Enzon Reports Third Quarter Financial Results; Product Sales Increase by 28%.

Business Editors/Health/Medical Writers

BRIDGEWATER, N.J.--(BUSINESS WIRE)--May 5, 2004

Enzon Pharmaceuticals, Inc. (Nasdaq: ENZN) announced today its financial results for the quarter ended March 31, 2004, the third quarter of Enzon's fiscal year (FY) 2004. During the quarter, Enzon completed several corporate milestones including:

-- Establishing a commercialization partnership with Inex

Pharmaceuticals Corporation (TSX: IEX) for Inex's oncology

drug, Onco TCS. Inex completed a pivotal Phase 2/3 trial for

Onco TCS in 2003 for patients with relapsed, aggressive

non-Hodgkin's lymphoma and several Phase 2 trials are also

underway in various other cancers.

-- Initiating patient dosing in a clinical trial designed to

evaluate Pegamotecan as a single-agent, second-line therapy

for the treatment of gastric and gastroesophageal junction

cancers. This study was initiated based on the positive

interim data yielded from the Company's ongoing Phase 2 trial

for the treatment of gastric and gastroesophageal cancers.

-- The filing of a New Drug Application (NDA) for Onco TCS and

the requesting of a Priority Review, as Onco TCS is a product

intended to address an unmet medical need. Applications that

are granted Priority Review status are targeted for action by

the United States Food and Drug Administration (FDA) within

six months from the date that the submission is complete.

-- Launching a major new initiative in antifungal research with

the introduction of the Company's proprietary CLEAR II(TM)

patient registry. CLEAR II is a multi-center registry

developed by and for clinicians to share and exchange online,

real-time data on the clinical course of invasive fungal

infections. Importantly, this registry captures information on

physician clinical experiences with Enzon's ABELCET(R)

(Amphotericin B Lipid Complex Injection), as well as other

antifungal agents and the Company anticipates it will quickly

become an important resource for physicians treating invasive

fungal infections.

"This quarter is highlighted by several notable achievements, with the most significant being adding Onco TCS to our product pipeline and soon thereafter submitting an NDA for this important product," said Arthur J. Higgins, Enzon's chairman and chief executive officer. "With a strengthened pipeline, continued strong performance from our marketed products, and the potential for a product approval and launch in the near term, Enzon is well positioned for continued growth."

Financial Results

The Company reported net income for the third quarter of FY 2004 of $5.1 million, or $0.12 cents per diluted share, compared with net income of $7.6 million or $0.17 cents per diluted share for the third quarter of FY 2003. The Company's net income for the third quarter of FY 2004 includes a write-off of acquired in-process research and development costs of $12.0 million related to the acquisition of the North American commercialization rights to Onco TCS from Inex in January 2004 and a net gain on investments of $11.0 million principally related to the sale of approximately 50% of the Company's investment in Nektar Therapeutics (Nasdaq: NKTR).

Combined product sales for the Company's four internally marketed products (ABELCET(R), ONCASPAR(R), DEPOCYT(R), and ADAGEN(R)) increased by $6.1 million or 28% to $28.0 million compared with $21.9 million for the prior year's comparable quarter. This increase was primarily driven by an increase in sales of ABELCET. For the third quarter of FY 2004 North American sales of ABELCET were $17.6 million compared with $13.5 million for the third quarter of FY 2003 and ahead of the Company's expectations for the quarter of $16.5 million to $17.5 million.

Sales of ONCASPAR for the third quarter of FY 2004 increased by $2.1 million or 75% to $4.9 million compared with $2.8 for the third quarter of FY 2003. Sales of DEPOCYT were $1.4 million for the third quarter of FY 2004, compared with $1.2 million for the third quarter of FY 2003. In January 2003, the Company in-licensed the North American rights to DEPOCYT from SkyePharma PLC. ADAGEN sales for the third quarter of FY 2004 were $4.1 million versus $4.3 million in the third quarter of FY 2003.

During the quarter, the Company also recorded $5.0 million in manufacturing revenue related to the ABELCET business, which included approximately $1.7 million of revenue related to the settlement of certain disputed items. Manufacturing revenue for the third quarter of FY 2003 was $4.8 million.

Total royalties for the third quarter of FY 2004 decreased by $5.1 million or 32% to $11.1 million compared with $16.2 million for the third quarter of FY 2003. Total royalties for the quarter were made up principally of royalties from sales of PEG-INTRON marketed by Schering-Plough Corporation (NYSE: SGP). The decrease was due to the ongoing competition in the pegylated alpha interferon market. To strengthen its hepatitis C product line, in February 2004 Schering-Plough launched a new PEG-INTRON Redipen precision-dosing pen in the U.S. market, where Schering-Plough has reported it is being well received.

