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                                                                    EXHIBIT 10.5


                                                               November 22, 2004


                    SEPARATION AGREEMENT AND GENERAL RELEASE


                  This Separation Agreement and General Release ("Agreement") is
made as of the 24th day of November 2004, between ENZON PHARMACEUTICALS, INC.,
a Delaware corporation, with offices in Bridgewater, New Jersey ("Enzon"), and
ULRICH M. GRAU, PH.D. ("Executive"), a resident of New York.

                                   BACKGROUND

                  A. Executive is an Enzon employee who is voluntarily resigning
from his employment with Enzon; and

                  B. Enzon desires to recognize Executive's material
contributions during his employment; and

                  C. Executive and Enzon desire to resolve any potential claims
or disputes arising from Executive's employment with Enzon or his voluntary
resignation from employment;

                                      TERMS

                  In consideration of the mutual covenants and undertakings
contained herein, Executive and Enzon agree as follows:

                  1. Executive hereby resigns from his employment with Enzon,
effective March 31, 2005 (the "Separation Date"). Enzon agrees to pay
Executive's regular salary and benefits through the Separation Date, all
Compensated Time Off accrued but not taken (in accordance with Enzon's
compensated time off policy) as of the Separation Date, and any outstanding
expense reimbursement consistent with Enzon policy. Notwithstanding the above
Separation Date, effective as of January 15, 2005, Executive shall be on paid
leave with his sole obligation to provide reasonable assistance in the
transition by communicating at reasonable and mutually convenient times and
frequencies with persons designated by Enzon for this purposed with respect to
the transfer of duties and information. These obligations can be performed
off-site and not require the personal attendance of Executive except in unusual
circumstances requiring Executive's personal assistance which shall be given on
reasonable notice at mutually convenience times.

                  2. (a) In addition, subject to Section 2(b) hereof, Executive
shall receive cash payments as follows: (i) nine months of his Base Salary as of
the Separation Date; plus (ii) a bonus payment equal to Executive's annual bonus
target for fiscal year 2005 (50% of base salary) payable in August 2005 in
accordance with Enzon's current annual incentive payout process and as adjusted
for actual performance (based on performance goals already submitted to the
Board), provided that Executive shall receive no less than 90% of Executive's
target bonus for fiscal year 2005; plus (iii) a recognition bonus of $150,000
(One Hundred Fifty Thousand Dollars) if Marqibo is fully approved in January
2005 by the FDA (subject only to post-approval commitments), which, if earned,
shall be payable on March 31, 2005. If Marqibo is not fully approved in January
2005, but the Food and Drug Administration issues an "approvable" letter that
does not require the conduct of any clinical studies prior to the launch of
Marqibo and Enzon does launch Marqibo by June 30, 2005, then the recognition
bonus described in the preceding sentence shall be deemed earned and shall be
payable within 30 days after the launch of Marqibo. For purposes of this
Agreement, the term "launch" shall be deemed to mean the time at which Marqibo
can be legally marketed by Enzon regardless of when any actual sales or
marketing commences.

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                  (b) All payments made to Executive under these Sections1 and 2
that are based upon Executive's salary (not including bonus) shall be made
without deduction or offset (except for customary income tax withholding and the
like in accordance with Enzon's normal payroll practices consistent with the
manner in which such practices have been applied to Executive in the past) and
at times and in a manner which is in accordance with Enzon's standard payroll
practices for senior management; provided that such payments will cease on
December 31, 2005; provided however that if the salary and bonus payments under
this Agreement are not paid timely in accordance with this Agreement and then
within ten days of demand therefor, then Executive shall be have the right to
accelerate payment of the moneys due hereunder, including salary and unpaid
bonus, shall be reimbursed the cost and expense of collection of such moneys,
including reasonable attorneys fees and court costs.

                  (c) The Company shall pay reimburse Executive upon execution
of this Agreement Executive's reasonable legal fees and expenses incurred in
connection with the preparation and review of this Agreement up to a maximum of
$20,000 (Twenty Thousand Dollars). Enzon acknowledges that the flat fee
agreement of $ 20,000 paid to Rabner, Allcorn, Baumgart & Ben-Asher, P.C. in
connection with the negotiation of, and advice respecting, this agreement is
reasonable.

