Good morning, and welcome to the Enzo Biochem Inc. Second Quarter 2019 Operating Results Conference Call. I will now read the Company's Safe Harbor statement.

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, including those related to cash flow, gross margins, revenues and expenses are dependent on a number of factors outside of the control of the Company, including inter alia, the markets for the Company's products and services, cost of goods and services, other expenses, government regulations, litigations and general business conditions.

See Risk Factors in the Company's Form 10-K for the fiscal year ended July 31, 2018. 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 obligation to update any forward-looking statement as a result of developments occurring after the date of this conference call. During this conference call, the Company may refer to EBITDA, a non-GAAP measure.

EBITDA is not and should not be considered an alternative to net loss, loss from operations or any other measure for determining operating performance. The Company has provided a reconciliation of the difference to GAAP on its website, www.enzo.com, and in its press release issued last night. Our speaker today is Barry Weiner, President.

At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. I would now like to turn the floor over to your host, Mr. Weiner. The floor is yours..

Thank you. Good morning and thank you for joining us today. On the call with me is Jim O'Brien, our Executive Vice President of Finance. We distributed our second quarter results yesterday after the market closed and I hope you’ve had a chance to review it.

I am pleased to report that we continue to make steady and important progress in our strategic program in the development of high-value, highly efficient and effective platforms and reagents to offset today’s challenging economic climate among independent and institutional clinical laboratories.

We are making important investments in support of our strategic program despite significant headwinds industry-wide from reduced diagnostic reimbursement which is clearly – most important challenge for today for companies like our laboratory operation is to control cost of services and lower operating costs while continuously investing in efficiency measures to generate profits in the marketplace.

Enzo has a long history in the industry in technology innovation and primarily as the developer of products and platforms to reduce costs while clinical diagnostic reimbursement is declining.

Our strong balance sheet enables us to deploy capital behind our strategic programs in the space of these challenges and our conviction towards successful diagnostic development remains focused and strong.

To expedite our product development goals, during the quarter, we reported that we acquired a 36,000 square foot commercial facility in Farmingdale, New York and that architectural design and construction development is underway which will materially enhance our Farmingdale campus.

When completed, it will facilitate product development, manufacturing and distribution of our expanded low-cost, open architecture diagnostic platform products, as well as support our ongoing clinical laboratory activities in connection with this acquisition of this new facility, the company has Town of Babylon Industrial Development Agency commitments that will provide Enzo with significant multi-year tax abatements and additional incentives with respect to its entire Farmingdale complex.

As a result of the rapid onset of reimbursement pressure, development work has been accelerated to expand the company’s comprehensive menu test to be used in connection with our proprietary and affordable open system platforms that are uniquely capable of high quality and economic throughput to improve the margins of clinical laboratories.

With the completion nearing of the installation of our GMP manufacturing operations to support the lab develop tests, FDA and CE mark diagnostic submissions, we anticipate regulatory submissions in the near-term on a number of products and platforms. Included is our New York State approved AMPIPROBE multiplex real-time PCR assays.

The company is rapidly implementing its strategic plan to build a comprehensive menu of reagents, automated systems and related consumables on several independent platforms and systems.

This effort started with research and development activity which was initiated several years ago, adaption and current validation of products to automated systems and now it’s extending into GMP manufacturing. These automated systems are in the process of clinical trials for submission to obtain LDT, CE Mark and FDA approvals where appropriate.

Enzo’s business development efforts are ongoing with potential partners that would accelerate market access and penetration to provide much needed margin relief to small and midsize clinical and hospital laboratories.

Progress continues in transforming into clinical labs to an efficient centralized service provider to other laboratories as a new market for Enzo.

The companies adopting Enzo platforms and products to be able to offer services for a high value menu of tests to other clinical laboratories not only to patients and physicians at prices that will provide marginal return to the customer laboratory.

We have invested in our clinical laboratory and its translational capabilities, validation capabilities and its performance of Enzo test platforms.

We have also expanded on marketing and sales activities to address the market opportunities which include a broad range of diagnostic testing including FISH, which is Fluorescence in situ hybridization, immunohistochemistry, and molecular diagnostics.

