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To: Ditchdigger who wrote (51405)	4/24/2013 7:58:46 AM
From: paulelgin	2 Recommendations Respond to of 78659

I'm not interested in Enzon as a going concern - I'm interested in the cash dividend and royalty distributions to shareholders, until PegIntron goes off-patent. The potential oral drug competitors to PegIntron are in Phase 2 currently, meaning there will be several years until FDA approval. You'll note that I accounted for a potential drop-off in each year of my royalty distribution estimate. The Enzon situation is a de facto liquidation (without saying as much) that will continue to generate a return to shareholders. I don't care about competitors - those drugs will surely come to market - I care about the payouts now and in the next few years. Enzon is toast as a company. I'm not disputing that. However, as Klarman wrote in Margin of Safety: "A corporate liquidation typically connotes business failure; but, ironically, it may correspond with investment success...liquidation proceeds are usually maximized through a more orderly winding-up of a business." Such is the case here with Enzon - not only is all cash being returned to shareholders, royalties are as well. The company is not "liquidating" ie, they're not shutting the doors completely. The reason for this is the continued expectation of royalty payments for some time (three, four, five years?) that will be distributed to shareholders. That is the thesis. Drug competitors in clinical trials don't factor-in, because this company is no longer a going concern. Once royalty payments from PegIntron cease (again, three, four, or five years out...?), Enzon is done. Until then, the company will provide distributions to shareholders.