<PAGE>

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


                                   FORM 10-Q

(Mark One)

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

               For the quarterly period ended September 30, 2005
                                       or

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


                   For the Transition Period from ___ to ___

                         Commission file number 0-12957

                          Enzon Pharmaceuticals, Inc.

             (Exact name of registrant as specified in its charter)

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

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

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

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

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X  No
                                              ---    ---

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes  X  No
                                                    ---    ---

         Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes     No  X
                                                ---    ---

         As of November 1, 2005 there were 44,354,757 shares of Common Stock,
par value $.01 per share, outstanding.

<PAGE>

PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                SEPTEMBER 30, 2005   JUNE 30, 2005
                                                                                ------------------   -------------
                                                                                                          (*)
<S>                                                                                 <C>               <C>

ASSETS
Current assets:
  Cash and cash equivalents                                                          $  26,590         $  55,553
  Short-term investments                                                               126,777           103,194
  Investment in equity securities                                                         --               4,256
  Accounts receivable, net                                                              28,235            25,638
  Inventories                                                                           16,021            15,679
  Other current assets                                                                   5,283             7,733
                                                                                     ---------         ---------
       Total current assets                                                            202,906           212,053
                                                                                     ---------         ---------

Other assets:
  Property and equipment, net                                                           33,020            33,214
  Marketable securities                                                                 75,321            66,384
  Investments in equity securities                                                       6,375             6,375
  Amortizable intangible assets, net                                                   171,675           176,142
  Goodwill                                                                             150,985           150,985
  Other assets                                                                           5,255             5,708
                                                                                     ---------         ---------
                                                                                       442,631           438,808
                                                                                     ---------         ---------
Total assets                                                                         $ 645,537         $ 650,861
                                                                                     =========         =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                   $   6,558         $   9,874
  Accrued expenses                                                                      26,131            26,874
  Deferred tax liability                                                                 1,200             1,106
                                                                                     ---------         ---------
     Total current liabilities                                                          33,889            37,854
                                                                                     ---------         ---------

Other liabilities                                                                          406               645
Deferred tax liability                                                                  10,793             9,860
Notes payable                                                                          399,000           399,000
                                                                                     ---------         ---------
                                                                                       410,199           409,505
                                                                                     ---------         ---------
Commitments and contingencies

Stockholders' equity:
   Preferred stock - $.01 par value, authorized 3,000,000 shares; zero shares
         issued and outstanding at September 30, 2005
         and at June 30, 2005                                                             --                --
  Common stock - $.01 par value, authorized 90,000,000 shares;
         issued and outstanding 44,349,757 shares at September
         30, 2005 and 44,236,202 shares at June 30, 2005                                   443               442
  Additional paid-in capital                                                           320,559           325,821
  Accumulated other comprehensive loss                                                  (1,249)           (4,527)
  Deferred compensation                                                                   --              (5,696)
  Accumulated deficit                                                                 (118,304)         (112,538)
                                                                                     ---------         ---------
Total stockholders' equity                                                             201,449           203,502
                                                                                     ---------         ---------
Total liabilities and stockholders' equity                                           $ 645,537         $ 650,861
                                                                                     =========         =========
</TABLE>

(*)      Condensed from audited consolidated financial statements.

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

                                       2
<PAGE>

                  ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                  -----------------------
<S>                                                              <C>            <C>
                                                                    2005           2004
                                                                  --------       --------
Revenues:
    Product sales, net                                            $ 25,176       $ 27,527
    Manufacturing revenue                                            3,393          2,513
    Royalties                                                       15,209         10,115
    Contract revenue                                                   269            299
                                                                  --------       --------
              Total revenues                                        44,047         40,454
                                                                  --------       --------

Costs and expenses:
    Cost of sales and manufacturing revenue                         11,964         10,901
    Research and development                                         5,319          9,974
    Selling, general and administrative                             11,697         12,199
    Amortization of acquired intangible assets                       3,348          3,358
    Acquired in-process research and development                    10,000           --
                                                                  --------       --------
             Total costs and expenses                               42,328         36,432
                                                                  --------       --------

Operating income                                                     1,719          4,022
                                                                  --------       --------

Other income (expense):
    Investment income, net                                           1,632            770
    Interest expense                                                (4,946)        (4,957)
    Other, net                                                      (3,059)        (1,411)
                                                                  --------       --------
                                                                    (6,373)        (5,598)
                                                                  --------       --------

Loss before tax provision                                           (4,654)        (1,576)

Income tax provision (benefit)                                       1,112           (637)
                                                                  --------       --------

Net loss                                                           ($5,766)         ($939)
                                                                  ========       ========

Basic loss per common share                                         ($0.13)        ($0.02)
                                                                  ========       ========
Diluted loss per common share                                       ($0.13)        ($0.02)
                                                                  ========       ========

Weighted average number of common shares outstanding - basic        43,486         43,470
                                                                  ========       ========
Weighted average number of common shares and potentially
    dilutive common shares outstanding                              43,486         43,470
                                                                  ========       ========
</TABLE>

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


                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                            SEPTEMBER 30,
                                                                      -------------------------
                                                                        2005            2004
                                                                      ---------       ---------
<S>                                                                  <C>             <C>
Cash flows from operating activities:
      Net loss                                                          ($5,766)          ($939)
      Adjustments to reconcile net loss to net cash
           used  in operating activities:
           Depreciation and amortization                                  5,726           5,652
           Non-cash expense for issuance of common stock                    435             166
           Gain on sale of equity investment                               --              (163)
           Non-cash loss relating to equity collar arrangement
           and sale of NPS common stock                                   3,460           1,321
           Acquired in-process research and development                  10,000            --
           Amortization of debt issue costs                                 457             457
           Amortization of bond premium/discount                            214             737
           Deferred income taxes                                          1,027            (335)
      Changes in operating assets and liabilities                       (17,955)        (10,728)
                                                                      ---------       ---------

                    Net cash used in by operating activities             (2,402)         (3,832)
                                                                      ---------       ---------

Cash flows from investing activities:
      Purchase of property and equipment                                 (1,065)           (783)
      Proceeds from sale of marketable securities                        18,706           7,830
      Purchase of marketable securities                                (117,625)        (34,330)
      Maturities of marketable securities                                73,423           4,000
                                                                      ---------       ---------

                    Net cash used in investing activities               (26,561)        (23,283)
                                                                      ---------       ---------

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                               (28,963)        (26,977)

Cash and cash equivalents at beginning of period                         55,553          91,532
                                                                      ---------       ---------

Cash and cash equivalents at end of period                            $  26,590       $  64,555
                                                                      =========       =========
</TABLE>

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


                                       4
<PAGE>

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

(1)  ORGANIZATION AND BASIS OF PRESENTATION

         The unaudited condensed consolidated financial statements have been
prepared from the books and records of Enzon Pharmaceuticals, Inc. ("Enzon" or
the "Company") and its subsidiaries in accordance with U.S. generally accepted
accounting principles ("GAAP") 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. Certain prior year balances have been
reclassified to conform to the current period presentation. Interim results are
not necessarily indicative of the results that may be expected for the six-month
transition period (see below). The interim consolidated financial statements
should be read in conjunction with the consolidated financial statements and the
notes thereto included in the Company's annual report on Form 10-K for the
fiscal year ended June 30, 2005. Effective December 31, 2005, the Company will
change its fiscal year end from June 30 to December 31. Accordingly, Enzon will
file a report on Form 10-K covering the six-month transition period ending
December 31, 2005.

(2)  STOCK-BASED COMPENSATION

          The Company has incentive and non-qualified stock option plans for
employees, officers, directors, consultants and independent contractors. These
plans, the 2001 Incentive Stock Plan and the 1987 Non-Qualified Stock Option
Plan, are administered by the Compensation Committee of the Board of Directors.
Options granted to employees generally vest over four years from date of grant
and options granted to directors vest after one year. The exercise price of the
options granted must be at least 100% of the fair value of the Company's common
stock at the time the options are granted. Options may be exercised for a period
of up to ten years from the date they are granted. In April and June 2005, the
Board of Directors accelerated the vesting of all of the Company's unvested
stock options awarded to directors, officers and employees with exercise prices
greater than the market value of the Company's common stock on the effective
date of the accelerations. The accelerations resulted in the Company not being
required to recognize aggregate compensation expense under the new accounting
for share-based payments described below of approximately $2.5 million during
the three months ended September 30, 2005.

