NEW YORK – The last few quarters haven't been easy for Enzo Biochem — the company's year-over-year revenues fell 7 percent in its fiscal fourth quarter (ended July 31), sank 14 percent in Q3, and barely ticked up 1 percent in Q2. The COVID-19 pandemic seemed to hit the diagnostics company hard, adversely affecting its clinical services revenues, diagnostic testing volumes, and product revenues.
During the summer, however, Enzo President Barry Weiner struck a somewhat positive note. While the pandemic caused a decrease in accession volumes, leading to lower revenues in the firm's clinical lab segment, he said the firm expected these problems to be "partially counterbalanced by new opportunities" related to the pandemic, including a ramp up of COVID-19 molecular tests and ELISA-based serological antibody tests.
Weiner also said at the time that the pandemic had created "a newfound appreciation for clinical laboratories and the diagnostics industry at large," which would benefit Enzo in the long run.
The company now seems to be making good on that prediction, reporting a 42 percent increase in revenues for fiscal Q1 2021 on Wednesday. More importantly, Weiner told analysts on a conference call following the release of the earnings, Enzo is now poised to leverage company improvements and new products and services to create significant growth beyond COVID.
"We have several innovations and product launches, including serological testing in a post-vaccine environment, that are in early days of adoption but we think will be a critical element of diagnostic testing in 2021," he said. "What is particularly evident in this most recent quarter has been our flexibility to adapt existing procedures to safely and effectively meet the demands for testing resulting from the pandemic. The advent of vaccines that hopefully will enable the world to deal with the COVID-19 virus and return to normalcy will not, in most expert opinions, lessen the need for testing or safeguards. This will present an opportunity for Enzo but it will also underscore the vital role of diagnostics and how they will play in the future in terms of satisfying medical needs."
Indeed, when news broke in early November that the vaccine developed by Pfizer and BioNTech demonstrated 90 percent efficacy at protecting people from COVID-19 in a clinical study, shares of several in vitro diagnostic companies plummeted as investors assumed a vaccine would eliminate the need for testing. But analysts agreed the sell-off was overblown as large-scale testing will still be needed in order to test the continuing efficacy of a vaccine in the population.
Enzo has the same view. Although the hope is that the vaccine will usher in a return to normalcy, there will be the need for testing to validate and verify immunity in people who are vaccinated, Weiner said.
"That means the serological test will be one that we think will have to be employed by those who are vaccinated to validate whether they have antibody production, and the sustainability of that production," he added. "You have to remember that the vaccine still is yet unproven in terms of its durability. As recently as this morning I was reading a scientific study on one of the vaccines, which said that they're hopeful it has a six-month antibody sustainability. That means that testing will be predicated and necessary as long as this virus is proliferative. And we believe that our program to address that is comprehensive."
The company is currently running IgG tests for SARS-CoV-2 antibodies, but there will also likely be a need for IgM and IgA tests, as well as other, more rapid, tests that will indicate whether a person has been vaccinated and is immune.
Enzo also believes it can offer more than COVID-related testing in a post-vaccine world. The company is also taking the products and services it developed during the pandemic for SARS-CoV-2 testing, and showing that they can be applied in other contexts.
For example, said Enzo CFO David Bench, the firm announced in July that it was partnering with Farmingdale State College to provide molecular and antibody testing for COVID-19 to the campus community as the college reopened in the summer and fall. The collaboration operated under Enzo's School and Institution Testing (SIT) Program to provide several pre-scheduled testing clinics onsite each month at the college.
Now, Bench said, the SIT program has been extended beyond COVID, with many schools asking Enzo to help them with testing for sexually transmitted diseases.
"Also, with regards to other areas like nursing homes and urgent cares, we're also finding expansion, where we open the door through implementing our COVID program but then we expand beyond that with all the other testing that we're able to do," he added. "So, it is a very interesting model for us that we're able to come in with the COVID [testing] and then get the breadth of services across the platform."
In many ways, Weiner noted, the pandemic has allowed Enzo to "showcase" its capabilities in terms of providing services that are timely and effective. Although some labs are now suggesting a turnaround time of three to seven days for a COVID test, Enzo has been able to ensure a turnaround time of 24 to 48 hours, for the most part.
"I think that has been extremely well received and it has allowed us to pick up new clientele," he said. "And the clientele we have been working with and extending into is being targeted for also moving their testing … beyond COVID testing into our services capability. And we believe that will serve us well in the post-COVID environment as we expand both the nature and type of businesses we're servicing, as well as the breadth and scope of the testing that we're providing, and expand our revenue lines and service provisions in the future period."