##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 or
 o
    
    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.
  Delaware
(State of incorporation)
    
    22-2372868
(I.R.S. Employer Identification No.)685 Route 202/206, Bridgewater, New Jersey
(Address of principal executive offices)
    
    08807
(Zip Code)
 (908) 541-8600
(Registrants telephone number, including area code)Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 
 þ o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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TABLE OF CONTENTS  PART I FINANCIAL INFORMATIONItem 1. Financial StatementsItem 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations.Item 3. | Quantitative and Qualitative Disclosures About Market RiskItem 4. | Controls and ProceduresPART II OTHER INFORMATIONItem 4. Submission of Matters to a Vote of Security HoldersItem 6. ExhibitsEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATION    Table of Contents  
 PART I FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
 June 30, 2008
    
    
    December 31, 2007*ASSETSCurrent assets:Cash and cash equivalents
    
    $
    65,426
    
    
    $
    40,053Short-term investments
    
    
    53,866
    
    
    
    123,907Restricted investments and cash
    
    
    14,561
    
    
    
    73,592Accounts receivable, net of allowance for doubtful accounts of
$735 at June 30, 2008 and $280 at December 31, 2007
    
    
    17,039
    
    
    
    14,927Inventories
    
    
    20,044
    
    
    
    22,297Other current assets
    
    
    6,272
    
    
    
    6,401Total current assets
    
    
    177,208
    
    
    
    281,177Property and equipment, net of accumulated depreciation of
$41,419 at June 30, 2008 and $37,031 at December 31, 2007
    
    
    45,012
    
    
    
    45,312Marketable securities
    
    
    72,045
    
    
    
    20,653Amortizable intangible assets, net
    
    
    66,077
    
    
    
    68,141Other assets
    
    
    4,523
    
    
    
    5,074Total assets
    
    $
    364,865
    
    
    $
    420,357LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    7,298
    
    
    $
    9,441Notes payable
    
    
    12,521
    
    
    
    72,391Accrued expenses
    
    
    25,413
    
    
    
    23,650Total current liabilities
    
    
    45,232
    
    
    
    105,482Notes payable
    
    
    275,000
    
    
    
    275,000Other liabilities
    
    
    3,807
    
    
    
    3,302Total liabilities
    
    
    324,039
    
    
    
    383,784Commitments and contingenciesStockholders equity:Preferred stock  $.01 par value, authorized 3,000,000 shares;
no shares issued and outstanding at June 30, 2008 and
December 31, 2007
    
    
    
    
    
    
    Common stock  $.01 par value, authorized 170,000,000 shares;
issued and outstanding 44,840,399 shares and 44,199,831
shares
at June 30, 2008 and December 31, 2007, respectively
    
    
    448
    
    
    
    442Additional paid-in capital
    
    
    340,481
    
    
    
    335,318Accumulated other comprehensive (loss) income
    
    
    (361
    )
    
    
    326Accumulated deficit
    
    
    (299,742
    )
    
    
    (299,513
    )Total stockholders equity
    
    
    40,826
    
    
    
    36,573Total liabilities and stockholders equity
    
    $
    364,865
    
    
    $
    420,357
 
 *
    
    Condensed from audited financial statements.
  2




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Product sales, net
    
    $
    29,206
    
    
    $
    25,019
    
    
    $
    56,635
    
    
    $
    47,668Royalties
    
    
    15,035
    
    
    
    18,290
    
    
    
    29,735
    
    
    
    34,634Contract manufacturing
    
    
    6,723
    
    
    
    5,903
    
    
    
    13,367
    
    
    
    8,398Total revenues
    
    
    50,964
    
    
    
    49,212
    
    
    
    99,737
    
    
    
    90,700Costs and expenses:Cost of product sales and contract manufacturing
    
    
    17,406
    
    
    
    15,269
    
    
    
    33,545
    
    
    
    26,733Research and development
    
    
    14,056
    
    
    
    16,921
    
    
    
    26,835
    
    
    
    29,993Selling, general and administrative
    
    
    18,070
    
    
    
    15,982
    
    
    
    33,868
    
    
    
    33,273Amortization of acquired intangible assets
    
    
    166
    
    
    
    185
    
    
    
    333
    
    
    
    370Restructuring charge
    
    
    889
    
    
    
    755
    
    
    
    2,143
    
    
    
    1,324Total costs and expenses
    
    
    50,587
    
    
    
