UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-K
(MARK ONE)

 [x]              ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
                  THE SECURITIES  EXCHANGE ACT OF 1934

For the fiscal year ended July 31, 2005

                                       or

 [ ]              TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________  to ___________________

                        Commission File Number 001-09974

                               ENZO BIOCHEM, INC.
           ----------------------------------------------------------
             (Exact name of registrant as specified in its charter)

            New York                                            13-2866202
------------------------------------------                    --------------
     (State or other jurisdiction                            (I.R.S. Employer
   of incorporation or organization)                         Identification No.)

         60 Executive Boulevard,
         Farmingdale, New York                                    11735
-------------------------------------                            -------
 (Address of principal executive offices)                       (Zip Code)

                                 (631) 755-5500
                                 --------------
              (Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

(Title of Each Class)                (Name of Each Exchange on Which Registered)
Common Stock, $.01 Par Value          The New York Stock Exchange
----------------------------          ---------------------------

SECURITIES  REGISTERED  PURSUANT TO SECTION 12(g) OF THE ACT:

                                      NONE

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes [x]    No [ ]

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.

                                 Yes [x]    No [ ]

         Indicate by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).

                                 Yes [x]    No [ ]

         The aggregate  market value of the voting and non-voting  common equity
held by  non-affiliates  computed by  reference to the price at which the common
equity  was  last  sold  as of  January  31,  2005,  the  last  business  of the
registrant's  most recently  completed second fiscal quarter,  was approximately
$462,341,000.  As of October 3, 2005, the  Registrant  had 32,142,400  shares of
Common Stock outstanding.

                       DOCUMENT INCORPORATED BY REFERENCE

         Portions  of  the  definitive   Proxy  Statement  to  be  delivered  to
shareholders in connection with the Annual Meeting of Shareholders to be held on
or about January 20, 2006 are incorporated by reference into Part III.

<PAGE>

         PART I

         Item 1.  BUSINESS

         OVERVIEW

         Enzo  Biochem,  Inc.  (the  "Company" or "Enzo") is a life sciences and
biotechnology  company  focused  on  harnessing  genetic  processes  to  develop
research  tools,  diagnostics and  therapeutics  and the provision of diagnostic
services  to the  medical  community.  Since  our  formation  in  1976,  we have
concentrated on developing  enabling  technologies for detecting and identifying
genes and for  modifying  gene  expression.  These  technologies  are  generally
applicable to the diagnosis of infectious  and other diseases and form the basis
for a  portfolio  of  products  marketed to the  biomedical  and  pharmaceutical
research  markets.  We are further using these  technologies as platforms in the
development of products for the clinical  diagnostics  market. In addition,  our
work  in  gene  analysis  has  led to the  development  of  therapeutic  product
candidates,  several of which are currently in clinical trials,  and several are
in  preclinical   studies.  In  the  course  of  our  research  and  development
activities,  we have  built what we believe  is a  significant  patent  position
(comprised  of 40 issued U.S.  patents,  over 167 issued  foreign  patents,  and
various pending applications worldwide) around our core technologies.

         The business  activities  of the Company are performed by the Company's
three wholly owned  subsidiaries--Enzo  Life Sciences,  Inc., Enzo Therapeutics,
Inc.,  and Enzo  Clinical  Labs,  Inc.  These  activities  are: (1) research and
development,  manufacturing  and marketing of biomedical  research  products and
tools through Enzo Life  Sciences and research and  development  of  therapeutic
products  through  Enzo  Therapeutics,  and  (2)  the  operation  of a  clinical
laboratory through Enzo Clinical Labs. For information relating to the Company's
business  segments,   see  Note  15  of  the  Notes  to  Consolidated  Financial
Statements.

         The Company's  primary sources of revenue have  historically  been from
sales of  research  products  utilized  in life  science  research  and from the
clinical  laboratory  services  provided to the  healthcare  community.  For the
fiscal years ended July 31, 2005 and 2004,  respectively,  approximately 24% and
31% of the  Company's  operating  revenues  were derived from product  sales and
approximately  76% and 69%  were  derived  from  clinical  reference  laboratory
services.

         MARKETS

         BACKGROUND

         DNA is the source of biological  information that governs the molecular
mechanisms  underlying  life. This information is stored in the linear sequences
of nucleotides  that comprise DNA. The sequence of the human genome,  comprising
over 30,000 genes, has been  identified.  The challenge for the next decade will
be  the  determination  of  the  function  and  relevance  of  each  gene.  This
information will facilitate the  understanding of biological  mechanisms and how
variations  and mutations in such  mechanisms  result in disease,  enabling more
rapid and accurate  detection of specific  diseases and the  development  of new
therapeutics to treat them.

         TOOLS FOR BIOMEDICAL AND PHARMACEUTICAL RESEARCH

         There  is  an  increasing  demand  by  biomedical  and   pharmaceutical
researchers  for tools that both  facilitate  and  accelerate  the generation of
biological  information.  In response to this demand,  a variety of formats,  or
tools, have been developed that allow  researchers to study biological  pathways
and to identify  mutations in gene sequences and  variations in gene  expression
levels that can lead to disease. These tools include DNA sequencing instruments,
microarrays,  biochips, microspheres, and microfluidic chips. Common among these
formats is the need for reagents that allow the  identification,  quantification
and characterization of specific genes or nucleic acid sequences.

         We believe this market will grow as a result of:

         o    research   spending   by   academic,    government   and   private
              organizations to determine the function and clinical  relevance of
              the gene sequences identified by the Human Genome Project;

         o    development  of  commercial   applications  based  on  information
              derived from this research; and

         o    ongoing  advancements in tools that accelerate  these research and
              development activities.

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<PAGE>

         CLINICAL DIAGNOSTICS

         The clinical diagnostics market currently has been reported by industry
sources to be greater  than $20  billion.  It is  comprised  of a broad range of
tests such as clinical chemistry,  microbiology,  immunoassay, blood banking and
cancer screening. Many of these tests employ traditional  technologies,  such as
immunoassays  and cell  culture  technologies,  for the  detection  of diseases.
Immunoassays  are based on the use of  antibodies  directed  against a  specific
target, or antigen,  to detect that antigen in a patient sample.  Cell culturing
techniques involve the growth, isolation and visual detection of the presence of
microorganisms.

