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Enzo Biochem Q4 Revenues Down 13 Percent

NEW YORK (GenomeWeb) – Enzo Biochem reported after the close of the market on Monday that its fourth quarter revenues fell 13 percent year over year, thanks mostly to a previously reported account loss, as well as to lower insurance reimbursement payments and shifts away from high-value genetic testing in the prior year.

For the three months ended July 31, the firm reported total revenues of $24.5 million, down from $28.2 million in Q4 2017.

Clinical services revenues dropped to $16.8 million from $20.4 million in the prior year. Total diagnostic testing volume as measured by the number of accessions reported decreased 3 percent year over year. Clinical products and royalties revenues stayed flat at $7.7 million.

The company noted that it received approval from the New York State Department of Health for an additional three women's health infectious disease diagnostic assays to expand its women's health panel to 16 pathogens on its AmpiProbe platform. The panel, which is performed using a single swab, now includes Ureaplasma spp./M. genitalium/M. hominis (UMM) in addition to Chlamydia trachomatis, Neisseria gonorrhoeae, Trichomonas vaginalis, Candida spp (C. albicans, C. glabrata, C. krusei, C. parapsilosis, C. tropicalis), Atopobium vaginae, Gardnerella vaginalis, Lactobacillus spp, Megasphera spp, and BVAB2.

Enzo's Q4 2018 net loss was $5.8 million, or $.12 per share, compared to a breakeven in Q4 2017.

The company's R&D expenses for the quarter were essentially flat year over year, while its SG&A costs rose 6 percent to $11.5 million from $10.9 million the year before. Enzo noted that operating expenses were affected by higher legal expenses related to patent infringement and contract litigation, increased allowances for bad debts, and higher SG&A expenses.

For full year 2018, the firm reported that total revenues fell 3 percent to $104.7 million from $107.8 million in 2017.

Clinical services revenues fell 3 percent to $74.8 million from $77.4 million in the prior year due to lower insurance reimbursement payments and shifts in test mix to lower-value esoteric testing compared to high-value genetic testing in the prior year. Total diagnostic testing volume as measured by the number of accessions reported increased 4 percent year over year. Clinical products and royalties revenues fell to $29.9 million from $30.4 million in 2017 due to lower product royalties from an agreement that expired in April 2018.

"Fiscal 2018 was a year of solid progress in our strategic plan, and one in which each of the principal operating units posted volume increases and achieved objectives towards our growth initiatives. These initiatives began over three years ago now provide the potential for multiple ventures and partnerships that could generate significant shareholder value," Enzo President Barry Weiner said in a statement.

"Our focus is centered on providing cost efficient products and services utilizing our proprietary assays optimized for our automated, open system platforms that are compatible with existing sample collection devices as well as our own lower-cost option," he added. "These have been designed to provide not only high-performance and adaptable solutions to existing lab workflow, but also to address a critical need for lower-cost solutions. Besides the number of assays already approved, in process is the development of a screening assay for oncogenic forms of HPV, among others."

He also noted that in the next few quarters, the company will focus on a strategic plan to submit tests that are currently being developed to the New York State Department of Health for conditional approval and to add those tests to Enzo's diagnostic menu.

On a call with analysts following the release of the earnings, Weiner said that Enzo has made significant advancement in developing a new molecular platform for labs do to new molecular testing. The platform is now being validated in Enzo's lab. This platform will be critically important to Enzo's business, which will be serving samples from labs across the country, he noted. The company is also developing several new products, including some based on immunohistochemistry and immunoassay technology.

Weiner further said that the company has been recently named the in-network lab provider for three additional insurance companies, which will add millions of additional covered lives to Enzo's reach. 

Enzo's 2018 net loss widened to $10.3 million, or $.22 per share, from $2.5 million, or $.05 per share, in 2017. On an adjusted basis, the firm reported a net loss of $.24 per share for the year. On the analyst call, Weiner noted that half the company's yearly loss could be attributed to legal fees related to a patent infringement- and contract-related suit the company is engaged in against Hoffman-La Roche.

The company's R&D expenses for the year rose 10 percent to $3.2 million from $2.9 million in the prior year, while its SG&A costs ticked up to $44.5 million from $44.0 million the year before. Enzo said that total operating expenses for the year rose due to an expense for legal fees to pay for the pending patent infringement case, which may be litigated in the next calendar year. Total legal expenses in 2018 were $5.1 million compared to $1.7 million in 2017.

Enzo ended the fiscal year with $60.0 million in cash and cash equivalents.

The company's shares dropped nearly 9 percent to $3.78 in morning trading on the New York Stock Exchange.