NEW YORK (GenomeWeb) – Enzo Biochem reported after the close of the market on Monday that its second quarter revenues rose 3 percent year over year, thanks almost entirely to a 4 percent increase in its clinical laboratory service revenues.
For the three months ended Jan. 31, the firm reported total revenues of $27.0 million, up from $26.3 million in Q2 2017.
Clinical lab services revenues rose to $19.5 million from $18.8 million a year earlier, despite severe weather having an effect on operations, the company said. The increase in revenues was offset in part by the severe flu season, which curtailed patient visits to physicians and clinics by approximately two days during the quarter. This, in turn, reduced the number of tests that were submitted and processed.
Product revenues inched up 1 percent to $7.1 million, compared to $7.0 million in Q2 2017. Royalty and licensing revenues fell 32 percent to $300,000 in Q2 2018 from $440,000 in the year-ago period.
Enzo also noted that it fully integrated and validated its AmpiProbe platform during Q2. The platform will be used in the firm's lab and is expected to result in significant savings in the cost of laboratory services in future quarters.
"The second fiscal quarter of 2018 has been an especially productive period. While we continued to gain ground with our AmpiProbe products and other New York State Department of Health-approved diagnostics designed to allay cost pressures affecting the nation's independent clinical laboratories, severe winter weather cut into our clinical laboratory operations revenues," Enzo President Barry Weiner said in a statement. "Total revenues continue to grow, with clinical labs quarterly results improving year over year despite the harsh weather that affected operations. Product revenues also advanced, underscoring the benefits starting to derive from our strategic program to increase both services and product revenues."
On a conference call with analysts, Weiner noted that Enzo anticipates its AmpiProbe 13-analyte women's health panel will have an $800 million market opportunity. The company plans to launch a marketing campaign for its products and services, and plans to add seven to 10 new reps to its sales and marketing team, as well as begin a new training program for its existing team in the US and Europe.
Enzo is also exploring potential business development opportunities for third-party distribution deals with other labs for Enzo products, Weiner said. The company expects these discussions and ultimate agreements to add market opportunities for Enzo. Further, he added, all of this activity will not only add to the company's bottom line in subsequent quarters, but will also demonstrate to labs and diagnostics companies the value of Enzo products and services. In many cases, Enzo products and services can save labs 30 percent to 50 percent in costs compared to products and services from the firm's competitors, Weiner said. As labs continue to feel the effects of new reimbursement rates resulting from the Protecting Access to Medicare Act, or PAMA, this will become increasingly important.
PAMA became effective on January 1, resulting in a reduction in Medicare reimbursement rates for labs for a wide range of tests.
Enzo's Q2 2018 net loss was $901,000, or $.02 per share, compared to a net loss of $1.1 million, or $.02 per share, in Q2 2017. Its adjusted loss per share was $.04.
The company's R&D expenses for the quarter rose 68 percent to $812,000 from $483,000 in the year-ago period, while its SG&A costs dipped slightly to $11.1 million from $11.2 million the year before.
Enzo also noted that it had a heavier than usual legal expense this quarter, as it spent $1.7 million compared to $370,000 in Q2 2017, resulting in an operating loss of $3.1 million compared to an operating loss of $1.0 million a year ago.
The higher legal fees were spent in anticipation of a trial in US District Court Southern District of New York involving litigation with Roche. The trial follows a favorable patent-related decision by the court for Enzo, Weiner said, and the increased expenses involved depositions related to expert testimony on both patent and contract issues.
Enzo ended the quarter with $64.5 million in cash and cash equivalents.
Weiner noted that the company is working on the development of several new assays, including ones for cancer, genomics and genetics, flow cytometry, and an HPV high-risk panel for AmpiProbe.
The firm's shares fell nearly 3 percent to $6.98 in Tuesday morning trading on the New York Stock Exchange.