SEC Filing | Enzon Pharmaceuticals

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                          ----------------------------

                                    FORM 10-Q
                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                           ---------------------------

For the Quarter Ended September 30, 1999             Commission File No. 0-12957

                               [LOGO] ENZON, INC.
             (Exact name of registrant as specified in its charter)

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

 20 Kingsbridge Road, Piscataway, New Jersey                      08854
 (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code: (732) 980-4500

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.01 par value
                                (Title of class)

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

     As of November 5, 1999,  there were 36,813,597  shares of Common Stock, par
value $.01 per share, outstanding.





PART I FINANCIAL INFORMATION
Item 1. Financial Statements


                          ENZON, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                      September 30, 1999 and June 30, 1999



                                                                    September 30,      June 30,
                                                                         1999            1999
                                                                      (unaudited)          *
                                                                    -------------    -------------
                                                                               
ASSETS
Current assets:
  Cash and cash equivalents                                         $  24,635,324    $  24,673,636
  Accounts receivable                                                   4,039,919        4,604,847
  Inventories                                                           1,469,355        1,326,601
  Other current assets                                                  1,189,517        1,034,327
                                                                    -------------    -------------

     Total current assets                                              31,334,115       31,639,411
                                                                    -------------    -------------

Property and equipment                                                 11,911,932       12,054,505
  Less accumulated depreciation and amortization                       10,526,747       10,649,661
                                                                    -------------    -------------
                                                                        1,385,185        1,404,844
                                                                    -------------    -------------
Other assets:
  Investments                                                              68,823           68,823
  Other assets, net                                                       754,186          753,683
  Patents, net                                                          1,013,719        1,049,554
                                                                    -------------    -------------
                                                                        1,836,728        1,872,060
                                                                    -------------    -------------

Total assets                                                        $  34,556,028    $  34,916,315
                                                                    =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                                  $   1,661,334    $   1,716,089
  Accrued expenses                                                      6,604,559        6,261,640
                                                                    -------------    -------------
     Total current liabilities                                          8,265,893        7,977,729
                                                                    -------------    -------------
Accrued rent                                                              627,771          634,390
Royalty advance - RPR                                                     734,196          728,977
                                                                    -------------    -------------
                                                                        1,361,967        1,363,367
                                                                    -------------    -------------

Commitments and contingencies

Stockholders' equity:
  Preferred stock-$.01  par  value, authorized
   3,000,000 shares: issued and outstanding
   107,000 shares at September 30, 1999 and
   June 30, 1999 (liquidation preference
   aggregating $4,713,000 at September 30, 1999                            1,070            1,070
   and $4,659,000 at June 30, 1999)
   Common stock-$.01 par value, authorized 60,000,000 shares;
   issued and outstanding 36,814,085 shares at September 30, 1999
   and 36,488,684 shares at June 30, 1999                                 368,140          364,886
   Additional paid-in capital                                         148,270,447      146,970,289
   Accumulated deficit                                               (123,711,489)    (121,761,026)
                                                                    -------------    -------------
Total stockholders' equity                                             24,928,168       25,575,219
                                                                    -------------    -------------

Total liabilities and stockholders' equity                          $  34,556,028    $  34,916,315
                                                                    =============    =============



*Condensed from audited financial statements.

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


                                       2



                          ENZON, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                 Three Months Ended September 30, 1999 and 1998
                                   (Unaudited)

                                                       Three months ended
                                                  September 30,    September 30,
                                                      1999             1998
                                                   ------------    ------------
Revenues:
  Sales                                              $2,870,135      $2,935,702
  Contract revenue                                       43,678          51,965
                                                   ------------    ------------
     Total revenues                                   2,913,813       2,987,667
                                                   ------------    ------------
Costs and expenses:

  Cost of sales                                       1,178,561       1,309,851

  Research and development expenses                   1,657,283       1,575,346
  Selling, general and administrative expenses        2,325,971       1,535,279
                                                   ------------    ------------
     Total costs and expenses:                        5,161,815       4,420,476
                                                   ------------    ------------
        Operating loss                               (2,248,002)     (1,432,809)
                                                   ------------    ------------
Other income (expense):
  Interest and dividend income                           300,497        302,566
  Interest expense                                       (2,958)         (5,436)
  Other
                                                           --               730
                                                   ------------    ------------
                                                        297,539         297,860
                                                   ------------    ------------
    Net loss                                        ($1,950,463)    ($1,134,949)
                                                   ============    ============
Basic and diluted loss per common share
                                                         ($0.05)         ($0.03)
                                                   ============    ============