The clinical laboratory market dynamics of lower reimbursement and high operating costs imposes a challenging future to the clinical lab industry. These market conditions present us with an opportunity to address the industry needs in the form of reference services at a lower cost and provide products and systems at lower cost than competitors.

Enzo’s progress towards achieving these goals is the result of Enzo’s vertically integrated operating structure to provide both products and services, and its extensive intellectual property estate, the Company is better positioned in the industry than most to address these needs.

We have stepped up our investment activities to capitalize on our unique capabilities to address these industry challenges by offering highly efficient and lower cost systems that address valuable components of diagnostic testing.

We also continue to invest to grow our core business to drive efficiencies and growth in revenue per test and to improve gross margins.

The Company continues to aggressively grow its business around its strategic plan by making investments in all aspects of product development, validation, clinical trial and sales and marketing to reach new markets for Enzo’s platforms and products and reference services.

Over the last several quarters Enzo estimates that it has invested approximately 10% of costs in these strategic growth areas. Continuous efforts are being made to improve efficiencies in operations while expanding marketing sales to drive revenue growth, while taking costs out of our core operations.

During the quarter, the Company realigned client facing groups such as client services and other support functions to eliminate costs while maintaining high quality services. In addition, Enzo continues to recruit new sales professionals to further penetrate the U.S. market, including the Northeast markets.

As we’ve noted our commercial efforts towards implementing our marketing plan is two-fold. Expanding our internal highly trained and technical sales teams, and supplementing this effort with a focused business development program to partner, collaborate and/or combine with companies in the diagnostic testing market.

In the past quarter alone, we have held numerous discussions of many strategic partners, many of whom we’ve met with over the last year. Defining the scope of new relationships and building collaborations and partnerships takes time.

However, Enzo’s disruptive strategic plan is gaining market awareness and acceptance and we are confident new relationships will materialize.

To give you just one example, Enzo’s products has been seeded in more than 50 laboratories across the country where teams are validating them to confirm their performance and cost benefit opportunities within the laboratory setting. This gives us confidence that we are on the right track and our development efforts will bring commercial success.

Potential collaborations, particularly with regional labs are vital in this challenging reimbursement environment as these many operations are too small to achieve economies of scale.

Enzo’s business goal is to provide platforms and services for clinical labs that will break their dependence on close platform technologies and transfer marginal value to them from their supplier intermediates.

We believe using Enzo technology platforms coupled with our laboratory reference service option will produce greater margin and efficiency than it’s currently practiced by these labs. We believe the economics of pairing with Enzo to centralized diagnostic processing creates more value with industry-wide organic growth of only 1% to 2% a year.

Combining and centralizing diagnostic testing volumes is critical to gaining market presence and operational mass. Our historical view and experience enabled us several years ago to recognize the trend to reduced reimbursements and focus us on how to apply our capabilities to meet its challenges.

While we prepare our marketing program to rollout various product lines, we have begun to institute a variety of structural changes and enhancings to our company. Today, we have a situation where leading diagnostic companies are for the most part marketing close system platforms in certain high-value areas.

Those few companies providing open systems are limited in their offerings by their intellectual property requirements and lower than average test capacity or turnaround time which in workflow design carries throughput limitations for the laboratories.

Enzo will be offering platforms with flexibility, to process samples from different collection devices along with laboratory developed tests and soon to be FDA approved assays for both existing and novel diagnostic targets.

Our development program already has yielded New York State approved tests for a number of infectious disease agents in the areas of woman’s health and viral load.

Specifically, our previously mentioned comprehensive woman’s health panel using AMPIPROBE multiplex real-time PCR assays featuring detection of infectious diseases tests for a total of 16 pathogens from the single vaginal swab is being offered in our clinical lab currently.

Our pipeline of test is growing and includes fertility assays, additional viral load targets and a cancer panel among others.

I’d like to turn to the financial results for the quarter, which as noted has been impacted at the lab operation by lower reimbursement, tightening trends among third-party payers and lower high value testing this quarter over the year ago period.