         There are several drawbacks to these technologies.  Immunoassays do not
allow for early  detection of diseases  because they require  minimum  levels of
antigens to be produced by the microorganism for detection. These levels vary by
microorganism, and the delay involved could be several days or several years, as
seen in HIV/AIDS.  Cell cultures are slow,  labor  intensive and not amenable to
all  microorganisms.  For example,  gonorrhea  and  chlamydia  are  difficult to
culture.

         Gene-based   diagnostics   have  many   advantages   over   traditional
technologies.  Since  gene-based  diagnostics  focus  on the  identification  of
diseases at the gene level, they can identify the presence of the disease at its
earliest stage of  manifestation  in the body.  These tests provide results more
rapidly,  are applicable to a broad spectrum of microorganisms and can easily be
automated in a multiplex platform.

         Several  advances  in  technology  are  accelerating  the  adoption  of
gene-based  diagnostics in clinical  laboratories.  These advances  include high
throughput automated formats that minimize labor costs,  non-radioactive  probes
and  reagents  that are safe to  handle,  and  amplification  technologies  that
improve the sensitivity of such diagnostics.

         According to  recognized  industry  sources,  the market for  molecular
diagnostic tools, assays and other products is now more than $3 billion per year
as a result of:

         o    rising number of diagnostic tests being developed from discoveries
              in genome research;

         o    advances  in formats  and other  technologies  that  automate  and
              accelerate gene-based diagnostic testing;

         o    growing  emphasis by the health care  industry on early  diagnosis
              and treatment of disease; and

         o    application of gene-based  diagnostics as tools to match therapies
              to   specific   patient   genetics   commonly   referred   to   as
              pharmacogenomics.

         THERAPEUTICS

         Most diseases are the  consequence  of the expression of foreign genes,
such as those residing in viruses and pathogenic  organisms,  or the abnormal or
unregulated  expression  of the  body's  own genes.  In other  cases,  it is the
failure to express a gene that causes the disease.  Recent  advancements in gene
analysis have provided the information and tools necessary to develop drugs that
intervene  in the  disease  process at the gene level.  For a broad  spectrum of
diseases,  this approach can be more precise and effective  than  intervening in
the downstream  molecular processes of the disease.  Therapies targeting genetic
processes are called gene  medicines.  There are two  fundamental  approaches to
gene medicines, synthetic and genetic.

         Synthetic  gene  medicine  involves  the  administration  of  synthetic
nucleic acid  sequences  called  "oligos" that are designed to bind to, and thus
deactivate,  RNA produced by a gene.  To date,  this  approach has  demonstrated
limited  success.  Since a single cell may contain  thousands of strands of RNA,
large  amounts of oligos are  necessary to shut down the  production of unwanted
proteins.  Also,  since oligos are  synthetic,  they are quickly  metabolized or
eliminated  by the  body.  As a  result,  large  quantities  of  oligos  must be
delivered in multiple treatments, which can be both toxic to the body as well as
costly.

         Genetic medicine or gene therapies involve the insertion of a gene into
a cell. The inserted gene  biologically  manufactures  the therapy on an ongoing
basis.  This gene may be inserted to enable a beneficial  effect or to disable a
pathological mechanism within the cell. For example, the gene may be inserted to
replace a  missing  or  malfunctioning  gene  responsible  for  synthesizing  an
essential protein. On the other hand, a gene coding for a molecule to deactivate
either  an  overactive  gene or a gene  producing  an  unwanted  protein  may be
inserted.  As a permanent  addition  to the  cellular  DNA,  the  inserted  gene
produces RNA and/or proteins where needed.

         A major  challenge in designing  gene  therapy  medicines  has been the
efficient and safe  delivery of the gene to the  appropriate  target cell.  Gene
delivery is often  accomplished  using a delivery  vehicle known as a vector.  A
critical

                                       3
<PAGE>

quality of the vector is its ability to bind to the target cell and  effectively
deliver, or transduce,  the gene into the cell. It is also critical that the DNA
of the vector not  produce  proteins  or  antigens  that can  trigger an adverse
immune response.

         STRATEGY

         Our  objective is to be a leading  developer and provider of medicines,
as well as a leading developer and provider of the tools and diagnostics used to
study and detect disease at the molecular level.  There can be no assurance that
our objective will be met. Key elements of our strategy include:

         APPLY OUR INNOVATIVE TECHNOLOGY TO THE INFECTIOUS DISEASE MARKET

         We believe our core  technologies have broad diagnostic and therapeutic
applications.  We have initially  focused our efforts on the infectious  disease
market.  Infectious  diseases are among the largest  contributors  to healthcare
costs  worldwide.  Generally,  there are no long-term  effective  treatments for
viral  pathogens as there are for bacterial  pathogens.  We have developed novel
technologies we believe can serve as enabling platforms for developing medicines
that genetically  target and inhibit viral functions,  as well as medicines that
regulate the immune response.  In addition to such therapeutic products, we have
capitalized   on  our  nucleic  acid  labeling,   amplification   and  detection
technologies to develop diagnostic and monitoring tests for infectious agents.

         MAXIMIZE  OUR  RESOURCES BY  COLLABORATING  WITH OTHERS IN RESEARCH AND
         COMMERCIALIZATION ACTIVITIES

         We enter into research  collaborations  with leading academic and other
research  centers to augment our core  expertise on specific  programs.  We have
research  collaborations  with, among others,  Hadassah  University  Hospital in
Jerusalem,  Israel regarding immune regulation and Cornell University  regarding
the application of our genetic antisense technology to HIV.

         During the  current  fiscal year the  Company  acquired  the rights and
intellectual property to a candidate drug and technology intended for use in the
treatment of autoimmune uveitis. We also entered into a collaboration  agreement
with scientists at Ludwig-Maximilians  University in Munich, Germany to evaluate
certain of Enzo's proprietary technology for treating uveitis in an animal model
system.  In fiscal  2004,  Enzo,  through  Enzo  Therapeutics,  entered into two
agreements with the University of Connecticut  Health Center at Farmington,  CT,
to license and cooperatively  develop novel therapeutics for the stimulation and
enhancement  of bone  formation.  The  products  if  any,  emanating  from  this
technology could provide  potential  therapy for bone disorders,  including bone
loss,  fractures,  abnormalities,  diseases,  and other applications.  In fiscal
2004,  we  also  entered  into  a  licensing  agreement  with  Thomas  Jefferson
University,  Philadelphia, PA for certain patents relating to the development of
products within our therapeutic  program.  There can be no assurance that any of
these collaborative projects will be successful.