    49,112
    
    
    
    96,724
    
    
    
    91,693Operating income (loss)
    
    
    377
    
    
    
    100
    
    
    
    3,013
    
    
    
    (993
    )Other income (expense):Investment income, net
    
    
    1,120
    
    
    
    2,366
    
    
    
    3,299
    
    
    
    4,943Interest expense
    
    
    (3,181
    )
    
    
    (4,491
    )
    
    
    (6,566
    )
    
    
    (9,044
    )Other, net
    
    
    24
    
    
    
    327
    
    
    
    320
    
    
    
    417(2,037
    )
    
    
    (1,798
    )
    
    
    (2,947
    )
    
    
    (3,684
    )(Loss) income before income tax provision
    
    
    (1,660
    )
    
    
    (1,698
    )
    
    
    66
    
    
    
    (4,677
    )Income tax provision
    
    
    85
    
    
    
    261
    
    
    
    295
    
    
    
    68Net loss
    
    $
    (1,745
    )
    
    $
    (1,959
    )
    
    $
    (229
    )
    
    $
    (4,745
    )Loss per common share  basic
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    (0.11
    )Loss per common share  diluted
    
    $
    (0.04
    )
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    (0.11
    )Weighted average shares  basic
    
    
    44,352
    
    
    
    43,884
    
    
    
    44,259
    
    
    
    43,873Weighted average shares  diluted
    
    
    44,352
    
    
    
    43,884
    
    
    
    44,259
    
    
    
    43,873
  3




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six months endedJune 30,2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (229
    )
    
    $
    (4,745
    )Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:Depreciation and amortization
    
    
    10,833
    
    
    
    8,106Write-down
of manufacturing assets
    
    
    619
    
    
    
    Share-based compensation
    
    
    4,338
    
    
    
    4,477Loss on impairment of securities available for sale
    
    
    645
    
    
    
    Gain on redemption of notes payable
    
    
    (371
    )
    
    
    (198
    )Write off and amortization of debt issue costs
    
    
    715
    
    
    
    904Amortization
of debt securities premium/discount
    
    
    (2,510
    )
    
    
    132Changes in operating assets and liabilities
    
    
    (4,802
    )
    
    
    (18,515
    )Net cash provided by (used in) operating
activities
    
    
    9,238
    
    
    
    (9,839
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (4,088
    )
    
    
    (11,564
    )Purchase of product rights
    
    
    
    
    
    
    (17,500
    )Proceeds from sale of marketable securities
    
    
    50,240
    
    
    
    110,850Purchase of marketable securities
    
    
    (94,482
    )
    
    
    (164,488
    )Maturities of marketable securities
    
    
    123,100
    
    
    
    103,492Net cash provided by investing activities
    
    
    74,770
    
    
    
    20,790Cash flows from financing activities:Proceeds from exercise of common stock options
    
    
    983
    
    
    
    339Proceeds from employee stock purchase plan
    
    
    581
    
    
    
    226Issuance of
shares pursuant to employee stock purchase plan
    
    
    (700
    )
    
    
    Redemption of notes payable
    
    
    (59,499
    )
    
    
    (15,723
    )Net cash used in financing activities
    
    
    (58,635
    )
    
    
    (15,158
    )Net increase (decrease) in cash and cash equivalents
    
    
    25,373
    
    
    
    (4,207
    )Cash and cash equivalents at beginning of period
    
    
    40,053
    
    
    
    28,431Cash and cash equivalents at end of period
    
    $
    65,426
    
    
    $
    24,224
  4




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (1) Organization and Basis of Presentation
   (2) Spin-Off of Research and Development Operations
   (3) New Accounting Standards
  5




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
   (4) Investments and Marketable Securities
      Quoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    UnobservableIdentical Assets
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    TotalU.S. corporate debt
    
    $
    117,998
    
    
    $
    
    
    
    $
    117,998Auction rate securities
    
    
    4,650
    
    
    
    855
    
    
    
    5,505Other
    
    
    2,408
    
    
    
    
    
    
    
    2,408$
    125,056
    
    
    $
    855
    
    
    $
    125,911
 6




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
   Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Holding Gains
    
    
    Holding Losses
    
    
    Value*U.S. corporate debt
    
    $
    118,852
    
    
    $
    103
    
    
    $
    (957
    )
    
    $
    117,998Auction rate securities
    
    
    5,505
    
    
    
    
    
