Enzo Biochem Reports Second Quarter Results; HIV-1 Stealth Vector Trial Initiated.FARMINGDALE, N.Y. -- Enzo Biochem, Inc. (NYSE NYSE See: New York Stock Exchange :ENZ), a leading biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications, today announced operating results for the three and six months ended January 31, 2006. For the fiscal second quarter, total revenues amounted to $10.1 million, compared to $11.2 million in the corresponding year-ago period. Gross profit totaled $6.3 million, compared with $7.8 million a year ago. The net loss totaled $4.4 million, compared with a loss of $0.5 million in 2005. The results reflect, in addition to lower sales volume in the Life Sciences division, a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for options expense under SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123 (R) "Accounting for Share Based Payment" and higher Sarbanes Oxley Section 404-related accounting fees and other corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. expenditures. "The past few months have been productive ones for Enzo," said Barry Weiner, President. "After extensive work, we received approval to continue our evaluation of HGTV HGTV Home and Garden Television 43(R), our gene therapy medicine for HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. , which was initiated today. We are planning to begin a Phase II study for EGS EGS European Geophysical Society EGS European Graduate School EGS El Goonish Shive (webcomic) EGS Environmental Goods and Services EGS Employment Guarantee Scheme (UK) EGS EOS Ground System 21(TM) testing the effect of this candidate drug in the management of Crohn's disease Crohn's disease: see colitis. . This treatment is expected to complement Alequel(TM), the Company's oral immune regulation product, which is also in a Phase II trial. On the intellectual property front, the Company received a patent award for a potentially far-reaching technology applicable to a wide variety of DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. diagnostic and medical research products. Our results reflect the continued investment in R&D and people, both administrative and professional, as we position Enzo for the years ahead, in addition to supporting our litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. efforts in order to protect our valuable intellectual property." At Enzo Clinical Labs, revenues totaled $8.0 million, approximating year-ago second quarter levels. Reflecting increased costs associated with the performance of certain tests, gross margin declined to 57% from 64% year-over-year. Enzo Life Sciences revenue amounted to $2.1 million, compared to $3.3 million a year ago. The results at Enzo Life Sciences were impacted by the non-recognition of sales from certain distributors as a result of ongoing legal issues, as well as a decrease in direct sales. Gross margins at Life Sciences were 82% versus 83% in the year-ago quarter. Selling, general and administrative expenses for the fiscal 2006 second quarter increased to $7.3 million, from $4.7 million in the prior year's period, reflecting higher costs in the marketing activities at Enzo Clinical Labs, increased expenses associated with compliance with Sarbanes-Oxley legislation and new governance-related procedures, and a non-cash charge of $0.4 million related to stock-based compensation. Research and development expenses were comparable to the year ago quarter. In addition, during the fiscal 2006 second quarter, the Company incurred legal expenses totaling $1.6 million, compared to $1.2 million a year ago. Legal expense increased as a result of higher expenses surrounding patent litigation and added patent costs associated with continued development of the Company's intellectual property. For the six months, revenues amounted to $20.3 million, compared with $21.6 million a year ago. Gross profit totaled $12.4 million, compared with $14.6 million in the corresponding year ago period. The net loss for the first half amounted to $7.7 million, compared to net income of $6.5 million a year ago, which included the Digene Corporation-related gain of $14 million as a result of the patent litigation settlement. As of January 31, 2006, working capital amounted to $90.1 million, and cash and cash equivalents totaled $76.4 million. There was no debt. Total stockholders equity amounted to $102.0 million. With a number of clinical trials already underway, Enzo announced today the official initiation of the Phase I-II clinical evaluation clinical evaluation Medtalk An evaluation of whether a Pt has symptoms of a disease, is responding to treatment, or is having adverse reactions to therapy of the Company's Stealth Vector HGTV43(TM) gene construct for HIV-1 infection. The protocol for this study has been designed to increase the number of stem cells stem cells, unspecialized human or animal cells that can produce mature specialized body cells and at the same time replicate themselves. Embryonic stem cells are derived from a blastocyst (the blastula typical of placental mammals; see embryo), which is very young that engraft en·graft tr.v. en·graft·ed, en·graft·ing, en·grafts 1. To graft (a scion) onto or into another plant. 