         Similarly,  we  seek to  fully  exploit  the  commercial  value  of our
technology by partnering with for-profit enterprises in areas in order to act on
opportunities  that  can  be  accretive  to  our  efforts  in  accelerating  our
development  program.  In line  with  this  strategy,  during  fiscal  2004 Enzo
acquired  the  assets  of  OraGen  Corporation,  Moorestown,  New  Jersey  and a
privately  owned  biotechnology   company   specializing  in  immune  regulation
technologies.  This  acquisition is expected to broaden our  capabilities in the
area of immunological regulation, particularly as it relates to the treatment of
infectious diseases.

         APPLY OUR  BIOMEDICAL  RESEARCH  PRODUCTS TO THE  CLINICAL  DIAGNOSTICS
         MARKET

         We intend to apply our  gene-based  tests to the  clinical  diagnostics
market. We currently offer over 25 gene-based tests for the research market, for
the identification of such viruses as human papillomavirus, cytomegalovirus, and
Epstein-Barr  virus.  We also  have  an  extensive  library  of  probes  for the
detection of various diseases.  We have developed a standardized  testing format
that permits multiple  diagnoses to be performed on the same specimen and are in
discussions with third parties to develop instrumentation for this purpose.

         LEVERAGE  MARKETING  AND  DISTRIBUTION  INFRASTRUCTURE  OF LEADING LIFE
         SCIENCES COMPANIES

         During  fiscal  2005,  Enzo Life  Sciences  continued  to  implement an
aggressive  marketing  program  designed to more directly service its end users,
while  simultaneously  positioning the Company for product line  expansion.  The
program  involves  continued  increases  in the  direct  field  sales  force,  a
comprehensive  advertising campaign,  increased attendance at top industry trade
meetings, as well as the enhancement of the interactive web site. In addition to
our

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<PAGE>

direct sales, we distribute our research  products through leading  producers of
gene analysis  formats and other life  sciences  companies.  By partnering  with
these industry leaders, we are able to leverage their established  marketing and
distribution infrastructure to expand the market for our products. During fiscal
2005,   distribution  agreements  were  in  effect  with,  among  others,  Roche
Diagnostic  Systems and Perkin-Elmer Life Sciences.  The Company received notice
in December 2004 that  Perkin-Elmer  Life Sciences was terminating its agreement
with the Company. See Item 3. Legal Proceedings.

         Research product revenue from Affymetrix represented  approximately 0%,
0% and  22% of  the  consolidated  revenues  in  fiscal  2005,  2004  and  2003,
respectively,  under a non-exclusive  distribution and supply agreement. At July
31, 2005 and 2004,  of the  Company's  net  accounts  receivable  no monies were
included  from this former  major  distributor.  Research  product  revenue from
Perkin-Elmer  represented  approximately  3%,  8%  and  4% of  the  consolidated
revenues in fiscal  2005,  2004 and 2003,  respectively,  under a  non-exclusive
distribution and supply agreement.  At July 31, 2005 and 2004,  approximately 0%
and 5%, respectively, of the Company's net accounts receivable relate to amounts
due from this  distributor.  Research product revenue from Amersham  represented
approximately  0%, 0% and 1% of the  consolidated  revenues in fiscal 2005, 2004
and 2003, respectively, under a terminated non-exclusive distribution and supply
agreement. At July 31, 2004 and 2003, 0% and 2%, respectively,  of the Company's
net  accounts  receivable  relate to amounts due from this  former  distributor.
Research product revenue from Roche  represented  approximately 0%, 8% and 6% of
the consolidated revenues in fiscal 2005, 2004 and 2003,  respectively,  under a
non-exclusive  distribution and supply agreement.  At July 31, 2005 and 2004, 0%
and 0% respectively of the Company's net accounts  receivable  relate to amounts
due from the this distributor.

The  following is a table  outlining the above for the  respective  consolidated
fiscal years:

<TABLE>
<CAPTION>
                                       % of Revenue                           % of Accounts Receivable
                               2005                  2004                  2003                  2005                  2004
                               ----                  ----                  ----                  ----                  ----
         <S>                    <C>                   <C>                   <C>                   <C>                   <C>
         Affymetrix             0%                    0%                    22%                   0%                    0%
         Perkin-Elmer           3%                    8%                    4%                    0%                    5%
         Amersham               0%                    0%                    1%                    0%                    0%
         Roche                  0%                    8%                    6%                    0%                    0%
</TABLE>

         EXPANDING AND PROTECTING OUR INTELLECTUAL PROPERTY ESTATE

         Since our  inception,  we have  followed a  strategy  to create a broad
encompassing  patent  position in the life sciences and  therapeutics  areas. We
have made obtaining  patent  protection a central  strategic  policy,  both with
respect  to our  proprietary  platform  technologies  and  products,  as well as
broadly in the areas of our research activities.

         CORE TECHNOLOGIES

         We have  developed  a  portfolio  of  proprietary  technologies  with a
variety of research, diagnostic and therapeutic applications.

         GENE ANALYSIS TECHNOLOGY

         All  gene-based  testing is premised on the knowledge  that DNA forms a
double helix comprised of two complementary  strands that match and bind to each
other.  If a  complementary  piece of DNA (a probe) is introduced  into a sample
containing  its matching  DNA, it will bind to, or  hybridize,  to form a double
helix with that DNA. Gene-based testing is carried out by:

         o    amplification  of the  target  DNA  sequence  (a  process  that is
              essential  for the  detection  of very  small  amounts  of nucleic
              acid);

         o    labeling  the probe  with a marker  that  generates  a  detectable
              signal upon hybridization;

         o    addition of the probe to the sample containing the DNA; and

         o    binding or  hybridization of the probe to the target DNA sequence,
              if present, to generate a detectable signal.

         We have developed a broad technology base for the labeling,  detection,
amplification  and formatting of nucleic acids for gene analysis.  We believe we
have a significant proprietary position in these fields.

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<PAGE>

         NON-RADIOACTIVE  LABELING AND  DETECTION.  Traditionally,  nucleic acid
probes were labeled with radioactive  isotopes.  However,  radioactively labeled
probes have a number of shortcomings.  They are unstable and consequently have a
limited shelf life.  They are  potentially  hazardous,  resulting in restrictive
licensing requirements and safety precautions for preparation, use and disposal.
Finally,  radioactive  components are expensive.  Our  technologies  permit gene
analysis without the problems  associated with radioactively  labeled probes and
are adaptable to a wide variety of formats.

