Biopharmaceuticals outfit Enzon Pharmaceuticals (NASDAQ:ENZN) reported a 62% increase in first-quarter revenue -- and a 78% decline in earnings. Talk about yo-yo results!

Most of the revenue boost came from antifungal Abelcet -- a $360 million acquisition from Elan (NYSE:ELN) in November 2002. At $16.6 million, sales are on track to meet company guidance of $65 to $70 million. That's good. The company did not report whether the drug is still gaining market share. That's not so good.

Sales for the company's three other products were also up a robust 52% to $10 million.

Royalties for hepatitus C drug PEG-Intron, manufactured and marketed by Schering-Plough (NYSE:SGP), however, were downright ugly. With the drug pressured by Roche's Pegasys, royalties plunged 25% to $13.8 million, at the lower end of guidance offered October 22. Due to a lack of visibility, the company provides no net income or EBITDA guidance for 2004. That is not good either.

For the quarter, R&D spending increased 60% to $6.6 million. That was expected -- and good for the long-term health of Enzon. On the other hand, SG&A, up 280%, and cost of sales and manufacturing, up 435%, need attention if profits are to recover.

The good of Enzon is that it's profitable. Abelcet brought manufacturing assets and a sales force -- and the promise that profits will continue. It also helped the company's total debt balloon to $400 million -- an extremely high 2.6 long-term debt-to-equity ratio. This debt could be a real burden if profitability is not maintained.

Despite its promising product pipeline, PEG-Intron and Abelcet are the heart of Enzon. With PEG-Intron, as expected, seeing sales erosion, Abelcet needs to continue gaining market share to return the hefty investment Enzon has financed with debt.

Either way, there seems little, near term, to move this stock.

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You can reach W.D. Crotty at Hawaii-Fool@hawaii.com .