Weighed average number of common
  shares issued and outstanding                      36,650,335      34,708,853
                                                   ============    ============


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


                                       3


                          ENZON, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                 Three Months Ended September 30, 1999 and 1998
                                   (Unaudited)



                                                              Three Months Ended
                                                         September 30,    September 30,
                                                             1999             1998
                                                         ------------    ------------
                                                                    
Cash flows from operating activities:
  Net loss                                                ($1,950,463)    ($1,134,949)
  Adjustment for depreciation and amortization                124,512         288,768
  Gain on retirement of equipment                                --              (730)
  Non-cash expense for issuance of common stock,
    stock options, and warrants                                70,022         171,340
  Decrease in accrued rent                                     (6,619)        (39,766)
  Increase (decrease) in royalty advance - RPR                  5,219        (254,350)
  Changes in assets and liabilities                           554,645        (347,252)
                                                         ------------    ------------
  Net cash used in operating activities                    (1,202,684)     (1,316,939)
                                                         ------------    ------------

Cash flows from investing activities:
  Capital expenditures                                        (69,018)        (17,893)
  Proceeds from sale of equipment                                --            88,372
  Net cash (used in) provided by investing activities         (69,018)         70,479
                                                         ------------    ------------
Cash flows from financing activities - proceeds from
  issuance of common stock, net                             1,233,390      17,800,549
  Net (decrease) increase in cash and cash equivalents        (38,312)     16,554,089
                                                         ------------    ------------
  Cash and cash equivalents at beginning of period         24,673,636       6,478,459
                                                         ------------    ------------
  Cash and cash equivalents at end of period              $24,635,324     $23,032,548
                                                         ============    ============




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



                                       4



                          ENZON, INC. AND SUBSIDIARIES
              Notes To Consolidated Condensed Financial Statements
                                   (Unaudited)


(1)  Organization and Basis of Presentation

     The  unaudited   consolidated  condensed  financial  statements  have  been
prepared  from the  books  and  records  of  Enzon,  Inc.  and  subsidiaries  in
accordance with generally accepted  accounting  principles for interim financial
information.  Accordingly,  they  do not  include  all of  the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
only of  normal  and  recurring  adjustments)  considered  necessary  for a fair
presentation have been included.  Interim results are not necessarily indicative
of the results that may be expected for the year.

(2)  Loss Per Common Share

     Basic and  diluted  loss per common  share is based on the net loss for the
relevant period, adjusted for cumulative undeclared preferred stock dividends of
$54,000 for the three months ended  September 30, 1999 and 1998,  divided by the
weighted average number of shares issued and outstanding during the periods. Due
to the net loss recorded for the three months ended September 30, 1999 and 1998,
the  exercise or  conversion  of all  dilutive  potential  common  shares is not
included for purposes of the diluted loss per share calculation. As of September
30, 1999, the Company had 5,537,000 dilutive potential common shares outstanding
that could potentially dilute future diluted earnings per share calculations.

(3)  Inventories

     The  composition  of inventories at September 30, 1999 and June 30, 1999 is
as follows:

                                             September 30,        June 30,
                                                 1999               1999
                                              ----------         ----------

     Raw materials                              $566,000           $503,000
     Work in process                             764,000            548,000
     Finished goods                              139,000            276,000
                                              ----------         ----------
                                              $1,469,000         $1,327,000
                                              ==========         ==========

(4)  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  $3,000 and $5,000 for the three months ended  September  30, 1999
and 1998,  respectively.  There were no income tax  payments  made for the three
months ended September 30, 1999 and 1998.  There were no conversions of Series A
Preferred Stock during the three months ended September 30, 1999 and 1998.

