Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

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

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 Annual Report on Form 10-K.

Forward-Looking Information and Factors That May Affect Future Results

The following discussion contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements contained in the following discussion, other than statements that are purely historical, are forward-looking statements. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "could," "potential," "anticipates," "estimates," "plans," "would," or "intends" or the negative thereof, or other variations thereof, or comparable terminology, or by discussions of strategy. Forward-looking statements are based upon management's present expectations, objectives, anticipations, plans, hopes, beliefs, intentions or strategies regarding the future and are subject to risks and uncertainties that could cause actual results, events or developments to be materially different from those indicated in such forward-looking statements, including the risks and uncertainties set forth in Item 1A. Risk Factors. These risks and uncertainties should be considered carefully and readers are cautioned not to place undue reliance on such forward-looking statements. As such, we cannot assure you that the future results covered by the forward-looking statements will be achieved.

Overview

Enzon Pharmaceuticals, Inc. (together with its subsidiaries, the "Company," "Enzon," "we" or "us") is positioned as a public company acquisition vehicle.

Historically, we 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. We previously were a party to a marketing agreement relating to the drug Vicineum, which, if approved, could have potentially generated milestone and royalty payments to us in the future. However, our licensee for this drug was canceled by the counterparty to the marketing agreement and our patent for Vicineum has since expired. Accordingly, we do not believe any future revenue will be earned from this product or that if any such revenue is earned it will be material.

Merger Agreement

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, which was amended on October 24, 2025 (as amended, the "Merger Agreement"). 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"). Following consummation of the Merger, it is anticipated that Enzon's pre-closing stockholders, including holders of Enzon's Series C Preferred Stock who exchange such stock for shares of Enzon's Common Stock pursuant to the Series C Exchange Offer (see below), will hold 45% of the outstanding shares of Enzon's Common Stock, and Viskase's pre-closing stockholders will hold 55% of the outstanding shares of Enzon's Common Stock. If the Merger is completed, Enzon Pharmaceuticals, Inc. will change its name to "Viskase Holdings, Inc." and its common stock will be quoted on the OTCQB tier of the OTC Markets Group, Inc., although pursuant to the rules of the OTCQB, Enzon is required to re-apply to the OTCQB following such change of control transaction

The Merger Agreement and the transactions contemplated thereby, including the anticipated amendment to the Company's Amended and Restated Certificate of Incorporation to effect the consolidation of the issued and outstanding shares of the Enzon's Common Stock at a ratio of 1-for-100 (which we refer to as the "Reverse Stock Split"), were approved by the requisite holders of Enzon's Common Stock. The closing of the transactions contemplated by the Merger Agreement is subject to satisfaction or waiver of the remaining conditions to closing as set forth in the Merger Agreement. The conditions to the closing of the transactions subject to the Merger Agreement are described in more detail in the Prospectus/Consent Solicitation/Offer to Exchange filed by Enzon with the SEC on January 30, 2026.

Series C Exchange Offer

As required by the Merger Agreement, on January 30, 2026, Enzon commenced an exchange offer pursuant to which Enzon offered each holder of the its Series C Preferred Stock to exchange each share of Enzon's Series C Preferred Stock held by such stockholder for a number of shares of Enzon's Common Stock equal to (i) the aggregate liquidation preference of each share of Enzon's Series C Preferred Stock, divided by (ii) $7.83 after giving effect to the Reverse Stock Split (referred to as the "Series C Exchange Offer"). The Series C Exchange Offer will expire one minute after 11:59 p.m., Eastern Time, on March 9, 2026, unless extended or terminated in Enzon's sole discretion or in accordance with applicable law.

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.

Results of Operations (in thousands of dollars):

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Overview

The following table summarizes our royalties earned in 2025 and 2024:

Royalties and Milestones Revenues

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The revenues in 2025 and 2024 were approximately $0 and $26,000, respectively, from license fees from Amgen, Inc. ("Amgen") in payment for a worldwide, royalty-free non-exclusive right to license Vicineum. Our right to receive royalties on U.S. and European sales of PegIntron expired in all jurisdictions as of December 31, 2024 and our agreement with Amgen in connection with Vicineum was canceled by Amgen.

