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

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FORM 10-K

Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

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Commission
For the fiscal year ended June 30, 2002                      File Number 0-12957

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

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

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

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

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)
Preferred Stock Purchase Rights
(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 |_|

Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

The aggregate market value of the Common Stock, par value $.01 per share,
held by non-affiliates based upon the reported last sale price of the Common
Stock on September 18, 2002 was approximately $876,693,848. There is no market
for the Series A Cumulative Convertible preferred stock, the only other class of
stock outstanding.

As of September 18, 2002, there were 42,999,823 shares of Common Stock,
par value $.01 per share, outstanding.

The Index to Exhibits appears on page 47.

Documents Incorporated by Reference

The registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders scheduled to be held on December 3, 2002, to be filed with the
Commission not later than 120 days after the close of the registrant's fiscal
year, has been incorporated by reference, in whole or in part, into Part III
Items 10, 11, 12 and 13 of this Annual Report on Form 10-K.

ENZON, INC.

2002 Form 10-K Annual Report

TABLE OF CONTENTS

Page

PART I

Item 1.  Business                                                              3
Item 2.  Properties                                                           22
Item 3.  Legal Proceedings                                                    23
Item 4.  Submission of Matters to a Vote of Security Holders                  23

PART II

Item 5.  Market for the Registrant's Common Equity and Related
Stockholder Matters                                               24
Item 6.  Selected Financial Data                                              25
Item 7.  Management's Discussion and Analysis of Financial
Condition and Results of Operations                               25
Item 7a. Quantitative and Qualitative Disclosures About Market Risk           44
Item 8.  Financial Statements and Supplementary Data                          45
Item 9.  Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure                                              45

PART III

Item 10. Directors and Executive Officers of the Registrant                   46
Item 11. Executive Compensation                                               46
Item 12. Security Ownership of Certain Beneficial Owners and Management       46
Item 13. Certain Relationships and Related Transactions                       46
Item 14. Controls and Procedures                                              46

PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K      47

ADAGEN(R), ONCASPAR(R) and PROTHECAN(R) are our registered trademarks. Other
trademarks and trade names used in this annual report are the property of their
respective owners.

Information contained in this Annual Report 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 section entitled Risk Factors, 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.

2

PART I

Item 1. BUSINESS

Overview

We are a biopharmaceutical company that develops and commercializes
products for life-threatening diseases on our own and through strategic
partnerships. We are currently executing a dual-prong strategy designed to
broaden our revenue stream, expand our product pipeline, and enhance our
organizational capabilities through both internal efforts and the execution of
strategic transactions. First, internally we are focused on the advancement of
our product pipeline through our continued investment in research and
development and the application of our proprietary PEG and SCA technologies. Our
PEG, or polyethylene glycol, technology is used to improve the delivery, safety,
and efficacy of proteins and small molecules with known therapeutic efficacy.
Our single-chain antibody, or SCA, technology is used to discover and produce
antibody-like molecules that can offer many of the therapeutic benefits of
monoclonal antibodies while addressing some of their limitations. Second,
through strategic transactions we plan to broaden our revenue stream and further
expand our product pipeline by accessing already marketed products and products
in development. Our strategic initiatives will also seek using alliances to
enhance our organization by accessing additional technologies and extending our
product development and commercialization capabilities.

To date we have developed three products that utilize our proprietary PEG
technologies and have several under development.

PEG-INTRON(R) is a PEG-enhanced version of Schering-Plough's
alpha-interferon product, INTRON(R) A. We have designed PEG-INTRON to allow for
less frequent dosing and to yield greater efficacy as compared to INTRON A. Our
worldwide partner for PEG-INTRON, Schering-Plough, has received approval of
PEG-INTRON as a monotherapy and for use in combination with REBETOL(R)
(ribavirin, USP) Capsules for the treatment of chronic hepatitis C in adult
patients not previously treated with alpha-interferon in the United States and
the European Union. The product is currently in Phase III clinical trials for
hepatitis C in Japan and is also being evaluated for use as long term
maintenance therapy in cirrhotic patients that have failed previous treatment
(COPILOT study). A Phase III clinical trial is also being conducted for
PEG-INTRON for the treatment of high risk malignant melanoma, and earlier stage
clinical trials of PEG-INTRON are being conducted for other indications,
including HIV. Schering-Plough has reported that its worldwide sales of INTRON
A, REBETOL and PEG-INTRON for all indications in 2001 totaled $1.4 billion.

PROTHECAN(R) is a PEG-enhanced version of camptothecin, a compound in the
class of molecules called topoisomerase I inhibitors. Camptothecin has been
shown in clinical testing to be potent against certain tumor types, but its
clinical development has been discontinued due to significant side effects and
poor solubility. We have shown in preclinical studies that PROTHECAN
preferentially accumulates in tumors and has comparable or better efficacy
compared to camptothecin as well as marketed topoisomerase I inhibitors. We are
currently conducting Phase II clinical trials for PROTHECAN in small cell lung,
non-small cell lung and pancreatic cancers as a monotherapy. We plan to initiate
additional clinical trails for PROTHECAN in other cancer indications in order to
fully explore PROTHECAN'S clinical potential.

We have initiated a phase I program for PEG-paclitaxel, a PEG-modified
version of paclitaxel.

We commercialize two additional products based on our PEG technology:
ADAGEN(R) for the treatment of a congenital enzyme deficiency disease called
Severe Combined Immunodeficiency Disease, or SCID, and ONCASPAR(R) for the
treatment of acute lymphoblastic leukemia. Each of these products is a
PEG-enhanced version of a naturally occurring enzyme. Both products have been
marketed for several years and have demonstrated the safe and effective
application of our PEG technology.

3

Our second proprietary technology, SCAs, are genetically engineered
proteins which possess the antigen binding domains of a monoclonal antibody and
as a result its binding specificity and affinity. SCAs are designed to expand on
the therapeutic and diagnostic applications possible with monoclonal antibodies.
Preclinical studies have shown that SCAs allow for greater tissue penetration
and faster clearance from the body. During fiscal 2002 we entered into a broad
product development agreement with Micromet AG, a private German company focused
on the development of antibody products with complementary intellectual property
and development expertise in the area of SCAs. We believe that we possess strong
intellectual property in the area of SCAs. The most clinically advanced SCA
based on our technology is being developed by one of our licensees, Alexion
Pharmaceuticals. Alexion has commenced enrollment in a Phase III clinical trial
for this SCA in patients undergoing cardiopulmonary bypass surgery. Alexion is
also evaluating this SCA for myocardial infarction, for which two Phase II
clinical trials are ongoing.

Our Strategy

To build a fully integrated biopharmaceutical company and to further
realize the potential value of our PEG and SCA technologies, we intend to pursue
the following strategic initiatives:

o     Continue to identify macro and small molecules of known therapeutic
value that we believe can be improved by our PEG technology and
develop PEG-enhanced versions of such compounds;

o     Acquire already marketed products and build a marketing and sales
infrastructure to enhance our profitability;

o     Acquire products under development and technologies which are
complementary to our technologies and clinical focus;

o     Enter into development agreements with third parties to apply our
PEG technology to their existing compounds; and

o     Advance our SCA technology through our Micromet collaboration.

PEG Technology

Our proprietary PEG technology involves the covalent attachment of PEG to
therapeutic proteins or small molecules for the purpose of enhancing therapeutic
value. PEG is a relatively non-reactive and non-toxic polymer that is frequently
used in food and pharmaceutical products. We have demonstrated, both in our
marketed products and our products under development, that for some proteins and
small molecules, we can impart significant pharmacologic advantages over the
unmodified forms of the compound by modifying a compound using our PEG
technology.

These advantages include:

o     extended circulating life,

o     lower toxicity,

o     increased drug stability, and

o     enhanced drug solubility.

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[GRAPHIC OMITTED]

A depiction of a PEG-enhanced molecule.

For years, we have applied and continually improved our PEG technology to
modify the pharmacologic characteristics of potential or existing protein
therapeutics. We modify proteins with PEG for the purpose of prolonging life and
reducing toxicities. In some cases, PEG can render a protein therapeutically
effective, where the unmodified form had only limited clinical utility. For
example, proteins frequently induce an immunologic response. When PEG is
attached, it disguises the compound and reduces recognition by the patient's
immune system. In addition, frequency of dosing can be reduced and the delay in
clearance can achieve an improved therapeutic effect due to the prolonged
exposure to the protein therapeutic.

We have also developed a PEG technology that allows us to apply PEG to
small molecules. We are currently applying this technology to develop
PEG-enhanced versions of anti-cancer compounds. Like proteins, many anti-cancer
compounds of potentially significant therapeutic value possess undesired
pharmacologic characteristics such as toxicity, poor solubility, and limited
half-life. The attachment of PEG to anti-cancer compounds extends their
circulatory life and, at the same time, greatly increases the solubility of
these compounds. We attach PEG to anti-cancer compounds by means of chemistries
that are designed to temporarily inactivate the compound, and then release it
over time, releasing the compound in the proximity of the targeted tissue. By
inactivating and then reactivating the compound in the body we create a prodrug
version of such compounds. These attributes may significantly enhance the
therapeutic value of new chemicals, drugs already marketed by others and
off-patent drugs with otherwise limited utility. We believe that this technology
has broad usefulness and that it can be applied to a wide range of small
molecules, such as:

o     cancer chemotherapy agents,

o     antibiotics,

o     anti-fungals, and

o     immunosuppressants.

We have significant expertise and intellectual property in the methods by
which PEG can be attached to a compound, the selection of appropriate sites on
the compound to which PEG is attached, and the amount and type of PEG used. If
PEG is attached to the wrong site on the protein, it can result in a loss of the
protein's activity or therapeutic effect. Similarly, inappropriate linkers or
the incorrect type or amount of PEG applied to a compound will typically fail to
produce the desired outcome. Given our expertise, we are able to tailor the PEG
technology to produce the desired results for the particular substance being
modified.

5

PEG Products

PEG-INTRON

PEG-INTRON is a PEG-enhanced version of Schering-Plough's recombinant
alpha-interferon product called INTRON A. We have modified the INTRON A compound
by attaching PEG to it. The effect was not only a prolonged half life allowing
for once weekly dosing, but also greater efficacy as compared to unmodified
INTRON-A. Schering-Plough currently markets INTRON A for 16 major antiviral and
oncology indications worldwide. Historically the largest indication for INTRON A
is hepatitis C. INTRON A is also used to treat certain types of cancer. Our
worldwide partner for PEG-INTRON, Schering-Plough has received approval for the
treatment of adult patients with chronic hepatitis C as a monotherapy and in
combination with REBETOL (ribavirin, USP) capsules in the United States and
European Union. Schering-Plough is currently conducting late-stage clinical
trials for the treatment of hepatitis C in Japan. Schering-Plough is also
evaluating PEG-INTRON as a long term maintenance therapy (COPILOT study) and in
combination with REBETOL in hepatitis C patients who did not respond to or had
relapsed following previous interferon-based therapy. A Phase III clinical trial
is also being conducted for PEG-INTRON for the treatment of malignant melanoma
and earlier stage clinical trials of PEG-INTRON are being conducted for other
indications, including HIV.

The COPILOT (Colchicine versus PEG-INTRON Long-Term) study, is evaluating
maintenance therapy with PEG-INTRON in hepatitis C patients with advanced
cirrhosis. In this study, 250 patients with advanced cirrhosis who had
previously failed interferon-based therapy were randomized to two groups: 130
patients received once-weekly PEG-INTRON (0.5 mcg/kg) and 120 patients received
twice-daily colchicine (0.6 mg). At the end of one year of treatment, the
PEG-INTRON group had a reduction in detectable virus (HCV RNA), while the virus
levels in the colchicine group remained the same. These findings may be
important for hepatitis C patients who have not responded to previous therapy.

Schering-Plough has reported that its worldwide sales of INTRON A, REBETOL
and PEG-INTRON for all indications in 2001 totaled $1.4 billion, with the
majority of sales coming from hepatitis C.

Under our licensing agreement with Schering-Plough, we earned milestone
payments and receive royalties on Schering-Plough's worldwide sales of
PEG-INTRON. Schering-Plough is responsible for all marketing and development
activities for PEG-INTRON.

Hepatitis C

According to an article published in the New England Journal of Medicine,
approximately 3.9 million people in the United States are infected with the
hepatitis C virus. Approximately 2.7 million of these people are characterized
as having chronic hepatitis C infection. We believe that the number of people
infected with the hepatitis C virus in Europe is comparable to that in the
United States. It is also estimated that approximately 2.0 million people in
Japan are infected with hepatitis C. According to the World Health Organization,
there were approximately 170 million chronic cases of hepatitis C worldwide. A
substantial number of people in the United States who were infected with
hepatitis C more than 10 years ago are thought to have contracted the virus
through blood transfusions. Prior to 1992, the blood supply was not screened for
the hepatitis C virus. In addition, the majority of people infected with the
virus are thought to be unaware of the infection because the hepatitis C virus
can incubate for 10 or more years before patients become symptomatic.
Schering-Plough estimates that only 10 to 15 percent of patients with hepatitis
C have been treated.

Prior to the introduction of PEG-INTRON, the standard of care for
hepatitis C infection was alpha-interferon administered three times per week for
one year in combination with ribavirin, another antiviral drug. The
alpha-interferon plus ribavirin therapy was approved in the United States for
the treatment of hepatitis C in December 1998. Prior to such approval, hepatitis
C infection was typically treated with alpha-interferon alone. In clinical
studies, alpha-interferon stand-alone therapy for 48 weeks has reduced viral
loads below the detectable levels in 10% to 15% of patients treated. In clinical
studies, alpha-interferon

6

plus ribavirin in combination therapy has reduced viral loads below detectable
levels in 31% to 38% of patients treated. The clinical efficacy of
alpha-interferon, both as a stand-alone or combination therapy, has been limited
by serious side effects, which include flu-like symptoms, gastro-intestinal
disorders and depression, in addition to undesirable dosing requirements. The
requirement of three times per week dosing for the treatment of hepatitis C has
also limited patient compliance.

Schering-Plough reported the following results of clinical trials
conducted with PEG-INTRON for the treatment of hepatitis C. In a clinical study
comparing PEG-INTRON to INTRON A as stand-alone therapy, 24% of patients treated
with PEG-INTRON had sustained virologic response at the end of the 24 week
follow-up period following completion of 48 weeks of therapy, compared to 12% of
patients treated with INTRON A who had sustained virologic response. Sustained
virologic response is the reduction of viral loads below detectable levels. In a
clinical study comparing PEG-INTRON plus REBETOL to REBETRON Combination Therapy
containing REBETOL Capsules and INTRON A, when analyzed based upon optimal body
weight dosing, 61% of patients treated with PEG-INTRON plus REBETOL had
sustained virologic response compared to 47% of patients treated with REBETRON
combination therapy who had sustained virologic response. When the results of
this clinical trial were analyzed without using optimal body weight dosing, 54%
of the patients treated with PEG-INTRON plus REBETOL had sustained virologic
response compared to 47% of patients treated with REBETRON who had sustained
virologic response. Of the patients in this study who received at least 80% of
their treatment of PEG-INTRON plus REBETOL, 72% had sustained virologic response
compared to sustained virologic response in 46% of patients who received less
than 80% of their treatment.

During June 2002 the National Institutes of Health (NIH) issued a
consensus statement stating that the most effective treatment for hepatitis C is
combination therapy with PEGylated interferon and ribavirin for a period of 48
weeks. The consensus statement also provided recommendations on how to broaden
the treatment population as well as how to prevent transmission of the virus.

Hoffmann-LaRoche is developing a PEGylated version of its
alpha-interferon, product ROFERON(R)-A, called PEGASYS(R). Schering-Plough and
Hoffmann-LaRoche have been the major competitors in the global alpha-interferon
hepatitis C market since the approval of INTRON A and ROFERON-A. PEGASYS is
being developed by Hoffmann-LaRoche as a monotherapy as well as in combination
with ribavirin for the treatment of hepatitis C. PEGASYS is expected to compete
with PEG-INTRON on a global basis. PEGASYS was approved in the European Union in
June 2002 and is currently under review by the FDA for its use as a monotherapy
and in combination with ribavirin in the United States. Both products have
similar characteristics and efficacy. Hoffmann-La Roche has reported that its
Phase III study, which evaluated the combination of PEGASYS in combination with
one of two doses of ribavirin (depending on body weight) for the treatment of
hepatitis C achieved an overall sustained response of 56%.

Cancer

INTRON A is also used in the treatment of cancer. Of the 16 indications
for which INTRON A is approved throughout the world, 12 are cancer indications.
Currently, INTRON A is approved in the U.S. for three cancer indications and
used in some cases for other indications on an off-label basis.

INTRON A may be prescribed in the U.S. for the treatment of late stage
malignant melanoma, follicular NHL (low grade), chronic myelogenous leukemia and
AIDS-related Kaposi's sarcoma.

In June 2001, we reported that Schering-Plough completed its Phase III
study comparing PEG-INTRON to INTRON A in patients with newly diagnosed chronic
myelogenous leukemia, or CML. In this study, PEG-INTRON administered once weekly
demonstrated clinical comparability to INTRON A administered daily, with a
comparable safety profile. Despite demonstrating clinical comparability, the
efficacy results for PEG-INTRON did not meet the protocol-specified statistical
criteria for non-inferiority, the primary endpoint of the study. The major
cytogenic response rates at month 12 for both PEG-INTRON

7

and INTRON A were similar to those previously reported in the literature for
alpha-interferon.

In addition to conducting this Phase III study of PEG-INTRON in CML,
Schering-Plough has advised us that it is working with independent investigators
to research initiatives with PEG-INTRON in oncology indications through a
comprehensive medical affairs program. This program includes ongoing studies
with PEG-INTRON in high-risk melanoma, myeloma and non-Hodgkin's lymphoma, both
as and in combination with other agents. A Phase III clinical trial of
PEG-INTRON for high-risk malignant melanoma is ongoing.

Published data from a Phase I clinical trial of PEG-INTRON in various
cancer types showed that some patients who previously did not respond to
unmodified INTRON A treatment did respond to PEG-INTRON. In that trial,
PEG-INTRON was administered once per week as opposed to up to five times per
week, which is a typical therapy regimen using unmodified INTRON A, and we
expect that the once per week dosing regimen may be used in treating various
cancer types.

Potential Other Indications

We believe that PEG-INTRON may have potential in treating other diseases,
including HIV, hepatitis B and multiple sclerosis. A Phase I clinical trial of
PEG-INTRON has been conducted for HIV. In this study, 58% of the 30 patients had
substantial reductions in their levels of HIV after adding a weekly injection of
PEG-INTRON to their combination treatments.

PROTHECAN

PROTHECAN is a PEG-enhanced version of a small molecule called
camptothecin, which is an anticancer compound in the class of topoisomerase I
inhibitors. Camptothecin was originally developed at the National Institutes of
Health and is now off patent; it is a potent topoisomerase I inhibitor.

For many years camptothecin has been known to be a very effective
cytotoxic agent but its low solubility has limited its use. Two camptothecin
derivatives, topotecan and irinotecan, have been approved by the FDA for the
treatment of small-cell lung, ovarian and colorectal cancers. These two products
together achieved 2001 worldwide sales of approximately $881 million.

We have linked PEG and camptothecin so that it forms a prodrug. The PEG
component confers a long circulating half life and allows the compound to
accumulate in tumor sites. Animal tests have shown that PEG-camptothecin has
better efficacy compared to camptothecin, as well as other topoisomerase I
inhibitors. We are currently conducting a Phase II clinical trial of PROTHECAN
in small cell lung, non-small cell lung and pancreatic cancers as a monotherapy.
We also expect to initiate additional Phase II clinical trials for PROTHECAN in
gastric and other cancer indications.

PEG-paclitaxel

PEG-paclitaxel is a PEG-modified version of paclitaxel formulated for ease
of administration. TAXOL (paclitaxel) is a chemotherapeutic agent used to treat
various types of cancers, including ovarian, breast, non-small cell lung, and
AIDS-related Kaposi's sarcoma. In 2001, sales of TAXOL were reported to be
approximately $1.2 billion. Using our proprietary PEG technology, our scientists
have modified paclitaxel through the chemical attachment of PEG giving
PEG-paclitaxel prodrug attributes. PEG-paclitaxel can be delivered without the
need for solubilizing agents or pre-medications. TAXOL, a commercial
formulation of paclitaxel, contains the solubilizing agent CREMOPHOR and
patients are required to take pre-medications prior to treatment to reduce the
potential for adverse reactions, which may be caused by CREMOPHOR.

8

In May 2001, we initiated the patient dosing in a Phase I clinical trial
for PEG-paclitaxel. The trial is designed to determine the safety, tolerability
and pharmacology of PEG-paclitaxel in patients with advanced solid tumors and
lymphomas. Currently, we are evaluating the pharmacokinetic data from this
trial.

ADAGEN

ADAGEN, our first FDA-approved PEG product, is used to treat patients
afflicted with a type of Severe Combined Immunodeficiency Disease, or SCID, also
known as the Bubble Boy Disease, which is caused by the chronic deficiency of
the adenosine deaminase enzyme, or ADA. ADAGEN represents the first successful
application of enzyme replacement therapy for an inherited disease. SCID results
in children being born without fully functioning immune systems, leaving them
susceptible to a wide range of infectious diseases. Currently, the only
alternative to ADAGEN treatment is a well-matched bone marrow transplant.
Injections of unmodified ADA are not effective because of its short circulating
life (less than 30 minutes) and the potential for immunogenic reactions to a
bovine-sourced enzyme. The attachment of PEG to ADA allows ADA to achieve its
full therapeutic effect by increasing its circulating life and masking the ADA
to avoid immunogenic reactions.

The adenosine deaminase or the ADA enzyme in ADAGEN is obtained from
bovine intestine. We purchase this enzyme from the world's only FDA-approved
supplier, which until 2002 supplied ADA derived from cattle in Germany. In
November 2000, bovine spongiform encephalopathy or BSE or mad cow disease was
detected in certain cattle herds in Germany. During 2002 in order to comply with
FDA requirements, our supplier secured a new source of bovine intestines from
New Zealand, which has no confirmed cases of BSE in its cattle herds. Bovine
spongiform encephalopathy (BSE or mad cow disease) has been detected in cattle
herds in the United Kingdom and more recently, in other European countries.
There is evidence of a link between the agent that causes BSE in cattle and a
new variant form of Creutzfeld-Jakob disease or nvCJD in humans. Based upon the
use of certain purification steps taken in the manufacture of ADAGEN and from
our analysis of relevant information concerning this issue, we consider the risk
of product contamination to be extremely low. However, the lengthy incubation
period of BSE and the absence of a validated test for the BSE agent in
pharmaceutical products make it impossible to be absolutely certain that ADAGEN
is free of the agent that causes nvCJD. To date, cases of nvCJD have been rare
in the United Kingdom, where large numbers of BSE-infected cattle are known to
have entered the human food chain. To date, no cases of nvCJD have been linked
to ADAGEN or, to our knowledge, any other pharmaceutical product, including
vaccines manufactured using bovine derived materials from countries where BSE
has been detected.

We are marketing ADAGEN on a worldwide basis. We utilize independent
distributors in certain territories including the United States, Europe and
Australia. Currently, 76 patients in twelve countries are receiving ADAGEN
therapy. We believe many newborns with ADA-deficient SCID go undiagnosed and we
are therefore focusing our marketing efforts for ADAGEN on new patient
identification. Our sales of ADAGEN for the fiscal years ended June 30, 2002,
2001 and 2000 were $13.4 million, $13.4 million and $12.2 million respectively.

Beginning in September 2002, the United States Department of Agriculture
or USDA will require all animal sourced materials shipped to the United States
from any European country to contain a veterinary certificate that the product
is BSE free. We currently have more than a year's supply of ADA enzyme in
inventory and are investigating the ability for our supplier which processes our
ADA enzyme supply in Germany to comply with or obtain a waiver of this
requirement. We cannot guarantee that such certificate or waiver will be
available. If our supplier is unable to supply us with ADA enzyme, it is likely
that we will be unable to produce or distribute ADAGEN once we utilize our
current inventory of ADA enzyme.

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ONCASPAR

ONCASPAR, our second FDA-approved product, is a PEG-enhanced version of a
naturally occurring enzyme called L-asparaginase. It is currently approved in
the U.S., Canada, and Germany and is used in conjunction with other
chemotherapeutics to treat patients with acute lymphoblastic leukemia who are
hypersensitive, or allergic, to native, or unmodified, forms of L-asparaginase.
During June 2002 we amended our license agreement with Aventis
(formerly Rhone-Poulenc Rorer Pharmaceuticals) to acquire the rights to market
and distribute ONCASPAR in the U.S., Canada, Mexico and the Asia/Pacific region.
Under the amended agreement we acquired the rights to market and distribute
ONCASPAR in the United States and Canada in return for a payment of $15 million
and a royalty of 25% on our net sales of the product through 2014. MEDAC GmbH
has the exclusive right to market ONCASPAR in Europe.

L-asparaginase is an enzyme, which depletes the amino acid asparagine upon
which certain leukemic cells are dependent for survival. Other companies market
unmodified L-asparaginase in the U.S. for pediatric acute lymphoblastic leukemia
and in Europe to treat adult acute lymphoblastic leukemia and non-Hodgkin's
lymphoma, as well as pediatric acute lymphoblastic leukemia.

The therapeutic value of unmodified L-asparaginase is limited by its short
half-life, which requires every-other-day injections, and its propensity to
cause a high incidence of allergic reactions. We believe that ONCASPAR offers
significant therapeutic advantages over unmodified L-asparaginase. ONCASPAR has
a significantly increased half-life in blood, allowing every-other-week
administration, and it causes fewer allergic reactions. Based upon the current
use of unmodified L-asparaginase, we believe that ONCASPAR may potentially be
used in other cancer indications, including lymphoma.

Other PEG Products

Our PEG technology may be applicable to other potential products. We are
currently conducting preclinical studies for additional PEG-enhanced compounds.
We will continue to seek opportunities to develop and commercialize other
PEG-enhanced products on our own and through co-commercialization partnerships.

SCA Proteins

General

Antibodies are proteins produced by the immune system in response to the
presence in the body of antigens such as, bacteria, viruses or other disease
causing agents. Antibodies of identical molecular structure that bind to a
specific target are called monoclonal antibodies. Over the past few years,
several monoclonal antibodies have been approved for therapeutic use and have
achieved significant clinical and commercial success. Much of the clinical
utility of monoclonal antibodies results from the affinity and specificity with
which they bind to their targets, as well as a long circulating life due to
their relatively large size and their so-called effector function. Monoclonal
antibodies, however, are not well suited for use in indications where a short
half-life is advantageous or where their large size inhibits them physically
from reaching the area of potential therapeutic activity.

SCAs are genetically engineered proteins designed to expand on the
therapeutic and diagnostic applications possible with monoclonal antibodies.
SCAs have the binding specificity and affinity of monoclonal antibodies and, in
their native form, are about one-fifth to one-sixth of the size of a monoclonal
antibody, typically giving them very short half-lives. We believe that human
SCAs offer the following benefits compared to most monoclonal antibodies:

o     faster clearance from the body,

o     greater tissue penetration for both diagnostic imaging and therapy,

10

o     a significant decrease in immunogenicity when compared with
mouse-based antibodies,

o     easier and more cost effective scale-up for manufacturing when
compared with monoclonal antibodies,

o     enhanced screening capabilities which allow for the more rapid
assessment of SCA proteins of desired specificity using high
throughput screening methods, and

o     the potential for non-parenteral application.

[GRAPHIC OMITTED]

Comparison of a standard monoclonal antibody and a single-chain antibody.

In addition to these benefits, fully human SCAs can be isolated directly
from human SCA libraries without the need for consuming re-cloning or
humanization procedures. In specific formats, SCAs are also suitable for
intracellular expression allowing for their use e.g. as in inhibitors of gene
expression.

We, along with numerous other academic and industrial laboratories, have
demonstrated through in vitro testing the binding specificity of dozens of SCAs.
We, in collaboration with the National Cancer Institute, have shown in published
preclinical studies that SCAs localize to specific tumors and rapidly penetrate
the tumors.

SCAs Under Development

During April 2002 we entered into a multi-year strategic collaboration
with Micromet AG a private company based in Munich, Germany. Under the terms of
the agreement Enzon and Micromet will combine their significant patent estates
and complementary expertise in single chain antibody technology. The
collaboration will focus on the development of two clinical product candidates
within the first 30 months of the collaboration. Together with Micromet, we are
in the process of establishing a new 25 person research and development unit in
Micromet's facility in Germany. Enzon and Micromet will share the costs of the
collaboration equally, as well as in any future revenues generated through the
collaboration.

11

To date, we have granted SCA product licenses to more than 15 companies,
including Bristol-Myers Squibb, Baxter Healthcare and the Gencell Division of
Aventis. These product licenses generally provide for upfront payments,
milestone payments and royalties on sales of any SCA products developed. Some of
the areas being explored with SCAs are cancer therapy, cardiovascular
indications and AIDS. As part of our collaboration with Micromet, we are
combining our core intellectual property in SCAs with Micromet's key SCA linker
and fusion protein patents. Micromet will institute a comprehensive licensing
program on behalf of the partnership and Micromet and Enzon will jointly market
their combined SCA IP to third parties and share equally in the costs and
revenues.

One of our licensees, Alexion Pharmaceuticals, Inc., is developing an SCA
directed against complement protein C5, which is a component of the body's
normal defense against foreign pathogens. Inappropriate complement activation
during cardiopulmonary bypass and myocardial infarction can lead to clinical
problems. In Phase I trials during cardiopulmonary bypass, Alexion reported that
this SCA improved cardiac and neurological function and reduced blood loss.
Alexion reported that it and its partner, Procter & Gamble, have completed a
Phase IIb study and commenced enrollment in a pivotal Phase III study, to
evaluate this SCA in patients undergoing cardiopulmonary bypass surgery and are
currently conducting two additional 1,000 patient Phase II trials to evaluate
this SCA in myocardial infarction patients. This product has been given fast
track review status by the FDA for bypass surgery.

Licenses and Strategic Partnerships

Schering-Plough Agreement

In November 1990, we entered into an agreement with Schering-Plough. Under
this agreement, Schering-Plough agreed to apply our PEG technology to develop a
modified form of Schering-Plough's INTRON A. Schering-Plough is responsible for
conducting and funding the clinical studies, obtaining regulatory approval and
marketing and manufacturing the product worldwide on an exclusive basis and we
are entitled to receive royalties on worldwide sales of PEG-INTRON for all
indications. The royalty percentage to which we are entitled will be lower in
any country where a pegylated alpha-interferon product is being marketed by a
third party in competition with PEG-INTRON, where such third party is not
Hoffmann-La Roche.

In June 1999, we amended our agreement with Schering-Plough, which
resulted in an increase in the effective royalty rate that we receive for
PEG-INTRON sales. In exchange, we relinquished our option to retain exclusive
U.S. manufacturing rights for this product. In addition, we granted
Schering-Plough a non-exclusive license under some of our PEG patents relating
to Branched or U-PEG technology. This license gave Schering-Plough the ability
to sublicense rights under these patents to any party developing a competing
interferon product. During August 2001, Schering-Plough, pursuant to a cross
license agreement entered into as part of the settlement of certain patent
lawsuits, granted Hoffmann-La Roche a sublicense under our Branched PEG patents
to allow Hoffmann-La Roche to make, use, and sell its pegylated alpha-interferon
product, PEGASYS.

Schering-Plough's obligation to pay us royalties on sales of PEG-INTRON
terminates, on a country-by-country basis, upon the later of the date the last
patent of ours to contain a claim covering PEG-INTRON expires in the country or
15 years after the first commercial sale of PEG-INTRON in such country.

Schering-Plough has the right to terminate this agreement at any time if
we fail to maintain the requisite liability insurance of $5,000,000.

Aventis License Agreements

During June 2002 we amended our license agreement with Aventis (formerly
Rhone-Poulenc Rorer Pharmaceutical Inc.) to reacquire the rights to market and
distribute ONCASPAR in the United States, Mexico, Canada and the Asia/Pacific
region. In return for the marketing and distribution rights we

12

paid Aventis $15 million and will pay a 25% royalty on net sales of ONCASPAR
through 2014. Prior to the amendment, Aventis was responsible for marketing and
distribution of ONCASPAR. Under the previous agreement Aventis paid us a royalty
on net sales of ONCASPAR of 27.5% on annual sales up to $10 million and 25% on
annual sales exceeding $10 million. These royalty payments included Aventis'
cost of purchasing ONCASPAR from us under a supply agreement.

In connection with the reacquisition of these marketing and distribution
rights to ONCASPAR we have begun to establish a specialty sales force of 5 to 10
personnel to market ONCASPAR in the United States.

The amended license agreement prohibits Aventis from making, using or
selling an asparaginase product in the U.S. or a competing PEG-asparaginase
product anywhere in the world until the later of the expiration of the agreement
or, if the agreement is terminated earlier, five years after termination. If we
cease to distribute ONCASPAR or we fail to make the required royalty payments,
Aventis has the option to distribute the product in the territories under the
original license.

MEDAC License Agreement

We have granted an exclusive license to MEDAC to sell ONCASPAR and any
PEG-asparaginase product developed by us or MEDAC during the term of the
agreement in Western Europe, Turkey and Russia. Our supply agreement with MEDAC
provides for MEDAC to purchase ONCASPAR from us at certain established prices.
Under the license agreement, MEDAC is responsible for obtaining additional
approvals and indications in the licensed territories, beyond the currently
approved hypersensitive indication in Germany. Under the agreement, MEDAC is
required to meet certain minimum purchase requirements. The MEDAC license
terminated in October 2001. We are currently in negotiations with MEDAC to enter
into a new license agreement.

Micromet AG

On April 10, 2002, we announced a multi-year strategic collaboration with
Micromet AG, a private company based in Munich, Germany, to identify and develop
the next generation of antibody-based therapeutics.

Under the terms of the agreement, Enzon and Micromet will combine their
significant patent estates and complementary expertise in SCA technology to
create a leading platform of therapeutic products based on antibody fragments.
The collaboration will also benefit from a non-exclusive, royalty-bearing
license from Enzon for PEGylated SCA products. Enzon and Micromet are
establishing a new R&D Unit located at Micromet's research facility in Germany.
The R&D Unit will be staffed initially with 25 scientists and plans to be fully
operational by the end of 2002. During the first phase of the collaboration,
covering a 30-month period beginning in the third quarter of calendar 2002, the
new R&D Unit will focus on the generation of at least two clinical product
candidates in therapeutic areas of common strategic interest. Enzon and Micromet
will share equally the costs of research and development, and plan to share the
revenues generated from technology licenses and from future commercialization of
any developed products.

We hold core intellectual property in SCAs. These fundamental patents,
combined with Micromet's key patents in SCA linkers and fusion protein
technology, generate a compelling technology platform for SCA product
development. Enzon and Micromet have entered into a cross-license agreement for
their respective SCA intellectual property and have decided to jointly market
their combined SCA technology to third parties. Micromet will be the exclusive
marketing partner and will institute a comprehensive licensing program on behalf
of the partnership, for which the parties will share equally in the costs and
revenues. Current licensees to Enzon and Micromet's SCA intellectual property
include Alexion, Bristol-Myers Squibb, Cambridge Antibody Technologies, Cell
Genesys, Celltech, Crucell, Eli Lilly, Seattle Genetics and Xoma. Several SCA
molecules are in clinical trials. Alexion is currently

13

conducting a pivotal Phase III clinical study of an SCA in cardiopulmonary
bypass surgery.

In addition to our license and collaboration agreements with Micromet we
purchased an $8.3 million Micromet convertible note which bears interest of 3%
and is payable in March 2006. This note is convertible at our option into
Micromet common stock at a price of $1,015 per share.

Inhale Therapeutic Systems

In January 2002, we entered into a broad strategic alliance with Inhale
Therapeutic Systems, Inc. that includes the following components:

o     The companies agreed to enter into a collaboration to jointly
develop three products to be specified over time using Inhale's
Inhance(TM) pulmonary delivery platform and SEDS(TM) supercritical
fluids platform. Inhale will be responsible for formulation
development, delivery system supply, and in some cases, early
clinical development. We will have responsibility for most clinical
development and for commercialization.

o     The two companies will also explore the development of single-chain
antibody (SCA) products to be administered by the pulmonary route.

o     We granted to Inhale the exclusive right to grant sub-licenses under
our PEG patents to third parties. We will receive a royalty or a
share of profits on final product sales of any products that use our
patented PEG technology. We anticipate that we will receive 0.5% or
less of Hoffmann-LaRoche's sales of PEGASYS, which represents equal
profit sharing with Inhale on this product. We retain the right to
use all of our PEG technology for our own product portfolio, as well
as those products we develop in co-commercialization collaborations
with third parties.

o     We purchased $40 million of newly issued Inhale convertible
preferred stock in January 2002. The preferred stock is convertible
into Inhale common stock at a conversion price of $22.79 per share.
In the event Inhale's common stock price three years from the date
of issuance of the preferred stock or earlier in certain
circumstances is less than $22.79, the conversion price will be
adjusted down, although in no event will it be less than $18.23 per
share. Conversion of the preferred stock into common stock can occur
anywhere from 1 to 4 years following the issuance of the preferred
stock or earlier in certain circumstances. The preferred stock
investment is being accounted for under the cost method.

o     The two companies also agreed in January 2002 to a settlement of the
patent infringement suit we filed in 1998 against Inhale's
subsidiary, Shearwater Polymers, Inc. Inhale will receive licensing
access to the contested patents under a cross-license agreement. We
received a one-time payment of $3 million from Inhale to cover
expenses incurred in defending our branched PEG patents which is
included in other income.

Mitsubishi Pharma

We have two license agreements with Welfide Corporation (formerly
Yoshitomi Pharmaceutical Industries, Ltd.) for the development of a recombinant
human serum albumin, or rHSA, as a blood volume expander. In 1998, Yoshitomi
Pharmaceutical Industries, Ltd. and Green Cross Corporation merged to form
Yoshitomi Pharmaceutical Industries, Ltd. and during 2000 such entity was
renamed Welfide Corporation. Yoshitomi had reported that it filed for approval
of this product in Japan in November 1997. The agreements, which were assigned
to us in connection with our acquisition of Genex Corporation in 1991, entitle
us to a royalty on sales of the rHSA product in much of Asia and North and South
America. We believe, this product is currently being developed only for the
Japanese market. A binding arbitration was concluded in February 2000 regarding
the royalty rate required under the agreements. The arbitrators awarded us a 1%
royalty on the sales of the rHSA product in Japan, South East Asia, India,
China, Australia, New Zealand and North and South America for a period of 15
years after the first commercial

14

sale of such rHSA product following market approval of that product in Japan or
the United States.

Marketing

During June 2002, we reacquired the rights to market and distribute
ONCASPAR in North America from Aventis Pharmaceuticals. In connection with the
reacquisition, we have begun to establish a 5 to 10 person specialty sales force
to commercially market ONCASPAR in the United States. We also market ADAGEN on a
worldwide basis to a small patient population.

For some of our products, we have provided exclusive marketing rights to
our corporate partners in return for royalties on sales. We have an agreement
with Nova Factor, Inc. (formerly known as Gentiva Health Services, Inc.) to
purchase and distribute ADAGEN and ONCASPAR in the United States and Canada. The
agreement provides for Nova Factor to purchase ADAGEN and ONCASPAR from us at
certain prices established in the agreement. We pay Nova Factor a service fee
for the distribution of the products.

We expect to evaluate whether to expand or acquire additional sales forces
to market additional products we may acquire or develop.

Raw Materials and Manufacturing

In the manufacture of our products, we couple activated forms of PEG with
unmodified proteins. We do not have a long-term supply agreement for the raw
polyethylene glycol material that we use in the manufacturing of our PEG
products. Instead, we maintain a level of inventory, which we believe should
provide us sufficient time to find an alternate supplier of PEG, in the event it
becomes necessary, without materially disrupting our business.

ADAGEN and ONCASPAR use our early PEG technology which is not as advanced
as the PEG technology used in PEG-INTRON and our products under development.
Due, in part, to certain limitations of using our earlier PEG technology we have
had and will likely continue to have certain manufacturing problems with ADAGEN
and ONCASPAR.

Manufacturing and stability problems required us to implement voluntarily
recalls for a batch of ADAGEN in March 2001 and certain batches of ONCASPAR in
June 2002.

During 1998, we began to experience manufacturing problems with one of our
FDA-approved products, ONCASPAR. The problems were due to increased levels of
white particulates in batches of ONCASPAR, which resulted in an increased
rejection rate for this product. During fiscal 1999, we agreed with the FDA to
temporary labeling and distribution restrictions for ONCASPAR and instituted
additional inspection and labeling procedures prior to distribution. During May
1999, the FDA required us to limit distribution of ONCASPAR to only those
patients who are hypersensitive to native L-asparaginase. As a result of certain
manufacturing changes we made, the FDA withdrew this distribution restriction in
November 1999.

In July 1999, the FDA conducted an inspection of our manufacturing
facility in connection with our product license for ADAGEN. Following that
inspection, the FDA documented several deviations from Current Good
Manufacturing Practices, known as cGMP, in a Form 483 report. We provided the
FDA with a corrective action plan. In November 1999, the FDA issued a warning
letter citing the same cGMP deviations listed in the July 1999 Form 483, but it
also stated that the FDA was satisfied with our proposed corrective actions. As
a result of the deviations, the FDA decided not to approve product export
requests from us for ONCASPAR until it determined that all noted cGMP deviations
were either corrected or in the process of being corrected. This restriction was
removed in August 2000.

Since January 2000, the FDA has conducted follow-up inspections as well as
routine inspections of our manufacturing facility related to ONCASPAR and
ADAGEN. Following certain of these inspections,

15

the FDA issued Form 483 reports, citing deviations from cGMP. We have or are in
the process of responding to such reports with corrective action plans and are
currently in discussion with the FDA concerning some observations set forth in
the Form 483s.

Research and Development

To date, our primary source of new products has been our internal research
and development activities. Research and development expenses for the fiscal
years ended June 30, 2002, 2001 and 2000 were approximately $18.4 million, $13.1
million, and $8.4 million, respectively.

Our research and development activities during fiscal 2002 concentrated
primarily on the Phase II clinical trials of PROTHECAN, preclinical studies, and
continued research and development of our proprietary technologies. We expect
our research and development expenses for fiscal 2003 and beyond will be at
significantly higher levels as we continue clinical trials for PROTHECAN and
PEG-paclitaxel, and additional compounds enter clinical trials.

Patents

We have licensed, and been issued, a number of patents in the United
States and other countries and have other patent applications pending to protect
our proprietary technology. Although we believe that our patents provide
adequate protection for the conduct of our business, we cannot assure you that
such patents:

o     will be of substantial protection or commercial benefit to us,

o     will afford us adequate protection from competing products, or

o     will not be challenged or declared invalid.

We also cannot assure you that additional United States patents or foreign
patent equivalents will be issued to us.

The patent covering our original PEG technology, which we had licensed
from Research Corporation Technologies, Inc., contained broad claims covering
the attachment of PEG to polypeptides. However, this United States patent and
its corresponding foreign patents have expired. Based upon the expiration of the
Research Corporation patent, other parties will be permitted to make, use, or
sell products covered by the claims of the Research Corporation patent, subject
to other patents, including those which we hold. We have obtained and intend to
continue to pursue patents with claims covering improved methods of attaching or
linking PEG to therapeutic compounds. We also have obtained patents relating to
the specific composition of the PEG-modified compounds that we have identified
or created. We will continue to seek such patents as we develop additional
PEG-enhanced products. We cannot assure you that any of these patents will
enable us to prevent infringement or that competitors will not develop
competitive products outside the protection that may be afforded by our patents.

We are aware that others have also filed patent applications and have been
granted patents in the United States and other countries with respect to the
application of PEG to proteins and other compounds. Owners of any such patents
may seek to prevent us or our collaborators from making, using or selling our
products.

During January 2002, we settled a patent infringement suit we had brought
against Shearwater Corporation Inc., a company that reportedly has developed a
Branched PEG, or U-PEG, used in Hoffmann-La Roche's product, PEGASYS, a
PEG-modified version of its alpha-interferon product ROFERON-A. The settlement
was part of a broad strategic alliance we formed with Inhale Therapeutic Systems
Inc., Shearwater Corporation's parent corporation, in which Inhale agreed to pay
us $3,000,000 to cover our expenses incurred in defending our Branched PEG
patents and pay us 0.5% of any revenues it receives from

16

Hoffmann-La Roche's manufacture and sale of PEGASYS. In addition, Enzon and
Inhale agreed to cross license their PEG intellectual property estates to each
other. Also, Inhale has the exclusive right to sublicense our PEG patent to
third parties and we will receive a royalty or a share of profit on final
product sales. We retained the rights to use our PEG patents for our own
proprietary products and products we may develop with co-commercialization
partners.

During August 2001, Schering-Plough granted a sublicense to Hoffmann-La
Roche under our Branched PEG patents to allow Hoffmann-La Roche to make, use and
sell its pegylated alpha-interferon product, PEGASYS as part of the settlement
of a patent infringement lawsuit related to PEG-INTRON. During August 2001, we
dismissed a patent infringement suit we had brought against Hoffmann-La Roche
relating to PEGASYS as a result of the sublicense by Schering-Plough of our
Branched PEG patents for PEGASYS to Hoffmann-La Roche.

In the field of SCA proteins, we have several United States and foreign
patents and pending patent applications, including a patent granted in August
1990 covering the genes needed to encode SCA proteins.

In November 1993, Curis Inc. (formerly known as Creative BioMolecules
Inc.) signed cross license agreements with us in the field of our SCA protein
technology and Curis' Biosynthetic Antibody Binding Site protein technology. In
July 2001, Curis reported that it had entered into a purchase and sale agreement
with Micromet AG, a German Corporation, pursuant to which Curis assigned its
single chain polypeptide technology to Micromet. In April 2002, we entered into
a cross-license agreement with Micromet for our respective SCA intellectual
property and have decided to jointly market such intellectual property with
Micromet.

The degree of patent protection to be afforded to biotechnological
inventions is uncertain and our products are subject to this uncertainty. There
may be issued third party patents or patent applications containing subject
matter which we or our licensees or collaborators will require in order to
research, develop or commercialize at least some of our products. We cannot
assure you that we will be able to obtain a license to such subject matter on
acceptable terms, or at all.

In addition to the litigation described above, we expect that there may be
significant litigation in the industry regarding patents and other proprietary
rights and, to the extent we become involved in such litigation, it could
consume a substantial amount of our resources. An adverse decision in any such
litigation could subject us to significant liabilities. In addition, we rely
heavily on our proprietary technologies for which pending patent applications
have been filed and on unpatented know-how developed by us. Insofar as we rely
on trade secrets and unpatented know-how to maintain our competitive
technological position, we cannot assure you that others may not independently
develop the same or similar technologies. Although we have taken steps to
protect our trade secrets and unpatented know-how, third parties nonetheless may
gain access to such information.

Government Regulation

The FDA and comparable regulatory agencies in state and local
jurisdictions and in foreign countries impose substantial requirements on the
clinical development, manufacture and marketing of pharmaceutical products.
These agencies and other federal, state and local entities regulate research and
development activities and the testing, manufacture, quality control, safety,
effectiveness, labeling, storage, record keeping, approval and promotion of our
products. All of our products will require regulatory approval before
commercialization. In particular, therapeutic products for human use are subject
to rigorous preclinical and clinical testing and other requirements of the
Federal Food, Drug, and Cosmetic Act and the Public Health Service Act,
implemented by the FDA, as well as similar statutory and regulatory requirements
of foreign countries. Obtaining these marketing approvals and subsequently
complying with ongoing statutory and regulatory requirements is costly and time
consuming. Any failure by us or our collaborators, licensors or licensees to
obtain, or any delay in obtaining, regulatory approval or in complying with
other requirements, could adversely affect the commercialization of products
that we are

17

then developing and our ability to receive product or royalty revenues.

The steps required before a new drug or biological product may be
distributed commercially in the United States generally include:

o     conducting appropriate preclinical laboratory evaluations of the
product's chemistry, formulation and stability, and animal studies
to assess the potential safety and efficacy of the product,

o     submitting the results of these evaluations and tests to the FDA,
along with manufacturing information and analytical data, in an
Investigational New Drug Application, or IND,

o     making the IND effective after the resolution of any safety or
regulatory concerns of the FDA,

o     obtaining approval of Institutional Review Boards, or IRBs, to
introduce the drug or biological product into humans in clinical
studies,

o     conducting adequate and well-controlled human clinical trials that
establish the safety and efficacy of the drug or biological product
candidate for the intended use, typically in the following three
sequential, or slightly overlapping stages:

Phase I. The drug or biologic is initially introduced into
healthy human subjects or patients and tested for safety, dose
tolerance, absorption, metabolism, distribution and excretion,

Phase II. The drug or biologic is studied in patients to
identify possible adverse effects and safety risks, to
determine dose tolerance and the optimal dosage, and to
collect initial efficacy data,

Phase III. The drug or biologic is studied in an expanded
patient population at multiple clinical study sites, to
confirm efficacy and safety at the optimized dose, by
measuring a primary endpoint established at the outset of the
study,

o     submitting the results of preliminary research, preclinical studies,
and clinical studies as well as chemistry, manufacturing and control
information on the drug or biological product to the FDA in a New
Drug Application, or NDA, for a drug product, or a Biologics License
Application, or BLA, for a biological product, and

o     obtaining FDA approval of the NDA or BLA prior to any commercial
sale or shipment of the drug or biological product.

An NDA or BLA must contain, among other things, data derived from
nonclinical laboratory and clinical studies which demonstrate that the product
meets prescribed standards of safety, purity and potency, and a full description
of manufacturing methods. The biological product may not be marketed in the
United States until a biological license is issued.

The approval process can take a number of years and often requires
substantial financial resources. The results of preclinical studies and initial
clinical trials are not necessarily predictive of the results from large-scale
clinical trials, and clinical trials may be subject to additional costs, delays
or modifications due to a number of factors, including the difficulty in
obtaining enough patients, clinical investigators, drug supply, or financial
support. The FDA has issued regulations intended to accelerate the approval
process for the development, evaluation and marketing of new therapeutic
products intended to treat life-threatening or severely debilitating diseases,
especially where no alternative therapies exist. If applicable, this procedure
may shorten the traditional product development process in the United States.
Similarly, products that represent a substantial improvement over existing
therapies may be eligible for priority review with a target

18

approval time of six months. Nonetheless, approval may be denied or delayed by
the FDA or additional trials may be required. The FDA also may require testing
and surveillance programs to monitor the effect of approved products that have
been commercialized, and the agency has the power to prevent or limit further
marketing of a product based on the results of these post-marketing programs.
Upon approval, a drug product or biological product may be marketed only in
those dosage forms and for those indications approved in the NDA or BLA,
although information about off-label indications may be distributed in certain
circumstances.

In addition to obtaining FDA approval for each indication to be treated
with each product, each domestic drug product manufacturing establishment must
register with the FDA, list its drug products with the FDA, comply with Current
Good Manufacturing Practices and permit and pass inspections by the FDA.
Moreover, the submission of applications for approval may require additional
time to complete manufacturing stability studies. Foreign establishments
manufacturing drug products for distribution in the United States also must list
their products with the FDA and comply with Current Good Manufacturing
Practices. They also are subject to periodic inspection by the FDA or by local
authorities under agreement with the FDA.

Any products manufactured or distributed by us pursuant to FDA approvals
are subject to extensive continuing regulation by the FDA, including
record-keeping requirements and a requirement to report adverse experiences with
the drug. In addition to continued compliance with standard regulatory
requirements, the FDA also may require post-marketing testing and surveillance
to monitor the safety and efficacy of the marketed product. Adverse experiences
with the product must be reported to the FDA. Product approvals may be withdrawn
if compliance with regulatory requirements is not maintained or if problems
concerning safety or efficacy of the product are discovered following approval.

The Federal Food, Drug, and Cosmetic Act also mandates that drug products
be manufactured consistent with Current Good Manufacturing Practices. In
complying with the FDA's regulations on Current Good Manufacturing Practices,
manufacturers must continue to spend time, money and effort in production,
record-keeping, quality control, and auditing to ensure that the marketed
product meets applicable specifications and other requirements. The FDA
periodically inspects drug product manufacturing facilities to ensure compliance
with Current Good Manufacturing Practices. Failure to comply subjects the
manufacturer to possible FDA action, such as:

o     warning letters,

o     suspension of manufacturing,

o     seizure of the product,

o     voluntary recall of a product,

o     injunctive action, or

o     possible civil or criminal penalties.

To the extent we rely on third parties to manufacture our compounds and
products, those third parties will be required to comply with Current Good
Manufacturing Practices.

Even after FDA approval has been obtained, and often as a condition to
expedited approval, further studies, including post-marketing studies, may be
required. Results of post-marketing studies may limit or expand the further
marketing of the products. If we propose any modifications to the product,
including changes in indication, manufacturing process, manufacturing facility
or labeling, an NDA or BLA supplement may be required to be submitted to the
FDA.

Products manufactured in the United States for distribution abroad will be
subject to FDA

19

regulations regarding export, as well as to the requirements of the country to
which they are shipped. These latter requirements are likely to cover the
conduct of clinical trials, the submission of marketing applications, and all
aspects of product manufacture and marketing. Such requirements can vary
significantly from country to country. As part of our strategic relationships
our collaborators may be responsible for the foreign regulatory approval process
of our products, although we may be legally liable for noncompliance.

We are also subject to various federal, state and local laws, rules,
regulations and policies relating to safe working conditions, laboratory and
manufacturing practices, the experimental use of animals and the use and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds and infectious disease agents, used in connection with our research
work. Although we believe that our safety procedures for handling and disposing
of such materials comply with current federal, state and local laws, rules,
regulations and policies, the risk of accidental injury or contamination from
these materials cannot be entirely eliminated.

We cannot predict the extent of government regulation which might result
from future legislation or administrative action. In this regard, although the
Food and Drug Administration Modernization Act of 1997 modified and created
requirements and standards under the Federal Food, Drug, and Cosmetic Act with
the intent of facilitating product development and marketing, the FDA is still
in the process of implementing the Food and Drug Administration Modernization
Act of 1997. Consequently, the actual effect of these developments on our
business is uncertain and unpredictable.