Our financial results thus far this year and for the second fiscal quarter we reported yesterday have directly reflected the industry factors we have pointed to. In addition, we have seen a notable shift within our laboratory away from high margin genetic testing to lower cost routine core tests.

On balance, our volume remains constant in terms of reported accessions, but both revenues and profitability clearly have been impacted by the price we have paid for the tests we perform.

Total revenues for the quarter were $19.3 million, compared with $26.1 million in the prior year, with Clinical service revenues of $12 million as compared to $18.7 million in the prior year.

This reflected reduced insurance reimbursement payments which a year ago were reimbursed at higher than current year rates, increased competition and testing denials, as well as changes to medical and procedural requirements for genetic testing by payors.

In addition, the Company recorded over $1.2 million of reserves offsetting revenues due to slow paying commercial payers and the claim made by a commercial payor for overpayments made to Enzo in prior periods.

Total diagnostic testing volume, measured by the number of accessions, decreased only slightly by 3% year-over-year, again due to lower high-value testing, which were offset by increased esoteric testing, including our AMPIPROBE woman’s health panel.

The woman’s health panel I might add has increased in volume each quarter since its launch last fiscal year.

What we see is that we can maintain and grow accession counts and there are opportunities for Enzo to expand its reach into markets such as the Northeast and Mid-Atlantic where new teams are being formed to address market needs determined with the help from commercial insurance companies where Enzo is already an network provider and partner.

Product and royalty revenue was $7.3 million, compared to $7.4 million in the prior year. The slight decrease year-over-year was the result of the elimination of product royalties due to the expiration last April of an agreement covering these payments, which was offset by higher product volume in the U.S. market.

As we previously reported, Clinical services revenues for the three months ended January 31, 2018, have been restated to reflect adoption of the new revenue recognition rules on a full retrospective basis.

Under the new accounting rules, we are required to report estimated uncollectible balances associated with patient responsibility as a reduction in net revenues; historically these amounts were separately classified in operating expenses as a separate provision for uncollectible accounts receivable.

They amounted to approximately $600,000 in the January 2019 quarter versus and $800,000 a year ago. Consolidated gross margins were 24% compared with 40% in the prior year. Clinical service gross margins were 8% compared to 37% a year ago and gross margins this year were negatively impacted by lower reimbursement revenue as we have explained.

Product gross margin was 49% compared to 46% in the prior year period. Operating expenses totaled $28.2 million, compared to $29.2 million a year ago, a decline of 3%. Total legal expenses were $1.1 million compared to $1.7 million in the prior year.

Selling and general administrative expenses, as well as research and development expenses were slightly higher year-over-year in support of the Company’s growth strategies.

The GAAP and non-GAAP net loss was $8.4 million or $0.18 per share, compared to a GAAP net loss of $0.9 million or $0.02 per share and a non-GAAP net loss of $2 million or $0.04 per share a year ago. EBITDA and adjusted EBITDA was a loss of $7.9 million, compared to losses of $1.4 million, respectively a year ago.

A key development this quarter is that we resolved a longstanding contract patent infringement suit in New York this past February. The settlement yielded us a $21 million cash payment before expenses, further strengthening our already highly sound and liquid financial condition.

The settlement did not affect our other infringement proceedings with that defendant which are underway in Federal District Court in Wilmington, Delaware. As noted, our financial condition remains strong. Total cash, cash equivalents and restricted cash at January 31, 2019 were $42.7 million.

This does not include the net proceeds of the $21 million settlement paid in February as a result of the aforementioned legal settlement.

Cash used in operations was $8.6 million during the second quarter of fiscal 2019 and cash used in investing activities, principally reflecting the purchase of our new facility and capital expenditures was $6 million. Working capital as of January 31, 2019 was over $47 million.

For the first half of fiscal 2019, total revenues were $40.6 million, compared to $53 million in the prior year, $12.4 million or 23% lower than the prior year. Gross profit was $11.6 million, compared to $22 million a year ago, with gross margins at 29% and 41%, respectively. SG&A decreased approximately $0.5 million.