    
    
    
    
    
    
    5,505Other
    
    
    2,143
    
    
    
    342
    
    
    
    (77
    )
    
    
    2,408$
    126,500
    
    
    $
    445
    
    
    $
    (1,034
    )
    
    $
    125,911
 
 *
    
    Includes short-term investments of $53,866 and marketable securities of $72,045 at
June 30, 2008.  Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Holding Gains
    
    
    Holding Losses
    
    
    Value*U.S. Government and GSE debt
    
    $
    9,796
    
    
    $
    2
    
    
    $
    (19
    )
    
    $
    9,779U.S. corporate debt
    
    
    136,037
    
    
    
    83
    
    
    
    (97
    )
    
    
    136,023Auction rate securities
    
    
    51,375
    
    
    
    
    
    
    
    (240
    )
    
    
    51,135Other
    
    
    2,308
    
    
    
    333
    
    
    
    
    
    
    
    2,641$
    199,516
    
    
    $
    418
    
    
    $
    (356
    )
    
    $
    199,578
 
 *
    
    Includes short-term investments of $123,907, restricted investments of $55,018 and
marketable securities of $20,653 at December 31, 2007.   7




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
  Twelve-MonthPeriods Ending
    
    Amortized
    
    
    FairJune 30,
    
    Cost
    
    
    Value2009
    
    $
    53,595
    
    
    $
    53,5242010
    
    
    58,225
    
    
    
    57,5742011
    
    
    12,537
    
    
    
    12,405$
    124,357
    
    
    $
    123,503
   Less Than 12 Months
    
    
    12 Months or GreaterFair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Loss
    
    
    Value
    
    
    LossU.S. corporate debt (1)
    
    $
    91,285
    
    
    $
    (957
    )
    
    $
    
    
    
    $
    Other(2)
    
    
    2,066
    
    
    
    (77
    )
    
    
    
    
    
    
    Total
    
    $
    93,351
    
    
    $
    (1,034
    )
    
    $
    
    
    
    $
    
 
 (1)
    
    U.S. corporate debt. The unrealized losses of $957,000 on the U.S. corporate debt
were attributable to increases in interest rates, as well as bond pricing. The Company invests in
bonds that are rated A1 or better, as dictated by its investment policy. Since the changes in the
market value of these investments are due to changes in interest rates and not the credit quality
of the issuer, and the Company has the ability and intent to hold these investments until recovery
of the cost, the Company does not consider its investments in U.S. corporate debt to be
other-than-temporarily impaired at June 30, 2008.(2)
    
    The Companys investments in other securities relate to the Companys Executive
Deferred Compensation Plan. 8




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (5) Comprehensive Loss
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (1,745
    )
    
    $
    (1,959
    )
    
    $
    (229
    )
    
    $
    (4,745
    )Other comprehensive (loss) income:Unrealized (loss) gain on securities
that arose during the period(1)
    
    
    (1,251
    )
    
    
    227
    
    
    
    (1,332
    )
    
    
    668Reclassification adjustment
for impairment loss included innet
loss(1)
    
    
    645
    
    
    
    
    
    
    
    645
    
    
    
    Total other comprehensive (loss) income
    
    
    (606
    )
    
    
    227
    
    
    
    (687
    )
    
    
    668Comprehensive loss
    
    $
    (2,351
    )
    
    $
    (1,732
    )
    
    $
    (916
    )
    
    $
    (4,077
    )
 
 (1)
    
    Information has not been tax-effected due to an estimated annual effective
tax rate of zero. (6) Earnings Per Common Share
    9




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (7) Share-Based Compensation
  Stock Option and Nonvested Share Awards
  NonvestedOptions
    
    SharesOutstanding at January 1, 2008
    
    
    8,385
    
    
    
    1,774Granted
    
    
    200
    
    
    
    432Exercised and vested
    
    
    (40
    )
    
    
    (215
    )Expired and forfeited
    
    
    (40
    )
    
    
    (45
    )Outstanding at June 30, 2008
    
    
    8,505
    
    
    
    1,946Options vested and expected to vest at June 30, 2008
    
    
    7,813Options exercisable at June 30, 2008
    
    
    5,980
  Employee Stock Purchase Plan
  10




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (8) Inventories
  June 30, 2008
    
    
    December 31, 2007Raw materials
    
    $
    9,737
    
    
    $
    9,809Work in process
    
    
    6,312
    
    
    