Moreover, we anticipate that Congress, state legislatures and the private
sector will continue to review and assess controls on health care spending. Any
such proposed or actual changes could cause us or our collaborators to limit or
eliminate spending on development projects and may otherwise impact us. We
cannot predict the likelihood, nature or extent of adverse governmental
regulation that might result from future legislative or administrative action,
either in the United States or abroad. Additionally, in both domestic and
foreign markets, sales of our proposed products will depend, in part, upon the
availability of reimbursement from third-party payors, such as government health
administration authorities, managed care providers, private health insurers and
other organizations. Significant uncertainty often exists as to the
reimbursement status of newly approved health care products. In addition,
third-party payors are increasingly challenging the price and cost-effectiveness
of medical products and services. There can be no assurance that our proposed
products will be considered cost-effective or that adequate third-party
reimbursement will be available to enable us to maintain price levels sufficient
to realize an appropriate return on our investment in product research and
development.

PEG-INTRON was approved in the European Union and the United States for
the treatment of hepatitis C in May 2000 and January 2001, respectively.
ONCASPAR was approved for marketing in the United States and Germany in 1994 and
in Canada in December 1997 for patients with acute lymphoblastic leukemia who
are hypersensitive to native forms of L-asparaginase, and in Russia in April
1993 for therapeutic use in a broad range of cancers. ADAGEN was approved by the
FDA in March 1990. Except for these approvals, none of our other products have
been approved for sale and use in humans in the United States or elsewhere.

With respect to patented products, delays imposed by the government
approval process may materially reduce the period during which we will have the
exclusive right to exploit them.

Competition

Competition in the biopharmaceutical industry is intense and based
significantly on scientific and technological factors. These factors include the
availability of patent and other protection of technology and products, the
ability to commercialize technological developments and the ability to obtain
governmental approval for testing, manufacturing and marketing. We compete with
specialized biopharmaceutical firms in the United States, Europe and elsewhere,
as well as a growing number of large pharmaceutical companies

20

that are applying biotechnology to their operations. These companies, as well as
academic institutions, governmental agencies and private research organizations,
also compete with us in recruiting and retaining highly qualified scientific
personnel and consultants.

We are aware that other companies are conducting research on chemically
modified therapeutic proteins and that certain companies are modifying
pharmaceutical products, including proteins, by attaching PEG. In particular
Amgen has received FDA approval for Neulasta, a pegylated version of Neupogen.
Other than PEG-INTRON and our ONCASPAR and ADAGEN products, and Hoffmann-La
Roche's PEGASYS, which has been approved by the European Union and Neulasta, we
are not aware of any PEG-modified therapeutic proteins that are currently
available commercially for therapeutic use. Nevertheless, other drugs or
treatments that are currently available or that may be developed in the future,
and which treat the same diseases as those that our products are designed to
treat, may compete with our products.

Prior to the development of ADAGEN, the only treatment available to
patients afflicted with ADA-deficient SCID was a bone marrow transplant.
Completing a successful transplant depends upon finding a matched donor, the
probability of which is low. Researchers at the National Institutes of Health,
or NIH, have been treating SCID patients with gene therapy, which if
successfully developed, would compete with, and could eventually replace ADAGEN
as a treatment. The theory behind gene therapy is that cultured T-lymphocytes
that are genetically engineered and injected back into the patient will express
adenosine deaminase, the deficient enzyme in people afflicted with ADA-deficient
SCID, permanently and at normal levels. To date, patients in gene therapy
clinical trials have not been able to stop ADAGEN treatment and, therefore, the
trials have been inconclusive.

Current standard treatment of patients with acute lymphoblastic leukemia
includes administering unmodified L-asparaginase along with the drugs
vincristine, prednisone and daunomycin. Studies have shown that long-term
treatment with L-asparaginase increases the disease-free survival in high risk
patients. ONCASPAR, our PEG-modified L-asparaginase product, is used to treat
patients with acute lymphoblastic leukemia who are hypersensitive to unmodified
forms of L-asparaginase. Currently, there is one unmodified form of
L-asparaginase (Elspar) available in the United States and several available in
Europe. We believe that ONCASPAR has two advantages over these unmodified forms
of L-asparaginase: increased circulating blood life and generally reduced
immunogenicity.

The current market for INTRON A, Schering-Plough's interferon alpha-2b
product, is highly competitive, with Hoffmann-La Roche, Amgen and several other
companies selling similar products. We believe that PEG-INTRON may have several
potential advantages over the other interferon products currently approved for
marketing in the United States including:

o     once per week dosing versus the current three times per week dosing,
and

o     increased efficacy, compared with unmodified alpha-interferon.

It has also been reported that Hoffmann-La Roche's PEGASYS product is a
pegylated longer lasting version of its interferon product, ROFERON-A.
Hoffmann-La Roche filed for United States marketing approval for PEGASYS in May
2000. During June 2002, Roche also filed for United States marketing approval in
combination with Ribavirin for treatment of hepatitis C. This product has
received priority (6 months) review status by the United States FDA. Currently
the product has not received FDA approval. During June 2002, PEGASYS received
European Union approval for treatment of hepatitis C as a monotherapy and in
combination with ribavirin. We expect PEGASYS to compete with PEG-INTRON in the
United States and the European Union.

21

There are several technologies which compete with our SCA protein
technology, including chimeric antibodies, humanized antibodies, human
monoclonal antibodies, recombinant antibody Fab fragments, low molecular weight
peptides and mimetics. These competing technologies can be categorized into two
areas:

o     those modifying monoclonal antibodies to minimize immunological
reaction to a foreign protein, which is the strategy employed with
chimerics, humanized antibodies and human monoclonal antibodies, and

o     those creating smaller portions of monoclonal antibodies, which are
more specific to the target and have fewer side effects, as is the
case with Fab fragments and low molecular weight peptides.

We believe that the smaller size of our SCA proteins should permit better
penetration into the tumor, result in rapid clearance from the blood and cause a
significant decrease in the immunogenic problems associated with conventional
monoclonal antibodies. A number of organizations have active programs in SCA
proteins. We believe that our patent position on SCA proteins will likely
require companies that have not licensed our SCA protein patents to obtain
licenses under our patents in order to commercialize their products, but we
cannot assure you this will prove to be the case.

Employees

As of June 30, 2002, we employed 127 persons, including 27 persons with
Ph.D. or MD degrees. At that date, 58 employees were engaged in research and
development activities, 40 were engaged in manufacturing, and 29 were engaged in
administration and management. None of our employees are covered by a collective
bargaining agreement. All of our employees are covered by confidentiality
agreements. We consider our relations with our employees to be good.

Item 2. Properties

We own no real property. The following are all of the facilities that we
currently lease:

Approx.        Approx.
Principal            Square         Annual              Lease
Location                 Operations            Footage         Rent            Expiration
--------                 ----------            -------         ----            ----------

20 Kingsbridge Road     Research & Development       56,000       $581,000(1)      July 31, 2021
Piscataway, NJ

300 Corporate Ct.       Manufacturing                24,000        183,000        March 31, 2007
S. Plainfield, NJ

685 Route 202/206       Administrative               19,000        470,000(2)      June 30, 2007
Bridgewater, NJ

(1)   Under the terms of the lease, annual rent increases over the
remaining term of the lease from $581,000 to $773,000.

(2)   Under the terms of the lease, annual rent increases over the
remaining term of the lease from $470,000 to $489,000.

We believe that our facilities are well maintained and generally adequate
for our present and future anticipated needs.

22

Item 3. Legal Proceedings

There is no pending material litigation to which we are a party or to
which any of our property is subject.

Item 4. Submission of Matters to a Vote of Security Holders

None.

23

PART II

Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters

Our common stock is traded in the over-the-counter market and is quoted on
the NASDAQ National Market under the trading symbol "ENZN".

The following table sets forth the high and low sale prices for our common
stock for the years ended June 30, 2002 and 2001, as reported by the NASDAQ
National Market. The quotations shown represent inter-dealer prices without
adjustment for retail markups, markdowns or commissions, and may not necessarily
reflect actual transactions.

Year Ended June 30, 2002                       High            Low
-----          -----
First Quarter                             67.92          42.77
Second Quarter                            67.15          50.10
Third Quarter                             57.86          40.75
Fourth Quarter                            44.70          22.12

Year Ended June 30, 2001
First Quarter                             74.13          41.38
Second Quarter                            84.13          50.75
Third Quarter                             67.75          33.13
Fourth Quarter                            79.40          39.56

As of September 18, 2002 there were 1,670 holders of record of our common
stock.

We have never declared or paid any cash dividends on our common stock and
do not anticipate paying any cash dividends in the foreseeable future. We
currently intend to retain future earnings to fund the development and growth of
our business. Holders of our Series A preferred stock are entitled to an annual
dividend of $2.00 per share, payable semiannually, but only when and if declared
by our board of directors, out of funds legally available. As of June 30, 2002,
there were 7,000 shares of Series A preferred stock issued and outstanding.
Dividends on the Series A preferred stock are cumulative and accrue and
accumulate but will not be paid, except in liquidation or upon conversion, until
such time as the board of directors deems it appropriate. No dividends are to be
paid or set apart for payment on our common stock, nor are any shares of common
stock to be redeemed, retired or otherwise acquired for valuable consideration
unless we have paid in full or made appropriate provision for the payment in
full of all dividends which have then accumulated on the Series A preferred
stock.

24

The following table provides additional information on the Company's
equity-based compensation plans as of June 30, 2002:

Number of securities
remaining available for
Number of securities to        Weighted-average          future issuance under
be issued upon exercise       exercise price of        equity compensation plans
of outstanding options,      outstanding options,        (excluding securities
Plan Category                 warrants and rights        warrants and rights         reflected in column a)
-------------               -----------------------      --------------------      -------------------------

Equity compensation
plans approved by
security holders                   3,644,428                   $38.07                      1,549,096
Equity compensation
plans not approved
by security holders                     --                       --                             --
---------                   ------                      ---------
Total                              3,644,428                   $38.07                      1,549,096
=========                   ======                      =========

Item 6. Selected Financial Data

Set forth below is our selected financial data for the five fiscal years
ended June 30, 2002.

Consolidated Statement of Operations Data:

Years Ended June 30
-------------------------------------------------------------------------------
2002            2001             2000             1999              1998
----            ----             ----             ----              ----

Revenues                  $75,804,746     $31,587,709     $ 17,017,797       13,158,207      $ 14,644,032
Net Income (Loss)          45,806,343      11,525,064       (6,306,464)      (4,919,208)       (3,617,133)
Net Income (Loss) per
Diluted Share           $      1.04     $       .26           ($0.17)          ($0.14)           ($0.12)
Dividends on
Common Stock                     None            None             None             None              None

Consolidated Balance Sheet Data:

June 30,
-------------------------------------------------------------------------------
2002            2001             2000             1999              1998
----            ----             ----             ----              ----

Total Assets             $610,747,883    $549,675,817     $130,252,250     $ 34,916,315       $13,741,378
Long-Term Obligations    $400,000,000    $400,000,000               --               --              --

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Results of Operations

Fiscal Years Ended June 30, 2002, 2001, and 2000

Revenues. Revenues for the year ended June 30, 2002 were $75,805,000
compared to $31,588,000 for the year ended June 30, 2001 and $17,018,000 for the
year ended June 30, 2000. The components of revenues are net sales and royalties
we earn on the sale of our products by others and contract revenues.

25

Net sales increased by 7% to $22,183,000 for the year ended June 30, 2002,
as compared to $20,769,000 for the year ended June 30, 2001. The increase was
due to increased ONCASPAR sales. The increase in ONCASPAR sales was due to the
lifting during the prior year of all of the FDA distribution and labeling
restrictions that were in place for a portion of fiscal 2001. During the year
ended June 30, 2001, the FDA gave final approval to manufacturing changes which
we made to correct certain manufacturing problems, and all previously imposed
restrictions were lifted. Net sales of ADAGEN were $13,441,000 for the year
ended June 30, 2002 and $13,369,000 for the year ended June 30, 2001.

Sales increased by 33% to 20,769,000 for the year ended June 30, 2001 from
$15,558,000 for the year ended June 30, 2000. This was due to increased ONCASPAR
and ADAGEN sales. The increase in ONCASPAR sales was due to the mid-year lifting
of FDA imposed distribution and labelling restrictions which were in place
during fiscal year ended June 30, 2000. Net sales of ADAGEN increased to
$13,369,000 for the year ended June 30, 2001 as compared to $12,159,000 in
fiscal 2000. The increase in ADAGEN sales resulted from an increase in the
number of patients receiving ADAGEN treatment.

Royalties for the year ended June 30, 2002 increased to $53,329,000
compared to $8,251,000 in the prior year. The increase was primarily due to the
commencement of sales of PEG-INTRON in combination with REBETOL in the U.S. and
increased sales of PEG-INTRON in Europe. Schering-Plough, our marketing partner
for PEG-INTRON, began selling PEG-INTRON in the European Union in June 2000 and
in the U.S. in February 2001. PEG-INTRON also received marketing approval for
use in combination with REBETOL for the treatment of chronic hepatitis C in the
European Union in March 2001 and in the U.S. in August 2001. Schering-Plough
launched PEG-INTRON as combination therapy with REBETOL in the U.S. in October
2001.

Royalties for the year ended June 30, 2001 increased to $8,251,000 as
compared to $34,000 for the year ended June 30, 2000 due to the approval of
PEG-INTRON in the European Union in late fiscal 2000 and in the United States
during fiscal 2001.

Sales of ADAGEN are expected to increase at rates comparable to those
achieved during the last two years as additional patients are treated. We
anticipate ONCASPAR revenues to increase due to increased detailing of the
product resulting from our reacquisition of marketing rights for the product
from Aventis at the end of fiscal 2002. During fiscal 2002, we distributed and
recorded the net sales of ONCASPAR, but the product was not marketed by us or
Aventis. We expect royalties on PEG-INTRON to increase in future quarters with
the continued roll out of the product in the U.S. Schering-Plough has reported
that clinical trials of PEG-INTRON for additional indications are being
conducted and will seek approval in additional countries for PEG-INTRON.
However, we cannot assure you that any particular sales levels of ADAGEN,
ONCASPAR or PEG-INTRON will be achieved or maintained.

Contract revenues for the year ended June 30, 2002 decreased by
$2,275,000, as compared to the prior year. The decrease was related primarily to
a $2,000,000 milestone payment from our development partner Schering-Plough
which was earned as a result of the FDA's approval of PEG-INTRON during the year
ended June 30, 2001.

Contract revenues for the year ended June 30, 2001 increased by
$1,141,000, as compared to the prior year as a result of a $2,000,000 milestone
payment from Schering-Plough in the fiscal year 2001 offset by a $1,000,000
milestone payment received in 2000 from Schering-Plough for the FDA's acceptance
in February 2000 of the U.S. marketing application for PEG-INTRON.

We had export sales and royalties recognized on export sales of
$26,302,000 for the year ended June 30, 2002, $11,161,000 for the year ended
June 30, 2001 and $4,137,000 for the year ended June 30, 2000. Of these amounts,
sales in Europe and royalties recognized on sales in Europe, were $22,671,000
for the year ended June 30, 2002, $10,226,000 for the year ended June 30, 2001
and $3,617,000 for the year ended June 30, 2000.

26

Cost of Sales. Cost of sales, as a percentage of net sales increased to
27% for the year ended June 30, 2002, as compared to 19% for the prior year.
This increase was due to lower cost of goods sold during the previous fiscal
year as certain finished goods, which had previously been reserved for due to
previously disclosed manufacturing problems related to ONCASPAR, were cleared
and sold in the prior year.

Cost of sales, as a percentage of sales, for the year ended June 30, 2001
was 19% as compared to 31% in 2000. This improvement was primarily due to the
prior year's write-off of ONCASPAR finished goods related to the previously
disclosed manufacturer problems.

Research and Development. Research and development expenses increased by
$5,375,000 or 41% to $18,427,000 for the year ended June 30, 2002, as compared
to $13,052,000 for the same period last year. The increase was primarily due to
the clinical advancement and related clinical trial costs for PROTHECAN
(PEG-camptothecin) and PEG-paclitaxel and increased payroll and related
expenses.

Research and development expenses for the year ended June 30, 2001
increased by 56% to $13,052,000 as compared to $8,383,000 in 2000. The increase
was due to increased payroll and related expenses due to an increase in research
personnel and increased contracted services related to clinical trials and
preclinical studies for products under development, including PROTHECAN and
PEG-paclitaxel.

Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the year ended June 30, 2002 increased by $4,892,000
to $16,687,000, as compared to $11,795,000 in 2001. The increase was primarily
due to increased payroll and related expenditures for additional administrative
personnel and costs related to the identification and review of potential
strategic alliances to gain access to technologies and products.

Selling, general and administrative expenses for the year ended June 30,
2001 decreased by $1,161,000 to $11,795,000, as compared to $12,956,000 in 2000.
The decrease was primarily due to a net charge of $2,600,000 recorded in the
prior year, which was the result of a binding arbitration award in a lawsuit
brought by a former financial advisor. The decrease was partially offset by
increased legal fees associated with patent filings and patent litigation costs.

Other Income/Expense. Interest income increased by $10,279,000 to
$18,681,000 for the year ended June 30, 2002, as compared to $8,402,000 for the
prior year. The increase in interest income was attributable to an increase in
interest bearing investments, primarily due to the issuance of $400,000,000 of
4.5% convertible subordinated notes during June 2001. Interest expense increased
to $19,829,000 from $275,000 for the prior year due to the issuance of the
$400,000,000 in 4.5% convertible subordinated notes in June 2001. Other income
increased to $3,218,000 for the year ended June 30, 2002 as compared to $11,000
in the prior year, primarily due to a $3,000,000 payment from Inhale in
connection with the settlement of the patent infringement suit against Inhale's
subsidiary Shearwater Corporation, Inc. This one-time payment was reimbursement
for expenses we incurred in defending our branched PEG patent.

Other income/expense increased by $5,234,000 to $8,137,000 for the year
ended June 30, 2001, as compared to $2,903,000 for the prior year. The increase
was attributable to an increase in interest income due to an increase in
interest bearing investments.

Income Taxes. For the year ended June 30, 2002, the Company recognized a
net tax benefit of approximately $9,123,000, primarily related to the reduction
in the valuation allowance based on the Company's net operating losses expected
to be utilized to offset the estimated tax liability for the year ended June 30,
2003. We also recognized a tax provision which represents our anticipated
Alternative Minimum Tax liability based on our fiscal 2002 taxable income. The
tax provision was offset by the sale of a portion of our net operating losses to
the state of New Jersey. During the year ended June 30, 2002, we sold
approximately $10,888,000 of our state net operating loss carry forwards for
proceeds of $857,000. For the year ended June 30, 2001 the Company recognized a
tax provision, which represents our anticipated Alternative Minimum Tax
liability based on our fiscal 2001 taxable income. The tax provision was offset

27

by the sale of a portion of our net operating losses to the state of New Jersey.
During the year ended June 30, 2001, we sold approximately $9,255,000 of our
state net operating loss carry forwards and recognized a tax benefit of $728,000
from this sale.

Liquidity and Capital Resources

Total cash reserves, including cash, cash equivalents and marketable
securities, as of June 30, 2002 were $485,014,000, as compared to $516,379,000
as of June 30, 2001. The decrease in total cash reserves was primarily due to
the strategic investment of approximately $48,300,000 in Inhale Therapeutics and
Micromet AG, and the payment of $15,000,000 for the reacquisition of ONCASPAR
offset in part by approximately $31,000,000 in positive cash flow from
operations. We invest our excess cash primarily in United States
government-backed securities.

As of June 30, 2002, we had $400,000,000 of 4.5% convertible subordinated
notes outstanding. The notes bear interest at an annual rate of 4.5%. Interest
is payable on January 1 and July 1 of each year beginning January 2, 2002.
Accrued interest on the notes was approximately $9,000,000 as of June 30, 2002
(which was paid on July 1, 2002). 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. On or after 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. 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.

To date, our sources of cash have been the proceeds from the sale of our
stock through public offerings and private placements, the issuance of the 4.5%
convertible subordinated notes, sales of and royalties on sales of ADAGEN,
ONCASPAR, and PEG-INTRON, sales of our products for research purposes, contract
research and development fees, technology transfer and license fees and royalty
advances.

The Company has a capital expenditure commitment for the year ended June
30, 2003 of approximately $3 million.

In January 2002, we purchased $40 million of newly issued Inhale
convertible preferred stock. The preferred stock is convertible into Inhale
common stock at a conversion price of $22.79 per share. In the event Inhale's
common stock price three years from the date of issuance of the preferred stock,
or earlier in certain circumstances, is less than $22.79, the conversion price
will be adjusted down, although in no event will it be less than $18.23 per
share.

In April 2002, we purchased an $8.3 million interest bearing note from
Micromet which is convertible into Micromet common stock.

In June 2002, we entered into an agreement with Aventis to reacquire our
rights to market and distribute ONCASPAR. Under this agreement we paid $15
million to Aventis.

As of June 30, 2002, 1,043,000 shares of Series A preferred stock had been
converted into 3,325,000 shares of common stock. Accrued dividends on the
converted Series A preferred stock in the aggregate of $3,770,000 were settled
by the issuance of 235,000 shares of common stock and cash payments of
$1,947,000. The preferred shares outstanding at June 30, 2002 are convertible
into approximately 32,000 shares of common stock. Dividends accrue on the
remaining outstanding shares of Series A preferred stock at a rate of $14,000
per year. As of June 30, 2002, there were accrued and unpaid dividends totaling
$172,000 on the 7,000 shares of Series A preferred stock outstanding. We have
the

28

option to pay these dividends in either cash or common stock.

Our current sources of liquidity are cash, cash equivalents and interest
earned on such cash reserves, sales of and royalties on sales of ADAGEN,
ONCASPAR, and PEG-INTRON, and sales of our products for research purposes and
license fees. Based upon our currently planned research and development
activities and related costs and our current sources of liquidity, we anticipate
our current cash reserves will be sufficient to meet our capital, debt service
and operational requirements 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.

Contractual Obligations

Our major outstanding contractual obligations relate to our operating
leases. Our facilities lease expense in future years will increase over previous
years as a result of a new lease agreement entered into in 2002.

In March 2002, we entered into a lease for a 19,000 square feet facility
located in Bridgewater, NJ that will serve as our corporate headquarters. The
lease has a term of 5 years, followed by one five year renewal option period.
The future minimum lease payments are approximately $2,350,000 throughout the
five year term of the lease. Other commitments for operating leases total
$13,679,000.

In April 2002, we entered into a multi-year strategic collaboration with
Micromet AG, a private company to combine our patent estates and complementary
expertise in single-chain antibody (SCA) technology to create a leading platform
of therapeutic products based on antibody fragments. We have an obligation to
fund 50% of research and development expenses for activities relating to SCA for
the collaboration through September 2003.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants discuss their
most "critical accounting policies" in management's discussion and analysis of
financial condition and results of operations. The SEC indicated that a
"critical accounting policy" is one which is both important to the portrayal of
the company's financial condition and results 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. We
believe based on our current business that there are no critical accounting
policies, except for our accounting related to Income Taxes. Under the asset and
liability method of Statement of Financial Accounting Standards No. 109 ("SFAS
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 rated
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 more likely than not that
some portion or all of the deferred tax assets will not be realized. The Company
has significant net deferred tax assets, primarily related to net operating loss
carryforward, and continues to analyze what the level of the valuation allowance
is needed (see Note 12 to the Consolidated Financial Statements). Our other
policies are described in Note 2 to the consolidated financial statements.

29

Recently Issued Accounting Standards

In July 2001, the FASB issued SFAS No. 141, Business Combination, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS 141 requires that all
business combinations be accounted for under a single method - the purchase
method. Use of the pooling-of-interests method no longer is permitted. SFAS 141
requires that the purchase method be used for business combinations initiated
after June 30, 2001. SFAS 142 requires that goodwill no longer be amortized to
earnings, but instead be reviewed for impairment. The amortization of goodwill
ceases upon adoption of the statement, which was adopted by the Company on July
1, 2001. SFAS 142 has no impact on our historical financial statements as we do
not have any goodwill or intangible assets, which resulted from business
combinations.

In August 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations, which addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. SFAS 143 requires an enterprise to record the
fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of tangible
long-lived assets. Since the requirement is to recognize the obligation when
incurred, approaches that have been used in the past to accrue the asset
retirement obligation over the life of the asset are no longer acceptable. SFAS
143 also requires the enterprise to record the contra to the initial obligation
as an increase to the carrying amount of the related long-lived asset (i.e., the
associated asset retirement costs) and to depreciate that cost over the life of
the asset. The liability is increased at the end of each period to reflect the
passage of time (i.e., accretion expense) and changes in the estimated future
cash flows underlying the initial fair value measurement. Enterprises are
required to adopt Statement 143 for fiscal years beginning after June 15, 2002.
We are in the process of evaluating this SFAS and the effect that it will have
on our consolidated financial statements.

In October 2001, the FASB issued SFAS 144, Accounting for Impairment or
Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. While SFAS 144
supersedes SFAS 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be disposed of, it retains many of the fundamental
provisions of that statement. SFAS also supersedes the accounting and reporting
provisions of APB Opinion No. 30, Reporting the Results of Operations-Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions, for the disposal of a
segment of a business. However, it retains the requirement in Opinion No. 30 to
report separately discontinued operations and extends that reporting to a
component of an entity that either has been disposed of (by sale, abandonment,
or in distribution to owners) or is classified as held for sale. Enterprises are
required to adopt SFAS 144 for fiscal years beginning after December 15, 2002.
We are in the process of evaluating this SFAS and the effect that it will have
on our consolidated financial statements.

In July 2002, FASB issued FAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities. This Standard supercedes the accounting
guidance provided by Emerging Issues Task Force Issue No. 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an
Activity (including Certain Costs Incurred in a Restructuring). FAS No. 146
requires companies to recognize costs associated with exit activities when they
are incurred rather than at the date of a commitment to an exit or disposal
plan. FAS No. 146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. The Company is currently evaluating this
Standard.

Risk Factors

Our near term success is heavily dependent on Schering-Plough's effective
marketing of PEG-INTRON.

In the near term, our results of operations are heavily dependent on
Schering-Plough's sales of PEG-INTRON. Under our agreement with Schering-Plough,
pursuant to which we applied our PEG

30

technology to develop a modified form of Schering-Plough's INTRON A, we are
receiving royalties on worldwide sales of PEG-INTRON. During the fiscal year
ended June 30, 2002, royalties on sales of PEG-INTRON comprised approximately
70% of our total revenues. Schering-Plough is responsible for conducting and
funding the clinical studies, obtaining regulatory approval and marketing the
product worldwide on an exclusive basis. Schering-Plough received marketing
authorization for PEG-INTRON in the United States in January 2001 and in the
European Union in May 2000 for the treatment of hepatitis C. Schering-Plough has
also been granted marketing approval for the sale of PEG-INTRON and REBETOL
capsules as combination therapy for the treatment of hepatitis C in March 2001
in the European Union and in August 2001 in the U.S. If Schering-Plough fails to
effectively market PEG-INTRON or discontinues the marketing of PEG-INTRON for
these indications, this would have a material adverse effect on our business,
financial condition and results of operations.

Even though the use of PEG-INTRON as a stand alone therapy and as
combination therapy with REBETOL has received FDA approval, we cannot assure you
that Schering-Plough will be successful in marketing PEG-INTRON or that
Schering-Plough will not continue to market INTRON A, either as a stand-alone
product or in combination therapy with REBETOL. The amount and timing of
resources dedicated by Schering-Plough to the marketing of PEG-INTRON is not
within our control. If Schering-Plough breaches or terminates its agreement with
us, the commercialization of PEG-INTRON could be slowed or blocked completely.
Our revenues will be negatively affected if Schering-Plough continues to market
INTRON A in competition with PEG-INTRON or if it cannot meet the manufacturing
demands of the market. Schering-Plough has experienced problems manufacturing
sufficient quantities of PEG-INTRON to meet market demand. If Schering-Plough
breaches the agreement, a dispute may arise between us. A dispute would be both
expensive and time-consuming and may result in delays in the commercialization
of PEG-INTRON, which would likely have a material adverse effect on our
business, financial condition and results of operations.

We may not sustain profitability.

Prior to the fiscal year ended June 30, 2001, we had incurred substantial
losses. As of June 30, 2002, we had an accumulated deficit of approximately $73
million. Although we earned a profit for the fiscal years ended June 30, 2002
and 2001, we cannot assure you that we will be able to remain profitable. Our
ability to remain profitable will depend primarily on Schering-Plough's
effective marketing of PEG-INTRON, as well as on the rate of growth in our other
product sales or royalty revenue and on the level of our expenses. Our ability
to achieve long-term profitability will depend upon our or our licensees'
ability to obtain regulatory approvals for additional product candidates. Even
if our product candidates receive regulatory approval, we cannot assure you that
our products will achieve market acceptance or will be commercialized
successfully or that our operations will sustain profitability.

We are subject to extensive regulation. Compliance with these regulations
can be costly, time consuming and subject us to unanticipated delays in
developing our products.

The manufacturing and marketing of pharmaceutical products in the United
States and abroad are subject to stringent governmental regulation. The sale of
any of our products for use in humans in the United States will require the
prior approval of the FDA. Similar approvals by comparable agencies are required
in most foreign countries. The FDA has established mandatory procedures and
safety standards that apply to the clinical testing, manufacture and marketing
of pharmaceutical products. Obtaining FDA approval for a new therapeutic product
may take several years and involve substantial expenditures. ADAGEN was approved
by the FDA in 1990. ONCASPAR was approved in the United States and in Germany in
1994, and in Canada in 1997, in each case for patients with acute lymphoblastic
leukemia who are hypersensitive to native forms of L-asparaginase. ONCASPAR was
approved in Russia in April 1993 for therapeutic use in a broad range of
cancers. PEG-INTRON was approved in Europe and the United States for the
treatment of hepatitis C in May 2000 and January 2001, respectively. Except for
these

31

approvals, none of our other products has been approved for sale and use in
humans in the United States or elsewhere.

We cannot assure you that we or our licensees will be able to obtain FDA
or other relevant marketing approval for any of our other products. In addition,
any approved products are subject to continuing regulation. If we or our
licensees fail to comply with applicable requirements it could result in:

o     criminal penalties,

o     civil penalties,

o     fines,

o     recall or seizure,

o     injunctions requiring suspension of production,

o     orders requiring ongoing supervision by the FDA, or

o     refusal by the government to approve marketing or export
applications or to allow us to enter into supply contracts.

If we or our licensees fail to obtain or maintain requisite governmental
approvals or fail to obtain or maintain approvals of the scope requested, it
will delay or preclude us or our licensees or marketing partners from marketing
our products. It could also limit the commercial use of our products. Any such
failure or limitation may have a material adverse effect on our business,
financial condition and results of operations.

We have experienced problems complying with the FDA's regulations for
manufacturing our products, and we may not be able to resolve these problems.

Manufacturers of drugs also must comply with the applicable FDA good
manufacturing practice regulations, which include quality control and quality
assurance requirements as well as the corresponding maintenance of records and
documentation. Manufacturing facilities are subject to ongoing periodic
inspection by the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed as part of the product approval process before
they can be used in commercial manufacturing. We or our present or future
suppliers may be unable to comply with the applicable good manufacturing
practice regulations and other FDA regulatory requirements. We manufacture
ONCASPAR and ADAGEN, and Schering-Plough is responsible for the manufacture of
PEG-INTRON.

ADAGEN and ONCASPAR use our earlier PEG technology which tends to be less
stable then the PEG technology used in PEG-INTRON and our products under
development. Due, in part, to the draw backs in the earlier technologies we have
had and will likely continue to have these and other potential manufacturing
problems with these products.

Manufacturing and stability problems required us to implement voluntarily
recalls for one ADAGEN batch in March 2001 and certain batches of ONCASPAR in
June 2002.

During 1998, we experienced manufacturing problems with ONCASPAR. The
problems were due to increased levels of white particulates in batches of
ONCASPAR, which resulted in an increased rejection rate for this product. In
November 1999, as a result of manufacturing changes we implemented, the FDA
withdrew this distribution restriction. During this period we agreed with the
FDA to temporary labeling

32

and distribution restrictions for ONCASPAR and instituted additional inspection
and labeling procedures prior to distribution.

In July 1999, the FDA conducted an inspection of our manufacturing
facility in connection with our product license for ADAGEN. Following that
inspection, the FDA documented several deviations from Current Good
Manufacturing Practices, known as cGMP, in a Form 483 report. We provided the
FDA with a corrective action plan. In November 1999, the FDA issued a warning
letter citing the same cGMP deviations listed in the July 1999 Form 483, but it
also stated that the FDA was satisfied with our proposed corrective actions. As
a result of the deviations, the FDA decided not to approve product export
requests from us for ONCASPAR until it determined that all noted cGMP deviations
were either corrected or in the process of being corrected. This restriction was
removed in August 2000.

Since January 2000, the FDA has conducted follow-up inspections as well as
routine inspections of our manufacturing facility related to ONCASPAR and
ADAGEN. Following certain of these inspections, the FDA issued Form 483 reports,
citing deviations from cGMP. We have or are in the process of responding to such
reports with corrective action plans and are currently in discussion with the
FDA concerning some observations set forth in the Form 483s.

We are aware that the FDA has conducted inspections of certain of the
manufacturing facilities of Schering-Plough and those inspections have resulted
in the issuance of Form 483s citing deviations from cGMP.

If we or our licensees, including Schering-Plough, face additional
manufacturing problems in the future or if we or our licensees are unable to
satisfactorily resolve current or future manufacturing problems, the FDA could
require us or our licensees to discontinue the distribution of our products or
to delay continuation of clinical trials. If we or our licensees, including
Schering-Plough, cannot market and distribute our products for an extended
period, sales of the products will suffer, which would adversely affect our
financial results.

Our clinical trials could take longer to complete and cost more than we
expect.

We will need to conduct significant additional clinical studies of all of
our product candidates, which have not yet been approved for sale. These studies
are costly, time consuming and unpredictable. Any unanticipated costs or delays
in our clinical studies could harm our business, financial condition and results
of operations.

A Phase III clinical trial is being conducted for PEG-INTRON for one
cancer indication. Schering-Plough is also in early stage clinical trials for
PEG-INTRON in other cancer indications. Schering-Plough is currently conducting
late-stage strategic clinical trials for treatment of hepatitis C in Japan.
Clinical trials are also being conducted for PEG-INTRON as a long term
maintenance therapy (COPILOT) and as combination therapy with REBETOL in
patients with chronic hepatitis C who did not respond to or had relapsed
following previous interferon-based therapy. We are currently conducting early
stage clinical trials of two other PEG products, PROTHECAN currently in Phase II
and PEG-paclitaxel currently in Phase I. The rate of completion of clinical
trials depends upon many factors, including the rate of enrollment of patients.
If we or the other sponsors of these clinical trials are unable to accrue
sufficient clinical patients in such trials during the appropriate period, such
trials may be delayed and will likely incur significant additional costs. In
addition, FDA or institutional review boards may require us to delay, restrict,
or discontinue our clinical trials on various grounds, including a finding that
the subjects or patients are being exposed to an unacceptable health risk.

The cost of human clinical trials varies dramatically based on a number of
factors, including:

o     the order and timing of clinical indications pursued,

33

o     the extent of development and financial support from corporate
collaborators,

o     the number of patients required for enrollment,

o     the difficulty of obtaining clinical supplies of the product
candidate, and

o     the difficulty in obtaining sufficient patient populations and
clinicians.

All statutes and regulations governing the conduct of clinical trials are
subject to change in the future, which could affect the cost of our clinical
trials. Any unanticipated costs or delays in our clinical studies could harm our
business, financial condition and results of operations.

In some cases, we rely on corporate collaborators or academic institutions
to conduct some or all aspects of clinical trials involving our product
candidates. We will have less control over the timing and other aspects of these
clinical trials than if we conducted them entirely on our own. We cannot assure
you that these trials will commence or be completed as we expect or that they
will be conducted successfully.

If preclinical and clinical trials do not yield positive results, our
product candidates will fail.

If preclinical and clinical testing of one or more of our product
candidates do not demonstrate the safety and efficacy of the desired
indications, those potential products will fail. Numerous unforeseen events may
arise during, or as a result of, the testing process, including the following:

o     the results of preclinical studies may be inconclusive, or they may
not be indicative of results that will be obtained in human clinical
trials,

o     potential products may not have the desired effect or may have
undesirable side effects or other characteristics that preclude
regulatory approval or limit their commercial use if approved,

o     results attained in early human clinical trials may not be
indicative of results that are obtained in later clinical trials,
and

o     after reviewing test results, we or our corporate collaborators may
abandon projects which we might previously have believed to be
promising.

Clinical testing is very costly and can take many years. The failure to
adequately demonstrate the safety and efficacy of a therapeutic product under
development would delay or prevent regulatory approval, which could adversely
affect our business and financial performance.

In June 2001, we reported that Schering-Plough completed its Phase III
clinical trial, which compared PEG-INTRON to INTRON A in patients with newly
diagnosed chronic myelogenous leukemia or CML. In the study, although PEG-INTRON
demonstrated clinical comparability and a comparable safety profile with INTRON
A, the efficacy results for PEG-INTRON did not meet the protocol-specified
statistical criteria for non-inferiority, the primary endpoint of the study.

Even if we obtain regulatory approval for our products, they may not be
accepted in the marketplace.

The commercial success of our products will depend upon their acceptance
by the medical community and third-party payors as clinically useful,
cost-effective and safe. Even if our products obtain

34

regulatory approval, we cannot assure you that they will achieve market
acceptance of any kind. The degree of market acceptance will depend on many
factors, including:

o     the receipt, timing and scope of regulatory approvals,

o     the timing of market entry in comparison with potentially
competitive products,

o     the availability of third-party reimbursement, and

o     the establishment and demonstration in the medical community of the
clinical safety, efficacy and cost-effectiveness of drug candidates,
as well as their advantages over existing technologies and
therapeutics.

If any of our products do not achieve market acceptance, we will likely
lose our entire investment in that product.

We depend on our collaborative partners. If we lose our collaborative
partners or they do not apply adequate resources to our collaborations, our
product development and financial performance may suffer.

We rely heavily and will depend heavily in the future on collaborations
with corporate partners, primarily pharmaceutical companies, for one or more of
the research, development, manufacturing, marketing and other commercialization
activities relating to many of our product candidates. If we lose our
collaborative partners, or if they do not apply adequate resources to our
collaborations, our product development and financial performance may suffer.

The amount and timing of resources dedicated by our collaborators to their
collaborations with us is not within our control. If any collaborator breaches
or terminates its agreements with us, or fails to conduct its collaborative
activities in a timely manner, the commercialization of our product candidates
could be slowed or blocked completely. We cannot assure you that our
collaborative partners will not change their strategic focus or pursue
alternative technologies or develop alternative products as a means for
developing treatments for the diseases targeted by these collaborative programs.
Our collaborators could develop competing products. In addition, our revenues
will be affected by the effectiveness of our corporate partners in marketing any
successfully developed products.

We cannot assure you that our collaborations will be successful. Disputes
may arise between us and our collaborators as to a variety of matters, including
financing obligations under our agreements and ownership of intellectual
property rights. These disputes may be both expensive and time-consuming and may
result in delays in the development and commercialization of products.

We are dependent upon a single outside supplier for each of the crucial
raw materials necessary to the manufacture of each of our products and product
candidates.

We cannot assure you that sufficient quantities of our raw material
requirements will be available to support the continued research, development or
manufacture of our products. We purchase the unmodified compounds utilized in
our approved products and products under development from outside suppliers. We
may be required to enter into supply contracts with outside suppliers for
certain unmodified compounds. We do not produce the unmodified adenosine
deaminase used in the manufacture of ADAGEN or the unmodified forms of
L-asparaginase used in the manufacture of ONCASPAR. We have a supply contract
with an outside supplier for the supply of each of these unmodified compounds.
If we experience a delay in obtaining or are unable to obtain any unmodified
compound, including unmodified adenosine deaminase or unmodified L-asparaginase,
on reasonable terms, or at all, it could have a material adverse effect on our
business, financial condition and results of operations.

35

If we are required to obtain an alternate source for an unmodified
compound utilized in a product, the FDA and relevant foreign regulatory agencies
will likely require that we perform additional testing to demonstrate that the
alternate material is biologically and chemically equivalent to the unmodified
compound previously used in our clinical trials. This testing could delay or
stop development of a product, limit commercial sales of an approved product and
cause us to incur significant additional expenses. If we are unable to
demonstrate that the alternate material is chemically and biologically
equivalent to the previously used unmodified compound, we will likely be
required to repeat some or all of the preclinical and clinical trials conducted
for the compound. The marketing of an FDA approved drug could be disrupted while
such tests are conducted. Even if the alternate material is shown to be
chemically and biologically equivalent to the previously used compound, the FDA
or relevant foreign regulatory agency may require that we conduct additional
clinical trials with the alternate material.

There is one FDA-approved supplier of the adenosine deaminase enzyme, or
ADA, used in ADAGEN. During 2002 we obtained FDA approval of the use of the ADA
enzyme obtained from bovine intestines from cattle of New Zealand origin. New
Zealand currently certifies that it's cattle are Bovine spongiform
encephalopathy (BSE or mad cow disease) free. Beginning in September 2002, the
United States Department of Agriculture or USDA will require all animal sourced
materials shipped to the United States from any European country to contain a
veterinary certificate that the product is BSE free. We currently have more than
a year's supply of ADA enzyme in inventory and are investigating the ability for
our supplier which processes our ADA enzyme supply in Germany to comply with or
obtain a waiver of this requirement. We cannot guarantee that such certificate
or waiver will be available. If our supplier is unable to supply us with ADA
enzyme, it is likely that we will be unable to produce or distribute ADAGEN once
we utilize our current inventory of ADA enzyme.

The United States and foreign patents upon which our original PEG
technology was based have expired. We depend on patents and proprietary rights,
which may offer only limited protection against potential infringement and the
development by our competitors of competitive products.

Research Corporation Technologies, Inc. held the patent upon which our
original PEG technology was based and had granted us a license under such
patent. Research Corporation's patent contained broad claims covering the
attachment of PEG to polypeptides. However, this United States patent and its
corresponding foreign patents have expired. Based upon the expiration of the
Research Corporation patent, other parties will be permitted to make, use or
sell products covered by the claims of the Research Corporation patent, subject
to other patents, including those which we hold. We have obtained several
patents with claims covering improved methods of attaching or linking PEG to
therapeutic compounds. We cannot assure you that any of these patents will
enable us to prevent infringement or that competitors will not develop
alternative methods of attaching PEG to compounds potentially resulting in
competitive products outside the protection that may be afforded by our patents.
We are aware that others have also filed patent applications and have been
granted patents in the United States and other countries with respect to the
application of PEG to proteins and other compounds. We cannot assure you that
the expiration of the Research Corporation patent or other patents related to
PEG that have been granted to third parties will not have a material adverse
effect on our business, financial condition and results of operations.

The pharmaceutical industry places considerable importance on obtaining
patent and trade secret protection for new technologies, products and processes.
Our success depends, in part, on our ability to develop and maintain a strong
patent position for our products and technologies both in the United States and
in other countries. We have been licensed, and been issued, a number of patents
in the United States and other countries, and we have other patent applications
pending to protect our proprietary technology. Although we believe that our
patents provide certain protection from competition, we cannot assure you that
such patents will be of substantial protection or commercial benefit to us, will
afford us adequate protection from competing products, or will not be challenged
or declared invalid. In addition we cannot assure you that additional United
States patents or foreign patent equivalents will be issued to us. The scope of
patent

36

claims for biotechnological inventions is uncertain, and our patents and patent
applications are subject to this uncertainty.

To facilitate development of our proprietary technology base, we may need
to obtain licenses to patents or other proprietary rights from other parties. If
we are unable to obtain such licenses, our product development efforts may be
delayed or blocked.

We are aware that certain organizations are engaging in activities that
infringe certain of our PEG and SCA technology patents. We cannot assure you
that we will be able to enforce our patent and other rights against such
organizations.

We expect that there will continue to be significant litigation in the
biotechnology and pharmaceutical industries regarding patents and other
proprietary rights. We have become involved in patent litigation, and we may
likely become involved in additional patent litigation in the future. We may
incur substantial costs in asserting any patent rights and in defending suits
against us related to intellectual property rights. Such disputes could
substantially delay our product development or commercialization activities and
could have a material adverse effect on our business, financial condition and
results of operations.

We also rely on trade secrets, know-how and continuing technological
advancements to protect our proprietary technology. We have entered into
confidentiality agreements with our employees, consultants, advisors and
collaborators. However, these parties may not honor these agreements, and we may
not be able to successfully protect our rights to unpatented trade secrets and
know-how. Others may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets and
know-how.

We have limited sales and marketing experience, which makes us dependent
on our marketing partners.

Prior to our reacquisition in June 2002 of marketing rights to ONCASPAR
for the United States and certain other countries, ADAGEN, which we market on a
worldwide basis to a small patient population, was the only product for which we
engaged in the direct commercial marketing and therefore we do not have
significant experience in sales, marketing or distribution. For some of our
products, we have provided exclusive marketing rights to our corporate partners
in return for milestone payments and royalties to be received on sales. To the
extent that we enter into licensing arrangements for the marketing and sale of
our future products, any revenues we receive will depend primarily on the
efforts of these third parties. We will not control the amount and timing of
marketing resources that such third parties devote to our products. In addition,
to the extent we market products directly, significant additional expenditures
and management resources would be required to increase the size of our internal
sales force. In any sales or marketing effort, we would compete with many other
companies that currently have extensive and well-funded sales operations. Our
marketing and sales efforts may be unable to compete successfully against other
such companies.

We may acquire other companies or products and may be unable to
successfully integrate such companies with our operations.

We may expand and diversify our operations with acquisitions. If we are
unsuccessful in integrating any such company with our operations, or if
integration is more difficult than anticipated, we may experience disruptions
that could have a material adverse effect on our business, financial condition
and results of operations. Some of the risks that may affect our ability to
integrate or realize any anticipated benefits from any acquisition include those
associated with:

o     unexpected losses of key employees or customers of the acquired
company;

37

o     conforming the acquired company's standards, processes, procedures
and controls with our operations;

o     coordinating our new product and process development;

o     diversion of existing management relating to the integration and
operation of the acquired company;

o     hiring additional management and other critical personnel; and

o     increasing the scope, geographic diversity and complexity of our
operations.

We may need to obtain additional financing to meet our future capital
needs, and this financing may not be available when we need it.

Our current development projects require substantial capital. We may
require substantial additional funds to conduct research activities, preclinical
studies, clinical trials and other activities relating to the successful
commercialization of potential products. In addition, we may seek to acquire
additional products, technologies and companies, which could require substantial
capital. We do not expect to achieve significant sales or royalty revenue from
ADAGEN and ONCASPAR. In addition, we cannot be sure that we will be able to
obtain significant revenue from PEG-INTRON. Additional funds from other sources
may not be available on acceptable terms, if at all. If adequate funds are
unavailable from operations or additional sources of financing, we may have to
delay, reduce the scope of or eliminate one or more of our research or
development programs or one or more of our proposed acquisitions of technologies
or companies which could materially and adversely affect our business, financial
condition and operations.

While we believe that our cash, cash equivalents and investments will be
adequate to satisfy our capital needs for the foreseeable future, our actual
capital requirements will depend on many factors, including:

o     the level of revenues we receive from our FDA-approved products and
product candidates,

o     continued progress of our research and development programs,

o     our ability to establish additional collaborative arrangements,

o     changes in our existing collaborative relationships,

o     progress with preclinical studies and clinical trials,

o     the time and costs involved in obtaining regulatory clearance for
our products,

o     the costs involved in preparing, filing, prosecuting, maintaining
and enforcing patent claims,

o     competing technological and market developments, and

o     our ability to market and distribute our products and establish new
collaborative and licensing arrangements.

38

We may seek to raise any necessary additional funds through equity or debt
financings, collaborative arrangements with corporate partners or other sources
which may be dilutive to existing stockholders. We cannot assure you that we
will be able to obtain additional funds on acceptable terms, if at all. If
adequate funds are not available, we may be required to:

o     delay, reduce the scope or eliminate one or more of our development
projects,

o     obtain funds through arrangements with collaborative partners or
others that may require us to relinquish rights to technologies,
product candidates or products that we would otherwise seek to
develop or commercialize ourselves, or

o     license rights to technologies, product candidates or products on
terms that are less favorable to us than might otherwise be
available.

We depend on key personnel and may not be able to retain these employees
or recruit additional qualified personnel, which would harm our business.

Because of the specialized scientific nature of our business, we are
highly dependent upon qualified scientific, technical and managerial personnel.
There is intense competition for qualified personnel in the pharmaceutical
field. Therefore, we may not be able to attract and retain the qualified
personnel necessary for the development of our business. The loss of the
services of existing personnel, as well as the failure to recruit additional key
scientific, technical and managerial personnel in a timely manner, would harm
our research and development programs and our business.

Risks Related To Our Industry

We face rapid technological change and intense competition, which could
harm our business and results of operations.

The biopharmaceutical industry is characterized by rapid technological
change. Our future success will depend on our ability to maintain a competitive
position with respect to technological advances. Rapid technological development
by others may result in our products and technologies becoming obsolete.

We face intense competition from established biotechnology and
pharmaceutical companies, as well as academic and research institutions that are
pursuing competing technologies and products. We know that competitors are
developing or manufacturing various products that are used for the prevention,
diagnosis or treatment of diseases that we have targeted for product
development. Many of our competitors have substantially greater research and
development capabilities and experiences and greater manufacturing, marketing
and financial resources than we do. Accordingly, our competitors may develop
technologies and products that are superior to those we or our collaborators are
developing and render our technologies and products or those of our
collaborators obsolete and noncompetitive. In addition, many of our competitors
have much more experience than we do in preclinical testing and human clinical
trials of new drugs, as well as obtaining FDA and other regulatory approval. If
we cannot compete effectively, our business and financial performance would
suffer.

We may be sued for product liability.

Because our products and product candidates are new treatments with
limited, if any, past use on humans, their use during testing or after approval
could expose us to product liability claims. We maintain product liability
insurance coverage in the total amount of $40 million for claims arising from
the use of our products in clinical trials prior to FDA approval and for claims
arising from the use of our products after FDA approval. We cannot assure you
that we will be able to maintain our existing insurance coverage or obtain
coverage for the use of our other products in the future. Also, this insurance
coverage and our

39

resources may not be sufficient to satisfy any liability resulting from product
liability claims, and a product liability claim may have a material adverse
effect on our business, financial condition or results of operations.

Sales of our products could be adversely affected if the costs for these
products are not reimbursed by third-party payors.

In recent years, there have been numerous proposals to change the health
care system in the United States. Some of these proposals have included measures
that would limit or eliminate payments for medical procedures and treatments or
subject the pricing of pharmaceuticals to government control. In addition,
government and private third-party payors are increasingly attempting to contain
health care costs by limiting both the coverage and the level of reimbursement
of drug products. Consequently, significant uncertainty exists as to the
reimbursement status of newly-approved health care products.

Our ability to commercialize our products will depend, in part, on the
extent to which reimbursement for the cost of the products and related
treatments will be available from third-party payors. If we or any of our
collaborators succeeds in bringing one or more products to market, we cannot
assure you that third-party payors will establish and maintain price levels
sufficient for realization of an appropriate return on our investment in product
development. In addition, lifetime limits on benefits included in most private
health plans may force patients to self-pay for treatment. For example, patients
who receive ADAGEN are expected to require injections for their entire lives.
The cost of this treatment may exceed certain plan limits and cause patients to
self-fund further treatment. Furthermore, inadequate third-party coverage may
lead to reduced market acceptance of our products. Significant changes in the
health care system in the United States or elsewhere could have a material
adverse effect on our business and financial performance.

Risks Related To Our Subordinated Notes and Common Stock

The price of our common stock has been, and may continue to be, volatile
which may significantly affect the trading price of our notes.

Historically, the market price of our common stock has fluctuated over a
wide range, and it is likely that the price of our common stock will fluctuate
in the future. The market price of our common stock could be impacted due to a
variety of factors, including:

o     the results of preclinical testing and clinical trials by us, our
corporate partners or our competitors,

o     announcements of technical innovations or new products by us, our
corporate partners or our competitors,

o     the status of corporate collaborations and supply arrangements,

o     regulatory approvals,

o     government regulation,

o     developments in patent or other proprietary rights,

o     public concern as to the safety and efficacy of products developed
by us or others,

o     litigation,

40

o     acts of war or terrorism in the United States or worldwide, and

o     general market conditions in our industry.

In addition, due to one or more of the foregoing factors in one or more
future quarters, our results of operations may fall below the expectations of
securities analysts and investors. In that event, the market price of our common
stock could be materially and adversely affected.

The stock market has recently experienced extreme price and volume
fluctuations. These fluctuations have especially affected the market price of
the stock of many high technology and healthcare-related companies. Such
fluctuations have often been unrelated to the operating performance of these
companies. Nonetheless, these broad market fluctuations may negatively affect
the market price of our common stock.

Our notes are subordinated.

Our 4.5% convertible subordinated notes are unsecured and subordinated in
right of payment to all of our existing and future senior indebtedness. In the
event of our bankruptcy, liquidation or reorganization, or upon acceleration of
the notes due to an event of default under the indenture and in certain other
events, our assets will be available to pay obligations on the notes only after
all senior indebtedness has been paid. As a result, there may not be sufficient
assets remaining to pay amounts due on any or all of the outstanding notes. We
are not prohibited from incurring debt, including senior indebtedness, under the
indenture. If we were to incur additional debt or liabilities, our ability to
pay our obligations on the notes could be adversely affected. As of June 30,
2002, we had no senior indebtedness outstanding.

We may be unable to redeem our notes upon a fundamental change.