Legal expenses were $2.4 million, up slightly from the $2.1 million a year ago. The GAAP and non-GAAP net loss totaled $14.4 million or $0.30 per share, compared to net losses of $1.5 million and $2.6 million or $0.03 and $0.06 per share, respectively.

EBITDA and adjusted EBITDA was a loss of $13.4 million, compared to losses of $1.4 million, a year ago. Notably, despite sharply reduced revenues in the clinical laboratory, we have generally held expenses reasonably well in line. We are instituting programs to further reduce where applicable despite making targeted investments to grow the business.

What the results do not reflect is the growing transformation of Enzo to a national provider of highly efficient technologically advanced diagnostic products and a national provider to independent reference laboratories using our highly cost-effective molecular diagnostic tools of our own design.

Our efforts currently are directed at developing a well rounded offering of wide ranging tests for approval by both the FDA and New York State Department of Health.

In the mean time, while Enzo continues to be financially strong and highly liquid, our operating results are reflective of the cross currents now effecting the diagnostic laboratory industry.

Despite the revenue shortfall, we are diligently working to invest behind our strategic program while we also focus on expense reductions and even more heightened efficiencies. When completed, our Farmingdale campus will be an important in that regard and we would plan to continue to invest in our strategic plan.

We also are taking steps to aggressively expand marketing and sales to reach a wider customer base, to maintain the high service standards for which we are known and to control those aspects of our business that are within our reach to achieve improved results.

We are confident that our efforts to do so and achieve our goals on the development front will pay off. On that, I would like to turn the floor over for questions. .

[Operator Instructions] Our first question is coming from Per Ostlund of Craig Hallum. .

Thanks. Good morning, Barry and Jim. So, I guess, maybe starting with the overarching strategic mission here which I think makes sense. I think it’s clear that the pressure points are there. You are seeing them, others are seeing them and so endeavoring to be that lower cost provider of products and services makes a lot of sense.

I guess, the question becomes what level of investments, so you’ve invested in the lab in Connecticut. You’ve invested in the building to expand your campus.

What level of investment? How many more products and platforms do you need to truly be able to offer that comprehensive solution, that critical mass to your ultimate lab partners? And what kind of timeline should we be thinking about? Because like you said, this has been some years in the making to get here and obviously the rapidity and severity of the change has been felt, I would say, pretty substantially in the last couple quarters.

So I think that the message is there and should resonate. It’s just a question of timing and what you need to get there. .

Today, our offering in our laboratory and we are beginning now to provide access to our molecular diagnostic platform which as you are aware has been LDT approved by New York State.

That platform has been the model for our molecular diagnostic offering and that it provides a very, very unique capability of running 16 different analytes from one vaginal swab. It has been growing the in-volume in our own clinical labs.

The marginal return from that has been extremely gratifying for us and that it has set a model as an example for what this type of system can do to drive margins in the more routine, but higher volume testing area of woman’s health.

We are looking now to expand that platform onto an automated platform that will give us significantly higher throughput capability which will allow us to be able to market that system to what would be deemed very high volume laboratories. And that product is being validated right now.

We hope within this year to see the submission of that platform for a clinical utility. We are moving our products through a process that will include FDA clearance.

We do have LDT approval in that particular products that we are able to run it, others can run it with validation in their own labs, but as we move to expand the utility into CE marked products, we felt it’s pragmatic and wise to move all of our products into the FDA cycle and we are doing such.

That is part of the reason that we engage in the addition to our GMP facility and have increased our manufacturing space on our Farmingdale campus. In terms of the totality of platforms, we are operating right now in five different areas of product utility in the clinical lab flow through process.

One is molecular diagnostics that we have spoken about, the AMPIPROBE prep platform is operational and is now being built out with content. We are looking at a number of different areas of growth in the molecular space. Besides women health, it will include cancer panel, it will include a viral load panel that would be complete.

We are also looking at HPV products in many different levels that I think will add value to that platform. We have a very interesting advanced immuno assay platform that is under development. It will provide for highly sensitive immuno assays in different laboratories.

We may not be aware that Enzo today markets a very significant line of immuno assays. We are now enhancing them with our technology and we will be providing them to the laboratories. We are working in areas of anatomical pathology.