                  3. Executive's health coverage under Enzon's health care plans
will end effective as of the end of the month in which the Separation Date
occurs. Executive will then be eligible for COBRA continuation of medical and
dental coverage for a period of eighteen months. If Executive elects to obtain
COBRA coverage, Enzon will reimburse Executive for the total applicable premium
cost for a period the earlier of: (a) the date that is nine months from the
Separation Date, or (b) the date upon which Executive becomes eligible for
comparable benefit coverage through another employer. If Executive obtains
comparable benefit coverage at any time during this nine-month period, he will
immediately provide written notice to that effect to Enzon at the address set
forth in Paragraph 14 below.

                  4. Executive's eligibility for any other Enzon benefits of any
kind will end effective as of the Separation Date. Those portions of the stock
options to purchase Enzon common stock granted to Executive that will have
vested as of the Separation Date in accordance with the original and
non-accelerated vesting schedules set forth in the relevant Enzon stock option
plans and the relevant grant agreements, will remain outstanding and exercisable
after the Separation Date in accordance with their terms. None of the shares of
restricted stock or restricted stock units granted to Executive will have vested
as of the Separation Date, and they will be forfeited as of the Separation Date.

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                  5. As of the Separation Date, the Amended and Restated
Employment Agreement dated December 5, 2003 between Executive and Enzon (the
"Employment Agreement") shall be amended by deleting Sections 5(a) and 5(e) in
their entirety. As of the Separation Date, the Executive shall be subject to,
and shall abide by and adhere to the following restrictive covenants (in
addition to any obligations to which the Executive is otherwise subject after
the Separation Date under the Employment Agreement):

                  (a)      Noncompetition.

                           (i) The "Noncompete Period" shall be (A) with respect
                  to any activity covered by clause (x) below, the two (2) year
                  period commencing on the Separation Date and (B) with respect
                  to any activity covered by clauses (y) or (z) below, the one
                  (1) year period commencing on the Separation Date.

                           (ii) Attached as Schedule A hereto is a complete
                  listing of technologies and compounds being utilized, pursued
                  or developed by Enzon and the classes into which such
                  technologies or compounds fall or the indications for which
                  they are being utilized, pursued or developed (hereinafter
                  "Technology Listing"). During the Noncompete Period, Executive
                  will not directly, or indirectly, whether as an officer,
                  director, stockholder, partner, proprietor, associate,
                  employee, consultant, representative or otherwise, become, or
                  be interested in or associated with any other person,
                  corporation, firm, partnership or entity (collectively,
                  "entity") developing, manufacturing, marketing or selling
                  protein-based biopharmaceuticals or other pharmaceuticals
                  (collectively, "products") (x) where a significant business of
                  the entity is to develop, manufacture, market, or sell (for
                  its own account or for others) products that are modified
                  using PEGylation technology for the classes and indications as
                  referred to in Item 1 on the Technology Listing; or (y) where
                  a significant business of the entity is to develop,
                  manufacture, market or sell (for its own account or for
                  others) single chain antibodies for the classes and
                  indications, as referred to in Item 2 on the Technology
                  Listing, or (z) where a significant business of the entity
                  relates to a project involving a compound or technology that
                  is within any class listed in items 3-20 of the Technology
                  Listing and that is being utilized, pursued or developed for
                  any indication listed in items 3-20 of the Technology Listing;
                  notwithstanding anything set forth above, for the compounds
                  set forth as Items 9,18, 19 and 20, subsection (z) shall be
                  applicable only if Enzon licenses the respective compound (s)
                  within six months of the Effective Date. Enzon agrees to
                  advice Executive in writing as to which, if any, of such
                  compounds have been the subject of a written license agreement
                  within those period within ten days of the end of such six
                  months period, and, in absence of such notice Executive can
                  assume that no such licensing has occurred.

                  For purposes of this Agreement the term "significant business"
                  of the entity shall mean an activity with respect to which at
                  least 20% of the entity's gross revenues are attributable or
                  at least 20% of the entity's research and development budget
                  is allocated or 20% of its research and development resources
                  are allocable.

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                  (b) Nonsolicitation of Employees. During the Noncompete Period
                  (specified in Section 5(a)(i)(B) hereof), Executive shall not,
                  directly or indirectly, personally or through others,
                  encourage to leave employment with the Company, employ or
                  solicit for employment, or advise or recommend to any other
                  person, firm, business, or entity that they employ or solicit
                  for employment, any employee of the Company or of any parent,
                  subsidiary, or affiliate of the Company; provided that the
                  restriction contained in this Section 5(b) shall not apply
                  with respect to Mr. A. Clarke Atwell and Dr. Eddy Anglade.