We may be unable to redeem our notes in the event of a fundamental change.
Upon a fundamental change, holders of the notes may require us to redeem all or
a portion of the notes. If a fundamental change were to occur, we may not have
enough funds to pay the redemption price for all tendered notes. Any future
credit agreements or other agreements relating to our indebtedness may contain
similar provisions, or expressly prohibit the repurchase of the notes upon a
fundamental change or may provide that a fundamental change constitutes an event
of default under that agreement. If a fundamental change occurs at a time when
we are prohibited from purchasing or redeeming notes, we could seek the consent
of our lenders to redeem the notes or could attempt to refinance this debt. If
we do not obtain a consent, we could not purchase or redeem the notes. Our
failure to redeem tendered notes would constitute an event of default under the
indenture. In such circumstances, or if a fundamental change would constitute an
event of default under our senior indebtedness, the subordination provisions of
the indenture would restrict payments to the holders of notes. A "fundamental
change" is any transaction or event (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) in connection with which all or substantially all
of our common stock is exchanged for, converted into, acquired for or
constitutes solely the right to receive, consideration which is not all or
substantially all common stock that:

o     is listed on, or immediately after the transaction or event will be
listed on, a United States national securities exchange, or

o     is approved, or immediately after the transaction or event will be
approved, for quotation on the Nasdaq National Market or any similar
United States system of automated dissemination of quotations of
securities prices.

The term fundamental change is limited to certain specified transactions
and may not include other events that might adversely affect our financial
condition or the market value of the notes or our common

41

stock. Our obligation to offer to redeem the notes upon a fundamental change
would not necessarily afford holders of the notes protection in the event of a
highly leveraged transaction, reorganization, merger or similar transaction
involving us.

A public market for our notes may fail to develop or be sustained.

The initial purchasers of the notes, although they have advised us that
they intend to make a market in the notes, are not obligated to do so and may
discontinue this market making activity at any time without notice. In addition,
market making activity by the initial purchasers will be subject to the limits
imposed by the Securities Act and the Exchange Act of 1934, as amended. As a
result, we cannot assure you that any market for the notes will develop or, if
one does develop, that it will be maintained. If an active market for the notes
fails to develop or be sustained, the trading price of the notes could be
materially adversely affected.

Events with respect to our share capital could cause the price of our
common stock to decline.

Sales of substantial amounts of our common stock in the open market, or
the availability of such shares for sale, could adversely affect the price of
our common stock. An adverse effect on the price of our common stock may
adversely affect the trading price of the notes. We had 42,999,823 shares of
common stock outstanding as of June 30, 2002. The following securities that may
be exercised for, or are convertible into, shares of our common stock were
issued and outstanding as of June 30, 2002:

o     Options. Stock options to purchase 3,644,428 shares of our common
stock at a weighted average exercise price of approximately $38.07
per share; of this total, 1,410,153 were exercisable at a weighted
average exercise price of $24.84 per share as of such date.

o     Series A preferred stock. 7,000 shares of our Series A preferred
stock are outstanding, which were convertible into an aggregate of
175,000 shares of our common stock as of such date.

o     Convertible subordinated notes. Notes which will convert to
5,635,390 shares of our common stock at a conversion price of $70.98
as of such date.

The shares of our common stock that may be issued under the options and
upon conversion of the Convertible Subordinated Notes are currently registered
with the SEC. The shares of common stock that may be issued upon conversion of
the Series A preferred stock are eligible for sale without any volume
limitations pursuant to Rule 144(k) under the Securities Act.

The issuance of preferred stock may adversely affect rights of common
stockholders or discourage a takeover.

Under our certificate of incorporation, our board of directors has the
authority to issue up to 3,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges of those shares without any
further vote or action by our stockholders. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any shares of preferred stock that may be issued in the future.

In May, 2002, our board of directors authorized shares of Series B
Preferred Stock in connection with its adoption of a stockholder rights plan,
under which we issued rights to purchase Series B Preferred Stock to holders of
the common stock. Upon certain triggering events, such rights become exercisable
to purchase common stock (or, in the discretion of our board of directors,
Series B Preferred Stock) at a price substantially discounted from the then
current market price of the Common Stock. Our stockholder rights

42

plan could generally discourage a merger or tender offer involving our
securities that is not approved by our board of directors by increasing the cost
of effecting any such transaction and, accordingly, could have an adverse impact
on stockholders who might want to vote in favor of such merger or participate in
such tender offer.

While we have no present intention to authorize any additional series of
preferred stock, such issuance, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could also
have the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. The preferred stock may have other
rights, including economic rights senior to the Common Stock, and, as a result,
the issuance thereof could have a material adverse effect on the market value of
the common stock.

We have a significant amount of indebtedness.

As a result of the initial offering of the notes, our long-term debt is
$400,000,000. This indebtedness has affected us by:

o     significantly increasing our interest expense and related debt
service costs, and

o     making it more difficult to obtain additional financing.

We may not generate sufficient cash flow from operations to satisfy the
annual debt service payments that will be required under the notes. This may
require us to use a portion of the proceeds of the notes to pay interest or
borrow additional funds or sell additional equity to meet our debt service
obligations. If we are unable to satisfy our debt service requirements,
substantial liquidity problems could result, which would negatively impact our
future prospects.

The market for unrated debt is subject to disruptions, which could have an
adverse effect on the market price of the notes.

Our notes have not been rated. As a result, holders of the notes have the
risks associated with an investment in unrated debt. Historically, the market
for unrated debt has been subject to disruptions that have caused substantial
volatility in the prices of such securities and greatly reduced liquidity for
the holders of such securities. If the notes are traded, they may trade at a
discount from their initial offering price, depending on, among other things,
prevailing interest rates, the markets for similar securities, general economic
conditions and our financial condition, results of operations and prospects. The
liquidity of, and trading markets for, the notes also may be adversely affected
by general declines in the market for unrated debt. Such declines may adversely
affect the liquidity of, and trading markets for, the notes, independent of our
financial performance or prospects. In addition, certain regulatory restrictions
prohibit certain types of financial institutions from investing in unrated debt,
which may further suppress demand for such securities. We cannot assure you that
the market for the notes will not be subject to similar disruptions. Any such
disruptions may have an adverse effect on the holders of the notes.

43

RATIO OF EARNINGS TO FIXED CHARGES

The ratio of earnings to fixed charges was negative for all periods
presented, other than the years ended June 30, 2002 and 2001, because we
incurred net losses in the periods prior to the year ended June 30, 2001. The
dollar amounts of the deficiencies for these periods and the ratio of earnings
to fixed charges for the years ended June 30, 2002 and 2001 are disclosed below
(dollars in thousands):

Year Ended June 30,
------------------------------------------------------
2002        2001       2000         1999         1998
----        ----       ----         ----         ----

Ratio of earnings to fixed charges* ....         3:1        22:1       N/A          N/A          N/A

Deficiency of earnings available to
cover fixed charges* ...............         N/A         N/A     ($6,306)     ($4,919)     ($3,617)

*Earnings consist of net income (loss) plus fixed charges less capitalized
interest and preferred stock dividends. Fixed charges consist of interest
expense, including amortization of debt issuance costs and that portion of
rental expense we believe to be representative of interest.

Item 7a. 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 debt securities and
time deposits. All such instruments are classified as securities
available-for-sale. 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 June 30, 2002 all of our holdings
were in instruments maturing in four 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
June 30, 2002.

2003             2004              2005              2006             Total           Fair Value
-----------------------------------------------------------------------------------------------------

Fixed Rate                $75,062,270      $ 79,974,578      $124,212,652      $ 90,152,455      $369,401,955      $371,155,695
Average Interest Rate            2.54%             3.45%             3.84%             4.41%             3.63%               --
Variable Rate                      --                --                --                --                --                --
Average Interest Rate              --                --                --                --                --                --
-----------------------------------------------------------------------------------------------------
$75,062,270      $ 79,974,578      $124,212,652      $ 90,152,455      $369,401,955      $371,155,695
=====================================================================================================

Our 4.5% convertible subordinated notes in the principal amount of
$400,000,000 due July 1, 2008 have fixed interest rates. 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.

44

Item 8. Financial Statements and Supplementary Data

The response to this item is submitted as a separate section of this
report commencing on Page F-1.

Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

Not applicable.

45

PART III

The information required by Item 10 - Directors and Executive Officers of
the Registrant; Item 11 - Executive Compensation; Item 12 - Security Ownership
of Certain Beneficial Owners and Management and Item 13 - Certain Relationships
and Related Transactions; is incorporated into Part III of this Annual Report on
Form 10-K by reference to the Proxy Statement for our Annual Meeting of
Stockholders scheduled to be held on December 3, 2002.

Item 14. Controls and Procedures

Based upon KPMG's management letter to our Board of Directors, dated
September 11, 2002, there were no deficiencies or weaknesses in our internal
controls and therefore, we have not made any changes to our internal controls
since KPMG's last evaluation of such controls on September 11, 2002.

46

PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)(1) and (2). The response to this portion of Item 15 is submitted as a
separate section of this report commencing on page F-1.

(a)(3) and (c). 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                                   ^^(3(ii))

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 Note due 2008
attached as Exhibit A thereto                         ++++(4.1)

4.2        Registration Rights Agreement dated as of June
26, 2001, between the Company and the initial
purchasers                                            ++++(4.2)

4.3        Rights Agreement dated May 17, 2002 between
the Company and Continental Stock Transfer
Trust Company, as rights agent                             ^(1)

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)

10.3       Lease dated April 1, 1995 regarding 20
Kingsbridge Road, Piscataway, New Jersey              ###(10.7)

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

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

10.6       Stock Purchase Agreement between the Company
and Schering Corporation dated as of June 30,
1995                                                   ~(10.16)

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

10.8       Employment Agreement dated May 9, 2001,
between the Company and Arthur J. Higgins
///(10.30)

10.9       Amendment dated May 23, 2001, to Employment
Agreement between the Company and Arthur J.
Higgins dated May 9, 2001                            ///(10.31)

10.10      Form of Restricted Stock Award Agreement
between the Company and Arthur J. Higgins             ////(4.3)

10.11      Form of Employee Retention Agreement dated as
of August 3, 2001 between the Company and
certain key employees                                +++(10.13)

10.12      Lease - 685 Route 202/206, Bridgewater, New Jersey         ####

10.13      Employment Agreement with Ulrich Grau dated as
of March 6, 2002                                           ####

10.14      2001 Incentive Stock Plan                                     @

10.15      Development, License and Supply Agreement                     @
between the Company and Schering Corporation; dated 
November 14, 1990, as amended*                                @

12.1       Computation of Ratio of Earnings to Fixed Charges             @

21.0       Subsidiaries of Registrant                                    @

23.0       Consent of KPMG LLP                                           @

99.1       Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                @

47

99.2       Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002                                @

@     Filed herewith

***   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 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, 2001 and incorporated herein by
reference 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.

###   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.

~     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 December 31, 1996 and incorporated herein by
reference thereto.

///   Previously filed as an exhibit to the Company's Current Report on Form 8-K
filed with the Commission on June 13, 2001 and incorporated herein by
reference thereto.

////  Previously filed as an exhibit to the Company's Registration Statement on
Form S-8 (File No. 333-64110) filed with the Commission and incorporated
herein by reference thereto.

^     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.

^^    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.

####  Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 2002 and incorporated herein by
reference thereto.

*     Copy omits information for which confidential treatment has been
requested.

(b)   Reports on Form 8-K.

On April 11, 2002, we filed with the Commission a Current Report on Form
8-K dated April 10, 2002 reporting our multi-year strategic collaboration with
Micromet AG.

On May 9, 2002, we filed with the Commission a Current Report on Form 8-K
dated May 8, 2002

48

reporting our financial results for the third quarter in fiscal year 2002.

On May 22, 2002 we filed with the Commission a Current Report on Form 8-K
dated May 17, 2002 reporting that we declared a dividend of one preferred share
purchase right per share for each outstanding share of Common Stock, par value
$0.01 of the Company. The dividend will be payable on June 3, 2002 to holders of
the Common Shares of record on that date.

On June 12, 2002 we filed with the Commission a Current Report on Form 8-K
dated June 12, 2002 reporting a voluntary recall of the prescription medication
ONCASPAR, a product used for the treatment of acute lymphoblastic leukemia.

49

SIGNATURES

Pursuant to the requirements of section 13 or 15(d) 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)

Dated: September 26, 2002                          by: /S/ Arthur J. Higgins
--------------------------
Arthur J. Higgins
Chairman, President and Chief
Executive Officer
(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

Name                          Title                        Date
----                          -----                        ----

/S/ Arthur J. Higgins          Chairman, President and        September 26, 2002
----------------------------   Chief Executive Officer
Arthur J. Higgins              (Principal Executive Officer)

/S/ Kenneth J. Zuerblis        Vice President, Finance,       September 26, 2002
----------------------------   Chief Financial Officer
Kenneth J. Zuerblis            (Principal Financial and
Accounting Officer) and
Corporate Secretary

/S/ David S. Barlow            Director                       September 26, 2002
----------------------------
David S. Barlow

/S/ Rolf A. Classon            Director                       September 26, 2002
----------------------------
Rolf A. Classon

/S/ Rosina B. Dixon            Director                       September 26, 2002
----------------------------
Rosina B. Dixon

/S/ David W. Golde             Director                       September 26, 2002
----------------------------
David W. Golde

/S/ Robert LeBuhn              Director                       September 26, 2002
----------------------------
Robert LeBuhn

/S/ Robert L. Parkinson, Jr.   Director                       September 26, 2002
----------------------------
Robert L. Parkinson, Jr.

50

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Arthur J. Higgins, certify that:

1.    I have reviewed this annual report on Form 10-K of Enzon. Inc.
("Enzon");

2.    Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Enzon as of, and for, the periods presented in this
annual report.

September 26, 2002

/s/ Arthur J. Higgins
---------------------------
Arthur J. Higgins
Chief Executive Officer

51

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth J. Zuerblis, certify that:

1.    I have reviewed this annual report on Form 10-K of Enzon. Inc.
("Enzon");

2.    Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which such statements were made, not misleading
with respect to the period covered by this annual report;

3.    Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all
material respects the financial condition, results of operations and
cash flows of Enzon as of, and for, the periods presented in this
annual report.

September 26, 2002

/s/ Kenneth J. Zuerblis
---------------------------
Kenneth J. Zuerblis
Chief Financial Officer

52

ENZON, INC. AND SUBSIDIARIES

Index

Page
----

Independent Auditors' Report                                                 F-2

Consolidated Financial Statements:
Consolidated Balance Sheets - June 30, 2002 and 2001                    F-3
Consolidated Statements of Operations - Years ended
June 30, 2002, 2001 and 2000                                           F-4
Consolidated Statements of Stockholders' Equity -
Years ended June 30, 2002, 2001 and 2000                               F-5
Consolidated Statements of Cash Flows - Years ended
June 30, 2002, 2001 and 2000                                           F-7
Notes to Consolidated Financial Statements - Years ended
June 30, 2002, 2001 and 2000                                           F-8

F-1

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Enzon, Inc.:

We have audited the consolidated financial statements of Enzon, Inc. and
subsidiaries as listed in the accompanying index. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Enzon, Inc. and
subsidiaries as of June 30, 2002 and 2001, and the results of their operations
and their cash flows for each of the years in the three-year period ended June
30, 2002, in conformity with accounting principles generally accepted in the
United States of America.

KPMG LLP

Short Hills, New Jersey
August 8, 2002

F-2

ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and 2001

2002             2001
-------------    -------------

ASSETS
Current assets:
Cash and cash equivalents                                                            $ 113,857,998    $ 310,223,837
Short-term investments                                                                 75,165,094      129,520,083
Accounts receivable                                                                    26,050,415       11,087,748
Inventories                                                                             2,213,667        1,852,144
Other current assets                                                                    4,174,652        2,837,199
-------------    -------------
Total current assets                                                                        221,461,826      455,521,011
-------------    -------------
Property and equipment                                                                       19,230,456       13,181,671
Less accumulated depreciation and amortization                                              9,128,545        9,761,999
-------------    -------------
10,101,911        3,419,672
-------------    -------------
Other assets:
Marketable securities                                                                 295,990,601       76,634,780
Cost method equity investments                                                         48,381,782           40,777
Debt issue costs, net                                                                  10,946,380       12,774,951
Product acquisition costs, net                                                         14,008,047               --
Deferred tax assets                                                                     8,342,000               --
Patents and other assets, net                                                           1,515,336        1,284,626
-------------    -------------
379,184,146       90,735,134
-------------    -------------
Total assets                                                                              $ 610,747,883    $ 549,675,817
=============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                                                     $   4,526,180    $   4,670,259
Accrued expenses                                                                         6,174,304        4,490,081
Accrued interest                                                                         9,000,000          250,000
-------------    -------------

Total current liabilities                                                                    19,700,484        9,410,340
-------------    -------------
Accrued rent                                                                               552,256          581,438
Unearned revenue                                                                                --          694,814
Notes payable                                                                          400,000,000      400,000,000

-------------    -------------
400,552,256      401,276,252
-------------    -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock-$.01 par value, authorized 3,000,000 shares;
issued and outstanding 7,000 shares in 2002 and 2001
(liquidation preference aggregating $347,000 in 2002 and
$333,000 in 2001)                                                                                70               70
Common stock-$.01 par value, authorized 90,000,000 shares
issued and outstanding 42,999,823 shares in 2002 and 41,990,859
shares in 2001                                                                              429,999          419,909
Additional paid-in capital                                                              262,854,210      257,682,479
Accumulated other comprehensive income                                                    1,095,739          884,935
Deferred compensation                                                                    (1,202,221)      (1,509,171)
Accumulated deficit                                                                     (72,682,654)    (118,488,997)
-------------    -------------
Total stockholders' equity                                                                  190,495,143      138,989,225
-------------    -------------
Total liabilities and stockholders' equity                                                $ 610,747,883    $ 549,675,817
=============    =============

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

F-3

ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 30, 2002, 2001 and 2000

2002            2001            2000
------------    ------------    ------------
Revenues:

Net sales                                      $ 22,182,704    $ 20,768,767    $ 15,557,906
Royalties                                        53,329,494       8,251,234          33,582
Contract revenue                                    292,548       2,567,708       1,426,309
------------    ------------    ------------
Total revenues                                   75,804,746      31,587,709      17,017,797
------------    ------------    ------------

Costs and expenses:
Cost of sales                                     6,077,454       3,864,284       4,888,357
Research and development expenses                18,426,860      13,051,714       8,382,772
Selling, general and administrative expenses     16,687,365      11,795,398      12,956,118
------------    ------------    ------------
Total costs and expenses                         41,191,679      28,711,396      26,227,247
------------    ------------    ------------

Operating income (loss)                          34,613,067       2,876,313      (9,209,450)
------------    ------------    ------------

Other income (expense):
Interest and dividend income                     18,680,908       8,401,526       2,943,311
Interest expense                                (19,828,918)       (275,049)         (4,051)
Other                                             3,217,878          10,627         (36,274)
------------    ------------    ------------

2,069,868       8,137,104       2,902,986
------------    ------------    ------------

Income (loss) before tax benefit                     36,682,935      11,013,417      (6,306,464)

Tax benefit                                        9,123,408         511,647              --
------------    ------------    ------------

Net income (loss)                                  $ 45,806,343    $ 11,525,064     ($6,306,464)
============    ============    ============

Basic earnings (loss) per common share             $       1.07    $       0.28          ($0.17)
============    ============    ============
Diluted earnings (loss) per common share           $       1.04    $       0.26          ($0.17)
============    ============    ============

Weighted average number of common
shares outstanding - basic                          42,726,112      41,602,104      38,172,515
============    ============    ============

Weighted average number of common shares
and dilutive potential common shares
outstanding                                         44,025,783      43,606,194      38,172,515
============    ============    ============

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

F-4

ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended June 30, 2002, 2001 and 2000

Preferred stock                         Common stock
-----------------------------------      ----------------------------------
Amount        Number of       Par         Amount     Number of       Par
per share       Shares        Value      per share      Shares        Value
---------       ------        -----      ---------      ------        -----

Balance, July 1, 1999                                           107,000      $ 1,070                  36,488,684     $364,886
Common stock issued for exercise of
non-qualified stock options                          --             --           --         4.25        807,181        8,072
Common stock issued for conversion of
Series A preferred stock                          25.00       (100,000)      (1,000)       11.00        227,271        2,273
Dividends issued on Series A preferred stock                         --           --           --             --           --
Common stock issued for exercise of
common stock warrants                                --             --           --         4.57      1,012,116       10,121
Net Proceeds from common stock offering                                                     44.50      2,300,000       23,000
Common stock issued for Independent
Directors' Stock Plan                                --             --           --        30.82          2,863           29
Common stock options issued for
consulting services                                  --             --           --           --             --           --
Net loss                                              --             --           --           --             --           --
-----      -------                  ----------     --------
Balance, June 30, 2000                                            7,000           70                  40,838,115      408,381
Common stock issued for exercise of
non-qualified stock options                          --             --           --           --      1,032,468       10,325
Issuance of restricted common stock                   --             --           --        61.40         25,000          250
Common stock issued on conversion
of common stock warrants                             --             --           --         1.79         93,993          940
Common stock issued for Independent
Directors' Stock Plan                                --             --           --        51.84          1,283           13
Amortization of deferred compensation                 --             --           --           --             --           --
Unrealized gain on securities                         --             --           --           --             --           --
Net income                                            --             --           --           --             --           --
-----      -------                  ----------     --------
Balance, June 30, 2001, carried forward                           7,000      $    70                  41,990,859     $419,909

Additional         Other
paid-in       Comprehensive      Deferred      Accumulated
capital          Income       Compensation        Deficit            Total
-------          ------       ------------        -------            -----

Balance, July 1, 1999                              $ 146,970,289                                   ($121,761,026)     $  25,575,219
Common stock issued for exercise of
non-qualified stock options                           3,286,246             --              --               --          3,294,318
Common stock issued for conversion of
Series A preferred stock                                 (1,273)            --              --               --                 --
Dividends issued on Series A preferred stock                  --             --              --       (1,946,571)        (1,946,571)
Common stock issued for exercise of
common stock warrants                                 4,395,803             --              --               --          4,405,924
Net Proceeds from common stock offering               95,647,262             --              --               --         95,670,262
Common stock issued for Independent
Directors' Stock Plan                                    88,208             --              --               --             88,237
Common stock options issued for
consulting services                                     181,239             --              --               --            181,239
Net loss                                                      --             --              --       (6,306,464)        (6,306,464)
-------------       --------     -----------    -------------      -------------
Balance, June 30, 2000                               250,567,774             --              --     (130,014,061)       120,962,164
Common stock issued for exercise of
non-qualified stock options                           5,345,647             --              --               --          5,355,972
Issuance of restricted common stock                    1,534,750             --      (1,534,750)              --                250
Common stock issued on conversion
of common stock warrants                                167,810             --              --               --            168,750
Common stock issued for Independent
Directors' Stock Plan                                    66,498             --              --               --             66,511
Amortization of deferred compensation                         --             --          25,579               --             25,579
Unrealized gain on securities                                 --        884,935              --               --            884,935
Net income                                                    --             --              --       11,525,064         11,525,064
-------------       --------     -----------    -------------      -------------
Balance, June 30, 2001, carried forward            $ 257,682,479       $884,935     ($1,509,171)   ($118,488,997)     $ 138,989,225

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

F-5

ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued)
Years ended 2002, 2001 and 2000

Preferred stock                  Common stock
-----------------------------    ----------------------------------
Amount     Number of    Par      Amount     Number of         Par
per share    Shares     Value    per share    Shares          Value
---------    ------     -----    ---------    ------          -----

Balance, June 30, 2001, brought forward                       7,000      $70                 41,990,859      $419,909
Common stock issued for exercise of
non-qualified stock options                        --           --       --         --       1,007,638        10,077
Common stock issued for Independent
Directors' Stock Plan                              --           --       --         --           1,326            13
Amortization of deferred compensation               --           --       --         --              --            --
Unrealized gain on securities, net of income
taxes of $658,000                                  --           --       --         --              --            --
Net income                                          --           --       --         --              --            --
-----      ---                 ----------      --------
Balance, June 30, 2002                                        7,000      $70                 42,999,823      $429,999
=====      ===                 ==========      ========

Additional          Other
paid-in        Comprehensive      Deferred      Accumulated
capital            Income       Compensation       Deficit          Total
-------            ------       ------------       -------          -----

Balance, June 30, 2001, brought forward         $257,682,479      $  884,935      ($1,509,171)    ($118,488,997)  $138,989,225
Common stock issued for exercise of
non-qualified stock options                       5,171,731              --               --                --      5,181,808
Common stock issued for Independent
Directors' Stock Plan                                    --              --               --                --             13
Amortization of deferred compensation                     --              --          306,950                          306,950
Unrealized gain on securities, net of income
taxes of $658,000                                        --         210,804               --                --        210,804
Net income                                                --              --               --        45,806,343     45,806,343
------------      ----------      -----------     -------------   ------------
Balance, June 30, 2002                          $262,854,210      $1,095,739      ($1,202,221)    ($ 72,682,654)  $190,495,143
============      ==========      ===========     =============   ============

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

F-6

ENZON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended June 30, 2002, 2001 and 2000

2002               2001                2000
-------------       -------------       -------------

Cash flows from operating activities:
Net income (loss)                                  $  45,806,343       $  11,525,064         ($6,306,464)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation and amortization                            971,569             587,495             499,245

Amortization of bond premium/discount                 (2,680,372)           (830,481)                 --
Amortization of debt issue costs                       1,828,571                  --                  --
Deferred income taxes                                 (9,000,000)                 --                  --
Loss on retirement of assets                               2,870               2,746              36,274
Non-cash expense for issuance of restricted
common stock, warrants, and options                    306,950              92,090             269,476
Changes in operating assets and liabilities:
Increase in accounts receivable                      (14,962,667)         (5,645,293)           (837,608)
Increase (decrease) in inventories                      (361,523)           (905,427)            379,884
Increase in other current assets                      (1,337,453)           (567,315)         (1,232,483)
(Increase) decrease in deposits                         (385,609)           (101,419)            326,952
(Decrease) increase  in accounts payable                (144,079)          2,204,899             749,271
Increase (decrease) accrued expenses                   1,981,362          (1,216,730)           (473,442)
Increase in accrued interest                           8,750,000             250,000                  --
Decrease in accrued rent                                 (29,182)            (26,476)            (26,476)
Increase (decrease) in unearned revenue                       --             184,814            (300,363)
-------------       -------------       -------------
Net cash provided by (used in) operating
activities                                      30,746,780           5,553,967          (6,915,734)
-------------       -------------       -------------
Cash flows from investing activities:
Purchase of property and equipment                    (7,502,741)         (2,082,621)           (768,415)
Purchase of intangible asset                         (15,000,000)                 --                  --
Proceeds from sale of equipment                              962               3,525                  --
Purchase of cost method equity investments           (48,341,005)                 --                  --
Proceeds from sale of marketable securities          270,549,000              24,972                  --
Purchase of marketable securities                   (512,001,000)       (163,244,000)        (90,478,010)
Maturities of marketable securities                   80,260,000          45,303,000           4,000,000
Decrease in long-term investments                       (259,656)            (20,437)                 --
-------------       -------------       -------------
Net cash used in investing activities               (232,294,440)       (120,015,561)        (87,246,425)
-------------       -------------       -------------
Cash flows from financing activities:
Proceeds from issuance of common stock                 5,181,821           5,524,972         103,370,504
Proceeds from issuance of notes                               --         400,000,000                  --
Preferred stock dividend paid                                 --                  --          (1,946,571)
Debt issue costs                                              --         (12,774,951)                 --
-------------       -------------       -------------
Net cash provided by financing activities              5,181,821         392,750,021         101,423,933
-------------       -------------       -------------
Net increase (decrease) in cash and
equivalents                                     (196,365,839)        278,288,427           7,261,774
Cash and cash equivalents at beginning of year           310,223,837          31,935,410          24,673,636
-------------       -------------       -------------
Cash and cash equivalents at end of year               $ 113,857,998       $ 310,223,837       $  31,935,410
=============       =============       =============

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

F-7

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Years ended June 30, 2002, 2001 and 2000

(1)   Company Overview

Enzon, Inc. ("Enzon" or "Company") is a biopharmaceutical company that
develops, manufactures and markets enhanced therapeutics for life-threatening
diseases through the application of its proprietary technologies. The Company
was originally incorporated in 1981. To date, the Company's sources of cash have
been the proceeds from the sale of its equity and debt securities through public
offerings and private placements, sales of ADAGEN(R), and ONCASPAR(R), royalties
on sales of PEG-INTRON(TM), sales of its products for research purposes,
contract research and development fees, technology transfer and license fees and
royalty advances. The manufacturing and marketing of pharmaceutical products in
the United States is subject to stringent governmental regulation, and the sale
of any of the Company's products for use in humans in the United States will
require the prior approval of the United States Food and Drug Administration
("FDA"). To date, ADAGEN, ONCASPAR and PEG-INTRON are the only products of the
Company which have been approved by the FDA, all of which utilize the Company's
PEG technology.

(2)   Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation. The preparation of financial statements
in conformity with accounting principles generally accepted in the United States
of America 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. Actual results could
differ from those estimates.

Cash Equivalents

Cash equivalents consist primarily of U.S. Government instruments,
commercial paper, and money market funds. The Company considers all highly
liquid debt instruments with original maturities not exceeding three months to
be cash equivalents.

Investments In Securities

The Company classifies its investments in debt and marketable equity
securities as held-to-maturity or available-for-sale. Debt and marketable equity
securities classified as available-for-sale are carried at fair market value,
with the unrealized gains and losses, net of related tax effect, included in the
determination of comprehensive income and reported in stockholders' equity. As
of June 30, 2002 and 2001, all of the Company's debt and marketable equity
securities were classified as available-for sale as the Company does not have
the intent to hold them to maturity.

F-8

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

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
June 30, 2002 were as follows:

Gross              Gross
Unrealized         Unrealized
Amortized          Holding            Holding           Fair Market
Cost             Gains              Losses              Value
------------      -----------       -------------       ------------

U.S. Government
agency debt        $339,638,000      $ 2,052,000       $          --       $341,690,000
U.S. corporate debt        29,764,000               --            (298,000)        29,466,000
------------      -----------       -------------       ------------
$369,402,000      $ 2,052,000           ($298,000)      $371,156,000
============      ===========       =============       ============

Maturities of debt securities classified as available-for-sale at June 30,
2002 were as follows:

Years ended June, 30             Amortized Cost   Fair Market Value
--------------   -----------------
2003                              $ 75,062,000      $ 75,165,000
2004                                79,975,000        80,171,000
2005                               124,213,000       124,911,000
2006                                90,152,000        90,909,000
------------      ------------
$369,402,000      $371,156,000
============      ============

Gross realized gains from the sale of investment securities included in
income for the year ended June 30, 2002 were $1,185,000.

The amortized cost, gross unrealized holding gains or losses, and fair
value for securities available-for-sale by major security type at June 30, 2001
were as follows:

Gross              Gross
Unrealized         Unrealized
Amortized          Holding            Holding           Fair Market
Cost             Gains              Losses              Value
------------      -----------       -------------       ------------

U.S. Government
agency debt           $ 19,921,000      $   467,000       $          --       $ 20,388,000
U.S. corporate debt       171,807,000          520,000            (253,000)       172,074,000
Foreign corporate
debt                   13,542,000          151,000                  --         13,693,000
------------      -----------       -------------       ------------
$205,270,000      $ 1,138,000       ($    253,000)      $206,155,000
============      ===========       =============       ============

Gross realized gains from the sale of investment securities included in
income for the year ended June 30, 2001 were $178,000.

The fair value of substantially all securities is determined by quoted
market prices. Gains or losses on securities sold are based on the specific
identification method.

Inventory Costing and Idle Capacity

F-9

Inventories are carried at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method and includes the cost of raw
materials, labor and overhead.

Costs associated with idle capacity at the Company's manufacturing
facility are charged to cost of sales as incurred.

Patents

The Company has licensed, and been issued, a number of patents in the
United States and other countries and has other patent applications pending to
protect its proprietary technology. Although the Company believes that its
patents provide adequate protection for the conduct of its business, there can
be no assurance that such patents will be of substantial protection or
commercial benefit to the Company, will afford the Company adequate protection
from competing products, or will not be challenged or declared invalid, or that
additional United States patents or foreign patent equivalents will be issued to
the Company. The degree of patent protection to be afforded to biotechnological
inventions is uncertain, and the Company's products are subject to this
uncertainty.

Patents related to the acquisition of SCA Ventures, Inc., formerly Genex
Corporation, were recorded at their fair value at the date of acquisition and
are being amortized over the estimated useful lives of the patents ranging from
8 to 17 years. Accumulated amortization as of June 30, 2002 and 2001 was
$1,490,000 and $1,372,000, respectively.

Costs related to the filing of patent applications related to the
Company's products and technology are expensed as incurred.

Property and Equipment

Property and equipment are stated at cost. Depreciation of fixed assets is
provided by straight-line methods over estimated useful lives. When assets are
retired or otherwise disposed of, the cost and related accumulated depreciation
are removed from the accounts, and any resulting gain or loss is recognized in
operations for the period. The cost of repairs and maintenance is charged to
operations as incurred; significant renewals and improvements are capitalized.

Long-Lived Assets

In accordance with statement of Financial Accounting ("SFAS") No. 121,
Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of, the Company reviews long-lived assets for impairment whenever
events or changes in business circumstances occur that indicate the carrying
amount of the assets may not be recovered. The Company assesses the
recoverability of long-lived assets held and to be used based on undiscounted
cash flows.

Product Acquisition Cost

Cost related to acquisition of products are recorded on the balance sheet
at cost and amortized over the estimated life of the product.

Revenue Recognition

Revenues from the sale of the Company's products that are sold are
recognized at the time of shipment and provision is made for estimated returns.
Reimbursement for ADAGEN sold directly to third party payers is handled on an
individual basis due to the high cost of treatment and limited patient

F-10

population. Because of the uncertainty of reimbursement and the Company's
commitment of supply to the patient regardless of whether or not the Company
will be reimbursed, revenues for the sale of ADAGEN are recognized when
reimbursement from third party payers becomes likely.

Royalties under the Company's license agreements with third parties are
recognized when earned (See note 13).

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. Non-refundable payments
received upon entering into license and other collaborative agreements where the
Company has continuing involvement are recorded as deferred revenue and
recognized ratably over the estimated service period.

Research and Development

All research and development costs are expensed as incurred. These include
the following types of costs incurred in performing research and development
activities: salaries and benefits, allocated overhead and occupancy costs,
clinical trial and related clinical manufacturing costs, contract services and
other outside costs.

Stock-Based Compensation Plans

The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, in accounting for its
fixed plan stock options. As such, compensation expense would be recorded on the
date of grant only if the current market price of the underlying stock exceeded
the exercise price. SFAS No. 123, Accounting for Stock-Based Compensation,
established accounting for stock-based employee compensation plans. As allowed
by SFAS No. 123, the Company has elected to continue to apply the intrinsic
value-based method of accounting described above, and has adopted the disclosure
requirements of SFAS No. 123.

When the exercise price of employee or director stock options is less than
the fair value of the underlying stock on the grant date, the Company records
deferred compensation for the difference and amortizes this amount to expense
over the vesting period of the options. Options or stock awards issued to
non-employees and consultants are recorded at their fair value as determined in
accordance with SFAS No. 123 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 period.

Cash Flow Information

During the year ended June 30, 2000, 100,000 shares of Series A Preferred
Stock were converted to 227,271 shares of Common Stock. Accrued dividends of
$1,947,000 on the Series A Preferred Shares that were converted, were settled by
cash payments. Additionally, cash payments totaling $19 were made for fractional
shares related to the conversions. There were no conversions of Series A
Cumulative Convertible Preferred Stock ("Series A Preferred Stock" or "Series A
Preferred Shares") during the years ended June 30, 2002 and 2001.

Cash payments for interest were approximately $9,250,000, $25,000 and
$4,000 for the years ended June 30, 2002, 2001 and 2000, respectively. There
were no income tax payments made for the years ended June 30, 2002, 2001 and
2000.

F-11

Reclassifications

The Company made certain reclassifications to the 2001 and 2000 financial
statements to conform to the 2002 presentation.

(3)   Comprehensive Income

SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and presentation of comprehensive income and its components in a full
set of financial statements. Comprehensive income (loss) consists of net income
(loss) and net unrealized gains (losses) on securities and is presented in the
consolidated statements of stockholders' equity.

The following table reconciles net income (loss) to comprehensive income
(loss):

Years ended June 30,
2002            2001              2000
-----------      -----------      -----------

Net income (loss)                         $45,806,000      $11,525,000      ($6,306,000)
Unrealized gain on securities net of
tax of $658,000 for 2002 and $0
for 2001 and 2000                           211,000          885,000               --
-----------      -----------      -----------

Total comprehensive income (loss)         $46,017,000      $12,410,000      ($6,306,000)
===========      ===========      ===========

(4)   Earnings (loss) Per Common Share

Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common shareholders adjusted for cumulative undeclared
preferred stock dividends for the relevant period, 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 years ended June 30,
2002 and 2001, the denominator includes both the weighted average number of
shares of Common Stock outstanding and the number of dilutive Common Stock
equivalents. The number of dilutive Common Stock equivalents includes the effect
of non-qualified stock options calculated using the treasury stock method and
the number of shares issuable upon conversion of the outstanding Series A
Preferred Stock. The number of shares issuable upon conversion of the Company's
4.5% Convertible Subordinated Notes due 2008 (the "Notes") have not been
included as the effect of their inclusion would be antidilutive. For the year
ended June 30, 2000, the exercise or conversion of all dilutive potential common
shares is not included for purposes of the diluted loss per share calculation as
the effect of their inclusion would be antidilutive due to the net loss recorded
for that period. As of June 30, 2002, the Company had 6,955,000 dilutive
potential common shares outstanding that could potentially dilute future
earnings per share calculations.

F-12

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The following table reconciles the basic and diluted earnings (loss) per
share calculation:

Years ended June 30,
----------------------------------------------
2002              2001              2000
-----------      -----------       -----------

Net income (loss)                             $45,806,000      $11,525,000       ($6,306,000)
Less: preferred stock dividends                    14,000           14,000            14,000
-----------      -----------       -----------
Net income (loss) available to
common stockholders                           $45,792,000      $11,511,000       ($6,320,000)
===========      ===========       ===========
Weighted average number of
common shares issued and
outstanding - basic                         42,726,112       41,602,104        38,172,515
Effect of dilutive common stock
equivalents:
Conversion of preferred stock                   16,000           16,000                --
Exercise of non-qualified
stock options and  restricted stock        1,283,671        1,988,090                --
-----------      -----------       -----------
44,025,783       43,606,194        38,172,515
===========      ===========       ===========

(5)   Inventories

Inventories consist of the following:

June 30,
--------------------------
2002             2001
----------      ----------
Raw materials                $  827,000      $  421,000
Work in process               1,043,000         737,000
Finished goods                  344,000         694,000
----------      ----------
$2,214,000      $1,852,000
==========      ==========

(6)   Property and Equipment

Property and equipment consist of the following:

June 30,
----------------------------       Estimated
2002             2001       useful lives
----             ----       ------------
Equipment                   $ 9,123,000      $ 8,692,000       3-7 years
Furniture and fixtures        1,362,000        1,446,000         7 years
Vehicles                         55,000           24,000         3 years
Leasehold improvements        8,690,000        3,020,000      3-15 years
-----------      -----------
$19,230,000      $13,182,000
===========      ===========

During the years ended June 30, 2002 and 2001, the Company's fixed asset
disposals were approximately $1,454,000 and $991,000, respectively. The Company
disposed of $1,450,000 in fully depreciated assets during the year ended June
30, 2002.

F-13

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

Depreciation and amortization charged to operations relating to property
and equipment totaled $817,000, $442,000 and $348,000 for the years ended June
30, 2002, 2001 and 2000, respectively.

(7)   Accrued Expenses

Accrued expenses consist of:

June 30,
---------------------------
2002             2001
----             ----
Accrued wages and vacation               $3,685,000       $1,596,000
Accrued Medicaid rebates                  1,418,000          943,000
Unearned revenue                            183,000          630,000
Accrued costs associated with
subordinated notes offering                   --          371,000
Other                                       888,000          950,000
----------       ----------
$6,174,000       $4,490,000
==========       ==========

(8)   Long-term debt

In June 2001, the Company completed a private placement of $400,000,000 in
4.5% Convertible Subordinated Notes due July 1, 2008 (the "Notes"). The Company
received net proceeds from this offering of $387,200,000, after deducting costs
associated with the offering. The Notes bear interest at an annual rate of 4.5%.
Accrued interest on the Notes was approximately $9,000,000 as of June 30, 2002.
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 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. On or
after July 7, 2004, the Company may redeem any or all of the Notes at specified
redemption prices, plus accrued and unpaid interest to the day preceding the
redemption date. Upon the occurrence of a "fundamental change", as defined in
the indenture governing the Notes, holders of the Notes may require the Company
to redeem the Notes at a price equal to 100 percent of the principal amount. In
August 2001, the Company filed a registration statement with the U.S. Securities
and Exchange Commission covering the resale of the Notes and the Common Stock
issuable upon conversion of the Notes. The fair value of the 4.5% Convertible
Subordinated Notes was approximately $286,520,000 at June 30, 2002.

(9)   Stockholders' Equity

During May 2002 the Company adopted a shareholder rights plan ("Rights
Plan"). The Rights Plan involves the distribution of one preferred share
purchase right ("Right") as a dividend on each outstanding share of the
Company's common stock to each holder of record on June 3, 2002. Each right
shall entitle the holder to purchase one-thousandth of a share of Series B
Preferred Stock ("Preferred Shares") of the Company at a price of $190.00 per
one-thousandth of Preferred Share. The Rights are not immediately exercisable
and will become exercisable only upon the occurrence of certain events. If a
person or group acquires, or announces a tender or exchange offer that would
result in the acquisition of 15 percent or more of Enzon's common stock while
the stockholder rights plan remains in place, then, unless (1) the rights are
redeemed by Enzon for $0.01 per right or (2) the Board of Directors determines
that a tender or exchange offer for all of the outstanding Common Stock of the
Company is in the best interest of the Company and the stockholders, then the
rights will be exercisable by all right holders except the

F-14

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

acquiring person or group for one share of Enzon or in certain circumstances,
shares of the third party acquirer, each having a value of twice the Right's
then-current exercise price. The Rights will expire on May 16, 2012.

Series A Preferred Stock

The Company's Series A Preferred Shares are convertible into Common Stock
at a conversion rate of $11 per share. The value of the Series A Preferred
Shares for conversion purposes is $25 per share. Holders of the Series A
Preferred Shares are entitled to an annual dividend of $2 per share, payable
semiannually, but only when and if declared by the Board of Directors, out of
funds legally available. Dividends on the Series A Preferred Shares are
cumulative and accrue and accumulate but will not be paid, except in liquidation
or upon conversion, until such time as the Board of Directors deems it
appropriate in light of the Company's then current financial condition. No
dividends are to be paid or set apart for payment on the Company's Common Stock,
nor are any shares of Common Stock to be redeemed, retired or otherwise acquired
for valuable consideration unless the Company has paid in full or made
appropriate provision for the payment in full of all dividends which have then
accumulated on the Series A Preferred Shares. Holders of the Series A Preferred
Shares are entitled to one vote per share on matters to be voted upon by the
stockholders of the Company. As of June 30, 2002 and 2001, undeclared accrued
dividends in arrears were $172,000 or $24.54 per share and $158,000 or $22.54
per share, respectively. All Common Shares are junior in rank to the Series A
Preferred Shares, with respect to the preferences as to dividends, distributions
and payments upon the liquidation, dissolution or winding up of the Company.

Common Stock

During the year ended June 30, 2001, the Company issued 25,000 shares of
restricted Common Stock to its President and Chief Executive Officer. Such
shares were issued in conjunction with an employment agreement and vest ratably
over five years. Total compensation expense of approximately $1.5 million is
being recognized over the five year vesting period.

In December 2001, the stockholders approved the amendment of the Company's
certificate of incorporation to increase the total number of shares of common
stock the Company is authorized to issue from 60,000,000 shares to 90,000,000
shares.

During the year ended June 30, 2000, the Company sold 2,300,000 shares of
Common Stock in a public offering at a gross offering price of $44.50 per share.
The offering resulted in gross proceeds of approximately $102,350,000 and net
proceeds of approximately $95,670,000.

The board of directors has the authority to issue up to 3,000,000 shares
of preferred stock, par value $0.01 per share, and to determine the price and
terms, including preferences and voting rights, of those shares without
stockholder approval.

Holders of shares of Common Stock are entitled to one vote per share on
matters to be voted upon by the stockholders of the Company.

F-15

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

As of June 30, 2002, the Company has reserved its common shares for
special purposes as detailed below:

Shares issuable upon conversion of
Series A Preferred Shares                         16,000
Non-Qualified Stock Option Plan                5,194,000
Shares issuable upon conversion of Notes       5,635,000
----------
10,845,000
==========

Common Stock Warrants

As of June 30, 2002 and 2001, there were no warrants outstanding.

During the year ended June 30, 2001, warrants were exercised to purchase
94,000 shares of the Company's Common Stock. Of this amount, 34,000 warrants
were issued in connection with the Company's January and March 1996 private
placements of Common Stock and 60,000 were issued during the year ended June 30,
1999 as compensation for consulting services.

During the year ended June 30, 2000, warrants were exercised to purchase
1,012,000 shares of the Company's Common Stock. Of this amount, 702,000 warrants
were issued in connection with the Company's January 1996 private placement and
134,000 were issued during the year ended June 30, 1999 as compensation for
consulting services. The exercise price of and the number of shares issuable
under these warrants were adjusted under standard anti-dilution provisions, as
defined in the warrants.

(10)  Independent Directors' Stock Plan

On December 3, 1996, the stockholders voted to approve the Company's
Independent Directors' Stock Plan, which provides for compensation in the form
of quarterly grants of Common Stock to non-executive, independent directors
serving on the Company's Board of Directors. Each independent director is
granted shares of Common Stock equivalent to $2,500 per quarter plus $500 per
Board of Director's meeting attended. The number of shares issued is based on
the fair market value of Common Stock on the last trading day of the applicable
quarter. In October 2000, the Compensation Committee of the Board of Directors
amended the Plan to provide that the Independent Directors will be entitled to
elect to receive up to 50% of the fees payable in cash with the remainder of the
fee to be paid in Common Stock. During the years ended June 30, 2002, 2001 and
2000, the Company issued 1,000, 1,000 and 3,000 shares of Common Stock,
respectively, to independent directors, pursuant to the Independent Directors'
Stock Plan. Commencing with the stock issuable for the quarter ended March 31,
2002, the Compensation Committee has determined to issue the common stock
previously issuable to the independent directors under the Independent Plan
under the Company's 2001 Incentive Stock Plan which was approved by the
Company's stockholders in December 2001.

F-16

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(11)  Stock Option Plans

In November 1987, the Company's Board of Directors adopted a Non-Qualified
Stock Option Plan (the "Stock Option Plan"). As of June 30, 2002, 5,194,000
shares of Common Stock were reserved for issuance pursuant to options, which may
be granted to employees, non-employee directors or consultants to the Company.
The exercise price of the options granted must be at least 100% of the fair
market value of the stock at the time the option is granted. Options may be
exercised for a period of up to ten years from the date they are granted. Some
of the options granted contain accelerated vesting provision, under which the
vesting and exercisability of such shares will accelerate if the closing price
of the Company's Common Stock extends $100 per share for at least twenty
consecutive days as reported by the NASDAQ national market. The other terms and
conditions of the options generally are to be determined by the Board of
Directors, or an option committee appointed by the Board, at their discretion.

In October 2001, the Board of Directors adopted, and in December 2001 the
stockholders approved, the 2001 Incentive Stock Plan (the "2001 Incentive Stock
Plan"). The 2001 Incentive Stock Plan provides for the grant of stock options
and other stock-based awards to employees, officers, consultants, independent
contractors and directors providing services to Enzon and its subsidiaries as
determined by the Board of Directors or by a committee of directors designated
by the Board of Directors to administer the 2001 Incentive Stock Plan.

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation". The Company continues to use APB No. 25, "Accounting for Stock
Issued to Employees," to account for the Stock Option Plan. All options granted
under the Stock Option Plan are granted with exercise prices which equal or
exceed the fair market value of the stock at the date of grant. Accordingly,
there is no compensation expense recognized for options granted to employees.

The following pro forma financial information shows the effect and the
Company's net income (loss) and net income (loss) per share, had compensation
expense been recognized consistent with the fair value method of SFAS 123.

2002             2001              2000
----             ----              ----

Net income (loss) - as reported                        $45,806,000      $11,525,000       ($6,306,000)
Net income (loss) - pro forma                           23,055,117        1,609,000      ($10,008,000)
Net income (loss) per diluted share - as reported      $      1.04      $      0.26            ($0.17)
Net income (loss) per diluted share - pro forma        $      0.52      $      0.04            ($0.26)

F-17

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The fair value of each option granted during the three years ended June
30, 2002 is estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions: (i) dividend yield of 0%,
(ii) expected term of five years, (iii) volatility of 78%, 83% and 84% and (iv)
a risk-free interest rate of 4.00%, 5.72% and 6.19% for the years ended June 30,
2002, 2001 and 2000, respectively. The weighted average fair value at the date
of grant for options granted during the years ended June 30, 2002, 2001 and 2000
was $44.39, $56.79 and $33.78 per share, respectively.

The following is a summary of the activity in the Company's Stock Option
Plans:

Weighted
Average
Exercise           Range of
Shares        Price             Prices
------        -----             ------

Outstanding at July 1, 1999                              3,724,000        4.51         $ 1.88 to $15.75

Granted at exercise prices which equaled
the fair market value on the date of grant            302,000       33.78         $21.50 to $69.50
Exercised                                               (809,000)       4.25         $ 2.06 to $32.00
Canceled                                                 (11,000)      20.53         $ 6.00 to $37.38
----------
Outstanding at June 30, 2000                             3,206,000        7.35         $ 1.88 to $69.50

Granted at exercise prices which equaled
the fair market value on the date of grant          1,150,000       56.79         $44.75 to $73.22
Exercised                                             (1,033,000)       5.25         $ 2.06 to $39.94
Canceled                                                 (39,000)      36.31         $14.13 to $58.63
----------
Outstanding at June 30, 2001                             3,284,000       24.98         $ 1.88 to $73.22

Granted at exercise prices which equaled
the fair market value on the date of grant          1,399,000       44.39         $25.10 to $65.86
Exercised                                             (1,008,000)       4.13         $ 2.00 to $37.38
Canceled                                                 (31,000)      41.56         $22.31 to $70.69
----------
Outstanding at June 30, 2002                             3,644,000       38.07         $ 2.47 to $73.22
==========

Of the options the Company granted for the fiscal year ended June 30,
2002, some contain accelerated vesting provisions based on the achievement of
certain milestones.

F-18

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

As of June 30, 2002, the Stock Option Plans had options outstanding and
exercisable by price range as follows:

Weighted
Average          Weighted                         Weighted
Range of                            Remaining          Average                          Average
Exercise               Options     Contractual        Exercise          Options         Exercise
Prices             Outstanding       Life             Price           Exercisable        Price
------             -----------       ----             -----           -----------        -----

$1.87  -  $ 4.50            541,000        2.74            $ 3.54              541,000       $ 3.54
$4.62  -  $15.75            370,000        6.02            $ 8.78              350,000       $ 8.47
$22.31 -  $28.17            463,000        9.54            $27.41               20,000       $22.60
$29.75 -  $43.75            389,000        8.88            $39.78              108,000       $41.67
$43.85 -  $44.75            424,000        8.16            $44.71               41,000       $44.75
$45.98 -  $55.99            498,000        9.12            $51.13               20,000       $51.53
$57.12 -  $58.63            494,000        9.28            $57.82               64,000       $58.62
$60.35 -  $69.50             26,000        8.44            $63.82                7,000       $63.22
$70.00 -  $73.21            439,000        8.86            $70.11              259,000       $70.04
---------                                          ---------
3,644,000        7.76            $38.08            1,410,000       $24.84
=========                                          =========

(12)  Income Taxes

Under the asset and liability method of Statement of Financial Accounting
Standards No. 109 ("SFAS 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. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

The components of the income tax benefit are summarized as follows:

June 30,
---------------------------
2002             2001
-----------       ---------
Current:
Federal            $        --       $ 217,000
State                 (857,067)       (728,647)
-----------       ---------
Total current              (857,067)       (511,647)
-----------       ---------

Deferred:
Federal             (6,132,696)             --
State               (2,133,645)             --
-----------       ---------

Total deferred           (8,266,341)             --
-----------       ---------
Income tax benefit      ($9,123,408)      ($511,647)
===========       =========

F-19

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

The following table represents a reconciliation between the reported
income taxes and the income taxes which would be completed by applying the
federal statutory rate (35%) to income before taxes:

June 30,
2002             2001
------------     -----------
Income tax expense (benefit)
computed at federal
statutory rate                       $ 12,839,027     $ 3,854,696

Add (deduct) effect of:
State income taxes (including sale
of state net operating loss
carryforwards),  net of federal tax    (1,930,962)       (473,620)

Federal tax benefit through
utilization of net operating loss
carryforwards against current
period income                         (13,116,686)     (3,892,723)

Reduction in beginning of year
valuation allowance                   (6,914,787)             --
------------     -----------

($9,123,408)      ($511,647)
============     ===========

F-20

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

At June 30, 2002 and 2001, the tax effects of temporary differences that
give rise to the deferred tax assets and deferred tax liabilities are as
follows:

2002               2001
Deferred tax assets:

Inventories                                               $     49,000       $    116,000
Investment valuation reserve                                    78,000             78,000
Contribution carryover                                          63,000             36,000
Compensated absences                                           271,000            190,000
Excess of financial statement over tax depreciation            719,000            862,000
Royalty advance - Aventis                                      396,000            396,000
Accrued expenses                                               356,000            315,000
Federal and state net operating loss carryforwards          74,574,000         63,662,000
Research and development and investment tax
credit carryforwards                                        12,009,000          9,851,000
------------       ------------
Total gross deferred tax assets                             88,515,000         75,506,000

Less valuation allowance                                   (78,809,000)       (74,800,000)
------------       ------------

9,706,000            706,000
------------       ------------

Deferred tax liabilities:

Unrealized gain on securities                                 (658,000)                --
Book basis in excess of tax basis of acquired assets          (706,000)          (706,000)
------------       ------------
(1,364,000)          (706,000)
------------       ------------

Net deferred tax assets                                   $  8,342,000       $         --
============       ============

During 2002 and 2001, the Company recognized a tax benefit of $857,000 and
$728,000 respectively, from the sale of certain state net operating loss
carryforwards.