         FORMATS.  There are  various  processes,  or  formats,  for  performing
probe-based  tests.  In certain  formats,  the probe is  introduced  to a target
sample  affixed  to a solid  matrix;  in others the probe is  combined  with the
sample in solution  (homogeneous  assay).  Solid matrix assays include:  IN SITU
assays in which the probe reaction  takes place directly on a microscope  slide;
dot blot assays in which the target DNA is fixed to a membrane;  and  microplate
and  microarray  assays  in which the DNA is fixed on a solid  surface,  and the
reaction can be quantified by instrumentation.

         AMPLIFICATION.  In the early  stages of  infection,  a pathogen  may be
present in very small amounts and consequently may be difficult to detect. Using
DNA  amplification,  samples  can be  treated  to cause a  pathogen's  DNA to be
replicated,  or amplified, to detectable levels. We have developed a proprietary
amplification  process for  multicopy  production  of nucleic  acid,  as well as
proprietary  techniques  for  amplifying  the  signals  of our probes to further
improve sensitivity.  Our amplification technologies are particularly useful for
the early  detection  of very  small  amounts  of  target  DNA and,  unlike  PCR
(currently  the most commonly used method of  amplification),  we have developed
isothermal   amplification   procedures   that  can  be  performed  at  constant
temperatures  and thus do not require  expensive  heating and cooling systems or
specialized heat-resistant enzymes.

         THERAPEUTIC TECHNOLOGY PLATFORMS

         We have  developed  proprietary  technologies  in the areas of  genetic
antisense  (antisense RNA) and immune regulation that we are using as a platform
for a portfolio of novel therapeutics.

         GENE  REGULATION  TECHNOLOGY.  We are pursuing a novel approach to gene
regulation known as genetic antisense or antisense RNA. Our technology  involves
the introduction into cellular DNA of a gene that codes for an RNA molecule that
binds to, and thus deactivates,  RNA produced by a specific gene. To deliver our
antisense  gene  to the  target  cell,  we  have  developed  proprietary  vector
technology. Our vector technology has the following three strengths:

         o EFFICIENT  TRANSDUCTION. A  principal  problem  to date of most  gene
therapy programs has been inefficient transduction,  or an unacceptably low rate
of  delivery  of  operating   genes  to  the  target  cells.  We  have  achieved
transduction   rates   significantly   higher  than  those   reported  by  other
researchers.

         o IMMUNOLOGICALLY "QUIET." Transduced cells often produce non-essential
proteins that trigger an immune response,  causing such cells to be cleared from
the body before they can produce a therapeutic effect. Cells transduced with our
Stealth Vectors(TM) have not expressed extraneous proteins.

         o "SMART"  VECTORS. We  incorporate  into the  surface  of our  vectors
proteins that have an affinity for the surface of the cell types  intended to be
transduced.  By including this targeting mechanism, we create in essence "smart"
vectors  that  preferentially   transduce  the  intended  cell  type.  This  may
ultimately permit us to develop a genetic antisense product that is administered
directly to the patient.

         We believe though there can be no assurance that our vector  technology
has broad applicability in the field of gene medicine. This can be attributed to
the following properties of our construct:

     o   the viral promoters are inactivated;

     o   insertional gene activation is prevented - a major safety factor;

     o   chromosomal integration; and

     o   nuclear localization.

         IMMUNE REGULATION.

         o ORAL  IMMUNE  REGULATION.   We  are  exploring  a  potentially  novel
therapeutic   approach  based  on  immune  regulation.   Our  immune  regulation
technology  seeks to  control  an  individual's  immune  response  to a specific
antigen in the body.  An  antigen  is a  substance  that the body  perceives  is
foreign and, consequently,  against which the body mounts an immune response. We
are  developing  our technology to treat  immune-mediated  diseases,  infectious
diseases and complications arising from transplantation. Our technology utilizes
oral administration of known proteins

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<PAGE>

to  regulate  the  subject's  immune  response  against  the  antigen.  Specific
formulations of the protein are administered  orally to the patient according to
precise dosing protocols.

         We have filed patent applications relating to this technology,  as well
as to our  therapeutics  and protocols under  development,  relating to areas of
infectious    diseases   and   immunological    adjustments   and   enhancements
characteristic of this reaction.  There can be no assurance that we will be able
to secure patents or that these programs will be successful. We are applying our
expertise  in immune  regulation  to develop  proprietary  therapeutics  for the
treatment of a variety of diseases, including chronic active hepatitis caused by
HBV and HCV infection, graft versus host disease and inflammatory bowel disease,
including Crohn's Disease and ulcerative  colitis.  During this fiscal year, the
Company  acquired the rights and  intellectual  property to a candidate drug and
technology  intended for use in the treatment of autoimmune  uveitis,  a chronic
inflammation of the eye that can lead to blindness.

         o IMMUNE  POTENTIATION. We have developed a new immunomodulator  agent,
EGS21, a  beta-D-glucosylceramide  (GC) compound, as a potential therapeutic for
treating  immune mediated  disorders.  GC is a glycolipid that has been shown by
Enzo scientists and collaborators to act as an anti-inflammatory agent in animal
model systems,  and therefore is being evaluated as an important  candidate drug
in the treatment of various immune mediated  diseases,  such as Crohn's disease,
hepatitis B, hepatitis C,  non-alcoholic  steatohepatitis  (NASH) or fatty liver
and HIV. We believe that GC might be utilized  either as a separate  therapeutic
or as an adjunct  or  combination  treatment  with our other  platforms  for the
management of immune mediated disorders.

         SMALL MOLECULE DEVELOPMENT

         Enzo's  newest   therapeutic   platform  involves  the  development  as
pharmaceutical  agents,  of protein factors or associated  peptides,  as well as
small molecules that interfere with  protein-protein  interactions.  It has been
shown  recently  that bone  density  is  dependent  on a  homeostatic  mechanism
requiring the  interaction  of several  protein  factors.  The  interference  of
factor-factor  interactions by small molecules can lead to significant increases
in bone mass. Enzo is developing these  observations to yield new pharmaceutical
products for the management of osteoporosis and certain periodontal disorders.

         PRODUCTS AND SERVICES

         We are applying our core technologies to develop novel  therapeutics as
well as research tools for the life sciences and clinical  diagnostics  markets.
In addition,  we provide  clinical  laboratory  services to physicians and other
health care providers in the greater New York area.

