<PAGE>


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


                                   FORM 10-Q/A
                                (AMENDMENT NO. 2)

(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)

<TABLE>
<CAPTION>


                      DELAWARE                                            22-2372868
          <S>                                                <C>
          (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)

</TABLE>

                                 (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>


                                EXPLANATORY NOTE

         This quarterly report on Form 10-Q/A amends and restates our original
quarterly report on Form 10-Q for the period ended September 30, 2004 as of the
date of filing the original Form 10-Q on November 15, 2004 as amended by the
filing on Form 10-Q/A on November 17, 2004 (collectively, the "Original
Quarterly Report"). We are amending and restating our original quarterly report
on Form 10-Q in its entirety with respect to our accounting for the application
of hedge accounting for a zero cost protective collar arrangement under
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended (SFAS No. 133) and certain
changes identified in the accounting for certain third party agreements. The
protective collar arrangement was entered into during August 2003 to reduce the
exposure associated with changes in the fair value of the 1.5 million shares of
common stock of NPS Pharmaceuticals, Inc. ("NPS") we received in connection with
a June 2003 merger termination agreement.

         This amended quarterly report on Form 10-Q/A for the period ended
September 30, 2004 reflects corrections and restatements of the following
financial statements: (a) condensed consolidated balance sheet as of September
30, 2004; (b) condensed consolidated statement of operations for the period
ended September 30, 2004; and (c) condensed consolidated statement of cash
flows for the period ended September 30, 2004.

         We are also filing under separate documents amended quarterly reports
on Form 10-Q/A for the quarter and fiscal year-to-date periods ended December
31, 2004 and March 31, 2005. For a more detailed description of corrections and
restatements made to the financial statements, see Note 2, "Restatement and
Reclassifications of Condensed Consolidated Financial Statements" to the
accompanying notes to the condensed consolidated financial statements.

         In addition to the changes discussed above, we have also made other
changes, including but not limited to the following to reflect the changes
discussed herein: (a) other income for the fiscal period ended September 30,
2004 under "Item 2, Management's Discussion and Analysis of Financial Condition
and Results of Operations" (b) unrealized loss on securities that arose during
the fiscal period and our total comprehensive loss for the fiscal period ended
September 30, 2004 in Note 3, "Comprehensive Income", to the accompanying notes
to the condensed consolidated financial statements; (c) unrealized gain
recognized in other income and recorded in accumulated other comprehensive
income for the fiscal period ended September 30, 2004 with respect to the sale
and repurchase of shares of NPS in Note 12, "Derivative Instruments", to the
accompanying notes to the condensed consolidated financial statements (d) total
gross deferred tax assets, and income tax provision for the fiscal period ended
September 30, 2004 in Note 10, "Income Taxes", to the accompanying notes to the
condensed consolidated financial statements; (e) net loss and net loss per
common share for the fiscal period ended September 30, 2004 in Note 4, "Earnings
Per Common Share", to the accompanying notes to the condensed consolidated
financial statements; and (f) pro forma net loss and net loss per common share
for the fiscal period ended September 30, 2004 in Note 5, "Stock Based
Compensation", to the accompanying notes to the condensed consolidated financial
statements.

         This amended and restated quarterly report on Form 10-Q/A is as of
the end of our fiscal period September 30, 2004 as required by Form 10-Q or as
of the date of filing the original Form 10-Q. It does not update any of the
statements contained therein for subsequent events or forward looking
statements. This quarterly report on Form 10-Q/A contains forward looking
statements, which were made at the time the original quarterly report on Form
10-Q was filed on November 15, 2004 and must be considered in light of any
subsequent events and subsequent statements including forward looking statements
in any written statement subsequent to the filing of the original quarterly
report on Form 10-Q, including statements made in filings on current reports on
Form 8-K.