A valuation allowance is provided when it is more likely than not that
some portion or all of the deferred tax assets will not be realized. At June 30,
2002, the Company had Federal net operating loss carryforwards of approximately
$202,000,000 and combined state net operating loss carryforwards of
approximately $120,000,000 that will expire in the years 2003 through 2021. The
Company also has federal research and development tax credit carryforwards of
approximately $9,042,000 for tax reporting purposes, which expire in the years
2003 to 2021. In addition, the Company has $2,967,000 state research and
development tax credit carryforwards, which expire in the years 2003 to 2008.
The Company's ability to use the net operation loss and research and development
tax credits carryforwards are subject to certain limitations due to ownership
changes, as defined by rules pursuant to Section 382 of the Internal Revenue
Code of 1986, as amended. Of the deferred tax asset related to the federal and
state net operating loss carryforwards, approximately $54,260,000 relates to a
tax deduction for non-qualified stock options. The Company will increase paid in
capital when these benefits are realized for tax purposes. Management believes
that it is more likely than not that a portion of the deferred tax asset will be
realized associated with the net operating losses from operating activities,
based on future operations, and has recognized approximately $9 million as a
deferred tax asset at June 30, 2002 related to the expected future profits. The
Company has provided a

F-21

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

valuation allowance of $78,809,000 against the remaining deferred tax asset and
will continue to reassess the need for such in accordance with SFAS 109 and
based on the future operating performance of the Company.

In addition to the net operating loss carryforward stated above, the
Company has additional net operating loss of $39,945,000 from the acquisition of
Enzon Labs, Inc. which is limited to a maximum of $4,921,000 per year. The
$39,945,000 is not included in the determination of the deferred tax asset
figure in the table above.

(13)  Significant Agreements

Schering Agreement

In November 1990, the Company entered into an agreement with
Schering-Plough. Under this agreement, Schering-Plough agreed to apply Enzon's
PEG technology to develop a modified form of Schering-Plough's INTRON A.
Schering-Plough is responsible for conducting and funding the clinical studies,
obtaining regulatory approval and marketing and manufacturing the product
worldwide on an exclusive basis and Enzon will receive royalties on worldwide
sales of PEG-INTRON for all indications. The royalty percentage to which Enzon
is entitled will be lower in any country where a pegylated alpha-interferon
product is being marketed by a third party in competition with PEG-INTRON, where
such third party is not Hoffmann-La Roche.

PEG-INTRON received marketing authorization in the European Union as a
stand-alone therapy for hepatitis C in May 2000 and as a combination therapy
with REBETOL in March 2001. Schering-Plough received FDA approval for PEG-INTRON
as a stand-alone therapy for the treatment of hepatitis C in January 2001 and as
a combination therapy with REBETOL for the treatment of hepatitis C in August
2001.

In June 1999, the Company amended its agreement with Schering-Plough,
which resulted in an increase in the effective royalty rate that it receives for
PEG-INTRON sales. In exchange, the Company relinquished its option to retain
exclusive U.S. manufacturing rights for this product. In addition, the Company
granted Schering-Plough a non-exclusive license under some of its PEG patents
relating to Branched or U-PEG technology. This license gives Schering-Plough the
ability to sublicense rights under these patents to any party developing a
competing interferon product. During August 2001, Schering-Plough, pursuant to a
cross license agreement entered into as part of the settlement of certain patent
litigation, granted Hoffmann-La Roche a sublicense under the Company's Branched
PEG patents to allow Hoffmann-La Roche to make, use, and sell its pegylated
alpha-interferon product, PEGASYS.

In January 2001, the Company earned a final $2,000,000 million milestone
payment upon the FDA's approval of PEG-INTRON and in February 2000 the Company
earned a $1,000,000 million milestone payment when the FDA accepted the
Biologics License Application, or BLA, for PEG-INTRON filed by Schering-Plough.
These milestone payments were recognized when received, as the earnings process
was complete. Schering-Plough's obligation to pay the Company royalties on sales
of PEG-INTRON terminates, on a country-by-country basis, upon the later of the
date the last patent of the Company to contain a claim covering PEG-INTRON
expires in the country or 15 years after the first commercial sale of PEG-INTRON
in such country.

Schering-Plough has the right to terminate this agreement at any time if
the Company fails to maintain the requisite liability insurance of $5,000,000.

F-22

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

Aventis Agreement

During June 2002, the Company amended its license agreement with Aventis
to reacquire rights to market and distribute ONCASPAR in the United States,
Mexico, Canada and the Asia/Pacific region. In return for the marketing and
distribution rights the Company paid Aventis $15 million and will pay a 25%
royalty on net sales of ONCASPAR through 2014. Prior to the amendment Aventis
was responsible for the marketing and distribution of ONCASPAR. Under the
previous agreement Aventis paid the Company a royalty on net sales of ONCASPAR
of 27.5% on annual sales up to $10 million and 25% on annual sales exceeding $10
million.

The amended license agreement prohibits Aventis from making, using or
selling an asparaginase product in the U.S. or a competing PEG-asparaginase
product anywhere in the world until the later of the expiration of the agreement
or, if the agreement is terminated earlier, five years after termination. If the
Company ceases to distribute ONCASPAR, Aventis has the option to distribute the
product in the territories under the original license.

Under the Company's license agreement with Aventis in effect prior to the
June 2002 amendment discussed above (the "Prior License Agreement"), Enzon
granted an exclusive license to Aventis to sell ONCASPAR in the U.S. Enzon has
received licensing payments totaling $6,000,000 and was entitled to royalties on
net sales of ONCASPAR. During July 2000, the Company further amended the license
agreement with Aventis to increase the base royalty payable to the Company on
net sales of ONCASPAR from 23.5% to 27.5% on annual sales up to $10,000,000 and
25% on annual sales exceeding $10,000,000. These royalty payments included
Aventis' cost of purchasing ONCASPAR under a separate supply agreement. The
agreement was also extended until 2016. Additionally, the Prior License
Agreement eliminated the super royalty of 43.5% on net sales of ONCASPAR which
exceed certain agreed-upon amounts. The Prior License Agreement also provided
for a payment of $3,500,000 in advance royalties, which was received in January
1995.

As part of the June 2002 amendment, the remaining unpaid royalty advance
on the balance sheet of $1 million was eliminated. This will be offset against
the $15 million payment to Aventis and the net $14 million is included in
product acquisition cost, net and will be amortized over 14 years, the estimated
remaining life of ONCASPAR.

During August 2000, the Company made a $1,500,000 million payment to
Aventis which was accrued at June 30, 2000 to settle a disagreement over the
purchase price of ONCASPAR under the supply agreement and to settle Aventis'
claim that Enzon should be responsible for Aventis' lost profits while ONCASPAR
was under temporary labeling and distribution modifications. In November 1998,
the Company and the FDA agreed to temporary labeling and distribution
modifications for ONCASPAR, as a result of certain previously disclosed
manufacturing problems. These temporary modifications resulted in Enzon, rather
than Aventis, distributing ONCASPAR directly to patients on an as needed basis.

The settlement also called for a payment of $100,000 beginning in May 2000
and for each month that expired prior to the resumption of normal distribution
and labeling of this product by Aventis. During the quarter ended December 31,
2000, the FDA gave final approval to the Company's manufacturing changes, which
were made to correct these problems, and all previously imposed restrictions on
ONCASPAR were lifted. This obligation was terminated pursuant to the June 2002
amendment to the license agreement. Payments as required were made through June
2002.

F-23

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

MEDAC Agreement

The Company also granted an exclusive license to MEDAC to sell ONCASPAR
and any PEG-asparaginase product, developed by the Company or MEDAC, during the
term of the agreement in Western Europe, Turkey and Russia. The Company's supply
agreement with MEDAC provides for MEDAC to purchase ONCASPAR from the Company at
certain established prices, which increase over the initial five-year term of
the agreement. Under the license agreement, MEDAC is responsible for obtaining
additional approvals and indications in the licensed territories, beyond the
currently approved hypersensitive indication in Germany. Under the agreement,
MEDAC is required to meet certain minimum purchase requirements. The MEDAC
license terminates in October 2001. The Company is currently in negotiations
with MEDAC to enter into a new license agreement.

Nova Factor Agreement

The Company has an agreement with Nova Factor, Inc. ("Nova Factor"),
formerly Gentiva Health Services to purchase and distribute ADAGEN and ONCASPAR
in the United States and Canada. The agreement provides for Nova Factor to
purchase the products from the Company at prices established in the agreement.
Nova Factor also receives a service fee for the distribution of the products.

Inhale Agreement

In January 2002, the Company entered into a broad strategic alliance with
Inhale Therapeutic Systems, Inc. that includes the following components:

o     The companies agreed to enter into a collaboration to jointly
develop three products to be specified over time using Inhale's
Inhance(TM) pulmonary delivery platform and SEDS(TM) supercritical
fluids platform. Inhale will be responsible for formulation
development, delivery system supply, and in some cases, early
clinical development. Enzon will have responsibility for most
clinical development and for commercialization.

o     The two companies also agreed to collaborate on the development of
single-chain antibody (SCA(R)) products to be administered by the
pulmonary route. 

o     Enzon granted to Inhale the exclusive right to grant sub-licenses
under Enzon's PEG patents to third parties. Enzon will receive a
share of profits for certain products that currently incorporate
Enzon's branched PEG technology and royalties on sales of products
that are subject to new sub-licenses that Inhale grants to its
partners under Enzon's PEG patents. Enzon retains the right to use
all of its PEG technology for its own product portfolio, as well as
those products it develops in co-commercialization collaborations
with third parties. Enzon purchased $40 million of newly issued
Inhale convertible preferred stock in January 2002. The preferred
stock is convertible into Inhale common stock at a conversion price
of $22.79 per share. In the event Inhale's common stock price three
years from the date of issuance of the preferred stock or earlier in
certain circumstances is less than $22.79, the conversion price will
be adjusted down, although in no event will it be less than $18.23
per share. Conversion of the preferred stock into common stock can
occur anywhere from 1 to 4 years following the issuance of the
preferred stock or earlier in certain circumstances. The preferred
stock investment will be accounted for under the cost method.

F-24

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

o     The two companies also agreed in January 2002 to a settlement of the
patent infringement suit filed in 1998 by Enzon against Inhale's
subsidiary, Shearwater Polymers, Inc. Inhale will receive licensing
access to the contested patents under a cross-license agreement.
Enzon received a one-time payment of $3 million from Inhale to cover
expenses incurred in defending Enzon's branched PEG patents which is
included in other income.

Micromet Agreement

On April 10, 2002, the Company announced a multi-year strategic
collaboration with Micromet AG ("Micromet"), a private company based in Munich,
Germany, to identify and develop the next generation of antibody-based
therapeutics.

Under the terms of the agreement, Enzon and Micromet (collectively, the
Partners) will combine their significant patent estates and complementary
expertise in single-chain antibody ("SCA") technology to create a leading
platform of therapeutic products based on antibody fragments. The collaboration
will also benefit from a non-exclusive, royalty-bearing license from Enzon for
PEGylated SCA products. The companies will establish a new R&D Unit located at
Micromet's research facility in Germany. The R&D Unit will be staffed initially
with 25 scientists and plans to be fully operational by the end of 2002. During
the first phase of the collaboration, covering a 30-month period beginning in
the third quarter of calendar 2002, the new R&D Unit will focus on the
generation of at least two clinical product candidates in therapeutic areas of
common strategic interest. The Partners will share equally the costs of research
and development, and plan to share the revenues generated from technology
licenses and from future commercialization of any developed products.

In addition to the R&D collaboration, Enzon made an $8.3 million
investment into Micromet in the form of a note convertible into common stock of
Micromet. This note is convertible into Micromet Common Stock at a price of
$1,015 per share.

We hold core intellectual property in SCAs. These fundamental patents,
combined with Micromet's key patents in SCA linkers and fusion protein
technology, generate a compelling technology platform for SCA product
development. The Partners have entered into a cross-license agreement for there
respective SCA intellectual property and have decided to jointly market their
combined SCA to third parties. Micromet will be the exclusive marketing partner
and will institute a comprehensive licensing program on behalf of the
partnership, for which the parties will share equally in the costs and revenues.
Current licensees to Enzon and Micromet SCA intellectual property include
Alexion, Bristol-Myers Squibb, Cambridge Antibody Technologies, Cell Genesys,
Celltech, Crucell, Eli Lilly, Seattle Genetics and Xoma. Several SCA molecules
are in clinical trials. Alexion Pharmaceuticals, Inc. is currently in Phase III
clinical studies in cardiopulmonary bypass surgery.

(14)  Commitments and Contingencies

In the course of normal operations, the Company is subject to the
marketing and manufacturing regulations as established by the FDA. During fiscal
1999, the Company agreed with the FDA to temporary labeling and distribution
modifications for ONCASPAR due to increased levels of particulates in certain
batches of ONCASPAR, which the Company manufactured. The Company, rather than
its marketing partner, Aventis, took over distribution of ONCASPAR directly to
patients, on an as needed basis.

F-25

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

During fiscal 2001, the FDA gave final approval to manufacturing changes,
which the Company made to correct these manufacturing problems, and all previous
imposed restrictions were lifted.

During April 2000, the Company agreed to binding arbitration to settle a
lawsuit, filed by LBC Capital Resources, Inc. ("LBC") a former financial
advisor, in the United States District Court for the District of New Jersey. The
arbitrator awarded LBC a $6,000,000 judgment. In its suit LBC claimed that under
a May 2, 1995 letter agreement between LBC and the Company, LBC was entitled to
a commission in connection with the Company's January and March 1996 private
placements, comprised of $675,000 and warrants to purchase 1,250,000 shares of
the Company's Common Stock at an exercise price of $2.50 per share. As a result
of the arbitration award, the Company recognized a net charge to selling,
general and administrative expenses of approximately $2,600,000 during the third
quarter of the year ended June 30, 2000. The charge represents the net profit
and loss effect of the incremental reserves provided specifically for this
litigation, offset by the reduction during the quarter of $2,900,000 of other
contingency accruals that were deemed to not be required for certain other
contingencies.

The Company has agreements with certain members of its upper management,
which provide for payments following a termination of employment occurring after
a change in control of the Company. The Company also has an employment
agreement, dated May 9, 2001 with its Chief Executive Officer and certain
members of upper management which provides for severance payments in addition to
the change in control provisions discussed above.

(15)  Leases

The Company has several leases for office, warehouse, production and
research facilities and equipment. The non-cancelable lease-terms for the
operating leases expire at various dates between 2003 and 2021 and each
agreement includes renewal options.

Future minimum lease payments, for non-cancelable operating (leases with
initial or remaining lease terms in excess of one year) as of June 30, 2002 are:

Year ending                             Operating
June 30,                                  leases
--------                                  ------
2003                                 $ 1,274,000
2004                                   1,261,000
2005                                   1,250,000
2006                                   1,264,000
2007                                   1,174,000
Thereafter                               9,806,000
-----------
Total minimum lease payments           $16,029,000
===========

Rent expense amounted to $847,000, $856,000 and $1,055,000 for the years
ended June 30, 2002, 2001 and 2000, respectively.

F-26

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(16)  Retirement Plans

The Company maintains a defined contribution, 401(k) pension plan for
substantially all its employees. The Company currently matches 50% of the
employee's contribution of up to 6% of compensation, as defined. The Company's
match is invested solely in a fund which purchases the Company's Common Stock in
the open market. Total Company contributions for the years ended June 30, 2002,
2001, and 2000 were $196,000, $156,000 and $128,000, respectively.

(17)  Business and Geographical Segments

The Company is managed and operated as one business segment. The entire
business is comprehensively managed by a single management team that reports to
the Chief Executive Officer. The Company does not operate separate lines of
business or separate business entities with respect to any of its products or
product candidates. In addition, the Company does not conduct any of its
operations outside of the United States.

Accordingly, the Company does not prepare discrete financial information
with respect to separate product areas or by location and does not have
separately reportable segments as defined by SFAS No. 131.

During the years ended June 30, 2002, 2001 and 2000, the Company had
export sales and royalties recognized on export sales of $26,302,000,
$11,161,000 and $4,137,000, respectively. Of these amounts, sales and royalties
in Europe and royalties recognized on sales in Europe represented $22,671,000,
$10,226,000 and $3,617,000 during the years ended June 30, 2002, 2001 and 2000,
respectively.

ADAGEN sales represent approximately 61%, 64% and 78% of the Company's
total net sales for the year ended June 30, 2002, 2001 and 2000, respectively. A
portion of the Company's ADAGEN sales for the years ended June 30, 2002, 2001
and 2000, were made to Medicaid patients.

F-27

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

(18)  Quarterly Results of Operations (Unaudited)

The following table presents summarized unaudited quarterly financial
data.

Three Months Ended
-------------------------------------------------------------------------------------
September 30,      December 31,        March 31,         June 30,         Fiscal Year
2001               2001              2002              2002              2002
-------------      -----------       -----------     --------------       -----------

Revenues                          $12,143,702       $18,601,788       $19,844,153     $   25,215,103       $75,804,746
Gross Profit (1)                    3,715,629         4,416,756        4,352,880           3,619,985        16,105,250
Tax (Provision) Benefit               (86,331)          183,002          267,174           8,759,563         9,123,408
Net income                        $ 4,230,220       $ 8,645,525       $12,167,075     $   20,763,523       $45,806,343
===========       ===========       ===========     ==============       ===========
Net income per
common share:
Basic                        $      0.10       $      0.20       $     0.28      $         0.48       $      1.07
Diluted                      $      0.10       $      0.20       $     0.28      $         0.47       $      1.04

Weighted
average number
of shares of
common stock
outstanding-basic               42,122,284        42,766,699       42,969,222          42,982,052        42,726,112

Weighted
average number
of shares of
common stock
outstanding-diluted             43,922,829        43,959,216       43,933,865          43,839,982        44,025,783

Three Months Ended
-------------------------------------------------------------------------------------
September 30,      December 31,        March 31,         June 30,         Fiscal Year
2000               2000              2001              2001              2001
-------------      -----------       -----------     --------------       -----------

Revenues                          $ 5,173,614       $ 6,019,145       $9,931,754      $   10,463,196       $31,587,709
Gross profit (1)                    3,613,914         4,134,146        4,393,680           4,762,744        16,904,484
Tax (Provision) Benefit               (11,654)          (43,622)         632,879             (65,956)          511,647
Net income                        $   571,052       $ 2,137,483       $5,508,221      $    3,308,308       $11,525,064
===========       ===========       ==========      ==============       ===========

Net income per
common share:
Basic                        $      0.01       $      0.05       $     0.13      $         0.09       $      0.28
Diluted                      $      0.01       $      0.05       $     0.13      $         0.07       $      0.26

F-28

ENZON, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued

Three Months Ended
---------------------------------------------------------------------------------------
September 30,      December 31,           March 31,         June 30,       Fiscal Year
2000               2000                2001              2001            2001
-------------      ------------          ----------        ----------      ------------

Weighted
average number
of shares of
common stock
outstanding-basic                41,101,289         41,568,723           41,802,586        41,935,820      41,602,104

Weighted
average number
of shares of
common stock
outstanding-diluted              43,658,659         43,850,319           43,718,044        43,956,840      43,606,194

(1)   Gross Profit is calculated as Product Sales less Cost of Goods sold.

F-29

EXHIBIT INDEX

Exhibit                                                                                    Page
Numbers                     Description                                                   Number
-------                     -----------                                                   ------

3(i)       Certificate of Incorporation as amended                                         E-1

10.14      2001 Incentive Stock Plan                                                       E-36

10.15      Development, License and Supply Agreement between the Company and               E-46
Schering Corporation, dated November 14, 1990, as amended

12.1       Computation of Ratio of Earnings to Fixed Charges                               E-155

21.0       Subsidiaries of Registrant                                                      E-156

23.0       Consent of KPMG LLP                                                             E-157

99.1       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to        E-158
Section 906 of the Sarbanes - Oxley Act of 2002

99.2       Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to        E-159
Section 906 of the Sarbanes - Oxley Act of 2002

E

Exhibit 3(i)

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

The undersigned incorporator, in order to form a corporation under

the General Corporation Law of the State of Delaware, certifies as follows:

1.    NAME.  The name of the corporation is

ENZON, INC.

(hereinafter called the "Corporation").

2.    ADDRESS REGISTERED AGENT.  The address of the Corporation's

registered office is 410 South State Street, Dover, Delaware  19901; and its

registered agent at such address is Corporate Filing Securities, Inc.

3.    PURPOSE.  The nature of the business and purposes to be

conducted or promoted by the Corporation are to engage in, carry on and conduct

any lawful act or activity for which corporations may be organized under the

General Corporation Law of Delaware.

4.    NUMBER OF SHARES.  The total number of shares of stock which

the Corporation shall have authority to issue is ten million (10,000,000), all

of which shall be shares of Common Stock of the par value of one cent ($.01)

each.

5.    NAME AND ADDRESS OF INCORPORATOR.  The name and mailing

address of the incorporator is Dan Brecher, 260 Madison Avenue, New York, New

York  10016.

6.    ELECTION OF DIRECTORS.  Members of the Board of Directors may

be elected either by written ballot or by voice vote.

7.    ADOPTION, AMENDMENT AND/OR REPEAL OF BY-LAWS.  The Board of

Directors may from time to time (after adoption by the undersigned of the

original by-laws of the Corporation) make, alter or repeal the by-laws of the

Corporation; provided, that any by-laws made, amended or repealed by the Board

of Directors may be amended or repealed, and any by-laws may be made, by the

stockholders of the Corporation.

8.    COMPROMISES AND ARRANGEMENTS.  Whenever a compromise or

arrangement is proposed between the Corporation and its creditors or any class

of them and/or between this Corporation and its stockholders or any class of

them, any court of equitable jurisdiction within the State of Delaware may, on

the application in a summary way of this Corporation or of any creditor or

stockholder thereof or on the application of any receiver or receivers

appointed for this Corporation under the provisions of section 291 of Title 8

of the Delaware Code or on the application of trustees in dissolution of any

receiver or receivers appointed for this Corporation under the provisions of

section 279 of Title 8 of the Delaware Code, order a meeting of the creditors

or class of creditors, and/or of the stockolders or class of stockholders of

this Corporation, as the case may be, to be summoned in such manner as the said

court directs.  If a majority in number representing three-fourths in value of

the creditors or class or creditors, and/or of the stockholders or class of

stockholders of this Corporation, as the case may be, agree to any compromise

or arrangement and to any reorganization of this Corporation as consequence of

such compromise or arrangement, the said compromise or arrangement and the said

reorganization shall, if sanctioned by the court for which the said application

has been made, be binding on all the creditors or class of creditors, and/or on

all the stockholders or class of stockholders, of this Corporation, as the case

may be, and also on this Corporation.

IN WITNESS WHEREOF, this Certificate has been signed on this __ day

of April, 1983, and the signature of the undersigned shall constitute the

affirmation and acknowledgment of the undersigned, under penalties of perjury,

that the Certificate is the act and deed of the undersigned and that the facts

stated in the Certificate are true.

/S/ DAN BRECHER
Dan Brecher
Incorporator

E-1

CERTIFICATE OF CORRECTION

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

Pursuant to Section 103 (f) of Title 8 of the Delaware Code of 1953, as

Amended

The undersigned, being the sole incorporator of ENZON, INC., a

corporation organized and existing under and by virtue of the General

Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

FIRST:  That Article "SECOND" of the Certificate of Incorporation was set

forth incorrectly.  In order to correct Article "SECOND" it should read in its

entirety as follows:

SECOND:  Address:  Registered Agent.  The Address of the corporation's

registered office is 410 South State Street, Dover, Delaware 19901; and its

registered agent at such address is Corporate Filing Service, Inc.

IN WITNESS WHEREOF, we have hereunto set our respective seals this 31st

day of May, 1983.

/S/ DAN BRECHER
Dan Brecher, Sole Incorporator

E-2

STATE OF NEW YORK
COUNTY OF New York                  ss:

BE IT REMEMBERED That on this 31 day of May, 1983 personally came before
me Leila Lurie a Notary Public in and for the County and State aforesaid, Dan
Brecher, Sole Incorporator of a corporation of the State of Delaware, the
corporation described in and which executed the foregoing certificate, known to
me personally to be such, and that the said Dan Brecher as such Sole
Incorporator, duly executed the said Certificate before me and acknowledged the
said certificate to be their act and deed and the act and deed of said
corporation and the facts stated therein are true; that the signature of the
said Sole Incorporator of said corporation respectively, and that the seal
affixed to said certificate is the common or corporate seal of said
corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and seal of office the
day and year aforesaid.

/S/ LEILA LURIE
Notary Public (Seal)

E-3

CERTIFICATE OF OWNERSHIP AND MERGER
of
ENZON, INC.
(a Delaware corporation)

by

ENZON INC.
(a New Jersey corporation)

Pursuant to Section 253 of the
General Corporation Law of the
STATE OF DELAWARE

Enzon Inc., a corporation formed and existing under the laws of the State

of New Jersey ("Enzon of NJ"), desiring to merge into Enzon, Inc., a

corporation formed and existing under the laws of the State of Delaware ("Enzon

of Del."), pursuant to the provisions of section 253 of the General Corporation

Law of the State of Delaware, does hereby certify as follows:

FIRST:  That Enzon of NJ is a corporation formed and existing under the

laws of the State of New Jersey and that its Certificate of Incorporation was

filed in the Office of the Secretary of State of the State of New Jersey on

September 17, 1981.

SECOND:  That on and prior to June 23, 1983, Enzon of Del. was a

corporation formed and existing under the laws of the State of Delaware and

that its Certificate of Incorporation was filed in the Office of the Secretary

of State of the State of Delaware on May 11, 1983.

THIRD:  That on June 23, 1983, Enzon of NJ lawfully owned one hundred

percent (100%) of the outstanding shares of the outstanding stock of Enzon of

Del.

FOURTH:  That this certificate was approved by all the shareholders of

Enzon Inc. a New Jersey Corporation.

FIFTH:  That on June 23, 1983, the Board of Directors of Enzon of NJ by

resolutions duly adopted determined to merge Enzon of NJ into Enzon of Del.,

said resolutions being as follows:

WHEREAS, this Corporation lawfully owns one hundred percent (100%) of the
outstanding stock of Enzon, Inc. ("Enzon of Del."), a Delaware corporation, and
desires to merge this Corporation and to have all of this Corporation's estate,
property, rights, privileges and franchises vested in and held and enjoyed by
Enzon of Del.

"NOW, THEREFORE, BE IT RESOLVED that this Corporation merge into Enzon of
Del.; and

"RESOLVED that the effective date of such merger be on June 23, 1983; and

"RESOLVED that the proper officers of this Corporation be, and they
hereby are, authorized and directed to make and execute, in its name and under
its corporate seal, and to file in the proper public offices, a Certificate of
Ownership and Merger pursuant to section 253 of the General Corporation Law of
the State of Delaware setting forth a copy of these resolutions; and

"RESOLVED that the officers of this Corporation be, and they hereby are,
authorized and empowered to take such further action and to execute such other
documents as in their judgment may be necessary or proper to consummate the
merger provided for by these resolutions."

IN WITNESS WHEREOF, said ENZON, INC. has caused this Certificate to be executed

by its officers thereunto duly authorized and its corporate seal to be

thereunto affixed this 29 day of June, 1983.

ENZON, INC.

By: /S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski
President
ATTEST:

/S/ FRANK DAVIS
Frank Davis
Secretary

E-4

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

* * * * *

Enzon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST:  That the Board of Directors of said corporation, by the
unanimous written consent of its members, filed with the minutes of the board,
adopted a resolution proposing and declaring advisable the following amendments
to the Certificate of Incorporation of said corporation:

RESOLVED, that Article Fourth of the Certificate of Incorporation
be deleted in its entirety and the following substituted therefor:

"FOURTH - The total number of shares of stock which the
Corporation shall have authority to issue is Fifteen Million
(15,000,000) Shares, all of which shall be shares of Common
Stock of the par value of $.01 each."

SECOND:  That in lieu of a meeting and vote of stockholders, the
stockholders holding a majority of the shares currently outstanding have given
their written consent to said amendments in accordance with the provisions of
Section 228 of the General Corporation Law of the State of Delaware.

THIRD:  That the aforementioned amendment was duly adopted in
accordance with the applicable provisions of Sections 242 and 228 of the
General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said Enzon, Inc. has caused this certificate to
be signed by Abraham Abuchowski, its President, and attested by Frank Davis,
its Secretary, this 23rd day of February, 1984.

By /S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski, President

ATTEST:

By /S/ FRANK DAVIS
Frank Davis, Secretary

E-5

CERTIFICATE

FOR RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION

Enzon, Inc., a corporation organized under the laws of Delaware, the

Certificate of Incorporation of which was filed in the office of the Secretary

of State on the 11th day of May, 1983, the Certificate of Incorporation of

which was voided for non-payment of taxes, now desires to procure a

restoration, renewal and revival of its Certificate of Incorporation, and

hereby certifies as follows:

1.    The name of this corporation is Enzon, Inc.

2.    Its registered office in the State of Delaware is located at

Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New

Castle and the name of its registered agent at such address is The Corporation

Trust Company.

3.    The date when the restoration, renewal, and revival of the

Certificate of Incorporation of this Corporation is to commence is the 28th day

of February A.D. 1986, same being prior to the date of the expiration of the

Certificate of Incorporation.  This renewal and revival of the Certificate of

Incorporation of this corporation is to be perpetual.

4.    This corporation was duly organized under the Laws of the State of

Delaware and carried on the business authorized by its Certificate of

Incorporation until the 1st day of March A.D. 1986, at which time its

Certificate of Incorporation became inoperative and void for non-payment of

taxes and this certificate of renewal and revival is filed by authority of the

duly elected directors of the corporation in accordance with the laws of the

State of Delaware.

IN WITNESS WHEREOF, said Enzon, Inc. in compliance with Section 312 of

Title 8 of the Delaware Code has caused this certificate to be signed by

Abraham Abuchowski its last and acting President, and attested by Frank Davis,

its last and acting Secretary, this 17th day of December, 1986.

ENZON, INC.

By /S/ ABRAHAM ABUCHOWSKI
Last and Acting President

ATTEST:

By /S/ FRANK DAVIS
Frank Davis
Last and Acting Secretary

E-6

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * *

Enzon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST:  That the Board of Directors of said Corporation, at a
meeting of its members, adopted resolutions proposing and declaring advisable
the following amendments to the Certificate of Incorporation of said
Corporation:

(a)   RESOLVED, that Article 4 of the Certificate of Incorporation
be amended as set forth below:

"4:  The total number of shares of capital stock which
the Corporation shall have authority to issue is sixteen
million (16,000,000) shares, of which fifteen million
(15,000,000) shares shall be Common Stock, par value $.01 per
share, and one million (1,000,000) shares shall be Preferred
Stock, par value $.01 per share.

The Preferred  Stock may be issued from time to time in
one or more series.  The board of Directors of the
Corporation is hereby expressly authorized to provide, by
resolution or resolutions duly adopted by it prior to
issuance, for the creation of each such series and to fix the
designation and the powers, preferences, rights,
qualifications, limitations and restrictions relating to the
shares of each such series.  The authority of the Board of
Directors with respect to each series of Preferred Stock
shall include, but not be limited to, determining the
following:

(a)   the designation of such series, the number of
shares to constitute such series and the stated value thereof
if different from the par value thereof;

(b)   whether the shares of such series shall have
voting rights, in addition to any voting rights provided by
law, and, if so, the terms of such voting rights, which may
be general or limited;

(c)   the dividends, if any, payable on such series,
whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such
dividends shall be payable, and the preference or relation
which such dividends shall bear to the dividends payable on
any shares of stock of any other class or any other series of
Preferred Stock;

(d)   whether the shares of such series shall be
subject to redemption by the Corporation, and, if so, the
times, prices and other conditions of such redemption;

(e)   the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in,
the voluntary or involuntary liquidation, dissolution or
winding up, or upon any distribution of the assets, of the
Corporation;
(f)   whether the shares of such series shall be
subject to the operation of a retirement or sinking fund and,
if so, the extent to and manner in which any such retirement
or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or
other corporation purposes and the terms and provisions
relating to the operation thereof;

(g)   whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or any other series of Preferred Stock or any
other securities and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of
conversion or exchange;

(h)   the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issue
of any additional stock, including additional shares of such
series or of any other series of Preferred Stock or of any
other class; and

(i)   any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions, thereof.

The powers, preferences and relative, participating,
optional and other special rights of each series of Preferred
Stock, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other
series at any time outstanding.  All shares of any one series
of Preferred Stock shall be identical in all respects with
all other shares of such series, except that shares of any
one series issued at different times may differ as to the
dates from which dividends thereof shall be cumulative.

(b)   RESOLVED, that an additional Article, Article 9 be added to
the Certificate of Incorporation as set forth below:

"9.  The Board of Directors shall consist of not less
than three nor more than fifteen directors, the exact number
of directors to be determined from time to time by resolution
adopted by affirmative vote of a majority of the whole Board
of Directors, and such exact number shall be four until
otherwise determined by resolution adopted by affirmative
vote of a majority of the whole Board of Directors.  As used
in this Article 9, the term "whole Board" means the total
number of directors which the Corporation would have if there
were no vacancies.  The Board of Directors shall divide the
directors into three classes and, when the number of
directors is changed, shall determine the class or classes to
which the increased or decreased number of directors shall be
apportioned; provided, that no decrease in the number of
directors shall affect the term of any director then in
office.  Notwithstanding the foregoing, and except as
otherwise required by law, whenever the holders of any one or
more series of Preferred Stock shall have the right, voting
separately as a class, to elect one or more directors of the
Corporation, the terms of the director or directors elected
by such holders shall expire at the next succeeding annual
meeting of stockholders.  The term of office of directors
elected at the 1986 Annual Meeting of Stockholders held on
January 20, 1987 shall be as follows:  the term of office of
directors of the first class shall expire at the first annual
meeting of stockholders after their election; the term of
office of directors of the second class shall expire at the
second annual meeting of stockholders after their election;
and the term of office of directors of the third class shall
expire at the third annual meeting of stockholders after
their election; and as to directors of each class, when their
respective successors are elected and qualified.  At each
annual meeting of stockholders subsequent to the 1986 Annual
Meeting of Stockholders, directors elected to succeed those
whose terms are expiring shall be elected for a term of
office to expire at the third succeeding annual meeting of
stockholders and when their respective successors are elected
and qualified.

Vacancies in the Board of Directors, however caused,
and newly created directorships shall be filled solely by a
majority vote of the directors then in office, whether or not
a quorum, and any director so chosen shall hold office for a
term expiring at the annual meeting of stockholders at which
the term of the class to which the director has been chosen
expires and when the director's successor is elected and
qualified.

The affirmative vote of the holders of not less than
two-thirds of the outstanding voting shares of capital stock
of the Corporation entitled to vote generally in the election
of directors shall be required to amend, alter, change or
repeal, or adopt any provisions inconsistent with this
Article 9, provided, however, that this paragraph shall not
apply to, and such two-thirds vote shall not be required for,
any amendment, alteration, change, repeal or adoption of any
inconsistent provision declared advisable by the Board of
Directors by the affirmative vote of two-thirds of the Board
and submitted to stockholders for their consideration, but
only if a majority of the members of the Board of Directors
acting upon such matter shall be Continuing Directors.  The
term "Continuing Director" shall mean a director who was a
member of the Board as of October 1, 1986."

(c)   RESOLVED, that an additional Article, Article 10 be added to
the Certificate of Incorporation as set forth below:

"10.  A director of the Corporation shall not be
personally liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the Delaware General Corporation Law, as
the same exists or hereafter may be amended, or (iv) for any
transaction from which the director derived an improper
personal benefit.  If the Delaware General Corporation Law
hereafter is amended to authorize the further elimination or
limitation of the liability of directors, then the liability
of a director of the Corporation, in addition to the
limitation on personal liability provided herein, shall be
limited to the fullest extent permitted by the amended
Delaware General Corporation Law.  Any repeal or modification
of this paragraph by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the
corporation existing at the time of such repeal or
modification."

SECOND:  That at an annual meeting of stockholders the holders of a
majority of the outstanding stock entitled to vote thereon voted in favor of
said amendments in accordance with the provisions of Section 216 of the General
Corporation Law of the State of Delaware.

THIRD:  That the aforesaid amendments were duly adopted in
accordance with the applicable provisions of Sections 242 and 216 of the
General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said Enzon, Inc. has caused this certificate to
be signed by Dr. Abraham Abuchowski, its President, and attested by Leslie
Charmatz, asst. secretary, this 20th day of February, 1987.

By:/S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski, President

ATTEST:

By: /S/ LESLIE H. CHARMATZ
Leslie H. Charmatz, Assistant Secretary

E-7

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * *

Enzon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:

FIRST:  That the Board of Directors of said Corporation, at a
meeting of its members, adopted a resolution proposing and declaring advisable
the following amendments to the Certificate of Incorporation of said
Corporation:

(a)   RESOLVED, that Article 4 of the Certificate of Incorporation
be amended as set forth below:

"4:  The total number of shares of capital stock which
the Corporation shall have authority to issue is twenty-one
million (21,000,000) shares, of which twenty million
(20,000,000) shares shall be Common Stock, par value $.01 per
share, and one million (1,000,000) shares shall be Preferred
Stock, par value $.01 per share.

The Preferred  Stock may be issued from time to time in
one or more series.  The board of Directors of the
Corporation is hereby expressly authorized to provide, by
resolution or resolutions duly adopted by it prior to
issuance, for the creation of each such series and to fix the
designation and the powers, preferences, rights,
qualifications, limitations and restrictions relating to the
shares of each such series.  The authority of the Board of
Directors with respect to each series of Preferred Stock
shall include, but not be limited to, determining the
following:

(a)   the designation of such series, the number of
shares to constitute such series and the stated value thereof
if different from the par value thereof;

(b)   whether the shares of such series shall have
voting rights, in addition to any voting rights provided by
law, and, if so, the terms of such voting rights, which may
be general or limited;

(c)   the dividends, if any, payable on such series,
whether any such dividends shall be cumulative, and, if so,
from what dates, the conditions and dates upon which such
dividends shall be payable, and the preference or relation
which such dividends shall bear to the dividends payable on
any shares of stock of any other class or any other series of
Preferred Stock;

(d)   whether the shares of such series shall be
subject to redemption by the Corporation, and, if so, the
times, prices and other conditions of such redemption;

(e)   the amount or amounts payable upon shares of such
series upon, and the rights of the holders of such series in,
the voluntary or involuntary liquidation, dissolution or
winding up, or upon any distribution of the assets, of the
Corporation;
(f)   whether the shares of such series shall be
subject to the operation of a retirement or sinking fund and,
if so, the extent to and manner in which any such retirement
or sinking fund shall be applied to the purchase or
redemption of the shares of such series for retirement or
other corporation purposes and the terms and provisions
relating to the operation thereof;

(g)   whether the shares of such series shall be
convertible into, or exchangeable for, shares of stock of any
other class or any other series of Preferred Stock or any
other securities and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of
conversion or exchange;

(h)   the conditions or restrictions, if any, upon the
creation of indebtedness of the Corporation or upon the issue
of any additional stock, including additional shares of such
series or of any other series of Preferred Stock or of any
other class; and

(i)   any other powers, preferences and relative,
participating, optional and other special rights, and any
qualifications, limitations and restrictions, thereof.

The powers, preferences and relative, participating,
optional and other special rights of each series of Preferred
Stock, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other
series at any time outstanding.  All shares of any one series
of Preferred Stock shall be identical in all respects with
all other shares of such series, except that shares of any
one series issued at different times may differ as to the
dates from which dividends thereof shall be cumulative.

SECOND:  That at an annual meeting of stockholders the holders of a
majority of the outstanding stock entitled to vote thereon voted in favor of
said amendments in accordance with the provisions of Section 216 of the General
Corporation Law of the State of Delaware.

THIRD:  That the aforesaid amendments were duly adopted in
accordance with the applicable provisions of Sections 242 and 216 of the
General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said Enzon, Inc. has caused this certificate to
be signed by Dr. Abraham Abuchowski, President, and attested by Frank Davis,
Secretary, this 2nd day of March, 1988.

By:/S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski, President

ATTEST:

By: /S/ FRANK DAVIS
Frank Davis, Secretary

E-8

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * *

Enzon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:

FIRST:  That the Board of Directors of the Corporation, at a
meeting of its members, unanimously adopted a resolution proposing and
declaring advisable the following amendment to the Certificate of Incorporation
of the Corporation:

RESOLVED, that the first sentence of Article 4 of the Certificate
of Incorporation be amended to read in its entirety as set forth
below:

"4:  The total number of shares of capital stock which the
Corporation shall have authority to issue is twenty-two million
(22,000,000) shares, of which twenty million (20,000,000) shares
shall be Common Stock, par value $.01 per share, and two million
(2,000,000) shares shall be Preferred Stock, par value $.01 per
share.

SECOND:  That the remainder of Article 4 of the Certificate of
Incorporation of said Corporation shall remain unchanged.

THIRD:  That at the Annual Meeting of Stockholders of the
Corporation, the holders of a majority of the outstanding stock entitled to
vote thereon in favor of said amendment in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.

FOURTH:  That the aforesaid amendment was duly adopted in
accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, Enzon, Inc. has caused this certificate to be
signed by Dr. Abraham Abuchowski, President and Chief Executive Officer of the
Corporation, and attested to by John Caruso, Secretary of the Corporation, this
8th day of February, 1990.

By:/S/ ABRAHAM ABUCHOWSKI
ABRAHAM ABUCHOWSKI, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

ATTEST:

By: /S/ JOHN CARUSO
JOHN CARUSO, SECRETARY

E-9

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES A CUMULATIVE CONVERTIBLE

PREFERRED STOCK

OF

ENZON, INC.

ENZON, Inc.  (the  "Company"), a corporation organized and existing

under the General Corporation Law of the State of Delaware, does hereby certify

that, pursuant to authority conferred  upon  the  Board  of  Directors  of  the

Company  by  the  Certificate of Incorporation, as amended, of the Company, and

pursuant to Section  151  of  the  General  Corporation  Law  of  the  State of

Delaware, the Board of Directors of the Company at a meeting duly held on March

9,  1990,  adopted resolutions providing for the designations, preferences  and

relative, participating,  optional  or  other  rights,  and the qualifications,

limitations  or  restrictions  thereof,  of  one  million one hundred  thousand

(1,100,000)  shares  of Series A Cumulative Convertible  Preferred  Stock  (the

"Preferred Shares") of the Company, as follows:

RESOLVED, that the  Preferred  Shares  shall  have  the following powers,
designations, preferences and other special rights:

DIVIDENDS. The holders of the Preferred Shares shall be entitled to
an annual dividend of $2.00 per Share (pro-rated for  any  portion of the
applicable  period  during  which  the Preferred Shares are outstanding),
payable semi-annually on December 15  and  June 15 of each year, but only
when  and  if declared by the Board of Directors  out  of  funds  legally
available  therefor.    Dividends   on  the  Preferred  Shares  shall  be
cumulative from and after the date of issuance of such Shares.  Dividends
will accrue and accumulate but will not  be  paid  until such time as the
Board of Directors deems it appropriate in light of  the  Company's  then
current  financial  condition.   Any  accumulation  of  dividends  on the
Preferred Shares shall not bear interest.  No dividends shall be paid  or
set  apart for payment on the Company's common stock, par value, $.01 per
share  (the  "Common  Stock"),  nor shall any distribution be made on the
Common Stock (other than a dividend  payable  in  Common  Stock or in any
other class of stock ranking junior to the Preferred Shares),  nor  shall
any shares of Common Stock be redeemed, retired or otherwise acquired for
valuable  consideration  unless  the  Company shall have paid in full, or
made appropriate provision for the payment  in  full  of,  all  dividends
which  have then accumulated on the Preferred Shares.  In the event  that
the  Company   does  not  make  cash  dividend  payments  for  eight  (8)
semi-annual periods  from  the  date of issuance of the Preferred Shares,
any holder of the Preferred Shares  may elect, upon written notice to the
Company, to be paid all or any part of such accrued and unpaid dividends,
and any dividends which accrue but are  unpaid  thereafter,  in shares of
the  Company's  Common  Stock.   In  the  event of such an election,  the
Company shall, to the extent it may legally  do  so, issue and deliver to
any  holder  of  Preferred Shares who so elects to be  paid  its  accrued
dividends in Common  Stock,  within  thirty (30) days after the Company's
receipt  of  such  holder's  notice  to  so   elect,   a  certificate  or
certificates representing such Common Stock registered in  such  holder's
name.   Accrued  and  unpaid  dividends  payable  to holders of Preferred
Shares as of the date such holder elects to convert  the Preferred Shares
into Common Stock may, at the Company's option, be paid  by the Company's
issuance of Common Stock to such holder.  In order to exercise its option
to so pay accrued dividends upon conversion of the Preferred  Shares  the
Company  shall so notify the holder of such Preferred Shares, in writing,
within twenty  (20)  days after such holder's conversion of its Preferred
Shares and shall issue  and  deliver  to  such holder, within thirty (30)
days  after  such  holder's  conversion  of  its   Preferred   Shares,  a
certificate or certificates representing such Common Stock registered  in
such  holder's  name.  In all cases, the number of shares of Common Stock
to be received in  lieu  of  accrued  dividends  shall  be  determined by
dividing the aggregate amount of the accrued and unpaid dividends  by the
conversion  price  of  the  Preferred  Shares  in  effect  on the date of
election.  Any accrued dividends paid by the Company's delivery of Common
Stock shall be deemed to be paid in full for all purposes.

CONVERSION OF PREFERRED SHARES. The holders of the Preferred Shares
shall have the right, at their option, to convert such Shares into shares
of Common Stock on the following terms and conditions:

(a)  Each Preferred Share shall be convertible at  any  time
(or, if such Share is called for redemption, at any time up to and
including, but  not after, the close of business on the fifth full
business day prior  to  the date fixed for such redemption, unless
default shall be made by  the  Company  in providing the funds for
the  payment  of  the  redemption  price),  into  fully  paid  and
nonassessable shares (calculated to the nearest  whole  share)  of
Common  Stock  of  the  Company as constituted at the time of such
conversion, at the conversion  price  in  effect  at  the  time of
conversion  determined  as  hereinafter  provided.  Each Preferred
Share  shall  have  a  value  of  $25  for  the  purpose  of  such
conversion.   Every reference herein to the Common  Stock  of  the
Company (unless  a  different  intention is expressed) shall be to
the shares of the Common Stock of  the Company, $.01 par value, as
such stock exists immediately after  the issuance of the Preferred
Shares provided for hereunder, or to stock  into which such Common
Stock may be changed from time to time thereafter.

(b) Commencing on the date of issuance  each Preferred Share
shall  be  convertible into Common Stock at an initial  conversion
price  of  $7.50  per  share  of  Common  Stock  until  the  first
anniversary  of  issuance, and will thereafter be convertible at a
price  calculated  on  each  subsequent  anniversary  as  follows:
Commencing on the first  anniversary  of  issuance, each Preferred
Share will be convertible at a price of $7.875 per share of Common
Stock;  commencing  on the second anniversary  of  issuance,  each
Preferred Share will  be convertible at a price of $8.27 per share
of Common Stock; commencing  on  the third anniversary of issuance
each Preferred Share will be convertible  at  a price of $9.10 per
share  of  Common Stock; commencing on the fourth  anniversary  of
issuance each  Preferred  Share  will be convertible at a price of
$10.00 per share of Common Stock;  and  commencing  on  the  fifth
anniversary  of  issuance and thereafter each Preferred Share will
be convertible at  a  price  of  $11.00 per share of Common Stock.
Notwithstanding the foregoing, the  initial  conversion  price set
forth  above shall not increase unless and until at the time  such
increase was to have occurred, the Company shall have obtained the
effectiveness  of  the  registration  of the Common Stock issuable
under  the  conversion  terms  set  forth above  (the  "Underlying
Shares") under the Securities Act of  1933,  as amended; PROVIDED,
HOWEVER, that such increase in the conversion price shall occur if
the delay in obtaining the effectiveness of such  registration was
due  to  the  Purchaser's  failure  to provide the information  or
indemnification required under Section 5 of the Stock Subscription
Agreement dated as of March 20, 1990,  on  file  with the Company;
and, FURTHER PROVIDED, HOWEVER, that in the event  of such a delay
in the increase of the conversion price, the conversion price will
increase  immediately upon the effectiveness of such  registration
of the Underlying  Shares to the conversion price which would have
otherwise then been in effect under the terms set forth above.

(c) If at any  time, or from time to time, the Company shall
(i) declare and pay, on  or  in  respect  of, its Common Stock any
dividend payable in shares of Common Stock  or  (ii) subdivide the
outstanding  shares  of  Common  Stock  into a greater  number  of
shares, or reduce the number of outstanding  Preferred  Shares  by
combining  such  Shares  into  a  smaller  number  of  Shares, the
conversion price in effect at the time of the taking of  a  record
for  such  dividend  or  the  taking of such other action shall be
proportionately decreased as of such time, and conversely (iii) if
at any time, or from time to time,  the  Company  shall reduce the
number  of  outstanding  shares of Common Stock by combining  such
shares  into  a  smaller  number   of  shares,  or  subdivide  the
outstanding Preferred Shares into a  greater  number  of Preferred
Shares,  the conversion price in effect at the time of the  taking
of any such  action  shall be proportionately increased as of such
time.

(d) If the Company  shall consolidate with or merge into any
corporation or reclassify its  outstanding  shares of Common Stock
(other than by way of subdivision or reduction  of  such  shares),
each  Preferred  Share  shall  thereafter  be convertible into the
number of shares of stock or other securities  or  property of the
Company,  or  of  the entity resulting from such consolidation  or
merger, to which a  holder of the number of shares of Common Stock
delivered upon conversion  of such Preferred Share would have been
entitled upon such consolidation  or  merger  or reclassification,
had  the  holder of such Preferred Share exercised  its  right  of
conversion  and  had such Common Stock been issued and outstanding
and had such holder been the holder of record of such Common Stock
at the time of such consolidation, merger or reclassification; and
the Company shall make lawful provision therefor as a part of such
consolidation, merger or reclassification.

(e) The Company  shall not be required to give effect to any
adjustment in the conversion price unless and until the net effect
of one or more adjustments,  determined  as  above provided, shall
have  resulted  in a change of the conversion price  by  at  least
$0.50, PROVIDED,  HOWEVER,  that when the cumulative net effect of
more than one adjustment so determined  shall  be  to  change  the
conversion  price  by at least $0.50 such change in the conversion
price shall thereupon be given effect.

(f) Whenever the  conversion  price  is  adjusted, as herein
provided,  the Company shall promptly deliver to  each  holder  of
Preferred Shares  and  file  with  the  records  of  the Company a
statement signed by the Company's Chief Financial Officer  setting
forth  the  adjusted  conversion price, determined as so provided.
Such statement shall set  forth in reasonable detail such facts as
may  be  necessary  to show the  reason  for  and  the  manner  of
computing such adjustment.

(g) The Company  shall  not issue any fraction of a share of
Common Stock upon any conversion,  but  shall pay in cash therefor
at  the  conversion  price  then  in  effect  multiplied  by  such
fraction.

(h) On presentation and surrender to the  Company  or at any
office  or  agency  maintained  for  the transfer of the Preferred
Shares of the certificates of Preferred Shares so to be converted,
duly  endorsed  in  blank for transfer or  accompanied  by  proper
instruments of assignment  or  transfer  in blank, with signatures
guaranteed, the holder of such Preferred Shares shall be entitled,
subject  to  the  limitations  herein  contained,  to  receive  in
exchange therefor a certificate or certificates for fully paid and
nonassessable shares, and cash for fractional  shares,  of  Common
Stock  on  the  foregoing  basis.   The  Preferred Shares shall be
deemed to have been converted and the person  converting  the same
to  have  become  the  holder  of  record of Common Stock, for the
purpose of receiving dividends and for  all  other  purposes as of
the  date when the certificate or certificates for such  Preferred
Shares  are  surrendered to the Company as aforesaid.  The Company
shall  not  be required  to  make  any  such  conversion,  and  no
surrender of  the  Preferred  Shares  shall  be effective for such
purpose,  while  the  books  for the transfer of either  Preferred
Shares  or  Common  Stock are closed  for  any  purpose,  but  the
surrender  of such Preferred  Shares  for  conversion  during  any
period while  such books are closed shall become effective for all
purposes of conversion  immediately  upon  the  reopening  of such
books,  as  if  the  conversion  had  been  made  on the date such
Preferred Shares were surrendered.

(i)  The  Company  shall,  so  long as any of the  Preferred
Shares  are outstanding, reserve and keep  available  out  of  its
authorized  and  unissued  Common Stock, solely for the purpose of
effecting the conversion of  the  Preferred Shares, such number of
shares of Common Stock as shall from time to time be sufficient to
effect  the  conversion  of  all  of  the  Preferred  Shares  then
outstanding.

(j) The Company shall pay any and  all  taxes  which  may be
imposed  upon  it  with  respect  to  the issuance and delivery of
Common Stock upon the conversion of the Preferred Shares as herein
provided.  The Company shall not be required  in  any event to pay
any  transfer  or  other taxes by reason of the issuance  of  such
Common Stock in names  other  than  those  in  which the Preferred
Shares surrendered for conversion are registered  on the Company's
records, and no such conversion or issuance of Common  Stock shall
be  made unless and until the person requesting such issuance  has
paid to the Company the amount of any such tax, or has established
to the satisfaction of the Company and its transfer agent, if any,
that  such  tax  has  been paid.  Upon any conversion of Preferred
Shares as herein provided no adjustment or allowance shall be made
for dividends on the Preferred Shares so converted, and all rights
to dividends which would  otherwise  accrue subsequent to the date
of  conversion,  if  any,  shall cease and  be  deemed  satisfied,
PROVIDED, HOWEVER, that subject  to  the  Company's  right  to pay
accrued  and  unpaid  dividends  by  the  issuance of Common Stock
discussed above, nothing shall be deemed to  relieve  the  Company
from  its obligation to pay any dividends which shall have accrued
but remain unpaid to holders of Preferred Shares of record as of a
date prior  to  such  conversion  even though the payment date for
such dividend is subsequent to the date of conversion.