(5)  Non-Qualified Stock Option Plan

     During the three  months  ended  September  30,  1999,  the Company  issued
112,000 stock options at an average exercise price of $22.57 per share under the
Company's  Non-Qualified  Stock  Option Plan,  as amended,  of which 77,000 were
granted to  executive  officers  of the  Company as part of a bonus plan for the
year ended June 30,  1999.  None of the  options  granted  during the period are
exercisable  as of September  30, 1999.  All options were granted with  exercise
prices that equaled or exceeded the fair market value of the underlying stock on
the date of grant.


                                       5




                          ENZON, INC. AND SUBSIDIARIES
                        Notes To Consolidated Condensed
                        Financial Statements (Unaudited)


(6)  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.  The Company does
not prepare  discrete  financial  statements  with  respect to separate  product
areas. Accordingly,  the Company does not have separately reportable segments as
defined by Statement of Financial  Accounting  Standards  No. 131,  "Disclosures
about Segments of an Enterprise and Related Information".

(7) Comprehensive Income (Loss)

     The net loss of $1,950,000  and  $1,135,000,  recorded for the three months
ended September 30, 1999 and 1998,  respectively,  is equal to the comprehensive
loss for those periods.

(8) Commitments and Contingencies

     The  Company  is being  sued by a former  financial  advisor,  LBC  Capital
Resources,  Inc.  ("LBC"),  which is asserting that under a May 2, 1995,  letter
agreement  ("Letter  Agreement")  between  Enzon and LBC,  LBC was entitled to a
commission  in  connection  with the  Company's  January and March 1996  private
placement,  comprised of $500,000 and warrants to purchase  1,000,000  shares of
Enzon  common  stock  at an  exercise  price of $2.50  per  share.  LBC has also
asserted  that it is entitled to an  additional  fee of $175,000 and warrants to
purchase  250,000  shares of Enzon  common stock when and if any of the warrants
obtained  pursuant  to the private  placements  are  exercised.  LBC has claimed
$3,000,000 in  compensatory  damages,  plus punitive  damages,  counsel fees and
costs for the alleged breach of the Letter Agreement.  The Company believes that
no such  commission was due under the Letter  Agreement and denies any liability
under  the  Letter  Agreement.  The  Company  intends  to  defend  this  lawsuit
vigorously  and believes the ultimate  resolution of this matter will not have a
material adverse effect on the financial position of the Company.

     In the course of normal operations, the Company is subject to the marketing
and manufacturing regulations as established by the Food and Drug Administration
("FDA").  The Company and the FDA agreed to temporary  labeling and distribution
modifications  for ONCASPAR due to increased  levels of  particulates in certain
batches of ONCASPAR, which were manufactured by the Company. The Company, rather
than its  marketing  partner,  Rhone-Poulenc  Rorer  ("RPR"),  will  temporarily
distribute  ONCASPAR  directly  to  patients,  on an as needed  basis,  and will
conduct the additional inspection and labeling procedures prior to distribution.
During May 1999,  the FDA placed  additional  restrictions  on  ONCASPAR,  which
specified  ONCASPAR  was to be  distributed  only  to  those  patients  who  are
hypersensitive to native L-asparaginase.

     The Company has been able to manufacture  several batches of ONCASPAR which
contain  acceptable levels of particulates and anticipates a final resolution of
the problem during fiscal 2000. It is expected that RPR will resume distribution
of ONCASPAR at that time.  There can be no assurance  that this solution will be
acceptable  to the FDA. If the Company is unable to resolve  this  problem it is
possible that the FDA may not permit the Company to continue to distribute  this
product.  An extended  disruption in the marketing and  distribution of ONCASPAR
could have a material adverse impact on future ONCASPAR sales.


                                       6



                          ENZON, INC. AND SUBSIDIARIES
              Notes To Consolidated Condensed Financial Statements
                                   (Unaudited)


     The Company maintains a separate supply agreement with RPR, under which RPR
purchases from ENZON all of RPR's  requirements  for ONCASPAR at a price defined
in the supply  agreement.  The  Company  and RPR are  currently  in  discussions
related to a  disagreement  over the purchase price of ONCASPAR under the supply
agreement  between  the two  companies.  RPR has  asserted  that the Company has
overcharged  RPR under the supply  agreement  in the amount of  $2,329,000.  The
Company  believes its costing and pricing of ONCASPAR to RPR  complies  with the
supply agreement.

