Enzon Pharmaceuticals underwent significant changes in strategy and structure between 2008-2010. An activist investor split the company into two, then one part was sold off. This left Enzon a smaller biotech focused on cancer research. The HR leader helped transfer assets, downsize staff, and restructure operations at one site. They worked to improve employee engagement and alignment through open communication channels and social activities to support the new strategic direction. As a result, employee morale increased while also reducing costs through space and system efficiencies.

1. PSD Associates
. . . aligning human capital with business strategy
Paul Davit
Managing Principal
732.672.7599
paul.davit@psdassociatesllc.com
www.linkedin.com/in/pauldavit
Case Study: “And now for something completely different . . .”
Theme: Change Management/Organization Design
The Company/Client
Enzon Pharmaceuticals is a biopharmaceutical company that develops, manufactures and commercializes
medicines for cancer and other life-threatening conditions with 2008 annual revenues of $500 million and 450
employees. In 2010 the company re-oriented its strategy to divest all of its commercial assets and refocus
resources on promising R&D programs of innovative cancer therapeutics. The current company has annual
revenues of approximately $50 million and 40 employees.
The Challenge
In early 2008 the activist investor, Carl Icahn, acquired a stake in the company and subsequently two seats on the
Board. In order to increase shareholder value they pressed to split the company into two separate publicly traded
companies; one would be a specialty pharmaceutical company containing the commercial products and
manufacturing groups, and the other a stand-alone biotechnology research-based company.
Several months after the split of Enzon into two publicly traded companies was announced but not finalized,
buyers came forward to purchase the specialty pharmaceutical business. In mid-2009, a buyer emerged with solid
financing. Arrangements for the sale moved rapidly, resulting in a January 2010 closing of the sale of the
specialty pharmaceutical business. The buyer acquired the manufacturing plant and all of its employees, and
retained some but not all of the sales and marketing group. Those remaining were downsized, along with any
redundant staff. The incumbent CEO and CFO left shortly thereafter. We reduced headcount to ~ 150 FTE by July
2010, with additional reductions anticipated in 2011. But the downsizing was not the real challenge.
The Board presented us with an even greater challenge - transform the company into a more pure-play
biotechnology and entrepreneurial culture. We had to balance limited financial resources and higher scientific risk
with more openness, transparency and collective decision-making. However given the sale of the specialty
pharmaceutical business and staff downsizing, the trust level of the employees for management was at an all-time
low; they were extremely skeptical of anything management told them. Resistance to the change in company
strategy was high.
Actions Taken
Initially the top priority was to manage the transfer of all financial, human and physical assets to the purchaser.
First, my team identified those employees that were to be offered jobs with the new company and affect the
transfer. Since the buyer was foreign-owned with only a small presence in the US, I set up the appropriate
infrastructure required for them to operate from a human capital perspective.
Next I turned my attention to the “new” Enzon. Given the financial constraints of this new biotechnology
business, we recognized the need to consolidate our operations and downsize the remaining employees of the
commercial business that were not absorbed by the buyer. This reduction in employees enabled the company to
consolidate two sites into one. I was responsible for directing the office planning and physical move. We closed
our HQ office site and moved all employees into the R&D facilities.
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©2012 PSD Associates, LLC

2. As a member of the new Executive Team, I helped identify manpower requirements for the new organization and
implement the additional staff reductions.
While the transfer was underway, I next focused my attention to structuring what would be the remaining
biotechnology business. I became what many labeled the “Chief Explainer” and took on the role of
communicating to the employees the challenges and opportunities we now faced as a different company. Working
with the COO and Chief Scientific Officer (CSO), I prepared an organizational design that emphasized a strategy
focused upon increased clinical development.
To increase engagement and alignment, I . . .
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instituted monthly “Birthday Breakfasts” with myself and the COO where we would openly dialogue with
10 to 15 employees from various functions;
conducted quarterly town hall meetings after each earnings call where we discussed the budget and
performance to goal;
organized regular meetings of the top 20 senior managers to gain alignment of the day-to-day operations
with the new strategy; and,
guided the Employee Activities Committee in their planning of low cost employee social activities.
The Results
We successfully managed the turnaround of company culture, recognized an increase in employee morale/
engagement, as well as reducing administrative costs.
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Employee/Management dialogue produced a new company Values Statement, increasing alignment with
the new mission of the company.
The town hall meetings and the “Birthday Breakfasts” became known for an openness of dialogue with a
positive business focus.
The consolidation of operations into a single site made it easier for team members to interact. This alone
improved the quality of the scientific discussions and helped build stronger relationships between
employees, thereby increasing productivity.
Regular employee presentations on the progress of their individual projects reflected employee alignment
with the new business strategy.
Recovered substantial cost savings by eliminating under-utilized software systems and hardware,
reducing IT costs more than 30% over 3 years.
Improved utilization of office and lab space, reducing operating expense.
Employee social activities like pot luck lunches, group outings at baseball games and picnics helped break
down barriers, build camaraderie and foster team support.
©2012 PSD Associates, LLC