ENZON INC, DEF 14A, 1999-10-28

ENZON INC
DEF 14A, 1999-10-28
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. __ )

Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|

Check the appropriate box:

|_| Preliminary Proxy Statement
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12

ENZON, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

KEVIN T. COLLINS, ESQ.
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

|X| No fee required.

|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined.):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid.

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|_| Fee paid previously with preliminary materials:

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|_| Check box if any part of the fee is offset as provided by Exchange Act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

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

2) Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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<PAGE>

[LOGO] ENZON, INC.

20 Kingsbridge Road
Piscataway, New Jersey 08854
(732) 980-4500

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 7, 1999

To our Stockholders:

You are hereby notified that the annual meeting of stockholders (the
"Annual Meeting") of Enzon, Inc., a Delaware corporation ("Enzon" or the
"Company") will be held at the Embassy Suites Hotel, 121 Centennial Avenue,
Piscataway, New Jersey on Tuesday, December 7, 1999 at 10:00 a.m. local time,
for the following purposes:

1. To elect two Class I directors, each for a term of three years in
accordance with the Company's Certificate of Incorporation and By-Laws
(Proposal No. 1);

2. To vote on a proposal to approve amendments to the Company's
Non-Qualified Stock Option Plan, as amended which would (i) increase
the number of shares of Common Stock reserved for issuance upon
exercise of options granted to officers, employees, directors and
independent consultants under the Non-Qualified Stock Option Plan from
6,200,000 to 7,900,000; and (ii) decrease the number of shares
provided for automatic grants of options to the Company's non-employee
directors from 60,000 every three years to 10,000 each year (Proposal
No. 2);

3. To ratify the selection of KPMG LLP, independent certified public
accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending June 30, 2000 (Proposal No. 3); and

4. To transact such other matters as may properly come before the Annual
Meeting or any adjournment thereof.

Only holders of record of the Company's Common Stock, par value $.01 per
share, and Series A Cumulative Convertible Preferred Stock, par value $.01 per
share, at the close of business on October 28, 1999 are entitled to notice of,
and to vote at the Annual Meeting.

Enzon hopes that as many stockholders as possible will personally attend
the Annual Meeting. Whether or not you plan to attend the Annual Meeting, your
proxy vote is important. To assure your representation at the meeting, please
complete, sign and date the enclosed proxy card and return it promptly in the
enclosed envelope. Sending in your proxy will not prevent you from voting in
person at the Annual Meeting.

By order of the Board of Directors,

John A. Caruso, Secretary
Piscataway, New Jersey
October 28, 1999

<PAGE>

ENZON, INC.
-------

PROXY STATEMENT
-------

This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the annual meeting of stockholders (the "Annual Meeting") to
stockholders of record of Enzon, Inc. ("Enzon" or the "Company") as of October
28, 1999, to be held on Tuesday, December 7, 1999 and at any adjournment
thereof. The accompanying proxy is solicited by the Board of Directors of the
Company and is revocable by the stockholder any time before it is voted. For
more information concerning the procedure for revoking the proxy see "General."
This Proxy Statement was first mailed to stockholders of the Company on or about
November 7, 1999, accompanied by the Company's Annual Report to Stockholders for
the fiscal year ended June 30, 1999. The principal executive offices of the
Company are located at 20 Kingsbridge Road, Piscataway, New Jersey 08854,
telephone (732) 980-4500.

OUTSTANDING SHARES AND VOTING RIGHTS

Only holders of the Company's common stock, par value $.01 per share (the
"Common Stock" or "Common Shares") and Series A Cumulative Convertible Preferred
Stock, $.01 per share (the "Series A Preferred Stock" or "Series A Preferred
Shares") outstanding at the close of business on October 28, 1999 (the "Record
Date") are entitled to receive notice of and vote at the Annual Meeting. As of
the Record Date, the number and class of stock that was outstanding and will be
entitled to vote at the meeting were 36,813,597 Common Shares and 107,000 Series
A Preferred Shares. Each Common Share and Series A Preferred Share is entitled
to one vote on all matters. No other class of securities will be entitled to
vote at the Annual Meeting. There are no cumulative voting rights.

To be elected, a director must receive a plurality of the votes of the
Common Shares and Series A Preferred Shares, voting as a single class, present
in person or represented by proxy at the Annual Meeting and entitled to vote on
the election of directors. The affirmative vote of at least a majority of the
Common Shares and Series A Preferred Shares, present in person or represented by
proxy at the Annual Meeting and entitled to vote thereon, voting together as a
single class, is necessary for approval of Proposal No. 2 and Proposal No. 3. A
quorum is representation in person or by proxy at the Annual Meeting of at least
one-third of the combined Common Shares and Series A Preferred Shares
outstanding as of the Record Date.

Pursuant to the Delaware General Corporation Law, only votes cast "For" a
matter constitute affirmative votes. Proxy cards which are voted by marking
"Withheld" or "Abstain" on a particular matter are counted as present for quorum
purposes and for purposes of determining the outcome of such matter, but since
they are not cast "For" a particular matter, they will have the same effect as
negative votes or votes cast "Against" a particular matter. If a validly
executed proxy card is not marked to indicate a vote on a particular matter and
the proxy granted thereby is not revoked before it is voted, it will be voted
"For" such matter. Where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not provided voting instructions
(commonly referred to as "broker non-votes"), such broker non-votes will be
treated as shares that are present for purposes of determining the presence of a
quorum; however, with respect to proposals which require the affirmative vote of
a percentage of shares present at the Annual Meeting for approval, such broker
non-votes will be treated as not present for purposes of determining the outcome
of any such matter. With respect to proposals which require the affirmative vote
of a percentage of the outstanding shares for approval, since such broker
non-votes are not cast "For" a particular matter, they will have the same effect
as negative votes or votes cast "Against" such proposals.

1
<PAGE>

PROPOSAL NO. 1 - ELECTION OF DIRECTORS

Pursuant to the provisions of the Company's Certificate of Incorporation
and By-laws, the Board of Directors is comprised of three classes of directors,
designated Class I, Class II and Class III. One class of directors is elected
each year to hold office for a three-year term and until successors of such
directors are duly elected and qualified. Two Class I directors will be elected
at this year's Annual Meeting. The nominees for election to the office of
director, and certain information with respect to their backgrounds and the
backgrounds of non-nominee directors, are set forth below. It is the intention
of the persons named in the accompanying proxy card, unless otherwise
instructed, to vote to elect the nominees named herein as Class I directors.
Each of the nominees named herein presently serves as a director of the Company.
In the event any of the nominees named herein is unable to serve as a director,
discretionary authority is reserved to the Board of Directors to vote for a
substitute. The Board of Directors has no reason to believe that any of the
nominees named herein will be unable to serve if elected.

Nominees for Election to the Office of Director
at the 1999 Annual Meeting

Director
Nominee Age Since Position with the Company
- ------- --- ----- -------------------------

Peter G. Tombros (1) 57 1994 President and Chief Executive
Officer

Dr. Rosina B. Dixon (2)(4)(5) 57 1994 Director

Non-Nominee Directors Continuing to Serve
in the Office of Director After the 1999 Annual Meeting

Director
Nominee Age Since Position with the Company
- ------- --- ----- -------------------------

Randy H. Thurman(1)(2)(6) 50 1993 Chairman of the Board

David S. Barlow (2)(4)(7) 43 1999 Director

Rolf A. Classon(2)(3)(7) 54 1997 Director

Dr. David W. Golde(4)(5)(6) 59 1998 Director

Robert LeBuhn (1)(3)(5)(7) 67 1994 Director

A.M. "Don" MacKinnon(3)(6) 75 1990 Director

(1) Member of the Executive Committee

(2) Member of the Compensation Committee

(3) Member of the Finance and Audit Committee

(4) Member of Scientific Advisory Committee

(5) Member of Corporate Governance Committee

(6) Class II director serving until the 2000 Annual Meeting

(7) Class III director serving until the 2001 Annual Meeting

2
<PAGE>

BUSINESS EXPERIENCE OF DIRECTORS

Nominee Class I Directors for Election at the 1999 Annual Meeting

Peter G. Tombros has served as President and Chief Executive Officer of the
Company and a Director of the Company since April 1994. Prior to joining Enzon,
Mr. Tombros spent 25 years with Pfizer Inc., a research based, global healthcare
company headquartered in New York City. From 1986 to March 1994, he served as a
Vice President of Pfizer Inc. in the following areas: Executive Vice President
of Pfizer Pharmaceuticals, a division of Pfizer Inc., corporate strategic
planning and investor relations. From 1980 to 1986, Mr. Tombros served as Senior
Vice President of Pfizer Pharmaceuticals and general manager for the Roerig
division of Pfizer Inc. Mr. Tombros currently serves on the Board of Trustees of
Cancer Care and the National Cancer Care Foundation and Dominican College. He
has been a Director of the American Foundation of Pharmaceutical Education since
1980 and served as Chairman for three of those years. Mr. Tombros serves on the
Board of Directors of NPS Pharmaceuticals Inc. and Alpharma Inc.

