalter added.
Post spin-off, Enzon will retain the current marketed products of Abelcet, Adagen, DepoCyt and Oncaspar, the rights to current PEG royalty revenues, including PEG-Intron, Cimzia and Hematide, and the manufacturing facility in Indianapolis.
Enzon hopes the biotechnology company to leverage its customised PEGylation technology for licensing, collaboration and future royalty generation, and novel Locked Nucleic Acid (LNA) technology to develop promising therapeutics for oncology.
Enzon plans to spend approximately $150 million, representing approximately two to three years of anticipated cash needs to fund research and development efforts based on company projections, on the biotech unit.
While functional support associated with these operations will continue at Enzon, Enzon's outstanding convertible notes would remain as obligations of the company.
Buchalter will serve as chairman, president and CEO of the new biotechnology company and Craig Tooman, the current CFO of Enzon, will assume the role of resident and CEO of Enzon.
Each company will operate with independent management teams and additional details regarding management structure will be determined and disclosed at a later time.
Completion of the proposed spin-off is subject to various conditions, including final approval by Enzon's board of directors, the filing and effectiveness of a registration statement with the Securities and Exchange Commission (SEC) and any necessary third-party consents, the company said.
Enzon is currently evaluating whether or not the proposed spin-off would qualify as a tax-free stock distribution. Enzon has retained Goldman, Sachs & Co. as financial advisor, Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor and Mercer as human capital consultant with respect to the spin-off transaction, which is expected to be completed in the fourth quarter of 2008.
Enzon Pharmaceuticals, Inc. is a biopharmaceutical company dedicated to the development, manufacturing, commercialisation of important medicines for patients with cancer and other life-threatening conditions. Enzon has a portfolio of four marketed products, Oncaspar, DepoCyt, Abelcet and Adagen.
Billionaire investor Carl Icahn and other disgruntled shareholders have been pressing Enzon Pharmaceuticals to spin off its biotech business to unlock the company's value.
Icahn has taken considerable interest in biotech companies in recent years, including ImClone Systems and MedImmune. Funds controlled by the activist shareholder had amassed a 6.9-per cent stake in Enzon as of February this year.