Enzon Pharmaceuticals Inc. decided to discontinue development of its cancer drug Pegamotecan following an interim analysis of a Phase IIb trial in gastric or gastroesophageal cancers.

The Bridgewater, N.J.-based company did not provide details or results from the trial, but said it will not pursue any other indications for Pegamotecan based on an analysis of potential investment return vs. the necessary resource allocation and development risks. Enzon released the news with its second-quarter earnings report.

The company could not be reached for comment.

Enzon's shares (NASDAQ: ENZN) dipped 18 cents Friday to close at $12.37.

Pegamotecan is a PEGylated (polyethylene glycol-enhanced) version of topoisomerase I inhibitor camptothecin. The Phase IIb trial tested the drug in patients whose cancers had progressed following prior chemotherapy.

With the discontinuation of the drug, Enzon plans to redirect its investments to fund development of other products in its pipeline.

The company also reported its adjusted net income for the second quarter of fiscal 2005 ending Dec. 31 at $1.3 million, or 3 cents per diluted share, a decrease from the $2.3 million, or 5 cents per share, for the second quarter of fiscal year 2004. Enzon attributed the decrease to declining sales of Abelcet, which had $3.7 million less in sales last quarter, registering $14.3 million overall in North America.

Enzon said a growing intravenous antifungal market affected Abelcet.

Although overall product sales decreased from $27.7 million the year before to $27 million, Enzon reported that its other three internally marketed products recorded sales increases last quarter. Sales of Adagen, an enzyme-replacement therapy used to treat severe combined immunodeficiency disease, increased to $5.6 million, compared to $4 million the year before. Oncaspar, used in combination with other chemotherapeutics to treat acute lymphoblastic leukemia, grew to $5.5 million last quarter, up from $4.4 million. Sales of Depocyt, used to treat lymphomatous meningitis, increased by $300,000 to $1.6 million.

Enzon reported $10.1 million in royalties, mainly from sales of PegIntron, a hepatitis C treatment marketed by Kenilworth, N.J.-based Schering-Plough Corp.

Meanwhile, the company's research and development costs grew last quarter, increasing to $8.9 million, up from $7.4 million. Enzon said those figures were due primarily to its share of costs related to Marqibo, a cancer drug jointly developed by Inex Pharmaceuticals Corp., of Vancouver, British Columbia.

The FDA issued a not-approvable letter last month for Marqibo following its Oncologic Drugs Advisory Committee's unanimous vote to reject the accelerated approval submission citing deficiencies in the clinical section, namely that the original new drug application should have been based on a comparative study of Marqibo vs. other chemotherapy regimens. Marqibo is being developed for relapsed, aggressive non-Hodgkin's lymphoma. (See BioWorld Today, Jan. 20, 2005.)

Other drugs in Enzon's pipeline include SS1P, a fusion protein used to treat pancreatic cancer. That drug is in Phase I development, while ATG Fresenius S, a polyclonal antibody preparation used for T-lymphocyte suppression in solid organ transplant patients, is in Phase II studies.

As of Dec. 31, Enzon's cash, cash equivalents and marketable securities totaled $209.1 million. That figure included cash proceeds of $7.5 million related to the sale of 375,000 shares of NPS Pharmaceuticals Inc., of Salt Lake City. The two companies agreed to merge in February 2003, but negotiations stalled four months later. (See BioWorld Today, June 6, 2003.)

At the end of last year, Enzon named Jeffrey Buchalter president and CEO. Buchalter previously served as president, CEO and director of San Antonio-based ILEX Oncology Inc., which was acquired by Genzyme Corp., of Cambridge, Mass., in December.