         In December 2004, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 123 (revised
2004), "Share-Based Payment" ("SFAS 123R"), which replaces "Accounting for
Stock-Based Compensation," ("SFAS 123") and supersedes Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS
123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based on
their fair values beginning with the first annual reporting period that begins
after June 15, 2005. Under SFAS 123R, the pro forma disclosures previously
permitted under SFAS 123 are no longer an alternative to financial statement
recognition.

         The Company has adopted the new standard effective July 1, 2005 and has
selected the Black-Scholes method of valuation for share-based compensation. The
Company has adopted the modified prospective transition method which requires
that compensation cost be recorded, as earned, for all unvested stock options
and restricted stock outstanding at the beginning of the first quarter of
adoption of SFAS 123R. The charge is being distributed and recognized in
research and development and selling, general and administrative expenses over
the remaining service period after the adoption date based on the options'
original estimate of fair value.


                                       5
<PAGE>

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


         The following table summarizes option activity for the three months
ended September 30, 2005:

<TABLE>
<CAPTION>
                                                                                    Weighted         Aggregate
                                                                     Weighted        Average         Intrinsic
                                                         Options     Average        Remaining          Value
                                                           (in       Exercise      Contractual          (in
                                                         thousands)   Price        Term (years)      thousands)
                                                         -------     --------      ------------      ---------
<S>                                                      <C>         <C>              <C>            <C>
         Outstanding at June  30, 2005                    5,622       $16.63
         Granted at exercise prices which equaled
         the fair market value on the date of grant         424         7.25
           Exercised                                       --             --                          $   --
           Forfeited                                        (39)       27.39
                                                         ------
         Outstanding at September 30, 2005                6,007       $15.90           8.03           $  699
                                                         ======

         Exercisable at September 30, 2005                5,528       $16.65           7.88           $  687
                                                         ======
</TABLE>

         For grants during the three months ended September 30, 2005, the
Company's weighted average assumptions for expected volatility, dividends,
expected term until exercise, and risk-free interest rate were 57%, 0%, 5.18
years and 3.88%, respectively. Expected volatility is based on historical
volatility of the Company's common stock. The expected term of options is
estimated based on the Company's historical exercise rate and forfeiture rates
are estimated based on employment termination experience, each determined
separately for certain employee groups. The risk-free rate is based on U.S.
Treasury yields for securities in effect at the time of grant with terms
approximating the expected term until exercise of the option. In the three
months ended September 30, 2005, the Company recorded share-based compensation
for restricted stock and options of $0.4 million which is included in the
Company's net loss for the period. No compensation costs were capitalized into
inventory during the period. The Company did not record a tax benefit related
to share-based compensation expense. As of September 30, 2005, there was $1.8
million of total unrecognized compensation cost related to unvested options,
that the Company expects to recognize over a weighted-average period of 45
months. The Company granted options with fair values ranging from $3.14 to $3.52
per option or a weighted average of $3.21 per option. The amount of restricted
stock outstanding at September 30, 2005 was 0.7 million shares. The Company
utilizes newly issued shares to satisfy the exercise of stock options.

          Prior to the adoption of SFAS 123R, the Company applied the
intrinsic-value-based method of accounting prescribed by APB 25, "Accounting for
Stock Issued to Employees", and related interpretations, to account for its
stock options granted to employees. Under this method, compensation cost was
recorded only if the market price of the underlying common stock on the date of
grant exceeded the exercise price. SFAS 123, "Accounting for Stock-Based
Compensation", established accounting and disclosure requirements using a
fair-value-based method of accounting for stock-based employee compensation
plans. As permitted by SFAS 123, the Company elected to continue to apply the
intrinsic-value-based method of accounting described above, and adopted only the
disclosure requirements of SFAS 123, as amended, which were similar in most
respects to SFAS 123R, with the exception of option forfeitures, which the
Company accounted for as they occurred.

                                       6
<PAGE>

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

         The following table illustrates the pro forma effect on the Company's
net loss and net loss per share as if the Company had adopted the
fair-value-based method of accounting for stock-based compensation under SFAS
123 for the three months ended September 30, 2004 (in thousands, except per
share amounts):

                                                         Three months ended
                                                           September 30,
                                                         ------------------
                                                               2004
                                                             ---------
         Net loss, as reported                                   ($939)

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

         Pro forma net loss                                    ($4,019)
                                                             =========

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

         (1) Information for 2004 has been adjusted for taxes using an estimated
tax rate of 40%.

         The fair value for each stock option granted was estimated at the date
of grant using a Black-Scholes option-pricing model, assuming no dividends and
the following assumptions. For grants during the three months ended September
30, 2004, the Company's weighted average assumptions for expected volatility,
dividends, expected life, and risk-free interest rate were 39%, 0%, 4.76 years
and 3.38%, respectively.

         Expected volatility is based on historical volatility of our common
stock; the expected life represents the weighted average period of time that
options granted are expected to be outstanding giving consideration to vesting
schedules and our historical exercise patterns; and the risk-free rate is based
on the U.S. Treasury yield curve in effect at the time of grant for periods
corresponding with the expected life of the option.

(3)  SHORT-TERM INVESTMENTS AND MARKETABLE SECURITIES

          The Company classifies its investments in marketable equity securities
and debt securities, including auction rate securities, as available-for-sale.
The Company classifies those investments available for current operations with
maturities of one year or less as current assets and investments with maturities
greater than one year as noncurrent assets when it has the intent and ability to
hold such securities for at least one year. Debt and marketable equity
securities are carried at fair value, with the unrealized gains and losses
(which are deemed to be temporary), net of related tax effect, included in the
determination of other comprehensive income (loss) and reported in stockholders'
equity. The fair values of substantially all securities are determined by quoted
market prices.

          The Company holds auction rate securities for which interest or
dividend rates are generally reset for periods of up to 90 days. The auction
rate securities outstanding at September 30, 2005 were investments in state
government bonds and corporate securities. At September 30, 2005, the Company
held auction rate securities with contractual maturities between 2005 and 2009.


                                       7
<PAGE>

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

          The cost of the debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity. The amortization, along with
realized gains and losses, is included in investment income, net. The cost of
securities is based on the specific identification method.

         Investments are considered impaired when a decline in fair value is
determined to be other-than-temporary. The Company employs a systematic
methodology that considers available evidence in evaluating potential impairment
of its investments in accordance with Emerging Issues Task Force Issue No. 03-1,
"The Meaning of Other-Than-Temporary Impairment and Its Application to Certain
Investments" ("EITF 03-1"). In the event that the cost of an investment exceeds
its fair value, the Company evaluates, among other factors, the duration and
extent to which the fair value is less than cost; the financial health of and
business outlook for the investment or investee; and the Company's intent and
ability to hold the investment. The Company has determined that there were no
other-than-temporary declines in the fair values of its short-term investments
and marketable securities as of September 30, 2005 or June 30, 2005.

         The following table shows the gross unrealized losses and fair value of
the Company's available-for-sale securities (both short-term and long-term)
aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position, at September 30, 2005 (in
thousands):

<TABLE>
<CAPTION>
                                              Less than 12 months        12 Months or Greater
                                             ---------------------      ----------------------
                                              Fair      Unrealized       Fair       Unrealized
          Description of Securities           Value        Loss          Value         Loss
         ------------------------------      -------    ----------      -------     ----------
<S>                                         <C>          <C>           <C>          <C>
         U.S. Government agency debt(1)      $27,711        ($148)      $28,515        ($571)
         U.S. Corporate debt(2)               38,147         (274)       28,554         (311)
         Auction rate securities(3)           24,821           (4)         --           --
                                             -------      -------       -------      -------
         Total                               $90,679        ($426)      $57,069        ($882)
                                             =======      =======       =======      =======
</TABLE>

(1)      U.S. GOVERNMENT AGENCY DEBT. The unrealized losses of $0.7 million in
the U.S. Government agencies and Federal agency mortgage-backed securities were
attributable to increases in interest rates. These holdings do not permit the
issuer to settle the securities at a price less than the amortized cost.
Further, because the declines in market value are due to increases in interest
rates and not the credit quality of the issuer, and the Company has the ability
and the intent to hold these investments until a recovery of fair value, the
Company does not consider its investments in U.S. Government agency debt to be
other-than-temporarily impaired at September 30, 2005.