Dr. Rosina B. Dixon has served as a Director of the Company since August
1994. Dr. Dixon has been a consultant to the pharmaceutical industry since 1987.
Prior to such time she held senior positions at Ciba-Geigy Pharmaceuticals, a
division of Ciba-Geigy Corporation, and Schering-Plough Corporation. She
received her M.D. from Columbia University, College of Physicians and Surgeons
and is certified by the National Board of Medical Examiners and the American
Board of Internal Medicine. She is a member of the American College of Clinical
Pharmacology, American Society for Clinical Pharmacology and Therapeutics and
the National Association of Corporate Directors and currently serves as a
Director of Church & Dwight Co., Inc. and Cambrex Corporation.

The Board of Directors recommends a vote FOR Mr. Tombros and Dr. Dixon as
Class I Directors (Proposal No. 1 on the Proxy Card).

Non-Nominee Class II Director Serving Until the 2000 Annual Meeting

Randy H. Thurman has served as the Chairman of the Board of the Company
since April 1996 and as a Director of the Company since April 1993. Mr. Thurman
is Chairman and Chief Executive Officer of Strategic Reserves, LLC, a company he
founded in 1996. Mr. Thurman is the founder and has been Chairman of the Board
of Health Care Strategies 2000, a global healthcare consulting firm, since 1995.
During 1996, Mr. Thurman also served as a principal of Spencer Stuart Inc. From
1993 to 1995, Mr. Thurman served as Chairman and Chief Executive Officer of
Corning Life Sciences. From 1985 to 1993, Mr. Thurman served as Corporate
Executive Vice President and a Director of Rhone-Poulenc Rorer, Inc. and
President of Rhone-Poulenc Rorer Pharmaceuticals, Inc. He is also Chairman of
the Board of UTC International, a wholly owned subsidiary of Donaldson Lufkin
Jenrette, and also serves on the Board of Directors of Closure Medical, Inc.

A.M. "Don" MacKinnon has served as a Director of the Company since 1990.
Mr. MacKinnon was President and Chief Operating Officer of Ciba-Geigy
Corporation from 1980 until his retirement in 1986. He was a member of the Board
of Directors of Ciba-Geigy Corporation from 1970 until he reached the mandatory
retirement age in December 1994. Over the last nine years, Mr. MacKinnon has
served on the Board of Directors of several biopharmaceutical companies.

Dr. David W. Golde has served as a Director of the Company since March
1998. Dr. Golde has been the Physician-In-Chief at Memorial Sloan-Kettering
Cancer Center since 1996. From 1991 to 1996, Dr. Golde served as Head of the
Division of Hematology and Oncology at Memorial Sloan-Kettering Cancer Center.
Prior to 1991, Dr. Golde was a professor of medicine and Chief of the Division
of Hematology and Oncology at UCLA, Director of the UCLA AIDS Center and
Director of the UCLA Clinical Research Center.

Non-Nominee Class III Directors Serving until the 2001 Annual Meeting

David S. Barlow has served as a Director of the Company since June 1999.
From 1995 to September 1999 Mr. Barlow was President of Pharmaceuticals at
Sepracor, Inc. From 1993 to 1995 Mr. Barlow served as the General Manager of
Pharmaceuticals at Sepracor, Inc. Prior to 1993 Mr. Barlow held several senior
level positions at Rhone-

3
<PAGE>

Poulenc Rorer, Inc., including Vice President, World Wide Marketing and Business
Development at Armor Pharmaceutical Company, a subsidiary of Rhone-Poulenc
Rorer, Inc.

Rolf A. Classon has served as a Director of the Company since January 1997.
Mr. Classon is currently an Executive Vice President of Bayer Corporation and
President of Bayer Diagnostics. From 1991 to 1995, Mr. Classon was an Executive
Vice President in charge of Bayer Diagnostics' Worldwide Marketing, Sales and
Service operations. From 1990 to 1991, Mr. Classon was President and Chief
Operating Officer of Pharmacia Biosystems A.B. Prior to 1991, Mr. Classon served
as President of Pharmacia Development Company Inc. and Pharmacia A.B. Hospital
Products Division.

Robert LeBuhn has served as a Director of the Company since August 1994.
Mr. LeBuhn was chairman of Investor International (U.S.), Inc., a subsidiary of
Investor A.B., part of Sweden's Wallenberg Group from June 1992 until his
retirement in September 1994, and was its President from August 1984 through
June 1992. Mr. LeBuhn is a Director of US Airways Group, Inc., Acceptance
Insurance Companies, Inc. and Cambrex Corporation. He is President and a trustee
of the Geraldine R. Dodge Foundation.

DIRECTORS' COMPENSATION

Directors' Cash Compensation

During the fiscal year ended June 30, 1999, the Company paid Randy H.
Thurman $100,000 in consideration for serving as Chairman of the Board. The
Company did not pay cash compensation to its remaining directors for acting as
directors or as members of committees of the Board of Directors, other than
reimbursement of reasonable expenses incurred by the directors in attending
board and committee meetings.

Directors' Stock Options

In December 1993, the Board of Directors adopted, and the stockholders
approved, an amendment to the Non-Qualified Stock Option Plan, as amended, (the
"Plan") providing for automatic grants of options ("Automatic Grants") under a
formula (the "Formula") to non-executive members of the Board of Directors
("Independent Directors").

Currently under the Formula, Independent Directors automatically receive an
option to purchase 60,000 shares of Common Stock on each of the following dates:
January 2, 1994, January 2, 1997, January 2, 2000 and January 2, 2003 (the
"Regular Grants"). During May 1999, the Board of Directors adopted an amendment
to the Formula for grants to Independent Directors, subject to shareholder
approval "See Proposal 2." The amendment would reduce the number of shares
granted under the Regular Grant to 10,000 shares per year for the years
beginning after December 31, 1999 as opposed to the current Formula of 60,000
shares every three years. The options would be granted yearly on January 2 and
will vest one year after the grant. Newly elected directors will continue to
receive an option to purchase 10,000 shares of Common Stock (the "Initial
Election Grant") on the date of each Independent Director's initial election to
the Board. In addition each newly-elected Independent Director automatically
receives an option to purchase such Independent Director's pro rata share of the
Regular Grant, which equals the product of 833 multiplied by the number of whole
months remaining in the year until the next Regular Grant (the "Pro Rata
Grant"). Those options granted pursuant to a Pro Rata Grant vest and become
exercisable on the January 1st following such Independent Director's initial
election to the Board. Those options granted pursuant to an Initial Election
Grant vest and become exercisable as to 5,000 shares one year after the date of
grant; and as to 5,000 shares two years after the date of grant. The per share
exercise price of options granted pursuant to the Formula is equal to the fair
market value of the Common Stock on the date of grant.

4
<PAGE>

and become exercisable as though such Independent Director fulfilled the
continuous service requirement. An option granted to an Independent Director
pursuant to the Formula remains exercisable for a period of ten years from the
date of grant.

Independent Directors' Stock Plan

The Company's 1996 Independent Directors' Stock Plan (the "Independent
Directors' Stock Plan") provides compensation to Independent Directors serving
on the Board which is paid in the form of the Company's Common Stock. Other than
the Chairman of the Board, Independent Directors are not currently entitled to
receive cash compensation. Under the Independent Directors' Stock Plan, each
Independent Director is entitled to compensation in the form of shares of Common
Stock of the Company with a value equal to $2,500 per quarter and $500 for each
meeting attended by such Independent Director. The number of shares issued will
be based on the last reported sale price of a share of Common Stock on the
Nasdaq National Market at the end of the quarter for which fees are payable.
During the year ended June 30, 1999, the Company recorded an aggregate of
$75,500 in Independent Directors' fees. The following is a summary of
compensation paid to the Independent Directors under the Independent Director's
Stock Plan:

Value of Number
Consideration of Shares
------------- ---------
Randy H. Thurman $12,500 1,066
Rolf A. Classon 12,500 1,054
Dr. Rosina Dixon 13,000 1,091
David W. Golde 13,000 1,091
Robert LeBuhn 12,500 1,066
A.M. "Don" MacKinnon 12,000 979

Section 16(a) Beneficial Ownership Reporting Compliance

Ownership of and transactions in the Company's stock by executive officers
and directors of the Company and owners of 10% or more of the Company's
outstanding Common Stock are required to be reported to the Securities and
Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of
1934, as amended. During the year ended June 30, 1999 all such reports were
filed in a timely manner except (i) Mr. MacKinnon did not file a Form 4 in a
timely manner to report the exercise of a stock option and (ii) each of the
Independent Directors failed to file a Form 5 in a timely manner to report the
shares of Common Stock issued to such Independent Directors under the
Independent Directors' Stock Plan during the year ended June 30, 1999.

