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ENZON’s 4-1/8 JANUARY SURGE PEGGED TO L-ASPARAGINASE AND ORPHAN ADAGEN

Executive Summary

Enzon quick-started 1990 with a 4-1/8 point run-up to close up 110% at 7-7/8 in an otherwise sluggish January on Wall Street. The firm's strong showing was tied to four developments relating to its proprietary Pegnology protein-based drug delivery system and the ensuing investment community attention. Enzon's price appreciation began after the company's Jan. 10 annual meeting where the company announced a joint R&D agreement with Amgen to PEG-modify the biotech firm's granulocyte-colony stimulating factor (G-CSF) Neupogen to make the white blood cell growth factor longer lasting. A PLA for Neupogen as an adjunct to chemotherapy was filed on Dec. 28. A week later, the stock picked up more steam from the Jan. 16 announcement of a letter of intent with Erbamont covering foreign marketing rights to Enzon's leukemia drug, PEG-L-asparaginase. Erbamont will assume all costs for foreign clinical trials, registrations and marketing, while Enzon will receive royalties in addition to a significant up-front cash payment. Enzon also reiterated its intent to file a PLA in the U.S. in the next few months for PEG-L-asparaginase for acute lymphoblastic leukemia (ALL), lymphoma and other cancers. The South Plainfield, New Jersey-based company is awaiting FDA approval for its first U.S. product Adagen (PEG-ADA), an orphan drug for the treatment of severe combined immunodeficiency disease ("bubble boy" disease). The NDA was filed in January 1988. While Enzon sparkled, the pharmaceutical component and the "F-D-C" OTC Monthly Index as a whole were lackluster: the 39 stocks in the drug component were off 3.2% in January and the index dropped 3.6%. Overall, decliners outpaced gainers by three-to-one among drug stocks. Still, the index fared better than the Dow Industrials, down 7.6%, and the S&P 400, down 6.1%. Zenith Labs (up 26.7% on a two point gain to 9-1/2) was another bright spot on the index. The generic drug firm began trading on NASDAQ (trading symbol: ZEN) on Dec. 21 following the successful completion of its Chapter 11 reorganization plan. The only other stock to finish January with a significant gain was Cetus (up 11.4% to 15-7/8). A study in the journal Hypertension showing that IL-2 could permanently lower blood pressure in lab rats received widespread publicity Jan. 8 from the American Heart Association. Cetus has begun a pilot study in humans at the State University of New York/Syracuse to see if the biotech product, currently being developed as an anticancer agent, has potential as an antihypertensive. The "F-D-C" OTC Monthly Index adds coverage of 11 new companies this month, including generic firms Zenith and Marsam Pharmaceutical (MSM); the oncology R&D firms Immunogen (IMGN), Cell Technology (CELL), NeoRx (NERX), RIBI Immunochem Research (RIBI) and U.S. Bioscience (UBS); delivery systems R&D companies Liposome Technology (LTIZ) and Advanced Polymer Systems (APOS); the radiopharmaceutical R&D firm Syncor International (SCOR) and topical drug firms Chantal Pharmaceutical (CHTL) and Procyte (PRCY).

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