The Company's investment in research and development increased by $5.6 million or 110% to $10.8 million in the third quarter of FY 2004 compared with $5.1 million for the third quarter of FY 2003. The increase was primarily attributable to the Company's shared product development costs with Inex for Onco TCS, which included costs related to the filing of the NDA in March 2004, as well as costs related to the Company's internal research and development programs, namely, the initiation of a clinical trial for Pegamotecan as a second-line therapy for the treatment of gastric and gastroesophageal junction cancers, preparation for the commencement of a Phase 3 trial for ATG Fresenius S, and the Company's earlier stage programs.

Selling, general, and administrative expenses increased by $3.0 million or 32% to $12.5 million in the third quarter of FY 2004 versus $9.5 million for the third quarter of FY 2003. This increase was primarily attributable to expenditures related to ABELCET promotional activities, which included publications, presentations, and expenditures related to the March 2004 launch of the Company's CLEAR II registry at the Focus on Fungal Infections conference.

Net investment income increased to $11.6 million in the third quarter of FY 2004, compared with $632,000 for the corresponding period in FY 2003. The increase is principally due to the sale of 880,075 shares of Nektar Therapeutics common stock, which resulted in a net gain of approximately $11.0 million.

During the third quarter of FY 2004, the Company recorded a deferred tax benefit of approximately $5.5 million that was primarily attributable to the reversal of a deferred tax valuation allowance pertaining to the write down of the carrying value of the Company's Nektar Therapeutics shares that were sold during the quarter. The deferred tax benefit was also attributable to a reduction in the Company's estimated taxable income and effective tax rate due to the $12.0 million write-off of acquired in-process research and development costs related to the acquisition of the North American commercialization rights to Onco TCS.

The Company's cash and investments totaled $174.5 million as of March 31, 2004 compared with $153.3 million as of June 30, 2003. The increase in cash and investments was primarily the result of cash proceeds of $17.4 million related to the Company's sale of 880,075 shares of Nektar Therapeutics common stock and positive cash flows provided by the Company's operations. These increases were partially offset by the payment of $12.0 million to Inex for acquired in-process research and development related to the acquisition of the North American commercialization rights to Onco TCS.

The management of Enzon will be hosting a conference call today, May 5, 2004 at 4:30 PM EDT. All interested parties can access the live call using the following information:

       Domestic Dial-In Number:         888-428-4479
       International Dial-In Number:    651-291-0900
       Access Code:                     727692

Enzon's conference call will also be webcast in a "listen only" mode via the Internet at http://www.vcall.com. Additionally, for those parties unable to listen at the time of Enzon's conference call, a rebroadcast will be available following the call from Wednesday, May 5, 2004 at approximately 9:30 PM EDT. This rebroadcast will end on Wednesday, May 12, 2004 at midnight. The rebroadcast may be accessed using the following information:

       Domestic Dial-In Number:         800-475-6701
       International Dial-In Number:    320-365-3844
       Access Code:                     727692

Enzon Pharmaceuticals is a biopharmaceutical company dedicated to the discovery, development and commercialization of therapeutics to treat life-threatening diseases. The Company has developed or acquired a number of marketed products, including PEG-INTRON(R), marketed by Schering-Plough, and ABELCET(R), ONCASPAR(R), ADAGEN(R), and DEPOCYT(R), marketed in North America by Enzon's specialized sales force. Enzon's science-focused strategy includes an extensive drug development program that leverages the Company's macromolecular engineering technology platforms, including PEG modification and single-chain antibody (SCA(R)) technologies. Internal research and development efforts are complemented by strategic transactions that provide access to additional products and technologies. Enzon has several drug candidates in various stages of development, independently and with partners, including Onco TCS, for which a U.S. marketing application has been submitted for the treatment of relapsed, aggressive non-Hodgkin's lymphoma. Further information about Enzon, this press release, and the conference call can be found on the Company's web site at www.enzon.com.

There are forward-looking statements contained herein that are not based on historical fact, including without limitation statements containing the words "believes," "may," "plans," "will," "estimates," "continue," "anticipates," "intends," "expects," and similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, events or developments to be materially different from the future results, events or developments discussed above. Such factors include the risks that the NDA for Onco TCS may not be granted Priority Review status by the FDA and that Onco TCS may not receive regulatory approval from the FDA, as well as those described in Enzon's Form 10-K and Forms 10-Q on file with the SEC, such as Enzon's ability to successfully launch and market Onco TCS, Enzon's ability to sustain profitability, and positive cash flow; risks in obtaining and maintaining regulatory approval for indications and expanded indications for Enzon's products; market acceptance of and continuing demand for Enzon's products; timing and results of clinical trials, including, without limitation, the ongoing clinical trials of Pegamotecan for the treatment of gastric and gastroesophageal cancers; the risk that the FDA may not deem Pegamotecan eligible for accelerated approval under Subpart H of the Food and Drug Act; and the impact of competitive products and pricing. These factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. All information in this press release is as of May 5, 2004 and the Company undertakes no duty to update this information.

             ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
              Three Months ended March 31, 2004 and 2003
                 (In thousands, except per share data)
                              (Unaudited)


                                               March 31,    March 31,
                                                 2004         2003
                                              -----------  -----------
Revenues:
  Net sales                                      $27,993      $21,875
  Manufacturing revenue                            5,035        4,762
  Royalties                                       11,103       16,242
  Contract revenue                                   248          284
                                              -----------  -----------
    Total revenues                                44,379       43,163
                                              -----------  -----------
Costs and expenses:
  Cost of sales and manufacturing revenues        12,458       11,080
  Research and development expenses               10,772        5,132
  Acquired in-process research and development    12,000           --
  Selling, general and administrative expenses    12,500        9,481
  Merger expenses                                     --        1,398
  Amortization of acquired intangibles             3,358        3,960
                                              -----------  -----------
     Total costs and expenses                     51,088       31,051
                                              -----------  -----------
      Operating income (loss)                     (6,709)      12,112
                                              -----------  -----------
Other income (expense):
  Investment income, net                          11,564          632
  Interest expense                                (4,957)      (4,957)
  Other income (expense)                            (337)           3
                                              -----------  -----------
                                                   6,270       (4,322)
                                              -----------  -----------
Income before taxes                                 (439)       7,790
Tax provision (benefit)                           (5,505)         156
                                              -----------  -----------
Net income                                        $5,066       $7,634
                                              ===========  ===========
Basic earnings per common share                     0.12         0.18
                                              ===========  ===========
Diluted earnings per common share                   0.12         0.17
                                              ===========  ===========
Weighted average number of common shares
  issued and outstanding - basic                  43,368       43,192
                                              ===========  ===========

Weighted average number of common shares
 issued and outstanding and dilutive potential
 common shares outstanding                        43,817       43,634
                                              ===========  ===========

             ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
               Nine Months ended March 31, 2004 and 2003
                 (In thousands, except per share data)
                              (Unaudited)


                                               March 31,    March 31,
                                                 2004          2003
                                              -----------  -----------
Revenues:
  Net sales                                      $80,665      $36,250
  Manufacturing revenue                            8,826        5,496
  Royalties                                       36,461       57,565
  Contract revenue                                   769          417
                                              -----------  -----------
Total revenues                                   126,721       99,728
                                              -----------  -----------
Costs and expenses:
  Cost of sales and manufacturing revenues        35,195       17,859
  Research and development expenses               24,711       14,886
  Acquired in-process research and development    12,000           --
  Selling, general and administrative expenses    35,187       20,786
  Merger expenses                                     --        1,398
  Amortization of acquired intangibles            10,074        5,288
  Write-down of carrying value of investments         --       27,237
                                              -----------  -----------
      Total costs and expenses                   117,167       87,454
                                              -----------  -----------
      Operating income                             9,554       12,274
                                              -----------  -----------
Other income (expense):
  Investment income, net                          12,744        8,430
  Interest expense                               (14,871)     (14,871)
  Other income                                        71            3
                                              -----------  -----------
                                                  (2,056)      (6,438)
                                              -----------  -----------
Income before taxes                                7,498        5,836
Tax provision (benefit)                           (2,691)         662
                                              -----------  -----------
Net income                                        10,189       $5,174
                                              ===========  ===========
Basic earnings per common share                     0.24        $0.12
                                              ===========  ===========
Diluted earnings per common share                   0.23        $0.12
                                              ===========  ===========
Weighted average number of common shares
 issued and outstanding - basic                   43,322       43,061
                                              ===========  ===========
Weighted average number of common shares
 issued and outstanding and dilutive potential
 common shares outstanding                        43,657       43,611
                                              ===========  ===========

             ENZON PHARMACEUTICALS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED BALANCE SHEETS
                   March 31, 2004 and June 30, 2003
                   (In thousands, except share data)
                              (Unaudited)

                                               March 31,     June 30,
                                                  2004         2003
                                              -----------  -----------
Assets
Current assets:
  Cash and cash equivalents                      $83,370      $66,752
  Short-term investments                           9,741       25,047
  Accounts receivable, net                        29,623       33,173
  Inventories                                     10,586       11,786
  Deferred tax and other current assets           20,798       16,089
                                              -----------  -----------
     Total current assets                        154,118      152,847

Property and equipment, net                       34,178       32,593
                                              -----------  -----------
Other assets:
  Marketable securities                           81,358       61,452
  Investments in equity securities and
   convertible note                               65,274       56,364
  Amortizable intangible assets, net             198,544      211,975
  Goodwill                                       150,985      150,985
  Deferred tax and other assets                   53,132       62,350
                                              -----------  -----------
                                                 549,293      543,126
                                              -----------  -----------
     Total assets                               $737,589     $728,566
                                              ===========  ===========

Liabilities and Stockholders' Equity
Current liabilities                               26,517      $34,345
Notes payable                                    400,000      400,000
Other liabilities                                  6,671        2,637
Stockholders' equity                             304,401      291,584
                                              -----------  -----------
     Total liabilities and stockholders'
      equity                                    $737,589     $728,566
                                              ===========  ===========

Common stock shares outstanding                   43,841       43,518