ENZ - Earnings call transcript Q3 2019

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Operator

Good morning, and welcome to the Enzo Biochem Inc.

Third Quarter 2019 Operating Results Conference Call.

I will now read the company's Safe Harbor statement. 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, cost of goods and services, other expenses, government regulations, litigations and general business conditions. the XX, XX-K XXXX. in year the Factors July ended Risk company's for Form fiscal See

a and Investors occurring of statements actual update of this involve any are of cautioned results. after not of are that any call. as conference guarantees the future any The company forward-looking performance date obligation materially statement that developments could uncertainties such disclaims forward-looking number affect risks to and result a

a the press alternative performance. company other EBITDA may its loss During non-GAAP this reconciliation www.enzo.com, EBITDA, not an measure. determining The in not to considered from issued conference a on provided to website, and of should and operating release call, night. has measure for any is last difference refer the GAAP loss, its company operations be or net to

President. speaker the the mode, this At time, Barry all will listen-only questions floor comments is be your Our have a and placed for and today in Weiner, been participants presentation. open following

I like The host, yours. your floor is floor Mr. the would over to Weiner. now to turn

Barry Weiner

and you Good morning thank you. for today. joining Thank us

third the the results to me call O'Brien, our Jim Executive release President them. had at On look of I distributed We yesterday is Vice after hope and market Finance. chance close our you've with quarter a

and to and layout so a business us front minutes quarter creation program the we value nine get few what's Before marketplace, for why into about months, the excited would we a about our you in prospects. financial in and and the the fiscal take short-term thought discussion results for our the and feel of operational our three-pronged of I position I talk

Board last night, exists initiatives value aligned development intellectual industry, leverage in frustration are property The by poised conviction of in meaningful reflected and and today's stated materially our Enzo on know our ready implementing portfolio unlock Enzo our company across designed to investors value We is we product proprietary customers, and can was know our management our to stock short-term technology, team in the transformative As strategic of that our tangible our be for business. delivering shareholders. and capitalize and and our not there a tremendous change in in is the our and focused benefits share price. many agent of that colleagues announcement

I short-term to value strategy. three-pronged underscore our creation want

First, and core initiation the development relationships. of strategic

low-cost operating intensely laboratory Second, our And the diagnostics costs commitment reducing continue a framework to centralized increasing focus processing new on efficiencies. and to high to for and building industry. volume third,

growth We both are focused on today and tomorrow.

that know measured growth how And valued. growth the initiatives We is on we will underway. be are focused we and

active companies, which to as in First systems diagnostics, platforms: relationship is well immunohistochemistry, molecular and sciences with strategic develop and several life as our of global program. automated Elisa leading medical discussions strategic device platform. in of manufacturers relationships is Enzo key our three

The developing discussions sales. manufacturing, marketing long-term product relationships distribution, automation and and and involve

by acceptance We our to the at of end are announce one And pleased awareness relationships is calendar goal the least and these by are of XXXX. we receiving.

The for a second initiative the building model marketplace. is new strategic diagnostic

central business Enzo lower will testing to a molecular rolling as solutions, of capability we manufacturer and service a lab of a provider out business, whereby As product that lab and the vertically meaningful being of cost will connection lower new are for integrated serve model and high growth in of development for used offer the margins at and cost affordable open volume all system our sizes. strategy clinical platforms improvements labs our tests proprietary embraces financial of labs. with This our

of about drive rollout to end announcing calendar are of this by are the change we the and we good program believe formal anticipate the feel response receiving. XXXX. We positioned uniquely We

our and and is strategy our Our heightened is performance. third greater program operating that efficiency cost financial cutting value achieving plan of our creation intensive integration to

cash in of calendar operating quarterly over a to million, return we lab fund allowing our $XX $XX At We in and and course equivalents for comfortably we end April, the and XXXX. capital working growth. of laid anticipate had strong business goals Enzo cash improvement million and sequential the this in profitability meaningful financial is health. almost to for set have the out in us

underscore a noting quarter from developmental that key worth It's our third highlights the capabilities. few

an aid the an oncology addition function Our prostate effective by pathologists in and cancers. These the biopsies. to biomarkers and These system our assays, and the products MUC-X enhanced cancer, and with tests. of testing PAX-X of of our POLYVIEW further several This in prognosis PIN-X the workflow strategy solutions internally program lower includes for full margins. platforms. is quality to complement determining expanded menu open substituting for used related of systems detection ovarian in-situ comprehensive hybridization to market expand improve in add of and validated detection cancer, cost of services now oncology biomarker diagnosis colon and also Enzo’s reading diagnostic our cost developed high tissue tests immunohistochemistry to

cited been no a for leading by reviewed peer false publication positive competitors. compared our showing has it to Importantly,

all validation workflow accommodates platform. utility extraction expanding FDA and test, diagnostic Third to submission throughput enhance we in of culminate platform, and open our approval. high It and reagents in this on a our is ongoing capability the are the that AMPIPROBE an currently molecular reach. second will components in providing system sample running of including and engaged generation Validation

continue development generate Our to programs value.

