Enzon Pharmaceuticals (NDAQ:ENZN) shareholders may soon be rewarded after a large shareholder expressed concerns regarding a “troubling disconnect” in the stock. DellaCamera Capital, which owns 5.2% of the company, requested that the company hire an advisor to analyze various financial and structural options and implement a cohesive financial plan of action that would deliver increased value to shareholders.

“In our opinion, Enzon’s current stock price of $9.75 represents a significant discount to the intrinsic value of the Company and in no way reflects the tremendous embedded optionality associated with Enzon’s R&D pipeline and technology platform,” said portfolio manager Richard Mansouri. “It is our belief that the corporate structure and operational complexity of Enzon have made it difficult for the investment community to accurately assess the inherent value of the Company.”

The activist hedge fund pointed out that a share price of $9.75 implies a shocking negative valuation of -$263.5 million for the company’s R&D operations that, in reality, show promise. Enzon has four products on the market that will generate an estimated $100 million in revenue in 2007. A reasonable sales multiple of 3.5x yields a value of $350 million for the marketed products alone. Add in the revenues from royalties and contracted manufacturing and you get an additional $440 million in value.

So, why is there such a value disconnect? Well, DellaCamera insists that it can be traced to the company’s complex structure. Currently, Enzon operates in two businesses: (1) a commercial business comprised of marketed products, royalties, and contract manufacturing; and (2)an R&D organization and technology platform. The profitability of the commercial operations is being completely obscured by the expenses associated with advancing the company’s clinical and pre-clinical trials. This complexity has also led to operating inefficiencies that have resulted in runaway expenses.

In the end, DellaCamera insists that the company should work to simplify its message to investors by consolidating its operations or taking other measures to unlock value. To this end, they requested that the company hire an advisor in order to explore the best options. Combined, these factors make ENZN a stock worth watching!

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