Enzo Biochem Reports Fiscal Second Quarter Results

  Enzo Biochem Reports Fiscal Second Quarter Results

Business Wire

NEW YORK -- March 12, 2013

Enzo Biochem, Inc. (NYSE:ENZ) today reported results for the fiscal second
quarter and six months ended January 31, 2013.

  *Jury declares Life Technologies infringed Enzo Biochem patents and awards
    Enzo $48.6 million
  *Company Reports Progress on Technology Platforms; Anticipates New
    Lab-Developed Tests Aimed at Women’s Health Market;
  *Superstorm Sandy Aftermath Interrupts Clinical Labs Top-Line Growth.

“Although Hurricane Sandy significantly impacted our Clinical Lab business
during the second quarter, our restructuring efforts to streamline operations
and deliver improved financial results remain firmly on track,” said Barry
Weiner, President. “The storm delayed patient visits to doctors, resulting in
lower specimen collection and delayed new product approvals during the
quarter, which we estimate reduced revenue at Clinical Labs by $2.2 million.
We expect Clinical Labs to return to the pattern of growth it had previously
demonstrated during the upcoming quarters. In addition, we anticipate many of
our newly introduced diagnostic tests should enhance results in the coming
months.

“Our investment in protecting our intellectual property, which involved higher
legal expenses during the second quarter, resulted in a favorable $48.6
million verdict that we believe positions the Company well, in advance of
litigation surrounding even more significant patent infringement. Currently,
the Company has numerous active litigations against many of the leading life
sciences and diagnostics companies, which we believe have infringed upon our
intellectual property through sales of products that have collectively
generated billions of dollars of revenue. The majority of these recent cases
are currently being handled on a contingency basis by one of the leading law
firms in this area. Meanwhile, while some of the markets for our life sciences
products remain challenging, we continue to tightly manage expenses to
generate improved bottom-line results.”

Second Quarter Results

Revenues for the second fiscal quarter were $22.2 million, compared with $25.0
million a year ago. Operating expenses declined $0.5 million to $28.2 million,
reflecting a reduction in selling, general and administrative and research and
development expenses, partially offset by increased legal expenses in
connection with the Life Technologies litigation. The net loss for the period
was $(5.7) million or $(0.14) per diluted share, compared with $(4.2) million
or $(0.11) per diluted share in the same period a year ago. EBITDA loss was
$(4.7) million as compared to $(3.0) million in the year ago period.

As of January 31, 2013, cash and cash equivalents totaled $10.0 million.
Working capital amounted to $13.7 million. Net cash used in operating
activities for the six months ended January 31, 2013 was $4.6 million, up from
$3.6 million the year ago period.

“This has been an unexpectedly challenging quarter,” said Mr. Weiner. “It
included a devastating hurricane affecting Clinical Labs and reduced
government expenditures, including a tightened NIH budget that has affected
Life Sciences, while the trend continues towards reduced reimbursements both
from government as well as commercial payors. On the plus side, we anticipate
the introduction of new esoteric, higher margin laboratory developed tests
that should drive revenue growth in Clinical Labs. Clinical Labs will shortly
be adding several key assays to its expansive testing menu directed at Women’s
Health. Hurricane Sandy not only adversely affected our lab service volume,
but it also led to delays in final approval by regulatory authorities of
several of these new key tests that we now expect to release.

“Additionally, we remain optimistic about the commercialization potential for
products derived from our proprietary nucleic acid target amplification
platform, AmpiProbe^TM, as we have completed a number of key steps in the
manufacturing and product development processes to move this technology
towards monetization. I am also pleased to report that we continue to actively
recruit and treat patients for the clinical trial of Optiquel^TM, our study
drug for the treatment of autoimmune uveitis, which is ongoing at the National
Eye Institute in Bethesda, MD.

“Our investment in protecting our intellectual property, which resulted in
higher legal expenses during the second quarter, resulted in a favorable $48.6
million verdict plus interest to be determined by the Court.

