<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ----------------

                                    FORM 10-Q

 (Mark One)

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2004
                                       or
[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                    For the Transition Period from ___ to ___

                         Commission file number 0-12957

                           ENZON PHARMACEUTICALS, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                      22-2372868
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

685 Route 202/206, Bridgewater, New Jersey                   08807
 (Address of principal executive offices)                  (Zip Code)

                                 (908) 541-8600
              (Registrant's telephone number, including area code)

                                 Not Applicable
   (Former name, former address and former fiscal year, if changed since last
                                    report)

                                ----------------

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.   Yes   X      No__
                                                 --

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).  Yes   X      No__
                                                      --

         Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date 43,793,494.


<PAGE>

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                           September 30, 2004          June 30, 2004
                                                                           ------------------          -------------
<S>                                                                        <C>                         <C>
                                                                                                            (*)
ASSETS
Current assets:
  Cash and cash equivalents                                                      $ 76,055                $ 91,532
  Short-term investments                                                           44,243                  27,119
  Accounts receivable, net                                                         26,500                  25,977
  Inventories                                                                      14,108                  11,215
  Deferred tax and other current assets                                            15,207                  12,382
                                                                                 --------                --------
       Total current assets                                                       176,113                 168,225
                                                                                 --------                --------

Other assets:
  Property and equipment, net                                                      34,468                  34,859
  Marketable securities                                                            61,273                  67,582
  Investments in equity securities                                                 39,076                  37,906
  Amortizable intangible assets, net                                              189,588                 194,067
  Goodwill                                                                        150,985                 150,985
  Deferred tax and other assets                                                    67,677                  68,786
                                                                                 --------                --------
                                                                                  543,067                 554,185
                                                                                 --------                --------
Total assets                                                                     $719,180                $722,410
                                                                                 ========                ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                                 $9,169                  $8,663
  Accrued expenses                                                                 18,190                  23,001
                                                                                 --------                --------
     Total current liabilities                                                     27,359                  31,664
                                                                                 --------                --------

Other liabilities                                                                   1,407                   1,655
Notes payable                                                                     400,000                 400,000
                                                                                 --------                --------
                                                                                  401,407                 401,655
                                                                                 --------                --------
Commitments and contingencies
Stockholders' equity:
  Common stock-$.01 par value, authorized 90,000,000 shares;
   issued and outstanding 43,793,464 shares at September
   30, 2004 and 43,750,934 shares at June 30, 2004                                    438                     438
  Additional paid-in capital                                                      322,565                 322,486
  Accumulated other comprehensive loss                                             (3,472)                 (5,035)
  Deferred compensation                                                            (3,346)                 (3,571)
  Accumulated deficit                                                             (25,771)                (25,227)
                                                                                 --------                --------
Total stockholders' equity                                                        290,414                 289,091
                                                                                 --------                --------
Total liabilities and stockholders' equity                                       $719,180                $722,410
                                                                                 ========                ========
</TABLE>

(*)Condensed from audited financial statements.

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                       2
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Three months ended
                                                                                           September 30,
                                                                                 --------------------------------
                                                                                  2004                     2003
                                                                                 --------                --------
<S>                                                                              <C>                     <C>
Revenues:
    Product sales, net                                                            $27,527                 $24,961
    Manufacturing revenue                                                           2,513                   1,604
    Royalties                                                                      10,115                  13,811
    Contract revenue                                                                  299                     268
                                                                                 --------                --------
              Total revenues                                                       40,454                  40,644
                                                                                 --------                --------

Costs and expenses:

    Cost of sales and manufacturing revenue                                        10,901                  10,912
    Research and development                                                       10,046                   6,551
    Selling, general and administrative                                            12,199                  11,209
    Amortization of acquired intangible assets                                      3,358                   3,358
                                                                                 --------                --------
             Total costs and expenses                                              36,504                  32,030
                                                                                 --------                --------
Operating income                                                                    3,950                   8,614
                                                                                 --------                --------
Other income (expense):
    Investment income, net                                                            770                     474
    Interest expense                                                               (4,957)                 (4,957)
    Other                                                                            (670)                    307
                                                                                 --------                --------
                                                                                   (4,857)                 (4,176)
                                                                                 --------                --------

(Loss) income before tax provision                                                   (907)                  4,438
Income tax (benefit) provision                                                       (363)                  1,634
                                                                                 --------                --------
Net (loss) income                                                                   $(544)                 $2,804
                                                                                 ========                ========

Basic (loss) earnings per common share                                             $(0.01)                  $0.06
                                                                                 ========                ========
Diluted (loss) earnings per common share                                           $(0.01)                  $0.06
                                                                                 ========                ========
Weighted average number of common shares outstanding - basic                       43,470                  43,290
                                                                                 ========                ========

Weighted average number of common shares and dilutive
    potential common shares outstanding                                            43,470                  43,629
                                                                                 ========                ========
</TABLE>

The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                       3
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                          September 30,
                                                                                 --------------------------------
                                                                                   2004                    2003
                                                                                 --------                --------

<S>                                                                              <C>                     <C>
Cash flows from operating activities:
      Net (loss) income                                                             $(544)                 $2,804
      Adjustments to reconcile net (loss) income to net cash (used in)
       provided by operating activities:
           Depreciation and amortization                                            5,652                   5,925
           Non-cash expense for issuance of common stock                              166                     344
           Gain on sale of equity investment                                         (163)                      -
           Non-cash loss (gain) relating to equity collar arrangement                 882                    (307)
           Amortization of debt issue costs                                           457                       -
           Amortization of bond premium/discount                                      737                    (126)
           Deferred income taxes                                                     (363)                  1,240
      Changes in operating assets and liabilities                                 (10,656)                 (5,991)
                                                                                 --------                --------