                                       2
<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
                                                                      ------------------    -------------
                                                                          (Restated)
                                                                           (Note 2)
<S>                                                                        <C>                <C>
ASSETS
Current assets:
  Cash and cash equivalents                                                $  76,055          $  91,532
  Short-term investments                                                      44,243             27,119
  Investment in equity securities                                             32,670             23,625
  Accounts receivable, net                                                    26,500             25,977
  Inventories                                                                 14,108             11,215
  Deferred tax and other current assets                                       15,279             11,994
                                                                           ---------          ---------
       Total current assets                                                  208,855            191,462
                                                                           ---------          ---------
Other assets:
  Property and equipment, net                                                 34,468             34,859
  Marketable securities                                                       61,273             67,582
  Investments in equity securities                                             6,406             14,281
  Amortizable intangible assets, net                                         189,588            194,067
  Goodwill                                                                   150,985            150,985
  Deferred tax and other assets                                               67,648             69,174
                                                                           ---------          ---------
                                                                             510,368            530,948
                                                                           ---------          ---------
Total assets                                                               $ 719,223          $ 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:
  Preferred stock-$.01 par value, authorized 3,000,000 shares;
   no shares issued and outstanding at September 30, 2004 and at
   June 30, 2004                                                                  --                 --
  Common stock-$.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                                        (5,329)            (7,330)
  Deferred compensation                                                       (3,346)            (3,571)
  Accumulated deficit                                                        (23,871)           (22,932)
                                                                           ---------          ---------
Total stockholders' equity                                                   290,457            289,091
                                                                           ---------          ---------
Total liabilities and stockholders' equity                                 $ 719,223          $ 722,410
                                                                           =========          =========
</TABLE>

(*) Condensed from audited consolidated financial statements.

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 OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                         THREE MONTHS ENDED
                                                                            SEPTEMBER 30,
                                                                     ---------------------------
                                                                        2004             2003
                                                                     ----------       ----------
                                                                     (Restated)
                                                                      (Note 2)
<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                                             9,974            6,551
    Selling, general and administrative                                 12,199           11,209
    Amortization of acquired intangible assets                           3,358            3,358
                                                                      --------         --------
             Total costs and expenses                                   36,432           32,030
                                                                      --------         --------
Operating income                                                         4,022            8,614
                                                                      --------         --------
Other income (expense):
    Investment income, net                                                 770              474
    Interest expense                                                    (4,957)          (4,957)
    Other, net                                                          (1,411)          (2,513)
                                                                      --------         --------
                                                                        (5,598)          (6,996)
                                                                      --------         --------

(Loss) income before tax provision                                      (1,576)           1,618
Income tax (benefit) provision                                            (637)             482
                                                                      --------         --------
Net (loss) income                                                     $   (939)        $  1,136
                                                                      ========         ========

Basic (loss) earnings per common share                                $  (0.02)        $   0.03
                                                                      ========         ========
Diluted (loss) earnings per common share                              $  (0.02)        $   0.03
                                                                      ========         ========
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.



                                       4
<PAGE>


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                         THREE MONTHS ENDED
                                                                                            SEPTEMBER 30,
                                                                                      -------------------------
                                                                                         2004           2003
                                                                                      ----------     ----------
                                                                                      (Restated)
                                                                                       (Note 2)
<S>                                                                                    <C>           <C>
Cash flows from operating activities:
      Net (loss) income                                                                   ($939)     $  1,136
      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 income relating to equity collar arrangement                          1,321         2,513
           Amortization of debt issue costs                                                 457            --
           Amortization of bond premium/discount                                            737          (126)
           Deferred income taxes                                                           (335)           88
      Changes in operating assets and liabilities                                       (10,728)       (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
                                                                                       ========      ========

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

</TABLE>



                                       5
<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. The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. In the opinion of management, all adjustments
(consisting only of normal and recurring adjustments) considered necessary for a
fair presentation have been included. See Note 2 for discussion of restatement.
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 condensed consolidated financial statements and the
notes thereto included in the Company's latest annual report on Form 10-K/A
(Amendment No. 2).