INFORMATION CONCERNING BOARD AND COMMITTEE MEETINGS
AND COMMITTEES OF THE BOARD

Six meetings of the Company's Board of Directors were held during the
fiscal year ended June 30, 1999. A.M. "Don" MacKinnon attended four of the six
Board of Directors meetings held. Each incumbent director attended at least 75%
of the total number of meetings of the Board of Directors. All incumbent
directors attended at least 75% of the total number of meetings of any
committees of the Board of Directors, of which such director was a member, held
during the fiscal year.

As of June 30, 1999, the only standing committees of the Company's Board of
Directors were the Finance and Audit Committee, Compensation Committee and
Executive Committee. During September 1999 the Board of Directors also created
two new committees, a Scientific Advisory Committee and a Corporate Governance
Committee.

As of June 30, 1999, the Finance and Audit Committee was comprised of
Robert LeBuhn, Chairman, and A.M. "Don" MacKinnon. The primary functions of the
Finance and Audit Committee are to meet with the Company's independent auditors
to discuss and review audit procedures and issues; meet with management on
matters concerning

5
<PAGE>

the Company's financial condition, internal controls and year-end audit; and
report to the Board on such matters. The Finance and Audit Committee held two
meetings during the fiscal year ended June 30, 1999. Rolf D. Classon was added
to the Finance and Audit Committee in September 1999.

As of June 30, 1999, the Compensation Committee was comprised of Dr. Rosina
B. Dixon, Chairperson, Rolf A. Classon and Robert LeBuhn. The primary functions
of the Compensation Committee are to administer the Company's Non-Qualified
Stock Option Plan, determine the compensation of the Company's officers and
senior management and review compensation policy. There were three meetings of
the Compensation Committee during the fiscal year ended June 30, 1999. During
September 1999 Randy H. Thurman and David S. Barlow were appointed to the
Compensation Committee and Robert LeBuhn left the Compensation Committee. Rolf
A. Classon was named as Chairman of the Compensation Committee in September
1999.

The Executive Committee, which as of June 30, 1999 was comprised of A.M.
"Don" MacKinnon, Chairman, Peter G. Tombros, and Randy H. Thurman, was
established to review and make decisions concerning matters which would
otherwise come before the Board, as permitted by Delaware General Corporate Law
and the Company's By-laws. Given the relatively small size of the Company's
current Board of Directors, the Company determined that efficiencies were not
being realized from meetings of the Executive Committee and therefore suspended
regular meetings of the Executive Committee in September 1994. There were no
meetings of the Executive Committee during the fiscal year ended June 30, 1999.
During September 1999 Robert LeBuhn was appointed to the Executive Committee and
assumed the role of Chairman of the Executive Committee. Mr. MacKinnon left the
Executive Committee in September 1999.

The Scientific Advisory Committee is comprised of Dr. David Golde,
Chairman, Dr. Rosina Dixon and David S. Barlow. This committee will provide
scientific input to the board and serve as the liaison between the Company's
senior research and development management and the Board.

The Corporate Governance Committee is comprised of Dr. Rosina Dixon,
Chairperson, Dr. David Golde and Robert LeBuhn. This committee will review and
set corporate governance policy and will be responsible for director and senior
management succession planning.

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION

During fiscal year ended June 30, 1999, the members of the Board of
Directors serving on the Compensation Committee of the Board of Directors were
Dr. Rosina B. Dixon, Chairperson, Rolf A. Classon and Robert Le Buhn, all of
whom are non-employee directors of the Company.

BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS

Set forth below is certain information regarding the executive officers of
the Company who do not serve on the Board of Directors.

John A. Caruso, 54, has served as Vice President, Administration since May
1998, General Counsel of the Company since July 1994 and as Secretary of the
Company since July 1989. From January 1991 to May 1998, Mr. Caruso served as
Vice President of Business Development. From January 1991 to July 1994, Mr.
Caruso served as Vice President, Legal Affairs of the Company. From the time he
joined the Company in September 1987 through December 1990, Mr. Caruso served as
Corporate Counsel to the Company. From 1979 through 1987, Mr. Caruso was
employed at Baxter Travenol Laboratories in Deerfield, Illinois as corporate
counsel.

Kenneth J. Zuerblis, 40, has served as Chief Financial Officer since
January 1996 and as Vice President, Finance since April 1994. From July 1991 to
April 1994, Mr. Zuerblis served as the Company's Controller. From January 1982
to July 1991, Mr. Zuerblis was employed by KPMG LLP. He became a certified
public accountant in 1985.

6
<PAGE>

SUMMARY COMPENSATION TABLE

The following table provides a summary of cash and non-cash compensation
for each of the last three fiscal years ended June 30, 1999, 1998 and 1997 with
respect to Enzon's Chief Executive Officer and the other executive officers
serving during the fiscal year ended June 30, 1999 (the "Named Executive
Officers").

<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Options(#) Compensation($)(2)
------------------ ---- --------- -------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Peter G. Tombros 1999 $336,000 $120,000 $ -- 43,000(5) $ 6,152
President and Chief 1998 336,000 70,560 -- 78,000(4) 5,000
Executive Officer 1997 307,626 50,000(3) -- 420,000 4,729

John A. Caruso 1999 175,364 54,000 -- 17,300(5) 1,639
Vice President, Administration, 1998 171,642 26,025 -- 90,000(4) --
General Counsel and Secretary 1997 170,000 25,000 -- 80,000 163

Kenneth J. Zuerblis 1999 165,119 60,000 -- 17,000(5) 4,803
Vice President, Finance and 1998 154,692 33,600 -- 110,000(4) 3,775
Chief Financial Officer 1997 148,052 40,000 -- 90,000 5,395
</TABLE>

(1) Excludes perquisites and other personal benefits that in the aggregate do
not exceed 10% of the Named Executive Officer's total annual salary and
bonus.

(2) Consists of annual Company contributions to a 401(k) plan.

(3) The payment of Mr. Tombros' bonus, earned for the year ended June 30, 1997,
was deferred at his option and paid during the year ended June 30, 1999.

(4) Includes stock options granted during July 1998, which represent a portion
of the Named Executive Officer's total bonus earned for the year ended June
30, 1998.

(5) Represents stock options granted during July 1999, which represent a
portion of the Named Executive Officer's total bonus earned for the year
ended June 30, 1999.

7
<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information concerning the grant of stock
options under the Company's Non-Qualified Stock Option Plan to the Named
Executive Officers during the fiscal year ended June 30, 1999.

<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Number of Potential Realizable Value at Assumed
Securities % of Total Annual Rates of Stock Price
Underlying Options Granted Appreciation for Option Term (3)
Options to Employees Exercise or Base Expiration --------------------------------
Name Granted (1) in Fiscal Year Price ($/Share) Date 0%($) 5%($) 10%($)
---- ----------- -------------- --------------- ---- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Peter G. Tombros 78,000(2) 17.16% $6.50 7/21/08 0 $318,850 $808,027
John A. Caruso 50,000(2) 11.00% 6.50 7/21/08 0 204,391 517,966
Kenneth J. Zuerblis 70,000(2) 15.40% 6.50 7/21/08 0 286,147 725,153
</TABLE>

(1) All options were granted at an exercise price that equaled or exceeded the
fair market value of the Common Stock on the date of grant, as determined
by the last sale price as reported on the Nasdaq National Market. The
options will become exercisable as to all shares immediately upon a "change
in control" of the Company as defined in certain agreements between the
executive officers and the Company. See "Employment and Termination
Agreements."

(2) These options were granted during July 1998 as part of the Named Executive
Officers total bonus earned for the year ended June 30, 1998 will vest and
become exercisable as to 50% of the shares granted on July 21, 1999 and 50%
on July 21, 2000, provided that the Named Executive Officer is employed by
the Company on the vesting date.