At December 31, 2025 and 2024, we recorded a liability to Merck of approximately $331,000 based primarily on Merck's assertions regarding recoupments related to prior returns and rebates, as discussed in Note 4 to the Consolidated Financial Statements.

We will receive no additional royalties from Merck.

Interest and Dividend Income

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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 from the $43.6 million of proceeds from our rights offering (See Note 11 to the Consolidated Financial Statements). Interest

and dividend income decreased by approximately $531,000, or 22%, to $1,921,000 for 2025 from $2,452,000 for 2024. The decrease in interest and dividends income is primarily attributable to the lower rates of interest and smaller balances in 2025 as compared with 2024.

Operating Expenses

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For the year ended December 31, 2025, general and administrative expenses were approximately $1,356,000, an increase of approximately $3,000, substantially unchanged from $1,353,000 in the prior year.

In 2025 and 2024, general and administrative expenses consisted primarily of consulting fees for executive services and outside professional services for accounting, audit, tax and legal services.

Transaction Expenses:

Transaction expenses incurred in connection with the Merger were approximately $3,955,000 for the year ended December 31, 2025. These expenses were, primarily, for legal, consulting and professional fees. There were no comparable amounts during the corresponding period in 2024. (See Note 13 to our Consolidated Financial Statements).

Income Taxes

For the year ended December 31, 2025, we incurred approximately $3,390,000 in pre-tax book loss primarily due to increased expenses related to the pending Merger with Viskase. We are projecting 2026 pre-tax book loss through the expected closing date of the pending Merger with Viskase. Upon review of positive and negative evidence, the Company has concluded that a full valuation allowance is necessary as of December 31, 2025. A deferred tax expense of $17,000 was recorded during the year ended December 31, 2025.

Our management will continue to assess the need for this valuation allowance and will make adjustments when appropriate.

These projections and beliefs are based upon a variety of estimates and numerous assumptions made by our management with respect to, among other things, interest rates, expenses and transaction costs. As a result, we cannot assure you that the estimates and assumptions upon which these projections and beliefs are based will prove accurate, that the projected results will be realized or that the actual results will not be substantially higher or lower than projected.

Section 382 Rights Plan

On August 14, 2020, we entered into the Section 382 Rights Agreement with Continental Stock Transfer & Trust Company, as rights agent (as amended, the "Rights Agreement"), in order to protect our net operating loss carryforwards ("NOLs"), certain credits and other tax attributes. The Merger Agreement requires that we terminate the Rights Plan prior to the consummation of the Merger. On February 27, 2026, the Company entered into an amendment to the Rights Agreement to extend the final expiration date of the Rights Agreement to noon, New York City time, on March 11, 2026. We may further extend the term of the Rights Agreement to the extent necessary to provide that the Rights Agreement will terminate immediately prior to the date on which the Merger is consummated.

Rights Offering

On October 9, 2020, we completed a rights offering (the "Rights Offering") pursuant to which we offered our existing stockholders the ability to purchase rights consisting of shares of our Series C Preferred Stock and shares of our Common Stock. In connection with the Rights Offering, we realized gross proceeds of approximately $43.6 million and issued 40,000 shares of Series C Preferred Stock and 30,000,000 shares of Common Stock. We currently have an aggregate of 40,000 shares of Series C Preferred Stock and 74,214,603 shares of Common Stock outstanding. (See Note 11 to the Consolidated Financial Statements.)

The terms of the Series C Preferred Stock provide, on an annual basis, that the Company's Board of Directors may, at its sole discretion, cause a dividend with respect to the Series C Preferred Stock to be paid in cash to the holders in an amount equal to 3% of the liquidation preference as in effect at such time (initially $1,000 per share). If the dividend is not so paid in cash, the liquidation preference is adjusted and increased annually by an amount equal to 5% of the liquidation preference per share as in effect at such time,

that is not paid in cash to the holders on such date. Pursuant to the terms of the Merger Agreement, we are not permitted to pay any dividends to the holders of our Common Stock and we are not permitted to pay any cash dividends to the holders of our Series C Preferred Stock while the transactions contemplated by the Merger Agreement are pending.