(2) RESTATEMENT AND RECLASSIFICATIONS OF CONDENSED CONSOLIDATED FINANCIAL
    STATEMENTS

         In August and September 2005, the Company concluded that its previously
issued financial statements and other financial information for the quarter and
fiscal year-to-date periods ended September 30, 2004, December 31, 2004 and
March 31, 2005 required restatement with respect to its accounting for a
derivative hedging instrument and certain third party agreements. The Company
has restated the comparable fiscal periods in a previously filed amendment to
the respective Form 10-Q or 10-K due to computational changes in the valuation
of and/or the application of hedge accounting for a zero cost protective collar
arrangement under Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Securities," as amended. The
comparable fiscal periods included in this quarterly report on Form 10-Q/A,
reflect the restated amounts.

         The restatement is primarily due to the accounting for the application
of hedge accounting for a zero cost protective collar arrangement under
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities", as amended (SFAS No. 133).

         As described in Note 12, "Derivative Instruments", the Company entered
into a zero cost protective ("Collar") arrangement in August 2003 to reduce its
exposure to changes in fair value associated with 1.5 million common shares of
NPS Pharmaceutical, Inc. ("NPS"), which the Company received in connection with
the termination of a proposed merger. Pursuant to the terms of the Merger
Termination Agreement, the Company was restricted as to the number of shares it
could sell on a quarterly basis. Under the collar arrangement, the Company was
required to deliver unrestricted freely trading shares of NPS common stock upon
the maturity date of the Collar, as well as maintain 1.5 million of shares of
NPS on account with the financial institution as collateral during the term of
the Collar agreement. Therefore, during the period of November 2003 to October
2004, the Company sold and simultaneously repurchased up to 1.5 million shares
of NPS common stock quarterly in order to remove the restriction while
maintaining the collateralized shares. In August 2005, the Company determined
that the initial sale of NPS stock in November 2003 resulted in the termination
of the existing hedging relationship and that the Company was unable to meet
certain fair value hedging criteria pursuant to SFAS No. 133 at that time to
re-designate the hedging relationship. Accordingly, the Company terminated its
hedge accounting treatment in November 2003, which resulted in the change in
unrealized gains and losses on the NPS common stock underlying the derivative
hedging instrument previously included in other income (expense) being recorded
in accumulated other comprehensive income (loss) on the condensed consolidated
balance sheet. The accounting change corrects a misallocation between other
income (expense) and accumulated other comprehensive income (loss) for the
quarters and fiscal year-to-date periods ended September 30, 2004, December 31,
2004, and March 31, 2005.

         The Company has also made certain reclassifications between non-current
and current assets and liabilities of a portion of the balance associated with
the Collar and NPS common stock to reflect the timing of the maturity of the
Collar instrument and related sale of NPS common stock.

         Additionally, the Company has determined that certain third party
agreements were not accounted for correctly during the fiscal quarters ended
September 30, 2004, December 31, 2004 and March 31, 2005. The resulting changes
are a reduction of research and development expense during the fiscal quarters
ended September 30, 2004, December 31, 2004 and March 31, 2005 and an increase
to revenues during fiscal quarter ended March 31, 2005.



                                       6
<PAGE>


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


         The following tables show the impact of the restatement on the relevant
captions from the Company's condensed consolidated financial statements as of
and for the periods indicated. These tables contain only the changed balances
and do not represent the complete condensed consolidated balance sheet as of
such period or condensed consolidated statements of operations for the periods
then ended (in thousands, except per share amounts).

                 CHANGES TO CONDENSED CONSOLIDATED BALANCE SHEET

                               SEPTEMBER 30, 2004

<TABLE>
<CAPTION>

                                                             Previously
                                                              Reported       Adjustments          Restated
                                                             -----------     -----------          --------
<S>                                                            <C>                    <C>           <C>
Investment in equity securities                                     $-           $32,670           $32,670
Deferred tax and other current assets                          $15,207                72            15,279
Total current assets                                           176,113            32,742           208,855
Investments in equity securities                                39,076           (32,670)            6,406
Non-current deferred tax and other assets                       67,677               (29)           67,648
Total non-current assets                                       543,067           (32,699)          510,368
Total assets                                                   719,180                43           719,223
Accumulated other comprehensive loss                            (3,472)           (1,857)           (5,329)
Accumulated deficit                                            (25,771)            1,900           (23,871)
Total stockholders' equity                                     290,414                43           290,457
Total liabilities and stockholders' equity                     719,180                43           719,223