(3) The amounts set forth in the three columns represent hypothetical gains
that might be achieved by the optionees if the respective options are
exercised at the end of their terms. These gains are based on assumed rates
of stock price appreciation of 0%, 5% and 10% compounded annually from the
dates the respective options were granted. The 0% appreciation column is
included because the options were granted with exercise prices which
equaled or exceeded the market price of the underlying Common Stock on the
date of grant, and thus will have no value unless the Company's stock price
increases above the exercise prices.

8
<PAGE>

OPTION EXERCISES AND FISCAL YEAR-END VALUES

The following table sets forth the information with respect to the Named
Executive Officers concerning the exercise of options during the fiscal year
ended June 30, 1999 and unexercised options held as of June 30, 1999.

<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at FY-End (#) at FY-End ($)(1)
Shares Acquired Value --------------------- ----------------
Name On Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- --------------- ----------- ----------- ------------- ----------- -------------

<S> <C> <C> <C> <C> <C> <C>
Peter G. Tombros -- $ -- 1,069,000 78,000 $18,425,500 $1,096,875

John A. Caruso 75,600 895,671 175,392 70,000 3,043,907 994,375

Kenneth J. Zuerblis 75,000 1,019,065 155,000 90,000 2,498,438 1,275,625
</TABLE>

(1) Based upon a market value of $20.56 as determined by the last sale
price as reported on the Nasdaq National Market on June 30, 1999. If
the exercise price is equal to or greater than such last sale price,
the option is deemed to have no value.

EMPLOYMENT AND TERMINATION AGREEMENTS

The Company has a three-year employment agreement with Peter G. Tombros,
which terminates in April 2000, pursuant to which he received an annual base
salary of $336,000. In the event Mr. Tombros' employment is terminated for any
reason, except if such employment is terminated (i) voluntarily by Mr. Tombros
(other than in response to the Company's prior material breach of the employment
agreement), (ii) by the Company "for cause" (as defined in the employment
agreement) or (iii) as a result of Mr. Tombros' death or disability, Mr. Tombros
will be entitled to receive his base salary for one year after such termination.
In the event Mr. Tombros' employment is terminated due to his death or
disability his base salary will be paid for six months subsequent to such
termination. Pursuant to his employment agreement, Mr. Tombros was granted a
ten-year option under the Company's Non-Qualified Stock Option Plan to purchase
300,000 shares of the Company's Common Stock at a per share exercise price of
$2.69, the fair market value of the Company's Common Stock on the date of grant.
The vesting and exercisability of the options granted accelerated in 100,000
share increments when the closing stock price of the Company's common stock,
exceeded $4, $5 and $6 per share, for at least twenty consecutive trading days
as reported by the Nasdaq National Market. Mr. Tombros' employment agreement
also requires him to maintain the confidentiality of Company information and
assign inventions to the Company. Mr. Tombros is precluded from competing with
the Company during the term of his employment agreement and for two years after
his employment is terminated if his employment is terminated by the Company for
cause or by Mr. Tombros voluntarily (except in response to the Company's prior
material breach of the employment agreement).

The Company has agreements with each of its executive officers which
provide for payment to each executive officer of three years of compensation and
benefits (as defined in such agreements) following a change in control of the
Company (as defined in such agreements), including the provision for such
payment in the event such executive officer's employment with the Company is
terminated under certain circumstances following such change in control. Upon a
change in control of the Company, all options held by such executive officers
shall vest immediately, notwithstanding any vesting provisions in the option
certificates or any plan covering such options. The term of these agreements is
for three years. Prior to a change in control of the Company, the agreements
automatically renew on each successive anniversary for an additional three
years, unless the Company gives the executive officer 60 days notice prior to
the anniversary date that it does not plan to renew such contracts.

9
<PAGE>

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

During the fiscal year ended June 30, 1999 the Compensation Committee of
the Board of Directors consisted of three non-employee directors. The
Compensation Committee determines all compensation paid or awarded to the
Company's executive officers, including the Named Executive Officers in the
Summary Compensation Table. As with many other biotechnology companies, Enzon's
current level of development and the highly volatile nature of biotechnology
stocks in general makes executive compensation based on sales and earnings goals
or stock performance impracticable. The Compensation Committee believes that an
important factor in Enzon's success is the continued development and maintenance
of a culture focused on team-oriented performance. In this context, compensation
has been based on the accomplishment of a blend of mutually shared and
individual goals. The Compensation Committee has reviewed the executive
compensation of other biotechnology companies with comparable levels of
stockholders' equity and development and has designed the Company's total
executive compensation to be targeted at the median of executive compensation
levels of these companies. The compensation of the Company's executive officers
consist of three principal components: (i) base salary and benefits, (ii) a
bonus based on individual contributions evaluated against annual goals and (iii)
long-term incentives in the form of stock option grants.

The Compensation Committee has established a formal Performance Incentive
Program for its executive officers and other members of senior management. The
structure and design of the program was based on a detailed study of
compensation programs provided at comparable biotechnology companies. During
July 1999 the Compensation Committee made certain revisions to the program based
upon an updated compensation study. Under the revised program Mr. Tombros can
earn a cash bonus of up to a maximum of 40% of his base salary. This was
increased from 35% for the fiscal year ended June 30, 1998. Under the amended
program Mr. Tombros is also entitled to receive stock option grants to purchase
Common Stock of up to a maximum of 1.6 times his base salary divided by the
current stock price on the day of grant or approximately 30,400 shares, as
compared to a maximum of 130,000 shares in the fiscal year ended June 30, 1998.
For the fiscal year ended June 30, 1999 the Compensation Committee used a
combination of the previous option calculation under the program and the new
calculation to arrive at an option grant of 43,000 shares to Mr. Tombros. The
other executive officers, Mr. Caruso and Mr. Zuerblis, can each earn a cash
bonus of up to a maximum of 35% of their base salary as opposed to 30% in the
fiscal year ended June 30, 1998 and stock option grants to purchase Common
Stock. The maximum number of options to purchase shares of Common Stock for each
executive officer is calculated based on 1.2 times base salary divided by the
price of the Company Common Stock on the date of grant, as compared to 100,000
shares in fiscal 1998. The amount of bonus paid and options granted under the
program is based upon the achievement of predetermined corporate and individual
objectives. Stock options granted under the program are granted with exercise
prices equal to the fair market value of the Company's Common Stock on the date
of grant.

The annual salary of $336,000 and the bonus awarded to the Company's
President and Chief Executive Officer for the fiscal year ended June 30, 1999
were based on Mr. Tombros' extensive prior experience as a senior executive of a
major multinational pharmaceutical firm and the compensation paid to chief
executive officers with similar credentials at comparable biotech companies. The
bonus paid to Mr. Tombros under the Company's Performance Incentive Program was
based on many factors including increasing the awareness of the Company in the
financial community, the strengthening of the Company's financial position, the
renegotiation of the Schering Plough license agreement as well as the progress
made by the Company and its partners on products in the Company's development
pipeline.

During the fiscal year ended June 30, 1999, the Compensation Committee
awarded cash bonuses under the program described above to the Company's other
executive officers, Messrs. Caruso and Zuerblis. The bonuses were based on the
executives' contributions to increase the awareness of the Company in the
financial community, the improvement of the Company's financial position and the
renegotiation of the Schering-Plough license agreement.

10
<PAGE>

The Company also adjusted the salary level of Mr. Caruso and Mr. Zuerblis.
The salary adjustments were based on a detailed compensation study of executives
with similar credentials at comparable biotechnology companies.

THE COMPENSATION COMMITTEE
Dr. Rosina B. Dixon, Chairperson
Rolf A. Classon
Robert LeBuhn

STOCKHOLDER RETURN PERFORMANCE GRAPH

The graph below summarizes the total cumulative return experienced by the
Company's stockholders from June 30, 1994 through June 30, 1999, compared to the
Nasdaq National Market-US Index, the Company's former Peer Group index and the
Company's new Peer Group index; the Nasdaq Biotechnology Index. During fiscal
1999 the Company changed its Peer Group to the Nasdaq Biotechnology Index. The
Company's former Peer Group was not felt to be representative of the Company due
to the Company's increase in market capitalization. The former Peer Group
consisted of: Isis Pharmaceuticals, Inc., Repligen Corp., Celgene Corp., Gensia
Pharmaceuticals Inc., Collagen Corp., Liposome Inc., Cytel Corp., Cytogen Corp.,
DNAP Holding Corp., (formerly DNA Plant Technology Corp.) and Cephalon Inc. The
changes for the periods shown in the graph and table below are based on the
assumption that $100 had been invested in Enzon, Inc. Common Stock and in each
index below on June 30, 1994.