         RESEARCH AND DIAGNOSTIC PRODUCTS

         We are a leading  developer  and marketer of novel  research  tools for
gene analysis. We manufacture over 300 products that may be sold individually or
combined in a kit to meet the specific needs of the researcher.  We market these
products to biomedical and  pharmaceutical  firms worldwide.  We have summarized
our products into the following major categories:

         PRE-FORMATTED IN SITU KITS. Our  pre-formatted IN SITU kits include all
of the components  necessary to identify or detect a gene in a cell or tissue on
a glass slide. These components include specific labeled non-radioactive nucleic
acid probes on a glass slide,  signaling  reagents and buffers.  We offer probes
that will detect a variety of infectious  agents,  such as human  papillomavirus
(HPV), HBV,  cytomegalovirus (CMV) and chlamydia. We market these kits under the
PATHOGENE(R) brand name. These kits target the pathology market.

         MEMBRANE  KITS.  Our  membrane  kits  include all of the  reagents  and
buffers necessary to perform a gene analysis on a membrane.  The researcher will
supply the probe required for their  individual  needs.  Membrane  technology is
broadly  used  in life  sciences  research.  We  market  these  kits  under  the
MAXSENSE(R) brand name.

         LABELED  PROBES.  We have developed a line of  non-radioactive  nucleic
acid probes that have been  chemically-labeled  to allow detection of infectious
agents.  We offer  labeled  probes  that can detect  such  infectious  agents as
adenovirus,   HBV,   cytomegalovirus  (CMV),  herpes  simplex  virus  (HSV)  and
chlamydia,  as  well  as  certain  oncogenes.   These  probes  can  be  used  in
hybridization and detection assays in the format chosen by the researcher. These
probes  are  broadly  sold  into the life  sciences  research  market  under the
BIOPROBE(R) brand name.

         LABELING AND SIGNALING REAGENTS. We have developed an extensive line of
nucleic acid labeling and detections  reagent and kits that are designed for the
life sciences research market. The products are used by scientists to detect and
identify genes in certain specific formats. Our line of kits for the labeling of
nucleic  acids for the study of

                                       7
<PAGE>

specific gene  expression is marketed  under the  BIOARRAY(R)  brand name.  This
product line also includes a new kit for amplifying  small quantities of genetic
material  as  well  as our  new  GENEBEAM(TM)  system  for  gene  detection  and
identification.

         THERAPEUTIC DEVELOPMENT PROGRAMS

         We  have  a  number  of  therapeutic  products  in  various  stages  of
development  that are based on our  proprietary  genetic  antisense  and  immune
regulation technologies. Our therapeutic programs are described below.

         HUMAN IMMUNODEFICIENCY  VIRUS (HIV-1). We are developing  complementary
HIV-1  therapeutics  utilizing both our genetic  antisense and immune regulation
technologies.

         HIV-1  is a human  pathogenic  virus.  After  infection  it runs a slow
course  in  which  certain  of the  cells  in the  immune  system  (CD4+  cells)
progressively  disappear  from the body.  This  results  in a state in which the
infected  person  can no longer  mount an immune  response.  This loss of immune
responsiveness  is the  cause  of the  complex  of  diseases  known  as AIDS and
ultimately of death.

         According  to the World  Health  Organization,  there  were 60  million
individuals  worldwide  living  with HIV  infection  during  2003.  There were 5
million new infections and 3 million deaths from HIV during that same year. Over
20 million have died since the first cases of AIDS were  identified  in 1981. At
present,  two classes of products have received FDA marketing approval for HIV-1
infection: reverse transcriptase inhibitors and protease inhibitors. HIV's rapid
rate of mutation  results in the  development  of viral  strains  that no longer
respond to these medications. This problem is often exacerbated by interruptions
in dosing,  as  non-compliance  is common in patients on combination  therapies.
Moreover,  currently approved drugs produce toxic side-effects in many patients,
affecting a variety of organs and  tissues,  including  the  peripheral  nervous
system and  gastrointestinal  tract,  which  side-effects  also often  result in
patients interrupting or discontinuing therapy.

         HGTV43(TM)  GENE  MEDICINE.   Enzo's  proprietary   Stealth  Vector(TM)
HGTV43(TM) gene construct is a vehicle designed to carry and deliver  anti-HIV-1
antisense  RNA  genes  directed   against  the  genes   responsible   for  viral
replication. HGTV43 is designed to deliver the antisense genes to targeted blood
cells of subjects infected with HIV-1. These genes are incorporated into the DNA
of the blood cells,  and  subsequent  production  of the  antisense RNA prevents
replication of the virus, providing resistance to the virus.

         Preclinical  IN  VITRO  studies,  performed  in  conjunction  with  our
academic  collaborators,  demonstrated resistance to HIV-1 in human immune cells
into which the antisense genes had been inserted.  Our Phase I clinical trial of
the HIV-1 gene  medicine is in the  long-term  safety  follow up phase.  In this
study, white blood cell precursors, known as stem cells, were collected from the
subjects.  These stem cells were then treated EX VIVO with our Stealth Vector(R)
HGTV43(TM) transducing vector and infused into the subject. Results of the trial
have  shown  that all  subjects  tolerated  the  procedure  and that  anti-HIV-1
antisense RNA continued to be expressed in the subjects' circulating white blood
cells, the longest running subject at 60 months to date.

         o        all subjects tolerated the procedure;

         o        anti HIV-1  antisense RNA was detected in the  circulation  of
                  subjects,  the longest at 60 months

         o        purified  CD4+ cells from  evaluable  subjects were tested for
                  the  presence  of anti  HIV-1  antisense  RNA and these  cells
                  contained the antisense RNA;

         o        CD34+ cells from the bone marrow of all  subjects  were tested
                  for the presence of anti HIV-1  antisense RNA between 6 months
                  and 20 months  after  infusion and these cells  contained  the
                  antisense RNA.

         Based on these Phase I trial results  demonstrating  long-term survival
and functioning of antisense RNA in white blood cells,  including CD4+ cells, we
are preparing  for the next phase of the study in which we will test  strategies
to increase the percentage of CD4+ cells that contain the  anti-HIV-1  antisense
genes.