    5,419Finished goods
    
    
    3,995
    
    
    
    7,069$
    20,044
    
    
    $
    22,297
 (9) Intangible Assets
  WeightedAverageJune 30,
    
    
    December 31,
    
    
    Remaining2008
    
    
    2007
    
    
    Useful LivesProduct acquisition costs
    
    $
    83,694
    
    
    $
    78,694
    
    
    6.1 yearsProduct patented technology
    
    
    6,000
    
    
    
    6,000
    
    
    6.5 yearsManufacturing patent
    
    
    9,000
    
    
    
    9,000
    
    
    6.5 yearsPatent
    
    
    1,875
    
    
    
    1,875
    
    
    
    *100,569
    
    
    
    95,569Less:
Accumulated amortization
    
    
    34,492
    
    
    
    27,428$
    66,077
    
    
    $
    68,141
 
 *
    
    fully amortized   11




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (10) Notes Payable
  June 30, 2008
    
    
    December 31, 2007Current4.5% Convertible Subordinated Notes due
July 1, 2008
    
    $
    12,521
    
    
    $
    72,391Long-Term4% Convertible Senior Notes due June 1, 2013
    
    $
    275,000
    
    
    $
    275,000
       (11) Restructuring
  12




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
    Six MonthsEnded
    
    
    Year EndedJune 30, 2008
    
    
    December 31, 2007
    
    
    TotalEmployee termination costs  manufacturing
    
    $
    1,524
    
    
    $
    2,232
    
    
    $
    3,756 sales forces
    
    
    
    
    
    
    385
    
    
    
    3851,524
    
    
    
    2,617
    
    
    
    4,141Write-down of manufacturing assets
    
    
    619
    
    
    
    5,124
    
    
    
    5,743$
    2,143
    
    
    $
    7,741
    
    
    $
    9,884
    (12) Supplemental Cash Flow Information
   13




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
 (13) Income Taxes
  (14) Segment Information
  Products
 Royalties
 Contract Manufacturing ®
  14




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ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
  Three months ended June 30,ContractSegment
    
    
    
    
    
    Products
    
    Royalties
    
    Manufacturing
    
    Corporate(1)
    
    ConsolidatedRevenues
    
    
    2008
    
    
    $
    29,206
    
    
    $
    15,035
    
    
    $
    6,723
    
    
    $
    
    
    
    $
    50,9642007
    
    
    $
    25,019
    
    
    $
    18,290
    
    
    $
    5,903
    
    
    $
    
    
    
    $
    49,212Profit (Loss)
    
    
    2008
    
    
    $
    4,189
    
    
    $
    15,035
    
    
    $
    2,868
    
    
    $
    (23,752
    )
    
    $
    (1,660
    )2007
    
    
    $
    1,822
    
    
    $
    18,290
    
    
    $
    1,813
    
    
    $
    (23,623
    )
    
    $
    (1,698
    )
 Six months ended June 30,ContractSegment
    
    
    
    
    
    Products
    
    Royalties
    
    Manufacturing
    
    Corporate(1)
    
    ConsolidatedRevenues
    
    
    2008
    
    
    $
    56,635
    
    
    $
    29,735
    
    
    $
    13,367
    
    
    $
    
    
    
    $
    99,7372007
    
    
    $
    47,668
    
    
    $
    34,634
    
    
    $
    8,398
    
    
    $
    
    
    
    $
    90,700Profit (Loss)
    
    
    2008
    
    
    $
    7,275
    
    
    $
    29,735
    
    
    $
    4,978
    
    
    $
    (41,922
    )
    
    $
    662007
    
    
    $
    4,202
    
    
    $
    34,634
    
    
    $
    1,854
    
    
    $
    (45,367
    )
    
    $
    (4,677
    )
 
 (1)
    
    Corporate expenses include operating income (loss) components that are not
directly attributable to an operating segment, including general and administrative expenses,
treasury activities and exploratory, preclinical and clinical research and development expenses not
specifically identifiable with existing marketed products or product candidates that have not
entered Phase III clinical trials.  Three Months Ended June 30
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Segment profit
    
    $
    22,092
    
    
    $
    21,925
    
    
    $
    41,988
    
    
    $
    40,690Unallocated operating expense
    
    
    (21,715
    )
    
    
    (21,825
    )
    
    
    (38,975
    )
    
    
    (41,683
    )Operating income (loss)
    