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG ENZON, INC., THE NASDAQ NATIONAL MARKET-US INDEX AND PEER GROUPS

Fiscal year ending June 30,
-------------------------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----

Enzon, Inc. 100 86 127 82 232 570
Former Peer Group 100 122 166 104 81 123
Nasdaq National
Market-US Index 100 133 171 208 274 394
Nasdaq
Biotechnology 100 139 203 213 218 349
Index

11
<PAGE>

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information concerning stock
ownership of all persons known by the Company to own beneficially 5% or more of
the outstanding shares of the Company's voting stock, each director, each
executive officer named in the Summary Compensation Table and all executive
officers and directors of the Company as a group as of October 20, 1999:

Percentage of
Directors, Officers or Number of Voting Stock
5% Stockholders(1) Shares(2) Outstanding(3)
------------------ --------- --------------

Peter G. Tombros 1,138,300 (4) 3.0%
Randy H. Thurman 217,907 (5) *
Rolf A. Classon 56,328 (6) *
David S. Barlow 124 *
Dr. Rosina B. Dixon 128,486 (7) *
Dr. David W. Golde 68,498 (8) *
Robert LeBuhn 122,979 (9) *
A.M. "Don" MacKinnon 153,710(10) *
John A. Caruso 223,292(11) *
Kenneth J. Zuerblis 213,200(12) *
Janus Capital Corporation 2,978,125(13) 8.1%
100 Fillmore Street
Denver, Colorado 80206
All Executive Officers and Directors 2,322,824(14) 6.0%
as a group (ten persons)

- ----------

* Less than one percent.

(1) The address of all current executive officers and directors listed above is
in the care of the Company.

(2) All shares listed are Common Stock. Except as discussed below, none of
these shares are subject to rights to acquire beneficial ownership, as
specified in Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as
amended, and the beneficial owner has sole voting and investment power,
subject to community property laws where applicable.

(3) Gives effect to 36,813,597 shares of Common Stock and 107,000 shares of
Series A Preferred Stock which were issued and outstanding as of October
20, 1999. Generally, the Series A Preferred Stock and Common Stock will
vote as one class of stock. Each share of Common Stock and each share of
Series A Preferred Stock is entitled to one vote. The percentage of voting
stock outstanding for each stockholder is calculated by dividing (i) the
number of shares deemed to be beneficially held by such stockholder as of
October 20, 1999 by (ii) the sum of (A) the number of shares of Common
Stock outstanding as of October 20, 1999 plus (B) the number of shares of
Series A Preferred Stock outstanding as of October 20, 1999 plus (C) the
number of shares issuable upon exercise of options or warrants held by such
stockholder which were exercisable as of October 20, 1999 or which will
become exercisable within 60 days after October 20, 1999.

(4) Includes 1,108,000 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999.

(5) Consists of 200,000 shares subject to options which were exercisable as of
October 20, 1999 or which will

12
<PAGE>

become exercisable within 60 days after October 20, 1999.

(6) Includes 50,000 shares subject to option which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999.

(7) Includes 101,664 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999, 500 shares held by Dr. Dixon's husband and 100 shares
held by Dr. Dixon's son. Dr. Dixon disclaims beneficial ownership as to
shares held by her husband and son.

(8) Includes 23,320 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999, 32,500 shares held by a separate corporation for Dr.
Golde's retirement, 6,700 shares held by three separate trusts for Dr.
Golde's children and 1,000 shares beneficially owned by Dr. Golde's wife.

(9) Includes 96,664 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999.

(10) Includes 76,300 shares beneficially owned by Mr. MacKinnon's wife. Mr.
MacKinnon disclaims beneficial ownership as to the shares owned by his
wife.

(11) Consists of 220,992 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999.

(12) Includes 210,000 shares subject to options which were exercisable as of
October 20, 1999 or which will become exercisable within 60 days after
October 20, 1999 and 600 shares owned by Mr. Zuerblis' IRA.

(13) The information concerning the stock ownership of the Janus Capital
Corporation was obtained from a schedule 13F filed by the Janus Capital
Corporation with the Securities and Exchange Commission for the period
ended June 30, 1999.

(14) Includes all shares owned beneficially by the directors and executive
officers named in the Summary Compensation table.

13
<PAGE>

PROPOSAL NO. 2 - APPROVAL OF AMENDMENT
TO THE NON-QUALIFIED STOCK OPTION PLAN

In November 1987, the Company's Board of Directors adopted the
Non-Qualified Stock Option Plan (the "Plan") in order to enable the Company to
attract and retain qualified employees, directors and independent consultants.
Subject to stockholder approval, the Board of Directors has approved an
amendment to the Plan to increase the total number of Common Stock authorized
for issuance upon exercise of options granted under the plan from 6,200,000 to
7,900,000 shares and to provide for Regular Grants of 10,000 options per year to
Independent Directors.

The Board believes that the best way to attract and retain qualified
executives and board members is to offer significant potential rewards based
upon the Company's success through the issuance of stock options. The amendment
to the Plan increasing the shares of Common Stock authorized for issuance
presented herein to the stockholders for their approval is designed to assist
the Company in accomplishing this goal. Of the 6,200,000 shares of Common Stock
currently authorized, at October 20, 1999, 508,879 shares remained available for
future grants.

The following summary description of the Plan is qualified in its entirety
by the full text of the Plan which may be obtained by the Company's stockholders
upon request to the Secretary of the Company.

The last sale price of a share of the Company's Common Stock as reported by
the Nasdaq National Market on October 20, 1999 was $27.13.

Basic Terms

Under the Plan, directors, officers and employees of the Company and
independent consultants to the Company have been, and will be, eligible for
grants of options to purchase shares of Common Stock. To date, all options
granted under the Plan have been awarded at the discretion of the Board of
Directors or a committee thereof or pursuant to the formulas described below.
Currently, the Compensation Committee of the Board of Directors determines who
will receive options under the Plan, the number of shares of Common Stock which
will be issuable upon exercise of options which are granted under the Plan and
the terms of the options granted under the Plan to the extent the terms are not
otherwise set forth in the Plan. Currently, no option granted under the Plan may
be transferred by the optionee, otherwise than by will or the laws of descent
and distribution and, generally, during the optionee's lifetime, the option may
be exercised only by the optionee. The exercise price of the options must be at
least equal to the fair market value of the underlying Common Stock as of the
date of grant. Either the Compensation Committee of the Board of Directors or
the Board of Directors may, in its discretion, provide that an option may not be
exercised in whole or in part for any specified period or periods of time. No
option may be exercised prior to six months from the date of grant except
immediately prior to the dissolution or liquidation of the Company or a merger
or consolidation where the Company is not the surviving corporation, in which
case all outstanding options become immediately exercisable. Options expire no
later than the tenth anniversary of the date of grant.

Automatic Awards To Independent Directors

The Plan currently provides that Independent Directors receive option
grants pursuant to the Formula. The Formula provides for Regular Grants of
options for 60,000 shares to Independent Directors on each of January 2, 1994,
January 2, 1997, January 2, 2000 and January 2, 2003. During May 1999, the Board
of Directors adopted a revision to the Formula for grants to Independent
Directors, subject to shareholder approval. The amended Formula would reduce the
number of shares granted under the Regular Grant to 10,000 shares per year for
the years beginning after December 31, 1999 as opposed to the current formula of
60,000 shares every three years. The options will be granted yearly on January 2
and will vest one year after the grant. Newly elected directors will continue to
receive the Initial Election Grant on the date of each Independent Director's
initial election to the Board. In addition each newly-elected Independent
Director automatically receives an option to purchase such Independent
Director's pro rata share of the Regular Grant, which equals the product of 833
multiplied by the number of whole months remaining in the year until the next
Regular Grant (the "Pro Rata Grant"). Those options granted pursuant to a Pro
Rata Grant vest and become exercisable on the January 1st following such
Independent Director's initial election to the Board. Those options granted
pursuant to an Initial Election Grant vest and become exercisable as to 5,000
shares one year

14
<PAGE>

after the date of grant; and as to 5,000 shares two years after the date of
grant. The per share exercise price of options granted pursuant to the Formula
is equal to the fair market value of the Common Stock on the date of grant.