(2)      U.S. CORPORATE DEBT. The unrealized losses of $0.6 million 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 approved 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 fair value, the Company does not consider its
investments in U.S. corporate debt to be other-than-temporarily impaired at
September 30, 2005.

(3)      AUCTION RATE SECURITIES. The unrealized loss on the auction rate
securities was attributable to increases in interest rates. The Company has the
ability and intent to hold these investments until recovery of the fair value;
therefore, it does not consider its investments in auction rate securities to be
other-than-temporarily impaired at September 30, 2005.


                                       8
<PAGE>

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

         The amortized cost, gross unrealized holding gains or losses, and fair
value for the Company's available-for-sale securities by major security type at
September 30, 2005 were as follows (in thousands):

<TABLE>
<CAPTION>
                                                         Gross         Gross
                                                       Unrealized    Unrealized
                                          Amortized     Holdings      Holding          Fair
                                            Cost         Gains         Losses         Value*
                                          ---------    ----------    ----------      --------
<S>                                      <C>           <C>           <C>            <C>
         U.S. Government agency debt      $106,750      $     17         ($719)      $106,048
         U.S. Corporate debt                71,812             2          (585)        71,229
         Auction rate securities            24,825          --              (4)        24,821
                                          --------      --------      --------       --------
         Total                            $203,387      $     19       ($1,308)      $202,098
                                          ========      ========      ========       ========
</TABLE>

         *        $126.8 million included in short-term investments and $75.3
                  million included in marketable securities at September 30,
                  2005.

         The amortized cost, gross unrealized holding gains or losses, and fair
value for securities available-for-sale by major security type at June 30, 2005
were as follows (in thousands):

<TABLE>
<CAPTION>
                                                         Gross         Gross
                                                       Unrealized    Unrealized
                                          Amortized     Holdings      Holding          Fair
                                            Cost         Gains         Losses         Value*
                                          ---------    ----------    ----------      --------
<S>                                      <C>           <C>           <C>            <C>
         U.S. Government agency debt      $ 98,417      $   --           ($536)      $ 97,881
         U.S.  Corporate debt               62,182          --            (510)        61,672
         Auction rate securities            10,025          --            --           10,025
                                          --------      --------      --------       --------
         Total                            $170,624      $   --         ($1,046)      $169,578
                                          ========      ========      ========       ========
</TABLE>

         *        $103.2 million included in short-term investments and $66.4
                  million included in marketable securities at June 30, 2005.

         Maturities of debt and marketable equity securities classified as
available-for-sale at September 30, 2005 were as follows (in thousands):

         September 30,      Amortized Cost        Fair Value
         -------------      --------------        ----------
             2006              $127,217            $126,777
             2007                40,284              39,780
             2008                12,061              11,716
             2009                 4,000               4,000
             2010                19,825              19,825
                               --------            --------
                               $203,387            $202,098
                               ========            ========

(4) INVESTMENTS IN EQUITY SECURITIES

          At September 30, 2005 the Company's investments in equity securities
include mainly investments in Nektar Therapeutics ("Nektar") and Micromet AG
("Micromet"). At June 30, 2005, the Company's investment in equity securities
also included an investment in NPS Pharmaceuticals, Inc. ("NPS") common stock.
The Company's investment in Nektar is in the form of preferred stock that is
convertible into common stock and its investment in Micromet is in the form of a
note that is convertible into common stock. The Company's investments in Nektar
and Micromet are both cost method investments. As of September 30, 2005 and June
30, 2005, the Company's investments in Nektar and Micromet had an aggregate book
value of $6.4 million and $6.4 million, respectively. The Company's investment
in NPS common stock is recorded at its fair value and unrealized gains or losses
are reflected in accumulated other comprehensive income. During August 2005, the
Company sold its remaining investment in NPS common stock, which resulted in the
recognition of a $4.3 million loss as a component of other income (expense) in
the statement of operations and cash proceeds of $3.5 million. See note 13.


                                       9
<PAGE>

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

(5) COMPREHENSIVE INCOME

         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 to comprehensive (loss) income
(in thousands):

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED
                                                                      SEPTEMBER 30,
                                                                  ---------------------
                                                                   2005          2004
                                                                  -------       -------
<S>                                                              <C>           <C>
         Net loss                                                 ($5,766)        ($939)
             Other comprehensive income:
             Unrealized (loss) gain on securities that arose
                 during the period, net of tax (1)                   (243)        1,697
             Reclassification adjustment
                 for loss included in net
                 income, net of tax (1)                             3,521           304
                                                                  -------       -------

             Total other comprehensive income                       3,278         2,001
                                                                  -------       -------

         Comprehensive (loss) income                              ($2,488)      $ 1,062
                                                                  =======       =======
</TABLE>

         (1)      Information for 2004 has been adjusted for taxes using an
                  estimated tax rate of 40%.

(6) EARNINGS PER COMMON SHARE

         Basic earnings per share is computed by dividing the net loss 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, 2005 and 2004, the denominator includes both
the weighted average number of shares of common stock outstanding and the number
of potentially dilutive common stock equivalents if the inclusion of such common
stock equivalents is not anti-dilutive. As of September 30, 2005 and 2004, the
Company had 12.2 million and 9.5 million, respectively, of potentially dilutive
common stock equivalents that are excluded from the dilutive earnings per share
calculations, as the effect of their inclusion would be anti-dilutive.

(7) INVENTORIES

         Inventories, net of reserves consisted of the following (in thousands):

                              SEPTEMBER 30, 2005    JUNE 30, 2005
                              ------------------    -------------

         Raw materials              $ 6,553            $ 6,406
         Work in process              4,407              1,349
         Finished goods               5,061              7,924
                                    -------            -------
                                    $16,021            $15,679
                                    =======            =======


                                       10
<PAGE>

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


(8) INTANGIBLE ASSETS

         Intangible assets consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                               SEPTEMBER 30,    JUNE 30,       ESTIMATED
                                                   2005           2005        USEFUL LIVES
                                               -------------    --------      ------------
<S>                                              <C>           <C>           <C>
         Product patented technology              $ 64,400      $ 64,400         12 years
         Manufacturing patent                       18,300        18,300         12 years
         NDA approval                               31,100        31,100         12 years
         Trade name and other product rights        80,000        80,000         15 years
         Manufacturing contract                      2,200         2,200          3 years
         Patent                                      1,906         1,906        1-2 years
         Product acquisition costs                  26,194        26,194      10-14 years
                                                  --------      --------
                                                   224,100       224,100
         Less:  Accumulated amortization            52,425        47,958
                                                  --------      --------
                                                  $171,675      $176,142
                                                  ========      ========
</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 each of the three-month periods ended
September 30, 2005 and 2004. Amortization expense for these intangibles and
certain other product acquisition costs for the next five fiscal years is
expected to be approximately $17.0 million per year. The Company does not have
intangible assets with indefinite useful lives.

(9) PROPERTY AND EQUIPMENT

         Property and equipment consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                               SEPTEMBER 30,    JUNE 30,       ESTIMATED
                                                   2005           2005        USEFUL LIVES
                                               -------------    --------      ------------
<S>                                              <C>           <C>            <C>
         Land                                     $ 1,500       $ 1,500
         Building                                   4,800         4,800           7 years
         Leasehold improvements                    17,924        17,822        3-15 years
         Equipment                                 27,135        26,215         3-7 years
         Furniture and fixtures                     2,780         2,737           7 years
         Vehicles                                      38            38           3 years
                                                  -------       -------
                                                   54,177        53,112
         Less:  Accumulated depreciation           21,157        19,898
                                                  -------       -------
                                                  $33,020       $33,214
                                                  =======       =======
</TABLE>

         Depreciation charged to operations relating to property and equipment
totaled $1.3 million and $1.1 million for the periods ended September 30, 2005
and 2004, respectively.