     RPR has also asserted that the Company should be  responsible  for its lost
profits  while  ONCASPAR  is  under  the  temporary  labeling  and  distribution
modifications.  RPR contends  that its lost profits  through  September 30, 1999
were  $4,081,000.  The  Company  does not agree with  RPR's  claim for these two
issues.  The Company does not believe the ultimate  resolution  of these matters
will have a material  adverse  effect on the financial  results or operations of
the Company.


                                       7



Item 2. Management's  Discussion and Analysis of Financial Condition and Results
of Operations

Information contained herein contains "forward-looking  statements" which can be
identified  by the  use  of  forward-looking  terminology  such  as  "believes,"
"expects,"  "may," "will," "should," or "anticipates" or the negative thereof or
other  variations  thereon  or  comparable  terminology,  or by  discussions  of
strategy.  No  assurance  can be given  that the future  results  covered by the
forward-looking  statements will be achieved. The matters set forth in the "Risk
Factors" section and elsewhere in the Company's Annual Report on Form 10-K/A for
the fiscal year ended June 30, 1999, which is incorporated  herein by reference,
constitute cautionary  statements  identifying important factors with respect to
such forward-looking statements, including certain risks and uncertainties, that
could cause actual results to vary materially from the future results  indicated
in such  forward-looking  statements.  Other  factors  could also  cause  actual
results  to  vary  materially   from  the  future  results   indicated  in  such
forward-looking statements.

Results of Operations

Three months ended September 30, 1999 vs. Three months ended September 30, 1998

Revenues.  Revenues  for the three  months  ended  September  30, 1999  remained
relatively unchanged at $2,914,000 as compared to $2,988,000 for the same period
in 1998.  The  components  of revenues are sales,  which consist of sales of the
Company's  two  Food and  Drug  Administration  ("FDA")  approved  products  and
royalties  on the  sales of the  Company's  products  by  others,  and  contract
revenues.  Sales were  $2,870,000 for the three months ended September 30, 1999,
as compared to  $2,936,000  for the same period in the prior year.  The decrease
was primarily due to a decrease in ONCASPAR revenues, which was partially offset
by an increase in ADAGEN(R) sales.  ADAGEN sales increased by 10% over the prior
year as a result of an increase in patients receiving ADAGEN treatment. Sales of
ADAGEN for the three months ended  September  30, 1999 and 1998 were  $2,746,000
and $2,493,000  respectively.  ONCASPAR  revenues are comprised of manufacturing
revenues,  as well as royalties on sales of ONCASPAR by the Company's  marketing
partner,  Rhone-Poulenc Rorer Pharmaceuticals,  Inc. ("RPR").  ONCASPAR revenues
decreased due to difficulties encountered in the Company's manufacturing process
and  the  resulting  modifications  made to the  labeling  and  distribution  of
ONCASPAR.

     During 1998 the Company  began to  experience  manufacturing  problems with
ONCASPAR.  The problems were due to an increase in the levels of particulates in
batches of ONCASPAR  which  resulted  in an  increased  rejection  rate for this
product.  During  fiscal 1999, as a result of these  manufacturing  problems the
Company and the FDA agreed to temporary labeling and distribution  modifications
for ONCASPAR.  The Company,  rather then RPR, took over distribution of ONCASPAR
directly to patients on an as-needed basis and instituted  additional inspection
and labeling procedures prior to distribution.  In addition during May 1999, the
FDA  required  the  Company to limit  distribution  of the product to only those
patients who are hypersensitive to native L-asparaginase.

     The Company has been able to manufacture  several batches of ONCASPAR which
contain  acceptable levels of particulates and anticipates a final resolution of
the problem during fiscal 2000. It is expected that RPR will resume distribution
of ONCASPAR at that time.  There can be no assurance  that this solution will be
acceptable  to the FDA. If the Company is unable to resolve  this  problem it is
possible that the FDA may not permit the Company to continue to distribute  this
product.  An extended  disruption in the marketing and  distribution of ONCASPAR
could have a material adverse impact on future ONCASPAR sales.

     During the three months ended  September 30, 1999 and 1998, the Company had
export sales of $1,010,000 and $778,000,  respectively.  Of these amounts, sales
in Europe were $865,000 and $624,000 for the quarters  ended  September 30, 1999
and 1998, respectively.