                  6. Executive agrees that no additional compensation or
benefits of any kind shall be paid to him, and the compensation and benefits
provided to him under this Agreement shall be in full payment and satisfaction
of any and all financial obligations due to him from Enzon. Executive further
acknowledges that in consideration for his execution of this Agreement, he is
receiving significant consideration under this Agreement in addition to that to
which he was previously entitled.

                  7. (a) It is understood and agreed that, by this Agreement,
Executive and Enzon intend to settle any and all claims which Executive has or
may have against Enzon or Enzon has against Executive arising out of or
resulting from, among other things, Executive's employment at Enzon and his
resignation from such employment. Accordingly, in exchange for the benefits
provided to Executive by this Agreement, Executive, for himself, his heirs,
successors and assigns, and Enzon hereby voluntarily discharge and release each
other and their respective affiliates, parent and subsidiary companies, and
their respective officers, directors, employees, agents, representatives,
successors and assigns of the respective parties (the "Releasees") from any and
all claims or liabilities of any kind or description, known or unknown,
suspected or unsuspected, fixed or contingent, which Executive or Enzon ever
had, now has or hereafter may have against each other or any of the Releasees by
reason of any matter whatsoever arising out of or resulting from Executive's
employment at Enzon and/or his separation from such employment. The release of
claims specifically includes, but is not limited to, claims arising under or
based upon, the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the Family and Medical Leave Act of 1993, the Employee Retirement
Income Security Act, the Rehabilitation Act of 1973, the Americans with
Disabilities Act of 1990, the New Jersey Law Against Discrimination, the New
Jersey Family Leave Act, the New Jersey Conscientious Employee Protection Act,
the Fair Labor Standards Act, the New Jersey Wage and Hour Act, and/or any other
state, federal, or municipal employment discrimination statutes (including
without limitation claims based on age, sex, attainment of benefit plan rights,
race, national origin, religion, handicap, sexual orientation, sexual
harassment, family or marital status, retaliation, and veteran status), and/or
any other federal, state, or local statute, law, ordinance, or regulation and/or
pursuant to any other theory whatsoever, including without limitation claims
related to breach of implied or express employment contracts, breach of the
implied covenant of good faith and fair dealing, defamation, wrongful discharge,
constructive discharge, negligence of any kind, intentional infliction of
emotional distress, whistle-blowing, estoppel or detrimental reliance, public
policy, constitutional or tort claims, violation of the penal statutes and
common law claims, or pursuant to any other theory or claim whatsoever,
including claims for attorneys' fees, arising out of or related to Executive's
employment at Enzon and/or his resignation from such employment and/or any other
occurrence from the beginning of time to the date of this Agreement.

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                  (b) Notwithstanding the above, Enzon recognizes that Executive
does not release Enzon or its respective releasees from any: (i) claim for
indemnification which Executive has against Enzon and its releasees arising out
of claims by third parties for actions or omissions of Executive arising out of
his duties for Enzon; or (ii) claims against Enzon by releasees who have not
signed this Agreement and bring claims against Executive. In connection with
(b)(i)and b (ii) above, Enzon recognizes Executive's continuing right to
coverage under any errors or omissions or insurance coverage, and,
indemnification against such third party claims and expenses (including legal
fees and court costs) to the fullest extent permitted by law for claims made
against him, including those covered by the certificate or incorporation,
by-laws, resolutions, or otherwise required by law, such indemnification to
include the cost and expense of defending any such claim in any forum including
the costs of enforcing the indemnity hereunder, including reasonable attorneys
fees.

                  8. Each party agrees to reasonably cooperate with the other
with respect to transition matters. With respect to Executive, this will include
but not be limited to: (a) responding to reasonable telephonic inquiries from
Enzon management concerning the transition of matters that Executive worked on
during his employ and (b) promptly notifying within a reasonable time Gary Arlen
Smith, Vice President and General Counsel, or his successor or designee, if
Executive receives any legal notices, subpoenas or requests for information from
any person or entity, other than a representative of Enzon, concerning matters
which arose during the period of his employment with Enzon.