(10) 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, 2005 and September 30, 2004. Income tax payments for the three months ended
September 30, 2005 and 2004 were $0.05 million and $0.3 million, respectively.

(11) INCOME TAXES

         The Company recognized a tax expense for the three months ended
September 30, 2005 due to the deferred tax liability recorded for goodwill. As
of September 30, 2005, the Company has provided a valuation allowance against
its net deferred tax assets since the Company believes it is not more likely
than not that its deferred tax assets will be realized.


                                       11
<PAGE>

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

         During the three months ended September 30, 2004, the Company recorded
a net tax benefit of approximately $0.6 million. The tax benefit recognized for
the three months ended September 30, 2004 was calculated using an estimated
annual effective tax rate of 40%, based on the projected income tax benefit and
taxable loss for the fiscal year ended June 30, 2005.

(12) BUSINESS SEGMENTS

         A single management team that reports to the Chief Executive Officer
comprehensively manages the Company's 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 has not historically prepared discrete financial statements with respect
to separate product areas. Accordingly, the Company does not have separately
reportable segments.

(13) DERIVATIVE INSTRUMENTS

         On February 19, 2003, the Company entered into an agreement and plan of
merger with 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.

         In August 2003, the Company entered into a Zero Cost Protective Collar
(the "Collar") arrangement with a financial institution to reduce its exposure
to changes in the share price associated with the 1.5 million shares of common
stock of NPS received as part of the merger termination agreement with NPS. The
Collar matured in four separate three-month intervals from November 2004 through
August 2005, at which time the Company received proceeds from the sale of the
securities. The amount received at each maturity date was determined based on
the market value of NPS' common stock on such maturity date, as well as the
value of the Collar. From August 2003 to November 2003, the Collar was
designated a derivative hedging instrument in accordance with SFAS 133; in
November 2003, hedge accounting was terminated. The Company carried the
derivative as an asset or a liability at fair value. The change in fair value
was recorded in other income in the condensed consolidated statements of
operations. During each of the quarters ended September 30, 2005 and 2004, the
Company sold 375,000 shares of NPS common stock it held and 375,000 shares of
the Collar instrument matured. This resulted in the recognition of a loss of
$3.5 million and $1.3 million as a component of other income (expense) for the
quarters ended September 30, 2005 and 2004, respectively. The Company received
cash proceeds from the settlement of this instrument totaling $7.5 million in
each of the quarters ended September 30, 2005 and 2004. At September 30, 2005,
the Company no longer holds any shares of NPS nor does it hold any portion of
the Collar.

(14) RECENT ACCOUNTING PRONOUNCEMENTS

         In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections", which replaced APB Opinion No. 20, Accounting Changes, and
SFAS No. 3, "Reporting Accounting Changes in Interim Financial Statements".
Statement 154 changes the requirements for the accounting and reporting of a
change in accounting principle. APB Opinion No. 20 previously required that most
voluntary changes in an accounting principle be recognized by including the
cumulative effect of the new accounting principle in net income of the period of
the change. SFAS No. 154 now requires retrospective application of changes in an
accounting principle to prior period financial statements, unless it is
impracticable to determine either the period-specific effects or the cumulative
effect of the change. The Statement is effective for fiscal years beginning
after December 15, 2005. The Company does not expect the adoption of this
statement will have a material impact on its consolidated results of operations
and financial condition.


                                       12
<PAGE>

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

         In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets--An Amendment of APB Opinion No. 29, Accounting for
Nonmonetary Transactions". SFAS 153 eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive assets in paragraph
21(b) of APB Opinion No. 29, "Accounting for Nonmonetary Transactions," and
replaces it with an exception for exchanges that do not have commercial
substance. SFAS 153 specifies that a nonmonetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. SFAS 153 is effective for the fiscal
periods beginning after June 15, 2005 and was adopted by the Company on July 1,
2005. The adoption of SFAS 153 had no impact on its consolidated results of
operations and financial condition.

         In November 2004, the FASB issued SFAS No. 151, "Inventory Costs--An
Amendment of ARB No. 43, Chapter 4". SFAS 151 amends the guidance in ARB No. 43,
Chapter 4, "Inventory Pricing," to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Among other provisions, the new rule requires that items such as
idle facility expense, excessive spoilage, double freight, and rehandling costs
be recognized as current-period charges regardless of whether they meet the
criterion of "so abnormal" as stated in ARB No. 43. Additionally, SFAS 151
requires that the allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. SFAS
151 is effective for fiscal years beginning after June 15, 2005. On July 1, 2005
the Company adopted SFAS 151 and its adoption had no impact on its consolidated
results of operations and financial condition.

         In response to the enactment of the American Job Creation Act of 2004
on October 22, 2004 the FASB issued FASB Staff Position (FSP) 109-1,
"Application of FASB Statement No. 109, Accounting for Income Taxes, for the Tax
Deduction Provided to U.S. Based Manufacturers by the American Job Creation Act
of 2004". FSP No. 109-1 clarifies how to apply SFAS No. 109 to the new law's tax
deduction for income attributable to "domestic production activities." The fully
phased-in deduction is up to nine percent of the lesser of taxable income or
"qualified production activities income." The staff position requires that the
deduction be accounted for as a special deduction in the period earned, not as a
tax-rate reduction. As a result, the Company will recognize a reduction in its
provision for income taxes for domestic production activities in the quarterly
periods in which the Company is eligible for the deduction.

(15) NATIMMUNE A/S AGREEMENT

         In September 2005, the Company entered into a license agreement with
NatImmune A/S ("NatImmune") for NatImmune's lead development compound,
recombinant human Mannose-binding Lectin ("rhMBL"), a protein therapeutic under
development for the prevention of severe infections in MBL-deficient individuals
undergoing chemotherapy. Under the agreement, the Company received exclusive
worldwide rights, excluding the Nordic countries, and is responsible for the
development, manufacture, and marketing of rhMBL. The $10.0 million upfront cost
of the license agreement was charged to in-process research and development in
the three months ended September 30, 2005. The Company paid NatImmune the
upfront license fee in October 2005. The Company will be responsible for making
additional payments upon the successful completion of certain clinical
development, regulatory, and sales-based milestones. NatImmune is also eligible
to receive royalties from any future product sales of rhMBL by Enzon and retains
certain rights to develop a non-systemic formulation of rhMBL for topical
administration.

(16) RELATED PARTY TRANSACTION

         One of the Company's executive officers, Jeffrey H. Buchalter, received
relocation benefits in connection with his appointment as Chief Executive
Officer. The Company is administering these benefits through a relocation
services agreement with an independent third party (the "Provider") pursuant to
which, in accordance with Enzon's relocation policy, in September 2005 the
Provider purchased Mr. Buchalter's residence at a purchase price calculated
using the average of two independent appraisals of the property (the "Purchase
Price"). Mr. Buchalter was paid $412,384 in connection with the transaction
which amount represents Mr. Buchalter's equity in the property. The amount is
classified under other current assets on the condensed consolidated balance
sheet at September 30, 2005. Under the relocation services agreement, the
Company reimbursed the Provider for the equity component of the Purchase Price
and the related closing costs. The Company is responsible for a $2,500 service
fee to the Provider as well as carrying and sales costs that the Provider incurs
in connection with selling the property. The Company will receive the net
proceeds from the resale of the property, and, if the property is sold for less
than the Purchase Price, it is responsible for reimbursing the Provider for the
amount of the deficiency.

                                       13
<PAGE>

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


(17) SUBSEQUENT EVENT

         In October 2005, the Company amended its license agreement with Aventis
Pharma, Inc. and Aventis Pharmaceuticals, Inc. (together "Aventis"), members of
the Sanofi-Aventis Group, for its oncology product, ONCASPAR(R) (pegaspargase).
The amended agreement, which will become effective in January 2006, includes a
significant reduction in the royalty rate, with no royalty obligation for the
first $25.0 million of ONCASPAR sales and a single digit royalty percentage
payable to Aventis on those annual sales of ONCASPAR that are in excess of $25.0
million. Previously, the Company was obligated to pay 25% royalty on all sales
of ONCASPAR in the U.S. and Canada. The Company will pay Aventis an upfront cash
payment of $35.0 million in January 2006. Aventis is entitled to receive royalty
payments through June 30, 2014, at which time all Enzon royalty obligations will
cease.