         The next phase of clinical  trials is to be conducted at  University of
California San Francisco the site of the Phase I study. This study will focus on
a strategy  designed to increase the percentage of engineered CD4+ cells using a
low dose of total body irradiation (TBI).  Enzo's protocol for this phase of the
study  successfully   passed  review  by  the  National   Institutes  of  Health
Recombinant  DNA  Advisory  Committee  (RAC) and has been  submitted to the UCSF
Committee on Human  Research  (CHR) for approval.  We anticipate  initiating the
study and enrolling subjects as soon as the protocol is successfully reviewed by
CHR.  The study  initiated  at New York  Presbyterian  Hospital-Cornell  Medical
Center has not enrolled subjects pending completion of manufacturing protocols.

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         HEPATITIS B VIRUS (HBV). We are developing HBV  therapeutics  utilizing
our proprietary immune regulation technology.

         HBV is a viral  pathogen that can lead to a condition in which the body
destroys  its own liver cells  through an immune  response.  This  condition  is
commonly  referred  to as  chronic  active  hepatitis.  According  to the latest
figures  published by the World  Health  Organization,  approximately  2 billion
people are  infected by HBV, of whom an  estimated  350 million are  chronically
infected and therefore at risk of death from liver disease.

         EHT899 IMMUNE REGULATION PRODUCT.  EHT899 is a proprietary  formulation
of an HBV viral protein  designed to eliminate the  undesirable  immune response
elicited by the HBV infection.  It also apparently  enhances a secondary  immune
response to clear the viral  infection,  resulting  in reduction in liver damage
and decrease in viral load.

         In a clinical  trial,  conducted  at the Liver Unit of  Hadassah-Hebrew
University  Medical Center,  in Jerusalem,  Israel,  a formulation of EHT899 was
administered  orally to a total of 42 subjects  with chronic  active  hepatitis.
Subjects  received the medication  three times a week for 20 - 30 weeks and were
followed for an additional 20 weeks. Results of the trial have shown that:

         o        the drug was well tolerated in all subjects;

         o        46% of  subjects  showed  a  decrease  in HBV  viral  load and
                  improvement in liver function tests; and

         o        33% of  subjects  showed a decrease  in  inflammation  seen on
                  liver biopsy.

         Based on these results, the Company is exploring improved manufacturing
processes and pharmaceutical partnerships are being explored.

         Preclinical  animal studies with EHT899 showed that this medication was
able to achieve complete  suppression of  HBV-associated  human liver cancer and
significantly  reduced  mortality in  laboratory  mice.  These  studies may have
significant  potential  application  for treatment of liver and other cancers in
humans.

         UVEITIS.  Posterior uveitis,  which results from inflammation of a part
of the eye known as the uvea,  is  believed  to result  from an immune  reaction
against  some of the  antigens in the eye,  specifically  the S antigen  protein
(Sag) and the  interphotoreceptor  retinoid-binding  protein (IRBP). There is no
known cure for uveitis,  which in the United  States,  according to the American
Uveitis Society,  is diagnosed in approximately  38,000 people every year. While
there are steps that can be taken to  preserve  sight and slow the  progress  of
vision loss,  individuals  with uveitis are also at increased risk of developing
cataracts, glaucoma or retinal detachment.

         Enzo recently acquired rights and intellectual  property to a candidate
drug and  technology  intended for use in the treatment of uveitis.  The drug is
the  result  of a  discovery  by  scientists  at the eye  clinic  of the  Ludwig
Maximilians  University in Munich,  Germany, who found a small peptide that when
fed to rats with experimental allergic uveitis promoted their recovery. Based on
favorable preclinical studies, the developers conducted a small Phase I clinical
trial in  Germany  with  encouraging  results  that  indicated  a number  of the
patients treated with the study drug showed a decrease in inflammation and a few
showed improved visual acuity.

         Using its immune  regulation  platform and the recently acquired rights
to the candidate  drug,  Enzo is currently  composing a protocol to initiate the
next phase of clinical  trials that will be submitted to the central  regulatory
agencies in Germany.

          INFLAMMATORY   BOWEL  DISEASES.   We  believe  our  immune  regulation
technology  may be used to treat  inflammatory  bowel disease  (IBD),  including
ulcerative  colitis and Crohn's  Disease.  According to the  Inflammatory  Bowel
Disease  Foundation,  approximately  one  million  persons in the United  States
suffer from IBD. Although the cause of these disorders remains unknown,  various
features suggest immune system involvement in their pathogenesis.

         Patients  are managed  during  short-term  episodes  through the use of
anti-inflammatory  medications, or immunosuppressants,  that provide symptomatic
relief over short  periods of time,  but do not provide a cure.  These drugs are
all  based  on  a  generalized  suppression  of  the  immune  response  and  are
non-specific.  As such, they have  considerable  side effects and cannot be used
for long periods of time because of their inherent toxicity.

         Enzo  recently  completed a Phase II randomized  double-blind  clinical
trial of ALEQUEL(TM) our innovative immune regulation  medicine for treatment of
Crohn's  Disease.  In this  study,  subjects  were  evaluated  using the Crohn's
Disease

                                       9
<PAGE>

Activity Index (CDAI), a standard  measure of the severity of the disease,  with
higher scores  indicating  more severe  disease  activity.  An expanded study to
broaden the diversity of the patient population is ongoing at Hadassah Hospital.
Enzo plans to continue the study at additional sites in the United States and is
currently  conducting a selection  review  process to determine the  appropriate
site at which to expand the study.

         This current trial  followed a successful  open label Phase I study and
was based on successful  preclinical results achieved in an animal model system.
The  preclinical  study  results  showed  that  when  laboratory   animals  with
experimentally   induced   colitis   were  given   specific   proteins  by  oral
administration,  a remission of the condition was seen. The experimental animals
exhibited a marked amelioration of the symptoms, including significant reduction
in tissue inflammation,  as well as a decrease in the levels of gamma interferon
in the serum, both indicative of remission.

         GRAFT  VERSUS  HOST  DISEASE.  We are  applying  our immune  regulation
technology to treat graft versus host disease.  Graft versus Host Disease (GvHD)
is a major complication of bone marrow and stem cell transplantation  accounting
for many of the failures of these transplant  procedures.  GvHD is characterized
by an immune  response  mounted by the immune cells within the engrafted  tissue
against the recipient that leads to a wasting syndrome and  occasionally  death.
It is  estimated  that there are only 15,000 bone marrow  transplants  performed
annually  worldwide due, in part, to GvHD. It is assumed that the elimination of
GvHD would lead to a dramatic  rise in the number of these  procedures.  GvHD is
currently treated by  immunosuppressant  drugs,  which are toxic and only reduce
the extent of the wasting reaction.

