Enzon to spin off biotech unit into cancer research company

BRIDGEWATER, N.J.—Drug maker Enzon Pharmaceuticals Inc. said Wednesday it will spin off its biotechnology business into an independent company.

Enzon said the new company will focus on developing cancer treatments.

The move comes about two months after activist investor Carl Icahn said in a regulatory filing he held about 6.9 percent of the company's outstanding shares, and bought the stock "in the belief that they were undervalued." In the filing, Icahn said he approached management asking for the company to review strategic transactions, including a spinoff or sale of the company.

The transaction, which is subject to approval from Enzon's board of directors, is expected to close in the fourth quarter.

Enzon will fund the new entity with a $150 million cash infusion, which it believes will allow it to conduct research and development over two to three years.

Enzon CEO Jeffrey H. Buchalter will head the new biotechnology company once the spinoff is complete, while current ENZON CFO Craig Tooman will take over the reins of the specialty pharmaceuticals business. Each company will have separate management teams.

"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," Buchalter said in a statement.

Enzon will also retain rights to its currently marketed drugs, which include Oncaspar for leukemia, Depocyt for meningitis, Abelcet for fungal infections and Adagen for severe combined immunodeficiency disease, also known as "Bubble Boy Disease." In addition, it will keep rights to its royalty revenue stream.

Separately, Enzon said it earned $1.5 million, or 3 cents per share, in the first quarter, reversing a year-ago loss of $2.8 million or 6 cents per share. Revenue rose 17.6 percent to $48.8 million, from $41.5 million in the year-ago quarter.

Shares of Enzon wavered throughout Wednesday's session, gaining as much as 7.4 percent in morning trading before settling back to end the day up 9 cents, at $9.26.