                                       14
<PAGE>

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

COMPANY OVERVIEW

         We are a biopharmaceutical company focused on the development,
manufacture, and commercialization of pharmaceutical products for patients with
cancer and other life-threatening diseases through the application of our
proprietary technologies and through strategic partnerships. Our revenues are
comprised of sales of four FDA-approved products marketed by our specialized
sales force, ABELCET, ADAGEN, ONCASPAR, and DEPOCYT. We also receive royalties
on sales of products that use our technology, including PEG-INTRON marketed by
Schering-Plough Corporation ("Schering-Plough") and MACUGEN, marketed by Eyetech
Pharmaceuticals ("Eyetech") and Pfizer Inc. In addition, we receive contract
manufacturing revenue for the manufacture of injectable products at our
manufacturing facility, including ABELCET and MYOCET for Zeneus Pharma Ltd. and
the multivitamin MVI(R) for Mayne Group Limited ("Mayne").

         Since December 2004, a new executive management team has been formed
and a number of new board members have been appointed. Our new leadership has
been taking a number of positive actions to reshape our business for the future,
including focusing on maximizing performance, improving processes, and investing
in our core assets. Going forward, key elements of our strategy will include:
leveraging our resources and infrastructure; capitalizing on our strong
technological heritage, including rebuilding our development pipeline; investing
in our marketed brands; and selectively pursuing strategic alliances.

         Effective December 31, 2005, we will change our fiscal year end from
June 30 to December 31. Accordingly, we will file a report on Form 10-K covering
the six-month transition period ending December 31, 2005.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         Management's Discussion and Analysis of Financial Condition and Results
of Operations in this report contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements relate to expectations or forecasts of future events. These
statements use words such as "anticipate," "believe," "could," "estimate,"
"expect," "forecast," "project," "intend," "plan," "potential," "will," and
other words and terms of similar meaning in connection with a discussion of
potential future events or circumstances or future operating or financial
performance. You can also identify forward-looking statements by the fact that
they do not relate strictly to historical or current facts, but rather, relate
to future actions, prospective products, future performance or results of
current or anticipated products, research and development and other expenses and
revenues from new or existing collaborations.

         Specific examples of such forward looking statements include the
potential impact on our revenues of Schering-Plough's launch of PEG-INTRON in
Japan, the potential impact on our ability to sustain or grow our ABELCET
revenues in light of continuing competitive and pricing pressure in the
intravenous antifungal market, the future sales performance of our other
products, the potential impact of manufacturing and stability problems with
ONCASPAR, the continued sufficiency of our capital resources, and our ability to
access the capital markets in the future. This is not necessarily inclusive of
all examples of forward-looking statements that are or may be contained in this
report.

         Any or all forward-looking statements contained in this report may turn
out to be wrong. Actual results may vary materially, and there are no guarantees
about our financial and operating performance or the performance of our stock.
All statements are made as of the date of signing of this report and we do not
assume any obligation to update any forward-looking statement as a result of new
information, future events, or otherwise. You should, however, consult any
further disclosures we make on related subjects in our reports on Forms 10-Q,
8-K and 10-K filed with the Securities and Exchange Commission ("SEC").

         Many factors could cause actual results to differ from the results or
developments discussed or predicted in the forward-looking statements made in
this report. These factors include inaccurate assumptions and a broad variety of
other risks and uncertainties, including some that are known and some that are
not. Although it is not possible to predict or identify all such factors, many
of them are described under the caption "Risk Factors" in the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
section of our Annual Report on Form 10-K for the fiscal year ended June 30,
2005, which we filed with the SEC and which "Risk Factors" section of such Form
10-K is incorporated by Reference in this report. Readers of this report are
advised to read such Risk Factors in connection with this report.


                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         Total cash reserves, which include cash, cash equivalents, short term
investments and marketable securities, were $228.7 million as of September 30,
2005, as compared to $225.1 million as of June 30, 2005. The increase is
primarily due to net proceeds from the sale of 375,000 shares of NPS
Pharmaceuticals, Inc. common stock, offset in part by cash used in operating
activities.

         During the three months ended September 30, 2005, net cash used in
operating activities was $2.4 million compared to $3.8 million for the three
months ended September 30, 2004. Cash used in operating activities during the
three months ended September 30, 2005 consisted of our net loss of $5.8 million
and cash outflows related to changes in our operating assets and liabilities of
$18.0 million, offset in part by non-cash reconciling items related to (i)
depreciation and amortization charges of $5.7 million, (ii) an increase in the
valuation allowance associated with our deferred tax assets of $1.0 million,
(iii) a loss related to an equity collar arrangement and sale of NPS common
stock of $3.5 million, (iv) acquired in-process research and development of
$10.0 million, and (v) other adjustments of $1.2 million. Cash used in operating
activities during the three months ended September 30, 2004 consisted of our net
loss of $0.9 million and cash outflows related to changes in our operating
assets and liabilities of $10.7 million, offset in part by non-cash reconciling
items related to (i) depreciation and amortization charges of $5.6 million, (ii)
a loss related to an equity collar arrangement and sale of NPS common stock of
$1.3 million, and (iii) other adjustments of $0.9 million.

         Cash used in investing activities totaled $26.6 million for the three
months ended September 30, 2005 compared to $23.3 million for the three months
ended September 30, 2004. Cash used in investing activities during the three
months ended September 30, 2005, consisted of net cash used for purchases of
marketable securities of $117.6 million and capital expenditures of $1.1 million
offset in part by cash proceeds of $92.1 million from sales of marketable
securities, including $7.5 million from the sale of 375,000 shares of NPS common
stock. Cash used in investing activities during the three months ended September
30, 2004 consisted of net cash used for purchases of marketable securities of
$22.5 million and capital expenditures of $0.8 million.

         There was no cash provided by financing activities for the three months
ended September 30, 2005. During the three months ended September 30, 2004, we
received $0.1 million in proceeds from the issuance of common stock under our
stock option plans.

         As of September 30, 2005, we had $399.0 million of convertible
subordinated notes outstanding that 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, 2005. 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. Since July 7, 2004,
we may redeem any or all of the notes at specified redemption prices, plus
accrued and unpaid interest to the day preceding the redemption date. In October
2005, through a privately negotiated transaction, we redeemed approximately $5.0
million in aggregate principal amount and accrued interest of the Notes in
exchange for a cash payment of $4.7 million, which includes a principal payment
of $4.6 million and accrued interest of $0.1 million. 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.

         Our current sources of liquidity are our cash reserves; interest earned
on such cash reserves; short-term investments; marketable and equity 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 and operational requirements for the foreseeable
future; however, we may seek additional financing to meet the maturity of our
convertible notes.

         While we believe that our current sources of liquidity will be adequate
to satisfy our capital and operational 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.


                                       16
<PAGE>

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, 2005, 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, 2005, other than the addition of the agreements with
NatImmune discussed in Note 15, NatImmune A/S Agreement, and members of the
Sanofi-Aventis Group in Note 17, Subsequent Event, to the condensed consolidated
financial statements contained in this report, 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 for the year ended
June 30, 2005.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004

         Revenues. Total revenues for the three months ended September 30, 2005
were $44.0 million, as compared to $40.5 million for the three months ended
September 30, 2004. The components of revenues are product sales, manufacturing
revenue, royalties we earn on the sale of our products by others and contract
revenue.