                    Net cash (used in) provided by operating activities            (3,832)                  3,889
                                                                                 --------                --------

Cash flows from investing activities:

      Purchase of property and equipment                                             (783)                 (1,649)
      Proceeds from sale of marketable securities                                   7,830                   3,000
      Purchase of marketable securities                                           (22,830)                 (8,950)
      Maturities of marketable securities                                           4,000                       -
                                                                                 --------                --------

                    Net cash used in investing activities                         (11,783)                 (7,599)
                                                                                 --------                --------

Cash flows from financing activities:
      Proceeds from issuance of common stock                                          138                       -
                                                                                 --------                --------
                    Net cash provided by financing activities                         138                       -
                                                                                 --------                --------

Net decrease in cash and cash equivalents                                         (15,477)                 (3,710)

Cash and cash equivalents at beginning of period                                   91,532                  66,752
                                                                                 --------                --------

Cash and cash equivalents at end of period                                        $76,055                 $63,042
                                                                                 ========                ========
</TABLE>


The accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.


                                       4
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (Unaudited)


(1)  Organization and Basis of Presentation


         The unaudited condensed consolidated financial statements have been
prepared from the books and records of Enzon Pharmaceuticals, Inc. (the
"Company") and its subsidiaries in accordance with United States generally
accepted accounting principles for interim financial information pursuant to
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required for complete annual financial statements. In
the opinion of management, all adjustments (consisting only of normal and
recurring adjustments) considered necessary for a fair presentation have been
included. Interim results are not necessarily indicative of the results that may
be expected for the year. The interim consolidated financial statements should
be read in conjunction with the consolidated financial statements and the notes
thereto included in the Company's latest annual report on Form 10-K/A.

(2)  Comprehensive Income

         Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income", requires unrealized gains and losses on the
Company's available-for-sale securities to be included in other comprehensive
income.

      The following table reconciles net (loss) income to comprehensive income
(in thousands):

                                                           Three months ended
                                                             September 30,
                                                         ---------------------
                                                          2004          2003
                                                          ----          ----

         Net (loss) income                               $(544)        $2,804
             Other comprehensive income:
             Unrealized gain on securities
                 that arose during the period              556            (54)

             Unrealized gain (loss) on NPS
                 investment arising during the
                 period                                    844          1,682

             Reclassification adjustment
                 for gain included in net
                 income                                    163              -
                                                        ------         ------

             Total other comprehensive income           $1,563         $1,628
                                                        ------         ------

         Comprehensive income                           $1,019         $4,432
                                                        ======         ======


                                       5
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (Unaudited)


(3)  Earnings Per Common Share

         Basic earnings per share is computed by dividing the net (loss) income
available to common stockholders by the weighted average number of shares of
Common Stock issued and outstanding during the periods. For purposes of
calculating diluted earnings per share for the three months ended September 30,
2004 and 2003, the denominator includes both the weighted average number of
shares of Common Stock outstanding and the number of dilutive Common Stock
equivalents. During the three months ended September 30, 2004 the exercise or
conversion of approximately 353,000 dilutive potential common shares are not
included for purposes of the diluted loss per share calculation. The number of
dilutive Common Stock equivalents includes the effect of non-qualified stock
options calculated using the treasury stock method. The number of shares
issuable upon conversion of the Company's 4.5% Convertible Subordinated Notes
due 2008 (the "Notes") and the effect of the vesting of certain restricted stock
and certain stock options using the treasury stock method have not been included
as the effect of their inclusion would be antidilutive. As of September 30,
2004, the Company had 9,472,000 dilutive potential common shares outstanding
that could potentially dilute future earnings per share calculations.

         The following table reconciles the basic and diluted earnings per share
calculations (in thousands):

                                                         Three months ended
                                                            September 30,
                                                        ---------------------
                                                         2004           2003
                                                        ------         ------

       Net (loss) income available to common
          stockholders                                   $(544)        $2,804
                                                        ======         ======

       Weighted average number of common
          shares issued and outstanding - basic         43,470         43,290
       Effect of dilutive common stock equivalents:
             Exercise of stock options                       -            339
                                                        ------         ------


                                                        43,470         43,629
                                                        ======         ======

(4)  Stock Based Compensation

         As permitted by Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation", the Company accounts for
stock-based compensation arrangements in accordance with the provisions of
Accounting Principals Board ("APB") Opinion No. 25 "Accounting for Stock Issued
to Employees". Compensation expense for stock options issued to employees is
based on the difference on the date of grant between


                                       6
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (Unaudited)


the fair value of the Company's stock and the exercise price of the option. No
stock option-based employee compensation cost is reflected in net income, as all
options granted to employees had exercise prices equal to the market value of
the underlying common stock at the date of grant.

         The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
SFAS No. 123 to stock based compensation (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                                              September 30,
                                                                    --------------------------------
                                                                      2004                     2003
                                                                    -------                   ------
<S>                                                                 <C>                       <C>
         Net (loss) income applicable to common stockholders:
              As reported                                             $(544)                  $2,804

         Add stock-based employee
             compensation expense included in
             reported net income, net of
             tax (1)                                                    100                      176
         Deduct total stock-based employee
             compensation expense determined
             under fair-value-based method for all
             awards, net of tax (1)                                  (3,180)                  (2,221)
                                                                    -------                   ------

             Pro forma net (loss) income                            $(3,624)                    $759
                                                                    =======                   ======

         Earnings per common share - basic:
            As reported                                              $(0.01)                   $0.06
            Pro forma                                                $(0.08)                   $0.02
         Earnings per common share - diluted:
            As reported                                              $(0.01)                   $0.06
            Pro forma                                                $(0.08)                   $0.02
</TABLE>

         (1) Information for 2004 and 2003 has been adjusted for taxes using
estimated tax rates of 40% and 37%, respectively.