</TABLE>

           CHANGES TO CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                                            Three Months ended
                                                                            September 30, 2004
                                                           -----------------------------------------------
                                                             Previously
                                                              Reported        Adjustments         Restated
                                                             -----------      -----------         --------
<S>                                                            <C>              <C>              <C>
Research and development                                       $10,046          $  (72)          $ 9,974
Total costs and expenses                                        36,504             (72)           36,432
Operating income                                                 3,950              72             4,022
Other, net                                                        (670)           (741)           (1,411)
Total other income (expense)                                    (4,857)           (741)           (5,598)
Income (loss) before tax provision (benefit)                      (907)           (669)           (1,576)
Income tax provision (benefit)                                    (363)           (274)             (637)
Net (loss) income                                                 (544)           (395)             (939)
Basic (loss) earnings per common share                           (0.01)          (0.01)            (0.02)
Diluted (loss) earnings per common share                         (0.01)          (0.01)            (0.02)

</TABLE>

         The restatement did not result in any changes to cash and cash
equivalents as of September 30, 2004 or any changes to the net cash flows from
operations, investing or financing activities in the condensed consolidated
statement of cash flows for the period ended September 30, 2004 although it did
result in certain reclassifications among certain components of net cash flow
from operations.

         As a result of the adjustments discussed above, modifications were
required to previously filed footnotes as follows: Note 3, "Comprehensive
Income", Note 4, "Earnings Per Common Share", Note 5, "Stock-Based
Compensation", Note 10, "Income Taxes" and Note 12, "Derivative Instruments".



                                       7
<PAGE>


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(3) 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):

<TABLE>
<CAPTION>

                                                                  THREE MONTHS ENDED
                                                                     SEPTEMBER 30,
                                                         --------------------------------------
                                                               2004                 2003
                                                         -----------------     ----------------
                                                            (Restated)
         <S>                                              <C>                  <C>
         Net (loss) income                                     ($939)                $1,136
             Other comprehensive income:
             Unrealized gain on securities
                 arising during the period,
                 net of tax                                    1,697                  1,628

             Reclassification adjustment
                 for gain included in net
                 income, net of tax                              304                      --
                                                         -----------------     ----------------

             Total other comprehensive income                 $2,001                 $1,628
                                                         -----------------     ----------------

         Comprehensive income                                 $1,062                 $2,764
                                                         =================     ================

</TABLE>

(4) EARNINGS PER COMMON SHARE

         Basic earnings per share is computed by dividing the net (loss) income
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.



                                       8
<PAGE>


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

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

<TABLE>
<CAPTION>

                                                                                 THREE MONTHS ENDED
                                                                                   SEPTEMBER 30,
                                                                        -------------------------------------
                                                                              2004                  2003
                                                                        -----------------    ----------------
                                                                            (Restated)
       <S>                                                              <C>                  <C>
       Net (loss) income                                                      ($939)                $1,136

       Weighted average number of common
          shares outstanding - basic                                         43,470                 43,290
       Effect of dilutive common stock equivalents:
             Exercise of stock options                                            -                    339
                                                                        -----------------    ----------------
                                                                             43,470                 43,629
                                                                        =================    ================

</TABLE>

(5) 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" and related interpretations. Compensation expense for stock
options issued to employees is based on the difference on the date of grant
between the fair value of the Company's stock and the exercise price of the
option. Stock-based compensation reflected in net (loss) income is attributed to
restricted stock. No stock option-based employee compensation cost is reflected
in net (loss) 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 (loss) income and
earnings (loss) 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
                                                                 ------------------       -------------
                                                                      (Restated)
         <S>                                                     <C>                      <C>
         Net (loss) income                                               ($939)                $1,136

         Add stock-based employee
             compensation expense included in
             reported net (loss) 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                                        ($4,019)                 ($909)
                                                                 ==================       =============