         Net product sales decreased by 9% to $25.2 million for the three months
ended September 30, 2005, as compared to $27.5 million for the three months
ended September 30, 2004. The decrease in net product sales was attributable to
a decline in North American sales of our intravenous antifungal product,
ABELCET, due to competitive market conditions. Sales of ABELCET in North America
decreased by 33% to $11.1 million for the three months ended September 30, 2005,
as compared to $16.5 million for the three months ended September 30, 2004.
ONCASPAR net sales increased by 33% to $5.8 million for the three months ended
September 30, 2005 versus $4.4 million for the three months ended September 30,
2004. The increase in ONCASPAR sales was attributable to an increase in demand
reflecting our increased sales and marketing efforts to support the product, and
to a lesser extent a higher weighted average price. Sales of DEPOCYT remained
fairly consistent coming in at $2.3 million for each of the three-month periods
ended September 30, 2005 and 2004. ADAGEN sales increased by 38% for the three
months ended September 30, 2005 to $6.0 million compared to $4.3 million for the
three months ended September 30, 2004. The growth in ADAGEN sales for the three
months ended September 30, 2005 was due to an increase in the number of patients
over the corresponding period in the prior year, as well as, a higher weighted
average selling price.

         Manufacturing revenue for the three months ended September 30, 2005
increased to $3.4 million, as compared to $2.5 million for the comparable period
of the prior year. Manufacturing revenues were comprised of revenues from the
manufacture of ABELCET and MYOCET for the European market, and to a lesser
extent the manufacture of an injectable multivitamin, MVI, for Mayne. Our
manufacturing revenue commenced in November 2002, when we entered into a
long-term manufacturing and supply agreement with Elan for the manufacture of
ABELCET and MYOCET for the European market in connection with our acquisition of
the North American ABELCET business.

         Royalties for the three months ended September 30, 2005, increased to
$15.2 million compared to $10.1 million for the three months ended September 30,
2004. Royalties are primarily comprised of royalties we receive on sales of
PEG-INTRON, a PEG enhanced alpha interferon product. PEG-INTRON is marketed
worldwide by Schering-Plough for the treatment of hepatitis C. The growth in
royalties was due to the December 2004 launch of PEG-INTRON combination therapy
in Japan and to a lesser extent the January 2005 launch of MACUGEN in the U.S.
for the treatment of neovascular (wet) age-related macular degeneration (AMD),
an eye disease associated with aging that destroys central vision. Under a
strategic alliance we formed in 2002 with Nektar, Nektar provides Eyetech with
PEGylation technology for use in MACUGEN and we receive a share of the royalties
Nektar Therapeutics ("Nektar") receives from Eyetech.


                                       17
<PAGE>

         Due to the December 2004 launch of PEG-INTRON combination therapy in
Japan, we believe royalties from sales of PEG-INTRON may continue to be
positively impacted in the near term. In September 2005, Hoffmann-La Roche
reported that it received fast-track review in Japan for its PEGylated
interferon-based combination therapy with approval expected in the third quarter
of calendar 2006. In markets outside of Japan, PEG-INTRON competes in a highly
competitive market and Schering-Plough has reported contracting market
conditions. We cannot assure you that the positive impact of the launch of
PEG-INTRON in Japan will offset this market contraction and competitive
conditions or that any particular sales levels of PEG-INTRON will be achieved or
maintained.

         Since December 2004, a new executive management team has been named and
a significant focus is being placed on improving our revenues by supporting our
four marketed brands, ABELCET, ONCASPAR, ADAGEN, and DEPOCYT, and expanding
their market potential through new initiatives. Despite our efforts, North
American sales of ABELCET may continue to be negatively impacted by the
competitive conditions in the intravenous antifungal market due to the
introduction of newer agents as well as increased pricing pressure in the
lipid-based amphotericin B market. We cannot assure you that our efforts to
support our products will be successful or that any particular sales levels of
ABELCET, ONCASPAR, ADAGEN, and DEPOCYT will be achieved or maintained.

         Contract revenues for the three months ended September 30, 2005
remained relatively consistent at $0.3 million as compared to $0.3 million for
the three months ended September 30, 2004.

         During the three months ended September 30, 2005, we had export sales
and royalties on export sales of $14.8 million, of which $8.4 million were in
Europe. Export sales and royalties recognized on export sales for the prior year
quarter were $10.8 million, of which $7.9 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,
increased to 42% for the three months ended September 30, 2005 as compared to
36% for the same period last year. The increase was attributable to increased
capacity costs and negative absorption variances arising from low production
volumes.

          Research and Development Expense. Research and development expenses
consist primarily of salaries and benefits; patent filing fees; contractor and
consulting fees, principally related to clinical and regulatory projects; costs
related to research and development partnerships or licenses; drug supplies for
clinical and preclinical activities; as well as, other research supplies and
allocated facilities charges.

          Research and development expenses decreased by 47% to $5.3 million for
the three months ended September 30, 2005 compared to $10.0 million for the
three months ended September 30, 2004. The decrease was attributable to our
decision to discontinue a number of clinical and preclinical development
programs that did not meet our criteria for continued investment. We are
committed to investing in research and development as we advance our objective
of rebuilding our development pipeline.

         Selling, General and Administrative Expense. Selling expenses consist
primarily of salaries and benefits for our sales and marketing personnel, as
well as other commercial expenses and marketing programs to support our sales
force. General and administrative expenses consist primarily of salaries and
benefits; outside professional services for accounting, audit, tax, legal, and
investor activities; and allocations of facilities costs.

         Selling, general and administrative expenses for the three months ended
September 30, 2005 decreased by 4% to $11.7 million, as compared to $12.2
million in the same period last year. The decrease was attributable to an
increase in general and administrative costs of $1.7 million offset in part by a
decrease in sales and marketing expenses of $2.2 million. The increase in
general and administrative costs was primarily attributable to (i) an increase
in personnel-related costs, including the timing of executive-level replacements
and relocation expenses associated with such replacements, and (ii) increased
legal fees associated with the increased focus we are placing on protecting our
intellectual property. The decrease in sales and marketing expenses was largely
due to the timing of our investments in sales and marketing programs.


                                       18
<PAGE>

         Acquired in-process research and development. Acquired in-process
research and development for the three months ended September 30, 2005, was
$10.0 million and was attributable to the execution of a license agreement with
NatImmune in September 2005 for the clinical development of recombinant human
Mannose-binding Lectin. Mannose-binding Lectin is a naturally occurring human
plasma protein that plays a key role in the immune system's first-line defense
against infection.

         Amortization. Amortization expense remained unchanged at $3.4 million
for the three months ended September 30, 2005 and 2004. Amortization expense is
related to intangible assets acquired in connection with our purchase of the
North American ABELCET business in November 2002. Amortization of intangible
assets is provided over their estimated lives ranging from 1-15 years on a
straight-line basis.

         Other income (expense). Other income (expense) for the three months
ended September 30, 2005 was a net expense of $6.4 million, as compared to a net
expense of $5.6 million for the three months ended September 30, 2004. Other
income (expense) includes: net investment income, interest expense, and other,
net.

         Net investment income for the three months ended September 30, 2005
increased to $1.6 million from $0.8 million for the three months ended September
30, 2004 due to an increase in our interest bearing investments and higher
interest rates.

         Interest expense was $4.9 million for the three months ended September
30, 2005, as compared to $5.0 million for the three months ended September 30,
2004. Interest expense is related to our 4.5% convertible subordinated notes
that were outstanding during each of the periods.

         Other, net is primarily attributable to 1.5 million shares of NPS
common stock that 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, 2005,
other, net was an expense of $3.1 million, as compared to an expense of $1.4
million for the three months ended September 30, 2004. During each of the
quarters ended September 30, 2005 and 2004, the Company sold 375,000 shares of
NPS common stock it held and 375,000 shares of the Collar instrument matured.
This resulted in the recognition of a loss of $3.5 million and $1.3 million as a
component of other income (expense) for the quarters ended September 30, 2005
and 2004, respectively. The Company received cash proceeds from the settlement
of this instrument totaling $7.5 million in each of the quarters ended September
30, 2005 and 2004.

         Income Taxes. During the three months ended September 30, 2005, we
recognized a tax expense of approximately $1.1 million compared to tax benefit
of $0.6 million for the three months ended September 30, 2004. We recognized a
tax expense for the three months ended September 30, 2005 due to a deferred tax
liability for goodwill. The tax provision for the three months ended September
30, 2004 was based on the projected income tax expense and taxable income for
the fiscal year ended June 30, 2005.