VOTING RIGHTS. Preferred Shares may  be  voted  for the election of
Directors  and  all  other  corporate matters upon which the  holders  of
Common  Stock have the right to  vote.   Each  Preferred  Share  will  be
entitled  to  one  vote.   Except  as  otherwise provided herein, for the
purpose  of determining a quorum or the vote  on  any  such  matters  the
Preferred  Shares  and  Common  Stock  will  be deemed to be one class of
voting stock.  Holders of Preferred Shares shall  have  all  of  the same
rights  to receive notice of and call meetings of stockholders as holders
of the Common Stock.
REDEMPTION.   The  Company may, at any time subsequent to the fifth
anniversary of the issuance  thereof, redeem the whole or any part of the
Preferred Shares then outstanding  at  a  redemption  price of $25.00 per
Preferred  Share,  plus  in each case a sum equal to all accumulated  and
unpaid  dividends thereon through  the  date  fixed  for  redemption,  in
accordance with the following redemption procedures:

(a)  In  case  of  redemption  of only part of the Preferred
Shares at any time outstanding, the Company  shall  designate  the
amount of Preferred Shares so to be redeemed and shall redeem such
Preferred  Shares on a PRO RATA basis.  Subject to the limitations
and provisions herein contained, the Board of Directors shall have
the power and authority to prescribe the terms and conditions upon
which the Preferred Shares shall be redeemed from time to time.

(b) Notice  of  every  redemption  shall be given by mail to
every  holder  of  record  of  any  Preferred Shares  then  to  be
redeemed, at least thirty (30), but no more than ninety (90), days
prior to the date fixed as the date for the redemption thereof, at
the respective addresses of such holders  as the same shall appear
on  the  stock transfer books of the Company.   The  notice  shall
state that  the  Preferred Shares shall be redeemed by the Company
at the redemption  price  of $25.00 per share, plus a sum equal to
all accumulated and unpaid  dividends  thereon  through  the  date
fixed  for redemption, upon the surrender for cancellation, at the
time and  place  designated  in  such  notice, of the certificates
representing  the  Preferred  Shares  to  be   redeemed,  properly
endorsed   in  blank  for  transfer,  or  accompanied  by   proper
instruments  of  assignment and transfer in blank, with signatures
guaranteed, and bearing  all necessary transfer tax stamps thereto
affixed and cancelled.  On  and  after  the  date specified in the
notice described above, each holder of Preferred Shares called for
redemption  shall  be entitled to receive therefor  the  specified
redemption price upon  presentation  and  surrender  at  the place
designated in such notice of the certificates for Preferred Shares
called for redemption, properly endorsed in blank for transfer  or
accompanied  by  proper  instruments  of assignment or transfer in
blank,  with  signatures  guaranteed, and  bearing  all  necessary
transfer tax stamps thereto affixed and cancelled.

(c)  If  the Company shall  give  notice  of  redemption  as
aforesaid (and unless the Company shall fail to pay the redemption
price  of  the  Preferred   Shares  presented  for  redemption  in
accordance with such notice),  all  Preferred  Shares  called  for
redemption  shall  be  deemed  to  have  been redeemed on the date
specified in such notice, whether or not the certificates for such
Preferred  Shares shall be surrendered for  redemption,  and  such
Preferred Shares  so  called  for  redemption shall from and after
such  date  cease  to  represent any interest  whatsoever  in  the
Company or its property,  and  the  holders  thereof shall have no
rights  other  than  the  right  to receive such redemption  price
without any interest thereon from and after such date.

(d)  Notwithstanding  the  foregoing,   if  such  notice  of
redemption shall have been duly given as herein  provided  in this
section  or  if  the  Company  shall have given to a bank or trust
company irrevocable authorization  to give or complete such notice
as herein provided, and if prior to  the redemption date specified
in such notice the funds necessary for  such redemption shall have
been deposited by the Company with a bank or trust company in good
standing, organized under the laws of the United States of America
or  the  State  of  New  York,  and  having capital,  surplus  and
undivided profits aggregating at least  $50,000,000  according  to
its  last published statement of condition, in trust to be applied
to the  redemption  of the Preferred Shares called for redemption,
and such notice shall  state that such deposit has taken place and
the date thereof, then notwithstanding  that  any  certificate for
such  Preferred  Shares  shall  not  have  been  surrendered   for
redemption,  from  and  after  the  time  of such deposit all such
Preferred  Shares  so  called for redemption shall  no  longer  be
deemed to be outstanding  and  all  rights  with  respect  to such
Preferred Shares shall forthwith cease and terminate, except  only
the  right  of  the  holders  thereof to receive from such bank or
trust company at any time after the time of such deposit the funds
so deposited, without interest,  and  the  right  of  the  holders
thereof  to convert the Preferred Shares as discussed above.   Any
funds so set aside or deposited, as the case may be, and unclaimed
one day prior  to  the end of three (3) years from such redemption
date shall be released  or  repaid to the Company, after which the
holders of the Preferred Shares  called  for redemption shall look
only to the Company for payment thereof.   Any interest accrued on
any funds so deposited shall be paid to the  Company  from time to
time; and no such holder shall have any right thereto.

LIQUIDATION,  DISSOLUTION,  WINDING  UP.   In  the  event  of   any
voluntary  or  involuntary  liquidation, dissolution or winding up of the
Company, the holders of the Preferred Shares shall be entitled to receive
in cash out of the assets of  the  Company,  whether from capital or from
earnings,  available  for  distribution to its stockholders,  before  any
amount shall be paid to the  holders  of the Common Stock, the sum of $25
per Preferred Share, plus an amount equal  to  all accumulated and unpaid
dividends thereon through the date fixed for payment of such distributive
amount.  The purchase or redemption by the Company of stock of any class,
in any manner permitted by law, shall not, for the  purposes  hereof,  be
regarded  as  a  liquidation,  dissolution  or winding up of the Company.
Neither  the consolidation nor merger of the Company  with  or  into  any
other corporation  or  corporations,  nor  the  sale  or  transfer by the
Company of all or any part of its assets, shall, for the purposes hereof,
be deemed to be a liquidation, dissolution or winding up of  the Company.
No  holder  of Preferred Shares shall be entitled to receive any  amounts
with respect  thereto  upon any liquidation, dissolution or winding up of
the Company other than the amounts provided for herein.

PREFERRED RANK.  All shares of Common Stock shall be of junior rank
to all Preferred Shares  in  respect  of the preferences as to dividends,
distributions and payments upon the liquidation,  dissolution  or winding
up  of  the  Company.  The rights of the shares of Common Stock shall  be
subject to the  preferences  and relative rights of the Preferred Shares.
Notwithstanding  the foregoing,  the  Company  may  authorize  and  issue
additional or other  preferred  stock  which  is  of  equal rank with the
Preferred   Shares  in  respect  of  the  preferences  as  to  dividends,
distributions  and  payments upon the liquidation, dissolution or winding
up of the Company; PROVIDED,  HOWEVER,  that for so long as the Preferred
Shares remain outstanding the Company shall  not  issue any capital stock
which is more senior in rank than the Preferred Shares  in respect of the
foregoing preferences or which shall have greater voting  rights than the
Preferred  Shares.   In  the  event of a merger or consolidation  of  the
Company  with or into another corporation,  the  Preferred  Shares  shall
maintain their relative powers, designations and preferences provided for
herein.

VOTE TO CHANGE PREFERRED SHARES.  The affirmative vote at a meeting
duly called  for such purpose or the written consent without a meeting of
the holders of not less than two-thirds (66 2/3%) of the then outstanding
Preferred Shares  shall be required to amend, alter, change or repeal any
of the powers, designations,  preferences  and  rights  of  the Preferred
Shares.

IN WITNESS WHEREOF, the Company has caused this certificate  to  be

signed  by  Abraham  Abuchowski, its Chief Executive Officer and President, and

John Caruso, its Secretary, this 21st day of March, 1990.

ENZON, INC.

By:/S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski, Chief
Executive Officer and President

ATTEST:

By: /S/JOHN CARUSO
John Caruso, Secretary

E-10

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * *

Enzon, Inc.,  a  corporation  organized  and  existing under and by
virtue  of  the  General  Corporation  Law  of  the  State  of  Delaware   (the
"Corporation"), DOES HEREBY CERTIFY:

FIRST:   That  the  Board  of  Directors  of  the Corporation, at a
meeting  of  its  members,  unanimously  adopted  a  resolution  proposing  and
declaring advisable the following amendment to the Certificate of Incorporation
of the Corporation:

RESOLVED,  that the first sentence of Article 4 of the  Certificate
of Incorporation  be  amended  to read in its entirety as set forth
below:

"4:  The total number of shares  of  capital  stock which the
Corporation  shall have authority to issue is thirty-three  million
(33,000,000) shares,  of  which  thirty million (30,000,000) shares
shall be Common Stock, par value $.01  per share, and three million
(3,000,000) shares shall be Preferred Stock,  par  value  $.01  per
share."

SECOND:   That  the  remainder  of  Article 4 of the Certificate of
Incorporation of said Corporation shall remain unchanged.

THIRD:   That  at  the  Annual  Meeting  of   Stockholders  of  the
Corporation,  the  holders of a majority of the outstanding stock  entitled  to
vote thereon and a majority  of the outstanding stock of each class entitled to
vote thereon as a class voted in favor of said amendment in accordance with the
provisions of Section 242 of the  General  Corporation  Law  of  the  State  of
Delaware.

FOURTH:    That   the  aforesaid  amendment  was  duly  adopted  in
accordance  with the applicable  provisions  of  Section  242  of  the  General
Corporation Law of the State of Delaware.

IN  WITNESS  WHEREOF, Enzon, Inc. has caused this certificate to be
signed by Abraham Abuchowski,  President  and  Chief  Executive  Officer of the
Corporation, and attested to by John Caruso, Secretary of the Corporation, this
17 day of January, 1991.

By:/S/ ABRAHAM ABUCHOWSKI
ABRAHAM ABUCHOWSKI, PRESIDENT AND
CHIEF EXECUTIVE OFFICER

ATTEST:

By: /S/ JOHN CARUSO
JOHN CARUSO, SECRETARY

E-11

AMENDMENT TO CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES A CUMULATIVE CONVERTIBLE

PREFERRED STOCK

OF ENZON, INC.

ENZON, Inc. (the "Company"), a corporation organized and existing

under the General Corporation Law of the State of Delaware, does hereby certify

that, pursuant to Section 242 of the Delaware General Corporation Law and the

authority conferred upon the holders of the Company's Series A Cumulative

Convertible Preferred Stock (the "Series A Preferred Stock") pursuant to the

Certificate of Designations, Preferences and Rights of Series A Cumulative

Convertible Preferred Stock filed with the Secretary of State of the State of

Delaware on March 22, 1990 (the "Certificate of Designations"), in excess of 66

2/3% of the holders of the Series A Preferred Stock pursuant to a Written

Consent of such holders dated December 16, 1992, adopted a resolution providing

for an addition to the voting rights section at the end of the Certificate of

Designations as follows:

In addition to the voting rights currently possessed by the holders

of the Series A Preferred Stock, if and whenever at any time or times dividends

payable on the Company's Convertible Exchangeable Preferred Stock (the

"Convertible Preferred Stock") shall have been in arrears and unpaid in an

aggregate amount equal to or exceeding any amount of dividends payable thereon

for six full quarterly periods, then the holders of the Convertible Preferred

Stock, the Series A Preferred Stock and of any parity preferred stock having

similar voting rights then exercisable shall have the exclusive right, voting

as a single class without regard to series, to elect two directors of the

Corporation, such directors to be in addition to the number of directors

constituting the board immediately prior to the accrual of that right.  The

remaining directors shall be elected in accordance with the provisions of the

Corporation's Certificate of Incorporation and By-Laws by the other class or

classes of stock entitled to vote therefor at each meeting of stockholders held

for the purpose of electing directors.  Such voting right of the Series A

Preferred Stock shall continue until such time as all cumulative dividends

accumulated on the Convertible Preferred Stock shall have been paid in full at

which time such voting right of the holders of the Series A Preferred Stock

shall terminate, subject to revesting in accordance with the provisions of the

first sentence of this subparagraph in the event of each

IN WITNESS WHEREOF, the Company has caused this certificate to be

signed by its President and attested to be its Secretary this 16th day of

December 1992.

ENZON, INC.

By: /S/ ABRAHAM ABUCHOWSKI
Abraham Abuchowski
President and
Chief Executive Officer

ATTEST:

By:  /S/ JOHN CARUSO
John Caruso, Secretary

E-12

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * * * * * *

Enzon, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:

FIRST: That the Board of Directors of the Corporation, at a meeting
of its members, unanimously adopted a resolution proposing and declaring
advisable the following amendment to the Certificate of Incorporation of the
Corporation:

RESOLVED, that the first sentence of Article 4 of the Certificate
of Incorporation be amended to read in its entirety as set forth
below:

"4: The total number of shares of capital stock which the
Corporation shall have authority to issue is forty-three million
(43,000,000) shares, of which forty million (40,000,000) shares
shall be Common Stock, par value $.01 per share, and three million
(3,000,000) shares shall be Preferred Stock, par value $.01 per
share".

SECOND: That the remainder of Article 4 of the Certificate of
Incorporation of said Corporation shall remain unchanged.

THIRD: That at the Annual Meeting of Stockholders of the
Corporation, the holders of a majority of the outstanding stock entitled to
vote thereon and a majority of the outstanding stock of each class entitled to
vote thereon as a class voted in favor of said amendment in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

FOURTH: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Section 242 of the General Corporation law of
the State of Delaware.

IN WITNESS WHEREOF, Enzon, Inc. has caused this certificate to be
signed by Abraham Abuchowski, President and Chief Executive Officer of the
Corporation, and attested to by John A. Caruso, Secretary of the Corporation,
this 17th day of February, 1993.

By:/S/ ABRAHAM ABUCHOWSKI
ABRAHAM ABUCHOWSKI, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
ATTEST:

By:/S/ JOHN A. CARUSO
JOHN A. CARUSO, SECRETARY

E-13

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES B CONVERTIBLE

PREFERRED STOCK

OF

ENZON, INC.

ENZON,  Inc. (the "COMPANY"), a corporation organized and existing  under

the General Corporation Law of the State of Delaware, does hereby certify that,

pursuant to authority  conferred  upon the Board of Directors of the Company by

the Certificate of Incorporation, as  amended,  of the Company, and pursuant to

Section 151 of the General Corporation Law of the  State of Delaware, the Board

of Directors of the Company at a meeting duly held on January 31, 1996, adopted

resolutions   providing  for  the  designations,  preferences   and   relative,

participating, optional or other rights, and the qualifications, limitations or

restrictions thereof, of forty thousand (40,000) shares of Series B Convertible

Preferred Stock (the "SERIES B PREFERRED SHARES") of the Company, as follows:

RESOLVED,  that the Company is authorized to issue 40,000 shares of
Series B Convertible  Preferred  Stock  (the  "SERIES  B  PREFERRED
SHARES")  which  shall  have  the  following  powers, designations,
preferences and other special rights:

(1)   DIVIDENDS.   The  holders  of  the Series  B  Preferred
Shares shall not be entitled to dividends.

(2)   CONVERSION OF SERIES B PREFERRED  SHARES.   The holders
of  the  Series  B Preferred Shares shall have the right, at  their
option, to convert  the  Series  B  Preferred Shares into shares of
Common Stock on the following terms and conditions:

(a)   Each Preferred Share  shall be convertible at any
time after seventy (70) days after the date  of  issuance  (or,  if
such Series B Preferred Share is called for redemption, at any time
up  to  and  including, but not after, the close of business on the
fifth  full  business   day  prior  to  the  date  fixed  for  such
redemption,  unless  default  shall  be  made  by  the  Company  in
providing the funds for  the payment of the redemption price), into
fully paid and nonassessable  shares  (calculated  to  the  nearest
whole  share) of Common Stock of the Company as constituted at  the
time of  such  conversion, at the conversion price (the "CONVERSION
PRICE")  in  effect   at  the  time  of  conversion  determined  as
hereinafter provided; PROVIDED, HOWEVER, that in no event shall any
holder be entitled to convert  Series  B Preferred Shares if, after
giving effect to such conversion, the number  of  shares  of Common
Stock purchased pursuant to the Securities Purchase Agreement dated
January  31,  1996  by  and among the Company and certain investors
(the "SECURITIES PURCHASE  AGREEMENT")  set forth therein providing
for the purchase of Common Stock, the Series B Preferred Shares and
Warrants or issued on exercise of such Warrants,  or  conversion of
Series B Preferred Shares and beneficially owned by such holder and
all  other  holders  whose  holdings would be aggregated with  such
holder  for  purposes  of  calculating   beneficial   ownership  in
accordance  with  Sections 13(d) and 16 of the Securities  Exchange
Act of 1934, as amended,  and the regulations thereunder ("SECTIONS
13(D) AND 16"), including,  without  limitation, any person serving
as an adviser to any holder (collectively,  the "RELATED PERSONS"),
would exceed four and nine-tenths percent (4.9%) of the outstanding
shares  of  Common  Stock (calculated in accordance  with  Sections
13(d) and 16).  Common  Stock  issuable upon conversion of Series B
Preferred Shares or exercise of  the  warrants  for the purchase of
Common Stock held by such holder or the Related Persons  shall  not
be  deemed  to  be beneficially owned by such holder or the Related
Persons for this purpose.   Each Preferred Share shall have a value
of $100 (the "STATED VALUE") for the purpose of such conversion and
the number of shares  of  Common  Stock issuable upon conversion of
each  of  the  Series B Preferred Shares  shall  be  determined  by
dividing the Stated  Value  thereof by the Conversion Price then in
effect.  Every reference herein  to the COMMON STOCK of the Company
(unless a different intention is expressed)  shall be to the shares
of the Common Stock of the Company, $.01 par value,  as  such stock
exists  immediately  after  the  issuance of the Series B Preferred
Shares provided for hereunder, or  to  stock into which such Common
Stock may be changed from time to time thereafter.

(b)   The  Conversion  Price shall  be  eighty  percent
(80%) (the "CONVERSION PERCENTAGE") of the Average Market Price (as
defined below) for the Common Stock  for  the  five (5) consecutive
trading  days  ending  one  trading  day  prior  to  the  date  the
Conversion  Notice  (as defined below) is received by the  Company,
subject to adjustment  as  provided  herein.   If  the registration
statement  (the  "REGISTRATION STATEMENT") covering the  shares  of
Common Stock issuable  upon  conversion  of  the Series B Preferred
Shares  required  to  be  filed  by  the  Company pursuant  to  the
Registration  Rights  Agreement  between  the Company  and  initial
holders of the Series B Preferred Shares (the  "REGISTRATION RIGHTS
AGREEMENT") has not been declared effective by the  U.S. Securities
and Exchange Commission ("SEC") within ninety (90) days  after  the
date of issuance of the Series B Preferred Shares, or if, after the
Registration  Statement  has  been  declared  effective by the SEC,
sales  cannot  be  made pursuant to the Registration  Statement  by
reason  of  stop  order,   the  Company's  failure  to  update  the
Registration Statement or otherwise,  or if the Common Stock is not
listed  or included for quotation on the  National  Association  of
Securities  Dealers  Automated Quotation ("NASDAQ") National Market
System  (the  "NASDAQ-NMS"),  the  New  York  Stock  Exchange  (the
"NYSE"), the American  Stock  Exchange  (the "AMEX"), or the NASDAQ
SmallCap Market (the "NASDAQ SMALLCAP") then, as partial relief for
the  damages  to  the  holder by reason of any  such  delay  in  or
reduction of its ability  to sell the shares of Common Stock (which
remedy shall not be exclusive  of  any  other remedies available at
law or in equity, except that such remedy  shall  be  the exclusive
remedy  for  any  delay  in  the  effectiveness of the Registration
Statement provided the Registration Statement is declared effective
by the SEC within 180 days after the date of issuance of the Series
B Preferred Shares), the Conversion  Percentage shall be reduced by
a number of percentage points equal to  three (3) times the sum of:
(i) the number of months (prorated for partial  months)  after  the
end  of  such  90 day period and prior to the date the Registration
Statement is declared effective by the SEC, provided, however, that
there shall be excluded from such period (and from any period under
clause (ii) immediate  below)  delays  which  are  attributable  to
changes in the Registration Statement required by the Investors (as
that  term  is  defined  in  the  Registration  Rights  Agreement),
including, without limitation, changes in the plan of distribution;
(ii) the number of months (prorated for partial months) that  sales
cannot be made pursuant to the Registration Statement (by reason of
stop  order,  the  Company's  failure to update the Registration or
otherwise)  after  the Registration  Statement  has  been  declared
effective; and (iii)  the  number  of  months (prorated for partial
months)  that  the  Common  Stock  is not listed  or  included  for
quotation on the NASDAQ-NMS, NYSE, AMEX,  or  NASDAQ SmallCap after
the  Registration  Statement has been declared effective;  provided
that the aggregate number  of  months  that  are  the  basis  of  a
reduction  in  the  Conversion Percentage pursuant to the foregoing
clauses (i), (ii) and  (iii)  shall  not  exceed twelve (12).  (For
example, if the Registration Statement becomes  effective  one  and
one-half  (1  1/2 ) months after the end of such 90 day period, the
Conversion  Percentage   would   be   75.5%  until  any  subsequent
adjustment; if thereafter sales could not  be  made pursuant to the
Registration  Statement  for  a  period  of  two  (2)  months,  the
Conversion Percentage would then be 69.5%.)  If the holder converts
Series  B  Preferred Shares into Common Stock and an adjustment  to
the  Conversion   Percentage   is   required   subsequent  to  such
conversion,  but  prior to the sale of such Common  Stock  by  such
holder, the Company  shall pay to such holder, within five (5) days
after receipt of a notice  of  the  sale  of such Common Stock from
such holder, an amount equal to the Average  Market  Price  of  the
Common  Stock  obtained  upon conversion of such Series B Preferred
Shares for the five (5) trading  days  ending  one  (1) trading day
prior  to  the  date  of  conversion multiplied by three-hundredths
(.03) times the number of months  (prorated for partial months) for
which  an  adjustment  was required; provided  that  the  aggregate
number of months for which  such  an  adjustment  is required (when
added  to  the  number  of months for which an adjustment  is  made
pursuant to clauses (i),  (ii)  and  (iii)  above) shall not exceed
twelve (12).  Such amount may be paid at the  Company's  option  in
cash  or  Common  Stock valued based on the Average Market Price of
the Common Stock for  the  period  of  five (5) consecutive trading
days ending on the date of the sale of such Common Stock; PROVIDED,
HOWEVER, that any amounts due as to that  period  during  which the
shares  are not traded or included for quotation on the NASDAQ-NMS,
NYSE, AMEX or NASDAQ SmallCap shall be paid in cash only; PROVIDED,
FURTHER, HOWEVER, that in no event shall shares be issued hereunder
if, after  giving  effect to such issuance, the number of shares of
Common  Stock  purchased   pursuant   to  the  Securities  Purchase
Agreement or issued on exercise of the  Warrants  or  conversion of
the Series B Preferred Shares and beneficially owned by such holder
and  all Related Persons would exceed four and nine-tenths  percent
(4.9%)  of  the  outstanding  shares of Common Stock (calculated in
accordance with Sections 13(d)  and  16; cash shall be paid in lieu
of  any  shares  which  cannot be issued pursuant  to  this  second
proviso.   Common  Stock  issuable  upon  conversion  of  Series  B
Preferred Shares or exercise  of  the  warrants for the purchase of
Common Stock held by such holder or the  Related  Persons shall not
be  deemed to be beneficially owned by such holder or  the  Related
Persons   for   this  purpose.  (For  example,  if  the  Conversion
Percentage was 75.5%  at  the  time  of conversion of $1,000,000 in
Stated Value of Series B Preferred Shares  (such  that the Series B
Preferred Shares were converted into Common Stock having an Average
Market Price for the applicable period in aggregate  of $1,324,503)
and  subsequent  to  conversion  there was a further two (2)  month
delay in the Registration Statement's being declared effective, and
such Common Stock was sold at the end of such two (2) month period,
the Company would pay to the holder  $79,470.20  in  cash or Common
Stock.)

"AVERAGE MARKET PRICE" of any security for  any  period
shall  be  computed  as  the  arithmetic average of the closing bid
prices for such security for each trading day in such period on the
NASDAQ-NMS, or, if the NASDAQ-NMS  is  not  the  principal  trading
market for such security, on the principal trading market for  such
security,  or, if market value cannot be calculated for such period
on any of the foregoing bases, the average fair market value during
such period  as reasonably determined in good faith by the Board of
Directors of the Company.

(c)   If  the  Company  shall consolidate with or merge
into any corporation or reclassify its outstanding shares of Common
Stock  (other  than  by way of subdivision  or  reduction  of  such
shares) (each a "MAJOR  TRANSACTION"), then each Series B Preferred
Share shall thereafter be  convertible into the number of shares of
stock or securities (the "RESULTING SECURITIES") or property of the
Company,  or of the entity resulting  from  such  consolidation  or
merger, to  which  a holder of the number of shares of Common Stock
delivered upon conversion  of  such  Series B Preferred Share would
have been entitled upon such Major Transaction  had  the  holder of
such Series B Preferred Share exercised its right of conversion and
had  such  Common  Stock  been  issued and outstanding and had such
holder been the holder of record  of  such Common Stock at the time
of  such  Major  Transaction,  and the Company  shall  make  lawful
provision  therefor  as a part of  such  consolidation,  merger  or
reclassification; PROVIDED,  HOWEVER,  that  the Company shall give
the holders of the Series B Preferred Shares written  notice of any
Major  Transaction  promptly  upon  the  execution of any agreement
whether or not binding in connection therewith  (including  without
limitation a letter of intent or agreement in principle) and  in no
event shall a Major Transaction be consummated prior to ninety (90)
days after such notice.

(d)   The  Company  shall  not  issue any fraction of a
share of Common Stock upon any conversion, but  shall  pay  in cash
therefor at the Conversion Price then in effect multiplied by  such
fraction.

(e)   On  presentation and surrender to the Company (or
at any office or agency maintained for the transfer of the Series B
Preferred Shares) of the  certificates of Series B Preferred Shares
so  to  be  converted,  duly endorsed  in  blank  for  transfer  or
accompanied by proper instruments  of  assignment  or  transfer  in
blank  (a  "CONVERSION  NOTICE"),  with  signatures guaranteed, the
holder of such Series B Preferred Shares shall be entitled, subject
to  the  limitations  herein  contained,  to  receive  in  exchange
therefor  a  certificate  or  certificates  for  fully   paid   and
nonassessable  shares, which certificates shall be delivered by the
second trading day  after  the  date  of delivery of the Conversion
Notice, and cash for fractional shares,  of  Common  Stock  on  the
foregoing  basis.  The Series B Preferred Shares shall be deemed to
have been converted,  and  the  person  converting the same to have
become the holder of record of Common Stock, for all purposes as of
the date of delivery of the Conversion Notice.

(f)   The Company shall, so long as any of the Series B
Preferred Shares are outstanding, reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of
effecting  the conversion of the Series B  Preferred  Shares,  such
number of shares  of  Common  Stock  as  shall from time to time be
sufficient  to  effect  the  conversion  of all  of  the  Series  B
Preferred Shares then outstanding.

(g)   The Company shall pay any and all taxes which may
be  imposed upon it with respect to the issuance  and  delivery  of
Common  Stock  upon the conversion of the Series B Preferred Shares
as herein provided.  The Company shall not be required in any event
to pay any transfer  or  other  taxes  by reason of the issuance of
such Common Stock in names other than those  in  which the Series B
Preferred Shares surrendered for conversion are registered  on  the
Company's  records,  and  no  such conversion or issuance of Common
Stock shall be made unless and  until  the  person  requesting such
issuance has paid to the Company the amount of any such tax, or has
established  to  the  satisfaction of the Company and its  transfer
agent, if any, that such tax has been paid.

(3)   VOTING RIGHTS.   Holders  of  Series B Preferred Shares
shall  have  no voting rights, except as required  by  law  and  by
Section 7 hereof.

(4)   REDEMPTION.    The   Company  may,  but  shall  not  be
obligated to, at any time subsequent  to ninety (90) days after the
issuance of the Series B Preferred Shares,  redeem the whole or any
part  of  the  Series  B  Preferred  Shares then outstanding  at  a
redemption price of $127 per Preferred  Share,  in  accordance with
the following redemption procedures:

(a)   In case of redemption of only part  of the Series
B  Preferred  Shares  at  any  time outstanding, the Company  shall
designate the amount of Series B Preferred Shares so to be redeemed
and  shall redeem such Series B Preferred  Shares  on  a  PRO  RATA
basis.  Subject to the limitations and provisions herein contained,
the Board  of  Directors  shall  have  the  power  and authority to
prescribe  the  terms  and  conditions  upon  which  the  Series  B
Preferred Shares shall be redeemed from time to time.

(b)   Notice of every redemption shall be given by mail
to every holder of record of any Series B Preferred Shares  then to
be  redeemed,  at  least thirty (30), but no more than ninety (90),
days  prior to the date  fixed  as  the  date  for  the  redemption
thereof,  at  the  respective addresses of such holders as the same
shall appear on the  stock  transfer  books  of  the  Company.  The
notice  shall  state  that  the Series B Preferred Shares shall  be
redeemed by the Company at the  redemption  price  specified above,
upon  the  surrender  for  cancellation,  at  the  time  and  place
designated  in  such  notice, of the certificates representing  the
Series B Preferred Shares  to  be  redeemed,  properly  endorsed in
blank  for  transfer,  or  accompanied  by  proper  instruments  of
assignment  and transfer in blank, with signatures guaranteed,  and
bearing all necessary  transfer  tax  stamps  thereto  affixed  and
cancelled.  On and after the date specified in the notice described
above,  each  holder  of  Series  B  Preferred  Shares  called  for
redemption  shall  be  entitled  to  receive therefor the specified
redemption  price  upon presentation and  surrender  at  the  place
designated  in  such  notice  of  the  certificates  for  Series  B
Preferred Shares called  for redemption, properly endorsed in blank
for transfer or accompanied  by proper instruments of assignment or
transfer  in blank, with signatures  guaranteed,  and  bearing  all
necessary transfer tax stamps thereto affixed and cancelled.

(c)   If the Company shall give notice of redemption as
aforesaid (and  unless the Company shall fail to pay the redemption
price of the Series  B Preferred Shares presented for redemption in
accordance with such notice),  all Series B Preferred Shares called
for redemption shall be deemed to  have  been  redeemed on the date
specified in such notice, whether or not the certificates  for such
Series B Preferred Shares shall be surrendered for redemption,  and
such  Series B Preferred Shares so called for redemption shall from
and after  such  date cease to represent any interest whatsoever in
the Company or its  property, and the holders thereof shall have no
rights  other than the  right  to  receive  such  redemption  price
without any interest thereof from and after such date.

(5)   LIQUIDATION,  DISSOLUTION, WINDING UP.  In the event of
any voluntary or involuntary liquidation, dissolution or winding up
of the Company, the holders  of the Series B Preferred Shares shall
be entitled to receive in cash  out  of  the assets of the Company,
whether from capital or from earnings, available  for  distribution
to  its  stockholders  (the  "PREFERRED FUNDS"), before any  amount
shall be paid to the holders of  the  Common Stock, an amount equal
to the Stated Value per Series B Preferred Share, provided that, if
the Preferred Funds are insufficient to  pay the full amount due to
the holders of Series B Preferred Shares and  holders  of shares of
other classes or series of preferred stock of the Company  that are
of equal rank with the Series B Preferred Shares as to payments  of
Preferred  Funds  (the  "PARI  PASSU  SHARES"), then each holder of
Series B Preferred Shares and Pari Passu  Shares  shall  receive  a
percentage  of  the  Preferred  Funds  equal  to the full amount of
Preferred Funds payable to such holder as a percentage  of the full
amount  of  Preferred  Funds  payable  to  all holders of Series  B
Preferred  Shares  and  Pari  Passu  Shares.    The   purchase   or
redemption  by  the  Company  of  stock of any class, in any manner
permitted by law, shall not, for the  purposes  hereof, be regarded
as  a  liquidation,  dissolution  or  winding  up  of the  Company.
Neither the consolidation nor merger of the Company  with  or  into
any other corporation or corporations, nor the sale or transfer  by
the  Company  of  less than substantially all of its assets, shall,
for the purposes hereof, be deemed to be a liquidation, dissolution
or winding up of the  Company.   No  holder  of  Series B Preferred
Shares  shall  be  entitled  to  receive  any amounts with  respect
thereto  upon any liquidation, dissolution or  winding  up  of  the
Company other than the amounts provided for herein.

(6)   PREFERRED RANK.  All shares of Common Stock shall be of
junior rank  to  all  Series  B  Preferred Shares in respect to the
preferences as to distributions and  payments upon the liquidation,
dissolution or winding up of the Company.  The rights of the shares
of Common Stock shall be subject to the  preferences  and  relative
rights  of  the  Series B Preferred Shares.  The Series B Preferred
Shares  shall  be  of  equal  rank  with  the  Company's  Series  A
Cumulative Convertible  Preferred Stock in respect of distributions
and payments upon the liquidation, dissolution or winding up of the
Company.  Notwithstanding  the foregoing, the Company may authorize
and issue additional or other  preferred stock which is of equal or
junior rank with the Series B Preferred  Shares  in  respect of the
preferences as to distributions and payments upon the  liquidation,
dissolution  or winding up of the Company; PROVIDED, HOWEVER,  that
for so long as the Series B Preferred Shares remain outstanding the
Company shall  not  issue any capital stock which is more senior in
rank than the Series B Preferred Shares in respect of the foregoing
preferences. In the event  of  the  merger  or consolidation of the
Company with or into another corporation, the  Series  B  Preferred
Shares  shall  maintain  their  relative  powers,  designations and
preferences provided for herein.

(7)   VOTE TO CHANGE THE TERMS OF SERIES B PREFERRED  SHARES.
The  affirmative vote at a meeting duly called for such purpose  or
the written  consent  without  a meeting of the holders of not less
than two-thirds (2/3) of the then  outstanding  Series  B Preferred
Shares shall be required to amend, alter, change or repeal  any  of
the  powers,  designations,  preferences and rights of the Series B
Preferred Shares.

IN WITNESS WHEREOF, the Company has  caused this certificate to be signed
by Peter G. Tombros, its President, and John  A.  Caruso,  its  Secretary, this
31st day of January 1996.

ENZON, INC.

By:/S/ PETER G. TOMBROS
President

Attest:/S/ JOHN A. CARUSO
Secretary

E-14

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES C CONVERTIBLE

PREFERRED STOCK

OF

ENZON, INC.

ENZON,  Inc. (the "COMPANY"), a corporation organized and existing  under

the General Corporation Law of the State of Delaware, does hereby certify that,

pursuant to authority  conferred  upon the Board of Directors of the Company by

the Certificate of Incorporation, as  amended,  of the Company, and pursuant to

Section 151 of the General Corporation Law of the  State of Delaware, the Board

of Directors of the Company at a meeting duly held on  March  14, 1996, adopted

resolutions   providing   for   the  designations,  preferences  and  relative,

participating, optional or other rights, and the qualifications, limitations or

restrictions  thereof,  of  twenty  thousand   (20,000)   shares  of  Series  C

Convertible Preferred Stock (the "SERIES C PREFERRED SHARES")  of  the Company,

as follows:

RESOLVED, that the Company is authorized to issue 20,000  shares of
Series  C  Convertible  Preferred  Stock  (the  "SERIES C PREFERRED
SHARES")  which  shall  have  the  following  powers, designations,
preferences and other special rights:

(1)   DIVIDENDS.   The  holders  of  the Series  C  Preferred
Shares shall not be entitled to dividends.

(2)   CONVERSION OF SERIES C PREFERRED  SHARES.   The holders
of  the  Series  C Preferred Shares shall have the right, at  their
option, to convert  the  Series  C  Preferred Shares into shares of
Common Stock on the following terms and conditions:

(a)   Each   Series   C  Preferred   Share   shall   be
convertible at any time after seventy  (70)  days after the date of
issuance  (or,  if  such  Series C Preferred Share  is  called  for
redemption, at any time up  to  and  including,  but not after, the
close of business on the fifth full business day prior  to the date
fixed  for  such  redemption,  unless default shall be made by  the
Company in providing the funds for  the  payment  of the redemption
price), into fully paid and nonassessable shares (calculated to the
nearest whole share) of Common Stock of the Company  as constituted
at  the  time  of  such  conversion,  at the conversion price  (the
"CONVERSION PRICE") in effect at the time  of conversion determined
as hereinafter provided; PROVIDED, HOWEVER,  that in no event shall
any  holder  be entitled to convert Series C Preferred  Shares  if,
after giving effect  to  such  conversion,  the number of shares of
Common   Stock  purchased  pursuant  to  the  Securities   Purchase
Agreement  dated  January  31,  1996  by  and among the Company and
certain  investors  providing  for the purchase  of  Common  Stock,
Series  B  Convertible Preferred Stock  (the  "SERIES  B  PREFERRED
SHARES") and  warrants  to  purchase Common Stock (the "WARRANTS"),
and pursuant to the Securities  Purchase  Agreement dated March 15,
1996 by and among the Company and certain investors  providing  for
the  purchase  of  Common  Stock, the Series C Preferred Shares and
warrants   to   purchase  Common   Stock   (the   "NEW   WARRANTS")
(collectively, the  "SECURITIES PURCHASE AGREEMENTS"), or issued on
exercise of the Warrants  or  New  Warrants,  or  conversion of the
Series  C  Preferred  Shares  or  Series  B  Preferred  Shares  and
beneficially  owned  by  such  holder  and  all other holders whose
holdings  would  be  aggregated with such holder  for  purposes  of
calculating beneficial  ownership in accordance with Sections 13(d)
and 16 of the Securities  Exchange Act of 1934, as amended, and the
regulations  thereunder  ("SECTIONS   13(D)  AND  16"),  including,
without limitation, any person serving  as an adviser to any holder
(collectively, the "RELATED PERSONS"), would exceed four and ninety
five-hundredths percent (4.95%) of the outstanding shares of Common
Stock  (calculated  in  accordance  with Sections  13(d)  and  16).
Common Stock issuable upon conversion  of  the  Series  C Preferred
Shares or the Series B Preferred Shares or exercise of the Warrants
or  New  Warrants  for  the  purchase of Common Stock held by  such
holder  or  the  Related  Persons   shall   not  be  deemed  to  be
beneficially owned by such holder or the Related  Persons  for this
purpose.   Each Series C Preferred Share shall have a value of $100
(the  "STATED  VALUE")  for the purpose of such conversion and  the
number of shares of Common  Stock  issuable upon conversion of each
of the Series C Preferred Shares shall  be  determined  by dividing
the  Stated  Value thereof by the Conversion Price then in  effect.
Every reference herein to the COMMON STOCK of the Company (unless a
different intention  is  expressed)  shall  be to the shares of the
Common Stock of the Company, $.01 par value,  as  such stock exists
immediately  after  the  issuance of the Series C Preferred  Shares
provided for hereunder, or  to  stock  into which such Common Stock
may be changed from time to time thereafter.

(b)   The  Conversion  Price shall  be  eighty  percent
(80%) (the "CONVERSION PERCENTAGE") of the Average Market Price (as
defined below) for the Common Stock  for  the  five (5) consecutive
trading  days  ending  one  trading  day  prior  to  the  date  the
Conversion  Notice  (as defined below) is received by the  Company,
subject to adjustment  as  provided  herein.   If  the registration
statement  (the  "REGISTRATION STATEMENT") covering the  shares  of
Common Stock issuable  upon  conversion  of  the Series C Preferred
Shares  required  to  be  filed  by  the  Company pursuant  to  the
Registration  Rights  Agreement  between  the Company  and  initial
holders of the Series C Preferred Shares (the  "REGISTRATION RIGHTS
AGREEMENT") has not been declared effective by the  U.S. Securities
and Exchange Commission ("SEC") within ninety (90) days  after  the
date of issuance of the Series C Preferred Shares, or if, after the
Registration  Statement  has  been  declared  effective by the SEC,
sales  cannot  be  made pursuant to the Registration  Statement  by
reason  of  stop  order,   the  Company's  failure  to  update  the
Registration Statement in accordance with the rules and regulations
of the SEC or otherwise, or  if  the  Common Stock is not listed or
included for quotation on the National  Association  of  Securities
Dealers Automated Quotation ("NASDAQ") National Market System  (the
"NASDAQ-NMS"),  the  New  York  Stock  Exchange  (the  "NYSE"), the
American Stock Exchange (the "AMEX"), or the NASDAQ SmallCap Market
(the "NASDAQ SMALLCAP") then, as partial relief for the  damages to
the  holder  by  reason  of  any such delay in or reduction of  its
ability to sell the shares of  Common Stock (which remedy shall not
be exclusive of any other remedies  available  at law or in equity,
except that such remedy shall be the exclusive remedy for any delay
in  the  effectiveness of the Registration Statement  provided  the
Registration  Statement is declared effective by the SEC within 180
days after the  date of issuance of the Series C Preferred Shares),
the  Conversion  Percentage   shall  be  reduced  by  a  number  of
percentage points equal to three  (3)  times  the  sum  of: (i) the
number  of  months (prorated for partial months) after the  end  of
such 90 day period and prior to the date the Registration Statement
is declared effective  by  the  SEC,  provided, however, that there
shall  be  excluded from such period (and  from  any  period  under
clause (ii)  immediately  below)  delays  which are attributable to
changes in the Registration Statement required by the Investors (as
that  term  is  defined  in  the  Registration  Rights  Agreement),
including, without limitation, changes in the plan of distribution;
(ii) the number of months (prorated for partial months)  that sales
cannot be made pursuant to the Registration Statement (by reason of
stop  order,  the  Company's failure to update the Registration  or
otherwise)  after the  Registration  Statement  has  been  declared
effective; and  (iii)  the  number  of months (prorated for partial
months)  that  the  Common  Stock is not  listed  or  included  for
quotation on the NASDAQ-NMS,  NYSE,  AMEX, or NASDAQ SmallCap after
the  Registration Statement has been declared  effective;  provided
that the  aggregate  number  of  months  that  are  the  basis of a
reduction  in  the  Conversion Percentage pursuant to the foregoing
clauses (i), (ii) and  (iii)  shall  not  exceed twelve (12).  (For
example, if the Registration Statement becomes  effective  one  and
one-half  (1  1/2 ) months after the end of such 90 day period, the
Conversion  Percentage   would   be   75.5%  until  any  subsequent
adjustment; if thereafter sales could not  be  made pursuant to the
Registration  Statement  for  a  period  of  two  (2)  months,  the
Conversion Percentage would then be 69.5%.)  If the holder converts
Series  C  Preferred Shares into Common Stock and an adjustment  to
the  Conversion   Percentage   is   required   subsequent  to  such
conversion,  but  prior to the sale of such Common  Stock  by  such
holder, the Company  shall pay to such holder, within five (5) days
after receipt of a notice  of  the  sale  of such Common Stock from
such holder, an amount equal to the Average  Market  Price  of  the
Common  Stock  obtained  upon conversion of such Series C Preferred
Shares for the five (5) trading  days  ending  one  (1) trading day
prior  to  the  date  of  conversion multiplied by three-hundredths
(.03) times the number of months  (prorated for partial months) for
which  an  adjustment  was required; provided  that  the  aggregate
number of months for which  such  an  adjustment  is required (when
added  to  the  number  of months for which an adjustment  is  made
pursuant to clauses (i),  (ii)  and  (iii)  above) shall not exceed
twelve (12).  Such amount may be paid at the  Company's  option  in
cash  or  Common  Stock valued based on the Average Market Price of
the Common Stock for  the  period  of  five (5) consecutive trading
days ending on the date of the sale of such Common Stock; PROVIDED,
HOWEVER, that any amounts due as to that  period  during  which the
shares  are not traded or included for quotation on the NASDAQ-NMS,
NYSE, AMEX or NASDAQ SmallCap shall be paid in cash only; PROVIDED,
FURTHER, HOWEVER, that in no event shall shares be issued hereunder
if, after  giving  effect to such issuance, the number of shares of
Common Stock issued  pursuant to the Securities Purchase Agreements
or issued on exercise of the Warrants or New Warrants or conversion
of the Series C Preferred  Shares  or Series B Preferred Shares and
beneficially owned by such holder and  all  Related  Persons  would
exceed  four  and  ninety  five  hundredths  percent (4.95%) of the
outstanding shares of Common Stock (calculated  in  accordance with
Sections  13(d) and 16); cash shall be paid in lieu of  any  shares
which cannot  be  issued  pursuant  to this second proviso.  Common
Stock issuable upon conversion of Series C Preferred Shares, Series
B Preferred Shares or exercise of the  Warrants or New Warrants for
the purchase of Common Stock held by such  holder  or  the  Related
Persons shall not be deemed to be beneficially owned by such holder
or  the  Related  Persons  for  this  purpose. (For example, if the
Conversion  Percentage  was  75.5% at the  time  of  conversion  of
$1,000,000 in Stated Value of  Series C Preferred Shares (such that
the  Series C Preferred Shares were  converted  into  Common  Stock
having  an  Average  Market  Price  for  the  applicable  period in
aggregate of $1,324,503) and subsequent to conversion there  was  a
further  two  (2) month delay in the Registration Statement's being
declared effective,  and  such  Common Stock was sold at the end of
such two (2) month period, the Company  would  pay  to  the  holder
$79,470.20 in cash or Common Stock.)

"AVERAGE  MARKET  PRICE" of any security for any period
shall be computed as the arithmetic  average  of  the  closing  bid
prices for such security for each trading day in such period on the
NASDAQ-NMS,  or,  if  the  NASDAQ-NMS  is not the principal trading
market for such security, on the principal  trading market for such
security, or, if market value cannot be calculated  for such period
on any of the foregoing bases, the average fair market value during
such period as reasonably determined in good faith by  the Board of
Directors of the Company.

(c)   If  the Company shall consolidate with  or  merge
into any corporation or reclassify its outstanding shares of Common
Stock  (other than by way  of  subdivision  or  reduction  of  such
shares)  (each a "MAJOR TRANSACTION"), then each Series C Preferred
Share shall  thereafter be convertible into the number of shares of
stock or securities (the "RESULTING SECURITIES") or property of the
Company, or of  the  entity  resulting  from  such consolidation or
merger, to which a holder of the number of shares  of  Common Stock
delivered  upon  conversion of such Series C Preferred Share  would
have been entitled  upon  such  Major Transaction had the holder of
such Series C Preferred Share exercised its right of conversion and
had such Common Stock been issued  and  outstanding  and  had  such
holder  been  the holder of record of such Common Stock at the time
of  such Major Transaction,  and  the  Company  shall  make  lawful
provision  therefor  as  a  part  of  such consolidation, merger or
reclassification; PROVIDED, HOWEVER, that  the  Company  shall give
the holders of the Series C Preferred Shares written notice  of any
Major  Transaction  promptly  upon  the  execution of any agreement
whether or not binding in connection therewith  (including  without
limitation a letter of intent or agreement in principle) and  in no
event shall a Major Transaction be consummated prior to ninety (90)
days after such notice.

(d)   The  Company  shall  not  issue any fraction of a
share of Common Stock upon any conversion, but  shall  pay  in cash
therefor at the Conversion Price then in effect multiplied by  such
fraction.

(e)   On  presentation and surrender to the Company (or
at any office or agency maintained for the transfer of the Series C
Preferred Shares) of the  certificates of Series C Preferred Shares
so  to  be  converted,  duly endorsed  in  blank  for  transfer  or
accompanied by proper instruments  of  assignment  or  transfer  in
blank  (a  "CONVERSION  NOTICE"),  with  signatures guaranteed, the
holder of such Series C Preferred Shares shall be entitled, subject
to  the  limitations  herein  contained,  to  receive  in  exchange
therefor  a  certificate  or  certificates  for  fully   paid   and
nonassessable  shares, which certificates shall be delivered by the
second trading day  after  the  date  of delivery of the Conversion
Notice, and cash for fractional shares,  of  Common  Stock  on  the
foregoing  basis.  The Series C Preferred Shares shall be deemed to
have been converted,  and  the  person  converting the same to have
become the holder of record of Common Stock, for all purposes as of
the date of delivery of the Conversion Notice.

(f)   The Company shall, so long as any of the Series C
Preferred Shares are outstanding, reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of
effecting  the conversion of the Series C  Preferred  Shares,  such
number of shares  of  Common  Stock  as  shall from time to time be
sufficient  to  effect  the  conversion  of all  of  the  Series  C
Preferred Shares then outstanding.

(g)   The Company shall pay any and all taxes which may
be  imposed upon it with respect to the issuance  and  delivery  of
Common  Stock  upon the conversion of the Series C Preferred Shares
as herein provided.  The Company shall not be required in any event
to pay any transfer  or  other  taxes  by reason of the issuance of
such Common Stock in names other than those  in  which the Series C
Preferred Shares surrendered for conversion are registered  on  the
Company's  records,  and  no  such conversion or issuance of Common
Stock shall be made unless and  until  the  person  requesting such
issuance has paid to the Company the amount of any such tax, or has
established  to  the  satisfaction of the Company and its  transfer
agent, if any, that such tax has been paid.

(3)   VOTING RIGHTS.   Holders  of  Series C Preferred Shares
shall  have  no voting rights, except as required  by  law  and  by
Section 7 hereof.

(4)   REDEMPTION.    The   Company  may,  but  shall  not  be
obligated to, at any time subsequent  to ninety (90) days after the
issuance of the Series C Preferred Shares,  redeem the whole or any
part  of  the  Series  C  Preferred  Shares then outstanding  at  a
redemption price of $127 per Preferred  Share,  in  accordance with
the following redemption procedures:

(a)   In case of redemption of  only  part  of  the  
Series  C  Preferred  Shares  at  any  time outstanding, the Company shall
designate the amount of Series C Preferred Shares so to be redeemed and
shall  redeem  such  Series  C  Preferred  Shares on a PRO RATA basis. 
Subject to the limitations and provisions herein contained, the Board of 
Directors  shall  have  the power and authority to prescribe
the terms and conditions upon which the Series C Preferred Shares shall be 
redeemed from time to time.

(a)   Notice of every redemption shall be given by 
mail to every holder of  record of any Series C Preferred Shares then to be 
redeemed, at least thirty (30), but no more than ninety (90), days prior to 
the date fixed as the date for the redemption thereof, at the respective 
addresses of such holders as the same shall  appear  on the stock transfer 
books of the Company.  The notice shall state that the Series C Preferred 
Shares shall be redeemed by the Company at the redemption price specified 
above, upon the surrender for cancellation, at the time and place designated
in such notice, of the certificates representing the Series C Preferred 
Shares to be redeemed, properly endorsed in blank  for transfer, or  
accompanied  by proper instruments of assignment and transfer in blank, with 
signatures guaranteed, and bearing all necessary transfer  tax  stamps  
thereto affixed and cancelled.  On and after the date specified in the 
notice described above, each holder of Series C Preferred  Shares  called  
for  redemption  shall  be  entitled  to  receive therefor the specified  
redemption price upon presentation and surrender at the place designated in 
such notice of  the  certificates for Series C  Preferred  Shares  called 
for redemption, properly endorsed in blank for transfer or accompanied by proper
instruments of assignment or transfer  in  blank,  with  signatures  guaranteed,
and bearing all necessary transfer tax stamps thereto affixed and cancelled.

(b)   If the Company shall give notice of redemption as
aforesaid (and  unless the Company shall fail to pay the  redemption price 
of the Series C Preferred Shares presented for redemption in accordance 
with  such  notice),  all  Series  C  Preferred  Shares  called  for 
redemption shall be deemed to have been redeemed on the date specified in such
notice, whether or not the certificates for such Series C Preferred Shares 
shall be surrendered for redemption, and such Series C Preferred Shares so 
called for  redemption  shall  from  and  after  such  date cease to 
represent any interest whatsoever in the Company or its property, and the 
holders thereof shall have no rights  other than the right to receive such 
redemption price without any interest thereof from and after such date.

(5)   LIQUIDATION,  DISSOLUTION, WINDING UP.  In the event of
any voluntary or involuntary liquidation, dissolution or winding up
of the Company, the holders  of the Series C Preferred Shares shall
be entitled to receive in cash  out  of  the assets of the Company,
whether from capital or from earnings, available  for  distribution
to  its  stockholders  (the  "PREFERRED FUNDS"), before any  amount
shall be paid to the holders of  the  Common Stock, an amount equal
to the Stated Value per Series C Preferred Share, provided that, if
the Preferred Funds are insufficient to  pay the full amount due to
the holders of Series C Preferred Shares and  holders  of shares of
other classes or series of preferred stock of the Company  that are
of equal rank with the Series C Preferred Shares as to payments  of
Preferred  Funds  (the  "PARI  PASSU  SHARES"), then each holder of
Series C Preferred Shares and Pari Passu  Shares  shall  receive  a
percentage  of  the  Preferred  Funds  equal  to the full amount of
Preferred Funds payable to such holder as a percentage  of the full
amount  of  Preferred  Funds  payable  to  all holders of Series  C
Preferred  Shares  and  Pari  Passu  Shares.    The   purchase   or
redemption  by  the  Company  of  stock of any class, in any manner
permitted by law, shall not, for the  purposes  hereof, be regarded
as  a  liquidation,  dissolution  or  winding  up  of the  Company.
Neither the consolidation nor merger of the Company  with  or  into
any other corporation or corporations, nor the sale or transfer  by
the  Company  of  less than substantially all of its assets, shall,
for the purposes hereof, be deemed to be a liquidation, dissolution
or winding up of the  Company.   No  holder  of  Series C Preferred
Shares  shall  be  entitled  to  receive  any amounts with  respect
thereto  upon any liquidation, dissolution or  winding  up  of  the
Company other than the amounts provided for herein.