(5)  Inventories

         The composition of inventories is as follows (in thousands):


                                       September 30, 2004          June 30, 2004
                                       ------------------          -------------

             Raw materials                   $4,827                    $3,143
             Work in process                  3,651                     3,716
             Finished goods                   5,630                     4,356
                                            -------                   -------
                                            $14,108                   $11,215
                                            =======                   =======

         (2) The Company has recently recalled three lots of ONCASPAR. The
Company has established a sales return reserve of $415,000 in accrued expenses
with respect to the related recall. In addition, the Company wrote off $195,000
of ONCASPAR inventory.


                                       7
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (Unaudited)


(6)   Intangible Assets

      Intangible assets consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                         September 30,                Estimated
                                                              2004                   Useful lives
                                                       -------------------          --------------
          <S>                                          <C>                          <C>
          Product Patented Technology                        $ 64,400                  12 years
          Manufacturing Patent                                 18,300                  12 years
          NDA Approval                                         31,100                  12 years
          Trade name and other product rights                  80,000                  15 years
          Manufacturing Contract                                2,200                   3 years
          Patent                                                2,092                  15 years
          Product Acquisition Costs                            26,194               10-14 years
                                                             --------
                                                              224,286
          Less:  Accumulated amortization                      34,697
                                                             --------
                                                             $189,589
                                                             ========
</TABLE>

         Amortization charged to operations relating to intangible assets
totaled $4.5 million including $1.1 million which is classified in cost of sales
and manufacturing revenue for both the three months ended September 30, 2004 and
2003. Amortization expense for these intangibles and certain other product
acquisition costs for the next five fiscal years is expected to be approximately
$15.5 million per year.

(7)   Goodwill

         On November 22, 2002, the Company acquired the North American rights
and operational assets associated with the development, manufacture, sales and
marketing of ABELCET(R) (Amphotericin B Lipid Complex Injection) (the "North
American ABELCET business") from Elan Corporation, plc ("Elan"), for $360.0
million plus acquisition costs of approximately $9.3 million. The acquisition is
being accounted for by the purchase method of accounting in accordance with SFAS
No. 141 "Business Combinations". The amount assigned to goodwill in connection
with the ABELCET product line acquisition was recorded at $151.0 million. In
accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," goodwill
is not amortized, but rather is reviewed at least annually for impairment. For
income tax purposes, the entire amount of goodwill is deductible and is being
amortized over a 15 year period.

 (8)  Cash Flow Information

         The Company considers all highly liquid securities with original
maturities of three months or less to be cash equivalents. Cash payments for
interest were approximately $9.0 million for the three months ended September
30, 2004 and September 30, 2003. Income tax payments for the three months ended
September 30, 2004 and 2003, respectively were $271,000 and $2.5 million.

(9)  Income Taxes

         The Company recognized a tax provision for the three months ended
September 30, 2004 at an estimated annual effective tax rate of 40%, which is
based on the projected income tax expense and taxable income for the fiscal year
ending June 30, 2005.


                                       8
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              Notes To Condensed Consolidated Financial Statements
                                   (Unaudited)


         At September 30, 2004, the Company recognized approximately $67.5
million as a net deferred tax asset because management concluded that it is more
likely than not that the net deferred tax assets will be realized, including the
net operating losses from operating activities and stock option exercises, based
on future operations. As of September 30, 2004, the Company retained a valuation
allowance of $18.0 million with respect to certain capital loss carryforwards,
deductible temporary differences that would result in a capital loss
carryforward when realized and federal research and development tax credits, as
the ultimate utilization of such losses and credits is not more likely than not.
The Company will continue to reassess the need for such valuation allowance
based on the future operating performance of the Company.

         The tax provision for the three months ended September 30, 2003 was
based on the Company's projected income tax expense and taxable income for the
fiscal year ended June 30, 2004.

(10)  Business Segments

         A single management team that reports to the Chief Executive Officer
comprehensively manages the business operations. The Company does not operate
separate lines of business or separate business entities with respect to any of
its approved products or product candidates. In addition, the Company does not
conduct any operations outside of the United States and Canada. The Company does
not prepare discrete financial statements with respect to separate product
areas. Accordingly, the Company does not have separately reportable segments as
defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information".