An option granted to an Independent Director pursuant to the Formula will
not become exercisable as to the relevant shares unless such Independent
Director has served continuously on the Board during the period commencing on
the date the option was granted and terminating on the date the option is
scheduled to vest; provided, however, that if an Independent Director does not
fulfill such continuous service requirement due to such Independent Director's
death or disability, all options granted under the Formula and held by such
Independent Director shall nonetheless vest and become exercisable as though
such Independent Director fulfilled the continuous service requirement. An
option granted to an Independent Director pursuant to the Formula will remain
exercisable for a period of ten years from the date of grant.

Administration

The Plan is to be administered by either the Board of Directors or a
committee of at least two directors appointed by the Board. The Plan is
currently administered by the Compensation Committee.

Amendments and Termination

Currently, no options may be granted under the Plan beyond November 21,
2007. The Compensation Committee or the Board of Directors may terminate, amend,
or revise the Plan with respect to any shares as to which options have not been
granted, but may not alter any previously granted options without the optionee's
consent. Termination of the Plan will not affect previously granted options.
Subject to the foregoing restriction relating to outstanding options, the Board
can amend the Plan without stockholder approval unless stockholder approval is
required by applicable law or the rules of Nasdaq or any stock exchange on which
the Company's shares are then traded.

Capital Adjustments

The aggregate number of shares of Common Stock available for options, the
shares subject to any option, and the price per share, will all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from (1) a subdivision or consolidation of
shares or any other capital adjustment, (2) the payment of a stock dividend on
the Company's Common Stock, or (3) other increase or decrease in such shares
effected without receipt of consideration by the Company. If the Company shall
be the surviving corporation in any merger or consolidation, any option
outstanding under the Plan shall pertain, apply, and relate to the securities to
which a holder of the number of shares of Common Stock subject to the option
would have been entitled after the merger or consolidation. Upon dissolution or
liquidation of the Company, or upon a merger or consolidation in which the
Company is not the surviving corporation, all options outstanding under the Plan
shall terminate; except that each optionee shall have the right, immediately
prior to such dissolution or liquidation, or such merger or consolidation, to
exercise the options that such optionee holds in whole or in part.

Tax Consequences

An optionee will not recognize taxable income for Federal income tax
purposes upon the receipt of an option under the Plan, and the Company will not
be entitled to a deduction upon the grant of an option. Upon exercise of an
option, the optionee will recognize ordinary income equal to the excess of the
fair market value on the date of exercise of the Common Stock received upon
exercise over the exercise price for such Common Stock. However, any such
optionee who is subject to the trading restrictions of Section 16(b) of the
Exchange Act would, unless the optionee elected to recognize ordinary income on
the date of exercise, recognize ordinary income on the date such trading
restrictions terminate (the "Deferred Date"). The amount of such income would
equal the excess of the fair market value on the Deferred Date of the Common
Stock received upon exercise of the option over the exercise price for such
Common Stock, and the holding period for long-term capital gain treatment would
not begin until the Deferred Date. The Company will be entitled to a deduction
equal to the amount of ordinary income recognized by any optionee at the same
time that such optionee recognized such income.

15
<PAGE>

Eligible Participants

As of October 20, 1999, there were approximately 95 persons eligible to
participate in the Plan. Of these eligible participants, eight are directors
(seven of whom are Independent Directors), two are executive officers who are
not directors and the remainder are employees of the Company who are not
executive officers and consultants.

For information concerning options granted under the Plan to directors, the
Chief Executive Officer and the Named Executive Officers see "Directors'
Compensation - Directors' Stock Options," "Summary Compensation Table" and
"Option Grants In Last Fiscal Year."

The Board of Directors recommends a vote FOR approval of the proposed
amendments to the Non-Qualified Stock Option Plan (Proposal No. 2 on the Proxy
Card).

PROPOSAL NO. 3 - RATIFICATION OF AUDITORS

On October 27, 1999, the Audit Committee of the Board of Directors,
pursuant to authority granted by the Board of Directors, approved the retention
of KPMG LLP ("KPMG"), independent certified public accountants, to audit the
consolidated financial statements of the Company for the fiscal year ending June
30, 2000. KPMG served as auditor of the consolidated financial statements of the
Company for the fiscal years ended June 30, 1999, June 30, 1998, and June 30,
1997. Representatives of KPMG are expected to be present at the Annual Meeting
and will have the opportunity to make a statement should they desire to do so.
Such representatives are also expected to be available to respond to questions.

The Board of Directors recommends a vote FOR ratification of the selection
of KPMG Peat Marwick LLP, independent certified public accountants, to audit the
consolidated financial statements of the Company for the fiscal year ending June
30, 2000 (Proposal No. 3 on the Proxy Card).

ANNUAL REPORT TO STOCKHOLDERS

The Company's Annual Report to Stockholders for the fiscal year ended June
30, 1999 accompanies this Proxy Statement.

STOCKHOLDERS' PROPOSALS

It is anticipated that the Company's fiscal 2000 Annual Meeting of
Stockholders will be held on or about December 5, 2000. Stockholders who intend
to present proposals at such Annual Meeting of Stockholders must submit their
proposals to the Secretary of the Company on or before July 5, 2000.

16
<PAGE>

GENERAL

The cost of soliciting proxies will be borne by the Company. In addition to
mailing, proxies may be solicited by personal interview, telephone and
telegraph, and by directors, officers and regular employees of the Company,
without special compensation therefor. The Company expects to reimburse banks,
brokers and other persons for their reasonable out-of-pocket expenses in
handling proxy materials for beneficial owners of the Company's Common Stock.

Unless contrary instructions are indicated on the proxy card, all Common
Shares or Series A Preferred Shares represented by valid proxies received
pursuant to this solicitation (and not revoked before they are voted) will be
voted FOR the election of the nominees for directors named herein and FOR
Proposal No. 2 and Proposal No. 3.

Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by filing with
the Secretary of the Company written notice of revocation bearing a later date
than the proxy, by duly executing a subsequent proxy relating to the same Common
Shares or Series A Preferred Shares or by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy unless the stockholder votes his or her Common
Shares or Series A Preferred Shares in person at the Annual Meeting. Any notice
revoking a proxy should be sent to the Secretary of the Company, John A. Caruso,
at Enzon, Inc., 20 Kingsbridge Road, Piscataway, New Jersey 08854.

The Board of Directors knows of no business other than that set forth above
to be transacted at the meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the Common
Shares or Series A Preferred Shares represented by the proxies in accordance
with their judgment on such matters. If a stockholder specifies a different
choice on the proxy, his or her Common Shares or Series A Preferred Shares will
be voted in accordance with the specification so made.

Please complete, sign and date the enclosed proxy card, which is revocable
as described herein, and mail it promptly in the enclosed postage-paid envelope.

IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.

By order of the Board of Directors,

John A. Caruso, Secretary

Piscataway, New Jersey
October 28, 1999

<PAGE>

Proxy Card

ENZON, INC.

Annual Meeting of Stockholders December 7, 1999
This Proxy Is Solicited on Behalf of the Board of Directors

John A. Caruso and Kenneth J. Zuerblis and each of them, as proxies, with
full power of substitution in each of them, are hereby authorized to represent
and to vote, as designated below and on the reverse side, on all proposals and
in the discretion of the proxies on such other matters as may properly come
before the annual meeting of stockholders of Enzon, Inc. (the "Company") to be
held on December 7, 1999 or any adjournment(s), postponement(s), or other
delay(s) thereof (the "Annual Meeting"), all shares of stock of the Company to
which the undersigned is entitled to vote at the Annual Meeting.

UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2
and 3 AND WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" PROPOSALS 1, 2 and 3.

(1) Election of the following nominees as Class I Directors to serve in such
capacities until their successors are duly elected and qualified:

PETER G. TOMBROS DR. ROSINA B. DIXON

(Authority to vote for any nominee(s) may be withheld by lining through the
name(s) of any such nominee(s).)

|_| FOR all nominees |_| WITHHOLD authority for all

(2) Proposal to approve amendments to the Company's Non-Qualified Stock Option
Plan, as set forth in the Company's Proxy Statement dated October 28, 1999.

|_| FOR |_| AGAINST |_| ABSTAIN

<PAGE>

(3) Ratification of the selection of KPMG LLP to audit the consolidated
financial statements of the Company for the fiscal year ending June 30,
2000.

|_| FOR |_| AGAINST |_| ABSTAIN

|_| Please check this box if you expect to attend the Annual Meeting in person.