(6)   PREFERRED RANK.  All shares of Common Stock shall be of
junior rank  to  all  Series  C  Preferred Shares in respect to the
preferences as to distributions and  payments upon the liquidation,
dissolution or winding up of the Company.  The rights of the shares
of Common Stock shall be subject to the  preferences  and  relative
rights  of  the  Series C Preferred Shares.  The Series C Preferred
Shares  shall  be  of  equal  rank  with  the  Company's  Series  A
Cumulative Convertible  Preferred  Stock and the Series B Preferred
Shares  in  respect  of  distributions  and   payments   upon   the
liquidation,   dissolution   or   winding   up   of   the  Company.
Notwithstanding the foregoing, the Company may authorize  and issue
additional  or  other  preferred  stock which is of equal or junior
rank  with  the  Series  C  Preferred  Shares  in  respect  of  the
preferences as to distributions and payments  upon the liquidation,
dissolution or winding up of the Company; PROVIDED,  HOWEVER,  that
for so long as the Series C Preferred Shares remain outstanding the
Company  shall  not issue any capital stock which is more senior in
rank than the Series C Preferred Shares in respect of the foregoing
preferences. In the  event  of  the  merger or consolidation of the
Company with or into another corporation,  the  Series  C Preferred
Shares shall

E-15

maintain   their  relative  powers,  designations  and  preferences
provided for herein.

(7)   VOTE  TO CHANGE THE TERMS OF SERIES C PREFERRED SHARES.
The affirmative vote  at  a meeting duly called for such purpose or
the written consent without  a  meeting  of the holders of not less
than two-thirds (2/3) of the then outstanding  Series  C  Preferred
Shares shall be required to amend, alter, change or repeal  any  of
the  powers,  designations,  preferences and rights of the Series C
Preferred Shares.

IN WITNESS WHEREOF, the Company has  caused this certificate to be signed
by Peter G. Tombros, its President, and John  A.  Caruso,  its  Secretary, this
15th day of March 1996.

ENZON, INC.

By: /S/ PETER G. TOMBROS
President

Attest: /S/ JOHN A. CARUSO
Secretary

E-16

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES D CONVERTIBLE

PREFERRED STOCK

OF

ENZON, INC.

ENZON, Inc. (the "Company"), a corporation organized and existing under
the General Corporation Law of the State of Delaware,  does hereby certify that,
pursuant to  authority  conferred  upon the Board of Directors of the Company by
the Certificate of Incorporation,  as amended,  of the Company,  and pursuant to
Section 151 of the General  Corporation Law of the State of Delaware,  the Board
of Directors of the Company at a meeting duly held on February 27, 1997, adopted
resolutions   providing  for  the   designations,   preferences   and  relative,
participating, optional or other rights, and the qualifications,  limitations or
restrictions thereof, of twenty thousand (20,000) shares of Series D Convertible
Preferred Stock (the "Series D Preferred Shares") of the Company, as follows:

RESOLVED,  that the Company is  authorized to issue 20,000 shares
of Series D  Convertible  Preferred  Stock  (the  "Series D  Preferred
Shares")  which  shall  have  the  following   powers,   designations,
preferences and other special rights:

(1) Dividends.  The holders of the Series D Preferred Shares
shall not be entitled to dividends.

(2) Conversion of Series D Preferred Shares.  The holders of
the Series D  Preferred  Shares  shall  have the right,  at their
option, to convert the

1

E-17

Series D  Preferred  Shares  into  shares of Common  Stock on the
following terms and conditions:

(a) Each Series D Preferred  Share  shall be  convertible  at any
time after the date of issuance (or, if such Series D Preferred  Share
is called for  redemption,  at any time up to and  including,  but not
after,  the close of business on the fifth full  business day prior to
the date fixed for such  redemption,  unless  default shall be made by
the Company in providing  the funds for the payment of the  redemption
price),  into fully paid and nonassessable  shares  (calculated to the
nearest whole share) of Common Stock of the Company as  constituted at
the time of such conversion,  at the conversion price (the "Conversion
Price") in effect at the time of conversion  determined as hereinafter
provided.  Each  Series D  Preferred  Share shall have a value of $100
(the "Stated Value") for the purpose of such conversion and the number
of shares of Common  Stock  issuable  upon  conversion  of each of the
Series D Preferred  Shares shall be  determined by dividing the Stated
Value thereof by the Conversion Price then in effect.  Every reference
herein  to  the  Common  Stock  of the  Company  (unless  a  different
intention is expressed)  shall be to the shares of the Common Stock of
the Company,  $.01 par value, as such stock exists  immediately  after
the issuance of the Series D Preferred  Shares provided for hereunder,
or to stock into which such Common  Stock may be changed  from time to
time thereafter.

(b) The  Conversion  Price  shall be eighty  percent  (80%)  (the
"Conversion Percentage") of $2.4625, subject to adjustment as provided
herein. If the registration  statement (the "Registration  Statement")
covering the shares of Common Stock  issuable  upon  conversion of the
Series D Preferred Shares (the  "Registration  Rights  Agreement") has
not been  declared  effective  by the  U.S.  Securities  and  Exchange
Commission ("SEC") within two hundred ten (210) days after the date of
issuance  of  the  Series  D  Preferred   Shares,  or  if,  after  the
Registration  Statement has been declared  effective by the SEC, sales
cannot be made  pursuant to the  Registration  Statement  by reason of
stop order, the Company's failure to update the Registration Statement
in accordance  with the rules and regulations of the SEC or otherwise,
or if the Common Stock is not listed or included for  quotation on the
National   Association  of  Securities  Dealers  Automated   Quotation
("NASDAQ")  National  Market System (the  "NASDAQ-NMS"),  the New York
Stock Exchange (the "NYSE"), the American Stock Exchange (the "AMEX"),
or the NASDAQ SmallCap Market (the "NASDAQ SmallCap") then, as partial
relief for the damages to the holder by reason of any such delay in or
reduction  of its  ability to sell the shares of Common  Stock  (which
remedy shall not be exclusive of any other  remedies  available at law
or in equity,  except that such remedy shall be the  exclusive  remedy
for any  delay  in the  effectiveness  of the  Registration  Statement
provided the Registration Statement

- 2 -

E-18

is declared  effective  by the SEC within 210 days after the date
of  issuance  of  the  Series  D  Preferred  Shares),  the  Conversion
Percentage shall be reduced by a number of percentage  points equal to
three (3) times the sum of:  (i) the  number of months  (prorated  for
partial  months) after the end of such 210 day period and prior to the
date the  Registration  Statement  is declared  effective  by the SEC,
provided,  however, that there shall be excluded from such period (and
from any period under clause (ii) immediately  below) delays which are
attributable to changes in the Registration  Statement required by the
holders of Series D Preferred Stock,  including,  without  limitation,
changes  in the  plan of  distribution;  (ii)  the  number  of  months
(prorated  for partial  months) that sales cannot be made  pursuant to
the  Registration  Statement  (by reason of stop order,  the Company's
failure  to  update  the   Registration   or   otherwise)   after  the
Registration  Statement  has been  declared  effective;  and (iii) the
number of months  (prorated for partial  months) that the Common Stock
is not listed or included for quotation on the NASDAQ-NMS, NYSE, AMEX,
or NASDAQ SmallCap after the Registration  Statement has been declared
effective;  provided that the aggregate  number of months that are the
basis of a  reduction  in the  Conversion  Percentage  pursuant to the
foregoing  clauses (i),  (ii) and (iii) shall not exceed  twelve (12).
(For example, if the Registration  Statement becomes effective one and
one-half  (1 1/2)  months  after the end of such 210 day  period,  the
Conversion Percentage would be 75.5% until any subsequent  adjustment;
if  thereafter  sales could not be made  pursuant to the  Registration
Statement for a period of two (2) months,  the  Conversion  Percentage
would then be 69.5%.) If the holder converts Series D Preferred Shares
into Common Stock and an  adjustment to the  Conversion  Percentage is
required subsequent to such conversion,  but prior to the sale of such
Common  Stock by such  holder,  the Company  shall pay to such holder,
within  five (5) days  after  receipt  of a notice of the sale of such
Common Stock from such holder,  an amount equal to $1.97 multiplied by
three-hundredths  (.03)  times  the  number of  months  (prorated  for
partial  months) for which an adjustment  was required;  provided that
the  aggregate  number  of  months  for which  such an  adjustment  is
required  (when added to the number of months for which an  adjustment
is made  pursuant  to clauses  (i),  (ii) and (iii)  above)  shall not
exceed twelve (12). Such amount may be paid at the Company's option in
cash or Common  Stock  valued  based on the Average  Market  Price (as
hereinafter  defined)  of the Common  Stock for the period of five (5)
consecutive trading days ending on the date of the sale of such Common
Stock;  provided,  however,  that any  amounts  due as to that  period
during  which the shares are not traded or included  for  quotation on
the  NASDAQ-NMS,  NYSE,  AMEX or NASDAQ SmallCap shall be paid in cash
only. (For example, if the Conversion Percentage was 75.5% at the time
of  conversion  of  $1,000,000  in Stated  Value of Series D Preferred
Shares (such that the Series D Preferred  Shares were  converted  into
Common Stock having an Average Market Price for the applicable  period
in aggregate of $1,324,503) and subsequent to conversion

- 3 -

E-19

there  was a  further  two (2)  month  delay in the  Registration
Statement's being declared  effective,  and such Common Stock was sold
at the end of such two (2) month period,  the Company would pay to the
holder $79,470.20 in cash or Common Stock.)

"Average  Market  Price" of any  security for any period shall be
computed as the arithmetic  average of the closing bid prices for such
security for each trading day in such period on the NASDAQ-NMS, or, if
the NASDAQ-NMS is not the principal  trading market for such security,
on the principal trading market for such security, or, if market value
cannot be calculated  for such period on any of the  foregoing  bases,
the  average  fair  market  value  during  such  period as  reasonably
determined in good faith by the Board of Directors of the Company.

(c) If the  Company  shall  consolidate  with or  merge  into any
corporation  or  reclassify  its  outstanding  shares of Common  Stock
(other than by way of subdivision or reduction of such shares) (each a
"Major  Transaction"),  then  each  Series  D  Preferred  Share  shall
thereafter  be  convertible  into the  number  of  shares  of stock or
securities (the "Resulting Securities") or property of the Company, or
of the entity resulting from such  consolidation or merger, to which a
holder  of the  number  of  shares  of  Common  Stock  delivered  upon
conversion  of such Series D Preferred  Share would have been entitled
upon such Major  Transaction had the holder of such Series D Preferred
Share exercised its right of conversion and had such Common Stock been
issued and  outstanding  and had such holder been the holder of record
of such Common  Stock at the time of such Major  Transaction,  and the
Company  shall  make  lawful  provision  therefor  as a part  of  such
consolidation, merger or reclassification; provided, however, that the
Company  shall  give the  holders  of the  Series D  Preferred  Shares
written notice of any Major Transaction promptly upon the execution of
any  agreement   whether  or  not  binding  in  connection   therewith
(including  without  limitation  a letter of intent  or  agreement  in
principle)  and in no event shall a Major  Transaction  be consummated
prior to ninety (90) days after such notice.

(d) The Company shall not issue any fraction of a share of Common
Stock  upon any  conversion,  but  shall pay in cash  therefor  at the
Conversion Price then in effect multiplied by such fraction.

(e) On  presentation  and  surrender  to the  Company  (or at any
office or agency maintained for the transfer of the Series D Preferred
Shares)  of the  certificates  of Series D  Preferred  Shares so to be
converted,  duly  endorsed  in blank for  transfer or  accompanied  by
proper  instruments  of assignment or transfer in blank (a "Conversion
Notice"),  with  signatures  guaranteed,  the holder of such  Series D
Preferred Shares shall be entitled,

- 4 -

E-20

subject  to the  limitations  herein  contained,  to  receive  in
exchange  therefor a certificate  or  certificates  for fully paid and
nonassessable  shares,  which  certificates  shall be delivered by the
second  trading  day  after  the date of  delivery  of the  Conversion
Notice,  and  cash  for  fractional  shares,  of  Common  Stock on the
foregoing basis. The Series D Preferred Shares shall be deemed to have
been converted,  and the person converting the same to have become the
holder of record of Common  Stock,  for all purposes as of the date of
delivery of the Conversion Notice.

(f) The Company  shall,  so long as any of the Series D Preferred
Shares  are  outstanding,  reserve  and  keep  available  out  of  its
authorized  and  unissued  Common  Stock,  solely  for the  purpose of
effecting the conversion of the Series D Preferred Shares, such number
of shares of Common Stock as shall from time to time be  sufficient to
effect the  conversion  of all of the Series D  Preferred  Shares then
outstanding.

(g) The Company  shall pay any and all taxes which may be imposed
upon it with respect to the issuance and delivery of Common Stock upon
the  conversion of the Series D Preferred  Shares as herein  provided.
The Company  shall not be required in any event to pay any transfer or
other taxes by reason of the  issuance  of such Common  Stock in names
other than those in which the Series D  Preferred  Shares  surrendered
for conversion are  registered on the Company's  records,  and no such
conversion  or issuance of Common Stock shall be made unless and until
the person requesting such issuance has paid to the Company the amount
of any such tax, or has established to the satisfaction of the Company
and its transfer agent, if any, that such tax has been paid.

(3) Voting  Rights.  Holders  of Series D  Preferred  Shares  shall have no
voting rights, except as required by law and by Section 7 hereof.

(4) Redemption. The Company may, but shall not be obligated to, at any time
subsequent  to ninety  (90) days after the  issuance  of the Series D  Preferred
Shares,  redeem  the whole or any part of the  Series D  Preferred  Shares  then
outstanding  at a redemption  price of $127 per Preferred  Share,  in accordance
with the following redemption procedures:

(a) In case of  redemption  of only  part of the  Series  D  Preferred
Shares at any time  outstanding,  the Company shall designate the amount of
Series D Preferred  Shares so to be redeemed and shall redeem such Series D
Preferred  Shares  on a pro rata  basis.  Subject  to the  limitations  and
provisions  herein  contained,  the Board of Directors shall have the power
and authority to prescribe the terms and conditions upon which the Series D
Preferred Shares shall be redeemed from time to time.

- 5 -

E-21

(b) Notice of every  redemption shall be given by mail to every holder
of record of any Series D Preferred  Shares then to be  redeemed,  at least
thirty (30), but no more than ninety (90),  days prior to the date fixed as
the date for the redemption  thereof,  at the respective  addresses of such
holders  as the  same  shall  appear  on the  stock  transfer  books of the
Company. The notice shall state that the Series D Preferred Shares shall be
redeemed by the Company at the redemption price specified  above,  upon the
surrender  for  cancellation,  at the time  and  place  designated  in such
notice,  of the certificates  representing the Series D Preferred Shares to
be redeemed,  properly  endorsed in blank for transfer,  or  accompanied by
proper  instruments  of assignment and transfer in blank,  with  signatures
guaranteed,  and bearing all necessary  transfer tax stamps thereto affixed
and  cancelled.  On and after the date  specified  in the notice  described
above, each holder of Series D Preferred Shares called for redemption shall
be  entitled  to  receive  therefor  the  specified  redemption  price upon
presentation  and  surrender at the place  designated in such notice of the
certificates for Series D Preferred Shares called for redemption,  properly
endorsed in blank for  transfer or  accompanied  by proper  instruments  of
assignment or transfer in blank,  with signatures  guaranteed,  and bearing
all necessary transfer tax stamps thereto affixed and cancelled.

(c) If the Company shall give notice of  redemption as aforesaid  (and
unless the Company shall fail to pay the  redemption  price of the Series D
Preferred  Shares presented for redemption in accordance with such notice),
all Series D Preferred Shares called for redemption shall be deemed to have
been  redeemed on the date  specified  in such  notice,  whether or not the
certificates  for such Series D Preferred  Shares shall be surrendered  for
redemption,  and such  Series D Preferred  Shares so called for  redemption
shall from and after such date cease to represent  any interest  whatsoever
in the  Company or its  property,  and the  holders  thereof  shall have no
rights other than the right to receive such  redemption  price  without any
interest thereof from and after such date.

(5) Liquidation,  Dissolution, Winding Up. In the event of any voluntary or
involuntary  liquidation,  dissolution or winding up of the Company, the holders
of the Series D Preferred Shares shall be entitled to receive in cash out of the
assets of the  Company,  whether from capital or from  earnings,  available  for
distribution  to its  stockholders  (the "Preferred  Funds"),  before any amount
shall be paid to the holders of the Common Stock,  an amount equal to the Stated
Value per Series D Preferred  Share,  provided that, if the Preferred  Funds are
insufficient  to pay the full  amount due to the  holders of Series D  Preferred
Shares and holders of shares of other  classes or series of  preferred  stock of
the  Company  that are of equal  rank with the Series D  Preferred  Shares as to
payments  of  Preferred  Funds (the "Pari  Passu  Shares"),  then each holder of
Series D Preferred Shares and Pari Passu

- 6 -

E-22

Shares  shall  receive a  percentage  of the  Preferred  Funds equal to the full
amount of Preferred  Funds  payable to such holder as a  percentage  of the full
amount of Preferred  Funds  payable to all holders of Series D Preferred  Shares
and Pari Passu Shares. The purchase or redemption by the Company of stock of any
class, in any manner  permitted by law, shall not, for the purposes  hereof,  be
regarded as a liquidation, dissolution or winding up of the Company. Neither the
consolidation  nor merger of the Company with or into any other  corporation  or
corporations, nor the sale or transfer by the Company of less than substantially
all  of  its  assets,  shall,  for  the  purposes  hereof,  be  deemed  to  be a
liquidation,  dissolution  or winding up of the  Company.  No holder of Series D
Preferred  Shares shall be entitled to receive any amounts with respect  thereto
upon any  liquidation,  dissolution  or winding up of the Company other than the
amounts provided for herein.

(6) Preferred  Rank.  All shares of Common Stock shall be of junior rank to
all Series D Preferred  Shares in respect to the preferences as to distributions
and payments upon the liquidation, dissolution or winding up of the Company. The
rights of the shares of Common  Stock  shall be subject to the  preferences  and
relative rights of the Series D Preferred Shares.  The Series D Preferred Shares
shall be of  equal  rank  with the  Company's  Series A  Cumulative  Convertible
Preferred  Stock and the Series B Preferred  Shares in respect of  distributions
and payments  upon the  liquidation,  dissolution  or winding up of the Company.
Notwithstanding the foregoing, the Company may authorize and issue additional or
other  preferred  stock  which is of  equal or  junior  rank  with the  Series D
Preferred Shares in respect of the preferences as to distributions  and payments
upon the  liquidation,  dissolution  or  winding  up of the  Company;  provided,
however,  that for so long as the Series D Preferred  Shares remain  outstanding
the Company  shall not issue any capital stock which is more senior in rank than
the Series D Preferred  Shares in respect of the foregoing  preferences.  In the
event  of the  merger  or  consolidation  of the  Company  with or into  another
corporation, the Series D Preferred Shares shall maintain their relative powers,
designations and preferences provided for herein.

(7) Vote to Change the Terms of Series D Preferred Shares.  The affirmative
vote at a meeting duly called for such purpose or the written  consent without a
meeting of the holders of not less than two-thirds (2/3) of the then outstanding
Series D Preferred  Shares shall be required to amend,  alter,  change or repeal
any of the  powers,  designations,  preferences  and  rights  of  the  Series  D
Preferred Shares.

- 7 -

E-23

IN WITNESS  WHEREOF,  the  Company has caused  this  certificate  to be
signed by Peter G. Tombros,  its President,  and John A. Caruso,  its Secretary,
this 28th day of February 1997.

ENZON, INC.

By: /S/PETER G. TOMBROS
-----------------------
President

Attest: /S/JOHN A. CARUSO
-------------------------
Secretary

- 8 -

E-24

CERTIFICATE OF AMENDMENT

OF

CERTIFICATE OF INCORPORATION

OF

ENZON, INC.

* * * * * * * * * * * * *

Enzon,  Inc., a corporation  organized and existing  under and by virtue of
the General Corporation Law of the State of Delaware (the  ACorporation@),  DOES
HEREBY CERTIFY:

FIRST: That the Board of Directors of said Corporation, at a meeting of its
members,  adopted  resolutions  proposing and declaring  advisable the following
amendments to the Certificate of Incorporation of said Corporation:

RESOLVED,  that the first sentence of Article 4 of the  Certificate of
Incorporation be amended to read in its entirety as set forth below:

"4. Number of Shares. The total number of shares of capital stock
which the  Corporation  shall have  authority to issue is  sixty-three
million  (63,000,000)  shares,  of which  sixty  million  (60,000,000)
shares  shall be Common  Stock,  par value $.01 per  share,  and three
million  (3,000,000)  shares shall be Preferred  Stock, par value $.01
per share."

SECOND: That the remainder of Article 4 of the Certificate of Incorporation
of said Corporation shall remain unchanged.

THIRD:  That at the Annual Meeting of Stockholders of the Corporation,  the
holders of a majority of the outstanding stock entitled to vote thereon voted in
favor of said amendments in accordance with the provisions of Section 215 of the
General Corporation Law of the State of Delaware.

FOURTH: That the aforesaid  amendments were duly adopted in accordance with
the applicable provisions of Sections 242 and 216 of the General Corporation Law
of the State of Delaware.

E-25

IN WITNESS WHEREOF, Enzon, Inc. has caused this certificate to be signed by
Peter G. Tombros, its President and attested to by John A. Caruso,  Secretary of
the Corporation, this 18 of December, 1997.

By:/S/PETER G. TOMBROS
--------------------------
Peter G. Tombros
President

ATTEST:

By:/S/ JOHN A. CARUSO
---------------------------
John A. Caruso
Secretary

2

E-26

CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION OF
ENZON, INC.

Pursuant to Section 242 of the Delaware General  Corporation Law, Enzon, Inc., a
Delaware corporation, hereby amends its Certificate of Incorporation:

1. The name of the Corporation is Enzon, Inc., (the "Corporation").

2. The  Certificate  of  Incorporation,  as amended  (the  "Certificate  of
Incorporation")  of the  Corporation is hereby amended by striking out the first
sentence of Article 4 thereof and by substituting in lieu of said first sentence
the following new sentence:

"The total number of shares of capital stock which the Corporation shall
have authority to issue is 93,000,000 shares, of which 90,000,000 shares
shall be Common Stock,  par value $.01 per share,  and 3,000,000  shares
shall be Preferred Stock, par value $.01 per share."

3. That the remainder of Article 4 of the Certificate of  Incorporation  of
the Corporation shall remain unchanged.

4. The amendment of the Certificate of  Incorporation  herein certified has
been duly  adopted in  accordance  with the  provisions  of Sections  242 of the
General Corporation Law of the State of Delaware.

I,  Arthur  J.  Higgins,  President  and  Chief  Executive  Officer  of the
Corporation,  for the  purpose of  amending  the  Corporation's  Certificate  of
Incorporation  pursuant to the Delaware  General  Corporation  Law, do make this
certificate,  hereby  declaring and  certifying  that this is my act and deed on
behalf of the Corporation this 4th day of December, 2001.

/s/Arthur J. Higgins
--------------------------------------------
By:  Arthur J. Higgins
Title:  Chairman and Chief Executive Officer

E-27

CERTIFICATE OF ELIMINATION

ELIMINATING CLASSES OF SERIES B, C and D CONVERTIBLE PREFERRED STOCKS

OF

ENZON, INC.

(Pursuant to Section 151 of the Delaware General Corporation Law)

The undersigned, being the President and Chief Executive Officer of Enzon,
Inc., a corporation organized and existing under the General Corporation Law of
the State of Delaware (the "GCL"), hereby certifies, pursuant to Section 151 of
the GCL, that:

1. The name of the Corporation is Enzon, Inc. (the "Corporation").

2. On January 31, 1996, the Corporation filed a Certificate of Designation
creating a class of capital stock designated as Series B Convertible Preferred
Stock, par value $.01 per share (the "Series B Stock"), and authorized the
issuance of 40,000 shares of such class.

3. On March 15, 1996, the Corporation filed a Certificate of Designation
creating a class of capital stock designated as Series C Convertible Preferred
Stock, par value $.01 per share (the "Series C Stock"), and authorized the
issuance of 20,000 shares of such class.

4. On February 28, 1997, the Corporation filed a Certificate of
Designation creating a class of capital stock designated as Series D Convertible
Preferred Stock, par value $.01 per share (the "Series D Stock"), and authorized
the issuance of 20,000 shares of such class.

5. No shares of the Series B Stock, the Series C Stock or the Series D
Stock are outstanding and none will be issued pursuant to the Certificates of
Designation listed in paragraphs two (2), three (3) and four (4) above.

6. Pursuant to the authorization and direction of the Board of Directors
of the Corporation, adopted by the resolution set forth below, the Corporation
hereby eliminates the Classes of Series B Stock, Series C Stock and Series D
Stock.

7. The following is the resolution of the Corporation's Board of Directors
eliminating such classes of preferred stock:

1

E-28

RESOLVED, that there currently being no outstanding shares of (1) the
Series B Convertible Preferred Stock; (2) the Series C Convertible Preferred
Stock or (3) the Series D Convertible Preferred Stock, and that no shares will
be issued subject to the certificates of designation setting forth the relative
rights and preferences of the shares of each such series and previously filed
with the Delaware Secretary of State and pursuant to Section 151 of the Delaware
General Corporation Law the officers of the Corporation be and they hereby are
authorized to file with the Delaware Secretary of State a Certificate of
Elimination reciting this resolution and such Certificate will have the effect
of eliminating from the Corporation's Certificate of Incorporation, as amended
all matters set forth in the certificates of designation with respect to (1) the
Series B Convertible Preferred Stock; (2) the Series C Convertible Preferred
Stock and (3) the Series D Convertible Preferred Stock.

IN WITNESS WHEREOF, this Certificate of Elimination is executed on behalf
of the Corporation by its President and Chief Executive Officer this 20th day of
May, 2002.

ENZON, INC.

By: /s/ Arthur Higgins
---------------------------------------
Arthur Higgins
President and Chief Executive Officer

2

E-29

CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF

SERIES B PREFERRED STOCK

OF

ENZON, INC.

Pursuant to Section 151 of the
General Corporation Law of the State of Delaware

Enzon, Inc. (the "Corporation"), a corporation organized and existing
under the laws of the State of Delaware, does hereby certify that, pursuant to
the authority conferred on the Board of Directors of the Corporation by the
Certificate of Incorporation, as amended, of the Corporation and in accordance
with Section 151 of the General Corporation Law of the State of Delaware, the
Board of Directors of the Corporation adopted the following resolution creating
the preferences and rights of its series of 600,000 shares of Preferred Stock,
no shares of which have been issued, designated as "Series B Preferred Stock."

RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, as amended, the preferences and rights of the series of Preferred
Stock of the Corporation, designated as "Series B Preferred Stock," be and are
hereby amended and restated in their entirety, and that the designation and
amount of such series and the voting powers, preferences and relative,
participating, optional and other special rights of the shares of such series,
and the qualifications, limitations or restrictions thereof are as follows:

(a) Designation and Amount. The shares of such series shall be
designated as "Series B Preferred Stock" (the "Series B Preferred Stock")
and the number of shares constituting the Series B Preferred Stock shall
be six hundred thousand (600,000). Such number of shares may be increased
or decreased by resolution of the Board of Directors; provided, that no
decrease shall reduce the number of shares of Series B Preferred Stock to
a number less than the number of shares then outstanding plus the number
of shares reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities
issued by the Corporation convertible into Series B Preferred Stock.

(b) Dividends and Distributions.

(i) Subject to the rights of the holders of any shares of any
series of preferred stock (or any similar stock) ranking prior and
superior to the Series B Preferred Stock with respect to dividends,
the holders of shares of Series B Preferred Stock, in preference to
the holders of Common Stock, par value $.01 (the "Common Stock"), of
the Corporation, and of any other junior stock, shall be entitled to
receive, when, as and if declared by the Board of Directors out of
funds legally available for the purpose, quarterly dividends payable
in cash on the first

E-30

day of March, June, September and December in each year (each such
date being referred to herein as a "Quarterly Dividend Payment
Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series
B Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (a) $1.00 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the
aggregate per share amount of all cash dividends, and 1,000 times
the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend
Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a
share of Series B Preferred Stock. In the event the Corporation
shall at any time after June 3, 2002, declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each
such case the amount to which holders of shares of Series B
Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.

(ii) The Corporation shall declare a dividend or distribution
on the Series B Preferred Stock as provided in paragraph (A) of this
Section immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding Common Stock); provided
that, in the event no dividend or distribution shall have been
declared on the Common Stock during the period between any Quarterly
Dividend Payment Date and the next subsequent Quarterly Dividend
Payment Date, a dividend of $1.00 per share on the Series B
Preferred Stock shall nevertheless be payable, out of funds legally
available for such purpose, on such subsequent Quarterly Dividend
Payment Date.

(iii) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends
shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B Preferred Stock in an
amount less than the total amount of such

2

E-31

dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares
at the time outstanding. The Board of Directors may fix a record
date for the determination of holders of shares of Series B
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more
than 60 days prior to the date fixed for the payment thereof.

(c) Voting Rights. The holders of shares of Series B Preferred Stock
shall have the following voting rights:

(i) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the
holder thereof to 1,000 votes on all matters submitted to a vote of
the stockholders of the Corporation. In the event the Corporation
shall at any time after June 3, 2002, declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a
greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares
of Series B Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction,
the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding
immediately prior to such event.

(ii) Except as otherwise provided herein, in any other
Certificate of Designation creating a series of preferred stock or
any similar stock, or by law, the holders of shares of Series B
Preferred Stock and the holders of shares of Common Stock and any
other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.

(iii) Except as set forth herein, or as otherwise provided by
law, holders of Series B Preferred Stock shall have no special
voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set
forth herein) for taking any corporate action.

(d) Certain Restrictions.

(i) Whenever quarterly dividends or other dividends or
distributions payable on the Series B Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on
shares of Series B Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:

(1) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either
as to dividends or upon liquidation, dissolution or winding
up) to the Series B Preferred Stock;

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(2) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or
winding up) with the Series B Preferred Stock, except
dividends paid ratably on the Series B Preferred Stock and all
such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all
such shares are then entitled;

(3) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to
the Series B Preferred Stock, provided that the Corporation
may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or
upon dissolution, liquidation or winding up) to the Series B
Preferred Stock; or

(4) redeem or purchase or otherwise acquire for
consideration any shares of Series B Preferred Stock, or any
shares of stock ranking on a parity with the Series B
Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board
of Directors) to all holders of such shares upon such terms as
the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and
preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable
treatment among the respective series or classes.

(ii) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any
shares of stock of the Corporation unless the Corporation could,
under paragraph (A) of this Section 4, purchase or otherwise acquire
such shares at such time and in such manner.

(e) Reacquired Shares. Any shares of Series B Preferred Stock
purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized
but unissued shares of preferred stock and may be reissued as part of a
new series of preferred stock subject to the conditions and restrictions
on issuance set forth herein, in the Certificate of Incorporation, as
amended, or in any other certificate of designation creating a series of
preferred stock or any similar stock or as otherwise required by law.

(f) Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series B
Preferred Stock unless, prior thereto, the holders of shares of Series B
Preferred Stock shall have received the greater of (i) $1,000 per share,
plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment, or (ii) an
aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock, or (2) to the
holders of shares of stock ranking on a parity

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(either as to dividends or upon liquidation, dissolution or winding up)
with the Series B Preferred Stock, except distributions made ratably on
the Series B Preferred Stock and all such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after June 3, 2002, declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect
a subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series B Preferred Stock were
entitled immediately prior to such event under clause (1)(ii) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.

(g) Consolidation, Merger, Etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, then in any such case each
share of Series B Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 1,000 times the aggregate
amount of stock, securities, cash and/or any other property (payable in
kind), as the case may be, into which or for which each share of Common
Stock is changed or exchanged. In the event the Corporation shall at any
time after June 3, 2002, declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares
of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of
Series B Preferred Stock shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately
prior to such event.

(h) No Redemption. The shares of Series B Preferred Stock shall not
be redeemable.

(i) Rank. The Series B Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all
series of any other class of the Corporation's preferred stock.

(j) Fractional Shares. Series B Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series B Preferred Stock.

(k) Amendment. The Certificate of Incorporation, as amended of the
Corporation shall not be amended in any manner which would materially
alter or change the powers, preferences or rights of the Series B
Preferred Stock so as to affect them adversely

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without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series B Preferred Stock, voting together as a
single class.

IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation, Preferences and Rights on behalf of the Corporation this 22nd day
of May, 2002.

/s/ Arthur J. Higgins
----------------------------------
Arthur J. Higgins
President, Chief Executive Officer

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Exhibit 10.14

ENZON, INC.

2001 INCENTIVE STOCK PLAN

Section 1. Purpose

The purpose of the Plan is to promote the interests of the Company and its
shareholders by aiding the Company in attracting and retaining employees,
officers, consultants, independent contractors and Non-Employee Directors
capable of contributing to the future success of the Company, to offer such
persons incentives to put forth maximum efforts for the success of the Company's
business and to afford such persons an opportunity to acquire a proprietary
interest in the Company.

Section 2. Definitions

As used in the Plan, the following terms shall have the meanings set forth
below:

1. "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii)
any entity in which the Company has a significant equity interest, in each
case as determined by the Committee.

2. "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit, Performance Award, Dividend Equivalent,
Other Stock Grant or Other Stock-Based Award granted under the Plan.

3. "Award Agreement" shall mean any written agreement, contract or other
instrument or document evidencing any Award granted under the Plan. Each
Award Agreement shall be subject to the applicable terms and conditions of
the Plan and any other terms and conditions (not inconsistent with the
Plan) determined by the Committee.

4. "Board" shall mean the Board of Directors of the Company.

5. "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.

6. "Committee" shall mean a committee of Directors designated by the Board
to administer the Plan. The Committee shall be comprised of not less than
such number of Directors as shall be required to permit Awards granted
under the Plan by the Committee to qualify under Rule 16b-3, and each
member of the Committee shall be a "Non-Employee Director" within the
meaning of Rule 16b-3 and an "outside director" within the meaning of
Section 162(m) of the Code. The Company expects to have the Plan
administered in accordance with the requirements for the award of
"qualified performance-based compensation" within the meaning of Section
162(m) of the Code.

7. "Company" shall mean Enzon, Inc., a Delaware corporation, and any
successor corporation.

8. "Director" shall mean a member of the Board, including Non-Employee
Directors.

9. "Dividend Equivalent" shall mean any right granted under Section 6(E)
of the Plan.

10. "Eligible Person" shall mean any employee, officer, consultant,
independent contractor or Director (including any Non-Employee Director)
providing services to the Company or any Affiliate whom the Committee
determines to be an Eligible Person.

11. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

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12. "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair
market value of such property determined by such methods or procedures as
shall be established from time to time by the Committee. Notwithstanding
the foregoing, unless otherwise determined by the Committee, the Fair
Market Value of a Share as of a given date shall be, if the Shares are
then traded on the Nasdaq National Market, the last reported sale price of
one Share as reported on the Nasdaq National Market on such date or, if
the Nasdaq National Market is not open for trading on such date, on the
most recent preceding date when it is open for trading.

13. "Family Members" shall be those persons related to a Participant as
determined by the Committee.

14. "Incentive Stock Option" shall mean an option granted under Section 6A
of the Plan that is intended to meet the requirements of Section 422 of
the Code or any successor provision.

15. "Non-Employee Director" shall have the meaning ascribed in Rule 16b-3
promulgated under the Exchange Act or any successor provision.

16. "Non-Qualified Stock Option" shall mean an option granted under
Section 6A of the Plan that is not intended to be an Incentive Stock
Option.

17. "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.

18. "Other Stock Grant" shall mean any right granted under Section 6F of
the Plan.

19. "Other Stock-Based Award" shall mean any right granted under Section
6G of the Plan.

20. "Participant" shall mean an Eligible Person designated to be granted
an Award under the Plan.

21. "Performance Award" shall mean any right granted under Section 6D of
the Plan.

22. "Person" shall mean any individual, corporation, partnership,
association or trust.

23. "Plan" shall mean the Enzon, Inc. 2001 Incentive Stock Plan, as
amended from time to time, the provisions of which are set forth herein.

24. "Plan Year" shall mean a consecutive 12-month period ending on
December 31 of each year.

25. "Reload Option" shall mean any Option granted under Section 6A(5) of
the Plan.

26. "Restricted Stock" shall mean any Shares granted under Section 6C of
the Plan.

27. "Restricted Stock Unit" shall mean any unit granted under Section 6C
of the Plan evidencing the right to receive a Share (or a cash payment
equal to the Fair Market Value of a Share) at some future date.

28. "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor rule or
regulation.

29. "Share" or "Shares" shall mean shares of common stock, $0.01 par value
per share, of the Company or such other securities or property as may
become subject to Awards pursuant to an adjustment made under Section 4C
of the Plan.

30. "Stock Appreciation Right" shall mean any right granted under Section
6B of the Plan.

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Section 3. Administration

A. Power and Authority of the Committee. The Plan shall be administered by
the Committee. Subject to the express provisions of the Plan and to applicable
law, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to each
Participant under the Plan; (iii) determine the number of Shares to be covered
by (or the method by which payments, or other rights are to be calculated in
connection with) each Award; (iv) determine the terms and conditions of any
Award or Award Agreement; (v) amend the terms and conditions of any Award or
Award Agreement and accelerate the exercisability of any Award or the lapse of
restrictions relating to any Award; (vi) determine whether, to what extent and
under what circumstances Awards may be exercised in cash, Shares, promissory
notes, other securities, other Awards or other property, or canceled, forfeited
or suspended; (vii) determine whether, to what extent and under what
circumstances cash, Shares, promissory notes, other securities, other Awards,
other property and other amounts payable with respect to an Award under the Plan
shall be deferred either automatically or at the election of the holder thereof
or the Committee; (viii) interpret and administer the Plan and any instrument or
agreement, including an Award Agreement, relating to the Plan; (ix) establish,
amend, suspend or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of the Plan; and (x) make
any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Award shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon any Participant, any holder
or beneficiary of any Award and any employee of the Company or any Affiliate.

B. Delegation. The Committee may delegate its powers and duties under the
Plan to one or more Directors or officers of the Company, or to a committee of
Directors or officers, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion, provided, however, that the
Committee shall not delegate its powers and duties under the Plan (i) with
regard to officers or directors of the Company or any Affiliate who are subject
to Section 16 of the Exchange Act or (ii) in such a manner as would cause the
Plan not to comply with the requirements of Section 162(m) of the Code.

C. Power and Authority of the Board. Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time,
without any further action of the Committee, exercise the powers and duties of
the Committee under the Plan.

Section 4. Shares Available for Awards

A. Shares Available. Subject to adjustment as provided in Section 4C of
the Plan, the aggregate number of Shares that may be issued under all Awards
under the Plan shall be 2,000,000; provided that, any Shares with respect to
which Awards may be issued, but are not issued, under the Plan in any Plan Year
shall be carried forward and shall be available to be covered by Awards issued
in any subsequent Plan Year in which Awards may be issued under the Plan. Shares
to be issued under the Plan may be either authorized but unissued Shares or
Shares acquired in the open market or otherwise. Any Shares that are used by a
Participant as full or partial payment to the Company of the purchase price
relating to an Award, or in connection with the satisfaction of tax obligations
relating to an Award, shall again be available for granting Awards (other than
Incentive Stock Options) under the Plan. In addition, if any Shares covered by
an Award or to which an Award relates are not purchased or are forfeited, or if
an Award otherwise terminates without delivery of any Shares, then the number of
Shares counted against the aggregate number of Shares available under the Plan
with respect to such Award, to the extent of any such forfeiture or termination,
shall again be available for granting Awards under the Plan. Notwithstanding the
foregoing, the number of Shares available for granting Incentive Stock Options
under the Plan shall not exceed 2,000,000 shares subject to adjustment as
provided in the Plan and subject to the provisions of Section 422 or 424 of the
Code or any successor provision.

B. Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be

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counted on the date of grant of such Award against the aggregate number of
Shares available for granting Awards under the Plan.

C. Adjustments. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
issuance of warrants or other rights to purchase Shares or other securities of
the Company to all holders of common stock pro rata whether as a dividend or
otherwise or other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be appropriate in
order to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and type of
Shares (or other securities or other property) that thereafter may be made the
subject of Awards, (ii) the number and type of Shares (or other securities or
other property) subject to outstanding Awards and (iii) the purchase or exercise
price with respect to any Award; provided, however, that the number of Shares
covered by any Award or to which such Award relates shall always be a whole
number.

D. Award Limitations Under the Plan. No Eligible Person may be granted any
Award or Awards under the Plan, the value of which Award or Awards is based
solely on an increase in the value of the Shares after the date of grant of such
Award or Awards, for more than 1,000,000 Shares (subject to adjustment as
provided for in Section 4(c) of the Plan), in the aggregate in any calendar
year. The foregoing annual limitation specifically includes the grant of any
Award or Awards representing "qualified performance-based compensation" within
the meaning of Section 162(m) of the Code.

Section 5. Eligibility.

Any Eligible Person shall be eligible to be designated a Participant. In
determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered
by the respective Eligible Persons, their present and potential contributions to
the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive
Stock Option may only be granted to full or part-time employees (which term as
used herein includes, without limitation, officers and Directors who are also
employees), and an Incentive Stock Option shall not be granted to an employee of
an Affiliate unless such Affiliate is also a "subsidiary corporation" of the
Company within the meaning of Section 424(f) of the Code or any successor
provision.

Section 6. Awards

A.    Options. The Committee is hereby authorized to grant Options to
Eligible Persons with the following terms and conditions and with
such additional terms and conditions not inconsistent with the
provisions of the Plan as the Committee shall determine:

1. Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee; provided, however, that
such purchase price shall not be less than 100% of the Fair Market
Value of a Share on the date of grant of such Option.

2. Option Term. The term of each Option shall be fixed by the
Committee, but, shall in no event exceed 10 years from the date on
which such Option is granted.

3. Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in
part and the method or methods by which, and the form or forms
(including, without limitation, cash, Shares, promissory notes,
other securities, other Awards or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to
the applicable exercise price) in which, payment of the exercise
price with respect thereto may be made or deemed to have been made.

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4. Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, the following additional provisions shall apply to the
grant of stock options which are intended to qualify as Incentive
Stock Options:

(a)   The aggregate Fair Market Value (determined as of the
time the option is granted) of the Shares with respect
to which Incentive Stock Options are exercisable for the
first time by any Participant during any calendar year
(under this Plan and all other plans of the Company and
its Affiliates) shall not exceed $100,000.

(b)   All Incentive Stock Options must be granted within ten
years from the earlier of the date on which this Plan
was adopted by the Board or the date this Plan was
approved by the shareholders of the Company.

(c)   Unless sooner exercised, all Incentive Stock Options
shall expire and no longer be exercisable no later than
10 years after the date of grant; provided, however,
that in the case of a grant of an Incentive Stock Option
to a Participant who, at the time such Option is
granted, owns (within the meaning of Section 422 of the
Code) stock possessing more than 10% of the total
combined voting power of all classes of stock of the
Company or of its Affiliate, such Incentive Stock Option
shall expire and no longer be exercisable no later than
5 years from the date of grant.

(d)   The purchase price per Share for an Incentive Stock
Option shall be not less than 100% of the Fair Market
Value of a Share on the date of grant of the Incentive
Stock Option; provided, however, that, in the case of
the grant of an Incentive Stock Option to a Participant
who, at the time such Option is granted, owns (within
the meaning of Section 422 of the Code) stock possessing
more than 10% of the total combined voting power of all
classes of stock of the Company or of its Affiliate, the
purchase price per Share purchasable under an Incentive
Stock Option shall be not less than 110% of the Fair
Market Value of a Share on the date of grant of the
Inventive Stock Option.

(e)   Any Incentive Stock Option authorized under the Plan
shall contain such other provisions as the Committee
shall deem advisable, but shall in all events be
consistent with and contain all provisions required in
order to qualify the Option as an Incentive Stock
Option.

5. Reload Options. The Committee may grant Reload Options,
separately or together with another Option, pursuant to which,
subject to the terms and conditions established by the Committee,
the Participant would be granted a new Option when the payment of
the exercise price of a previously granted option is made by the
delivery of Shares owned by the Participant pursuant to Section
6A(3) hereof or the relevant provisions of another plan of the
Company, and/or when Shares are tendered or withheld as payment of
the amount to be withheld under applicable income tax laws in
connection with the exercise of an Option, which new Option would be
an Option to purchase the number of Shares not exceeding the sum of
(A) the number of Shares so provided as consideration upon the
exercise of the previously granted option to which such Reload
Option relates and (B) the number of Shares, if any, tendered or
withheld as payment of the amount to be withheld under applicable
tax laws in connection with the exercise of the option to which such
Reload Option relates pursuant to the relevant provisions of the
plan or agreement relating to such option. Reload Options may be
granted with respect to Options previously granted under the Plan or
any other stock option plan of the Company or may be granted in
connection with any Option granted under the Plan or any other stock
option plan of the Company at the time of such grant. Such Reload
Options shall have a per share exercise price equal to the Fair
Market Value of one Share as of the date of grant of the new Option.
Any Reload Option shall be subject to availability of sufficient
Shares for grant under the Plan. Shares surrendered as part or all
of the exercise price

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of the Option to which it relates that have been owned by the
optionee less than six months will not be counted for purposes of
determining the number of Shares that may be purchased pursuant to a
Reload Option.

B. Stock Appreciation Rights. The Committee is hereby authorized to grant
Stock Appreciation Rights to Eligible Persons subject to the terms of the
Plan and any applicable Award Agreement. A Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to
receive upon exercise thereof the excess of (i) the Fair Market Value of
one Share on the date of exercise (or, if the Committee shall so
determine, at any time during a specified period before or after the date
of exercise) over (ii) the grant price of the Stock Appreciation Right as
specified by the Committee, which price shall not be less than 100% of the
Fair Market Value of one Share on the date of grant of the Stock
Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of
exercise, methods of settlement and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee. The
Committee may impose such conditions or restrictions on the exercise of
any Stock Appreciation Right as it may deem appropriate.

C. Restricted Stock and Restricted Stock Units. The Committee is hereby
authorized to grant Restricted Stock and Restricted Stock Units to
Eligible Persons with the following terms and conditions and with such
additional terms and conditions not inconsistent with the provisions of
the Plan as the Committee shall determine:

1.    Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee
may impose (including, without limitation, a waiver by the
Participant of the right to vote or to receive any dividend or
other right or property with respect thereto), which
restrictions may lapse separately or in combination at such
time or times, in such installments or otherwise as the
Committee may deem appropriate.

2.    Stock Certificates. Any Restricted Stock granted under the
Plan shall be registered in the name of the Participant and
shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted
Stock.

3.    Forfeiture. Except as otherwise determined by the Committee,
upon a Participant's termination of employment (as determined
under criteria established by the Committee) during the
applicable restriction period, all Shares of Restricted Stock
and Restricted Stock Units held by the Participant at such
time shall be forfeited and reacquired by the Company;
provided, however, that the Committee may, when it finds that
a waiver would be in the best interest of the Company, waive
in whole or in part any or all remaining restrictions with
respect to Shares of Restricted Stock or Restricted Stock
Units.

D. Performance Awards. The Committee is hereby authorized to grant
Performance Awards to Eligible Persons subject to the terms of the Plan
and any applicable Award Agreement. A Performance Award granted under the
Plan (i) may be denominated or payable in cash, Shares (including, without
limitation, Restricted Stock and Restricted Stock Units), other
securities, other Awards or other property and (ii) shall confer on the
holder thereof the right to receive payments, in whole or in part, upon
the achievement of such performance goals during such performance periods
as the Committee shall establish. Subject to the terms of the Plan and any
applicable Award Agreement, the performance goals to be achieved during
any performance period, the length of any performance period, the amount
of any Performance Award granted, the amount of any payment or transfer to
be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee.

E. Dividend Equivalents. The Committee is hereby authorized to grant
Dividend Equivalents to Eligible Persons under which the Participant shall
be entitled to receive payments (in cash, Shares, other securities, other
Awards or other property as determined in the discretion of the Committee)
equivalent to the amount of cash dividends paid by the Company to holders
of Shares with respect to a number of Shares determined

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by the Committee. Subject to the terms of the Plan and any applicable
Award Agreement, such Dividend Equivalents may have such terms and
conditions as the Committee shall determine.

F. Other Stock Grants. The Committee is hereby authorized, subject to the
terms of the Plan and any applicable Award Agreements, to grant to
Eligible Persons Shares without restrictions thereon as are deemed by the
Committee to be consistent with the purpose of the Plan.

G. Other Stock-Based Awards. The Committee is hereby authorized to grant
to Eligible Persons, subject to the terms of the Plan and any applicable
Award Agreements, such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or
related to, Shares (including, without limitation, securities convertible
into Shares), as are deemed by the Committee to be consistent with the
purpose of the Plan. Shares or other securities delivered pursuant to a
purchase right granted under this Section 6(G) shall be purchased for such
consideration, which may be paid by such method or methods and in such
form or forms (including, without limitation, cash, Shares, promissory
notes, other securities, other Awards or other property or any combination
thereof), as the Committee shall determine, the value of which
consideration, as established by the Committee, shall not be less than
100% of the Fair Market Value of such Shares or other securities as of the
date such purchase right is granted.

H. General

1.    Consideration for Awards. Awards shall be granted for no cash
consideration or for any cash or other consideration as may be
determined by the Committee or required by applicable law.

2.    Awards May Be Granted Separately or Together. Awards may, in
the discretion of the Committee, be granted either alone or in
addition to, in tandem with or in substitution, for any other
Award or any award granted under any plan of the Company or
any Affiliate other than the Plan. Awards granted in addition
to or in tandem with other Awards or in addition to or in
tandem with awards granted under any such other plan of the
Company or any Affiliate may be granted either at the same
time as or at a different time from the grant of such other
Awards or awards.

3.    Forms of Payment under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the
grant, exercise or payment of an Award may be made in such
form or forms as the Committee shall determine (including,
without limitation, cash, Shares, promissory notes, other
securities, other Awards or other property or any combination
thereof), and may be made in a single payment or transfer, in
installments or on a deferred basis, in each case in
accordance with rules and procedures established by the
Committee. Such rules and procedures may include, without
limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents with respect to
installment or deferred payments.

4.    Limits on Transfer of Awards. No Award (other than Other Stock
Grants) and no right under any such Award shall be
transferable by a Participant otherwise than by will or by the
laws of descent and distribution and the Company shall not be
required to recognize any attempted assignment of such rights
by any Participant; provided, however, that, if so determined
by the Committee, a Participant may, in the manner established
by the Committee, (a) designate a beneficiary or beneficiaries
to exercise the rights of the Participant and receive any
property distributable with respect to any Award upon the
death of the Participant and (b) transfer Awards, except in
the case of an Incentive Stock Option, to Family Members
pursuant to terms determined by the Committee. Except as
otherwise provided in this Plan or in any applicable Award
Agreement or amendment thereto (other than an Award Agreement
relating to an Incentive Stock Option), pursuant to terms
determined by the Committee, each Award or right under any
Award shall be exercisable during the Participant's lifetime
only by the Participant or, if permissible

7

E-42

under applicable law, by the Participant's guardian or legal
representative. Except as otherwise provided in this Plan or
in any applicable Award Agreement or amendment thereto (other
than an Award Agreement relating to an Incentive Stock
Option), no Award or right under any such Award may be
pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance
thereof shall be void and unenforceable against the Company or
any Affiliate.

5.    Term of Awards. The term of each Award shall be for such
period as may be determined by the Committee; provided,
however, that in the case of an Incentive Stock Option such
Option shall not be exercisable after the expiration of 10
years from the date such Option is granted.

6.    Restrictions; Securities Exchange Listing. All Shares or other
securities delivered under the Plan pursuant to any Award or
the exercise thereof shall be subject to such restrictions as
the Committee may deem advisable under the Plan, applicable
federal or state securities laws and regulatory requirements,
and the Committee may cause appropriate entries to be made or
legends to be placed on the certificates for such Shares or
other securities to reflect such restrictions. If the Shares
or other securities of the Company are traded on a securities
exchange, the Company shall not be required to deliver any
Shares or other securities covered by an Award unless and
until such Shares or other securities have been admitted for
trading on such securities exchange.

Section 7. Amendment and Termination; Adjustments

A. Amendments to the Plan. The Board may amend, alter, suspend,
discontinue or terminate the Plan at any time; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval would violate the rules or regulations of the Nasdaq National Market or
any other securities exchange that is applicable to the Company.

B. Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. Except as otherwise provided herein or in an Award Agreement, the
Committee may not amend, alter, suspend, discontinue or terminate any
outstanding Award, prospectively or retroactively, if such action would
adversely affect the rights of the holder of such Award, without the consent of
the Participant or holder or beneficiary thereof.

C. Correction of Defects, Omissions and Inconsistencies. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in the
Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.

Section 8. Income Tax Withholding

In order to comply with all applicable national, federal, state or local
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable national, federal, state or local
payroll, withholding, income or other taxes, which are the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
national, federal, state and local taxes to be withheld or collected upon
exercise or receipt of (or the lapse of restrictions relating to) an Award, the
Committee, in its discretion and subject to such additional terms and conditions
as it may adopt, may permit the Participant to satisfy such tax obligation by
(i) electing to have the Company withhold a portion of the Shares otherwise to
be delivered upon exercise or receipt of (or the lapse of restrictions relating
to) such Award with a Fair Market Value equal to the amount of such taxes or
(ii) delivering to the Company Shares other than Shares issuable upon exercise
or receipt of (or the lapse of restrictions relating to) such Award with a Fair
Market Value equal to the amount of such taxes. The election, if any, must be
made on or before the date that the amount of tax to be withheld is determined.

8

E-43

Section 9. General Provisions

A. No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.

B. Plan Provisions Control. In the event that any provision of an Award
Agreement conflicts with or is inconsistent in any respect with the terms of the
Plan as set forth herein or subsequently amended, the terms of the Plan shall
control.

C. No Rights of Shareholders. Except with respect to Shares of Restricted
Stock as to which the Participant has been granted the right to vote, neither a
Participant nor the Participant's legal representative shall be, or have any of
the rights and privileges of, a stockholder of the Company with respect to any
Shares issuable to such Participant upon the exercise or payment of any Award,
in whole or in part, unless and until such Shares have been issued in the name
of such Participant or such Participant's legal representative without
restrictions thereto.

D. No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Affiliate from adopting or continuing in
effect other or additional compensation arrangements, and such arrangements may
be either generally applicable or applicable only in specific cases.

