Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

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

Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to "Enzon," the "Company," "we," "us," or "our" and similar terms mean Enzon Pharmaceuticals, Inc. and its subsidiaries. The discussion below may contain forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in these forward-looking statements as a result of many factors, including but not limited to those under the heading "Forward-Looking Information and Factors that May Affect Future Results." The following discussion of our financial condition and results of operations should be read together with our consolidated financial statements and notes to those statements included elsewhere in this Quarterly Report on Form 10-Q and our 2024 Annual Report on Form 10-K, as amended.

Overview

Enzon (together with its subsidiaries, the "Company," "Enzon," "we" or "us") is positioned as a public company acquisition vehicle, where it can become an acquisition platform.

Historically, Enzon had received royalty revenues from licensing arrangements with other companies primarily related to sales of certain drug products that utilized Enzon's proprietary technology. For more than ten years, we have had no clinical operations and limited corporate operations. In the last two years the Company has received only minimal payments on our licenses. We had a marketing agreement with Micromet AG, now part of Amgen, Inc., pursuant to which we may have been entitled to certain milestone and royalty payments if Vicineum, a drug that was being developed by Sesen, Inc. (subsequently acquired by Carisma Therapeutics, Inc.), was approved for the treatment of non-muscle invasive bladder cancer. That agreement has been canceled. Enzon cannot assure you that it will receive any future royalties or milestones.

Throughout this Management's Discussion and Analysis, the primary focus is on our results of operations, cash flows and financial condition. The percentage changes throughout the following discussion are based on amounts stated in thousands of dollars and not the rounded millions of dollars reflected in this section.

Acquisition Activities

On June 20, 2025, the Company, EPSC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of ours ("Merger Sub"), and Viskase Companies, Inc. ("Viskase") entered into an Agreement and Plan of Merger (the "Merger Agreement"), which was amended on October 24, 2025 (the "Merger Agreement Amendment"). Upon the terms and subject to the satisfaction or waiver of the conditions described in the Merger Agreement, at the effective time of the merger, Merger Sub will be merged with and into Viskase, with Viskase as the surviving entity following the merger as a wholly owned subsidiary of Enzon (the "Merger") The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes. Following the consummation of the Merger, it is anticipated that Enzon Pharmaceuticals, Inc. will change its name to "Viskase Holdings, Inc." Following consummation of the Merger, it is anticipated that Enzon's current stockholders, including holders of Enzon's Series C Preferred Stock, will hold approximately 45% of the outstanding shares of Enzon's common stock following the Merger, and Viskase's current stockholders will hold approximately 55% of the outstanding shares of Enzon's common stock following the Merger.

On October 24, 2025, the Company and Viskase announced that they entered into the Merger Agreement Amendment, which was entered into to reflect recent developments in the operations of Viskase during the past several months and its expected operations in the near term.

Pursuant to the terms of the Merger Agreement Amendment, the parties agreed, among other things, to:

In connection with the execution and delivery of the Merger Agreement Amendment, Icahn Enterprises Holdings L.P., a Delaware limited partnership ("IEH"), and certain of its affiliates entered into an amendment to the Support Agreement (the "Support Agreement Amendment") that was previously entered into between the Company, IEH and Viskase in connection with the execution of the Merger Agreement (the "Support Agreement"). Pursuant to the terms of the Support Agreement (as amended by the Support Agreement Amendment), IEH agreed to, among other things, (i) deliver or cause the delivery of written consents with respect to all of the issued and outstanding shares of Enzon's common stock held by IEH and its affiliates approving the Merger and the amendment to Enzon's certificate of incorporation, and (ii) exchange all of the shares of Series C Preferred Stock held by IEH and its affiliates for the Company's common stock prior to the consummation of the Merger, based on the full liquidation preference of such shares of Series C Preferred Stock and the 20-Day VWAP.