2. To plant firmly; establish. in the subject's bone marrow. Enrollment is expected to begin shortly. In addition, Enzo Therapeutics is planning the initiation of a Phase II clinical trial Noun 1. phase II clinical trial - a clinical trial on more persons than in phase I; intended to evaluate the efficacy of a treatment for the condition it is intended to treat; possible side effects are monitored phase II to evaluate EGS21, involving an immunomodulatory candidate drug based on glucosylceramide for the management of Crohn's Disease. This is in addition to the ongoing Phase II study of Alequel(TM), which involves a wider and more diverse subject population than a previous clinical trial of the treatment. Also being planned is a Phase II for the study in Germany of Uveitis uveitis Inflammation of the uvea, the middle coat of the eyeball. Anterior uveitis, involving the iris or ciliary body (containing the muscle that adjusts the lens) or both, can lead to glaucoma and blindness. , an orphan drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the candidate for treating chronic inflammation chronic inflammation n. Inflammation that may have a rapid or slow onset but is characterized primarily by its persistence and lack of clear resolution; it occurs when the tissues are unable to overcome the effects of the injuring agent. of the eye; a date to initiate the study has not as yet been set. Enzo Biochem's intellectual property was further enhanced with the grant in this quarter of U.S. Patent No. 6,992,180, which, among other aspects, covers nucleic acid nucleic acid, any of a group of organic substances found in the chromosomes of living cells and viruses that play a central role in the storage and replication of hereditary information and in the expression of this information through protein synthesis. labeling molecules that are attached through the phosphate portion of the nucleic acid, either directly or indirectly. The technology can be applied to a range of commercial products, some of which are currently used for both diagnostics and medical research products. The current annual market for gene-based testing is estimated to be as high as $1 billion. About Enzo Enzo Biochem is engaged in the research, development and manufacture of innovative health care products based on molecular biology molecular biology, scientific study of the molecular basis of life processes, including cellular respiration, excretion, and reproduction. The term molecular biology was coined in 1938 by Warren Weaver, then director of the natural sciences program at the Rockefeller and genetic engineering techniques, and in providing diagnostic services diagnostic services, n.pl the imaging and laboratory capabilities available for determining the cause of an illness. to the medical community. The Company's proprietary labeling and detection products for gene sequencing and genetic analysis 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 Hepatitis B Definition Hepatitis B is a potentially serious form of liver inflammation due to infection by the hepatitis B virus (HBV). It occurs in both rapidly developing (acute) and long-lasting (chronic) forms, and is one of the most common chronic and hepatitis C Hepatitis C Definition Hepatitis C is a form of liver inflammation that causes primarily a long-lasting (chronic) disease. Acute (newly developed) hepatitis C is rarely observed as the early disease is generally quite mild. infection and for Crohn's Disease. Pre-clinical research is being conducted on several candidate compounds aimed at producing new mineral and organic bone, including technology that could provide therapy for osteoporosis and fractures, among other applications. The Company also holds a patent covering a method and materials for correcting point mutations point mutation n. A mutation that involves a single nucleotide and may consist of loss of a nucleotide, substitution of one nucleotide for another, or the insertion of an additional nucleotide. or small insertions or deletions of genetic material that would allow for editing and correcting certain abnormalities in genes. The Company owns or licenses over 200 patents worldwide. 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. An informational call conducted by Enzo Biochem, Inc. management will take place on Tuesday, March 14, 2006 at 9:00 AM E.T. It can be accessed by dialing 1-877-692-2086. International callers can dial 1-973-582-2734. Please reference PIN number 7143926. Interested parties may also listen over the Internet at www.investorcalendar.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 approximately two hours after the end of the live call, through midnight (ET) on March 28, 2006. The replay of the conference call can be accessed by dialing 1-877-519-4471, and, when prompted, use PIN number 7143926. International callers can dial 1-973-341-3080, using the same PIN number.
ENZO BIOCHEM, INC.
SELECTED STATEMENT OF OPERATIONS DATA
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SIX MONTHS ENDED THREE MONTHS ENDED
JANUARY 31, JANUARY 31,
2006 2005 2006 2005
---------------- ------------- --------- --------
TOTAL REVENUES $20,281 $21,536 $10,116 $11,235
---------------- ------------- --------- --------
(LOSS) INCOME BEFORE
INCOME TAXES ($8,260) $11,228 ($5,098) ($944)
BENEFIT (PROVISION)
FOR INCOME TAXES $536 ($4,736) $659 $416
---------------- ------------- --------- --------
NET (LOSS) INCOME ($7,724) $6,492 ($4,439) ($528)
---------------- ------------- --------- --------
BASIC (LOSS) INCOME
PER SHARE ($0.24) $0.20 ($0.14) ($0.02)
DILUTED (LOSS) INCOME
PER SHARE ($0.24) $0.20 ($0.14) ($0.02)
COMMON SHARE-BASIC 32,179 32,062 32,200 32,076
COMMON SHARE-DILUTED 32,179 32,739 32,200 32,076
SELECTED BALANCE SHEET DATA
January 31, 2006 July 31, 2005
(IN THOUSANDS) (IN THOUSANDS)
(Unaudited)
---------------- -------------
CASH AND MARKETABLE
SECURITIES $76,362 $83,695
WORKING CAPITAL $90,117 $97,012
STOCKHOLDERS' EQUITY $102,018 $108,267
TOTAL ASSETS $107,341 $116,466
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