    
    377
    
    
    
    100
    
    
    
    3,013
    
    
    
    (993
    )Other corporate expense
    
    
    (2,037
    )
    
    
    (1,798
    )
    
    
    (2,947
    )
    
    
    (3,684
    )(Loss) income before income
tax provision
    
    $
    (1,660
    )
    
    $
    (1,698
    )
    
    $
    66
    
    
    $
    (4,677
    )
 15




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Overview
 TM
  Results of Operations
 Three-Month
and Six-Month Periods Ended June 30, 2008 and 2007
 Overview
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    June2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Products Segment profit
    
    $
    4.3
    
    
    
    130
    
    
    $
    1.8
    
    
    $
    7.3
    
    
    
    73
    
    
    $
    4.2Royalty Segment profit
    
    
    15.0
    
    
    
    (18
    )
    
    
    18.3
    
    
    
    29.7
    
    
    
    (14
    )
    
    
    34.6Contract Manufacturing
Segment profit
    
    
    2.9
    
    
    
    58
    
    
    
    1.9
    
    
    
    5.0
    
    
    
    169
    
    
    
    1.9Corporate and other
expenses*
    
    
    (23.8
    )
    
    
    1
    
    
    
    (23.7
    )
    
    
    (41.9
    )
    
    
    (8
    )
    
    
    (45.4
    )(Loss) income before income
tax provision
    
    $
    (1.6
    )
    
    
    (2
    )
    
    $
    (1.7
    )
    
    $
    0.1
    
    
    
    n.m.
    
    
    $
    (4.7
    )
 
 *
    
    We do not allocate certain corporate income and expenses not directly identifiable with the
respective segments, including general and administrative expenses, exploratory and
preclinical research and development expenses, depreciation, investment income, interest
expense and income taxes. Research and development expense is considered a corporate expense
unless it relates to an existing marketed product or a product candidate enters Phase III
clinical trials at which time related costs would be chargeable to one of our operating
segments.  16




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##### Table of Contents



Products Segment
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    June2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Revenues
    
    $
    29.2
    
    
    
    17
    
    
    $
    25.0
    
    
    $
    56.6
    
    
    
    19
    
    
    $
    47.7Cost of sales
    
    
    13.6
    
    
    
    21
    
    
    
    11.2
    
    
    
    25.2
    
    
    
    25
    
    
    
    20.2Research and development
    
    
    3.4
    
    
    
    (5
    )
    
    
    3.6
    
    
    
    7.2
    
    
    
    19
    
    
    
    6.0Selling and marketing
    
    
    7.0
    
    
    
    (7
    )
    
    
    7.5
    
    
    
    14.5
    
    
    
    (7
    )
    
    
    15.6Amortization of
intangibles
    
    
    0.1
    
    
    
    (10
    )
    
    
    0.2
    
    
    
    0.3
    
    
    
    (10
    )
    
    
    0.4Restructuring
    
    
    0.8
    
    
    
    18
    
    
    
    0.7
    
    
    
    2.1
    
    
    
    62
    
    
    
    1.3Segment profit
    
    $
    4.3
    
    
    
    130
    
    
    $
    1.8
    
    
    $
    7.3
    
    
    
    73
    
    
    $
    4.2
  Revenues
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    JuneProduct
    
    2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Oncaspar
    
    $
    13.2
    
    
    
    36
    
    
    $
    9.6
    
    
    $
    25.5
    
    
    
    49
    
    
    $
    17.1DepoCyt
    
    
    2.4
    
    
    
    14
    
    
    
    2.1
    
    
    
    4.4
    
    
    
    (3
    )
    
    
    4.5Abelcet
    
    
    6.6
    
    
    
    (1
    )
    
    
    6.7
    
    
    
    13.6
    
    
    
    (5
    )
    
    
    14.4Adagen
    
    
    7.0
    
    
    
    7
    
    
    
    6.6
    
    
    
    13.1
    
    
    
    13
    
    
    
    11.7Totals
    
    $
    29.2
    
    
    
    17
    
    
    $
    25.0
    
    
    $
    56.6
    
    
    
    19
    
    
    $
    47.7
  Cost of sales
  17




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Research and development
  Selling and marketing expenses
  Restructuring
      18




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Royalties Segment
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    June2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Royalty revenue
    
    $
    15.0
    
    
    
    (18
    )
    
    $
    18.3
    
    
    $
    29.7
    
    
    
