Enzo Biochem Reports Strong Gains in Operating Results; Third Quarter Pre-Tax Net Increases 64%, on 20% Rise in Revenues.

Business & Health/Medical Editors

FARMINGDALE, N.Y.--(BUSINESS WIRE)--June 14, 2001

Enzo Biochem, Inc. (NYSE:ENZ), a leading biotechnology company specializing in gene identification and gene regulation technologies for diagnostic and therapeutic applications, today reported strong gains in revenues and sharply increased pre-tax income for the fiscal third quarter and nine months ended April 30, 2001.

In the third quarter, operating revenues increased 20.9%, to $15.2 million, compared with $12.6 million in the corresponding period a year ago. Pre-tax income advanced 64.7%, to $3.3 million, from $2.0 million, in the corresponding year-ago period. Net income for the third quarter amounted to $1.9 million, or $0.07 per share, diluted, after an income tax rate of approximately 44%, compared with $2 million, or $0.07 per share, in the corresponding year-ago period when the Company utilized its available tax loss carry forwards.

For the first nine months, operating revenues increased 20%, to $42.9 million, compared with $35.8 million, in the corresponding year-ago period. Pre-tax income for the nine-months was up 74.7%, to $9.1 million, compared with $5.2 million a year ago. Net income amounted to $5.1 million, or $0.18 per share, diluted, compared with $5.0 million, or $0.18 per share, diluted, in the corresponding year ago period. The fiscal 2001 nine-month tax rate approximated 44%, compared with 3%, a year ago.

On April 30, 2001, working capital amounted to $80.3 million, and cash and cash equivalents increased to $56.5 million.

Benefiting from continued strong sales of BioArray(TM) products to the genomics market, Enzo Life Sciences revenues for the third fiscal quarter rose 29.4%, and for the year-to-date increased 26.6%. Gross profits for Life Sciences for the quarter increased almost 57%. The gains reflected both continued rising sales to manufacturers of gene chip products, and faster growth of direct sales to users of these products, providing wider margins for Enzo. In addition, Enzo has added line extensions to its Life Sciences business that continue to meet the needs of this expanding market, and has broadened its marketing representation in key regions and major cities in the U.S.

Enzo Clinical Labs posted an approximately 15.7% increase in revenues for the third fiscal quarter. Results continue to reflect a strengthened market position in the metropolitan New York area, the result of consolidation among clinical laboratories in the region, and a more aggressive market effort. Enzo Labs has added four patient service centers, bringing the total to 18 throughout New York City and Long Island and enhancements also have been made to improve productivity and to facilitate reporting to physicians. In addition, the number of sales personnel has been increased. Enzo Clinical Labs continues to gain recognition for the widening variety of esoteric tests it performs.

"Enzo's operating results thus far in fiscal 2001 have been very satisfying and, we believe, indicative of the broad-based underlying strength of our Company," said Barry W. Weiner, President of Enzo. "What is especially notable is that while we are witnessing significant improvement in our reported results, extensive headway is also being achieved in new areas of our BioArray(TM) product line for the genomics market, in diagnostics, fortified by new patent awards, and in therapeutics, where we are engaged in highly promising clinical studies. Enzo is a unique biotechnology company, with growing operating results and strong underlying research capabilities. The outlook is very bright."

Research and development expenditures rose 24.6 % in the third quarter and for the nine months were ahead approximately 20% from a year ago. Currently, Enzo is preparing for expanded clinical trials of HGTV43, the Company's HIV-1 gene medicine product. At a recent meeting of the American Society of Gene Therapy, Enzo reported that in the follow-up phase of the current Phase 1 clinical trial there was continued expression of the anti-HIV antisense RNA in CD4+ cells (T4 cells). The data showed that to date these cells continued to express the antisense RNA for as long as 21 months after infusion, indicating long-term survival and functioning of antisense RNA in these cells. The new, expanded clinical testing is designed primarily to investigate levels of dosing as well as efficacy.

Enzo is also conducting a Phase 2 clinical trial of its EHT899 medicine for treatment of hepatitis B. The first group of hepatitis B subjects recently completed the initial round of treatment. A Phase 1 clinical trial of Enzo's EHC18 medicine for treatment of individuals suffering from hepatitis C virus infection (HCV) is also now underway.

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 conducting clinical trials for HIV-1-infected patients and for patients infected with hepatitis B and hepatitis C viruses. 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.

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.

                 SELECTED STATEMENT OF OPERATIONS DATA

                         Nine Months Ended        Three Months Ended
                             April 30,                 April 30,
                         2001         2000        2001          2000
                             unaudited                 unaudited
                             (in thousands, except per share data)
                             -------------------------------------

Operating revenues     $42,936      $35,755     $15,201       $12,579
Income before
 provision for
 income taxes           $9,123       $5,222      $3,335        $2,033
Provision for
 income taxes          ($4,024)       ($182)    ($1,474)         ($30)
                        ------       ------      ------        ------
Net income              $5,099       $5,040      $1,861        $2,003
                        ======       ======      ======        ======
Net income per
 common share - Basic    $0.19        $0.19       $0.07         $0.08
                         =====        =====       =====         =====
Net income per
 common share - Diluted  $0.18        $0.18       $0.07         $0.07
                         -----        -----       -----         -----
Common Share - Basic    26,969       26,359      26,999        26,338
Common Share - Diluted  28,079       27,895      27,899        27,854


                      SELECTED BALANCE SHEET DATA

                           April 30, 2001          July 31, 2000
                           (In Thousands)          (In Thousands)
                            (unaudited)

Cash and Cash Equivalents     $56,484                 $51,027
Working Capital               $80,259                 $73,492
Stockholders' Equity          $93,574                 $87,176