     The Company  expects  sales of ADAGEN to increase  at rates  comparable  to
those achieved during the last two years as additional patients are treated. The
Company also anticipates  ONCASPAR sales will remain at reduced levels until the
manufacturing  problem is resolved and RPR resumes  normal  distribution  of the
product. There can be no assurance that any particular sales levels of ADAGEN or
ONCASPAR will be achieved or maintained.


                                       8



Cost of Sales. Cost of sales, as a percentage of sales, decreased to 41% for the
three months ended  September 30, 1999 as compared to 45% for the same period in
1998.  The decrease was primarily due to a charge in the prior year for ONCASPAR
finished goods on hand and in the  distribution  pipeline,  as well as increased
ONCASPAR  production  costs.  The  write-off  of  ONCASPAR  finished  goods  was
attributable to the previously discussed manufacturing problem.

Research and Development. Research and development expenses for the three months
ended September 30, 1999 increased by 5% to $1,657,000 as compared to $1,575,000
for the same period in 1998. The increase in research and  development  expenses
resulted from the commencement of PEG-camptothecin Phase I safety trials.

Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative expenses for the three months ended September 30, 1999, increased
by 52% to $2,326,000, as compared to $1,535,000 for the same period in 1998. The
increase was  primarily  due to an increase in legal fees related to  litigation
and ongoing  arbitration  proceedings,  as well as increased  patent  filing and
defense costs.

Other Income/Expense. Other income/expense remained constant at $298,000 for the
three months ended September 30, 1999 and 1998.

Liquidity and Capital Resources

     Total cash reserves,  including  cash and cash  equivalents as of September
30, 1999 were  $24,635,000,  as compared to  $24,674,000  at June 30, 1999.  The
Company  invests  its  excess  cash  in a  portfolio  of  high-grade  marketable
securities and United States government-backed securities.

     The Company's  Amended RPR License  Agreement  for ONCASPAR  provided for a
payment  of  $3,500,000  in advance  royalties  which was  received  from RPR in
January  1995.  Royalties  due under the Amended RPR License  Agreement  will be
offset against an original  credit of $5,970,000,  which  represents the royalty
advance  plus  reimbursement  of  certain  amounts  due RPR under  the  previous
agreement  and interest  expense,  before cash  payments  will be made under the
agreement.  The  royalty  advance is shown as a  long-term  liability,  with the
corresponding  current portion  included in accrued expenses on the consolidated
balance  sheets  and  to be  reduced  as  royalties  are  recognized  under  the
agreement.  Through  September 30, 1999, an aggregate of $4,378,000 in royalties
payable by RPR has been offset against the original credit.

     As of September 30, 1999,  942,808 shares of Series A Preferred  Shares had
been converted into 3,097,955 shares of Common Stock.  Accrued  dividends on the
converted  Series A Preferred Shares in the aggregate of $1,824,000 were settled
by the  issuance  of  235,231  shares  of Common  Stock.  The  Company  does not
presently intend to pay cash dividends on the Series A Preferred  Shares.  As of
September 30, 1999, there were accrued and unpaid dividends totaling  $2,038,000
on the Series A Preferred Shares.  These dividends are payable in cash or Common
Stock at the Company's  option and accrue on the outstanding  Series A Preferred
Shares at the rate of $214,000 per year.

     The Company and RPR are currently in discussions  related to a disagreement
over the purchase price of ONCASPAR under the supply  agreement  between the two
companies.  RPR has  asserted  that the  Company has  overcharged  RPR under the
supply  agreement in the amount of $2,329,000.  The Company believes its costing
and pricing of ONCASPAR to RPR complies with the supply agreement.  RPR has also
asserted  that the Company  should be  responsible  for its lost  profits  while
ONCASPAR is under the temporary  labeling and  distribution  modifications.  RPR
contends that its lost profits through  September 30, 1999 were $4,081,000.  The
Company  does not agree with RPR's  claims.  The  Company  does not  believe the
ultimate  resolution of either matter will have a materially  adverse  effect on
the Company's financial position.