for compound liver HCC. cancer. Celgene carcinoma, methods now of the hepatocellular granted Corporation what stages in we treating very pathway modulating Patent US of directed XX the is of quarter, most as of was of uses to a This to cancers. It's one is four refer product the patents issuance the XXXXXXXX. entitled During has sphingosine common One No. has compounds filed product treatment for the company interesting the Ozanimod, development. It late and form applications, patents. or been This

it the treatment product, signaling of SKX also a cell part currently of sphingosine indicated Enzo well. cellular a a immune for development kinase different is same is the cancers It in It signaling targets HCC call that key as inhibitor. in the Its functions of various pathway. target system. in pathway proprietary our is has we

US human foreign each already number obtained compound, the Ozanimod examining patents covering of against have animal a and and in of from SKX efficacy currently SKX-I We xenotransplantation is tumors studies derived progress. liver cells the

release $XX in of company. point million like to a parties third agreement last a number also would discussed patent the with third to that and infringement I cash Enzo night, in entered licensing our press quarter, contract of additional we the during and as out, nearly that brought into

fact, lost portfolio relationships, Enzo in products. last $XXX and that This not a the grow million patent payments more monetized technology In What into of company Enzo settlements, that be business five over enabled alone, have the to high is cash. to continue that royalties its and best-in-class involves licensing years fund company. developmental has a our our is non-diluted first brought program marketable is and build should on shareholders to developer of than value

like quarter. results the third now of I'd return the to to

along to reimbursement increased and medical such testing sequentially results for volume rates were While diagnostic quarter, insurers, and with as over year-over-year procedural testing insurance genetic by other requirements and fiscal second private and reduced the payers. mandated impacted increased factors and our by changes competition PAMA testing the total denials,

XX%. one net compared licensing revenues settlements health $XX.X New accessions increased total million, into diagnostic As Clinical in grew and Delaware, noted, year-over-year. $X.X in year, $XX esoteric X% volume compared quarter each which a quarter measured by service including growth case has we legal panel a last in health increased of decline The million panel. entered our $XX.X product to Total and million two while its in ago, to of the $X.X proprietary reflecting to settlements agreements, were $XX.X an fiscal another million, from for with York almost million testing, testing further in revenues the in related women's resulted legal since launch prior million year $XX.X of year. million. Total revenue increase women's a

been are for previously reported a revenues noted, reduction service new the have revenues. collectible year net expenses in clinical which in under rules, now last As balances we as recognition to due have previously classified operating revenue restated

were preceding year, but quarter, XX% up with the fiscal XX%, compared prior improvement. from second XX% margins in in points gross the a Consolidated XXX basis

compared a ago XX% margins in with fiscal and quarter. year services a XX%, Clinical second were year margin gross up from X% was the X% gross Product XX% ago.

by Total improved in to million year and XX% were quarter-over-quarter. legal compared year. $X.X million $XX.X expenses, $X.X flat million both decreased million were approximately ago expenses R&D Operating and essentially SG&A the $X.X million from prior to a year-over-year. $XX.X expenses

share. GAAP a These share. and year $XX.X $X.XX million compared ago or settlements was to $X net and million per income licensing net loss GAAP or per include a payments illegal of $X.XX

The with EBITDA share, loss $X.X of was or compared $X.XX and loss was the $X.X loss EBITDA million, was current in year. $X.X of non-GAAP period. a million Adjusted net last million million a $XX.X EBITDA

For year, million ago, compared to XX% year and a totaled XX% were $XX.X profit a the revenues compared decline. nine at last months, margins $XX.X million million XX.X% respectively. total to million, $XX.X Gross with $XX.X gross

or and share, non-GAAP million totaled $XX.X was million net million share, legal or to million $X.XX from GAAP comparable $X.X expenses $X.X $XX million. per and a year to at loss ago, declined per SG&A net income $X.X respectively. and $X.XX

nine month was EBITDA $XX.X period. of a adjusted the and million $X.X was for loss million EBITDA

remains capital $X April provided $XX restricted from The cash that balance April the cash and $XX and cash ended settlements, at strong operations with XX, million. amounted cash, by million working for totaling XXXX sheet Including equivalents was months nine and million. XXXX proceeds XX, approximately to