The initial liquidation value of the Series C Preferred Stock was $1,000 per share. On December 20, 2024, our Board declared a cash dividend of 3% of the liquidation preference ($42,483,286) of the Series C Preferred Stock, aggregating approximately $1,275,000 ($31.86 per share). Such dividend was paid on January 9, 2025 to the holders of record of our Series C Preferred Stock as of January 2, 2025.

Due to the restrictions in the Merger Agreement, we are not permitted to pay a cash dividend on its Series C Preferred Stock for 2025. However, pursuant to the terms of the Series C Preferred Stock, if a cash dividend is not paid, we must accrete an increase in liquidation preference equal to 5% of the liquidation preference as in effect at such time. Accordingly, the Series C Preferred Stock was adjusted and increased by an amount equal to 5% of the liquidation preference per share ($42,483,400) as in effect at such time which aggregated approximately $2,124,000 ($53.10 per share) at December 31, 2025. Following such adjustment the liquidation preference of the Series C Preferred Stock at December 31, 2025 was approximately $44,607,400.

As described above, we have commenced the Series C Exchange Offer which allows holders of our Series C Preferred Stock to elect to exchange their shares of Series C Preferred Stock for shares of our Common Stock. Holders of Series C Preferred Stock that do not participate in the Series C Exchange Offer will not have the right to exchange their shares of Series C Preferred Stock into shares of Enzon's Common Stock following the expiration of the Series C Exchange Offer. The Series C Exchange Offer is open to holders of Enzon's Series C Preferred Stock that are held by holders other than Icahn Enterprises Holdings L.P., a Delaware limited partnership ("IEH"), and certain of its affiliates (collectively with IEH, the "IEH Parties"). Any shares of Enzon's Series C Preferred Stock held by holders other than the IEH Parties that are not exchanged for shares of Enzon's Common Stock in the Series C Exchange Offer will remain outstanding pursuant to their current terms. Pursuant to the terms of the Merger Agreement, the IEH Parties are required to exchange the shares of the Company's Series C Preferred Stock into shares of the Company's Common Stock prior to the completion of the Merger in a private exchange offer.

Since November 1, 2022, we have been able to redeem the Series C Preferred Stock at any time, in whole or in part, for an amount based on the liquidation preference per share as in effect at such time. Holders of Series C Preferred Stock have the right to demand that the Company redeem their shares of Series C Preferred Stock in the event that the Company experiences a change of control, such as the Merger. Under the terms of Enzon's Series C Preferred Stock, we may redeem any outstanding shares of our Series C Preferred Stock for a cash amount equal to the aggregate liquidation preference of such shares at any time.

Liquidity and Capital Resources

Our current source of liquidity is our existing cash on hand, which includes the gross proceeds from our Rights Offering and the interest earned on that amount less certain operating expenses. (See Note 11 to the 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, but we do not expect any such amounts to be material. We believe that our existing cash and cash equivalents on hand will be sufficient to fund our operations, at least, through March 2027, 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. We anticipate that we will continue to incur transaction costs in connection with the Merger. If the Merger is not completed, 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 year ended December 31, 2025 was approximately $3,010,000, as compared to net cash from operating activities during the year ended December 31, 2024 of $1,122,000. The decrease of approximately $4,132,000 was primarily attributable to the transaction costs of approximately $3,955,000 in the 2025 period related to the Merger for which there was no corresponding amount in the year ended December 31, 2024 and the decrease in interest and dividend income of approximately $531,000, decreasing to approximately $1,921,000 during the year ended December 31, 2025, from approximately $2,452,000 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 2025 relating to the 2024 period.

The net effect of the foregoing was a decrease of cash and cash equivalents of approximately $4,285,000 from approximately $46,859,000 for the year ended December 31, 2024 to approximately $42,574,000 for the year ended December 31, 2025.

Off-Balance Sheet Arrangements

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, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow limited purposes. As of December 31, 2025, we were not involved in any off-balance sheet special purpose entity 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 December 31, 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 operating loss 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. Accordingly, the Company is projecting pre-tax book loss through the expected closing date of the pending Merger with Viskase. Upon review of positive and negative evidence in determining a partial reversal of the valuation allowance, the Company has concluded that a full valuation allowance is necessary. Accordingly, our management will continue to assess the need for this valuation allowance and will make adjustments when 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 Merger (See Note 13 to the Consolidated Financial Statements).

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