         We  are  conducting   pre-clinical   and  animal  studies  at  Hadassah
University  Hospital.  The  results  of these  studies  suggest  that our immune
regulation technology could be effective in treating GvHD.  Currently,  clinical
protocols are in development.

         EGS21  IMMUNE  POTENTIATION  PRODUCT.  EGS21,  our immune  potentiation
product was tested for safety in a Phase I study in healthy human  volunteers at
the  Hadassah-Hebrew  University  Medical Center.  All subjects were followed by
complete blood analysis and standard blood  chemistries.  All laboratory results
were within normal limits and no treatment-related  adverse events were observed
during the treatment period or during the follow-up period.

         NON-ALCOHOLIC STATOHEPATITIS (NASH)

         Enzo  is  evaluating  the  use of  EGS21  as a  potential  product  for
treatment of fatty liver or non alcoholic  steatohepatitis  (NASH). Fatty liver,
often associated with a metabolic  syndrome defined by  hyperlipidemia,  insulin
resistance and obesity,  can be  demonstrated  by imaging  studies in 25% of the
general population. Recent studies have suggested an immunologic basis for NASH.
This condition is presently  considered to be a risk factor for the  development
of non-alcoholic  steatohepatitis  (NASH),  one of the top three causes of liver
disease  in the  USA  and a form  of  chronic  hepatitis  that  is  increasingly
recognized as a predisposing  condition for the development of liver  cirrhosis.
NASH  is  present  in 20%  of  obese  individuals  and in  2.5%  of the  general
population.  Using experimental animal model systems, we showed that EGS21 had a
beneficial  effect  on NASH  and its  associated  metabolic  syndrome  in  these
experimental animals. A Phase 2 open label study is currently being conducted at
Hadassah-Hebrew University Medical Center.


         CLINICAL LABORATORY SERVICES

         We operate a regional  clinical  laboratory that offers full diagnostic
services to the greater New York and New Jersey medical community. The Company's
clinical laboratory testing is utilized by physicians as an essential element in
the delivery of healthcare  services.  Physicians use laboratory tests to assist
in the detection,  diagnoses,  evaluation,  monitoring and treatment of diseases
and  other  medical   conditions.   Clinical  laboratory  testing  is  generally
categorized as clinical testing and anatomic pathology testing. Clinical testing
is performed on body fluids, such as blood and urine. Anatomic pathology testing
is performed on tissues and other  samples,  such as human cells.  Most clinical
laboratory tests are considered  routine and can be performed by most commercial
clinical  laboratories.  Tests  that  are not  routine  and  that  require  more
sophisticated  equipment and highly skilled  personnel are  considered  esoteric
tests and may be performed less frequently than routine tests.  The Company does
not perform certain low-volume esoteric tests in-house,  generally many of these
tests are referred to an esoteric  clinical testing  laboratory that specializes
in performing these more complex tests.

         The  Company  offers  a  comprehensive  menu of  routine  and  esoteric
clinical  laboratory  tests or procedures.  These tests are  frequently  used in
general  patient care by  physicians  to  establish  or support a diagnosis,  to
monitor  treatment  or  medication,  or  search  for  an  otherwise  undiagnosed
condition.

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<PAGE>

         We operate a full service clinical  laboratory in Farmingdale,  NY with
an  infrastructure  that  includes  a  comprehensive   information   technology,
logistics,  client service and billing  departments.  Also, we have a network of
nineteen  patient  service  centers and a full  service  phlebotomy  department.
Patient  service  centers  collect the specimens as requested by physicians.  We
also operate a STAT  laboratory in Manhattan.  A "STAT" lab is a laboratory that
has the ability to perform  certain  routine tests quickly and report results to
the physician immediately.

         Patient  specimens  are delivered to our  laboratory  facilities by our
logistics department  accompanied by a test requisition form. These forms, which
are completed by the ordering physician,  indicate the tests to be performed and
demographic  patient  information.  Once this  information  is entered  into the
laboratory  computer  system the tests are performed and the results are entered
primarily through an interface from the laboratory  testing equipment or in some
instances, manually into the laboratory computer system. Most routine testing is
completed  by early the next  morning,  and test  results  are  reported  to the
ordering physician.  These test results are either delivered  electronically via
our EnzoDirect(TM)  system or delivered by the logistic  department  directly to
the ordering  physicians'  offices.  Physicians  who request that they be called
with a result are so notified.

         For fiscal  years ended July 31, 2005 and 2004,  respectively,  76% and
69% of the Company's revenues were derived from the clinical laboratory. At July
31, 2005 and 2004, respectively,  approximately 94% and 89% of the Company's net
accounts  receivable  were derived from its clinical  laboratory  business.  The
Company believes that the  concentration of credit risk with respect to clinical
laboratory's  accounts receivable is limited due to the diversity of the various
numbers of third party insurance carriers,  the Federal Medicare Program and the
numerous individual patient accounts.  Revenue,  net of contractual  allowances,
from direct billings under the Federal  Medicare  program during the years ended
July 31, 2005, 2004 and 2003 were approximately 20%, 19%, and 11%, respectively,
of  the  Company's   total  revenue.   The  clinical   laboratory   industry  is
characterized  by a  significant  amount of  uncollectible  accounts  receivable
related to the inability to receive  accurate and timely billing  information in
order to forward it on to the third  party  payers  for  reimbursement,  and the
inaccurate  information  received  from  the  covered  individual  patients  for
unreimbursed unpaid amounts. The Company's provision for uncollectible  accounts
receivable is within historical expectations.

         Billing  for  laboratory  services  is  complicated.  Depending  on the
billing  arrangement and applicable  law, we must bill various  payers,  such as
patients,  insurance  companies and the Federal Medicare  Program,  all of which
have different  requirements.  In New York State,  the law prohibits the Company
from  billing  the  ordering  physician.  Compliance  with  applicable  laws and
regulations as well as, internal compliance policies and procedures adds further
complexity  to the  billing  process.  We depend on the  ordering  physician  to
provide timely,  accurate billing  demographic and diagnostic coding information
to us. We believe that most of our bad debt  expense is primarily  the result of
missing or incorrect  billing  information  on  requisitions  received  from the
ordering  physician rather than credit related issues.  We perform the requested
tests and report test results  regardless  of whether the billing or  diagnostic
coding information is incorrect or missing.  We subsequently  attempt to contact
the ordering  physician to obtain any missing  information and rectify incorrect
billing  information.  Missing or  incorrect  information  on  requisition  adds
complexity  to and slows the  billing  process,  creates  backlogs  of  unbilled
requisitions, and generally increases the aging of accounts receivable. When all
issues  relating to the missing or incorrect  information  are not resolved in a
timely manner,  the related  receivables are fully reserved to the allowance for
doubtful accounts or written off.  Additional  factors  complicating the billing
process include:

         o        pricing   differences   between  our  fee  schedules  and  the
                  reimbursement rates of the payers;

         o        disputes  with  payers as to which  party is  responsible  for
                  payment; and

         o        disparity  in  coverage  and  information  requirements  among
                  various payers.