(11)  Derivative Instruments

         In August 2003, the Company entered into a Zero Cost Protective Collar
arrangement with a financial institution to reduce the exposure associated with
the 1.5 million shares of common stock of NPS received as part of the merger
termination agreement with NPS Pharmaceuticals, Inc. ("NPS"). By entering into
this equity collar arrangement and taking into consideration the underlying put
and call option strike prices, the terms are structured so that the Company's
investment in NPS stock, when combined with the value of the Collar, should
secure ultimate cash proceeds in the range of 85%-108% of the negotiated fair
value per share of $23.47 (representing a 4.85% discount off of the closing
price of NPS common stock on the day before the collar was executed). The Collar
is considered a derivative hedging instrument under SFAS No. 133 and as such,
the Company periodically measures its fair value and recognizes the derivative
as an asset or a liability. The change in fair value is recorded in other
comprehensive income (See Note 2) or in the Statement of Operations depending on
the portion of the derivative designated and effective as a hedge. As of
September 30, 2004, the market value of NPS' common stock was $21.78 per share.
When the underlying shares become unrestricted and freely tradable, the Company
is required to deliver to the financial institution as posted collateral, a
corresponding number of shares of NPS common stock. During the quarter ended
September 30, 2004, we sold and re-purchased 375,000 shares of
common stock of NPS. The unrealized gain previously included in other
comprehensive income prior to the sale and repurchase with respect to these
shares aggregating $163,000 for the quarter ended September 30, 2004, was
recognized in the Statements of Operations and is included in "Other Income".
The fair value of the Collar represents a receivable from the counterparty of
$847,000 at September 30, 2004. The change from June 30, 2004 in the time value
component of the Collar represents a loss of $882,000 for the quarter ended
September 30, 2004, and was recorded as "Other Income" in the Statement of
Operations. For the quarter ended September 30, 2003 there were no sales under
the equity collar arrangement. The Collar will mature in four separate
three-month intervals from November 2004 through August 2005, at which time the
Company will receive the proceeds from the sale of the securities. The amount
due at each maturity date will be determined based on the market value of NPS'
common stock on such maturity date. The contract requires the Company to
maintain a minimum cash balance of $30.0 million and additional collateral up to
$10.0 million (as defined) under certain circumstances with the financial
institution. The strike prices of the put and call options are subject to
certain adjustments in the event the Company receives a dividend from NPS.


                                       9
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Information contained herein contains forward-looking statements which can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates" or the negative thereof or
other variations thereon or comparable terminology, or by discussions of
strategy. We cannot assure you that the future results covered by the
forward-looking statements will be achieved. The matters set forth in the "Risk
Factors" section of the Company's Annual Report on Form 10-K/A for the fiscal
year ended June 30, 2004, which is incorporated herein by reference, constitute
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results indicated
in such forward-looking statements. Other factors could also cause actual
results to vary materially from the future results indicated in such
forward-looking statements.

LIQUIDITY AND CAPITAL RESOURCES

         Total cash reserves, which include cash, cash equivalents and
marketable securities, were $181.6 million as of September 30, 2004, as compared
to $186.2 million as of June 30, 2004. The decrease is primarily due to the
payment of accrued interest on our convertible subordinated notes. We invest our
excess cash primarily in United States government-backed securities and
investment-grade corporate debt securities.

         During the three months ended September 30, 2004, net cash used in
operating activities was $3.8 million, compared to net cash provided of $3.9
million for the three months ended September 30, 2003, primarily reflecting the
payment of accrued interest of $9.0 million on our convertible subordinated note
and our net loss of $544,000, offset by depreciation and amortization of $5.7
million.

         Cash used in investing activities totaled $11.8 million for the three
months ended September 30, 2004 compared to $7.6 million for the three months
ended September 30, 2003. Cash used in investing activities during the three
months ended September 30, 2004, consisted of $783,000 of capital expenditures
and net purchases of marketable securities of $11.0 million.

         As of September 30, 2004, we had $400.0 million of 4.5% convertible
subordinated notes outstanding. The notes bear interest at an annual rate of
4.5%. Interest is payable on January 1 and July 1 of each year. Accrued interest
on the notes was $4.5 million as of September 30, 2004. The holders may convert
all or a portion of the notes into common stock at any time on or before July 1,
2008. The notes are convertible into our common stock at a conversion price of
$70.98 per share, subject to adjustment in certain events. The notes are
subordinated to all existing and future senior indebtedness. On or after July 7,
2004, we may redeem any or all of the notes at specified redemption prices, plus
accrued and unpaid interest to the day preceding the redemption date. The notes
will mature on July 1, 2008 unless earlier converted, redeemed at our option or
redeemed at the option of the note-holder upon a fundamental change, as
described in the indenture for the notes. Neither we nor any of our subsidiaries
are subject to any financial covenants under the indenture. In addition, neither
we nor any of our subsidiaries are restricted under the indenture from paying
dividends, incurring debt, or issuing or repurchasing our securities.

         In August 2003, we entered into a Zero Cost Protective Collar
arrangement with a financial institution to reduce the exposure associated with
the 1.5 million shares of common stock of NPS we received as part of the merger
termination agreement with NPS. By entering into this equity collar arrangement
and taking into consideration the underlying put and call option strike prices,
the terms are structured so that our investment in NPS stock, when combined with
the value of the Collar, should secure ultimate cash proceeds in the range of
85%-108% of the negotiated fair value per share of $23.47 (representing a 4.85%
discount off of the closing price of NPS common stock on the day before the
Collar was executed). The Collar is considered a derivative hedging instrument
under SFAS No. 133 and as such, we periodically measure its fair value and
recognize the derivative as an asset or a liability. The change in fair value is
recorded as either other comprehensive income (See Note 2) or in the Statement
of Operations depending on the portion of the derivative designated and
effective as a hedge. As of September 30, 2004, the market value of NPS' common
stock was $21.78 per share. When the underlying shares become unrestricted and


                                       10
<PAGE>


freely tradable, we are required to deliver to the financial institution as
posted collateral, a corresponding number of shares of NPS common stock. During
the quarter ended September 30, 2004, we sold and re-purchased 375,000 shares of
common stock of NPS. The unrealized gain previously included in other
comprehensive income prior to the sale and repurchase with respect to these
shares aggregating $163,000 for the quarter ended September 30, 2004, was
recognized in the Statements of Operations and is included in "Other Income".
The fair value of the Collar represents a receivable from the counterparty of
$847,000 at September 30, 2004. The change from June 30, 2004 in the time value
component of the Collar which represents a loss of $882,000 for the quarter
ended September 30, 2004, was recorded as "Other Income" in the Statement of
Operations. For the quarter ended September 30, 2003 there were no sales under
the equity collar arrangement. The Collar will mature in four separate
three-month intervals beginning November 2004 through August 2005, at which time
we will receive the proceeds from the sale of the securities. The amount due at
each maturity date will be determined based on the market value of NPS' common
stock on such maturity date. The contract requires us to maintain a minimum cash
balance of $30.0 million and additional collateral up to $10.0 million (as
defined) under certain circumstances with the financial institution. The strike
prices of the put and call options are subject to certain adjustments in the
event we receive a dividend from NPS.