                  9. (a) Enzon shall issue a press release announcing the
resignation hereunder, which press release shall be mutually agreed upon by the
parties. In the event that inquiries are made of Enzon or its agents or
representatives concerning Executive's employment with Enzon, Enzon will direct
all such inquiries to Human Resources and advise only that the Executive
voluntarily left employment in good standing and the position which he held with
Enzon and Executive will make a similar statement concerning the reasons for
termination. Notwithstanding the foregoing, Enzon's authorized spokespersons for
disclosure purposes shall be permitted to respond in a limited fashion to
questions proffered by investors or securities analysts regarding the
resignation hereunder; provided, however, that neither party shall be permitted
to make any disparaging, untrue or defamatory communication about the other.

                            (b) Executive shall not notify any party with whom
         Enzon has entered into any research or development or licensing
         agreement about his resignation hereunder until Enzon has discussed
         such resignation with such party. Enzon shall exercise commercially
         reasonable efforts to have engaged in such discussions with all such
         entities no later than three business days after the issuance of the
         press release referred to in Section 9(a).

                  10. Both parties agree that they will keep the specific terms
of this Agreement strictly confidential with the sole exceptions of Executive's
spouse, either party's attorney(s) or tax advisor(s), Enzon's independent
auditors (all of whom agree to keep the terms confidential), or as may be
required by law, including disclosure requirements under applicable securities
laws and other laws , including tax laws, or as necessary in any legal
proceeding to enforce or prosecute a party's rights.

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                  11. Executive agrees that, no later than January 15, 2005, he
shall deliver to Enzon all books, records, notes, documents and other written or
computer generated materials of any nature whatsoever relating to Enzon's
business and any other Enzon property in his possession or within his control
(e.g., credit cards, equipment, office keys). Executive agrees that he shall not
keep in his possession or control any of Enzon's property of any kind.

                  12. Both parties acknowledge and represent that they fully
understand this Agreement, that they have had adequate and reasonable
opportunity to review the Agreement, that they were advised to consult with, and
have, in fact, consulted with, independent counsel of their choice before
signing it, and that they are signing it voluntarily.

                  13. Executive acknowledges that the terms of this Agreement
shall be open for acceptance by him for a period of twenty-one (21) days during
which time he may consider whether to accept this Agreement.

                  14. Executive further acknowledges and agrees that he may
cancel or revoke this Agreement within seven (7) days after signing it. To be
effective, any notice of cancellation or revocation must be in writing and
delivered either by hand or mail within such seven (7) day period to Mr. Paul S.
Davit at Enzon. If delivered by mail, the notice of cancellation or revocation
must be (a) post-marked within the seven (7) day period; (b) properly addressed
to Mr. Paul S. Davit, Enzon Pharmaceuticals, Inc., 685 Route 202/206,
Bridgewater, New Jersey 08807; and (c) sent by certified mail, return receipt
requested. Executive acknowledges and agrees that if he exercises his right of
cancellation or revocation, Enzon shall be relieved of all obligations
undertaken in this Agreement.

                  15. The terms and conditions of this Agreement may not be
altered, amended or modified except by a writing duly executed by both Executive
and Enzon.

                  16. Except as otherwise stated herein, this Agreement contains
the entire understanding between Executive and Enzon with respect to the
termination of Executive's employment at Enzon. There are no covenants,
representations or undertakings with respect to such termination other than
those expressly set forth or referenced in this Agreement.

                  17. If any portion of this Agreement is found by a court of
competent jurisdiction to be void and unenforceable, such portions shall be
deemed to be severable from the Agreement and shall have no effect on the
remaining sections of this Agreement.

                  18. This Agreement shall be governed and construed in
accordance with the laws of the State of New Jersey without regard to its choice
of law or conflicts of law rules. In the event of any proceedings arising out of
this Agreement, the prevailing party shall be entitled to reasonable attorneys
fees and costs.

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                  19. This Agreement has been reviewed and negotiated by both
Executive and Enzon, and no provision of this Agreement shall be construed
against either party on the ground that such party was the drafter of that
provision or the Agreement.

                  20. This Agreement shall be binding upon Executive and Enzon
upon its execution by them and shall inure to the benefit of their respective
heirs, successors and permitted assigns.

                  IN WITNESS WHEREOF, the parties have duly executed this
Separation Agreement and General Release or caused it to be executed by duly
authorized representatives as of the dates set forth below.

ENZON PHARMACEUTICALS, INC.



By:   Chief Scientific Officer         /s/ Ulrich M. Grau
     -----------------------------     -----------------------------------------
        Name:                                   Ulrich M. Grau, Ph.D.
        Title:

Date:_____________________________     Date:___________________________



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