FOR IMMEDIATE RELEASE
ENZO BIOCHEM REPORTS OPERATING RESULTS
FOR FISCAL YEAR ENDED JULY 31, 2003
FARMINGDALE, NY, October 29, 2003 - Enzo Biochem, Inc. (NYSE:ENZ), a leading
biotechnology company specializing in gene identification and genetic and immune
regulation technologies for diagnostic and therapeutic applications, today
reported operating results for the fourth quarter and fiscal year ended July 31,
2003.
"While we continued to make important and significant progress in our
therapeutic programs and our clinical lab operation, our Life Sciences Division
experienced a reduction in orders. This resulted in decreased revenue and a
decline in profitability," said Barry Weiner, President. "Nonetheless, Enzo once
again ended the year with a profit and in excellent financial condition, with
cash flow from operations increasing 27% in fiscal 2003 and a strong cash
position. Our research and development activities continue to yield results,
including as reported recently, promising new therapeutic platforms."
For the fiscal year ended July 31, 2003, revenues amounted to $52.8
million, compared with $54.0 million in the prior year. The decline primarily
reflected research product revenues at Enzo Life Sciences for the year of $23.3
million, compared with $25.9 million a year earlier, due to an absence of orders
in the fourth quarter by a single distributor following heavy ordering by it
during the first half of the year. Enzo Clinical Labs posted an increase in
revenues, to $29.5 million from $28.1 million in fiscal 2002. Overall, gross
profit amounted to $41.0 million, compared with $43.2 million in the prior
fiscal year. Expenditures for research and development for the year rose by $2.1
million to $8.3 million, reflecting significantly increased activities for the
multiple clinical trials both in development and underway. Legal expenditures
for the year increased by $3.5 million to $5.7 million, principally as a result
of two major patent suits that the Company has brought to protect its
intellectual property assets. Fiscal 2003 net income amounted to $3.8 million,
or $0.13 per share fully diluted, compared with $6.9 million, or $0.22 per share
fully diluted, a year earlier.
Cash flow from operations for the year increased 27%, to $12.1 million.
At year-end, working capital amounted to $97.7 million, and cash and marketable
securities totaled $78.4 million. There was no debt. Shareholders' equity
amounted to $109.4 million, a new record.
Owing chiefly to the significantly reduced orders noted above of
research products, fourth quarter revenues for the Company amounted to $10.7
million, compared with $13.8 million in the corresponding year earlier period.
Enzo Life Sciences revenues declined to $2.6 million, compared with $7.6 million
for the comparable quarter a year earlier. In addition to the decrease in
orders, the life sciences market segment that Enzo participates in has continued
to be negatively impacted by cautious capital spending and
soft end-market demand for "discretionary" life sciences equipment, as well as
conservative research and development spending by pharmaceutical companies,
according to a recently published industry report. In contrast, Enzo Clinical
Labs' fourth quarter revenues rose 30.4%, to $8.0 million, compared with $6.1
million a year earlier. In the fourth fiscal quarter, the Company's expanded
research and development effort caused an increase in R&D expenses of over $2
million. Enzo's legal expenses also increased by over $2 million for the
quarter. As a result, for the quarter, the Company incurred a net loss of $2.5
million, or ($0.08) per share fully diluted, compared with net income of $1.7
million, or $0.06 per share fully diluted, in the corresponding year-earlier
quarter.
In fiscal 2003, Enzo Clinical Labs benefited from an increase in volume
of higher priced esoteric tests, as well as an improved mix of payors. The gross
profit of Enzo Clinical Labs increased by $2 million, and gross margin rose to
67.5%, from 64.0% in the prior year. Operating profit at Enzo Clinical Labs for
2003 was $3.0 million versus an operating loss in fiscal 2002 of nearly $3.8
million, for a net improvement of almost $6.8 million. The provision for
uncollectible receivables last year at the Labs declined sharply, to $8.7
million, compared with $14.2 million in fiscal 2002, reflecting both a continued
emphasis on the Company's more profitable core clientele and improved collection
procedures.
Shipments of products at Enzo Life Sciences fell sharply towards the
latter part of fiscal 2003, as a result of a significant decline in orders from
Affymetrix, Inc. ("Affymetrix"). The Company announced yesterday that Enzo Life
Sciences has commenced a lawsuit against Affymetrix in the U.S. District Court
for the Eastern District of New York. The complaint charges that Affymetrix
breached its agreement with Enzo by, among other things, misappropriating Enzo
assets, and manufacturing and selling Enzo products in violation of the terms of
the agreement. The Company has given notice to Affymetrix of termination of its
Agreement with the Company. The lawsuit was filed after unsuccessful lengthy
negotiations to resolve these and other issues. Enzo Life Sciences remains a
provider of proprietary novel detection systems for the genetics industry, and
is currently in the process of placing increasing emphasis on direct sales
development. It is anticipated that revenues for Enzo Life Sciences in the first
quarter in fiscal 2004 will be comparable to the fourth quarter of fiscal 2003.