(Please sign exactly as name appears to the left,
date and return. If shares are held by joint
tenants, both should sign. When signing as
attorney, executor, administrator, trustees or
guardian, please give full title as such. If a
corporation, please sign in full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.)

Date:________________________________________________

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

-----------------------------------------------------
Sign Here

-----------------------------------------------------
Signature (if held jointly)

-----------------------------------------------------
Capacity (Title or Authority, i.e. Executor, Trustee)

PLEASE SIGN, DATE AND MAIL YOUR PROXY TODAY.

<PAGE>

Appendix A

ENZON, INC.

NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED/a

A. Purpose and Scope

The purpose of this Plan is to encourage stock ownership by employees and
directors of, and independent consultants to, Enzon, Inc., a Delaware
corporation, and its subsidiaries (herein called the "Company"), to provide an
incentive to such persons to develop, expand and improve the profits and
prosperity of the Company, and to assist the Company in attracting key personnel
and consultants through the grant of Options to purchase shares of the Company's
Common Stock.

B. Definitions

Unless otherwise required by the context:

1. "Board" shall mean the Board of Directors of the Company.

- ----------

a/ The Plan was amended by vote of the Board of Directors on each of
January 10, 1990, February 6, 1990, April 25, 1990, February 23, 1991, May 30,
1991, November 21, 1991, approved by vote of the Stockholders on January 22,
1992, amended by vote of the Board of Directors on December 28, 1992 with such
amendment ratified by vote of the Stockholders on February 8, 1993, amended by
vote of the Board of Directors on September 13, 1993 with such amendment
ratified by vote of the Stockholders on December 7, 1993, amended by the Board
of Directors on July 17, 1995 with such amendment ratified by vote of the
Stockholders on December 5, 1995, amended by vote of the Board of Directors on
October 7, 1997 with such amendment ratified by vote of the Stockholders on
December 2, 1997, amended by the Board of Directors on October 20, 1998 with
such amendment ratified by vote of the Stockholders on December 1, 1998, amended
by the Board of Directors on May 18, 1999 with such amendment to be voted on by
the Stockholders on December 7, 1999 (to take effect January 1, 2000).

-1-
<PAGE>

2. "Committee" shall mean the Compensation Committee, which is appointed by
the Board, and which shall be composed of at least two Non-Employee Directors.

3. "Company" shall mean Enzon, Inc. and its subsidiaries.

4. "Code" shall mean the Internal Revenue Code of 1986, as amended.

5. "Independent Director" shall mean a director who is not an employee of
the Company.

6. "Non-Employee Director" shall have the meaning ascribed in Rule 16b-3
("Rule 16b- 3") promulgated under the Securities Exchange Act of 1934, as
amended.

7. "Option" shall mean a right to purchase Stock, granted pursuant to the
Plan.

8. "Option Price" shall mean the purchase price for Stock under an Option,
as determined in Section F below.

9. "Participant" shall mean an employee of the Company, a director of the
Company, a consultant to the Company, or any person to whom an Option is granted
under the Plan.

10. "Plan" shall mean this Enzon, Inc. Non-Qualified Stock Option Plan, as
amended.

11. "Stock" shall mean the Common Stock of the Company, par value $.01.

C. Stock to be Optioned

Subject to the provisions of Section L of the Plan, the maximum number of
shares of Stock that may be optioned or sold under the Plan is 7,900,000 shares.
Such shares may be treasury, or authorized but unissued shares of, the Stock of
the Company.

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D. Administration

The Plan shall be administered by the Committee or the Board. Two members
of the Committee shall constitute a quorum for the transaction of business.
Except as provided in Section Q hereof, the Committee or the Board shall make
all decisions with respect to the operation of the Plan, the participation in
the Plan by employees or directors of, or consultants to the Company, and with
respect to the extent of that participation. The interpretation and construction
of any provision of the Plan by the Board or the Committee shall be final. No
member of the Board or the Committee shall be liable for any action or
determination made by him in good faith.

E. Eligibility

The Board or the Committee may grant Options to any employee (including an
employee who is a director or an officer), or any person who is not an employee
who is a director or an officer, or any person who is not an employee and serves
as a director of the Company, or any consultant to the Company. Options may be
awarded by the Board or the Committee at any time and from time to time to new
Participants, or to then current Participants, or to a greater or lesser number
of Participants, and may include or exclude previous Participants, as the Board,
or the Committee shall determine. Options granted at different times need not
contain similar provisions.

F. Option Price

The purchase price for Stock under each Option shall be at least 100
percent of the fair market value of the Stock at the time the Option is granted,
but in no event less than the par value

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of the Stock. The fair market value of the Company's Stock shall be determined
as follows:

a. If the Common Stock continues to be traded on the over-the-counter
market as a National Market System Security or is traded on a national
securities exchange, the fair market value of the Stock shall be the
closing sale price on such day that the Option is granted as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or the national securities exchange on which the Stock is
trading, as the case may be; or

b. If the Common Stock ceases to be traded as a National Market System
Security but continues to be traded on the over-the-counter market, the
fair market value of the Stock shall be the closing bid price on such day
that the Option is granted as reported by NASDAQ; or

c. If the Common Stock ceases to be traded on the over-the-counter market
and is not traded on a national securities exchange, the current market
value shall be determined by a reputable investment banking firm retained
by the Board.

G. Terms and Conditions of Options

Except as provided in Section Q hereof, Options granted pursuant to the
Plan shall be authorized by the Board or the Committee and shall be evidenced by
agreements ("Option Agreements") in such form as the Board or the Committee,
shall from time to time approve. Such Agreements shall comply with and be
subject to the following terms and conditions:

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1. Employment Agreement - The Board or the Committee may, in its
discretion, include in any Option granted under the Plan to a Participant who is
an employee of the Company a condition that the Participant shall agree to
remain in the employ of, and/or to render services to, the Company for a period
of time (specified in the Option Agreement) following the date the Option is
granted. No such agreement shall impose upon the Company, however, any
obligation to employ the Participant for any period of time, except as otherwise
agreed to by the Company.

2. Time and Method of Payment - The Option Price shall be paid in full in
cash, by certified check or official bank check, at the time an Option is
exercised under the Plan. If the Board or the Committee in its sole discretion
so authorizes, payment may be made by exchange of shares of the Company's Common
Stock previously owned by the optionee, having the same fair market value as
determined in the manner set forth in Section F. In addition, at the discretion
of the Committee, the optionee may also surrender that number of shares of
Common Stock of the Company subject to such option having the aggregate fair
market value (as determined in the manner set forth in Section F) equivalent to
the aggregate Option Price of the exercised option in lieu of cash payment of
the Option Price. Without payment by one of the methods described above, an
exercise of any Option granted under the Plan shall be invalid and of no effect.
Promptly after the exercise of an Option and the payment of the full Option
Price, the Participant shall be entitled to the issuance of a stock certificate
evidencing his or her ownership of the Stock issuable under such Option. A
Participant shall have none of the rights of a stockholder until the Option is
duly exercised, and no adjustment will be made for dividends or other rights for
which the record date is prior to the date such Option is duly exercised.

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3. Number of Shares - Each Option shall state the total number of shares of
Stock to which it pertains.

4. Option Period and Limitations on Exercise of Options - Except for
Options granted pursuant to Section Q hereof, the Board or Committee shall
determine the period of time during which an Option may be exercised, provided,
however, that no Option may be exercised after the expiration of ten years from
the date it is granted. Except for Options granted pursuant to Section Q hereof,
the Board or the Committee may, in its discretion, provide that an Option may
not be exercised in whole or in part for any period or periods of time specified
in the Option Agreement; provided, however, that no Option granted subsequent to
November 21, 1991 may be exercisable for a minimum of six months from the date
of grant. Options granted pursuant to Section Q hereof will be exercisable in
accordance with Section R hereof. Except as provided in the Option Agreement and
in this Section G(4), an Option may be exercised in whole or in part at any time
during its term. No Option may be exercised for a fractional share of Stock.