“Our goal remains to utilize Enzo’s considerable intellectual property and
know-how to fashion Enzo into an industry-leading integrated life
sciences/clinical lab company with cutting edge, innovative products that, in
keeping with today’s healthcare cost concerns, are highly effective and
provide physicians as well as investigators and product development
technicians with advanced tools to better provide for the needs of patients.”

Segment Quarterly Results:

Clinical Labs was affected during the early part of the quarter as a result of
the storm, although there has since been a pickup in activity. Revenues were
$13.2 million, compared with $14.1 million a year ago, a 6% decline, mostly
due to the storm’s impact. Gross profit decreased $1.5 million, to $3.9
million due to the decreased revenues and higher lab costs. Operating
expenses, including a 5% reduction in the segment’s SG&A, declined $0.2
million to $6.3 million, from $6.5 million, with the result that the operating
loss amounted to $2.4 million, compared with $1.1 million year over year.

Life Sciences’ continued to benefit from its transformation to a more
centralized operating and marketing segment, narrower and more profitable
product lines, reduced distributorships and lower payroll expenses from
personnel staff reduction. However, lower funding for life science activities
amidst macroeconomic concerns is having an industry-wide effect, particularly
on product sales. Excluding royalty income, which was $1.0 million, product
revenues were $7.9 million as compared to $9.5 million in the prior period.
Total gross margin was $4.7 million, and as a percentage of sales was 53%, as
compared with 57% a year ago. Total operating expenses declined 13%, to $4.8
million, reflecting cost-cutting, and the operating loss was $57,000, compared
to operating income of $0.7 million a year ago. Life Sciences’ EBITDA was $0.9
million, a decrease of $.2 million from $1.1 million in the year ago period.

Year-to–Date Summary

For the six months ended January 31, 2013, revenue declined by $2.9 million to
$47.8 million, from $50.7 million in the first half of 2012. Clinical Labs’
revenues increased 1%, negatively affected by approximately $2.9 million from
the storm while Life Sciences’ product revenues declined 15% and royalty and
licensing revenues declined $0.1 million. Gross margins were $20.4 million, $3
million less than a year ago. Operating expenses, including R&D, SG&A, legal
and provision for uncollectible accounts decreased by 4%, largely due to
reduced SG&A and R&D expenses. Net loss was $(9.4) million, compared with
$(8.7) million in the year ago period.

Conference Call

The Company will conduct a conference call onMarch 13, 2013 at 8:30 AM ET.
The call can be accessed by dialing 1-888-459-5609. International callers can
dial 1-973-321-1024. Please reference PIN number 19695460. Interested parties
may also listen over the Internet at
http://phoenix.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=94391&eventID=4925179
. To listen to the live call on the Internet, please go to the web site at
least fifteen minutes early to register, download and install any necessary
audio software. For those who cannot listen to the live broadcast, a replay
will be available approximately two hours after the end of the live call,
through midnight (ET) onMarch 27, 2013. The replay of the conference call can
be accessed by dialing 1-800-585-8367, and when prompted, use PIN number
19695460. International callers can dial 1-404-537-3406, using the same PIN
number.

NON-GAAP Financial Measures

To comply with Regulation G promulgated pursuant to the Sarbanes-Oxley Act,
Enzo Biochem attached to this news release and will post to the Company's
investor relations web site (www.enzo.com) any reconciliation of differences
between non-GAAP financial information that may be required in connection with
issuing the Company's quarterly financial results.

The Company uses EBITDA, as a measure of performance to demonstrate earnings
exclusive of interest, taxes, depreciation and amortization. The Company
manages its business based on its operating cash flows. The Company, in its
daily management of its business affairs and analysis of its monthly,
quarterly and annual performance, makes its decisions based on cash flows, not
on the amortization of assets obtained through historical activities. The
Company, in managing its current and future affairs, cannot affect the
amortization of the intangible assets to any material degree, and therefore
uses EBITDA as its primary management guide. Since an outside investor may
base its evaluation of the Company's performance based on the Company's net
loss not its cash flows, there is a limitation to the EBITDA measurement.
EBITDA is not, and should not be considered, an alternative to net loss, loss
from operations, or any other measure for determining operating performance of
liquidity, as determined under accounting principles generally accepted in the
United States (GAAP). The most directly comparable GAAP reference in the
Company's case is the removal of interest, taxes, depreciation and
amortization.