Enzon believes that the Merger pursuant to the terms of the Merger Agreement, as amended by the Merger Agreement Amendment, should not limit its net operating loss ("NOL") carryforwards and other tax attributes under Section 382 of the Internal Revenue Code of 1986, as amended ("IRC"). However, the Section 382 rules are complex and there is no assurance that the Company's view is correct. If such an ownership change is found to have occurred, the amount of the combined company's taxable income that could be offset by our pre-ownership change NOL carryforwards and other tax attributes would be severely limited.

The Merger must be approved by Enzon stockholders and is subject to receipt of required regulatory approvals and satisfaction or waiver of other certain closing conditions.

Each of the Merger Agreement and the Merger Agreement Amendment was unanimously recommended by the Company's Special Committee and, acting upon such recommendations, was unanimously approved by the Board of Directors of the Company.

In connection with the Merger, Enzon intends to file a registration statement on Form S-4 with the Securities and Exchange Commission ("SEC") that will contain a consent solicitation statement and prospectus. Such registration statement will include financial information regarding the proposed transaction and the combined company and stockholders of Enzon are encouraged to review such information once filed.

Results of Operations

Revenues:

Royalties and Milestone Revenues

In the three and nine-month periods ended September 30, 2025, we had no revenue from royalties and milestones. In both the three and nine-months periods ended September 30, 2024, we earned approximately $26,000 in royalties and milestones.

Interest and Dividend Income (in thousands of dollars):

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Interest and dividend income is attributable to the interest and dividends received on the invested cash and cash equivalents we received primarily from the $43.6 million of proceeds from our rights offering (See Note 11 to our Condensed Consolidated Financial Statements) as well as other cash and cash equivalents. Interest and dividend income decreased by approximately $158,000, or 24%, to $496,000 for the three months ended September 30, 2025 from $654,000 for the comparable period in 2024. The decrease in interest and dividend income is attributable to the reduced cash and cash equivalent balances and lower rates of interest in the 2025 period compared to the same period in 2024.

Interest and dividend income decreased by approximately $412,000, or 22%, to $1,494,000 for the nine months ended September 30, 2025 from $1,906,000 for the nine months ended September 30, 2024. The decrease in interest and dividend income is primarily attributable to the reduced cash and cash equivalent balances and lower interest rates in 2025 period compared to the same period in 2024.

Operating Expenses:

General and Administrative(in thousands of dollars):

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General and administrative expenses, decreased by approximately $122,000, or 35%, to approximately $229,000 for the three months ended September 30, 2025 from $351,000 for the three months ended September 30, 2024. The decrease in general and administrative expense is substantially attributable to a decrease in professional and consulting fees not associated with the Merger.

General and administrative expenses were comparable for the nine-month periods ended September 30, 2025 and 2024.

Transaction expenses:

Transaction expenses incurred in connection with the Merger were approximately $1,075,000 and $2,801,000, respectively, for the three and nine-month periods ended September 30, 2025. These expenses were, primarily, for legal, consulting and professional fees. There were no comparable amounts during the corresponding periods in 2024. (See Note 14 to our Condensed Consolidated Financial Statements).

Tax Expense:

Assuming no acquisition is completed or material changes in results through September 2025, the Company has partially reversed the valuation allowances as of September 30, 2025. A deferred tax benefit of $9,000 and deferred tax expense of $53,000, respectively, were recorded during the nine-month periods ended September 30, 2025 and 2024. In the three-month periods ended September 30, 2025 and 2024, deferred tax expense of $16,000 and deferred tax expense of $50,000, respectively, were recorded. (See Note 8 to the Condensed Consolidated Financial Statements.)

Liquidity and Capital Resources

Our current source of liquidity is our existing cash on hand, which included the gross proceeds from our Rights Offering and the interest earned on that amount less certain operating expenses. (See Note 11 to the Condensed Consolidated Financial Statements.) While we no longer have any research and development activities, we continue to retain rights to receive fees, royalties and milestone payments from existing licensing arrangements with other companies and, accordingly, we may be entitled to a share of milestone and royalty payments from our few remaining licensed patents. We believe that our existing cash and cash equivalents on hand will be sufficient to fund our operations, at least, through November 2026, if the Merger is not consummated. Our future royalty revenues are expected to be de minimis over the foreseeable future and we cannot assure you that we will receive any royalty, milestone or other revenues.