We have a whole detection program and advanced reagent system utilizing what we call, our PolyView Plus Poly Enzyme technology. They were our products in there for cervical cancer and breast cancer. We already have products in the market in the areas of P-16 that are being developed.

So that is another platform that is being – off-products are being offered currently and products will be extended throughout that area. We also have an area of development in the genetics and genomics space where we are developing a whole line of products that will address the cost structure of running FISH or is Fluorescence in situ hybridization.

All of these areas already have approved products in them. What we are doing is now extending the content for each area, in a number of these we are applying them or adapting them to either existing equipment or bringing in our own developed equipment from partners that have been working with us over the last year.

So, we are building a complete portfolio of technology platforms to address what we see as a crisis of cost in the clinical laboratory market. Over the next year, we will continue to market the products that have been approved. We will be extending the critical mass of that as we move forward.

I think, within the next year you will start to see progress, specifically on content growth, as well as device offerings and that will certainly continue on over the next 24 months. .

Okay. Thank you for all of that color. It’s much appreciated. Barry, you also mentioned discussion with potential partners in terms of help and gain market access.

Is there anything you can characterize at this stage of the game in terms of those discussions and what might be the gating factors be to potential partners? And then, when might we actually hear something on that front in terms of some sort of a commercial agreement structure or something of that nature?.

It’s difficult to give a timing for any of these business development opportunities. Our dialogue has been ongoing now for a year.

As I just mentioned, we are working with equipment manufacturers in the development of our new platforms to drive our systems and already we have engaged certain parties who are working with us to design, develop, and produce these particular products. At the same time, our interest in the business develop area is far reaching in that.

We are speaking with potential partners in a number of different areas. It could be in the area of pure diagnostic marketing and sales. It could be in the area of insurance provision in terms of the design of driving lower cost solutions for the industry as a whole.

It could be with other clinical labs as we look to partner with both small and medium size labs as a centralized provider of diagnostic services or it could be with the larger laboratories to help drive their cost structure down with very unique product offerings that will provide them with opportunity to produce higher marginal yields from the products that running.

So, there is a whole variety of opportunities and that is actually the really interesting and good news for us. And that our technology platforms have a multiplicity of utility in a variety of different areas within the diagnostic area and we are looking to exploit that opportunity on many fronts. .

Excellent, excellent. Something certainly to look forward to there.

Have you said what the AMPIPROBE contribution to revenue is at this point? I know you’ve said that it continues to grow and as you’ve seen greater adoption and conversion within your own lab of the woman’s health panel, have you said or can you say what?.

No, we have not released that specifically yet. It is growing every quarter-over-quarter, volume continues to grow. That panel represents just one of our many offerings. It’s a small component of the totality of our work in woman’s health. But it is an area we are now looking to expand out on a reference level, nation-wide.

We have not released the specific numbers on that. .

Okay. Okay, perfect. Couple more from me and then I promise I’ll let somebody else hop in. You mentioned the 3% volume decline year-over-year and I would say, volumes holding in reasonably well.

Can you characterize what that would have been without the – I think we haven’t quite anniversaried that one customer, the one more notable customer from last spring.

So, would it have been kind of more flat or even a little bit up without that?.

No, it would have been up with that. Yes, it definitely would have been up without that, absolutely. .

Okay. Thank you for that. And then, any update on the therapeutic side? I know there have been some discussion about the marker or the pathway identification in a publication here about a quarter ago.

Has there been any additional thought in terms of potential partners or any developments on trial activity and that sort of thing?.

The answer is yes. We have been actively working quietly in the therapeutic area. It is a program that has not required a lot of capital investment at this point in time. We are actually looking to outside sources to support that activity. But there is a interesting active approach which is being explored at this point in time.

It’s too early to comment on that. We believe our therapeutic assets are meaningful. We don’t believe we are getting much credit for that within the company at this point in time. I am optimistic that you will see activity there that will create value generation for us as a company.

It goes beyond just the particular product we reported on or the research report that we reported on a few months back. Our therapeutic assets cover a variety of different areas. Whether they in chromes, whether they are in immune modulation, our work in the area of oral immune down regulation is now gaining interesting scientific interest.

