NEW YORK – Enzo Biochem reported after the close of the markets on Tuesday that its fiscal first quarter 2020 revenues fell 5 percent year over year, largely due to a decline in clinical services revenues.
For the three months ended Oct. 31, 2019, the company reported total revenues of $20.2 million, down from $21.3 million in the year-ago period.
Clinical accession volume rose 4 percent during the quarter. Product segment revenues increased 7 percent to $7.4 million from $6.9 million, reflecting increased US volumes and greater sales of diagnostic products. Clinical services revenues fell to $12.8 million from $14.3 million a year ago. The decrease was due to lower reimbursement rates, with $1.4 million of the decline due to reduced genetics testing reimbursements and insurance company-related changes in medical and procedural requirements.
The company also announced that it is considering several strategic paths for its therapeutics subsidiary. Enzo Therapeutics is developing therapeutic platforms based on oral immune modulation and regulation of specific signaling pathways implicated in a variety of cancers and immune mediated disorders. The company said it remains committed to the subsidiary's strategic path, but that its board has determined that there the capital requirements necessary to fully recognize its value are significant. Alternatives under consideration include a possible spinoff, sale, joint venture, or licensing of its intellectual property.
In another business update, the company said it has appointed David Bench as its new CFO. Bench most recently served as CFO of healthcare information technology firm ELLKAY, and has served as president of DBC Group and as an investment banker at Arete Wealth Management. Bench will take over the CFO role from Barry Weiner, who will retain his position as president and remain a director at Enzo.
"We continue to be intently focused on creating the new model of a modern-day diagnostics company. Our goals remain to develop and validate platforms focused on high-value areas that can reduce costs 30 percent to 50 percent and satisfy clinical demand for fully automated platforms and products while retaining an attractive profit margin for Enzo," Enzo CEO Elazar Rabbani said in a statement. "This has required investment in our dynamic vertically integrated infrastructure, investment in personnel [and] our facilities, and a focus on combining our significant intellectual property, technical capability, and manufacturing to drive our business goals."
He noted that the firm's molecular diagnostics women's health panel has now been fully instituted in its lab, and has been run on more than 100,000 samples and is generating high margins.
Rabbani also said that Enzo's Q1 was affected by several non-routine charges, including $800,000 in cash withheld by a provider in an ongoing dispute and another $600,000 that was spent in expenses relating to a pending proxy contest at the company.
The firm's Q1 net loss widened to $7.6 million, or $.16 per share, from $6.0 million, or $.13 per share, in Q1 2019. On an adjusted basis, the company reported a loss of $.13 per share for the quarter.
R&D costs for the quarter rose 45 percent to $1.1 million from $700,000, reflecting investments in new assays and LDTs. Its SG&A expenses rose less than 1 percent to $11.1 million from $11.0 million.
Enzo ended the quarter with $57.6 million in cash and cash equivalents.
Enzo's shares fell nearly 3 percent to $2.77 in after-hours trading on the New York Stock Exchange.