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Shares of drug-delivery technology firm



closed down more than 5% Tuesday on news of looming supply constraints for PEG-Intron/Rebetol, a new treatment for Hepatitis C.

Several Wall Street analysts' firms are reporting that


( SGP), the marketer of PEG-Intron, will be creating a waiting list for the drug because patient demand is greater than expected.

Enzon, which makes the drug-delivery technology used in PEG-Intron, receives royalty payments from Schering-Plough based on sales of the drug. So, while booming sales of the drug are good news for Enzon's upcoming fiscal second-quarter results, the waiting list could hurt revenue and earnings in future quarters until the supply constraint issue is resolved, some analysts say.

Shares of Enzon closed the day down $2.84, or 5.3%, to $51.05 per share. The stock traded as low as $49 a share earlier in the day.

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Shares of Schering-Plough was off 97 cents, or 2.8%, to $34.20 a share.

Schering-Plough rolled out PEG-Intron in the U.S. in October, and patient demand for the Hepatitis C treatment has been overwhelming. Buckingham Research says 60,000 patients started taking the drug in the fourth quarter, double the expected number. SG Cowen was expecting as many as 45,000 patients on PEG-Intron in the fourth quarter, but now says the number is tracking closer to 54,000 patients and is growing fast.

As a result, Schering-Plough has told doctors that new patients may have to wait six to 12 weeks before they can start the drug, analysts say. The waiting list is being implemented to ensure that current patients have enough of the drug to finish treatment.

Obviously, too much demand for your product is not a terribly bad problem to have, so analysts seem to disagree on the financial impact to Enzon.

Leerink Swann analyst Robert Parente bumped up Enzon's revenue to $17.2 million from $16.6 million for the fiscal second quarter ended Dec. 31. But he reduced overall fiscal 2002 revenue estimates to $74.6 million from $80.2 million and lowered earnings estimates for the year to 57 cents a share from 65 cents a share. Parente rates Enzon a buy, and his firm hasn't done underwriting for the company.

SG Cowen sees the situation differently. Analyst Ian Sanderson says Schering-Plough has enough capacity to treat between 80,000 and 90,000 U.S. patients currently -- levels it could reach at the end of January. The waiting list is being set up, Sanderson says, because the drugmaker didn't expect to reach those patient levels so soon.

That translates into good news for Enzon. Sanderson says the biotech firm could beat his fiscal 2002 earnings estimates of 95 cents a share by as much as 10 cents to 20 cents a share. Sanderson rates Enzon a strong buy, and his firm has done underwriting for the company.

SG Cowen was expecting total U.S. PEG-Intron sales in the December quarter, as reported by Schering-Plough, to reach a range of $85 million to $90 million, but now says sales could come in as much as $20 million higher. In the current quarter, SG Cowen was expecting U.S. PEG-Intron sales of $136 million, but increased demand could push that higher by more than $60 million.

Enzon is expected to earn 87 cents a share in fiscal 2002, according to consensus estimates compiled by Thomson Financial/First Call. The drugmaker has not yet set a date to announce financial results for its fiscal second quarter.