I floor would for the now to like questions. open

Operator

[Operator now floor Thank The is you. questions. Instructions]. for open

Our Hallum. the Per comes of Ostlund first of from Craig line question

Per Ostlund

Barry Good Thanks. Jim. morning and

I an start guess return here the under start appreciation obviously operating in been specifically of profitability growth I of to all, -- want out And and pillars the of I of to the overall three on just the that to pressure recently. third segment because the one, First near-term strategy. an has layout asking lab want out with

the in returning return cost you to top and it is line currently calendar at that you that it the the do How the see well? big I'm XXXX? on How of cut? as much where you there growth fueling And to much how the is from operating today? look curious, operating bridge losses lab So in profit how gap to a opportunities of

Barry Weiner

approach efficiencies, direction have We contracts.X increase renegotiation reorganized how through and capability, one a operational of organization. an into and as we've combination have put laboratory. all It from within operational a actions segment been clinical operational embodied look close is a a taking sum each looking which our have And client as reduce our looked it very and more supply at targeted costs, the example, of at organized can of exploring at to activities place, that create zero all services

And to with acted in result, production upon. And The handful of evaluated floor labs can to floor, the have in be approaches. and is much a new and can see methods efficiencies. the the a we at trends which of very areas billing to able staffing production these be at exercise, that at that structure conditions capabilities We're suppliers. of those just different and the in technical if cost as within And a marketplace. instituted. are to cost us this able has produce looking been work alignment The where a believe see we being identified to all are its savings We're looking reworking way. looking third-party is improve we efficient more we impacting efficiencies will a reimbursement area, be bring doing that are

improvement expand we forward by overall in of value higher the of supplementing believe the by significantly oncology, in tests of cost in introducing very gross receivables. new And segments that, what is molecular market amount introducing internally this give We and my for margins. success will a the We in our putting an market, also them believe the comments was product will new area enhance billing ability biomarkers that our and specifically, to growth. enhance with tests see increase products as into offerings such Coupled we higher us important novel that existing that develop and our and to activity. that stated our

our geographical So we are growing also intensively focused on reach. very

largest moving of into will are New us into help area reimbursement We New put model. from the which extensively. in our up networks just -- recently England the now one England, got reimbursement We

we and So be we a is cylinders, believe focus, hitting all are strategic it successful accomplishing it. will we very in

of centralize the to strategic a provide efficient build should make network framework. one centralized, It a laboratory that we flows strategic to, method. can in comment cost and services, centralized to one to relationship Per to It's pillars cost other I laboratories other in the in improve integrate more initiatives initiative cost. stated growth to I all our low just low a

in own industry So to to our with that it model provide improving the new providing services. hand goes cost a low hands all efficiencies in and

Per Ostlund

of So I'm very was that because as my glad you questions one well. mentioned that,

capability, So think central a be pillar we've desire I is think second if known. I that products the that diagnostic of your it you about, for that I services to cost mean, about while, talked you that well will, talked a provider and low little

need when that from the of So rollout, factors, you sort more about announcing have rollout put the making What rollout? talk things you of when, take that for now you formal described in some what are guess when a gating place it are of the concept factors? that time you've -- sort the announcement? a formal formal you're looking at that like that What the you I formal more to feel to before are program,

Barry Weiner

working been increase in examples fuller our will that institute laboratory It have number for menu as cost an test in a a other includes tests to the out approaches more improved tests menu to words, in We testing the to to a that but earlier, providing give lab, performing biomarkers general. would mentioned number many to of the own margins the partake expansion, I labs in. lower also of of round of

the are second the for currently platform don't necessary molecular capacity in comments have providers testing looking an I That as create provide we example. generation spoke will think my volume. provide capacity also about there I capability. we out capability to for large that

which activities, believe about. been place. of combination point coming where is critical we the time, are at And have we into a it's in put So mass a that

number labs. We are dialogue with in of a

which that formal initiate think include to dialogue when I now forward. programs rollout, integrating and to we testing are the in will labs with, we we for speak running that hope

a will drive a of that that program reach it's start a volume of necessary to larger marketplace capability, together believe coming a more a that So we into number this and and extended a components the of consolidation the testing menu, higher includes year.

Per Ostlund

I kind that to or back we this a think were point, of severe. at sounds new had even it to quarter quarter made So like or mass following critical progress you've last on Barry, rather almost issues fair the tremendous more mass to launch much two, is side, do discussed amount be the more many need word quarter, how going reimbursement the you more a formally of rapid, rather nice time it your term. critical the how prepared And from or time, that product guess -- a might with the have I be much product statement? more the out side this comprehensive to product there on more how strategy, How like on would It capability? that and been have based a offering. to little be sounds on remarks And