Enzo Therapeutics currently has four products in various stages of
clinical testing, including a Phase 2 randomized double blind study of the
Company's study drug for managing Crohn's Disease. Further studies are planned
for EHT899, the Company's medicine for hepatitis B virus-associated chronic
hepatitis; ECH18, a formulation to manage hepatitis C virus-associated
hepatitis; and Enzo's Stealth Vector(R) HGTV 43 gene medicine for HIV-1
infection. The Company recently unveiled promising new therapeutic platforms for
immune-mediated diseases that it is now working on, in addition to immune
modulation and gene transfer technology.
"While fiscal 2003 operating results were not as strong as we would
have liked," said Mr. Weiner, "the results we continue to achieve in our
research and development
efforts, both on the life sciences and therapeutic fronts, are highly
encouraging. We anticipate having additional Enzo proprietary medicines in
active clinical testing in fiscal 2004, with the objective of bringing these
products, providing the test results meet the necessary standards, to market. In
Life Sciences, we anticipate continued expansion of our proprietary product line
into areas such as amplification and dye technology--important tools for
studying how genes function. In addition, our recently expanded marketing group
is actively developing programs designed to improve our penetration into
additional segments of the genomics research market."
ABOUT ENZO
Enzo Biochem is engaged in the research, development and manufacture of
innovative health care products based on molecular biology and genetic
engineering techniques, and in providing diagnostic services to the medical
community. The Company's proprietary labeling and detection products for gene
sequencing and genetic analysis, with approximately 200 patents worldwide, are
sold to the life sciences market throughout the world. The Company's therapeutic
division is in various stages of clinical evaluation of its proprietary gene
medicine for HIV-1 infection and its proprietary immune regulation medicines for
hepatitis B and hepatitis C infection and for Crohn's Disease. The Company also
holds a patent covering a method and materials for correcting point mutations or
small insertions or deletions of genetic material that would allow for editing
and correcting certain abnormalities in genes. For more information visit our
website WWW.ENZO.COM.
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. 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.
A CONFERENCE CALL CONDUCTED BY ENZO BIOCHEM, INC. MANAGEMENT WILL TAKE
PLACE ON WEDNESDAY, OCTOBER 29, 2003 AT 8:30 A.M. (ET). IT CAN BE ACCESSED BY
DIALING 888-338-6461, INTERNATIONAL CALLERS CAN DIAL 973-935-8509. YOU MAY ALSO
LISTEN OVER THE INTERNET AT WWW.VCALL.COM. 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 THROUGH MIDNIGHT NOVEMBER 9,
2003, SHORTLY FOLLOWING THE LIVE CALL. FOR REPLAY, DIAL
877-519-4471(973-341-3080 INTERNATIONALLY). YOU WILL BE PROMPTED FOR PIN NUMBER
4251552.
- Table Follows -
Enzo Biochem, Inc. - Page 3
ENZO BIOCHEM, INC.
SELECTED STATEMENT OF OPERATIONS DATA
Fiscal Year Ended Three Months Ended
July 31 July 31
2003 2002 2003 2002
Unaudited
(IN THOUSANDS EXCEPT PER SHARE DATA)
Operating revenues $52,767 $54,015 $10,659 $13,781
Income before (provision) benefit
for income taxes $5,725 $10,340 ($4,714) $1,599
(Provision) benefit for income taxes ($1,881) ($3,417) $2,191 $126
--------- --------- --------- --------
Net income (loss) $3,844 $6,923 ($2,523) $1,725
========= ======== ======== ========
Net income per common share - basic $0.13 $0.23 ($ 0.08) $0.06
Net income per common share - diluted $0.13 $0.22 ($ 0.08) $0.06
--------- -------- -------- --------
Common share - basic 29,904 29,866 29,955 29,879
Common share - diluted 30,643 30,788 31,168 30,619
SELECTED BALANCE SHEET DATA
July 31, 2003 July 31, 2002
(in thousands)
Cash and Marketable Securities $78,422 $67,135
Working Capital $97,723 $92,772
Stockholders' Equity $109,380 $104,733
Total Assets $115,878 $109,291
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