E. No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate, nor will it affect in any way the right of the Company or an
Affiliate to terminate such employment at any time, with or without cause. In
addition, the Company or an Affiliate may at any time dismiss a Participant from
employment free from any liability or any claim under the Plan or any Award,
unless otherwise expressly provided in the Plan or in any Award Agreement.
Nothing in this Plan shall confer on any person any legal or equitable right
against the Company or any Affiliate, directly or indirectly, or give rise to
any cause of action at law or in equity against the Company or an Affiliate. The
Awards granted hereunder shall not form any part of the wages or salary of any
Eligible Person for purposes of severance pay or termination indemnities,
irrespective of the reason for termination of employment. Under no circumstances
shall any person ceasing to be an employee of the Company or any Affiliate be
entitled to any compensation for any loss of any right or benefit under the Plan
which such employee might otherwise have enjoyed but for termination of
employment, whether such compensation is claimed by way of damages for wrongful
or unfair dismissal, breach of contract or otherwise. By participating in the
Plan, each Participant shall be deemed to have accepted all the conditions of
the Plan and the terms and conditions of any rules and regulations adopted by
the Committee and shall be fully bound thereby.

F. Governing Law. The validity, construction and effect of the Plan or any
Award, and any rules and regulations relating to the Plan or any Award, shall be
determined in accordance with the internal laws, and not the law of conflicts,
of the State of Delaware.

G. Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal or unenforceable in any jurisdiction or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

H. No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.

9

E-44

I. Other Benefits. No compensation or benefit awarded to or realized by
any Participant under the Plan shall be included for the purpose of computing
such Participant's compensation under any compensation-based retirement,
disability, or similar plan of the Company unless required by law or otherwise
provided by such other plan.

J. No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash shall be paid in lieu of any fractional Shares or whether such fractional
Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.

K. Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

Section 10. Effective Date of the Plan.

The Plan shall be effective on December 4, 2001 subject to approval by the
shareholders of the Company on such date.

Section 11. Term of the Plan.

No Award shall be granted under the Plan ten years after the effective
date or any earlier date of discontinuation or termination established pursuant
to Section 7A of the Plan. However, unless otherwise expressly provided in the
Plan or in an applicable Award Agreement, any Award theretofore granted may
extend beyond such date, and the authority of the Committee provided for
hereunder with respect to the Plan and any Awards, and the authority of the
Board to amend the Plan, shall extend beyond the termination of the Plan.

10

E-45

Exhibit 10.15

29 OCT 1990:1

***

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

DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT

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

SCHERING CORPORATION

AND

ENZON, INC.

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

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-46

INDEX

Page
----
Article 1   :     Definitions                                               2
Article 2   :     Development Program                                       8
Article 3   :     Manufacture of Commercial Quantities of Agreement
Product; Know-How Transfer                           13
Article 4   :     Exclusive License                                        18
Article 5   :     Patent Rights                                            20
Article 6   :     Payments                                                 23
Article 7   :     Royalty Terms                                            24
Article 8   :     Royalty Payment Terms                                    28
Article 9   :     Term and Termination                                     31
Article 10  :     Representations and Warranties; Indemnification          33
Article 11  :     Confidentiality                                          38
Article 12  :     Governing Law                                            41
Article 13  :     Assignment or Delegation                                 42
Article 14  :     Force Majeure                                            43
Article 15  :     Independent Contractor; Publicity                        44
Article 16  :     No Inconsistent Obligations                              45
Article 17  :     Severability; Survival                                   45
Article 18  :     Captions                                                 46
Article 19  :     Waiver                                                   46
Article 20  :     Notice                                                   47
Article 21  :     Entire Agreement                                         47

10/29/90:1

E-47

SCHEDULES

Schedule A-1 - Specifications for Agreement Substance
A-2 - Specifications for Bulk Concentrate
A-3 - Specifications for Agreement Product

Schedule B   - Development Program

Schedule C   - Patent Rights

Schedule D   - Criteria for Efficacy in Pilot Study

Schedule E   - Supply Agreement

Schedule F   - Press Release

10/29/90:1

E-48

DEVELOPMENT, LICENSE AND SUPPLY AGREEMENT

This agreement is made and effective as of November 14, 1990 by and between

ENZON, Inc.
40 Cragwood Road
South Plainfield, NJ 07080-2406, a Delaware corporation,

hereinafter referred to as "ENZON",
and

SCHERING Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033, a New Jersey corporation,

hereinafter referred to as SCHERING:

WHEREAS, SCHERING markets a proprietary pharmaceutical alpha interferon product
(hereinafter "Intron A") in various finished pharmaceutical dosage forms; and

WHEREAS, ENZON has developed a technology for coupling polyethylene glycol
("PEG") with polypeptides to create longer-acting therapeutic products; and

WHEREAS, SCHERING and ENZON have performed preliminary in vitro testing of a
compound made from Intron A and PEG and now desire, subject to the terms of this
Agreement, to further develop, test, conduct clinical trials of, and market the
resulting product; and

10/29/90:1

E-49

WHEREAS the parties desire to enter into an agreement whereby ENZON shall
develop, under the terms of this Agreement, a longer-acting product in which
PEG is coupled with Intron A, develop scale-up and manufacturing procedures, and
manufacture such product for SCHERING, consistent with all applicable Good
Manufacturing Practices ("GMP's") and SCHERING shall, subject to the terms and
conditions of this Agreement, test, clinically develop and market worldwide, the
resulting Agreement Product as hereinafter defined;

NOW, THEREFORE, in consideration of the mutual premises and covenants set forth
below, the parties agree as follows:

Article 1 - Definitions

1.1 "Affiliate" shall mean any corporation or business entity controlled by,
controlling, or under common control with the respective party. For this purpose
"control" shall mean the direct or indirect beneficial ownership of at least
fifty percent (50%) of the voting stock of, or at least fifty percent (50%)
interest in the income of, such corporation or other business entity.

1.2 "Agreement Product" shall mean any pharmaceutical product in which Agreement
Substance as an active ingredient is coupled with PEG. The specifications for
the Agreement Product to be developed by SCHERING under this Agreement, in its
diluted form, will be set forth in Schedule A-3 hereto, which may be amended
from time-

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to-time, as mutually agreed by the parties hereto, or as needed to conform with
the IND (hereinafter defined) for Agreement Product. Agreement Product shall be
supplied to SCHERING by ENZON in the form of Bulk Concentrate, as hereinafter
defined.

1.3 "Agreement Substance" shall mean alpha interferon, including, without
limitation, the alpha interferon the specifications for which are set forth in
Schedule A-1 attached hereto (Specifications for Agreement Substance).

1.4 "Bulk Concentrate" shall mean Agreement Product in bulk concentrated form
meeting the criteria set forth in Schedule A-2 hereof. (Specifications for Bulk
Concentrate).

1.5 "Development Program" shall mean all development work undertaken by the
parties hereto with respect to Agreement Substance or Agreement Product,
relating to the development program for Agreement Product (Schedule B) hereto,
including the applicable objectives, protocols and timetables, by phases and
cumulatively, as well as any modifications to the development program set forth
[in Schedule B hereto made by Schering] in Schedule B hereto requested by either
party and accepted by the other party in writing, which acceptance shall not be
unreasonably withheld.

1.6 "FDA" shall mean the United States Food and Drug Administration or any
successor agency thereof, as well as any

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E-51

foreign equivalent thereof, including, where applicable, price-approval
authorities.

1.7 "FDA Approval" shall mean written notification of the approval (without
qualification which would materially adversely affect SCHERING's ability to
market Agreement Product) from the FDA of a PLA for Agreement Product for which
SCHERING seeks such approval, which allows SCHERING to commercially sell
Agreement Product.

1.8   (a)   "Know-How" shall mean all confidential scientific, medical, and
technical data, instructions, processes, formulae, unpatented
inventions, expert opinion and information, whether written or
otherwise, necessary (as set forth in the PLA for Agreement Product)
for the development, manufacture, use or sale of Agreement
Substance, Bulk Concentrate or Agreement Product. Know-How shall
include, without limitation, all biological, chemical,
pharmacological, toxicological, pharmaceutical, physical and
analytical, research, testing, safety, quality control,
manufacturing, marketing, test and clinical data and information
necessary (as set forth in the PLA for Agreement Product) for the
manufacture, use or sale of Agreement Substance, Bulk Concentrate or
Agreement Product. For purposes

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E-52

of this Agreement, Know-How shall not include any Know-How (as
defined in this Article 1.8(a)) which SCHERING can clearly
demonstrate was developed by SCHERING or its Affiliates without the
aid, application or use of any ENZON Existing or Development
Know-How (as hereinafter defined) or the participation of any
SCHERING employee or consultant who has knowledge of the contents of
such ENZON Existing or Development Know-How ("SCHERING Independent
Know-How"). Know-How also shall not include any information, data,
test result, study result, trial result, expert opinion or analysis
related to the pharmacology, toxicology, pharmacokinetics, clinical
trials or manufacturing steps to be taken by SCHERING, covered under
SCHERING'S PLA (hereinafter referred to as "SCHERING Information").
Know-How as defined in this subparagraph (a) is divided into the
three categories described below, and the two subcategories
described in Articles 4.1 and 4.2 hereof.

(b)   "ENZON Existing Know-How" shall mean all Know-How owned or
controlled by ENZON or its Affiliates on or before April 3, 1990.

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E-53

(c)   "SCHERING Existing Know-How" shall mean all Know-How owned or
controlled by SCHERING or its Affiliates on or before April 3, 1990.

(d)   "Development Know-How" shall mean all Know-How developed by or on
behalf of either or both parties and/or their Affiliates under this
Agreement.

1.9 "IND" shall mean an Investigational New Drug Application or its foreign
equivalent, as required to be filed with the FDA.

1.10 "Net Sales" shall mean the proceeds actually received from sales of
Agreement Product in any country in the Territory by SCHERING or any of its
Affiliates or sublicensees to independent third party customers in bona fide,
arm's-length transactions, less: 

(a)   actual allowances for returns, damages or otherwise, and discounts,
rebates and allowances to customers, including cash, credit or free
goods allowances; and

(b)   freight or other transportation charges, including insurance,
actually allowed or paid on account of the delivery of Agreement
Product to purchasers thereof; and

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E-54

(c)   taxes (except income taxes) or duties paid, absorbed or otherwise
imposed on the sale, including, without limitation, value added
taxes.

1.11 "Patent Rights" shall mean: (a) all claims of any patent applications and
issued patents arising under this Agreement; and (b) any and all reissues,
extensions (or other governmental actions which provide exclusive rights to the
patent holder in the patented subject matter beyond the original patent
expiration date), substitutions, confirmations, registrations, revalidations,
additions, continuations, continuations-in-part or divisions of or to any of
the foregoing which are hereafter granted in the Territory. For purposes of this
Agreement, Patent Rights shall not include: (1) any patentable invention related
to the SCHERING Information, or (2) any patentable invention which SCHERING can
clearly demonstrate was invented or developed by SCHERING or its Affiliates,
without the aid, application or use of any ENZON Know-How (as hereinafter
defined) or the participation of any SCHERING employee or consultant who has
knowledge of the contents of the ENZON Know-How ("SCHERING Independent Patent
Rights"). The parties shall list Patent Rights as they arise in Schedule C
hereto, which shall be updated by the parties periodically to reflect changes in
the status of the Patent Rights.

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E-55

1.12 "PLA" shall mean a Product License Application, or its foreign equivalent,
as required to be filed with the FDA to obtain approval to sell the Agreement
Product.

1.13 "Territory" shall mean all countries of the world.

1.14 "Valid Claim" shall mean any claim contained in any pending patent
application or issued patent included within the Patent Rights, which has not
been abandoned or declared invalid in a non-appealable order, as the case may
be, and which would be infringed by the manufacture, use or sale of Agreement
Product in the absence of the licenses granted hereunder.

Article 2 - Development Program

2.1 The parties have agreed upon, and set forth in Schedules A-2 and A-3 hereof,
specifications and criteria for Bulk Concentrate and Agreement Product.

2.2 The parties have executed a Letter of Agreement dated April 3, 1990, wherein
ENZON agreed, inter alia, to provide SCHERING with a *** sample batch and
a *** production batch of Agreement Product in exchange for certain
payments.

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-56

2.3 The parties have agreed upon, and set forth in Schedule B hereto, a
Development Program for Agreement Product. ENZON and SCHERING shall use diligent
efforts to carry out their designated responsibilities under the Development
Program in a timely fashion, except in those cases where a party has obtained
the prior written approval of the other to modify a portion of the Development
Program. The Development Program shall be reviewed from time-to-time as shall
be agreed by the parties hereto, and the terms thereof may only be changed as
mutually agreed in writing by the parties hereto or as suggested by the FDA
(with SCHERING's concurrence), or as ordered by the FDA. ENZON's obligations
under the Development Program are subject to its receipt of Agreement Substance
from SCHERING in a timely manner.

2.4 All trials for Agreement Product specified in the Development Program,
including any toxicological, pre-clinical or clinical trials that may be
required for drug registrations and approvals in the Territory, shall be the
responsibility of SCHERING. SCHERING shall use diligent efforts to obtain such
approvals and shall bear all costs of such trials; provided, however, that the
manufacture and supply of Agreement Product used in the trials referenced in the
Development Program shall be the responsibility of ENZON, but at SCHERING's sole
cost and expense, as set forth in Article 3.1 hereof, and subject to the
provisions of Article 2.8 and the other provisions of Article 3 hereof.

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2.5 Except as expressly provided otherwise herein, ENZON shall be solely
responsible for all direct and indirect costs and expenses of its employees,
agents, consultants, or subcontractors and for materials, plant and equipment
which ENZON employs or utilizes in carrying out its designated responsibilities
under the Development Program or in manufacturing Agreement Product for any
purpose hereunder.

2.6 The parties hereto shall keep each other informed of their progress with
respect to their respective responsibilities under the Development Program by
means of a quarterly written summary report in a form to be agreed upon by the
parties hereto. In addition, SCHERING will have access to ENZON's facilities to
observe progress of the Development Program, to the extent reasonably necessary
to successfully complete the Development Program, upon reasonable advance
notice. Each party hereto shall provide the other party with copies of all
Know-How in such other party's possession reasonably required in order to
enable SCHERING to obtain FDA Approval, including, without limitation, the
obligations of Article 2 hereof. Whenever reasonably feasible, such copies may
be given directly to the FDA rather than to the other party when in connection
with obtaining the FDA approval. ENZON shall, at SCHERING's reasonable request,
take all reasonable steps necessary to allow SCHERING to reference ENZON's Drug
Master File for Agreement Product; provided, however, that SCHERING shall not
have the right to have access to, view or have copies of

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E-58

ENZON's Drug Master File for Agreement Product. The right of reference and to
receive Know-How provided in this Article 2.6 shall not entitle SCHERING to use
or receive ENZON's Know-How for manufacturing the Agreement Product, except as
expressly permitted hereunder.

2.7 ENZON and SCHERING shall each designate one (1) senior development employee
as technical liaison to handle all technical matters and communications relating
to the Development Program.

2.8 SCHERING has provided ENZON with certain Know-How relating to the Agreement
Substance and shall provide ENZON with any additional Know-How in SCHERING's
possession as SCHERING and ENZON shall reasonably agree is required in
connection with ENZON's obligations under the Development Program.

2.9 SCHERING shall supply to ENZON in a timely fashion, at no cost, quantities
of Agreement Substance necessary to make the Agreement Product called for in the
Development Program and to manufacture Agreement Product as required under
Article 2.4 hereof. ENZON agrees to advise SCHERING, at least sixty (60) days in
advance of the requested delivery thereof, of its requirements for the Agreement
Substance. 

2.10 SCHERING shall use its best efforts (comparable to efforts it uses with
other products of similar status) to file the

-11-                             10/29/90:1

E-59

foreign equivalent of a Product License Application for Agreement Product in at
least three (3) of the following countries: France, West Germany, Italy, Spain,
United Kingdom, Japan and Canada, within twelve (12) months after the submission
of the initial PLA in the United States of America for Agreement Product, and
similarly file in the remaining countries set forth in this Article 2.10 within
twenty-four (24) months after such submission.

2.11 ENZON shall deliver to SCHERING in a timely fashion sufficient Agreement
Product for SCHERING to carry out the activities contemplated by Article 2.4
hereof.

2.12 ***

2.13 During the term of this Agreement, anything to the contrary contained
herein notwithstanding, ENZON shall not develop any product containing PEG and
alpha interferon for itself or with or for any third party, nor shall it enter
into discussions or negotiations with any such third party concerning any
product containing PEG and alpha interferon.

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-60

Article 3 - Manufacture of Commercial Quantities of Agreement Product; Know-How
Transfer

3.1 SCHERING shall notify ENZON, no later than the date of the first PLA filing,
that it intends to introduce Agreement Product into commerce. Upon such
notification, ENZON shall commence preparing to supply commercial quantities of
Agreement Product to SCHERING under a supply agreement (the "Supply Agreement")
executed by the parties concurrently with this Agreement and attached hereto as
Schedule E. SCHERING shall pay ENZON for Agreement Product to be supplied to
SCHERING for the Development Program and for commercial sales at the price
established pursuant to the terms of the Supply Agreement.

3.2 The provisions of Article 14 (Force Majeure) of this Agreement and Article
XIV (Force Majeure) of the Supply Agreement notwithstanding:

(a)   The parties recognize the importance of an uninterrupted supply of
commercial quantities of Agreement Product to SCHERING under the
terms and conditions of the Supply Agreement. As soon as it shall
become apparent to ENZON that circumstances resulting in any failure
or delay in delivery hereunder, beyond the time period for timely
delivery set forth in Article III.D. of the Supply

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E-61

Agreement, will continue for more than sixty (60) days, ENZON shall
promptly notify SCHERING, in writing, of that fact and shall consult
with SCHERING as to the best practical method for assuring SCHERING
a source of supply of Agreement Product during the continuance of
such circumstances. Provided such failure or delay is not caused by
SCHERING's failure to deliver Agreement Substance in a timely manner
to ENZON or otherwise by SCHERING's breach of this Agreement, ENZON
shall provide SCHERING with all reasonable technical and other
assistance in this regard ("Manufacturing Assistance") including
disclosure of only such Know-How as may be reasonably necessary (as
set forth in the PLA for Agreement Product) for manufacturing or
quality control of Agreement Product. Manufacturing Assistance shall
include, without limitation: (1) designation by ENZON of a
third-party manufacturer acceptable to SCHERING, or (2) assisting
SCHERING or any of its Affiliates to manufacture its own
requirements of Agreement Product; such assistance by ENZON shall
continue only for so long as such circumstances continue. The
decision as to whether SCHERING or any of its Affiliates, or a third
party source, shall be designated to supply Agreement Product during
the

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time ENZON cannot do so directly, shall be made jointly by the
parties, taking into account the best interest of both the parties,
including factors such as (without limitation) cost, time required
to initiate production of commercial quantities, protection of
intellectual property rights, avoiding benefitting competitors,
regulatory requirements, quality control, etc.

(b)   (1) ENZON shall be required to allow any manufacturing program for
Agreement Product initiated under this Article 3.2 to continue after
ENZON regains its ability to supply Agreement Product to SCHERING
hereunder only for so long as may be reasonably necessary for
SCHERING and/or any of its Affiliates to fully amortize any
incremental capital expenses it may have reasonably incurred under
such manufacturing program, using generally accepted accounting
principles normally used by SCHERING in keeping its own books and
records. Third-party sources designated by ENZON shall be acceptable
in view of the then-current health regulations.

(2) If the failure or delay first mentioned in Article 3.2(a) above
is the fault of ENZON and

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within its control, any additional cost of Agreement Product under
such manufacturing program, whether performed by SCHERING or any of
its Affiliates or any such third-party source, over the cost agreed
to by SCHERING in the Supply Agreement, will be borne by ENZON;
provided ENZON was afforded the opportunity to mitigate or reduce
such cost prior to it being incurred by SCHERING and/or any of its
Affiliates.

(c)   ENZON shall have the option, in its sole discretion, to delete
Article 3.2 from this Agreement. If ENZON exercises this option and
so advises SCHERING in writing (the "Option Notice") as far in
advance as possible, taking into account the current inventory of
Agreement Product and the time required for SCHERING to arrange for
another source of Agreement Product, but in no case less than nine
(9) months (or such shorter period as may be mutually agreed upon by
the parties hereto) in advance of the effective date of the Option
Notice, then Article 3.2 shall be deleted and have no further
effect, as of the effective date of the Option Notice; provided,
however, that ENZON's obligation to provide Manufacturing Assistance
to SCHERING and the provisions of Article 3.2(c)(1) through (4)

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inclusive shall survive such deletion and continue until SCHERING
shall reasonably be capable of manufacturing Agreement Product (in
the manner set forth in the PLA for Agreement Product). In such
case, as of the effective date of such notice: (1) ENZON shall have
no right or obligation to thereafter supply Agreement Product to
SCHERING under this Agreement or the Supply Agreement, (2) ENZON
shall grant to SCHERING a paid-up license in the Territory, at no
additional cost to SCHERING, for the term of this Agreement, of all
Know-How necessary (as set forth in the PLA for Agreement Product)
and Patent Rights for manufacturing Agreement Product, (3) SCHERING
will have no further obligations to purchase Agreement Product from
ENZON, and (4) SCHERING shall waive and give up any right or claim
to damages or recoupment of expenses or costs which are based on
ENZON's failure or delay in supplying Agreement Product and which
arose under this Article 3.2; provided, however, ENZON shall
continue to be responsible, as set forth in 3.2(b)(1), for any
additional cost of Agreement Product manufactured during the nine
(9) month period between the date the Option Notice is given and the
effective date of the Option Notice. In any event, SCHERING shall be
required to pay ENZON

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royalties on Net Sales under Article 7 hereof in connection with all
Agreement Product manufactured under this Agreement.

Article 4 - Ownership of Intellectual Property; Exclusive Licenses

4.1 ENZON shall own the entire right, title and interest in and to the
Development Know-How related to Agreement Product and/or PEG, whether created
by SCHERING, by ENZON or jointly by the parties ("ENZON Development Know-How").

4.2 SCHERING shall own the entire right, title and interest in and to the
Development Know-How covering and related to Agreement Substance, whether
created by SCHERING, by ENZON or jointly by the parties ("SCHERING Development
Know-How").

4.3 ENZON shall own the entire right, title and interest in and to all Patent
Rights related to Agreement Product and/or PEG, whether invented by SCHERING, by
ENZON, or jointly by the parties hereto ("ENZON Patent Rights").

4.4 SCHERING shall own the entire right, title and interest in and to all Patent
Rights related to Agreement Substance, whether invented by ENZON, by SCHERING,
or jointly by the parties hereto (the "SCHERING Patent Rights").

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4.5 For all other Development Know-How and Patent Rights, the party that
invented or created same shall own the entire right, title and interest therein,
if the other party is not a joint inventor or creator thereof. If the parties
jointly invented or created same, they shall be joint owners thereof.

4.6 SCHERING shall own all right, title and interest in and to all SCHERING
Information.

4.7 Subject to the other terms of this Agreement, ENZON hereby grants to
SCHERING and SCHERING hereby accepts, exclusive licenses, exclusive even as to
ENZON, under the ENZON Patent Rights the ENZON Existing Know-How and the ENZON
Development Know-How, during the term of this Agreement: (1) to use and sell
Agreement Product in the Territory, with the right to sub1icense SCHERING's
Affiliates or third parties and (2) to make and have made Agreement Product,
with the right to sublicense SCHERING's affiliates, under the conditions stated
in Article 3.2 hereof.

4.8 Subject to the other terms of this Agreement and for the sole purpose of
ENZON's development and manufacture of Agreement Product for SCHERING, SCHERING
hereby grants ENZON the right, under the SCHERING Information, the SCHERING
Patent Rights, the SCHERING Existing Know-How, the SCHERING Development
Know-How, and the RC License (as hereinafter defined) during the term of this
Agreement, to use Agreement Substance in the development and manufacture of

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Agreement Product and to manufacture Agreement Product, except under the
condition referred to in Article 3.2(a)(2) hereof.

4.9 Upon expiration of this Agreement as provided in Article 9.1 hereof, either
in its entirety or with respect to any country in the Territory, ENZON shall
disclose to SCHERING and SCHERING and its Affiliates may use, either in the
Territory or in any such country, without any further payment, for any purpose
whatsoever related to Agreement Product (but not for any other purpose or other
product), all ENZON Patent Rights, ENZON Existing Know-How, and ENZON
Development Know-How.

4.10 No license or right of any sort shall arise under this Agreement, whether
by implication or estoppel, with respect to U.S. Patent 4,179,337 and its
foreign counterparts, nor to any patent or patent right with respect to
Agreement Substance, except as specifically set forth herein.

Article 5 - Patent Rights

5.1 With respect to Patent Rights, it is agreed:

5.1.1 ENZON shall diligently prosecute, maintain and defend all
patent applications and issued patents included within the ENZON
Patent Rights. All costs for patent filing, prosecution, and
maintenance of such

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Patent Rights shall be borne by ENZON. If ENZON chooses not to
defend such Patent Rights in any country against any third party,
then SCHERING may defend such Patent Rights in such country with
respect to such third party, at SCHERING's sole cost, and SCHERING
will retain for its own benefit any judgment therefrom. If such
defense is successful, SCHERING may thereafter deduct its reasonable
expenses (including attorney's fees) related to such defense (net of
any judgment monies received by SCHERING) from future royalties due
in such country under Article 7 hereof.

5.1.2 ENZON shall notify SCHERING immediately (i) whenever it files
a patent application related to the ENZON Patent Rights in any
country; and (2) whenever it is considering discontinuance of the
prosecution or maintenance of such a patent application. If ENZON
shall fail to file a patent application related to the ENZON Patent
Rights in any country it shall so notify SCHERING immediately in
writing, and if ENZON does not initiate the filing process within
ninety (90) days after written request to do so from SCHERING, or if
ENZON does not continue prosecution or maintenance of such a patent
application related to the ENZON Patent Rights which it has
initiated pursuant to Article 5.1.2 above within ninety (90) days
after written notice from SCHERING,

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SCHERING shall have the option to file or continue prosecution in
its own name and at SCHERING's cost. In either such case ENZON shall
do all acts necessary to assign and vest title to and transfer
control of such patent application in that country in a timely
fashion to SCHERING for no additional consideration.

5.1.3 Each party hereto shall notify the other party hereto of its
knowledge of any infringement of the Patent Rights within sixty (60)
days after becoming aware of such infringement.

5.1.4 With respect to SCHERING Independent Patent Rights, it is
agreed that SCHERING shall, no later than the date of filing of the
first patent application for any patentable invention included in
the SCHERING Independent Patent Rights, provide to ENZON on a
non-confidential basis a statement of the subject matter of such
patent application, using good-faith efforts to make such statement
as complete as possible without divulging any confidential or
proprietary information, it being understood that SCHERING shall not
be required to divulge any confidential or proprietary information
in such statement. Thereafter, ENZON may request, and SCHERING shall
provide, within twenty (20) days after ENZON's request, (under
appropriate conditions of confidentiality

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imposing restrictions on ENZON similar to those SCHERING requires
for its other confidential information) a copy of the contents of
such patent application.

Article 6 - Payments

6.1 Subject to the terms of this Agreement, SCHERING agrees to make the
following payments to ENZON in U.S. Dollars as indicated:

(a)   One hundred and fifty thousand dollars ($150,000) within fifteen
(15) days after the date of execution by the last of the parties to
sign this Agreement.

(b)   Four hundred fifty thousand dollars ($450,000) within fifteen (15)
days after SCHERING's filing of the first IND in the United States
of America for Agreement Product.

(c)   Two million five hundred thousand dollars ($2,500,000) within
fifteen (15) days after confirmation of SCHERING's successful
completion ("Successful Completion") of the initial clinical trial
demonstrating that Agreement Product meets the criteria set forth in
Schedule D attached hereto (Criteria for Efficacy in Pilot Study).

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(d)   One million dollars ($1,000,000) within fifteen (15) days after
SCHERING's submission of the first PLA for Agreement Product in the
United States of America.

(e)   Two million dollars ($2,000,000) within fifteen (15) days after
receipt of the first FDA Approval to occur in the United States of
America.

(f)   None of the foregoing payments shall be payable to ENZON more than
once under any circumstance.

6.2 If, upon completion of the clinical trial described in Article 6.1(c)
hereof, Agreement Product does not meet the applicable criteria set forth in
Schedule D, and SCHERING decides at that time to terminate this Agreement as
permitted by Article 9.2(b) hereof, ENZON shall promptly refund *** to SCHERING.

Article 7  - Royalty Terms

7.1 Subject to Article 7.2 below, SCHERING shall pay or cause to be paid
royalties to ENZON on Net Sales as follows:

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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(a)   For as long as SCHERING pays a royalty, under the license agreement
dated December 3, 1987, between SCHERING and Research Corporation,
in connection with SCHERING's sale of an Agreement Product in any
country in the Territory, SCHERING shall pay ENZON a royalty in such
country of *** SCHERING shall provide to ENZON reasonable evidence
of such payments to Research Corporation at ENZON's request.

(b)   In each calendar year during the term of this Agreement, in
connection with SCHERING's sales of Agreement Product which do not
require payment of a royalty under Article 7.1(a) above, if
Competition, as defined in Article 7.1(d) below, exists in any such
country, SCHERING shall pay ENZON a royalty *** for so long as the
sum of Net Sales in all countries in the Territory during such
calendar year *** and *** after the sum of Net Sales in all
countries in the Territory during such calendar year ***

(c)   In each calendar year during the term of this Agreement, in
connection with SCHERING's sales of

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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Agreement Product which do not require payment of a royalty under
Article 7.1(a) above, if Competition does not exist in any such
country, SCHERING shall pay ENZON a royalty of *** for so long as
the sum of Net Sales in all countries in the Territory during such
calendar year does not ***, and *** after the sum of Net Sales in
all countries in the Territory during such calendar year ***

(d)   For purposes of this Article 7, "Competition" shall mean sales by a
party or parties, other than SCHERING, its Affiliates, licensees,
distributors or agents, in any country of the Territory, of a
competitive product which contains alpha interferon (as a
significant active ingredient) coupled with PEG to produce a
longer-lasting product, ***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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or countries, there exists no effective patent or know-how
protection) and: (1) the sales of such competitive product made by
any one party equal *** or, (2) the sales of such competitive
product by two or more parties equal, with respect to each such
party, *** but, considering the sales of such competitive product
made by all such parties in the aggregate, equal ***

7.2 If SCHERING shall hereafter be required, in respect of its sale of Agreement
Product, to pay royalties (hereinafter "Third-Party Royalties") to any third
party whose patents may be infringed by such sales, SCHERING, in order to
reimburse itself for any such Third-Party Royalties, may deduct from royalties
due ENZON hereunder the net amount of any such Third-Party Royalties paid, but
in no event shall royalty due ENZON for any calendar quarter with respect to
Agreement Product be thereby reduced by reason of the provisions of this Article
7.2 to less than one-half of the royalty which would otherwise be due under the
other provisions of this Article 7. This Article 7.2 shall only apply if such
infringement is based on PEG coupled with Agreement Substance, and shall not
apply or be effective in connection with an infringement

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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related to Agreement Substance alone. ***

Article 8 - Royalty Payment Terms

8.1 Royalties payable hereunder with respect to Net Sales shall be paid
quarterly within sixty (60) days after the close of the calendar quarter during
which proceeds from such Net Sales were received. All royalty payments shall be
accompanied by SCHERING's statement of Net Sales, together with SCHERING's
royalty calculations.

8.2 Royalties shall be payable in and remitted in United States dollars, by
SCHERING or its appropriate Affiliate. If Net Sales are invoiced in other than
U.S. dollars, such Net Sales shall be converted to U.S. dollars in accordance
with generally accepted accounting principles (as employed by SCHERING in
translating its published financial results for SEC reporting purposes) at the
closing rates of exchange in effect on the last SCHERING business day of the
month prior to the month in which the invoice was issued. If, due to
restrictions or prohibitions imposed by national or international authority,
SCHERING is unable to make the conversions as aforesaid or SCHERING or
SCHERING's affiliates are

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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unable to make any such royalty payment, the parties shall consult with a view
to finding a prompt and acceptable solution and SCHERING will, from time to
time, deal with such monies as ENZON may lawfully direct. The parties shall use
diligent efforts to cause such royalties to be paid, without reduction, and in
any event SCHERING's ultimate obligation for such payments shall not be
eliminated.

8.3 If the royalties set forth herein are higher than the maximum royalties
permitted by the law or regulations in any country in the Territory, the royalty
payable for sales in such country shall be equal to the maximum permitted
royalty under such law or regulations. In such case, the parties shall take
whatever actions are legally permissible to pay the entire amount of such
royalty above the permitted amount to ENZON, such as by an increase in the
period of time during which royalties shall be paid by SCHERING hereunder.

8.4 If any taxes, withholding or otherwise, are levied by any taxing authority
in connection with accrual or payment of any royalties payable under this
Agreement, SCHERING or its Affiliate shall have the right to pay such taxes to
the local tax authorities on behalf of ENZON and the payment to ENZON of the net
amount due after reduction by the amount of such taxes, together with evidence
of payment of such taxes, shall fully satisfy SCHERING's royalty

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obligations under this Agreement. SCHERING shall give ENZON reasonable notice of
any such payment.

8.5 Royalties shall be due hereunder and calculated only on the final sale of
Agreement Product by SCHERING or any SCHERING Affiliate or SCHERING sublicensee
to independent third parties in arm's-length transactions. No multiple royalties
shall be payable upon account of the sale of Agreement Product, regardless of
whether more than one patent exists within the Patent Rights in any country or
countries in the Territory.

8.6 SCHERING shall keep complete and adequate records with respect to the sale
of Agreement Product and royalties payable hereunder. ENZON shall have the right
to have such records of SCHERING inspected and examined, at ENZON's expense, for
the purpose of determining correctness of royalty payments made hereunder. Such
inspection and examination shall be made by an independent certified public
accountant to whom SCHERING shall have no reasonable objection. Such accountant
shall not disclose to ENZON any information other than that necessary to verify
the accuracy of reports and payments made pursuant to this Agreement. It is
understood that such examination with respect to any quarterly accounting period
hereunder shall take place not later than two (2) years following the expiration
of the said period. No more than one examination per year shall take place.

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8.7 If, in order to facilitate direct royalty payments by a SCHERING Affiliate,
it is desirable that a separate license agreement be entered into between ENZON
and such Affiliate, ENZON agrees to grant such license directly to such
Affiliate by means of an agreement which shall be consistent with the provisions
of this Agreement.

Article 9 - Term and Termination

9.1 This Agreement shall be made effective on the date first written above and
shall continue in effect, unless terminated earlier as expressly provided
herein, for a term which shall expire, on a country-by-country basis, upon the
longer of (a) the life in each such country of the last to expire of the ENZON
Patent Rights for which a Valid Claim exists, including any patent extension (or
any other governmental action which has the effect of extending the period of
market exclusivity of the patent owner) which is permitted by law and obtained,
or (b) fifteen (15) years from the date on which Agreement Product is first
approved for commercial marketing in each such country ("Term").

9.2 SCHERING shall have the right to terminate this Agreement at any time,
either in its entirety or on a country-by-country basis:

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(a)   after sixty (60) days' written notice to ENZON, if ENZON has not
cured the cause of such right to terminate if based upon this
Article 9.2(a), if the Agreement Product resulting from the
Development Program shall fail to meet the specifications and
criteria set forth in Schedule A-3;

(b)   after the completion of the clinical trial set forth in Article
6.1(c) hereof; provided, however, that if Successful Completion, as
defined in Article 6.1(c) hereof shall have taken place, SCHERING's
right to terminate under this Article 9.2(b) shall be contingent
upon SCHERING's having made the payment set forth in Article 6.1(C)
hereof.

In the event of any termination by SCHERING hereunder, SCHERING shall be
required to make only those payments hereunder which have accrued and are due
and owing prior to the effective date of such termination.

9.3 Upon the failure of either party hereto to comply with any of its respective
material obligations contained herein, the other party shall be entitled,
without prejudice to any other rights conferred on it herein, to terminate this
Agreement upon not less than sixty (60) days notice of such default given to the

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defaulting party, provided that the party in defau1t has failed to cure such
default within such sixty (60) day period.

9.4 If either party hereto shall become insolvent or shall make an assignment
for the benefit of creditors, or proceedings in voluntary or involuntary
bankruptcy shall be instituted in behalf of or against such party, or a receiver
or trustee of such party's property shall be appointed, the other party hereto
may, without other action or notice, forthwith terminate this Agreement.

9.5 Except as otherwise provided herein, in the event of termination under
Articles 9.2, 9.3 or 9.4, each party shall return to the other party, and no
longer use for any reason or purpose, all the Know-How belonging solely to the
other party.

Article 10 - Representations and Warranties; Indemnification

10.1 ENZON hereby represents and warrants that it has sole, full and complete
right, title and interest in all Patent Rights and ENZON Existing Know-How.
ENZON further represents and warrants that, to the best of its knowledge as of
the effective date of this Agreement, the manufacture, use or sale of Agreement
Product by ENZON will not infringe any third party's patent rights related to
Agreement Product or PEG. ENZON shall fully indemnify, defend and hold SCHERING
harmless for all direct damages and expenses, including reasonable attorney's
fees, (but not for consequential

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damages such as lost or reduced profits, royalties, or similar items) which may
be incurred by SCHERING for any breach of the warranties contained in this
Article 10.1, but not if such infringement is related to the Agreement
Substance.

10.2 Each party hereto represents and warrants that it has the right to enter
into this Agreement and has no obligation, or knows of no obstacle, which would
prevent either party from carrying out its obligations and responsibilities
thereunder, including manufacture, commercialization and/or sale of Agreement
Product on a world-wide basis.

10.3 SCHERING represents and warrants that the use by ENZON of Agreement
Substance supplied by Schering to ENZON only in connection with ENZON's
activities under this Agreement and the Supply Agreement will not infringe the
patent rights and/or know-how rights of any third party with respect to
Agreement Substance. SCHERING further represents and warrants that, to the best
of its knowledge as of the effective date of this Agreement, it has: (a) the
right to make, have made, use and sell: (1) alpha interferon, and (2) under a
license agreement with Research Corporation dated December 3, 1987, in
connection with U.S. Patent 4,179,337 and its foreign counterparts (the "RC
License"), products combining PEG and alpha interferon; and (b) the right to
make the grants to ENZON contained in Article 4.8 hereof. SCHERING shall fully
indemnify, defend and hold ENZON harmless for all direct damages and expenses,

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including reasonable attorney's fees, (but not for consequential damages such as
lost or reduced profits, royalties, or similar items) which may be incurred by
ENZON for any breach of the warranties contained in this Article 10.3.

10.4 SCHERING shall indemnify, defend and hold ENZON harmless from and against
any and all claims, including reasonable attorney's fees, for loss, damages, or
injury to persons or property by whomsoever raised, arising out of SCHERING's
negligence in manufacturing, marketing, distribution and sale of Agreement
Substance or Agreement Product.

10.5 In addition to the warranty set forth in Article 10.1 above, ENZON shall
indemnify, defend and hold SCHERING harmless from and against any and all
claims, including reasonable attorney's fees, for loss, damages, or injury to
persons or property by whomsoever raised, arising out of ENZON's negligence in
the development, testing or manufacture of Agreement Substance or Agreement
Product.

10.6 The coverage of Articles 10.4 and 10.5 above shall not be deemed to extend
to the infringement of any patent right.

10.7  (a)   ENZON shall provide to SCHERING, no later than thirty (30) days
after the date first written above, a certificate of insurance
evidencing liability

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insurance, including products liability and contractual liability
insurance, covering ENZON's obligations under this Agreement, and
satisfactory to SCHERING, in the amount of one million dollars
($1,000,000). Such insurance shall be kept valid and in full force
by ENZON until the initiation of Phase III clinical trials of
Agreement Product by SCHERING hereunder, and ENZON shall provide
SCHERING with certificates of renewal or re-issuance as they become
available.

(b)   ENZON shall provide to SCHERING, no later than thirty (30) days
after the initiation of Phase III clinical trials of Agreement
Product by SCHERING hereunder, a certificate of insurance evidencing
liability insurance, including products liability and contractual
liability insurance, covering ENZON's obligations under this
Agreement, and satisfactory to SCHERING, in the amount of five
million dollars ($5,000,000), hereinafter the "Face Amount". Such
insurance shall be kept valid and in full force by ENZON during the
term of this Agreement, and ENZON shall provide SCHERING with
certificates of renewal or re-issuance as they become available;
provided, however, that during any period in which the cost to ENZON
of the insurance

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required under this Article 10.7(b) reasonably shall be greater than
one hundred fifty percent (150%) of the adjusted cost ("Adjusted
Cost") to ENZON of such insurance during the first full year such
insurance was in effect, the Face Amount shall be reduced to an
amount which ENZON reasonably can purchase for a sum equal to one
hundred fifty percent (150%) of the Adjusted Cost. The Adjusted Cost
in each year shall be determined by applying to the prior year's
Adjusted Cost (or for the second year such insurance shall be in
effect, the prior year's actual cost) the percentage increase or
decrease in the U.S. gross national product shown in the final
annual Implicit Price Deflator for Gross National Product table
produced for the prior calendar year by the Bureau of Economic
Analysis of the U.S. Department of Commerce (or any successor agency
thereof).

(c)   Failure to demonstrate such proof of valid, in-force, insurance
coverage, or failure to maintain such coverage, shall be grounds for
immediate termination of this Agreement by SCHERING.

10.8 The aforesaid obligations of the indemnifying party shall be subject to the
indemnified party fulfilling the following obligations:

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(a)   The indemnified party shall bring any claim, action, damage,
expense, etc. to the attention of the indemnifying party as soon as
reasonably possible;

(b)   The indemnified party shall fully cooperate with the indemnifying
party in the defense of any claims, actions, etc., which defense
shall be controlled by the indemnifying party (provided, however,
that the indemnified party shall be entitled to counsel at its own
expense) ;

(c)   The indemnified party shall not, except at its own cost, voluntarily
make any payment or incur any expense with respect to any claim or
suit without the prior written consent of the indemnifying party,
which such party shall not be required to give.

Article 11 - Confidentiality

11.1 Both ENZON and SCHERING recognize that Know-How disclosed by each party to
each other, including ENZON Existing Know-How, ENZON Development Know-How,
SCHERING Existing Know-How, SCHERING Development Know-How, and any
jointly-owned Development Know-How, is of proprietary value to and is to be
considered highly confidential and shall be treated by the parties during the
term of this

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Agreement (or any extension thereof) and for a period of five (5) years after
the expiration or any termination thereof in the following manner:

(a)   SCHERING agrees to keep confidential and not to disclose to others,
without the express written permission of ENZON, ENZON Existing
Know-How, ENZON Development Know-How, and any jointly-owned
Development Know-How.

(b)   ENZON agrees to keep confidential and not to disclose to others,
without the express written permission of SCHERING, SCHERING
Existing Know-How, SCHERING Development Know-How, and any
jointly-owned Development Know-How.

11.2 Neither party shall be prevented from disclosing any Know-How which:

(a)   can be demonstrated by written records to have been known to the
recipient at the time of receipt, or

(b)   was subsequently otherwise legally acquired by such party from a
third party having an independent right to disclose the Confidential
Information, or

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(c)   which was at the time of disclosure, is now or later becomes
publicly known without breach of this Agreement by either party, or

(d)   which is required to be disclosed by law, regulation, or act of any
governmental agency.

11.3 Anything to the contrary in Article 11.1. above notwithstanding, SCHERING
and its Affiliates shall be permitted to disclose Know-How to:

(a)   regulatory agencies in support of applications to market Agreement
Product;

(b)   clinicians or others in connection with research related to such
applications, or to the preparation or filing of such applications,
provided, however, that SCHERING shall use diligent efforts to
secure signed confidentiality agreements prior to any disclosure
under this Article 11.3(b); and

(c)   distributors as reasonably necessary for purposes of obtaining
approval to market Agreement Product or to market or promote
Agreement Product, provided, however, that SCHERING shall use
diligent efforts to

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secure signed confidentiality agreements prior to any disclosure
under this Article 11.3(c).

11.4 Upon the expiration or any termination of (but not during) this Agreement
except termination for cause by SCHERING under the terms of Articles 9.3 and 9.4
hereof), ENZON shall have the right to disclose to potential licensees, under
appropriate confidentiality restrictions similar to those ENZON normally uses
for the disclosure of its own valuable proprietary information, summaries of the
SCHERING Information (but not the underlying data or the tests or analyses
themselves). These disclosures, however, may not contain any proprietary
information pertaining to Agreement Substance.

11.5 During the term of this Agreement, SCHERING and its Affiliates may use
ENZON Patent Rights, ENZON Existing Know-How, and ENZON Development Know-How for
any purpose whatsoever related to Agreement Product (but not for any other
purpose or other product) only pursuant to Article 4.7 hereof. This clause 11.5
shall not be deemed to impose any requirement for ENZON to disclose Know-How
except as otherwise expressly provided in this Agreement.

Article 12 - Governing Law

This Agreement shall be governed by and interpreted in accordance with the
substantive law of the State of New Jersey, without regard to its choice of law
principles.

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Article 13 - Assignment or Delegation

13.1 Except as provided in Article 13.2 below, neither party may without written
approval of the other:

(a)   assign this Agreement or transfer its interest or any part thereof
under this Agreement to any third party, or

(b)   designate and cause any third party to perform all or part of its
activities hereunder, or to have the benefit of all or part of
its rights hereunder, except that ENZON may continue to have that
portion of its manufacturing operation which is being performed by
other parties as of the date of this Agreement continue to be so
performed.

13.2 Either party hereto may assign this Agreement, without the other party's
consent, to a third party in a transaction in which all the assets of the
assigning party relating to Agreement Product are sold or assigned; provided
such third party was not selling a product competitive to the Agreement prior to
such assignment.

In the event of any such permitted assignment, transfer or designation, the
assignee, transferee or designee shall assume and be bound by the provisions of
this Agreement.

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Article 14 - Force Majeure

14.1 Except as otherwise provided in Article 3.2 hereof, neither party hereto
shall be liable in damages for, nor shall this Agreement be terminable or
cancellable by reason of, any delay or default in such party's performance
hereunder if such default or delay is caused by events beyond such party's
reasonable control, including, but not limited to, acts of God, regulation or
law or other action or failure to act of any government or agency thereof
(including, without limitation, any action or inaction of the FDA), war or
insurrection, civil commotion, destruction of production facilities or materials
by earthquake, fire, flood or storm, labor disturbances, epidemic, or failure of
suppliers (including each of SCHERING and ENZON with respect to their obligation
to supply the other), public utilities or common carriers; provided however,
that the party seeking relief hereunder shall immediately notify the other party
of such cause(s) beyond such party's reasonable control. 

14.2 Each party shall endeavor to resume its performance hereunder as quickly as
possible if such performance is delayed or interrupted as set forth in Article
14.1 above.

Article 15 - Independent Contractor; Publicity

15.1 It is understood that both parties hereto are independent contractors and
engage in the operation of their own respective

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businesses and neither party hereto is to be considered the agent of the other
party for any purpose whatsoever. Each party shall be fully responsible for its
own employees and consultants, and the employees of one party shall not be
deemed to be employees of the other party for any purpose whatsoever.

15.2 Both parties agree not to use or refer to, without the other party's
written permission, which shall not be unreasonably withheld, the other's name
or agreements with the other party, or the terms of this Agreement, in any
public statement, whether oral or written, including, but not limited to,
communications with the media, or prospectuses; provided, however, that either
party may, without the consent of the other party, make whatsoever disclosure is
required by law, and particularly by the Securities and Exchange Act of 1934, as
amended, the regulations promulgated thereunder, and any applicable NASDAQ
rule. The parties agree that the press release attached hereto as Schedule F may
be made public.

15.3 Except as allowed under Article 15.2 above, ENZON shall not, without the
written permission of SCHERING's Vice-President, Business Development, publish
or report any information related to Agreement Substance or Agreement Product,
such approval shall not unreasonably be withheld, and shall be deemed to have
been given unless notice in writing to the contrary has been given to ENZON
within sixty (60) days from receipt by SCHERING of a request to approve such
publication or report.

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Article 16 - No Inconsistent Obligations

Each party hereto represents and warrants that it has no obligations or
commitments inconsistent with this Agreement and that it knows of no reason the
Development Program may not proceed as set forth in Schedule B hereto.

Article 17 - Severability; Survival

(a)   Should any part of this Agreement be held unenforceable or in
conflict with the applicable laws or regulations of any
jurisdiction, the invalid or unenforceable part or provision shall
be replaced with a provision which accomplishes, to the extent
possible, the original business purpose of such invalid or
unenforceable part or provision in a valid and enforceable manner,
and the remainder of this Agreement shall remain binding upon the
parties hereto.

(b)   The terms of this Agreement which by their intent or meaning have
validity beyond the term of this Agreement shall survive the
termination or expiration of this Agreement.

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Article 18 - Captions

18.1 The captions of this Agreement are solely for the convenience of reference
and shall not affect its interpretation.

18.2 Schedules A-1, A-2, A-3, B, C, D, E and F are attached to and made a part
of this Agreement.

Article 19 - Waiver

The failure of either party at any time to times or enforce or require
performance of any provision of this Agreement shall in no way operate as a
waiver or affect the right of such party at a later time to enforce the same. No
waiver by either party of any condition or the breach of any term or agreement
contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or shall be construed as a further or
continuing waiver of any such condition or breach, or a waiver of any other
condition or of any other breach of any other term contained in this Agreement.

Article 20 - Notice

Any notice, payment, report or other correspondence (hereinafter collectively
referred to as "Correspondence") required or permitted to be given hereunder
shall be sent by certified mail, by telefax

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or delivered by hand to the party to whom such Correspondence is required or
permitted to be given hereunder. Any such Correspondence shall be deemed to be
received upon receipt as evidenced by the written and dated receipt signed by
the receiving party or its agent or employee, or as evidenced by telefax
records.

All Correspondence to ENZON shall be addressed as follows:

Enzon, Inc.
40 Cragwood Road
South Plainfield, NJ 07080-2406
Attention: Vice President, Corporate Development
with a copy to: General Counsel, Law Department

All Correspondence to SCHERING shall be addressed as follows:

Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attention: Vice President, Business Development
with a copy to: Legal Director, Research and Licensing

Any entity may change the address to which correspondence to it is to be
addressed by notification as provided herein.

Article 21 - Entire Agreement

This Agreement, including Schedules A through F attached hereto, and the Letter
Agreement between the parties dated April 3, 1990, (the "Letter Agreement")
represent the entire understanding between the parties with respect to the
subject matter hereof, and supersede all other prior agreements, negotiations,
understandings, representations, statements and writings between the parties
relating thereto. No modification, alteration, waiver or change in

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any of the terms of this Agreement shall be valid or binding upon the parties
hereto unless made in writing and duly executed by each of the parties hereto.
In the event of any conflict between this Agreement and the Letter Agreement,
this Agreement shall control.

IN WITNESS WHEREOF, this Agreement has been executed by the parties to be
effective as of the day and year first written above.

--------------
APPROVED AS TO
LEGAL FORM
[INITIALS]
--------------

ENZON, INC.                             SCHERING CORPORATION

By: /s/ Abraham                         By: /s/ Donald R.
---------------------------             ---------------------------------

Title: President and CEO                Title: President, Pharmaceuticals
------------------------               -------------------------------

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APPENDIX I

Initial Specifications for Agreement Substance

TEST                        SPECIFICATION
----                        -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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APPENDIX II

Additional Specifications for Agreement Substance

TEST                                   SPECIFICATIONS
----                                   --------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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SCHEDULE A-1

SPECIFICATIONS FOR AGREEMENT SUBSTANCE
(SCM 30500 Drug Substance in Solution)

TEST                                 SPECIFICATION
----                                 -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-99

SCHEDULE A-2

SPECIFICATIONS FOR BULK CONCENTRATE
(PEG-SCH 30500 in Solution)

TEST                                SPECIFICATION
----                                -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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SCHEDULE A-3

SPECIFICATIONS FOR AGREEMENT PRODUCT
(Modified PEG-Intron A Solution, 50x10^6 IU/ml.)

TEST                                SPECIFICATION
----                                -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-101

SCHEDULE B

SCH 30500--PEG INJECTION
DEVELOPMENT PLAN

START/
COMPLETION
ACTIVITY                        TARGET             RESPONSIBILITY
-------------------------------------       -----------          --------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-102

-2-

START/
COMPLETION
ACTIVITY                        TARGET             RESPONSIBILITY
-------------------------------------       -----------          --------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-103

-3-

START/
COMPLETION
ACTIVITY                        TARGET             RESPONSIBILITY
-------------------------------------       -----------          --------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-104

PROJECTED NDA TIMELINE

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-105

SCHEDULE C

PATENT RIGHTS

(To be updated by the parties as required under Article 1.11.]

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SCHEDULE D

CRITERIA FOR DEMONSTRATING EFFICACY
IN A PILOT CLINICAL STUDY

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

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E-107

SCHEDULE E

SUPPLY AGREEMENT

[omitted no longer in effect]

E-108

Amendment No. 1  December 10, 1991

FILE COPY

SCHERING CORPORATION           J.M.K. SEP 23 1991

GALLOPING HILL ROAD [LOGO] KENILWORTH, N.J 07033

CABLES: SCHERING KENILWORTH
TELEX: 138315
138280
TELEPHONE: (201) 298-4OOO

September 16, 1991

Enzon, Inc.
40 Cragwood Road
South Plainfield, NJ 07080-2406

ATTN: Glenn Kazo

Dear Mr. Kazo:

Pursuant to Article 1.5 of our Development, License and Supply Agreement
(the "Agreement"), dated November 14, 1990, this will confirm our agreement to
amend the Development Plan, as defined in the Agreement, in accord with the
attached memo from M. Zupon, dated April 29, 1991, and with the amended Schedule
B to the Agreement, both of which are attached hereto.

Please indicate your acceptance of the foregoing by signing one copy of
this letter as indicated below and returning it to us for our files.

Very Truly yours,

SCHERING CORPORATION            ---------------
APPROVED AS TO
LEGAL FORM
By: /s/ William J. Breiner
--------------------------      [INITIALS]
William J. Breiner              LAW DEPT
Vice President              ----------------
Business Development

Accepted and Agreed:

ENZON, INC.