    (14
    )
    
    $
    34.6
 Revenues
  Costs and expenses
  Contract Manufacturing Segment
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    June2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Revenues
    
    $
    6.8
    
    
    
    14
    
    
    $
    5.9
    
    
    $
    13.4
    
    
    
    59
    
    
    $
    8.4Cost of sales
    
    
    3.9
    
    
    
    (6
    )
    
    
    4.0
    
    
    
    8.4
    
    
    
    28
    
    
    
    6.5Segment profit
    
    $
    2.9
    
    
    
    58
    
    
    $
    1.9
    
    
    $
    5.0
    
    
    
    169
    
    
    $
    1.9
 Revenues
  Cost of sales
  19




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##### Table of Contents



Non-U.S Revenue
   Corporate and Other Expense
  Three Months Ended
    
    
    Six Months EndedJune
    
    
    %
    
    
    June
    
    
    June
    
    
    %
    
    
    June2008
    
    
    Change
    
    
    2007
    
    
    2008
    
    
    Change
    
    
    2007Research and development
    
    $
    10.6
    
    
    
    (20
    )
    
    $
    13.4
    
    
    $
    19.6
    
    
    
    (18
    )
    
    $
    24.0General and administrative
    
    
    11.1
    
    
    
    31
    
    
    
    8.5
    
    
    
    19.3
    
    
    
    9
    
    
    
    17.7Other (income) expense:Investment income, net
    
    
    (1.1
    )
    
    
    (53
    )
    
    
    (2.3
    )
    
    
    (3.3
    )
    
    
    (33
    )
    
    
    (4.9
    )Interest expense
    
    
    3.2
    
    
    
    (29
    )
    
    
    4.4
    
    
    
    6.6
    
    
    
    (27
    )
    
    
    9.0Other, net
    
    
    
    
    
    
    n.m.
    
    
    
    (0.3
    )
    
    
    (0.3
    )
    
    
    (23
    )
    
    
    (0.4
    )2.1
    
    
    
    13
    
    
    
    1.8
    
    
    
    3.0
    
    
    
    (20
    )
    
    
    3.7Corporate and other
expenses
    
    $
    23.8
    
    
    
    1
    
    
    $
    23.7
    
    
    $
    41.9
    
    
    
    (8
    )
    
    $
    45.4
  Research and development.
 General and administrative.
 Other (income) expense.
  20




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Income taxes
  Liquidity and Capital Resources
       
  21




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Off-Balance Sheet Arrangements








Contractual Obligations


Critical Accounting Policies and Estimates
   22




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##### Table of Contents



Revenues
      June 30, 2008
    
    
    December 31, 2007Accounts Receivable ReductionsChargebacks
    
    $
    2,240
    
    
    $
    2,578Cash Discounts
    
    
    158
    
    
    
    159Other (including returns)
    
    
    2,724
    
    
    
    2,046Total
    
    
    5,122
    
    
    
    4,783Accrued LiabilitiesMedicaid Rebates
    
    
    1,951
    
    
    
    1,382Administrative Fees
    
    
    178
    
    
    
    187Total
    
    
    2,129
    
    
    
    1,569Grand Total
    
    $
    7,251
    
    
    $
    6,352
  23




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##### Table of Contents



Income Taxes
  Available-for-Sale Securities
  Long-Lived Assets
   Share-Based Payment
  24




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25




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Recently Issued Accounting Standards, Not Adopted as of June 30, 2008
    Factors That May Affect Future Results
  
    
    The risk that we will not achieve success in our research and development efforts,
including clinical trials conducted by us or our collaborative partners.
    
    The risk that we will experience operating losses for the next several years.
    
    The risk that there will be a decline in sales of one or more of our marketed products
or products sold by others from which we derive royalty revenues. Such sales declines
could result from increased competition, loss of patent protection, pricing, supply
shortages and/or regulatory constraints.
    
    The risk that we will be unable to obtain critical compounds used in the manufacture of
our products at economically feasible prices or at all, or one of our key suppliers will
experience manufacturing problems or delays.
    
    Decisions by regulatory authorities regarding whether and when to approve our regulatory
applications as well as their decisions regarding labeling and other matters could affect
the commercial potential of our products or developmental products.
    
    The risk that we will fail to obtain adequate financing to meet our future capital and
financing needs.
    