         Our current sources of liquidity are our cash reserves, interest earned
on such cash reserves; short-term investments, marketable securities, sales of
ADAGEN(R), ONCASPAR(R), DEPOCYT(R) and ABELCET(R), royalties earned, which are
primarily related to sales of PEG-INTRON(R), and contract manufacturing revenue.
Based upon our currently planned research and development activities and related
costs and our current sources of liquidity, we anticipate our current cash
reserves and expected cash flow from operations will be sufficient to meet our
capital, debt service and operational requirements for the foreseeable future.

         While we believe that our cash, cash reserves and investments will be
adequate to satisfy our capital needs for the foreseeable future, we may seek
additional financing, such as through future offerings of equity or debt
securities or agreements with collaborators with respect to the development and
commercialization of products, to fund future operations and potential
acquisitions. We cannot assure you, however, that we will be able to obtain
additional funds on acceptable terms, if at all.

OFF-BALANCE SHEET ARRANGEMENTS

         As part of our ongoing business, we do not participate in transactions
that generate relationships with unconsolidated entities or financial
partnerships, such as entities often referred to as structured finance or
special purpose entities ("SPE"), which would have been established for the
purpose of facilitating off-balance sheet arrangements or other contractually
narrow limited purposes. As of September 30, 2004 we are not involved in any SPE
transactions.

CONTRACTUAL OBLIGATIONS

         Our major outstanding contractual obligations relate to our operating
leases, inventory purchase commitments, our convertible debt, and our license
agreements with collaborative partners. Since June 30, 2004, there has been no
material change with respect to our contractual obligations as disclosed under
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Contractual Obligations in our annual report on Form 10-K/A for the
year ended June 30, 2004.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

         Revenues. Total revenues for the three months ended September 30, 2004
were $40.5 million, as compared to $40.6 million for the three months ended
September 30, 2003. The components of revenues are product sales and contract
manufacturing revenue, royalties we earn on the sale of our products by others
and contract revenues.


                                       11
<PAGE>


         Net product sales increased by 10% to $27.5 million for the three
months ended September 30, 2004, as compared to $25.0 million for the three
months ended September 30, 2003. The increase in sales was due to increased
sales of three of our internally marketed products: ABELCET(R), DEPOCYT(R), and
ONCASPAR(R). Sales of ABELCET in North America increased by 10% to $16.5 million
for the three months ended September 30, 2004, as compared to $15.0 million for
the three months ended September 30, 2003 as a result of our focused marketing
efforts to combat the launch of competitive products from Merck and Co., Inc.
("Merck") and Pfizer Inc. ("Pfizer"). Sales of DEPOCYT increased by 82% to $2.3
million for the three months ended September 30, 2004 as compared to $1.3
million for the three months ended September 30, 2003. Sales of ONCASPAR
increased by 7% to $4.4 million for the three months ended September 30, 2004
from $4.1 million in the corresponding period in the prior year. These increased
product sales were driven by our focused sales and marketing efforts to support
ONCASPAR and DEPOCYT. The increase in ONCASPAR sales was offset in part by
approximately $415,000 in returns related to the recall of three lots in recent
months. Sales of ADAGEN decreased by 7% for the three months ended September 30,
2004 to $4.3 million as compared to $4.6 million for the three months ended
September 30, 2003 due to the timing of shipments.

         Contract manufacturing revenue for the three months ended September 30,
2004 increased to $2.5 million, as compared to $1.6 million for the comparable
period of the prior year. Contract manufacturing revenue is related to the
manufacture and sale of ABELCET for the international market and other contract
manufacturing revenue.

         Royalties for the three months ended September 30, 2004, decreased to
$10.1 million as compared to $13.8 million in the same period in the prior year.
The decrease was primarily due to decreased sales of PEG-INTRON by
Schering-Plough, our marketing partner, due to competitive pressure from the
competing pegylated alpha interferon product, PEGASYS(R), which Hoffmann-La
Roche launched as a combination therapy for hepatitis C in December 2002.

         Due to the competitive pressure from PEGASYS, we believe royalties from
sales of PEG-INTRON may continue to decrease in the near term. This decrease may
be offset by the potential launch of PEG-INTRON in combination with REBETOL in
Japan. In October 2004, Schering-Plough announced the approval of a New Drug
Application in Japan for PEG-INTRON combination therapy. PEG-INTRON is expected
to become available in Japan upon National Health Insurance Reimbursement Price
Listing. Since its launch, PEGASYS has taken market share away from PEG-INTRON
in the U.S. and Europe and the overall market for pegylated alpha interferon in
the treatment of hepatitis C has not increased enough to offset the effect
PEGASYS sales have had on sales of PEG-INTRON. As a result, quarterly sales of
PEG-INTRON and the royalties we receive on those sales have declined in recent
quarters. We cannot assure you that PEGASYS will not continue to gain market
share at the expense of PEG-INTRON, which could result in lower PEG-INTRON sales
and royalties to us.

         Based on our focused marketing efforts for ABELCET we believe that we
have been able to stabilize the pressure from the introduction of new products
in the antifungal market, namely Pfizer's VFEND(R) and Merck's CANCIDAS(R).
Given the highly competitive landscape of the antifungal market, we expect
ABELCET to have modest growth over the next year.