         Earnings (loss) per common share - basic:
            As reported                                                 ($0.02)                  $0.03
            Pro forma                                                   ($0.09)                 ($0.02)
         Earnings (loss) per common share - diluted:
            As reported                                                 ($0.02)                  $0.03
            Pro forma                                                   ($0.09)                 ($0.02)

</TABLE>

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


                                       9
<PAGE>


                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(6) 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
                                       ==================       =============

         The Company has recently recalled three lots of ONCASPAR. The Company
has established a sales return reserve of $415,000 in accrued expenses at
September 30, 2004 with respect to the related recall. In addition, the Company
wrote off $195,000 of ONCASPAR inventory for the three months ended September
30, 2004.

(7) 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            1-5 years
          Product Acquisition Costs                               26,194          10-14 years
                                                           -------------
                                                                 224,286
          Less:  Accumulated amortization                         34,698
                                                           -------------
                                                                $189,588
                                                           =============

</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.

8) 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.

(9) 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.



                                       10
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


(10) 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.

         At September 30, 2004, the Company recognized approximately $68.5
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. In addition, the Company recorded $1.0 million
tax benefit relating to the derivative instrument as described in note 12.

(11) 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".

(12) DERIVATIVE INSTRUMENTS

         On February 19, 2003, the Company entered into an agreement and plan of
merger with NPS Pharmaceuticals, Inc. ("NPS"). On June 4, 2003, the merger
agreement was terminated. In accordance with the mutual termination agreement
between the two companies, the Company received 1.5 million shares of NPS common
stock. The termination agreement imposes certain restrictions with respect to
the transferability of the underlying shares including limiting the maximum
number of shares that can be transferred each month after the registration
statement relating to the shares is declared effective to 125,000 shares per
month. Considering such restrictions, 1.1 million shares were valued at $26.7
million, which was the fair value of NPS common stock on June 4, 2003 and in
accordance with SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115") and the balance of 375,000 shares were
considered as restricted stock as defined under the scope exception provisions
of SFAS No. 115. The restricted stock was valued at $7.8 million by applying a
12% discount on the related fair value based on a valuation performed by an
independent third-party consulting firm. Total consideration received aggregated
$34.6 million. The Company also recorded $7.7 million in costs incurred related
to the proposed merger with NPS (primarily investment banking, legal and
accounting fees). The net gain of approximately $26.9 million was recorded as
other income in the condensed consolidated statement of operations for the year
ended June 30, 2003.

         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. 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 common 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 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, as well as the value of the Collar. 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. At the time of inception, the Collar was
designated a derivative hedging instrument in accordance with SFAS 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 income in the condensed consolidated statements of operations. At
September 30, 2004, the Company had a receivable from the financial institution
of $847,000. During the three months ended September 30, 2003, the Company
recorded an unrealized loss of $6.3 million as a component of other income
(expense) representing the change in fair value of the Collar instrument. During
the three months ended September 30, 2004 and 2003, the Company recorded an
unrealized loss of $882,000 and $6.3 million, respectively, as a component of
other income (expense) representing the change in fair value of the Collar.

                                       11
<PAGE>

         The Company began selling and buying back the underlying NPS common
stock in November 2003, which resulted in the termination of the hedging
relationship. During the period from August 2003 through the date the hedging
relationship was terminated, the NPS common stock had appreciated $5.7 million
in value, of which $2.3 million was recorded in other income in the condensed
consolidated statements of operations and $2.1 million, net of tax, was recorded
as a component of accumulated other comprehensive income in the condensed
consolidated statement of stockholders' equity. The $2.1 million gain, net of
tax, recognized in accumulated other comprehensive income at the point the
hedging relationship was terminated was recognized in operations proportionate
to the sale of the underlying NPS common stock.

         During the three months ended September 30, 2004, the Company sold and
repurchased 375,000 shares of NPS common stock to remove the
transferability restrictions on such shares, resulting in net realized losses
of $578,000, which is included in other income (expense) in the condensed
consolidated statement of operations.

