Zacks_Analysts' Blog : Enzon Stops Colorectal Cancer Study - Analyst Blog

Enzon Pharmaceuticals (ENZN) recently announced its plans to halt studies of its PEG-SN38 program for the treatment of metastatic colorectal cancer (mCRC). PEG-SN38 (EZN-2208) is a PEGylated version of the active metabolite of the cancer drug, irinotecan. The study is being discontinued in order to focus resources to other areas with nearer-term commercial potential. A mid-stage study of the program in this indication had recently concluded. Enzon however continues studies of the PEG-SN38 compound in metastatic breast cancer, pediatric cancer, and a study in combination with Roche’s (RHHBY) Avastin in solid tumors.

Other than PEG-SN38, Enzon’s other pipeline programs include three messenger ribonucleic acid (mRNA) antagonists utilizing the Locked Nucleic Acid (LNA) technology. These are Hypoxia-Inducible Factor-1 alpha (HIF-1 a), survivin and androgen receptor (AR). EZN-2968 or HIF-1 is the lead compound in the mRNA antagonist program, being developed for tumors and lymphoma. An early stage study is testing EZN-2968 for treating tumors in the liver. A second compound in the mRNA program, which targets survivin, is also in early stage trials in cancer and in pediatric patients with relapse acute lymphoblastic leukemia. A third mRNA antagonist, EZN-4176, which targets androgen receptor, or AR antagonists has received Investigational New Drug (IND) approval to start early stage studies for the treatment of patients with castration-resistant prostate cancer (CRPC).

Our Recommendation

Currently, we have a Neutral recommendation on Enzon. The stock carries a Zacks #3 Rank (short “Hold” rating). We are pleased with Enzon’s improved liquidity position arising from the sale of its specialty pharmaceutical business and its efforts to develop the pipeline. The successful development and subsequent commercialization of the pipeline would be a boost for the stock. However, we remain concerned about the early stage status of its pipeline and the dependence on royalties from sales of Merck’s (MRK) PegIntron. We believe that the stock is fairly valued at current levels with limited upside potential.