Enzo Biochem Announces Record 2009 Fiscal Third Quarter Revenues

Business Wire, June 15, 2009

Revenue at Enzo Life Sciences Increases 44%

NEW YORK -- Enzo Biochem, Inc. (NYSE:ENZ), a leading vertically integrated biotechnology company engaged in the research, development, manufacture and licensing and marketing of innovative health care products, technologies and services based on molecular and cellular techniques, today announced operating results for the three months ended April 30, 2009.

For the fiscal third quarter ended April 30, 2009, total revenues increased 22%, to a third quarter record $23.1 million, compared with $18.9 million in the corresponding year-earlier period. Revenue gains were attributable to a 50% increase in product revenues and a 20% increase in royalty and license fee income, from the Company’s Life Sciences’ business, and increased services revenues from Enzo Clinical Labs. Gross profit increased 8% to $10.1 million in the fiscal 2009 third quarter from $9.3 million in the fiscal 2008 third quarter. The net loss, including $1.3 million of non-cash expenses as a result of acquisitions, was ($4.2) million or ($0.12) per share, compared to a year ago net loss of ($2.1) million, or ($0.06) per share, which included $0.5 million of comparable non-cash expenses. Fiscal 2009 results were impacted by acquisition non-cash (pre-tax) expenses of $0.9 million of purchase accounting adjustments for inventory and $0.4 for depreciation and amortization derived from the acquired companies. Results were also impacted by a decline in interest income, from $712,000 in the year-earlier period to $17,000 in the 2009 fiscal third quarter, primarily due to significantly lower interest rates and lower cash and short term investment balances.

As of April 30, 2009 working capital was $64.2 million and cash and short term investments were $55.3 million. Acquisitions and cash used for operations were primarily responsible for the decrease in cash. There is no debt.

“We believe the fiscal third quarter results reflect the benefits of a number of the operational improvements we have made to our business units,” said Barry Weiner, President. “Despite a challenging economic environment, Enzo Life Sciences continued its growth. Enzo Clinical Labs showed meaningful improvement, reflecting some of the initial changes made to the operations. Licensing and royalty income continued to grow. We believe that we are well positioned to continue our plan of growing our Life Sciences business both organically and through acquisition, and that the management changes at Enzo Clinical Labs will allow it to capitalize on the many opportunities for growth that are available. We are pleased by the results from a Phase II clinical trial of Alequel™, the Company’s investigational individualized oral immune regulation preparation, that were recently presented at Digestive Disease Week which showed that it may be effective for the treatment of moderate-to-severe Crohn’s disease. We believe that these results can facilitate discussions with potential partners interested in licensing the drug for further development.”

Segment Analysis

Third quarter revenues at Enzo Life Sciences increased 44% to $12.4 million compared to $8.6 million in the year-earlier period. Product revenues rose 50% to $10.5 million, as a result of the inclusion of the results of the acquisitions of BIOMOL and Assay Designs. Royalty and licensing income totaled $2.0 million, a 20% increase. Gross profit for the third fiscal quarter at Life Sciences was $5.6 million, a 34% increase; gross profit from product sales was $3.7 million, a 43% increase. Research and development costs increased from $0.8 million in the prior year period to $1.6 million in the current quarter, reflecting the increased activities at the acquired companies. Operating income, including non-cash charges of $0.9 million related to inventory fair value adjustment sand $ 0.4 million in depreciation and amortization of intangibles associated with the acquisitions, was $0.2 million as compared to $1.1 million in the year ago period. The year-earlier period included $0.5 million in comparable non-cash charges.

Enzo Clinical Labs increased revenues for the third fiscal quarter to $10.6 million, compared with $10.3 million a year ago, reflecting greater service volume. Gross profit was $4.5 million for the current quarter compared to $5.1 million in the year-earlier period. Results were impacted by increased cost of services, and lower gross margins due to a shift in the mix of business. Other operating expenses, including selling, general and administrative, and provision for uncollectable accounts have remained comparable as a percentage of revenues. Clinical Labs incurred an operating loss of ($0.4) million, compared to operating income of $0.4 million in the year-earlier quarter.