         As of September 30, 2004 and June 30, 2004, the Company held 1.5
million shares of NPS common stock are valued at $32.7 million and $31.5
million, respectively, and are included in investments in equity securities on
the accompanying condensed consolidated balance sheets. During the period from
August 2003 to September 30, 2003, the NPS common stock had appreciated $7.2
million in value, of which $3.8 million was recorded in other income in the
Statement of Operations and $2.1 million was recorded as a component of other
comprehensive income, net of tax, in the statement of consolidated stockholders'
equity.





                                       12
<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 (Amendment No. 2)
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
notes and our net loss of $939,000, offset by depreciation and amortization of
$5.7 million and other non-cash adjustments of $455,000.

         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
a 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 Pharmaceuticals, Inc. ("NPS") we
received as part of a merger termination agreement with NPS. The Collar will
mature in four separate four-month intervals from November 2004 through August
2005, at which time we will receive the proceeds from the sale of the securities
which we estimate with consideration to the Collar to be $29.9 million to $38.0
million. The amount due at each maturity date will be determined based on the
market value of NPS common stock on such maturity date, as well as the value of
the Collar. 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.


                                       13
<PAGE>

         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, convertible debt, and 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.

         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.


                                       14
<PAGE>

         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.

         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.


                                       15
<PAGE>

         Other income (expense). Other income (expense) for the three months
ended September 30, 2004 was an expense of $5.6 million, as compared to an
expense of $7.0 million for the three months ended September 30, 2003. Other
income (expense) includes: net investment income, interest expense, and other,
net.

         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, net is primarily related to the 1.5 million shares of NPS common
stock we received under a June 2003 merger termination agreement and a financial
instrument we formed to reduce our exposure to the change in fair value
associated with such shares, specifically a zero cost protective collar
arrangement (the "Collar.") For the three months ended September 30, 2004,
other, net was an expense of $1.4 million, as compared to an expense of $2.5
million for the three months ended September 30, 2003. During the three months
ended September 30, 2004, we recognized (i) a realized loss of $578,000 related
to the sale and repurchase of 375,000 shares of NPS common stock and (ii) an
unrealized loss of $882,000 related to change in the fair value of the Collar.
For a more detailed description of our Merger Termination Agreement with NPS and
the Collar see Note 12 to the Notes to the accompanying condensed consolidated
financial statements - Derivative Instruments.

         During the three months ended September 30, 2003, we recognized (i) an
unrealized loss of $6.3 million related to change in the fair value of the
Collar, and (ii) $3.8 million unrealized gain on the NPS common stock.

         Income Taxes. During the three months ended September 30, 2004 we
recognized a tax benefit of approximately $637,000 compared to tax expense of
$482,000, 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.


                                       16
<PAGE>

         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.

         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 our 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.


                                       17
<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         1.65%          2.13%         2.32%       3.16%         2.06%            -
   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.

         As discussed in Liquidity and Capital Resources, in August 2003, we
entered into a zero cost protective collar arrangement (the "Collar") with a
financial institution to reduce the exposure to the changes in the fair value
associated with the 1.5 million shares of common stock of NPS we received as
part of the merger termination agreement with NPS. The Collar is considered a
derivative instrument and as such, we carry the Collar at fair value as an asset
or liability on the consolidated balance sheet and changes in fair value are
recorded as a charge or credit to operations in the period of change. The value
of the Collar instrument is subject to market conditions that cause variability
associated with its intrinsic value and time values. The fair value of the
Collar at September 30, 2004 was a receivable of $847,000.

ITEM 4. CONTROLS AND PROCEDURES

         The following has been amended to reflect the restatement of the
Company's condensed consolidated financial statements as discussed in (i) the
Explanatory Note to this quarterly report on Form 10-Q/A and (ii) Note 2 to the
condensed consolidated financial statements for the quarter ended September 30,
2004, which appear under Item 1 of this quarterly report on Form 10-Q/A.