     The  Company is being sued,  in the United  States  District  Court for the
District of New Jersey,  by a former financial  advisor asserting that under the
May 2, 1995 letter agreement ("Letter  Agreement") between Enzon and


                                       9



LBC  Capital  Resources  Inc.  ("LBC"),  LBC was  entitled  to a  commission  in
connection  with the  Company's  January  and  March  1996  private  placements,
comprised of $500,000 and warrants to purchase  1,000,000 shares of Enzon common
stock at an exercise price of $2.50 per share.  LBC has also asserted that it is
entitled to an  additional  fee of  $175,000  and  warrants to purchase  250,000
shares of Enzon common stock when and if any of the warrants  obtained  pursuant
to  the  private  placements  are  exercised.  LBC  has  claimed  $3,000,000  in
compensatory  damages,  plus  punitive  damages,  counsel fees and costs for the
alleged  breach of the  Letter  Agreement.  The  Company  believes  that no such
commission was due under the Letter Agreement and denies any liability under the
Letter  Agreement.  The Company  intends to defend this lawsuit  vigorously  and
believes the ultimate resolution of this matter will not have a material adverse
effect on the financial position of the Company.

     To date, the Company's sources of cash have been the proceeds from the sale
of its stock through public and private  placements,  sales of ADAGEN,  sales of
ONCASPAR,  contract  research  and  development  fees,  technology  transfer and
license fees and royalty  advances.  The Company's  current sources of liquidity
are its cash, cash equivalents and interest earned on such cash reserves,  sales
of ADAGEN,  sales of ONCASPAR,  sales of its products for research  purposes and
license  fees.  Based  upon  its  currently  planned  research  and  development
activities and related costs and its current  sources of liquidity,  the Company
anticipates its current cash reserves will be sufficient to meet its capital and
operational requirements for the foreseeable future.

     Upon  exhaustion  of the  Company's  current cash  reserves,  the Company's
continued  operations will depend on its ability to realize significant revenues
from the commercial sale of its products,  raise additional funds through equity
or debt  financing,  or obtain  significant  licensing,  technology  transfer or
contract  research and  development  fees.  There can be no assurance that these
sales, financings or revenue generating activities will be successful.

Year 2000

     The Company has completed a review of its business  systems,  including its
computer systems and manufacturing  equipment, and has queried its customers and
vendors as to their progress in identifying  and addressing  problems that their
systems may face in correctly  interpreting  and processing date  information as
the year 2000  approaches  and is  reached.  Based on this  review,  the Company
implemented a plan to achieve year 2000 compliance. The Company believes that it
has achieved year 2000 compliance in a manner which should be  non-disruptive to
its  operations.  In  addition,  the  Company  has  prepared  various  types  of
contingency  planning to address  potential  problem areas with internal systems
and with suppliers and other third parties. Year 2000 compliance should not have
a material  adverse  effect on the Company,  including the  Company's  financial
condition, results of operations or cash flow.

     However,  the Company may encounter  problems with suppliers and or revenue
sources which could adversely affect the Company's financial condition,  results
of operations or cash flow. The Company cannot accurately predict the occurrence
and or  outcome  of any such  problems,  nor can the  dollar  amount of any such
problem be estimated.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.


                                       10



13

PART II OTHER INFORMATION

Item 5. Other Information

     Schering-Plough   Corporation   has  submitted  a   centralized   Marketing
Authorization  Application  to the  European  Union's  European  Agency  for the
Evaluation  of  Medicinal   Products  seeking  clearance  to  market  PEG-INTRON
(PEG-interferon  alfa-2b) powder for solution for injection for the treatment of
chronic  hepatitis C in patients 18 years of age or older with compensated liver
disease.   The  application,   which  proposes   administration   of  PEG-INTRON
subcutaneously once weekly for one year, is currently under CPMP review.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K).