CRITICAL ACCOUNTING POLICIES

         A "critical accounting policy" is one that is both important to the
portrayal of a 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 of
America. All professional accounting standards effective as of September 30,
2005 have been taken into consideration in preparing our 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 including those related
to contingent assets and liabilities. 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.

         Revenue from product sales and manufacturing revenue is recognized upon
passage of title and risk of loss to customers. This is generally at the time
products are shipped to customers. Provisions for discounts or chargebacks,
rebates and sales incentives to customers, and returns and other adjustments are
provided for in the period the related sales are recorded. Historical data is
used for estimating the amount of the reduction in gross sales.


                                       19
<PAGE>

         The majority of our net product sales are to wholesale distributors who
resell the products to the end customers. We provide chargeback payments to
these distributors based on their sales to members of buying groups at prices
determined under a contract between us and the member. Administrative fees are
paid to buying groups based on the total amount of purchases by their members.
Chargeback amounts are based upon the volume of purchases multiplied by the
difference between the wholesaler acquisition cost and the contract price for a
product. We estimate the amount of the chargeback that will be paid using
historical trends, adjusted for current changes, and record the amounts as a
reduction to accounts receivable and a reduction of gross sales when we record
the sale of the product. The settlement of the chargebacks generally occurs
within three months after the sale to the wholesaler. We regularly analyze the
historical chargeback trends and make adjustments to recorded reserves for
changes in trends.

         In addition, state agencies, which administer various programs, such as
the U.S. Medicaid and Medicare programs, also receive rebates. Medicaid rebates
and administrative fees are recorded as a liability and a reduction of gross
sales when we record the sale of the product. Medicaid rebates are typically
paid within six to nine months after sale. In determining the appropriate
accrual amount we consider our historical Medicaid rebate and administration fee
payments by product as a percentage of our historical sales as well as any
significant changes in sales trend. Current Medicaid rebate laws and
interpretations, and the percentage of our products that are sold to Medicaid
patients are also evaluated. Factors that complicate the rebate calculations are
the timing of the average manufacturer pricing computation, the estimated lag
time between sale and payment of a rebate and the level of reimbursement by
state agencies.

         The following is a summary of reductions of gross sales accrued as of
September 30, 2005 and June 30, 2005:

                                              September 30, 2005   June 30, 2005
                                              ------------------   -------------
         Accounts Receivable Reductions:
         Chargebacks                                $5,216             $6,137
         Cash Discounts                                310                265
         Other (including returns)                     819                840
                                                    ------             ------
              Total                                 $6,345             $7,242
                                                    ------             ------

         Accrued Liabilities:
         Medicaid Rebates                           $2,089             $2,604
         Administrative Fees                           321                347
                                                    ------             ------
              Total                                 $2,410             $2,951
                                                    ------             ------

         We have inventory management agreements with three of our major
wholesalers. These agreements provide that the wholesalers maintain inventory
levels at no more than six selling weeks. During the three months ended
September 30, 2005, we decreased our distribution channel estimate to reflect
the maximum wholesaler inventory levels. This resulted in an $0.8 million
reduction to our chargeback estimates and a favorable effect on operating income
for the three months ended September 30, 2005.

         Royalties under our license agreements with third parties are
recognized when earned through the sale of the product by the licensee 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 licenses and other collaborative agreements
where we have continuing involvement are recorded as deferred revenue and
recognized ratably over the estimated service period.

         Under the asset and liability method of 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 not more likely than not that some portion or all of the
deferred tax assets will be realized. We believe that it is not more likely than
not that our net deferred tax assets will be realized, including our net
operating losses from operating activities and stock option exercises, based on
future operations. Accordingly, we have recorded a full valuation allowance
against our deferred tax assets.


                                       20
<PAGE>

         We assess the carrying value of our cost method investments in
accordance with SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity" and SEC Staff Accounting Bulletin ("SAB") No. 59 "Accounting for
Non-current Marketable Equity Securities". The Company evaluates its investments
in accordance with 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 other
Intangible Assets", 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. An impairment loss is recognized to the extent that
the carrying amount exceeds the asset's fair value. Because our business is in
one reporting unit, this determination is made at the entity level 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 the
reporting unit exceeds the 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 SFAS 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.

         Effective July 1, 2005, the Company has adopted SFAS 123R. "Share-Based
Payment." SFAS 123R establishes standards for the accounting for transactions in
which an entity exchanges its equity instruments for goods or services and
requires that the compensation cost relating to share-based payment transactions
be recognized in the financial statements, measured by the fair value of the
equity or liability instruments issued, adjusted for estimated forfeitures. The
effect of adoption of SFAS 123R was not material to the quarter ended September
30, 2005. It is expected, however, that the new rules will have a material
effect on our consolidated results of operations and earnings per share in
future periods.

         Options or stock awards issued to non-employees and consultants are
recorded at their fair value as determined in accordance with SFAS No. 123R 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 or service period.

         Fair value of share-based payments is determined using the
Black-Scholes valuation model which employs weighted average assumptions for
expected volatility of the Company's stock, expected term until exercise of the
options, the risk free interest rate, and dividends, if any.

         We have elected the modified prospective transition method which
requires that compensation costs be recorded, as earned, for all unvested stock
options and restricted stock awards outstanding at June 30, 2005. In April and
June 2005, the Board of Directors accelerated the vesting of all of the
Company's unvested stock options awarded to directors, officers and employees
with exercise prices greater than the market value of the Company's common stock
on the effective date of the accelerations. This acceleration resulted in our
not being required to recognize aggregate compensation expense of approximately
$28.0 million over the succeeding 48 months ($2.5 million in the quarter ended
September 30, 2005). As of September 30, 2005, there was $1.8 million of total
unrecognized compensation cost related to unvested options which is expected to
be recognized over a weighted-average period of 45 months.

                                       21
<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 equity and debt
securities and time deposits. All such instruments are classified as
available-for-sale securities. 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, 2005 all of our holdings were in instruments
maturing in five 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, 2005 (in thousands):

<TABLE>
<CAPTION>
                                                                                                     FAIR
                             2006        2007        2008        2009        2010       TOTAL        VALUE
                           --------    --------    --------    --------    --------    --------    ---------
<S>                        <C>         <C>         <C>         <C>         <C>         <C>         <C>
Fixed Rate Securities      $127,217    $ 40,284    $ 12,061    $  4,000    $ 19,825    $203,387    $ 202,098
Average Interest Rate          1.36%       3.41%       3.26%       3.51%       3.46%       2.13%        --
Variable Rate Securities       --          --          --          --          --          --           --
Average Interest Rate          --          --          --          --          --          --           --
                           --------    --------    --------    --------    --------    --------    ---------
                           $127,217    $ 40,284    $ 12,061    $  4,000    $ 19,825    $203,387    $ 202,098
                           ========    ========    ========    ========    ========    ========    =========
</TABLE>

         Our 4.5% convertible subordinated notes in the principal amount of
$399.0 million due July 1, 2008 have fixed interest rates. The fair value of the
notes was approximately $353.6 million at September 30, 2005 based on the
conversion price. The fair value of fixed interest rate convertible notes is
affected by changes in interest rates and by changes in the price of our common
stock.

ITEM 4.  CONTROLS AND PROCEDURES

(A)      EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         Our management, under the direction of our Chief Executive Officer and
Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act"), as of
September 30, 2005. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that our disclosure controls and
procedures were effective as of September 30, 2005.

(B)      CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

         During the quarter ended September 30, 2005, we began to implement a
remediation plan to enhance our accounting department and policies and
procedures to address material weaknesses in our internal control over financial
reporting that existed as of June 30, 2005. A detailed description of the
material weaknesses is included in Item 9A to our Annual Report on Form 10-K for
the fiscal year ended June 30, 2005. A summary of these material weaknesses is
as follows:

         o        Our policies and procedures did not provide for adequate
                  management oversight and review of the accounting implications
                  of the terms and conditions of certain third-party agreements.

         o        Our policies and procedures did not provide for adequate
                  management oversight and review of the determination of
                  estimated reserves for sales returns, rebates, and wholesaler
                  price adjustments.

         o        Our policies and procedures did not provide for adequate
                  management oversight and review to ensure the proper
                  accounting for a zero cost protective collar derivative
                  instrument (the "Collar"). Specifically, we did not properly
                  value the Collar and did not properly apply the provisions of
                  Statement of Financial Accounting Standards No. 133,
                  "Accounting for Derivative Instruments and Hedging
                  Activities," as amended, to the Collar.