Barry Weiner

actually progress made last three along at moving months. the over programs And nice the tremendous pace. very have are a We

testing generate just Recently We for to an offerings. gonorrhea swab samples. for our chlamydia, as content continue we now new targeting a for anal product new oral and example test submitted

big a We Hopefully, our the provide and hope able validating to machine. we will we us to to that industry. are take capacity throughput be allowing stage role extensive of content the high on provide deliver continue in the now to to in

consumers. lab for offered will is also for and product not -- and should the to other as only again, products comment, These labs it's this And I the also other clinical products be only platforms rollout, side. not it's

our lab our will to a only really clinical these not providing model technologies morph allow but capabilities centralized a component to to life lab-to-lab structure, it products science's industry the as our to change enhance extend whole. it and and also by So will

we've drive we the product subject marketing, of the And I support for that interrelate. refer in so product recognize partners also products the of announced believe for sales. we're are today, manufacturing, relationships should products, relationships will program All for go areas initiatives be right for three back all developmental with centralized will The all the these that what of and need industry to and the able strategic the to rapidity that introduction of is strategic lab It area drive we enhance these now. focused of and concept. will be the why in that

Per Ostlund

else from ask a more two So let somebody I and then will me, question.

on there a operating are How that? the your assuming, operational if is I'm there going that on to the talked of profit environment function that margin kind utilizing levers side. in the number suspect initiatives important developed lab of what Because getting restoring things I to lab to reimbursement as about few is need a lab. stipulate probably think and restore you gross you're get going volume to we of to a persist. current operating and other So and combination I tests a internally of profit

there? Just thoughts curious general in your

Barry Weiner

Yes.

geographically I actually issue about It's we're Volume are volume marginal and of with we Many is higher mentioned return, It's question why areas value It's have that move extending generating strategically area is mix. testing. somewhat as think the product right now. major answered important before. about the into oncology the higher you into areas the an yourself. which making deal into New extending I and a our of higher England. reach where we

force. We have our sales been enhancing

By that are function significantly. but the efficiencies And operations. marginal volume the to return that a centralizing margin improve again it's underpins generating laboratory we that is gaining is And necessary. of value such, key, doing also also

cylinders. all on So we're it hitting

one what be different we from It's clearly are it all areas. single clearly the we solution. to needs done. recognize And not challenges. a hitting process recognize think I We

model requires or an see equally able machine entity lot will approaches new lower are I you And to become lab I our will of not of starts think will more only that efficient utilization that cost quarters, efficient turn provide these and visible also labs services to being market I but it provide can that right laboratory. capacities clinical to taken to now that be the be quarter all within this the think over at, steps a a a will two unique in for believe such look important next in. settle into we

Per Ostlund

from me. the one there? Last are of good. should updated of if Curious us you and Very SKX back patent. be for sort the could looking an implications that what and the xenograft mentioned XXX what therapeutics, patent, Coming the to timeline you events studies are we the on give

Barry Weiner

activities one. therapeutic very are The interesting

As in is that indications different is now. used that Ozanimod. right a compound covers I patent It being commented called compound a medical

We in the the which liver of the have patent one of utility a that treatment hepatocellular received cancers. of on of carcinoma, is broadest

SKX pathway cleared patents on our inhibitor the kinase an this both have on sphingosine compound, have has own performed within we point as do targets time, Ozanimod that on -- toxicity our in already. studies compound that those been We have also that SKX model. We At additional well.

are now We human mice. looking at into xenograft that testing cells right implanted liver on are

no the terms make and treating adequate an those will results a pursue for treatment those to It's months, we results disease particular very fairly strong back, we've this alternative that hopefully term, right or within actually very broad able in the have in be It's we product next to then areas a now. exciting come approach near determination a When to of in market. the few discussed. hope has that challenging

will forward. Once can't them excited actions market let that. the make we forward come about studies And and and any hope we're will know We it. see going determination xenograft to our speak be quite we it, what the then we do to until

Operator

[Operator Instructions]

Barry Weiner

any to If other questions there would pleased take be them. we

Operator

Instructions] [Operator

Barry Weiner

next on speaking getting at report year We've detailed for the us this start this I are call end look much. to think the results. that questions. up our you point you next in to call, being no We want believe on very and results. date at will few I the is a time executed that very there forward the you the you we we to bring believe indication to for morning. exciting. joining Thank months be to further to I'm We will thank detailed program you on very

Operator

Thank XX:XX you. be midnight. June will this until A at broadcast replay available of Tuesday, XX

is this number dialing access at replay PIN This concludes available is teleconference. the may replay by over Internet www.enzo.com. today's the XXXX-XXX-XXXX also You This XXXXXXX.

have disconnect You may your day. now And lines a time. at this wonderful

Barry Weiner	President, Chief Financial Officer, Principal Accounting Officer and Director
Per Ostlund	Craig Hallum

Enzo Biochem (ENZ) 11 Jun 192019 Q3 Earnings call transcript