The case study describes how PSD Associates helped biopharmaceutical company Enzon Pharmaceuticals split into two separate publicly-traded companies - a specialty pharmaceutical company and a biotechnology research company - in order to increase shareholder value. PSD Associates facilitated the organization design, talent allocation, and workforce optimization for the new companies. This included developing new organization structures, identifying core competencies and allocating employees, designing compensation programs, managing downsizing, and leading change management communications. The results were increased employee understanding of the strategy and buy-in to the changes within six weeks with no losses in revenues or productivity.

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: “Split Personality”
Theme: Change Management/Strategy Execution
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
By 2008 Enzon Pharmaceuticals had grown as a biopharmaceutical company to over 450 employees and $500
million in revenues, with limited debt. By design, the company sought to be unique in its investment space. It
became both a specialty pharmaceutical company (with four marketed products and a significant royalty stream
from an out-licensed product), as well as a biotechnology company (with multiple innovative medical compounds
in various stages of research and clinical development). The company was heavily institutionally owned. These
investors were challenged in putting the company into a single traditional investment style box, which negatively
impacted the company’s overall market valuation.
In early 2008 the activist investor, Carl Icahn, acquired a stake in the company and subsequently two seats on the
Board. Their mission was to identify ways to increase the shareholder value they felt was inherent in the
company’s assets but not recognized by the market.
In order to increase shareholder value the Board 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. This announcement
created tension, concern and uncertainty among all employees as to possible loss of jobs, reconfiguration of
responsibilities and reduction in compensation.
Actions Taken
As the head of HR, the CEO tasked me with facilitating the organization design, talent allocation and workforce
optimization of the two newly formed companies. I collaborated with the Executive Committee to design two
separate top-level functional organization charts aligned with the core strategies of the two new companies.
Phase 1
I first met with the key functional managers to review the design and challenge their thinking as to improved and
different ways to organize their departments, with an eye towards gaining process efficiencies. With input from
key management, I identified the core competencies and skill sets required and then identified the employees who
fit the criteria. It was straightforward for many of the departments and functions who clearly supported either the
commercial or research businesses. However, there were many cross-functional departments that would have to
be split between the two companies. I developed a workforce allocation plan to provide both companies with
adequate staff support and minimal disruption.
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©2012 PSD Associates, LLC

2. Phase 2
Due to the distinctive market characteristics of both companies, they each required a separate compensation
strategy including base salary, cash bonus and long-term equity plans. I managed this project with the help of
outside consultants and presented finalized compensation programs to the Board of Directors for approval.
Phase 3
It became clear that in order for the financial objectives of the company split to be met, each new company would
have to downsize to some degree. With extreme confidentiality I worked with the CEO to identify the functions
that would be downsized and reconfigured, and identified the employees who were to be laid off based on their
individual competencies, performance and potential. I designed the severance program and implementation plan
to manage that process.
I had responsibility for employee messaging regarding the company split. In each Phase, I . . .
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drafted employee communications coming from the CEO and organized regularly held town hall style
meetings to open a dialogue between top management and all employees;
held small group meetings in each functional area to address individual concerns and communicate
personalized updates on the process;
met one-on-one with key employees to explain the strategy and where they fit into the overall picture in
order to maximize retention.
The Results
In less than six weeks of the announcement, the feedback from managers had become more positive toward
understanding the strategy and the alignment of their employees in making it work. No formal survey process was
undertaken; however, my staff attended staff meetings and met individually to gather direct feedback from
employees. They indicated that the strategy messages had been received, and were clearly explained. Employee
buy-in to the change increased. The people reported they felt more comfortable at least knowing their status and
how they were to be treated. There were no measurable losses in revenues or productivity over this time period.
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©2012 PSD Associates, LLC