                                       22
<PAGE>

         Our remedial action plan, which we began implementing during the
quarterly period ended September 30, 2005, includes:

         o        Revising our policies and procedures to provide for an
                  increased level of management oversight and review with
                  respect to accounting for certain agreements with
                  third-parties.

         o        Increasing our level of training and education for accounting
                  and finance personnel and revising other policies and
                  procedures to provide for an increased level of management
                  oversight with respect to the computation of our estimated
                  revenue reserves for wholesaler price adjustments.

         o        Increasing our level of training, education, and accounting
                  reviews, and when necessary accessing additional accounting
                  and financial personnel, to ensure that all relevant financial
                  personnel have the appropriate level of technical expertise to
                  effectively interpret and apply accounting standards. As
                  indicated in Note 13, Derivative Instruments, the zero cost
                  protection collar derivative instrument matured during the
                  three months ended September 30, 2005. In addition, all
                  accounting matters related to such investments have been
                  resolved.

         Other than the changes related to the remediation plan discussed above,
there have been no other changes in our internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during the quarterly period covered by this report that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting. Management is committed to monitoring the
improvements made to its internal control over financial reporting to ensure
remediation of the material weaknesses that existed as of June 30, 2005.


                                       23
<PAGE>

PART II OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

         In September 2005, we entered into an employment agreement with Ivan D.
Horak, pursuant to which Dr. Horak was appointed our Executive Vice President
and Chief Scientific Officer. The employment agreement will be effective until
September 2, 2009, subject to automatic renewal for an additional twenty-four
months.

         The agreement provides for a base salary of $425,000 per year and
participation in Enzon's bonus plan for management. Under the bonus plan, Dr.
Horak will be eligible to receive an annual performance-based cash bonus in an
amount between zero and 82.5% of base salary, based on individual and/or
corporate factors to be established and determined by the Board of Directors
each year. The annual target bonus is equal to 50% of Dr. Horak's base salary.
Within five days of the commencement of Dr. Horak's employment, he received a
sign-on cash bonus in the amount of $100,000.

         Pursuant to the agreement, Dr. Horak was granted an option under our
2001 Incentive Stock Plan to purchase 200,000 shares of our Common Stock at a
per share exercise price of $7.14 (the last reported sale price of our common
stock on September 2, 2005). One-quarter of the options will vest on each of the
first four anniversaries of the grant. Dr. Horak also received 50,000 shares of
restricted Common Stock, 15,000 of which shares will vest on each of the third
and fourth anniversaries of the date of grant and the remaining 20,000 shares
will vest on the fifth anniversary of the date of grant, provided Dr. Horak
remains employed as our Executive Vice President and Chief Scientific Officer on
each such date.

         In the event Dr. Horak's employment is terminated without cause (as
defined in the employment agreement) by us or terminated by Dr. Horak for good
reason (as defined in the employment agreement), Dr. Horak will be entitled to
(i) a cash payment equal to any unpaid base salary through the date of
termination plus any earned bonus relating to the preceding fiscal year that
remains unpaid on the date of termination; (ii) a cash payment equal to one year
of his base salary plus a cash payment equal to the target bonus which would
have been payable for the fiscal year which commences immediately following the
date of his termination and (iii) a cash payment equal to a prorata portion of
his target bonus for the fiscal year during which the termination occurs. In
addition, we will reimburse Dr. Horak for any medical and dental coverage
available to him and his family for a period of up to 18 months commencing on
the date of termination, and all options and shares of restricted stock
described above that have not vested at the time of termination will vest
immediately upon termination.

         If we experience a change of control (as defined in Dr. Horak's
employment agreement) and we terminate Dr. Horak's employment without cause or
he terminates his employment for good reason, as defined, within the period
commencing 90 days before such change in control and ending one year after the
change of control, Dr. Horak will be entitled to (i) a cash payment equal to any
unpaid base salary through the date of termination plus any earned bonus
relating to the preceding fiscal year that remains unpaid on the date of
termination; (ii) a cash payment equal to two times the sum of his base salary
and target bonus for the fiscal year in which the termination occurs and (iii) a
cash payment equal to a prorata portion of his target bonus for the fiscal year
during which the termination occurs. In addition, we will reimburse Dr. Horak
for any medical and dental coverage available to him and his family for a period
of up to 18 months commencing on the date of termination. Further, upon a change
of control any of Dr. Horak's options to purchase Common Stock and shares of
restricted Common Stock that have been granted to him, but not yet vested, prior
to the effective date of the change of control shall vest at such time.

         Dr. Horak's employment agreement requires him to maintain the
confidentiality of our proprietary information during the term of his agreement
and thereafter. Dr. Horak is precluded from competing with us during the term of
his employment agreement and for one year after his employment is terminated.

         In October 2005, Enzon amended its license agreement with Aventis
Pharma, Inc. and Aventis Pharmaceuticals, Inc. (together "Aventis"), members of
the Sanofi-Aventis Group, for its oncology product, ONCASPAR(R) (pegaspargase).
The amended agreement, which will become effective in January 2006, includes a
significant reduction in the royalty rate, with no royalty obligation for the
first $25.0 million of ONCASPAR sales and a single digit royalty percentage
payable to Aventis on those annual sales of ONCASPAR that are in excess of $25.0
million. Previously, Enzon was obligated to pay 25% royalty on all sales of
ONCASPAR in the U.S. and Canada. We will pay Aventis an upfront cash payment of
$35.0 million in January 2006. Aventis is entitled to receive royalty payments
through June 30, 2014, at which time all Enzon royalty obligations will cease.
We believe there is a growth opportunity for ONCASPAR and we are committed to
investing in programs designed to optimize that potential, including programs
that might produce additional intellectual property protection for the product.
None of the patents currently owned or licensed to us relate to ONCASPAR.


                                       24
<PAGE>

ITEM 6.  EXHIBITS

Exhibits required by Item 601 of Regulation S-K.

         EXHIBIT
         NUMBER   DESCRIPTION
         ------   -----------
         3.1      Certificate of Incorporation, as amended (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)
         3.2      Amendment to Certificate of Incorporation (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)
         3.3      By laws, as amended (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)
         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 (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)
         4.2      Rights Agreement dated May 17, 2002 between the Company and
                  Continental Stock Transfer Trust Company, as rights agent
                  (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)
         4.3      First Amendment to Rights Agreement, dated as of February 19,
                  2003 (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)
         10.1     Employment Agreement with Ivan D. Horak, M.D. dated September
                  2, 2005, along with a form of Stock Option Award Agreement and
                  Restricted Stock Unit Award Agreement between the Company and
                  Dr. Horak executed as of September 2, 2005 *
         10.2     Form of Restricted Stock Unit Award Agreement for Independent
                  Directors *
         10.3     Form of Stock Option Award Agreement for options granted to
                  Independent Directors under the 1987 Non-Qualified Stock
                  Option Plan*
         10.4     Form of Stock Option Award Agreement for options granted to
                  Independent Directors under the 2001 Incentive Stock Plan *
         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.


                                       25
<PAGE>

                                   SIGNATURES

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

                                        ENZON PHARMACEUTICALS, INC.
                                               (Registrant)

Date:  November 9, 2005                 By: /s/ Jeffrey H. Buchalter
                                            ------------------------------------
                                            Jeffrey H. Buchalter
                                            Chairman, President and
                                            Chief Executive Officer
                                            (Principal Executive Officer)



Date:  November 9, 2005                 By: /s/ Craig A. Tooman
                                            ------------------------------------
                                            Craig A. Tooman
                                            Executive Vice President, Finance
                                            and Chief Financial Officer
                                            (Principal Financial Officer)


                                       26