    The risk that key personnel will leave the Company.
  26




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##### Table of Contents



Item 3.  Quantitative and Qualitative Disclosures About Market Risk
   2009
    
    
    2010
    
    
    2011
    
    
    Total
    
    
    Fair ValueFixed Rate
    
    $
    48,090
    
    
    $
    58,225
    
    
    $
    12,537
    
    
    $
    118,852
    
    
    $
    117,997Average Interest Rate
    
    
    5.00
    %
    
    
    6.10
    %
    
    
    5.26
    %
    
    
    5.57
    %Variable Rate
    
    
    5,505
    
    
    
    
    
    
    
    
    
    
    
    5,505
    
    
    
    5,505Average Interest Rate
    
    
    3.49
    %
    
    
    
    
    
    
    
    
    
    
    3.49
    %$
    53,595
    
    
    $
    58,225
    
    
    $
    12,537
    
    
    $
    124,357
    
    
    $
    123,502
  
 Item 4.  Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
  Changes in Internal Controls
  27




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##### Table of Contents



PART II OTHER INFORMATION
 
 Item 4. Submission of Matters to a Vote of Security Holders
 (a)
    
    An annual meeting of stockholders was held on May 22, 2008.(b)
    
    Rolf A. Classon, Robert LeBuhn and Robert C. Salisbury were re-elected as Class
III directors of the Company. The term of office, as a director for each of Jeffrey H.
Buchalter, Goran A. Ando, M.D, Victor P. Micati and Philip M. Renfro, continued after
the annual meeting.(c)
    
    The matters voted upon at the annual meeting and the results of the voting,
including broker non-votes where applicable, are set forth below. All proposals were
approved by the requisite percentage:
 (i)
    
    The stockholders voted 30,485,452 shares in favor and
6,962,103 shares withheld with respect to the election of Rolf A. Classon as a
Class III director of the Company.
   (ii)
    
    The stockholders voted 32,964,265 shares in favor, 1,933,473
shares against and 2,549,817 shares abstained with respect to a proposal to
ratify the selection of KPMG LLP to audit our consolidated financial
statements for the fiscal year ending December 31, 2008.
 28




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##### Table of Contents



Item 6. Exhibits
  Exhibit
    
    
    
    ReferenceNumber
    
    Description
    
    No.3(i)
    
    Amended and Restated Certificate of Incorporation
    
    
    (1
    )3(ii)
    
    Amended and Restated By-laws
    
    
    (2
    )3(iii)
    
    Amendment dated July 31, 2007 to Amended and Restated Bylaws
    
    
    (3
    )3(iv)
    
    Amendment dated November 21, 2007 to Amended and Restated Bylaws
    
    
    (4
    )4.1
    
    Rights Agreement dated May 17, 2002 between the Company and
Continental Stock Transfer Trust Company, as rights agent
    
    
    (5
    )4.2
    
    First Amendment to the Rights Agreement, dated as of February 19,
2003 between the Company and Continental Stock Transfer & Trust
Company, as rights agent
    
    
    (6
    )4.3
    
    Second Amendment to the Rights Agreement,
dated as of January 7, 2008 between the
Company and Continental Stock Transfer and
Trust Company, as rights agent.
    
    
    (7
    )31.1
    
    Certification of Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    *31.2
    
    Certification of Principal Accounting Officer
pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
    
    
    *32.1
    
    Certification of Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    
    *32.2
    
    Certification of Principal Accounting Officer
pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
    
    
    *
 
 *
    
    Filed herewith.  (1)
    
    Current Report on Form 8-K filed May 19, 2006.(2)
    
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2006 filed August 3, 2006.(3)
    
    Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 filed August 2, 2007.(4)
    
    Current Report on Form 8-K filed on November 26, 2007.(5)
    
    Form 8-A12G (File No. 000-12957) filed with the Commission on May 22, 2002.(6)
    
    Form 8-A12G/A (File No. 000-12957) filed with the Commission on February 20, 2003.(7)
    
    Current Report on Form 8-K filed January 8, 2008. 29




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##### Table of Contents



SIGNATURES
  ENZON PHARMACEUTICALS, INC.
                        (Registrant)Date:  August 8, 2008
    By:

/s/ Jeffrey H. BuchalterJeffrey H. Buchalter,Chairman, President and
Chief Executive Officer
(Principal Executive Officer)Date:  August 8, 2008
    By:

/s/ Craig A. ToomanCraig A. ToomanExecutive Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer) 30