By /s/ Glenn M. Kazo   Glenn M. Kazo
----------------------------------------

Title Vice President Corporate Development

Date 12/10/91

C/ADAG2691

cc: John Caruso, Esq. (Enzon)
Karin Cast
Ann Martin

E-109

[LOGO] Schering-Plough                                                     Memo

Meeting Attendees                                       Date: April 29, 1991

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-110

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

/s/ Michael A. Zupon
-----------------------------

MAZ/nf Mtg(2)
Attachment

E-111

ATTACHMENT VII

SCHEDULE B

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-112

-2-

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-113

-3-

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-114

Amendment No. 2  October 30, 1992

[Amendment No. 2 is no longer in effect and therefore is not included in this
filing]

E-115

Amendment No. 3  March 1993

[Amendment No. 3 is no longer in effect and therefore is not included in this
filing]

E-116

Amendment No. 4 June 30, 1995

[LOGO] ENZON, Inc.
=========================================================================

June 30, 1995

Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033

Gentlemen:

This letter sets forth the terms and conditions under which Schering
Corporation (hereinafter called "SCHERING") and Enzon, Inc. (hereinafter called
"ENZON") agree to further amend their Development, License and Supply Agreement
dated November 14, 1990 (hereinafter the "Agreement"). Except as stated
otherwise in this letter amendment, capitalized words used herein shall have the
same meaning as those defined in the Agreement. A "Stock Purchase Agreement"
between the parties is effective concurrently with this letter amendment. This
letter amendment is effective June 30, 1995.

The Agreement shall be amended as follows:

Amendment 1

Under the March 2, 1993 letter amendment to the Agreement, paragraph 6, SCHERING
decided to continue development of an "Optimal Formulation" and ENZON provided
SCHERING with several batches of such Optimal Formulation. Additionally,
SCHERING elected to similarly pursue a second "Optimal Formulation" through the
filing of an IND. No additional payment is due ENZON pursuant to Article 6.1(b)
of the Agreement in connection with the second Optimal Formulation and all
payments required under the March 2, 1993 letter amendment to the Agreement have
been made by SCHERING.

================================================================================
40 Kingsbridge Road Piscataway, NJ 08854-3998 (908) 980-4500
FAX: (908) 980-5911

E-117

Amendment 2

Schedules A-1, A-2, B, C, and D, which were attached to the Agreement and part
thereof on November 14, 1990, are hereby deleted and replaced by the new
schedules of that same designation, which are attached to this letter amendment.
Schedule A-3 is deleted and when SCHERING develops new and final specifications
they will be put into the Agreement as a new Schedule A-3. Further, new
Schedules G and H are attached to and made a part of this letter amendment. All
references below to Schedules, and future interpretation of this letter
amendment and the Agreement, shall be made with respect to these new Schedules.

Amendment 3

In Article 1.2, delete -- ENZON -- and -- are -- in the fourth line and replace
them, respectively, with -- SCHERING -- and -- will be --. Add at the end of
Article 1.4, -- SCHERING may amend the specifications in Schedule A-2 after the
effective date of this letter amendment if in its reasonable judgment it is
necessary to do so. ENZON shall not be responsible for such specifications as
amended unless it chooses to supply Bulk Concentrate pursuant to Article 
3.1, --.

Amendment 4

In Article 1.5, strike the last three lines and insert -- in Schedule B hereto
made by SCHERING -- .

Amendment 5

In Article 2.3, delete -- ENZON and -- in the second line and delete the last
sentence in this Article. Further, insert therein

2

E-118

-- Neither party will unreasonably withhold consent to changes in the
Development Program --.

Amendment 6

In Article 2.4, strike the last six lines and insert -- approvals and bear all
costs of such trials, including the manufacture and supply of Agreement Product
used in the trials referenced in the Development Program --.

Amendment 7

Delete Article 2.6 and insert the following:

"The parties hereto shall keep each other informed of their activities
hereunder and the status of the Development Program by means of a
quarterly written summary report, a form to be agreed upon by such
parties. ENZON shall, at SCHERING'S reasonable request, take all
reasonable steps necessary to allow SCHERING to reference ENZON'S drug
master file for Agreement Product, which exists as of the effective date
of this letter amendment, but have no obligation to hereafter add to or
modify it, except any obligation which may arise from the exercise by
ENZON of it's option rights to supply SCHERING'S United States
requirements for Bulk Concentrate under Article 3.1."

Amendment 8

In Article 2.8 strike the last three lines and insert -- any additional Know-How
in SCHERING'S possession as SCHERING shall determine is required under the
Development Program --.

3

E-119

Amendment 9

Delete the present Article 2.9. Insert therein -- SCHERING shall supply to ENZON
in a timely fashion, at no cost, quantities of Agreement Substance necessary to
make the Bulk Concentrate called for under Article 3.1.--

Amendment 10

Delete Article 2.11.

Amendment 11

***

Amendment 12 

Delete Articles 3.1 and 3.2 and insert the following:

"3.1 SCHERING shall notify ENZON when it receives FDA approval for
Agreement Product no later than ten (10) days after such receipt. During
the two year period after the date of such FDA approval, ENZON shall have
the exclusive option, even as to SCHERING, to elect to manufacture for
SCHERING and its Affiliates and their sublicensees all of their
requirements for Bulk Concentrate to be sold in the U.S. during the Term
of this Agreement. If ENZON elects to supply such Bulk Concentrate, ENZON
shall supply, and SCHERING shall purchase, such Bulk Concentrate under the
terms and conditions of the "Supply Agreement" attached as Schedule

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

4

E-120

E to the Agreement. ENZON shall not have to supply, and SCHERING shall not
have to accept, Bulk Concentrate before seven months have expired since
the giving of such notice."

"3.2(a) In consideration of the payments made by SCHERING to ENZON under
the June 30, 1995 letter amendment, ENZON shall promptly transfer after
June 30, 1995 previously undisclosed Know-How, owned and controlled by
ENZON as of June 30, 1995, which is necessary to acquire polyethylene
glycol("PEG") from third party vendors for conversion to Bulk Concentrate
and to manufacture Bulk Concentrate, and to obtain regulatory approvals to
manufacture Bulk Concentrate and Agreement Product and to market Agreement
Product. This transfer is being made by ENZON for the sole purpose of
SCHERING developing, and obtaining FDA approval to manufacture, market and
sell the Bulk Concentrate and Agreement Product. SCHERING shall use such
Know-How only as necessary for such purposes. It is the intention of the
parties that such Know-How not in any way be used for or relied on by
SCHERING to independently develop its own technology for combining PEG
with polypeptide. Further to the obligations specified in Article 11,
SCHERING will not disclose such ENZON Know-How to any party other then a
SCHERING Affiliate, a government authority required to approve the
registration or sale of Agreement Product, or a vendor producing PEG for
SCHERING provided such vendor has an obligation of confidentiality to
SCHERING in connection

5

E-121

therewith. Further, SCHERING shall only disclose or allow access of such
ENZON Know-How to only those persons described above in this Article
3.2(a) who need such knowledge or access, as strictly interpreted, in
connection with the above stated purposes. As stated in Article 1.8(a) in
connection with SCHERING Independent Know-How, in the event SCHERING shall
develop any idea, invention or technology for combining PEG or any other
polyalkyleneoxide with any polypeptide, chemical or other compound the
presumption shall be that such development occurred, was based on and
originated out of such ENZON Know-How, unless SCHERING can reasonably
clearly demonstrate that it was developed by SCHERING or its Affiliates
without the aid, application, or use of such ENZON Know-How or the
participation of any SCHERING employee or consultant who had knowledge of
such Know-How. Further the second last sentence in Article 1.8(a)
relating to "SCHERING Information", shall be modified and interpreted to
exclude such ENZ0N Know-How or steps taken by SCHERING based on such
ENZON Know-How."

"3.2(b) ENZON shall transfer to SCHERING the Know-How referred to in
Article 3.2(a) promptly after June 30, 1995, generally in accordance with
the time table set forth in new Schedule G attached to and made a part of
the June 30, 1995 letter amendment. It is the intention of the parties
that ENZON provide to SCHERING, for example, but not by way of limitation
on SCHERING, the "recipe" for making and testing the Agreement Product,

6

E-122

but not ENZON's thought processes, theories, or reasons that led to such
recipe. Further, as an example only, ENZON shall provide SCHERING with its
standard operating procedures, batch records and raw material in-process,
final release assay protocols and available assay validations used in
connection with Agreement Product. However, ENZON shall not transfer to
SCHERING any of the information or documentation that led to ENZON's
selection or arrangement of the steps or information in these items.
Notwithstanding the remainder of this Article 3.2(b), such Know-How
shall include all elements of ENZON'S thought processes, theories or
reasons or previously referred to steps or information which ENZON relied
on in the manufacture of Bulk Concentrate. The foregoing limitations on
ENZON'S disclosure of such Know-How to SCHERING shall not apply to any of
such Know-How which is necessary to be disclosed to a government agency
for approval by that agency to manufacture Bulk Concentrate and / or sell
Agreement Product, provided such disclosure is done under confidentiality.

"3.2(c) Schedule G, entitled "Information Needed and Activities To Be
Completed For Transfer Of Know-How", lists particular information and
documents which ENZON shall transfer to SCHERING relating to the Know-How
described in Article 3.2 (a), but is not all inclusive of such Know-How.
In connection with the transfer of such Know-How to SCHERING under Article
3.2(b) ENZON will also provide to SCHERING and its Affiliates, and their

7

E-123

designees with regard to PEG and manufacture of Bulk Concentrate meeting
specifications included in Schedule A-2 as of June 30, 1995, reasonable
technical assistance in utilizing such Know-How. SCHERING shall pay
ENZON's reasonably documented out of pocket expenses for such assistance.
Further, upon completion or transfer of such information and documents and
of the activities specified in Schedule G, SCHERING shall make the One
Million Dollar($1,000,000) payment to ENZON described in "Amendment 15"
of the June 30, 1995 letter amendment."

Amendment 13

In Article 4.7, in the third line, delete -- licenses -- and insert -- license
--. Further, delete the last five lines and insert -- during the Term of this
Agreement, to make, have made, use and sell Bulk Concentrate and Agreement
Product in the Territory. This license shall include the right to sublicense
SCHERING'S Affiliates, with respect to making and having made the Bulk
Concentrate and Agreement Product, third party vendors with respect to the
manufacture of conforming PEG and its Affiliates or third parties, with respect
to using and selling Agreement Product. Notwithstanding the exclusive license
granted under the previous sentence, ENZON shall retain the right to manufacture
and supply Agreement Product to SCHERING under the terms and conditions covered
under Article 3.1, if ENZON exercises its option under that Article --.

Amendment 14

In Article 4.8, delete the first two lines on page 20 and insert --

8

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Bulk Concentrate and to manufacture Bulk Concentrate, under the terms and
conditions specified in Article 3.1 -- . In Article 4.9, in the sixth line, add
-- Bulk Concentrate or -- before the words -- Agreement Product --.

Amendment 15

In addition to the batches of Bulk Concentrate covered under the March 2, 1993
amendment to the Agreement sold to SCHERING, ENZON has delivered eleven (11)
batches of such Bulk Concentrate to SCHERING for total of eight hundred
eighty-five thousand dollars ($885,000), which SCHERING has paid to ENZON. In
addition to the payments called for under Article 6.1(a) - (f), SCHERING shall
also pay ENZON two million dollars ($2,000,000) within twenty(20) days after the
effective date of this letter amendment and a further additional one million
dollars ($1,000,000) on the completion of the transfer of Know-How from ENZON to
SCHERING covered under Article 3.2(c) of this letter amendment.

Amendment 16

Delete the Article 6.1 (C) and add the following

"(c) One million dollars ($1,000,000) within ten days after dosing the
first patient enrolled in the Phase 2 Clinical Trial, as that phase is described
in the Development Program (as per Schedule D(a)) and one million five hundred
thousand dollars ($1,500,000) within ten days after SCHERING's initiation of
large scale clinical trials as described in Schedule D(b)."

Amendment 17

In Article 9.2(a), in the third line, after --, -- delete the

9

E-125

ba1ance of Article 9.2(a) and insert the following:

"if any of the requirements specified in new Schedule H attached hereto
and made a part of the June 30, 1995 letter amendment are not met or."

Delete Article 9.2 (b) and insert the following:

" after completion of the initial clinical trial demonstrating that
Agreement Product meets the criteria set forth in Schedule D attached
hereto; provided, however, that if such successful completion shall have
taken place, SCHERING'S right to terminate under this Article 9.2 (b)
shall be contingent upon SCHERING'S having made to ENZON the total
payments of *** set forth in Article 6.1(c)."

Amendment 18

In Article 10 add the following new representations and warranties:

"10.9 As of June 30, 1995, ENZON and it's subsidiaries are each a
corporation duly organized and existing in good standing under the laws of
the jurisdiction of their incorporation, except, in the case of such
subsidiaries, as would not have a Material Adverse Effect(as defined
below), and has the requisite corporate power to own its properties and
carry on its business as now being conducted. ENZON and it's subsidiaries
are each duly qualified to do business and in good standing in every
jurisdiction in which the nature of the business conducted or property
owned by them makes such

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

10

E-126

qualification necessary and where the fai1ure so to qualify would have a
Material Adverse Effect. "Material Adverse Effect" means any material
adverse effect on the operation, properties or financial condition of
ENZON and it's subsidiaries taken as a whole."

"10.10 As of June 30, 1995 ENZON has the requisite corporate power and
authority to enter into and perform its obligations under the 1995 letter
amendment, the execution and delivery of the June 30, 1995 letter
amendment by ENZON and the consummation by it of the transaction
contemplated herein have been duly authorized by ENZON's Board of
Directors and no further consent or authorization of ENZON's Board of
Directors or stockholders is required. The June 30, 1995 letter amendment
has been duly executed and delivered by ENZ0N, and constitutes a valid and
binding obligation of ENZON enforceable against ENZON in accordance with
it's terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or reorganization, moratorium, liquidation, or
similar laws relating to, or effecting generally the enforcement of
creditor's rights and remedies or by other equitable principles of general
application."

"10.11 ENZON represents and warrants that the representations and
warranties provided in Article 10.1 and 10.2 of the Agreement shall also
apply and be binding on ENZON with respect to such Know-How transfer to
SCHERING under Article 3.2(b) above and to SCHERING's or

11

E-127

it's Affiliates as manufacture of Bulk Concentrate or Agreement Product
based on the use of such Know-How."

"10.12 As of June 30, 1995, ENZON represents and warrants that there is no
judicial or administrative action or other proceeding pending or, to the
best of it's knowledge, threatened, nor to the best of it's knowledge is
there any governmental investigation pending or threatened that questions
the validity of any of the transactions contemplated under the June 30,
1995 letter amendment."

"10.13 Enzon represents and warrants that with respect to the manufacture
of "M-PEG", "SC-PEG", and Bulk Concentrate ENZON will provide to SCHERING
all of such Know-How referred to in Article 3.2(a), and the reasonable
technical assistance in manufacturing Bulk Concentrate based on such
Know-How referred to in Article 3.2(b), and that such transfer would
enable a party skilled in the art of manufacture of substances similar to
Bulk Concentrate to be able to reproduce Bulk Concentrate meeting the
specifications of Schedule A-2 as they exist on the effective date of the
June 30, 1995 letter amendment in connection with an eight gram batch
thereof."

Amendment 19

In Article 11.5., the fourth and fifth lines, delete -- (but not for any other
purpose or other product) -- and insert -- (but not in contravention of
SCHERING'S obligations or the prohibitions

12

E-128

covered under Article 3.2) --.

[Amendment 20, 21 and 22 relate to the Supply Agreement between Enzon, Inc. and
Schering Corporation which is no longer in effect, therefore, these Amendments
are not included in this filing]

Amendment 23

13

E-129

In Article VI of the Supply Agreement, delete the last sentence and insert -- in
that case SCHERING shall be free to cancel such purchase order, in addition to
exercising any other legal remedies which SCHERING may have under the Agreement.
Further, in connection with ENZON's breach of it's obligations under this Supply
Agreement, Article 9.3 and Article 14 of the Agreement as they relate to
SCHERING'S right to terminate the Supply Agreement shall be incorporated by
reference into this Supply Agreement --.

Amendment 24

All rights and licenses granted under or pursuant to the Agreement by
ENZON to SCHERING are, for all purposes of Section 365(n) of Title 11 of the
U.S. Code ("Title 11"), licenses of rights to intellectual property as defined
in Title 11. ENZON agreed during the Term to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property. If a
case is commenced by or against ENZON under Title 11, then, unless and until
this Agreement is rejected as provided in Title 11, ENZON (in any capacity,
including debtor-in-possession) and its successors and assigns (including,
without limitation, a Title 11 Trustee) shall, as SCHERING may elect in a
written request, immediately upon such request (i) perform all of the
obligations provided in the Agreement to be performed by ENZON including, where
applicable and without limitation, providing to SCHERING portions of such
intellectual property (including embodiments thereof) held by ENZON and such
successors and assigns or otherwise available to them or (ii) provide to
SCHERING all such intellectual property (including all, embodiments thereof)
held by ENZON and such successors and assigns or otherwise

14

E-130

available to them. If a Title 11 case is commenced by or against ENZON, this
Agreement is rejected as provided in Title 11 and SCHERING elects to retain its
rights hereunder as provided in Title 11, then ENZON (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Title 11 Trustee) shall provide to SCHERING all such intellectual
property (including all embodiments thereof) held by ENZON and such successors
and assigns or otherwise available to them immediately upon SCHERING's written
request therefor. Whenever ENZON or any of its successors or assigns provides
to SCHERING any of the intellectual property licensed hereunder (or any
embodiment thereof) pursuant to this paragraph, SCHERING shall have the right to
perform the obligation of ENZON hereunder with respect to such intellectual
property, but neither such provision nor such performance by SCHERING shall
release ENZON from any such obligation or liability for failing to perform it.
All rights, powers and remedies of SCHERING provided herein are in addition to
and not in substitution for any and all other rights, powers and remedies now or
hereafter existing at law or in equity (including, without limitation, Title 11)
in the event of the commencement of a Title 11 case by or against ENZON.
SCHERING, in addition to the rights, powers and remedies expressly provided
herein, shall be entitled to exercise all other such rights and powers and
resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, Title 11) in such event. The parties
agree that they intend the foregoing SCHERING's rights to extend to the maximum
extent permitted by law, including without limitation for purposes of Title 11,
(i) the right of access to any intellectual property (including all embodiments
thereof) of ENZON, or any third party with whom ENZON contracts to perform an

15

E-131

obligation of ENZON under the Agreement, and in the case of the third party,
which is necessary for the development, registration and manufacture of Bulk
Concentrate and Agreement Product and (ii) the right to contract directly with
any third party as described in (i) in the sentence to complete the contracted
work.

Except as expressly set forth above, all other non-conflicting terms and
conditions of the Agreement shall remain in full force and effect.

Please indicate your acceptance of the foregoing by signing the enclosed copy of
this letter amendment and returning it to us.

Very truly yours,

ENZON, INC.

By: /s/ 
---------------------------

Title: President and Chief Executive Officer

ACCEPTED:

SCHERING CORPORAITON            ------------
LEGAL REVIEW
By: /s/ David Poorvin
---------------------------    [INITIALS]
------------
Title: Vice President
------------------------------------

JAC/cam

16

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SCHEDULE A-1

TEST                      SPECIFICATION
----                      -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-133

SCHEDULE A-2

TEST(1)                   SPECIFICATION
-------                   -------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-134

SCHEDULE B

Activity                Start/Completion Target               Responsibility
--------                -----------------------               --------------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-135

SCHEDULE C

PATENT RIGHTS

DATE                                 DATE
TITLE       INVENTOR    COUNTRY    FILED    SERIAL NO.    PATENT NO.    ISSUED
-----       --------    -------    -----    ----------    ----------    ------

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-136

SCHEDULE D

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-137

SCHEDULE G

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-138

SCHEDULE H

***

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-139

Amendment No. 5 June 24, 1999

AMENDMENT AGREEMENT

This "Amendment Agreement" effective as of the last date on the signature
page hereof, by and between Enzon, Inc. ("ENZON") and Schering Corporation
("SCHERING") amends and supplements that certain Development, License and
Supply Agreement between ENZON and SCHERING dated November 14, 1990, as amended
by: the Letter Amendment effective June 30, 1995, and the amendment letters of
March 2, 1993, October 30, 1992 and December 10, 1991 (collectively, the
"Agreement").

WHEREAS, ENZON has developed technology relating to branched chain PEG and
holds patent rights relating thereto, the U-PEG Patent Rights (as defined
below); and 

WHEREAS, SCHERING desires to obtain a license under the U-PEG Patent
Rights; and

WHEREAS, the parties further desire to modify certain provisions of the
Agreement relating to the manufacture of Agreement Product, payment of royalties
on sales of Agreement Product, and rights under Patent Rights and to use
Know-How;

NOW THEREFOR, The parties hereby agree to further amend the Agreement as
follows:

Except as expressly defined herein, all capitalized terms shall have the
meanings set forth in the Agreement, as amended.

1.    Add the following new provisions to Article 1:

"1.15 "U-PEG Patent Rights" shall mean United States patent number ***
together with its foreign counterparts and any reissues, re-examinations,
extensions, substitutions, confirmations, registrations, revalidations,
additions, continuations, continuations-in-part and divisions of any of
the foregoing. U-PEG Patent Rights shall not be included in Patent Rights
under the Agreement.

1.16 "Roche Patent Rights" shall mean United States patent which may be
infringed by Agreement Product, together with its foreign counterparts and
any reissues, re-examinations, extensions, substitutions, confirmations,
registrations, revalidations, additions, continuations,
continuations-in-part and divisions of any of the foregoing, which are
owned or controlled by F. Hoffmann La Roche Ltd. or its Affiliates
(collectively "Roche").

1.17 "Licensed ENZON Patent Rights" shall mean any ENZON Patent Rights
invented by SCHERING, or jointly by SCHERING and ENZON, and owned and/or
assigned to ENZON pursuant to Section 4.3 of the Agreement."

2.    Delete Articles 2.9, 3.1 and the Supply Agreement set forth in Schedule E
in their entirety.

3.    Delete Article 1.4 and insert in its place the following:

"1.4 "Bulk Concentrate" shall mean Agreement Product in bulk concentrated
form meeting the criteria set forth in Schedule A-2 hereof.
(Specifications for Bulk Concentrate). SCHERING may amend the
specifications in Schedule A-2 if in its reasonable judgment it is
necessary to do so. ENZON shall not be responsible for such specifications
as amended."

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-140

4.    Delete Article 2.6 and insert in its place the following:

"2.6 The parties hereto shall keep each other informed of their activities
hereunder and the status of the Development Program by means of a
quarterly written summary report in a form to be agreed upon by such
parties. ENZON shall, at SCHERING's reasonable request, take all
reasonable steps necessary to allow SCHERING to reference ENZON's drug
master file for Agreement Product, which exists as of June 30, 1995, but
have no obligation to hereafter add to or modify it."

5.    Delete Article 4.7 and insert in its place the following:

"4.7 Subject to the other terms of this Agreement, ENZON hereby grants to
SCHERING and SCHERING hereby accepts, an exclusive license, exclusive even
as to ENZON, under the ENZON Patent Rights, the ENZON Existing Know-How
and the ENZON Development Know-How, during the term of this Agreement, to
make, have made, use, import, export, offer for sale and sell Bulk
Concentrate and Agreement Product in the Territory. This license shall
include the right to sublicense: (i) SCHERING's Affiliates with respect to
making and having made the Bulk Concentrate and Agreement Product, (ii)
third party vendors with respect to the manufacture of conforming PEG, and
(iii) its Affiliates or third parties with respect to using importing,
exporting, offering for sale and selling Agreement Product."

6.    Delete Article 4.8 and insert in its place the following:

"4.8 Subject to the other terms of this Agreement and for the sole purpose
of ENZON's development and manufacture of Agreement Product for SCHERING,
SCHERING hereby grants ENZON the right, under the SCHERING Information,
the SCHERING Patent Rights, the SCHERING Existing Know-How, the SCHERING
Development Know-How, and the RC License (as hereinafter defined) during
the term of this Agreement, to use Agreement Substance in the development
of Bulk Concentrate and Agreement Product for SCHERING."

7.    Add the following new provision to Article 4:

"4.11 ENZON hereby grants to SCHERING and SCHERING hereby accepts a
non-exclusive license in the Territory under the U-PEG Patent Rights
during the term of this Agreement to make, have made, use, import, export,
offer for sale and sell pharmaceutical products in which alpha interferon
as an active ingredient is coupled with PEG. The licenses granted to
SCHERING under this Section 4.11 shall include the right to grant
sublicenses to SCHERING's Affiliates and/or to any third party.

4.12 ENZON hereby grants to SCHERING and its Affiliates, and SCHERING and
its Affiliates hereby accept, a non-exclusive license in the Territory
under the Licensed ENZON Patent Rights for all purposes during the term of
this Agreement. The license granted under this Section 4.12 includes,
without limitation, the right to make, have made, use, import, export,
offer for sale and sell pharmaceutical products comprising one or more
active ingredients coupled with PEG, and the limited right to grant
sublicenses to (i) third party contractors in connection with the
discovery, development and commercialization of such products by or on
behalf of SCHERING or its Affiliates, and/or (ii) SCHERING's, or its
Affiliates', third party licensees and/or distributors of such products."

E-141

8. It is the intent of the parties that ENZON shall be primarily responsible for
the prosecution, maintenance and defense of the U-PEG Patent Rights, at ENZON's
expense, and that the provisions of Article 5 of the Agreement which govern the
performance of such activities with regard to ENZON Patent Rights will also
control with respect to the U-PEG Patent Rights.

9.    Delete Article 7.1(b) and insert in its place the following:

"(b)  In each calendar year during the term of this Agreement, in
connection with SCHERING's sales of Agreement Product which do not
require payment of a royalty under Article 7-1(a) above, if
Competition (as defined in Article 7.1(d) below) exists in any such
country, SCHERING shall pay ENZON a royalty of ***."

10.   Delete Article 7.1(c) and insert in its place the following:

"(c)  In each calendar year during the term of this Agreement, in
connection with SCHERING's sales of Agreement Product which do not
require payment of a royalty under Article 7.1(a) above, if
Competition does not exist in any such country, SCHERING shall pay
ENZON a royalty of ***."

11.   Delete Article 7.1(d) and insert in its place the following:

"(d)  For purposes of this Article 7, "Competition" shall mean sales by a
party or parties (other than Roche, or SCHERING and its Affiliates,
or the licensees, distributors or agents of any of the foregoing) in
any country of the Territory, of a competitive product which
contains alpha interferon (as a significant active ingredient)
coupled with PEG to produce a longer-lasting product, with respect
to which product claims are made which are substantially similar to
those of Agreement Product, and the promotion, marketing or sale of
such competitive product does not infringe any of the Patent Rights
or Know-How exclusively licensed to SCHERING hereunder (or for
which, because of weak or ineffective intellectual property law in a
country or countries, there exists no effective patent of know-how
protection) and: (1) the sales of such competitive product made by
any one party equal *** or, (2) the sales of such competitive
product by two or more parties equal, with respect to such party,
*** but, considering the sales of such competitive product made by
all such parties in the aggregate, equal ***."

12.   Add new Articles 7.3 and 7.4 as follows:

"7.3 Notwithstanding the terms of Article 7.2, SCHERING will not be
entitled to deduct any amount paid as Third-Party Royalties to F. Hoffmann
La Roche Ltd. or its Affiliates ("Roche") as a result of any Roche Patent
Rights which may be infringed by SCHERING's sales of Agreement Product.
SCHERING shall have the right, in its sole discretion, to negotiate the
settlement of any claim or action related to the infringement of

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-142

any Roche Patent Rights. SCHERING will allow ENZON to participate in such
negotiations.

7.4 ***

13.   Add the following new provision to the end of Article 8.1:

"SCHERING's obligation to pay royalties on sales of Agreement Product
shall expire, unless terminated earlier as expressly provided in Article
9, on a country-by-country basis upon the longer of(a) the life in each
country of the last to expire of the ENZON Patent Rights for which a Valid
Claim exists, including any patent extension (or other governmental action
which has the effect of extending the period of market exclusivity of the
patent owner) which is permitted by law and obtained, or (b) fifteen (15)
years from the date on which Agreement Product is first approved for
commercial marketing in each such country."

l4.   Delete Article 9.1 and insert in its place the following:

"9.1 This Agreement shall be made effective on the date first written
above and shall continue in effect, unless terminated earlier as expressly
provided herein, for a term which shall expire, on a country-by-country
basis, upon the longer of (a) the duration of SCHERING's obligation to pay
royalties in each country, as set forth Article 8.1, or (b) the life in
each country of the last to expire of the U-PEG Patent Rights and/or
Licensed ENZON Patent Rights, including any patent extension (or other
governmental action which has the effect of extending the period of market
exclusivity of the patent owner) which is permitted by law and obtained
("Term")."

15.   In Article 10.3, in lines three and four, delete the term -- and the
Supply Agreement --.

16.   Delete Article 10.7 and insert in its place the following:

"10.7 During the term of this Agreement Enzon shall maintain an adequate
insurance program for liability insurance, including products liability
and contractual liability insurance, to cover its obligations under this
Agreement."

17. It is the intent of the parties that during and after the term of the
Agreement SCHERING shall have the right to utilize any Development Know-How
developed by SCHERING, either alone or jointly with ENZON, as well as any
Licensed ENZON Patent Rights, SCHERING Independent Know-How and SCHERING
Existing Know-How, to independently develop and commercialize products in which
one or more active ingredients, whether proteins (other than Agreement

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-143

Substance) or other compounds, are coupled with PEG ("Other Products"). The
parties acknowledge and agree (i) that any and all Other Products are outside
the scope of the Agreement, (ii) that nothing contained in the Agreement or this
Amendment Agreement shall be construed, either expressly, by estoppel or
otherwise, as granting or otherwise providing to ENZON any license or other
rights in or to such Other Products, and (iii) that ENZON will not be entitled
to any milestone payments or royalties under the Agreement or this Amendment
Agreement with respect thereto. In order to give effect to the intent of the
parties the Agreement is hereby amended as follows:

(a)   Delete Article 2.12 and insert in its place the following:

"2.12 Nothing herein shall be construed to prevent SCHERING from
independently developing its own technology for combining PEG with
polypeptides and other compounds for any use whatsoever."

(b)   Delete Article 3.2(a) and insert in its place the following:

"3.2(a) In consideration of the payments made by SCHERING to ENZON
under the June 30, 1995 letter agreement, ENZON has transferred to
SCHERING Know-How, owned and controlled by ENZON as of June 30,
1995, which is necessary to acquire PEG from third party vendors for
conversion to Bulk Concentrate and to manufacture Bulk Concentrate,
and to obtain regulatory approvals to manufacture Bulk Concentrate
and Agreement Product, and to market Agreement Product. Further to
its obligations specified in Article 11, SCHERING will not disclose
such ENZON Know-How to any party other than a SCHERING Affiliate, a
government authority required to approve the registration or sale of
Agreement Product or other products developed by SCHERING, or a
vendor producing PEG for SCHERING provided such vendor has an
obligation of confidentiality to SCHERING in connection therewith.
Further, SCHERING shall only disclose or allow access of such ENZON
Know-How to only those persons described in this Article 3.2(a) who
need such knowledge or access, as strictly interpreted, in
connection with the above stated purposes.

18.   Add the following new representations and warranties to Article 10:

"10.14 ENZON represents and warrants (a) that it has the sole, full and
complete right, title and interest in the U-PEG Patent Rights, (b) that it
has the full right, power and authority to grant the licenses and other
rights granted to SCHERING under this Amendment Agreement, and (c) that as
of the effective date of this Amendment Agreement there are no claims,
judgments or settlements against or owed by ENZON relating to the U-PEG
Patent Rights, and to the best of ENZON's knowledge there are no pending
or threatened claims or litigation, relating to the U-PEG Patent Rights
which have not been disclosed by ENZON to SCHERING, except Civil Action
98-5597 commenced by ENZON against Shearwater Polymers, Inc. in the State
of Alabama.

10.15 Each of SCHERING and ENZON represents and warrants that it has the
right to enter into this Amendment Agreement and has no obligation, or
knows of no obstacle, which would prevent it from carrying out its
obligations and responsibilities hereunder.

10.16 ENZON represents and warrants that the representations and
warranties set forth in Article 10.9 remain true and in full force and
effect as of the effective date of this Amendment Agreement.

E-144

10.17 ENZON represents and warrants that as of the effective date of this
Amendment Agreement it has the requisite corporate power and authority to
enter into and perform its obligations hereunder, that the execution and
delivery of this Amendment Agreement by ENZON and the consummation of the
transactions contemplated hereunder have been duly authorized by ENZON's
Board of Directors and no further consent or authorization of ENZON's
Board of Directors or stockholders is required. This Amendment Agreement
has been duly executed and delivered by ENZON and constitutes a valid and
binding obligation of ENZON, enforceable against ENZON in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, or reorganization, moratorium, liquidation, or
similar laws relating to, or affecting generally the enforcement of
creditor's rights and remedies or by other equitable principles of general
application.

10.18 ENZON represents and warrants (a) that to the best of ENZON's
knowledge based on diligent inquiry, as of the effective date of this
Amendment Agreement the U-PEG Patent Rights are free and clear of any
liens, charges or encumbrances, and no other person, corporate or private
entity, or governmental entity or subdivision thereof, has or shall have
any claim of ownership with respect to such U-PEG Patent Rights, (b) that
during the Term of the Agreement ENZON will use reasonable diligent
efforts not to diminish the rights under the U-PEG Patent Rights granted
to SCHERING hereunder, including without limitation, by not committing or
permitting any actions or omissions which would cause the breach of any
third party agreements relating to the U-PEG Patent Rights, that it will
provide SCHERING promptly with notice of any such alleged breach, and that
as of the effective date of this Amendment Agreement, ENZON is in
compliance in all material respects with all such third party agreements,
if any."

19. The parties acknowledge and agree that the licenses under the U-PEG Patent
Rights granted to SCHERING under this Amendment Agreement are licenses of
rights to intellectual property and are subject to the provisions set forth in
Amendment 24 of the Letter of Agreement dated June 30, 1995.

Except as expressly amended and supplemented hereby, all other terms of
the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be executed in duplicate by their duly authorized representatives.

------------
LEGAL REVIEW

[INITIALS]
------------

ENZON, INC.                              SCHERING CORPORATION

BY: /s/ John P. Caruso                   BY: /s/ David Poorvin, Ph.D.
------------------------------           -----------------------------------

NAME: John P. Caruso                     NAME:  David Poorvin, Ph.D.
----------------------------             ---------------------------------

TITLE: VP - Admin & Gen. Counsel         TITLE: Vice President
---------------------------              --------------------------------

DATE: 6/24/99                            DATE:  23 June 1999
----------------------------             ---------------------------------

E-145

Amendment No. 6 September 13, 1999

AMENDMENT

This "Amendment" effective as of the last date on the signature page
hereof, by and between Enzon, Inc. ("ENZON") and Schering Corporation
("SCHERING") amends and supplements that certain Development, License and Supply
Agreement between ENZON and SCHERING dated November 14, 1990, as amended by:
the Amendment Agreement effective June 24, 1999, the Letter Amendment effective
June 30, l995, and the amendment letters of March 2, 1993, October 30, 1992 and
December 10, 1991 (collectively, the "Agreement").

WHEREAS, the parties desire to clarify the scope of certain provisions of
the Agreement relating to (i) non-competition restrictions imposed on ENZON,
(ii) ENZON's rights under ENZON Patent Rights to which SCHERING may acquire
title under the terms of the Agreement, and (iii) assignment or change of
control;

NOW THEREFOR, The parties hereby agree to further amend the Agreement as
follows:

Except as expressly defined herein, all capitalized terms shall have the
meanings set forth in the Agreement, as amended.

1.    Delete Article 2.13 and insert in its place the following:

"2.13 During the term of this Agreement, anything to the contrary
contained herein notwithstanding, ENZON and its Affiliates shall not
develop any product containing PEG and alpha interferon for itself or with
or for any third party, nor shall it or its Affiliates enter into
discussions or negotiations with any third party concerning any product
containing PEG and alpha interferon."

2.    Delete Article 5.1.2 and insert in its place the following:

"5.1.2 ENZON shall notify SCHERING immediately (1) whenever it files a
patent application related to the ENZON Patent Rights in any country; and
(2) whenever it is considering discontinuance of the prosecution or
maintenance of such a patent application. If ENZON shall fail to file a
patent application related to the ENZON Patent Rights in any country it
shall notify SCHERING immediately in writing, and (a) if ENZON does not
initiate the filing process within ninety (90) days after written request
to do so from SCHERING, or (b) if ENZON does not continue prosecution or
maintenance of such a patent application related to the ENZON Patent
Rights which it has initiated pursuant to the Article 5.1.1 above within
ninety (90) days after written notice from SCHERING, SCHERING shall have
the option to file or continue prosecution in its own name and at
SCHERING's cost. In either such case (a) or (b), ENZON shall do all acts
necessary to assign and vest title to and transfer control of such patent
application in that country in a timely fashion to SCHERING for no
additional consideration. SCHERING hereby covenants that during the term
of this Agreement SCHERING and its Affiliates shall not file or initiate
any suit or other legal action or proceedings against ENZON with respect
to any products, with the exception of products containing both PEG and
alpha interferon, for infringement of any patents acquired, or obtained by
SCHERING from patent applications filed and/or prosecuted by SCHERING,
under this Section 5 1.2 in the

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Territory, The covenant not to sue set forth in this Section 5.1.2 is
personal to ENZON and shall not be transferred or assigned to any third
party."

3.    Delete Article 13.2 and insert in its place the following:

"13.2 Either party hereto may assign this Agreement, without the other
party's consent, to a third party in a transaction in which all the assets
of the assigning party relating to Agreement Product are sold or assigned;
provided such third party was not selling (directly or through an
Affiliate) a product competitive to the Agreement Product prior to such
assignment.

In the event of any such permitted assignment, transfer or designation,
the assignee, transferee or designee shall assume and be bound by the
provisions of this Agreement."

4.    Add new Article 13.3 as follows:

"13.3 In the event that any assignment pursuant to Section 13.1 or 13.2
causes ENZON's rights and obligations hereunder to pass to any third party
which itself or through an Affiliate is developing, manufacturing,
marketing, distributing or selling a product competitive to the Agreement
Product, then SCHERING's obligation under Section 2.6 to keep ENZON
informed and provide quarterly reports with respect to the Development
Program shall immediately terminate."

Except as expressly amended and supplemented hereby, all other terms of
the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in duplicate by their duly authorized representatives.

------------
LEGAL REVIEW

[INITIALS]
------------

ENZON, INC.                              SCHERING CORPORATION

BY: /s/ John Caruso                      BY: /s/ David Poorvin, Ph.D.
------------------------------           -----------------------------------

NAME: John Caruso                        NAME:  David Poorvin, Ph.D.
----------------------------             ---------------------------------

TITLE: VP - Admin & GC                   TITLE: Vice President
---------------------------              --------------------------------

DATE: 9/13/99                            DATE:   8 September 1999
----------------------------             ---------------------------------

E-147

Amendment No. 7

AMENDMENT

WHEREAS, Schering Corporation ("Schering") and Enzon, Inc. ("Enzon")
are parties to that certain Development, License and Supply Agreement having an
effective date of November 14, 1999, as amended (the "Agreement"),

WHEREAS, Schering's parent company is a party to Hoffman-LaRoche
Inc. v. Schering-Plough Corp., Civil Action No. 00-79 (JAG) pending in the U.S.
District Court for the District of New Jersey (the "Roche v. Schering case"),

WHEREAS, Enzon commenced on September 5, 2000 a suit for patent
infringement against Hoffman-La Roche Inc. and Roche Laboratories Inc. in
Federal court in New Jersey (the "Enzon v. Roche" case), and

WHEREAS, Schering and Enzon wish to clarify the effect of the
Agreement, including paragraph 2.13 thereof, on (i) the grant of a license or
sublicense under the U-PEG Patent Rights (as defined in the Agreement) to
Hoffman-LaRoche Inc., Roche Laboratories Inc., or their parents, subsidiaries,
affiliates, successors, assigns or third parties acting on their behalf
(collectively, "Roche"); and (ii) the settlement of Roche v. Schering.

THEREFORE, the Agreement is hereby amended as follows:

1.    Schering shall have sole authority to negotiate and settle (i) Roche
v. Schering; and (ii) the Enzon v. Roche and/or related cases ("the
Cases") (including the right to assume control of the Cases in the
event Enzon decides to discontinue such cases for any reason) or
license Roche under the U-PEG Patent Rights in the field of
pegylated alpha interferon; and Enzon shall not settle the Cases
with or license Roche or directly or

CONFIDENTIAL

E-148

impliedly a third party to enable Roche to make, use, sell, offer to
sell or import pegylated alpha interferon products under the U-PEG
Patent Rights without Schering's written consent (except as provided
below).

2.    If a settlement between Schering and Roche results in withdrawal of
PEG-INTRON from the United States market, then Enzon shall have the
right to negotiate and settle the Cases with Roche under terms as
Enzon sees fit, including the grant of a license to Roche under the
U-PEG Patent Rights.

3.    Schering shall not sublicense Roche under the U-PEG Patent Rights
except as part of a settlement that (i) licenses or releases
Schering under Roche's U.S. patent(s) covering PEG-INTRON; and (ii)
releases Enzon from any counterclaims or demands asserted against
Enzon by Roche (on behalf of Roche and not on behalf of a third
party) relating to the U-PEG patents or in the field of pegylated
alpha interferon products.

4.    If Schering grants a sublicense under the U-PEG Patent Rights to
Roche to settle the Roche v. Schering or Enzon v. Roche or related
cases that results in royalties or royalty equivalents from Roche to
Schering in connection with a license to Roche under the U-PEG
patent rights, such royalties and royalty equivalents that exceed
the value of any royalties or royalty equivalents paid by Schering
to Roche under a license to Schering under the Roche patents
relating to urethane linked pegylated interferon shall be divided
equally between Schering and Enzon. A license under the Roche
patents for Schering to market PEG-INTRON shall not be considered
royalty or royalty equivalents to Schering and is not subject to
division with Enzon hereunder. In the event of a dispute between
Schering and Enzon regarding whether Schering has received royalties
or royalty equivalents from Roche that exceed the value of any

E-149

royalties or royalty equivalents paid by Schering to Roche, such
dispute shall be resolved pursuant to the arbitration provision in
the Agreement.

5.    This Amendment contains the entire agreement of the parties
concerning the subject matter set forth herein. Except as expressly
amended by this Amendment, all terms of the Agreement and all
previous amendments shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed in duplicate by their duly authorized representatives.

ENZON, INC.                              SCHERING CORPORATION

By:                                      By: /s/ 
------------------------------           -----------------------------------
Authorized Representative                  Authorized Representative

Date:                                    Date:
----------------------------             ---------------------------------

E-150

Amendment No. 8 August 10, 2001

AMENDMENT

This "Amendment" effective as of the last date on the signature page
hereof, by and between Enzon, Inc. ("ENZON") and Schering Corporation
("SCHERING") amends and supplements that certain Development, License and Supply
Agreement between ENZON and SCHERING dated November 14, 1990, as amended (the
"Agreement").

WHEREAS, the parties desire to clarify the scope of certain provisions of
the Agreement relating to SCHERING's rights under the ENZON Patent Rights and
the Licensed ENZON Patent Rights;

NOW THEREFORE, the parties hereby agree to further amend the Agreement as
follows:

Except as expressly defined herein, all capitalized terms shall have the
meanings set forth in the Agreement, as amended.

1.    Amend Article 1.2 of the Agreement by adding the following new provision
to the end of the first sentence of that Article:

", whether or not developed by SCHERING under this Agreement."

2.    Add the following new provision to the end of Article 2.13:

"The parties acknowledge and agree that nothing in this Article 2.13 shall
be construed as preventing Enzon from acquiring, through merger,
acquisition or other similar transaction, all or substantially all of the
business and assets of Shearwater Polymers, Inc. ("Shearwater") or from
entering into discussions or negotiations with Shearwater with regard to
such an acquisition."

3.    Amend Article 2 of the Agreement by adding the following new provisions:

"2.14 During the term of this Agreement and subject to receipt of the
necessary regulatory approvals, SCHERING shall use commercially
reasonable efforts to market, promote, distribute and sell an Agreement
Product developed by SCHERING or its Affiliates under this Agreement in
the United States, United Kingdom, France, Germany, Italy and Spain and in
any other countries where in SCHERING's opinion it is commercially viable
to do so. Such commercially reasonable efforts shall be consistent with
the usual practice followed by SCHERING in pursuing the commercialization
and marketing of its other pharmaceutical products of similar potential,
value and status. The parties acknowledge and agree that all business
decisions relating to the commercialization of the Agreement Product,
including, without limitation, decisions relating to registration, design,
manufacture, sale, commercialization, pricing, distribution, marketing and
promotion of

E-151

No. 8

Agreement Products, shall be within the sole discretion of SCHERING
exercised in good faith.

2.15 SCHERING's obligations with respect to commercialization of Agreement
Product under Article 2.14 are expressly conditioned upon the continuing
absence of any adverse condition or event which warrants a delay in
commercialization of the Agreement Product, including, but not limited to,
an adverse condition or event relating to the safety or efficacy of the
Agreement Product, or unfavorable labeling, pricing or pricing
reimbursement approvals, or lack of regulatory approval, and such
obligations shall be delayed or suspended so long as in SCHERING's
reasonable opinion any such condition or event exists."

4.    Amend Article 4 of the Agreement by adding the following new provision:

"4.13 The rights granted to SCHERING under the ENZON Patent Rights in
Article 4.7 and the Licensed ENZON Patent Rights in Article 4.12 shall, to
the extent not previously granted, additionally include the right to grant
a royalty bearing, non-transferable, non-exclusive sublicense, with no
right to grant sublicenses to others, to Hoffmann-LaRoche Inc., F.
Hoffmann-LaRoche Ltd. and their respective Affiliates (collectively,
"Roche") in the Territory (as such term is defined in the Settlement and
License Agreement by and between SCHERING and Roche, dated as of August
10, 2001 (the "Settlement Agreement") to Commercialize Licensed Roche
Product under the Enzon Patent Rights (as such terms are defined in the
Settlement Agreement)."

5.    Delete Article 7.1(b) in its entirety and insert in its place the
following:

(b)   In each calendar year during the term of this Agreement, in
connection with Net Sales of Agreement Product which do not
require payment of a royalty under Article 7.1(a) above, if
Competition (as defined in Article 7.1(d) below) exists in any
such country, SCHERING shall pay ENZON a royalty of ***.

6.    Delete Article 7.1(c) in its entirety and insert in its place the
following:

(c)   In each calendar year during the term of this Agreement, in
connection with Net Sales of Agreement Product which do not
require payment of a royalty under Article 7.1(a) above, if
Competition does not exist in any such country, SCHERING shall
pay ENZON a royalty of ***.

7.    Amend Article 7.1 of the Agreement by adding the following new provision:

*** Indicates the omission of confidential material pursuant to a request for
confidential treatment made in accordance with Rule 24b-2 under the Securities
Exchange Act of 1934, as amended. The Confidential material is being filed
separately with the Secretary to the Securities and Exchange Commission.

E-152

(c)   The parties understand and agree that, except as expressly set
forth in section 4 of the Amendment to the Agreement dated
September 22, 2000, nothing in this Agreement shall give rise
to any right by ENZON to receive or claim entitlement to any
royalty payments from SCHERING and its Affiliates, nor shall
SCHERING or its Affiliates have any obligation to make any
royalty payments to ENZON or its Affiliates, under this
Agreement in connection with any sublicense or other rights
granted by SCHERING in the Territory to Roche under the
Settlement Agreement and/or the commercialization of Agreement
Products by Roche pursuant to such sublicense under the
Settlement Agreement (including, without limitation, the
manufacture of Agreement Products on behalf of Roche by
Shearwater and its Affiliates), provided that royalties on
Agreement Product sold by SCHERING or its Affiliates will
become payable at such time, if any, as Roche becomes an
Affiliate of SCHERING. It is understood and agreed that the
provisions of the immediately preceding sentence shall apply
on a country-by-country basis only for so long as such
sublicense granted by SCHERING to Roche under the Settlement
Agreement remains in effect."

8.    Delete Article 9.2(b) in its entirety.

9.    Amend Article 13 of the Agreement by adding the following new provision:

"l3.4 Nothing in this Agreement shall preclude Roche from becoming an
Affiliate of SCHERING if Roche should otherwise come within the definition
of Affiliate set forth in Article 1.1 of the Agreement.

Except as expressly amended and supplemented hereby, all other terms of
the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in duplicate by their duly authorized representatives.

ENZON, INC.                              SCHERING CORPORATION

BY: /s/ Arthur Higgins                   BY:
------------------------------           -----------------------------------

NAME: Arthur Higgins                     NAME:  David Poorvin, Ph.D.
----------------------------             ---------------------------------

TITLE: President and CEO                 TITLE: Vice President
---------------------------              --------------------------------

DATE: August 10, 2001                    DATE:
----------------------------             ---------------------------------

E-153

(e)   The parties understand and agree that, except as expressly set
forth in section 4 of the Amendment to the Agreement dated
September 22, 2000, nothing in this Agreement shall give rise
to any right by ENZON to receive or claim entitlement to any
royalty payments from SCHERING and its Affiliates, nor shall
SCHERING or its Affiliates have any obligation to make any
royalty payments to ENZON or its Affiliates, under this
Agreement in connection with any sublicense or other rights
granted by SCHERING in the Territory to Roche under the
Settlement Agreement and/or the commercialization of Agreement
Products by Roche pursuant to such sublicense under the
Settlement Agreement (including, without limitation, the
manufacture of Agreement Products on behalf of Roche by
Shearwater and its Affiliates), provided that royalties on
Agreement Product sold by SCHERING or its Affiliates will
become payable at such time, if any, as Roche becomes an
Affiliate of SCHERING. It is understood and agreed that the
provisions of the immediately preceding sentence shall apply
on a country-by-country basis only for so long as such
sublicense granted by SCHERING to Roche under the Settlement
Agreement remains in effect."

8.    Delete Article 9.2(b) in its entirety.

9.    Amend Article 13 of the Agreement by adding the following new provision:

"13.4 Nothing in this Agreement shall preclude Roche from becoming an
Affiliate of SCHERING if Roche should otherwise come within the definition
of Affiliate set forth in Article 1.1 of the Agreement.

Except as expressly amended arid supplemented hereby, all other terms of
the Agreement shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed in duplicate by their duly authorized representatives.

------------
LEGAL REVIEW

[INITIALS]
------------

ENZON, INC.                              SCHERING CORPORATION

BY:                                      BY: /s/ David Poorvin, Ph.D.
------------------------------           -----------------------------------

NAME:                                    NAME:  David Poorvin, Ph.D.
----------------------------             ---------------------------------

TITLE:                                   TITLE: Vice President

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

DATE:                                    DATE:  10 August 2001
----------------------------             ---------------------------------

E-154

EXHIBIT 12.1

Enzon, Inc.
Ratio of Earnings to Fixed Charges
(in thousands)

Years ended June 30,
2002         2001         2000          1999          1998
------------------------------------------------------------- 

Net Income (Loss)                         $45,806      $11,525      ($6,306)      ($4,919)      ($3,617)
Add:
Fixed Charges                           20,109          557          352           468           597
Less:
Capitalized interest                        --           --           --            --            --
------------------------------------------------------------- 
Net Income (Loss)
as adjusted                            $65,915      $12,082      ($5,954)      ($4,451)      ($3,020)
============================================================= 

Fixed charges:
Interest (gross)                       $19,829      $   275      $     4       $     8       $    14
Portion of rent representative of
the interest factor                      280          282          348           460           583
------------------------------------------------------------- 
Fixed charges                             $20,109      $   557      $   352       $   468       $   597
------------------------------------------------------------- 
Deficiency of earnings available
to cover fixed charges                   N/A          N/A      ($6,306)      ($4,919)      ($3,617)
============================================================= 

Ratio of earnings to fixed charges            3:1         22:1          N/A           N/A           N/A

E-155

EXHIBIT 21.0

SUBSIDIARIES OF REGISTRANT

Symvex Inc. is a wholly-owned subsidiary of the Registrant incorporated in the
State of Delaware. Symvex Inc. did business under its own name.

SCA Ventures Inc., (formerly Enzon Labs Inc.) is a wholly-owned subsidiary of
the Registrant incorporated in the State of Delaware. SCA Ventures does business
under its own name.

Enzon GmbH is a wholly-owned subsidiary of the Registrant incorporated in
Germany.

E-156

EXHIBIT 23.0

INDEPENDENT AUDITORS' CONSENT

The Board of Directors
Enzon, Inc.:

We consent to incorporation by reference in Registration Statement Nos.
333-64110, 333-18051 and 33-50904 on Form S-8 and Registration Statement Nos.
333-58269, 333-46117, 333-32093, 333-1535 and 333-30818 on Form S-3 of Enzon,
Inc. of our report dated August 8, 2002, relating to the consolidated balance
sheets of Enzon, Inc. and subsidiaries as of June 30, 2002 and 2001 and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended June 30, 2002, which
report appears in the June 30, 2002 annual report on Form 10-K of Enzon, Inc.

/s/ KPMG LLP
KPMG LLP

Short Hills, New Jersey
September 26, 2002

E-157

EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Enzon, Inc. (the "Company") on Form 10-K
for the period ended June 30, 2002 as filed with the Securities and Exchange
Commission on the date hereof (the "Report"), I, Arthur J. Higgins, Chief
Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.

/s/ Arthur J. Higgins           
--------------------------------
Arthur J. Higgins
Chief Executive Officer
September 26, 2002

E-158

.
EXHIBIT 99.2

CERTIFICATION PURSUANT TO
18 U.S.C. ss.1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Enzon, Inc. (the "Company") on Form
10-K for the period ended June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), I, Kenneth J. Zuerblis,
Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.    The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

2.    The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.

/s/ Kenneth J. Zuerblis
----------------------------
Kenneth J. Zuerblis
Chief Financial Officer
September 26, 2002

E-159