We have entered into the Merger Agreement with Viskase for an all-stock transaction. Should the Merger not successfully close, we will continue to be positioned as a public company acquisition vehicle.

Cash used in operating activities, as adjusted for certain non-cash items including the effect of changes in operating assets and liabilities, during the nine months ended September 30, 2025 was approximately $2,328,000, as compared to cash provided by operating activities of approximately $896,000 during the comparable period in 2024. The decrease of approximately $3,324,000 was primarily attributable to the transaction costs of approximately $2,801,000 in the 2025 period related to the Merger for which there was no corresponding amount in 2024 and the decrease in interest and dividend income of approximately $412,000, decreasing to approximately $1,494,000 during the nine months ended September 30, 2025, from approximately $1,906,000 during the comparable period in 2024.

Cash used in financing activities represents cash dividends of approximately $1,275,000 paid to holders of the Company's Series C Preferred Stock in each of the periods.

The net effect of the foregoing was a decrease of cash and cash equivalents of approximately $3,603,000 from approximately $46,859,000 at December 31, 2024 to approximately $43,256,000 at September 30, 2025.

Off-Balance Sheet Arrangements

As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually limited purposes. As of September 30, 2025, we were not involved in any SPE transactions.

Critical Accounting Policies and Estimates

A critical accounting policy is one that is both important to the portrayal of a company's financial condition and results of operations and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Our consolidated financial statements are presented in accordance with accounting principles that are generally accepted in the U.S. ("U.S. GAAP"). All applicable U.S. GAAP accounting standards effective as of September 30, 2025 have been taken into consideration in preparing the consolidated financial statements. The preparation of the consolidated financial statements requires estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. Some of those estimates are subjective and complex, and, consequently, actual results could differ from those estimates. The following accounting policies and estimates have been highlighted as significant because changes to certain judgments and assumptions inherent in these policies could affect our consolidated financial statements.

We base our estimates, to the extent possible, on historical experience. Historical information is modified as appropriate based on current business factors and various assumptions that we believe are necessary to form a basis for making judgments about the carrying value of assets and liabilities. We evaluate our estimates on an ongoing basis and make changes when necessary. Actual results could differ from our estimates.

Income Taxes

Under the asset and liability method of accounting for income taxes, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and NOL and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance on net deferred tax assets is provided for when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of September 30, 2025, we believe, based on our projections, without taking into consideration the Merger, that a partial reversal of the valuation allowance is necessary. Therefore, the Company will partially reverse the valuation allowances. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when or if appropriate. Additionally, our management believes that our NOLs will not be limited by any changes in our ownership as a result of the successful completion of the Rights Offering (See Note 11 to the Condensed Consolidated Financial Statements).

We recognize the benefit of an uncertain tax position that we have taken or expect to take on the income tax returns we file if it is more likely than not that we will be able to sustain our position.

Forward-Looking Information and Factors That May Affect Future Results

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding the Merger involving Enzon and Viskase, the ability to consummate the Merger, and the ability to quote the common stock of the combined company on the "OTCQB" tier of the OTC market of the OTC Markets Group, Inc. Forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as "may," "will," "should," "would," "expect," "anticipate," "plan," "likely," "believe," "estimate," "project," "intend," and other similar expressions, among others. Statements that are not historical are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties and that are not guarantees of future performance. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors, including, without limitation:

A more detailed discussion of these risks and uncertainties and other factors that could affect results is contained in our filings with the SEC, including in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2024, as amended, in the registration statement on Form S-4 that will be filed in connection with the Merger, and in Item 1A "Risk Factors" below. These risks and uncertainties and other factors should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. As such, no assurance can be given that the conditions to the Merger will be satisfied or that the future results covered by the forward-looking statements will be achieved. All information in this Quarterly Report on Form 10-Q is as of the date of this report, unless otherwise indicated, and, except as required by applicable law, we undertake no duty to review or update this information or to make any other forward looking-statements, whether as a result of new information, future events or otherwise.

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