         We expect ADAGEN sales to grow over the next year at similar levels to
those achieved for the year ended June 30, 2004. Assuming we are able to
successfully address certain manufacturing and product stability problems we
have experienced with ONCASPAR, which have resulted in the recent recalls
mentioned above, we expect ONCASPAR sales to continue to grow, but at a pace
slower then the 46% growth rate achieved in fiscal 2004. ONCASPAR sales may
decline, however, if we are unable to correct these manufacturing and product
stability problems. We expect DEPOCYT sales to gain modestly from the current
sales levels. However, we cannot assure you that any particular sales levels of
ABELCET, ADAGEN, ONCASPAR, DEPOCYT or PEG-INTRON will be achieved or maintained.


                                       12
<PAGE>


         Contract revenues for the three months ended September 30, 2004
remained relatively consistent at $299,000 as compared to $268,000 for the three
months ended September 30, 2003.

         During the three months ended September 30, 2004, we had export sales
and royalties on export sales of $10.8 million, of which $7.9 million were in
Europe. Export sales and royalties recognized on export sales for the prior year
quarter were $9.6 million, of which $8.2 million were in Europe.

         Cost of Sales and Manufacturing Revenue. Cost of sales and
manufacturing revenue, as a percentage of net sales and manufacturing revenue,
decreased to 36% for the three months ended September 30, 2004 as compared to
41% for the same period last year. The decrease was principally due to higher
2003 inventory costs as a result of certain purchase accounting adjustments to
the inventory acquired with the North American ABELCET Business which was sold
during the three months ended September 30, 2003.

         Research and Development. Research and development expenses increased
by 52% to $10.0 million for the three months ended September 30, 2004 from $6.6
million for the same period last year. The increase was primarily due to, (i)
increased spending on our late stage development program for ATG Fresenius S of
approximately $670,000; (ii) increased spending of approximately $1.5 million
related to our strategic partnership with Inex on Inex's proprietary oncology
product MARQIBO; (iii) increased preclinical spending of $670,000; and (iv)
increased personnel-related expenses of approximately $560,000.

         Selling, General and Administrative. Selling, general and
administrative expenses for the three months ended September 30, 2004 increased
by 9% to $12.2 million, as compared to $11.2 million in the same period last
year. The increase was primarily due to increased sales and marketing expense of
approximately $1.7 million of which $1.1 million related to expenses attributed
to our oncology sales operations. Approximately 46% of the increase in our
oncology sales and marketing costs are associated with the potential launch of
MARQIBO. This increase was offset in part by a decrease in general and
administrative personnel and other related costs of approximately $650,000.

         Amortization. Amortization expense remained unchanged at $3.4 million
for the three months ended September 30, 2004 and 2003. Amortization expense for
both periods relates to intangible assets acquired in connection with the
ABELCET acquisition during November 2002. Amortization of intangible assets is
provided over their estimated lives ranging from 3-15 years on a straight-line
basis.

         Other income (expense). Other income (expense) for the three months
ended September 30, 2004 was an expense of $4.9 million, as compared to an
expense of $4.2 million for the three months ended September 30, 2003. Other
income (expense) includes: net investment income, interest expense, and other
income.

         Net investment income for the three months ended September 30, 2004
increased to $770,000 from $474,000 for the three months ended September 30,
2003 due to an increase in our interest bearing investments and higher interest
rates.

         Interest expense was $5.0 million for each of the three months ended
September 30, 2004 and 2003. Interest expense is related to $400.0 million in
4.5% convertible subordinated notes, which were outstanding for each of the
periods.

         Other income (expense) decreased to an expense of $670,000 for the
three months ended September 30, 2004, as compared to income of $307,000 for the
three months ended September 30, 2003. The decrease in other income was related
to a derivative instrument we formed as a protective collar arrangement to
reduce our exposure associated with the 1.5 million shares of NPS common stock.


                                       13
<PAGE>


         Income Taxes. During the three months ended September 30, 2004 we
recognized a tax benefit of approximately $363,000 compared to tax expense $1.6
million, for the three months ended September 30, 2003. We recognized a tax
benefit for the three months ended September 30, 2004 at an estimated annual
effective tax rate of 40%, which is based on the projected income tax expense
and taxable income for the fiscal year ending June 30, 2005. The tax provision
for the three months ended September 30, 2003 was based on the Company's
projected income tax expense and taxable income for the fiscal year ended June
30, 2004.

CRITICAL ACCOUNTING POLICIES

          In December 2001, the SEC requested that all registrants discuss their
most "critical accounting policies" in Management's Discussion and Analysis of
Financial Condition and Results of Operations. The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the company's financial condition and results of operations and requires
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.

         Our consolidated financial statements are presented in accordance with
accounting principles that are generally accepted in the United States. All
professional accounting standards effective as of September 30, 2004 have been
taken into consideration in preparing the consolidated financial statements. The
preparation of the consolidated financial statements requires estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues,
expenses and related disclosures. Some of those estimates are subjective and
complex, and, consequently, actual results could differ from those estimates.
The following accounting policies have been highlighted as significant because
changes to certain judgments and assumptions inherent in these policies could
affect our consolidated financial statements.

         Revenues from product sales and manufacturing revenue are recognized at
the time of shipment and a provision is made at that time for estimated future
credits, chargebacks, sales discounts, rebates and returns. These sales
provision accruals, except for rebates which are recorded as a liability, are
presented as a reduction of the accounts receivable balances. We continually
monitor the adequacy of the accruals by comparing the actual payments to the
estimates used in establishing the accruals. We ship product to customers
primarily FOB shipping point and utilize the following criteria to determine
appropriate revenue recognition: pervasive evidence of an arrangement exists,
delivery has occurred, selling price is fixed and determinable and collection is
reasonably assured.