About Enzo Biochem

Enzo Biochem is a pioneer in molecular diagnostics, leading the convergence of
clinical laboratories, life sciences and therapeutics through the development
of unique diagnostic platform technologies that provide numerous advantages
over previous standards. A global company, Enzo Biochem utilizes
cross-functional teams to develop and deploy products systems and services
that meet the ever-changing and rapidly growing needs of health care both
today and into the future. Underpinning Enzo Biochem’s products and
technologies is a broad and deep intellectual property portfolio, with patent
coverage across a number of key enabling technologies.

Except for historical information, the matters discussed in this news release
may be considered "forward-looking" statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Such statements include
declarations regarding the intent, belief or current expectations of the
Company and its management, including those related to cash flow, gross
margins, revenues, and expenses are dependent on a number of factors outside
of the control of the company including, inter alia, the markets for the
Company’s products and services, costs of goods and services, other expenses,
government regulations, litigations, and general business conditions. See Risk
Factors in the Company’s Form 10-K for the fiscal year ended July 31, 2012.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve a number of risks and
uncertainties that could materially affect actual results. The Company
disclaims any obligations to update any forward-looking statement as a result
of developments occurring after the date of this press release.

                                                            
ENZO BIOCHEM, INC.
(in thousands, except per share data)
                
                                                                   
                   Three months ended              Six months ended
Selected
operations         January 31,                     January 31,
data:
                   (unaudited)                     (unaudited)
                                                                   
                    2013          2012          2013          2012    
Revenues:
Clinical
laboratory         $ 13,320        $ 14,123        $ 28,497        $ 28,310
services
Product            $ 7,876         $ 9,542         $ 16,309        $ 19,245
revenues
Royalty and
license fee        $ 1,014        $ 1,308        $ 3,033        $ 3,170   
income
                                                                   
                                                                   
Total revenues     $ 22,210       $ 24,973       $ 47,839       $ 50,725  
                                                                   
Gross profit       $ 8,642        $ 11,579       $ 20,377       $ 23,380  
                                                                   
Gross profit %      39      %      46      %      43      %      46      %
                                                                   
Loss before          ($5,854 )       ($4,076 )       ($9,607 )       ($8,402 )
income taxes
                                                                   
Benefit
(provision)          180             (145    )       242             (313    )
for income
taxes (A)
                                                                
Net loss            ($5,674 )      ($4,221 )      ($9,365 )      ($8,715 )
                                                                   
Basic and
diluted loss        ($0.14  )      ($0.11  )      ($0.24  )      ($0.23  )
per share
                                                                   
Weighted
average shares
outstanding -       39,312        38,616        39,295        38,607  
basic and
diluted
                                                                   
Reconciliation
of GAAP Net
Loss to
EBITDA:
                                                                   
Net loss             ($5,674 )       ($4,221 )       ($9,365 )       ($8,715 )
Add-back
(deduct):
Depreciation
and                  1,186           1,045           2,336           2,259
amortization
Interest
expense              7               (14     )       15              (12     )
(income)
(Benefit)
provision for       (180    )      145           (242    )      313     
income taxes
EBITDA (B)          ($4,661 )      ($3,045 )      ($7,256 )      ($6,155 )
                                                                             

Notes:
                           
A- All periods reflect effective tax rates below the statutory rate due to
inability to recognize future tax benefits.
                                                      
B- EBITDA is a non-GAAP measure, as described in the attached press release

                                               
Selected balance sheet data:
                                   Jan. 31, 2013     July 31, 2012
                                   (unaudited)
                                                     
Cash and cash equivalents          $    10,023       $    15,076
                                                     
Working capital                    $    13,673       $    21,412
                                                     
Stockholders' equity               $    40,290       $    49,101
                                                     
Total assets                       $    62,226       $    69,123

Contact:

For Enzo Biochem, Inc.
Anreder & Company
Steven Anreder, 212-532-3232
steven.anreder@anreder.com
or
CEOcast, Inc.
Michael Wachs, 212-732-4300
mwachs@ceocast.com
 
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