         In connection with the preparation of our previously filed quarterly
report on Form 10-Q for the quarterly period ended September 30, 2004, our
acting principal executive officer and principal accounting officer supervised
and participated with other management in the evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures (as defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended ("the
Exchange Act")). Based on that evaluation, our management including our acting
principal executive officer and principal accounting officer concluded that, as
of September 30, 2004, there were deficiencies in our internal control and
procedures and such controls were ineffective. Further background on this
conclusion and the changes in internal controls instituted are described in
further detail below.

         On October 29, 2004, we filed a current report on Form 8-K with the SEC
reporting that we would amend and restate our annual report on Form 10-K for the
year ended June 30, 2004 to correct our accounting for a derivative hedging
instrument and our assessment of the realizeability of our deferred tax assets
related to the unrealized loss on our available-for-sale securities included in
our other comprehensive loss. In connection with the restatement process, we
also concluded that a material weakness in our internal control over financial
reporting existed as of September 30, 2004 relating to the timely review and
monitoring of certain account analyses, including the derivative hedging
instrument and the assessment of the realizeability of our deferred tax assets.

         During the quarter ended September 30, 2004, we implemented more
comprehensive review and monitoring procedures to address a material weakness in
our internal control over financial reporting that existed as of September 30,
2004. The material weakness related to the timely review and monitoring of
certain account analyses, including a derivative hedging instrument and the
assessment of the realizeability of our deferred tax assets and led to the
restatement of our annual report on Form 10-K for the year ended June 30, 2004
as reported on October 29, 2004 in a Current Report on Form 8-K filed with the
SEC.

                                       18
<PAGE>

         Subsequent to the period covered by this report, in connection with the
audit of our consolidated financial statements for the year ended June 30, 2005,
we reevaluated our use of hedge accounting for the same derivative hedging
instrument under Statement of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities, as amended (SFAS No. 133). In
conjunction with our reevaluation, we determined that we would need to amend and
restate certain previously issued financial statements, including those
pertaining to the quarterly period ended September 30, 2004, with respect to our
accounting for the derivative hedging instrument. Accordingly, on August 16,
2005 and September 1, 2005 we filed a current report on Form 8-K with the SEC
detailing our determination.

         There have been no changes in our internal control over financial
reporting during the quarter ended September 30, 2004 that have materially
affected or are reasonably likely to materially affect our internal control over
financial reporting. However, since September 30, 2004, we have implemented more
comprehensive review and monitoring procedures as a means of mitigating the risk
of future inaccuracies in those particular areas related to the restatement of
our annual report on Form 10-K/A (Amendment No. 1) for the year ended June 30,
2004 reported on October 29, 2004. In addition, we are also designing a
remediation plan to address a material weakness in our internal controls and
procedures pertaining to our application of SFAS No. 133, the accounting for
derivative instruments and the related restatements of certain previously issued
financial statements that were reported on August 16, 2005 and September 1,
2005. Our remediation plan will include improving training, education, and
accounting reviews to ensure that all relevant financial personnel have the
appropriate level of technical expertise to effectively interpret and apply
accounting standards.



                                       19
<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 Executive Officer pursuant to Section
                     302 of the Sarbanes-Oxley Act of 2002                                       o
        31.2         Certification of Principal Accounting Officer pursuant to Section
                     302 of the Sarbanes-Oxley Act.                                              o
        32.1         Certification of Principal Executive Officer pursuant to Section
                     906 of the Sarbanes-Oxley Act of 2002                                       o
        32.2         Certification of Principal Accounting Officer pursuant to Section
                     906 of the Sarbanes-Oxley Act                                               o

         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.

</TABLE>


                                       20
<PAGE>



SIGNATURES

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

                                      ENZON PHARMACEUTICALS, INC.
                                             (Registrant)

Date: September 28, 2005              By: /s/ Jeffrey H. Buchalter
                                          --------------------------------
                                          Jeffrey H. Buchalter
                                          Chairman, President and
                                          Chief Executive Officer
                                          (Principal Executive Officer)



Date: September 28, 2005              By: /s/ Craig A. Tooman
                                          --------------------------------
                                          Craig A. Tooman
                                          Executive Vice President Finance and
                                          Chief Financial Officer
                                          (Principal Financial Officer)




                                       21