         Royalties under our license agreements with third parties are
recognized when earned through the sale of the product by the licensor net of
any estimated future credits, chargebacks, sales discount rebates and refunds.

         Contract revenues are recorded as the earnings process is completed.
Non-refundable milestone payments that represent the completion of a separate
earnings process are recognized as revenue when earned, upon the occurrence of
contract-specified events and when the milestone has substance. Non-refundable
payments received upon entering into license and other collaborative agreements
where we have continuing involvement are recorded as deferred revenue and
recognized ratably over the estimated service period.

         Under the asset and liability method of Statement of Financial
Accounting Standards ("SFAS") No. 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences
between financial statement carrying amounts of existing assets and liabilities
and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. A
valuation allowance on net deferred tax assets is provided for when it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. We have significant net deferred tax assets, primarily related to net
operating loss and other carryforwards, and continue to analyze what level of
the valuation allowance is needed taking into consideration the expected future
performance of the Company.


                                       14
<PAGE>


         We assess the carrying value of our cost method investments in
accordance with SFAS No. 115 and SEC Staff Accounting Bulletin (SAB) No. 59.
Commencing with the first quarter of fiscal 2005 we will evaluate investments in
accordance with Emerging Issues Task Force ("EITF") 03-01, the Meaning of
Other-Than-Temporary Impairment and its application to Certain Investments. An
impairment write-down is recorded when a decline in the value of an investment
is determined to be other-than-temporary. These determinations involve a
significant degree of judgment and are subject to change as facts and
circumstances change.

         In accordance with the provisions of SFAS No. 142, goodwill and
intangible assets determined to have an indefinite useful life acquired in a
purchase business combination, are not subject to amortization, are tested at
least annually for impairment, and are tested for impairment more frequently if
events and circumstances indicate that the asset might be impaired. We completed
our annual goodwill impairment test on May 31, 2004, which indicated that
goodwill was not impaired. An impairment loss is recognized to the extent that
the carrying amount exceeds the asset's fair value. This determination is made
at the Company level because the Company is in one reporting unit and consists
of two steps. First, we determine the fair value of our reporting unit and
compare it to its carrying amount. Second, if the carrying amount of its
reporting unit exceeds our fair value, an impairment loss is recognized for any
excess of the carrying amount of the reporting unit's goodwill over the implied
fair value of that goodwill. The implied fair value of goodwill is determined by
allocating the fair value of the reporting unit in a manner similar to a
purchase price allocation, in accordance with FASB Statement No. 141, Business
Combinations. The residual fair value after this allocation is the implied fair
value of our goodwill. Recoverability of amortizable intangible assets is
determined by comparing the carrying amount of the asset to the future
undiscounted net cash flow to be generated by the asset. The evaluations involve
amounts that are based on management's best estimate and judgment. Actual
results may differ from these estimates. If recorded values are less than the
fair values, no impairment is indicated. SFAS No. 142 also requires that
intangible assets with estimated useful lives be amortized over their respective
estimated useful lives.

        We apply the intrinsic value-based method of accounting prescribed by
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees, and related interpretations, in accounting for its fixed plan
stock options. As such, compensation expense would be recorded on the date of
grant of options to employees and members of the Board of Directors only if the
current market price of the underlying stock exceeded the exercise price. SFAS
No. 123, Accounting for Stock-Based Compensation, established accounting for
stock-based employee compensation plans. As allowed by SFAS No. 123, we have
elected to continue to apply the intrinsic value-based method of accounting
described above, and have adopted the disclosure requirements of SFAS No. 123,
as amended.

        When the exercise price of employee or director stock options is less
than the fair value of the underlying stock on the grant date, we record
deferred compensation for the difference and amortize this amount to expense
over the vesting period of the options. Options or stock awards issued to
non-employees and consultants are recorded at their fair value as determined in
accordance with SFAS No. 123 and EITF No. 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services and recognized over the related
vesting period.


                                       15
<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The following discussion about our exposure to market risk of financial
instruments contains forward-looking statements. Actual results may differ
materially from those described.

         Our holdings of financial instruments are comprised of debt securities
and time deposits. All such instruments are classified as securities
available-for-sale. We do not invest in portfolio equity securities or
commodities or use financial derivatives for trading purposes. Our debt security
portfolio represents funds held temporarily pending use in our business and
operations. We manage these funds accordingly. We seek reasonable assuredness of
the safety of principal and market liquidity by investing in rated fixed income
securities while at the same time seeking to achieve a favorable rate of return.
Our market risk exposure consists principally of exposure to changes in interest
rates. Our holdings are also exposed to the risks of changes in the credit
quality of issuers. We typically invest the majority of our investments in the
shorter-end of the maturity spectrum, and at September 30, 2004 all of our
holdings were in instruments maturing in four years or less.

         The table below presents the principal amounts and related weighted
average interest rates by year of maturity for our investment portfolio as of
September 30, 2004 (in thousands):

<TABLE>
<CAPTION>
                                     2005           2006         2007        2008        Total      Fair Value
                                     ----           ----         ----        ----        -----      ----------
<S>                                <C>            <C>          <C>          <C>         <C>          <C>
  Fixed Rate                       $44,445        $34,346      $17,308      $10,012     $106,111     $105,516
  Average Interest Rate                              2.13%        2.32%        3.16%        2.06%           -
                                      1.65%
  Variable Rate                          -              -            -            -            -            -
  Average Interest Rate                  -              -            -            -            -            -
                               --------------------------------------------------------------------------------
                                   $44,445        $34,346      $17,308      $10,012     $106,111     $105,516
                               ================================================================================
</TABLE>

         Our 4.5% convertible subordinated notes in the principal amount of
$400.0 million due July 1, 2008 have fixed interest rates. The fair value of the
notes was approximately $378.5 million at September 30, 2004. The fair value of
fixed interest rate convertible notes is affected by changes in interest rates
and by changes in the price of our common stock.