And we are seeing programs emerging from large academic centers and we are in dialogue with a number of large academic researchers and clinicians over the utility of some of the pathways that we have been developing here.

And we hope over the – in the near-term, we will start to release the information that will drive the interest in these therapeutic programs to the marketplace. We wish to solidify that before we go forward with concrete relationships. And so, we will be speaking more about it. It’s a little bit too premature to speak to it at this point in time. .

Okay. Very good. Thanks, Barry. .

Our next question comes from the line of Jim [Indiscernible]..

Thank you. Hi Barry. .

Good morning. .

Couple questions.

In the current set of suits, is the Roche case in terms of the alleged infringement in the current case, was the dollar volume that was potentially loss to Enzo greater than the volume in the case that was just won?.

I am sorry, could you rephrase that again? I just didn’t quite get it..

Sure. In terms of the six remaining cases, the Delaware cases, one of the defendant is Roche..

Yes. .

And I am trying to understand in terms of the alleged infringement in the current case which I understand are more fresh patent than the case that was just won against Roche.

Can you compare the, I guess, the level of infringement involving the current case to help investors get a sense of what the current, specifically the Roche case might involve in terms of a settlement compared to the one that was just won?.

Okay. I understand your question now. I am unable to speak to the infringement levels of – from a legal point of view. The level of infringement in these cases is determined by experts that both sides tend to submit to the court. Those reports in many levels are kept confidential.

In some cases, they are even confidential to the management of the company and only for legalized only. Unfortunately, I am unable to address it. All I can say to you is that, all these cases have significant infringement issues or else they would not have been brought.

The economics of running a case of this magnitude even though we are working with attorneys that work on a contingency level, it still have such a significance that the potential return would certainly have to be justifiable to engage in the case. So it’s – I can’t really compare the Delaware case with the New York case. They were very different.

Different issues, different history, different timing. So everyone of these is that you need to look to..

Got it. No, understand. Barry, can you comment on whether Roche tried to basically settle the current case in the first settlement? I mean, I would have assumed they would have tried to kind of get that one thrown out as part of the settlement.

Did that come up? And you kind of held the line there? Can you give any color on that?.

Under the terms of the settlement, I am not allowed to discuss it, this case at all. So I am really going to have to just pass on that..

Got it. Okay.

My next question is, can you give some color to your relationship with Quest and LabCorp? These companies are prudently acquiring labs and I am just wondering what your – could you give us some color to your relationships with those companies? Are they in fact, customers at some level?.

Certainly, our industry, in many ways is collegial. I believe we have a very – my characterization would be a very good relationship with both LabCorp and Quest. They are customers of ours on many levels.

We utilize both of them occasionally and frequently as a referencing partner, meaning we will partner with them to perform certain work on tests that we may not perform on.

So I think we have a very collegial and positive relationship with both laboratories and we are one of the dominant laboratories in what might be deemed the highest value clinical laboratory market in the United States that being the New York region. There are not that many competitors in this market left.

And so, we work with each other collegially frequently. So I think, I would characterize it as a positive relationship with both companies..

Got it. Well, so, I guess, my next question is Barry and it kind of goes to, I guess, some of the questions raised earlier in terms of cost to go to market with AMPIPROBE and a lot of these new technologies. So, when you look at the past several years, you have – the company has won over $100 million now in settlements from defending its patents.

So you’ve got over 300 patents clearly the company has a tremendous amount of value in IP as underscored by over $100 million in settlements. The company’s market cap now is below $100 million.

Why wouldn’t it be advantageous for a LabCorp, a Quest or one of these other companies who could take the technology to market much quicker given their sales force and what not? And I guess, how do you weigh the bird in the hand versus the two in the bush relationship? Because in just in terms of the lab business, we’ve been unable to find an acquisition done at less than two-times revenue which would put your lab business at least at $100 million.

And then, you’ve got the litigation, you’ve got the therapeutics, you got AMPIPROBE and you have the optionality on the diagnostics on the products business. It doesn’t seem to make sense and I just wonder at what point you might consider – I can’t believe that LabCorp or Quest wouldn’t want do a deal tomorrow with your willing. .

