Enzo Biochem Inc. reported financial results for the three and six months ended January 31, 2010.

Enzo Life Sciences posted an 11% increase in total revenue, to $12.6 million for the quarter, including a 13% increase in product sales, offset by a slight decline in royalty and license income to $1.8 million.  Product revenue increased due to increased products sales, driven by organic growth and the acquisition of Assay Designs Inc. (ADI) in March 2009, partially offset by reduced low margin third-party distribution business.  Gross margin improved to 58%, from 42% a year ago. Gross margin improved due to a 19% decline in the cost of product sales, primarily resulting from elimination of the aforementioned lower-margin distribution business.  Selling, general and administrative expenses increased as a percentage of total revenue to 40%, from 26%, primarily reflecting costs this year associated with ADI, which were not incurred a year ago prior to the acquisition.  Operating income increased to $0.4 million, from $0.1 million the year before.

Enzo Clinical Labs posted an 11% increase in revenues, to $10.6 million, due largely to higher service volume.  Higher reagent costs and personnel expenses, due to additions to the marketing and professional staff in anticipation of expanding service territories and test offerings, were reflected in greater laboratory costs and selling, general and administrative expenses.  However, with the new billing system, the provision for uncollectible receivables declined to $0.5 million, from $1.4 million, resulting in a reduced operating loss of ($2.0) million, compared to a year-ago operating loss of ($2.3) million. 

Enzo obtained exclusive rights from GeneNews Ltd. (Toronto) to market its ColonSentry, a proprietary blood test for colorectal cancer screening. This division also has entered into an exclusive marketing partnership with privately-owned Ikonisys Inc. (New Haven, CT) relating to Ikonisys’ proprietary oncoFish cervical test, a molecular diagnostic tool for cancer detection.  Enzo will make the test available to medical practitioners requesting advanced analysis of specimens from routine tests that are not definitive as to the existence of cervical cancer.

Results for the first six months of fiscal 2010 reflect solid improvement over year-ago results. Total revenue increased 15% to $48.4 million, and despite the litigation settlement and related legal costs of $3.7 million and incremental proxy related costs of $0.7 million, the net loss fell to ($12.1) million, or ($0.32) per share, compared to the year-ago net loss of ($14.0) million, of ($0.38) per share, a decline of 14% or an improvement of $1.9 million. Gross profit advanced 49%, to $24.2 million, and gross margin advanced to 50%, from 39% in the year ago period.