ITEM 4.  CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.

         Subsequent to filing our original Form 10-K on September 13, 2004, and
in connection with preparation and review of our consolidated financial
statements for the quarter ended September 30, 2004, management determined that
an error related to the accounting for a derivative hedging instrument as of and
for the quarter and year ended June 30, 2004 and an error in assessing the
realizeability of deferred tax assets related to the unrealized loss on
available-for-sale securities included in accumulated other comprehensive loss
as of June 30, 2004 had occurred.


                                       16
<PAGE>

         Executive management and the Finance and Audit Committee determined
that there was a material weakness relating to the timely review and monitoring
of certain account analyses, including the derivative hedging instrument and the
assessment of the realizeability of deferred tax assets established through
accumulated other comprehensive loss. In connection with restating our
consolidated financial statements as of June 30, 2004 on Form 10-K/A, our acting
principal executive officer and principal financial officer supervised and
participated with other management in reevaluating the effectiveness of our
disclosure controls and procedures for the year ended June 30, 2004 and based on
the reevaluation, the acting principal executive officer and principal financial
officer concluded that as of the year ended June 30, 2004 there were
deficiencies in our disclosure controls and procedures, which has resulted in
the conclusion that the disclosure controls were ineffective. Further background
on this matter and the changes in internal controls instituted as a result of
the errors are described below.

CHANGES IN INTERNAL CONTROLS

         Prior to the filing and in connection with filing this report on Form
10-Q, we made changes in our internal controls over financial reporting.

         On October 29, 2004, we announced that we would restate our
consolidated financial statements for the year ended June 30, 2004, and the
quarterly information for the quarter ended June 30, 2004 included therein to
correct an error related to the accounting for a derivative hedging instrument
and an error in assessing the realizeability of deferred tax assets related to
the unrealized loss on available-for-sale securities included in accumulated
other comprehensive loss.

         The error related to the derivative resulted in a misallocation between
other income and accumulated other comprehensive loss as of and for the quarter
and year ended June 30, 2004. The error related to the assessment of the
realizeability of the deferred tax assets resulted in a decrease to deferred tax
assets and an increase to accumulated other comprehensive loss as of June 30,
2004. Executive management and the Finance and Audit Committee determined that
there was a material weakness relating to the timely review and monitoring of
certain account analyses, including the derivative hedging instrument and the
assessment of the realizeability of deferred tax assets established through
accumulated other comprehensive loss. Other than the matters discussed above, no
other matters were identified that required significant adjustments to or
modification of disclosure in our consolidated financial statements. We have
instituted more comprehensive review and monitoring procedures to mitigate the
risk of errors in these particular areas from occurring in the future.


                                       17
<PAGE>


PART II OTHER INFORMATION


ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K.



<TABLE>
<CAPTION>
                                                                                              Page Number
                                                                                                   or
       Exhibit                                                                                Incorporation
       Number     Description                                                                 By Reference
       ------     -----------                                                                 -------------
       <S>        <C>                                                                         <C>
         3.1      Certificate of Incorporation, as amended                                         ^^^
         3.2      Amendment to Certificate of Incorporation                                         \\
         3.3      By laws, as amended                                                               ^^
         4.1      Indenture dated as of June 26, 2001, between the Company and
                  Wilmington Trust Company, as trustee, including the form of 4 1/2%
                  Convertible Subordinated Notes due 2008 attached as Exhibit A thereto           ++++
         4.2      Rights Agreement dated May 17, 2002 between the Company and
                  Continental Stock Transfer Trust Company, as rights agent                          ^
         4.3      First Amendment to Rights Agreement, dated as of February 19, 2003                 *
        31.1      Certification of Principal Accounting and Acting Principal Executive               o
                  Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
        32.1      Certification of Principal Accounting and Acting Principal Executive               o
                  Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>


         o Filed herewith.

       ^^^ Previously filed as an exhibit to the Company's Annual Report on Form
           10-K for the year ended June 30, 2002 and incorporated herein by
           reference thereto.

        \\ Previously filed as an exhibit to the Company's Current Report on
           Form 8-K filed on December 10, 2002 and incorporated herein by
           reference thereto.

        ^^ Previously filed as an exhibit to the Company's Current Report on
           Form 8-K filed with the Commission on May 22, 2002 and incorporated
           herein by reference thereto.

    ++++   Previously filed as an exhibit to the Company's Registration
           Statement on Form S-3 (File No. 333-67509) filed with the Commission
           and incorporated herein by reference thereto.

         ^ Previously filed as an exhibit to the Company's Form 8-A (File No.
           000-12957) filed with the Commission on May 22, 2002 and incorporated
           herein by reference thereto.

         * Previously filed as an exhibit to the Company's Form 8-A12 G/A (File
           No. 000-12957) filed with the Commission on February 20, 2003 and
           incorporated herein by reference thereto.


                                       18
<PAGE>


SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                  ENZON PHARMACEUTICALS, INC.
                                         (Registrant)



Date:  November 15, 2004                   By: /s/Kenneth J. Zuerblis
                                              -----------------------
                                           Executive Vice President Finance,
                                           Chief Financial Officer and
                                           (Principal Accounting Officer and
                                           Acting Principal Executive Officer)
                                           Corporate Secretary


                                       19