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ENZO Biochem Reports Results For Fourth Quarter And Fiscal Year

FARMINGDALE, NY, October 14, 2005 - Enzo Biochem, Inc. (NYSE:ENZ), a  biotechnology company specializing in gene identification and genetic and immune regulation technologies for diagnostic and therapeutic applications and laboratory services today reported operating results for the fiscal three months and year ended July 31, 2005.
 
Revenues in the fourth quarter of fiscal 2005 increased by $2.3 million, or  27%, to $10.9 million, compared with $8.6 million a year ago, reflecting a $1.9 million increase or a 29% gain in revenues at Enzo Clinical Labs and a $0.4 million increase, or a 20% gain in revenue at Enzo Life Sciences.   The net loss for the quarter totaled $2.0 million, or ($0.06) per share, compared to a net loss in the comparable year-ago period of $4.0 million, or ($0.12) per share, an improvement of $2.0 million
 
For the fiscal year, total revenues increased 4%, to $43.4 million, compared with $41.6 million in fiscal 2004.  Net income for the year amounted to $3.0 million, equal to $0.09 per fully diluted share, compared with a year-ago net loss of $6.2 million, or ($0.20) per share.  Included in the fiscal 2005 results was a $14.0 million gain from the patent litigation settlement in addition to royalty income from the settlement.
 
At year-end, the Company’s cash, cash equivalent and marketable securities amounted to $83.7 million, an increase of $12.0 million over a year ago. Working capital on July 31, 2005, stood at $97.0 million.
 
Enzo Clinical Labs continued to benefit from increased business in new markets, particularly in northern New Jersey, increased demand for higher margin esoteric tests and a continued rise in the number of total tests, offset by increased reagent expenses related to the higher volume of tests.  Fourth quarter revenues at the Labs were $8.4 million while fourth quarter gross profit increased by 43%, to $5.1 million, and gross margins rose to 60%, compared with 55% a year ago.  For the full year, Labs revenues increased by $4.2 million, or 15% to $32.9 million with gross profit advancing 12% to $20.3 million, and gross margins decreased from 63% in fiscal 2004 to 62% in fiscal 2005.
 
 At Enzo Life Sciences fiscal fourth quarter revenues, which included royalty payments, increased by 20% to $2.4 million, compared to the year earlier period.  The quarter’s gain reflected modestly higher direct sales of products and royalty income from the Digene settlement. These were offset by the non-recognition of certain product sales relating to the Company’s ongoing dispute with Roche, as well as the ending of certain distributor contracts.  For the fiscal year, revenues declined by 19%, to $10.5 million from $13.0 million in fiscal 2004, again due to the same factors that affected the fourth quarter results.
  
Selling, general and administrative expenses for fiscal 2005 increased 40%, to $20.1 million, largely due to the related costs in the selling activities at Enzo Clinical Labs and the expenses associated with compliance with Sarbanes-Oxley legislation and increased governance-related expenses.  Research and development expenses rose by $0.4 million to $8.5 million.  Legal expenses totaled $5.5 million, down 14% from fiscal 2004.  
           


“This has been a year of significant growth for Enzo Clinical Labs and one of transition for Life Sciences as we continue to move more forcefully into a direct sales mode,” said Barry Weiner,
President.  “Enzo Therapeutics, for its part, continues with an expanded Phase II clinical trial of Alequel™, the Company’s immune regulation product for Crohn’s disease and a Phase II study of EGS21, our immune potentiation product as a potential therapy for non-alcoholic steatohepatitis (NASH).  A Phase I/II study of the HGTV43™ StealthVector® experimental gene medicine for managing HIV-1 infection is expected to begin at the University of California San Francisco, the site of the Phase I study, upon approval of the University’s Committee on Human Research. During the year Enzo Therapeutics acquired rights and intellectual property to a candidate drug and technology intended for use in the treatment of uveitis, a chronic inflammation of the eye that can lead to blindness. This drug has been granted orphan status in Europe, and we intend to initiate a Phase II clinical trial in Germany.  Protocols are being prepared for submission to the German regulatory agencies.  We recently reported on favorable pre-clinical animal studies of a promising small molecule that was shown to stimulate increased bone density.  We have also expanded our professional staff with additional highly experienced Ph.D. researchers, a move to speed our activities, particularly in therapeutics.   With our strong balance sheet, and broad range of projects underway, we remain confident regarding the fruits of our research and our Company’s future.”
 
About Enzo
 
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 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 and hepatitis C 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 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 Monday, October 17, 2005 at 8:30 AM E.T.  It can be accessed by dialing 1-800-921-9431. International callers can dial 1-973-935-2981.  Interested parties may also listen over the Internet at www.vcall.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 Monday, October 31, 2005.  For replay, dial 1-877-519-4471 (1-973-341-3080 internationally).  You will be prompted for PIN number 6574183.
 


 
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