                                                                                                    Page Number
                                                                                                       or
 Exhibit                                                                                           Incorporation
 Number                 Description                                                                By Reference
 ------                 -----------                                                                ------------
                                                                                                
   3(i)  Certificate of Incorporation, as amended                                                           ~~

  3(ii)  By-laws, as amended                                                                            *(4.2)

  3(iv)  Amendment to Certificate of Incorporation dated January 5, 1998                               ##3(iv)

   10.1  Form of Change of Control Agreements dated as of January 20, 1995 entered
          into with the Company's Executive Officers                                                 ###(10.2)

   10.2  Lease - 300-C Corporate Court, South Plainfield, New Jersey                                 ***(10.3)

   10.4  Lease Termination Agreement dated March 31, 1995 for
          20 Kingsbridge Road and 40 Kingsbridge Road, Piscataway, New Jersey                        ###(10.6)

   10.5  Option Agreement dated April 1, 1995 regarding 20 Kingsbridge Road,
          Piscataway, New Jersey                                                                     ###(10.7)

   10.6  Form of Lease - 40 Cragwood Road, South Plainfield, New Jersey                             ****(10.9)

   10.7  Lease 300A-B Corporate Court, South Plainfield, New Jersey                                  ++(10.10)

   10.8  Stock Purchase Agreement dated March 5, 1987 between the Company and
          Eastman Kodak Company                                                                     ****(10.7)

   10.9  Amendment dated June 19, 1989 to Stock Purchase Agreement between the
          Company and Eastman Kodak Company                                                          **(10.10)

  10.10  Form of Stock Purchase Agreement between the Company
          and the purchasers of the Series A Cumulative
          Convertible Preferred Stock                                                                 +(10.11)

  10.11  Amendment to License Agreement and Revised License Agreement
          between the Company and RCT dated April 25, 1985                                           +++(10.5)

  10.12  Amendment dated as of May 3, 1989 to Revised License Agreement
          dated April 25, 1985 between the Company and Research Corporation                          **(10.14)

  10.13  License Agreement dated September 7, 1989 between the Company and
          Research Corporation Technologies, Inc.                                                    **(10.15)

  10.14  Master Lease Agreement and Purchase Leaseback Agreement dated
          October 28, 1994 between the Company and Comdisco, Inc.                                     #(10.16)

  10.15  Employment Agreement with Peter G. Tombros dated as of
          April 5, 1997                                                                              ^^(10.15)

  10.16  Stock Purchase Agreement dated as of June 30, 1995                                           ~(10.16)

  10.17  Securities Purchase Agreement dated as of January 31, 1996                                   ~(10.17)

  10.18  Registration Rights Agreements dated as of January 31, 1996                                  ~(10.18)

  10.19  Warrants dated as of February 7, 1996 and issued pursuant to the Securities
          Purchase Agreement dated as of January 31, 1996                                             ~(10.19)



                                       11



                                                                                                
  10.20  Securities Purchase Agreement dated as of March 15, 1996                                    ~~(10.20)

  10.21  Registration Rights Agreement dated as of March 15, 1996                                    ~~(10.21)

  10.22  Warrant dated as of March 15, 1996 and issued pursuant to the
          Securities PurchaseAgreement dated as of March 15, 1996                                    ~~(10.22)

  10.23  Amendment dated March 25, 1994 to License Agreement dated
          September 7, 1989 between the Company and Research Corporation
          Technologies, Inc.                                                                        ~~~(10.23)

  10.24  Independent Directors' Stock Plan                                                          ~~~(10.24)

  10.25  Stock Exchange Agreement dated February 28, 1997, by and between the
          Company and GFL Performance Fund Ltd.                                                      ^(10.25)

  10.26  Agreement Regarding Registration Rights Under Registration Rights Agreement
          dated March 10, 1997, by and between the Company and Clearwater Fund IV
          LLC                                                                                         ^(10.26)

  10.27  Common Stock Purchase Agreement dated June 25, 1998                                        ^^^(10.27)

  10.28  Placement Agent Agreement dated June 25, 1998 with SBC Warburg
                Dillon Read, Inc.                                                                  ^^^^(10.28)

  27.0     Financial Data Schedule                                                                          o



o         Filed herewith.

*         Previously filed as an exhibit to the Company's Registration Statement
          on Form S-2 (File No. 33-34874) and  incorporated  herein by reference
          thereto.

**        Previously  filed as exhibits to the  Company's  Annual Report on Form
          10-K for the fiscal year ended June 30, 1989 and  incorporated  herein
          by reference thereto.

***       Previously filed as an exhibit to the Company's Registration Statement
          on  Form  S-18  (File  No.  2-88240-NY)  and  incorporated  herein  by
          reference thereto.

****      Previously filed as exhibits to the Company's  Registration  Statement
          on  Form  S-1  (File  No.  2-96279)  filed  with  the  Commission  and
          incorporated herein by reference thereto.