So, again, what is the question now? I mean, I understand what you say or what you are saying is, ultimately reasonable and rational, what is the response you are looking for?.

Sure. So, here is the question. The question is, you have a – like all investors or a decision to make between a bird in the hand and two in the bush and I get that you have a lot of reason to believe that the two in the bush it’s a very big number for what you own. But the two in the bush involves capital and it involves time, it involves some risk.

And so my specific question is, do you know specifically what you could sell the company for today? And do you – have you modeled out what you think the company is worth tomorrow if you execute on all your initiatives and have you looked at those two numbers very closely to know the – whether your investors might not take the bird in the hand versus the risk of the two in the bush.

Do you know those two numbers?.

I think the number that the market places on the value of the company is present in the stock price.

I do not believe that value represents the asset values that has been worked on for many years by the company and certainly is not a reflective number of the value that will be obtained or could be obtained from the execution of the strategic plan that we have lined out for you.

When you look at the components and how they are intertwined with each other, we have built an entity which is very unique in the industry.

The value of the services component as a resource to drive the development in marketing plan of our platform products is unique and makes ultimate sense in an industry that is under such pressure at this point in time. What we see is an opportunity for a realignment of the approach in terms of clinical lab processing.

Right now, we have over 7,000 labs in the United States, most of which process their own specimens have the same equipment needs, equipment processing and cost structure that is a burden on their overhead. We also see a huge amount of capacity within the industry. That result says to us there needs to be a change.

In today’s environment, where logistics are pro forma, where digital communication is simple. There is no reason that every lab should be processing their own specimens on every product in every test base.

They may need to maintain local processing for the routine materials, but the high value and high cost tests make no sense to the individually processed. Until recently, because of the technology in the close platform approach to this business, the cost structure has been prohibited for laboratories to reference to other laboratories.

With our platforms, we believe that we are able and will be able to provide a lower cost option for laboratories around the country to be able to process and generate margin return. We can do it because we have capacity. We could do it because of the communication capabilities out there.

And this is all dependent upon the connectivity between our product development activity, our life sciences company, as well as our services company, the clinical laboratory.

So, in a sense, what I am suggesting to you is that we have built an infrastructure which is addressing a very targeted direction strategically and capturing what I would call short-term value that maybe at this point in the market not accurately reflecting the real value of the assets would not be in the interest of the shareholders in the long-term.

Going back specifically to your question, do we look at the value proposition of the assets today and what we believe the future value could be, the Board reviews that continuously. I mean, that is something that is the responsibility of the Board. They take it seriously and it is always an issue and a dialogue that takes place.

So we are looking at our structure, our value. The way that we believe we can optimize value for our shareholders. It’s interesting to note in one of the earlier questions when I delineated the different areas of product development that we are engaged in.

Each one of those entities in of its own rights could be the basis of a relationship, a partnership, an independent company. And we have assets that we are looking to bring in and to partner with that partnership may take various forms.

The partnerships can take place at the clinical lab, which may in some respect drive the interest that you are questioning on in terms of how do you build partnerships or value from the clinical laboratory asset. So there are multiplicity of ways that are being explored right now to create value.

Certainly, the market value of the company as we see it today is not reflective of the assets and we recognize that. .

Got it. Thanks, Barry. That’s helpful.

Let me just clarify, I want to make sure in an earlier answer, did you say there are very active discussions right now in terms of monetizing in one way or another the therapeutics business?.

There are – I did say that we are in the process of exploring approaches to create value around the therapeutics business, yes. .

Got it. Okay. Thank you. .

Thank you. .

And there appears to be no further questions at this time..

Thank you very much for your participation in the call. We will look forward over the next three months to report to you in June on our next quarter. Have a good day. .

Thank you. A replay of this broadcast will be available until Tuesday, March 26th, at 12:00 midnight. You may access this replay by dialing 1855-859-2056. The pin number is 2037608. This replay is also available over the Internet at www.enzo.com. This concludes today's teleconference. You may disconnect your lines at this time and have a wonderful day..