Enzon to Restate

The company cites derivatives accounting issues.
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Enzon Pharmaceuticals (ENZN) set plans to restate prior financials over a derivatives accounting mistake.

The Bridgewater, N.J., biopharmaceuticals maker said it re-evaluated its accounting for a derivative hedging instrument during a recent audit of year-end results. Tuesday's announcement came as Enzon was due to post fourth-quarter numbers and host a Wednesday morning conference call. Those events have been postponed.

Enzon said it has determined that "certain amounts classified as other comprehensive income and included in the consolidated statement of stockholders' equity should have been included as other non-operating income and included in the consolidated statement of operations." The derivative was formed in 2003 to reduce investment risk associated with 1.5 million shares of

NPS Pharmaceuticals

(NPSP)

common stock received under a June 2003 merger termination agreement with NPS.

To date, Enzon has received cash proceeds of $22.5 million related to the financial instrument and the sale of NPS common stock. The fourth and final portion of the financial instrument related to 375,000 shares of NPS common stock will expire this month and will result in additional cash proceeds of at least $7.5 million.

Enzon will issue restated financial statements for the quarters ended between Dec. 31, 2003, and March 31, 2005.

Enzon intends to file its annual report on Form 10-K for the fiscal year ended June 30 by the due date of Sept. 13 but warned that it may be unable to do so.

Enzon shares were halted late Tuesday after finishing unchanged in regular trading at $7.40.