H. Termination of Employment

Except as provided in Section I below, if an employee who is a Participant
ceases to be employed by the Company, his or her Options unless otherwise
exercised, shall terminate as of the close of business on the one hundred and
ninetieth (190th) day following the termination of the Participant's employment
with the Company; provided, however, that such Participant may exercise his or
her Options during such one hundred and ninety (190) day period following such
termination of employment only to the extent that he or she would otherwise be
entitled to exercise such Options

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during such period; provided, further, however, that in no event shall any
Option be exercisable more than ten (10) years from the date it was granted.
Notwithstanding the foregoing, the Board or the Committee may cancel an Option
during the one hundred and ninety (190) day period referred to in this section,
if the Participant engages in employment or activities contrary, in the opinion
of the Board or the Committee, to the best interests of the Company. The Board
or the Committee shall determine in each case whether a termination of
employment shall be considered a retirement with the consent of the Company,
and, subject to applicable law, whether a leave of absence shall constitute a
termination of employment. Any such determination of the Board or the Committee
shall be final and conclusive. The foregoing provisions may be modified or
waived by the Board or the Committee and do not, in any case, apply to any
Participant who is not an employee of the Company. Except for Options granted
pursuant to Section Q hereof, the Board or the Committee will determine what, if
any, provisions for earlier termination of the Option will be included in the
Option Agreement issued to any person who is not an employee. The Board or the
Committee will determine who shall be deemed to be an employee of the Company
for the purposes of this Section H and Section I below at the time the Option is
granted.

I. Rights in Event of Death

If an employee who is a Participant dies while employed by the Company, or
within three months after having retired with the consent of the Company, and
without having fully exercised his or her Options, the executors or
administrators, or legatees or heirs, of his or her estate shall have the right
to exercise such Options to the extent that such deceased Participant was
entitled to exercise

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the Options on the date of his or her death; provided, however, that in no event
shall the Options be exercisable more than ten years from the date they were
granted. The foregoing provisions may be modified or waived by the Board or the
Committee and do not, in any case, apply to any Participant who is not an
employee of the Company. Except for Options granted pursuant to Section Q
hereof, the Board or the Committee will determine what, if any, provisions
concerning exercise of the Option upon the death of the holder will be included
in the Option Agreement issued to any person who is not an employee.

J. No Obligations to Exercise Option

The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.

K. Assignability

At the discretion of the Committee, Options may be exercised by transferees
or beneficiaries who are family members of a Participant. No Option may be
pledged, alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment of encumbrance thereof shall be void and unenforceable
against the Company.

L. Effect of Change in Stock Subject to the Plan

The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option, and the price per share, shall all be
proportionately adjusted for any increase

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<PAGE>

or decrease in the number of issued shares of Stock subsequent to the effective
date of the Plan resulting from (1) a subdivision or consolidation of shares or
any other capital adjustment, (2) the payment of a stock dividend on the
Company's Common Stock, or (3) other increase or decrease in such shares
effected without receipt of consideration by the Company. If the Company shall
be the surviving corporation in any merger or consolidation, any Option shall
pertain, apply, and relate to the securities to which a holder of the number of
shares of Stock subject to the Option would have been entitled after the merger
or consolidation. Upon dissolution or liquidation of the Company, or upon a
merger or consolidation in which the Company is not the surviving corporation,
all Options outstanding under the Plan shall terminate; provided, however, that
each Participant (and each other person entitled under Section I to exercise an
Option) shall have the right, immediately prior to such dissolution or
liquidation, or such merger or consolidation, to exercise such Participant's
Options in whole or in part, notwithstanding any provisions contained in the
Plan or the Option Agreement to the contrary.

M. Amendment and Termination

Subject to the last paragraph of this Section M, the Board or the
Committee, by resolution, may terminate, amend, or revise the Plan with respect
to any shares as to which Options have not been granted. Neither the Board nor
the Committee may, without the consent of the holder of an Option, alter or
impair any Option previously granted under the Plan, except as authorized
herein. Unless sooner terminated, the Plan shall remain in effect for a period
of twenty years from the date

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<PAGE>

of the Plan's initial adoption by the Board. Termination of the Plan shall not
affect any Option previously granted.

No such amendment will require stockholder approval, unless stockholder
approval is required by either the rules of Nasdaq or any other stock exchange
upon which the Company's securities shall be listed or any applicable law.

N. Agreement and Representation of Participants

As a condition to the exercise of any portion of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of such exercise that any shares of Stock acquired at exercise are not
registered under the Securities Act of 1933 (the "Act"), are "restricted
securities" as that term is defined in Rule 144 under the Act and are being
acquired only for investment and without any present intention to sell or
distribute such shares, if, in the opinion of counsel for the Company, such a
representation is required under the Act or any other applicable law,
regulation, or rule of any governmental agency.

O. Reservation of Shares of Stock

The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Stock that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed necessary by counsel for the Company for the
lawful issuance and sale of its

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Stock hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell Stock as to which the requisite authority has not been
obtained.

P. Effective Date of Plan

The Plan shall be effective as of the date it is initially adopted by the
Board, provided that Section Q shall not become effective until it has been
ratified by the stockholders.

Q. Grant of Options to Independent Directors

(a) Prior to January 1, 2000 each Independent Director automatically
received an Option to purchase 60,000 shares of Stock on each of January 2, 1994
and January 2, 1997 (the "Old Regular Independent Director Grant").

(b) Each Independent Director shall automatically receive, effective as of
January 1, 2000, an annual grant of an Option to purchase 10,000 shares of Stock
on each January 2 during the Term of this Plan (the "New Regular Independent
Director Grant"). Notwithstanding the foregoing, should the date on which a New
Regular Independent Director Grant is scheduled to be awarded pursuant to the
preceding sentence fall on a Saturday, Sunday or holiday, the New Regular
Independent Director Grant shall be awarded on the first business day
immediately following such scheduled date.

(c) On the date of each Independent Director's initial election to the
Board, prior to January 1, 2000, pursuant to a vote of the Company's
stockholders or the Board, such newly- elected Independent Director
automatically received (i) an Option to purchase a pro rata share of the shares
of Stock underlying an Option granted pursuant to an Old Regular Independent
Director Grant, which was equal to the product of 1,666 multiplied by the number
of whole months remaining in the relevant three year period (the "Old Pro Rata
Independent Director Grant"); and (ii) an Option to purchase 10,000 shares of
Stock (the "Initial Independent Director Election Grant").

(d) On the date of each Independent Director's initial election to the
Board, effective as of January 1, 2000, pursuant to a vote of the Company's
stockholders or the Board, such newly- elected Independent Director shall
automatically receive (i) an Option to purchase that number of shares of Stock
equal to the product of 833 multiplied by the number of whole months remaining
in the calender year during which such Independent Director joined the Board
(the "New Pro Rata Independent Director Grant"); and (ii) the Initial
Independent Director Election Grant.

R. Exercise Period of Options Granted to Independent Directors

Subject to the last paragraph of this Section R, each Option granted
pursuant to the Plan shall vest and become exercisable as follows:

(1) Those Options granted pursuant to an Old Regular Independent Director
Grant shall vest and become exercisable as to 20,000 shares on the first
anniversary of the date of grant; as to 20,000 shares on the second anniversary
of the date of grant; and as to the remaining 20,000 shares on the third
anniversary of the date of grant.

(2) Those Options granted pursuant to an Old Pro Rata Independent Director
Grant shall vest and become exercisable as to that number of shares equal to the
product of 1,666 multiplied by the number of whole months remaining in the first
calendar year in which the Independent Director is elected initially to the
Board on the January 1st following such Independent Director's initial election
to the Board; and as to any remaining shares in accordance with the schedule for
Options granted pursuant to an Old Regular Independent Director Grant as
provided in Section R(1) hereof.

(3) Those Options granted pursuant to a New Regular Independent Director
Grant shall vest and become exercisable on the January 1st following the date on
which such Option was granted.

(4) Those Options granted pursuant to a New Pro Rata Independent Director
Grant shall vest and become exercisable on the January 1st following such
Independent Director's initial election to the Board.

(5) Those Options granted pursuant to an Initial Independent Director
Election Grant shall become exercisable as to 5,000 shares on the first
anniversary of the date of grant; and as to 5,000 shares on the second
anniversary of the date of grant.

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Notwithstanding the foregoing, an Option shall not vest and become
exercisable as to the relevant shares unless such Independent Director has
served continuously on the Board during the year preceding the date on which
such Options are scheduled to vest and become exercisable, or from the date such
Independent Director joined the board should such Independent Director have
joined the board during such preceding year; provided, however, that if an
Independent Director does not fulfill such continuous service requirement due to
such Independent Director's death or disability all Options granted to such
Independent Director pursuant to Section Q hereof shall nonetheless vest and
become exercisable as provided in this Section R. For purposes of this Section R
"disability" shall mean a physical or mental condition which prevents an
Independent Director from performing his duties as an Independent Director of
the Company for a continuous six month period or for a total

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of six months during any 18 month period. Any Option which does not vest and
become exercisable in accordance with this Section R shall terminate and be of
no further force or effect.

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