+         Previously filed as an exhibit to the Company's Registration Statement
          on Form  S-1  (File  No.  33-39391)  filed  with  the  Commission  and
          incorporated herein by reference thereto.

++        Previously  filed as an exhibit to the Company's Annual Report on Form
          10-K for the fiscal year ended June 30, 1993 and  incorporated  herein
          by reference thereto.

+++       Previously  filed as an exhibit to the Company's Annual Report on Form
          10-K for the fiscal year ended June 30, 1985 and  incorporated  herein
          by reference thereto.

#         Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter  ended  December  31, 1994 and  incorporated
          herein by reference thereto.

##        Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter  ended  December  31, 1997 and  incorporated
          herein by reference thereto.

###       Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter ended March 31, 1995 and incorporated herein
          by reference thereto.


                                       12



~         Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter  ended  December  31, 1995 and  incorporated
          herein by reference thereto.

~         ~ Previously filed as an exhibit to the Company's  Quarterly Report on
          Form 10-Q for the quarter ended March 31, 1996 and incorporated herein
          by reference thereto.

~~~       Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter  ended  December  31, 1996 and  incorporated
          herein by reference thereto.

^         Previously  filed as an exhibit to the Company's  Quarterly  Report on
          Form 10-Q for the quarter ended March 31, 1997 and incorporated herein
          by reference thereto.

^^        Previously  filed as an exhibit to the Company's Annual Report on Form
          10-K for the year  ended  June 30,  1997 and  incorporated  herein  by
          reference thereto.

^^^       Previously filed as an exhibit to the Company's Registration Statement
          on Form  S-3  (File  No.  333-58269)  filed  with the  Commission  and
          incorporated herein by reference thereto.

^^^^      Previously  filed as an exhibit to the Company's Annual Report on Form
          10-K for the year  ended  June 30,  1998 and  incorporated  herein  by
          reference thereto.


(b) Reports on Form 8-K.

On July 14, 1999, the Company filed with the Commission a Current Report on Form
8-K dated July 13,  1999,  related to the  revision  of the 1990  PEG-Intron(TM)
licensing    agreement   between   Enzon   and    Schering-Plough    Corporation
("Schering-Plough").  The revised  agreement  calls for  Schering-Plough  to pay
Enzon  royalties on sales at a higher  effective  rate than  provided for in the
original  agreement  in exchange  for the return to  Schering-Plough  of Enzon's
exclusive U.S. manufacturing rights for the product.

Additionally,  the revised  agreement grants to  Schering-Plough a non-exclusive
worldwide  license,  with a limited right to sublicense,  under Enzon's  patents
covering  another  form of PEG called  "Branched  PEG",  which uses a  different
proprietary PEG technology than PEG-Intron.


                                       13




                                   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, INC.
                                (Registrant)



Date: November 12, 1999         By: /s/ Peter G. Tombros
                                    ---------------------------------------
                                Peter G. Tombros
                                President and Chief Executive
                                 Officer


                               By: /s/ Kenneth J. Zuerblis
                                 ---------------------------------------
                                Kenneth J. Zuerblis
                                Vice President, Finance and Chief Financial
                                Officer
                               (Principal Financial
                                and Accounting Officer)

  


                     5

This schedule contains summary financial  information  extracted from the Enzon,
Inc. and Subsidiaries  Consolidated  Condensed Balance Sheet as of September 30,
1999 and the Consolidated Condensed Statement of Operations for the three months
ended  September  30, 1999 and is qualified in its entirety by reference to such
financial statements.


                             
                   12-MOS
                         JUN-30-2000
                              SEP-30-1999
                                    24,635,324
                                       0
                              4,039,919
                                       0
                                1,469,355
                          31,334,115
                                    11,911,932
                            10,526,747
                            34,556,028
                      8,265,893
                                            0
                              0
                                    1,070
                                     368,140
                                24,558,958
              24,928,168
                                    2,870,135
                           2,913,813
                                      1,178,561
                              5,161,815
                                   0
                                   0
                             2,958
                          (1,950,463)
                                       0
                      (1,950,463)
                                     0
                                    0
                                          0
                             (1,950,463)
                                   (0.05)
                                 (0.05)