         We incur significant  additional costs as a result of our participation
in Medicare,  as billing and  reimbursement for clinical  laboratory  testing is
subject  to  considerable  and  complex  federal  and state  regulations.  These
additional  costs include those related to: (1) complexity  added to our billing
processes;  (2)  training and  education of our  employees  and  customers;  (3)
compliance  and legal  costs;  and (4) costs  related to,  among other  factors,
medical  necessity  denials and  advance  beneficiary  notices.  The Centers for
Medicare  & Medicaid  Services,  or CMS  (formerly  the  Health  Care  Financing
Administration),   establishes   procedures  and   continuously   evaluates  and
implements changes in the reimbursement process.

         RESEARCH & DEVELOPMENT

         Our  principal  research and  development  efforts are directed  toward
expanding  our research and  diagnostic  product  lines,  as well as  developing
innovative  new  therapeutic  products  to  meet  unmet  market  needs.  We have
developed our core research  expertise in genomics through 25 years of dedicated
focus in this area.  We  conduct  our  research  and other  product  development
efforts through internal research and collaborative relationships. In the fiscal

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<PAGE>

years  ended  July 31,  2005,  2004 and  2003,  the  Company  incurred  costs of
approximately $8,452,000, $8,078,000, and $8,311,000, respectively, for research
and development activities.

         INTERNAL RESEARCH PROGRAMS

         Our  professional  staff  of 45  scientists,  including  23  with  post
doctorate  degrees,  performs our internal research and development  activities.
Our  product  development  programs  incorporate  various  scientific  areas  of
expertise,   including   recombinant  DNA,  monoclonal   antibody   development,
enzymology,  microbiology,  biochemistry,  molecular biology, organic chemistry,
and fermentation. In addition, we continuously review in-licensing opportunities
in connection with new technology.

         EXTERNAL RESEARCH COLLABORATIONS

         We have  and  continue  to  explore  collaborative  relationships  with
prominent companies and leading-edge  research institutions in order to maximize
the  application of our  technology in areas where we believe such  relationship
will benefit the development of our technology.

         SALES AND MARKETING

         Our sales  and  marketing  strategy  is to sell our  research  products
through two distinct  channels:  (i) direct sales to end-users;  and (ii) supply
agreements  with   manufacturers  and  distributors.   We  market  the  clinical
laboratory  services to ordering physicians in the metro New York and New Jersey
region  through our direct sales  force,  customer  service and patient  service
representatives.

         We focus  our sales  efforts  on  obtaining  and  retaining  profitable
accounts.  We also have an active  account  management  process to evaluate  the
profitability of all of our accounts.  Where appropriate,  we change the service
levels and terminate accounts that are not profitable.

         DIRECT SALES AND MARKETING EFFORT

         We market our research  products through a direct field sales group and
professional sales management team as well as through our interactive e-commerce
web  site.  Our  domestic  and  worldwide  marketing  efforts  also  consist  of
advertisements  in major  scientific  journals,  direct mailings to researchers,
presentations at scientific seminars and exhibitions at scientific meetings.

         SUPPLY AND DISTRIBUTION ARRANGEMENTS

         We also distribute our research  products through leading life sciences
companies.  Through these arrangements,  we are able to leverage the established
marketing and  distribution  infrastructure  of these  companies.  During fiscal
2005, we distributed under an agreement with  Perkin-Elmer Life Sciences,  among
other  companies.  Enzo Life  Sciences is focused on a strategic  initiative  to
expand its direct sales to the end user. See Item 3. Legal Proceedings.

         COMPETITION

         We compete with other life science and biotechnology companies, as well
as pharmaceutical,  chemical and other companies. Competition in our industry is
intense and is expected to  increase.  Many of these  companies  are  performing
research in the same areas as we are. Some of these  competitors are larger than
we are and have more  significant  financial  resources  than we do. The primary
competitive  factors in our  industry  are the ability to create  scientifically
advanced technology, successfully develop and commercialize products on a timely
basis,  establish  and  maintain  intellectual  property  rights and attract and
retain a breadth and depth of human resources.

         Our  clinical  laboratory  services  business  competes  with  numerous
national  and  local  entities,  some of which are  larger  than we are and have
greater financial resources than we do. Our laboratory competes primarily on the
basis of the  quality  and  specialized  nature of its  testing,  reporting  and
information  services,  its reputation in the medical community,  the pricing of
its services,  its reliability and speed in performing diagnostic tests, and its
ability to employ qualified laboratory personnel.

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<PAGE>

         INTELLECTUAL PROPERTY

         We consider our  intellectual  property program to be a key asset and a
major  strategic  component to the execution of our business  strategy.  A broad
portfolio of issued  patents and pending patent  applications  supports our core
technology  platforms.  Our  policy is to seek  patent  protection  for our core
technology platforms,  as well as for ancillary  technologies that support these
platforms and provide a competitive advantage.

         At the end of fiscal  2005 we owned or  licensed  40 U.S.  and over 167
foreign patents relating to products,  methods and procedures resulting from our
internal or  sponsored  research  projects.  During this year,  several  patents
relating  the  BioProbe(R)  nucleic  acid  probe  system  have  expired,   while
additional  patents  have  issued  in  the  U.S.  and  Europe.  There  can be no
assurance,  however, that patents will be issued on pending applications or that
any issued  patents will have  commercial  benefit.  We do not intend to rely on
patent  protection as the sole basis for protecting our proprietary  technology.
We also rely on our trade secrets and continuing  technological  innovation.  We
require each of our employees to sign a confidentiality agreement that prohibits
the employee from disclosing any  confidential  information  about us, including
our technology or trade secrets.

         In  some  instances,   we  may  enter  into  royalty   agreements  with
collaborating  research parties in consideration for the commercial use by us of
the developments of their joint research.  In other instances the  collaborating
party might  obtain a patent,  but we receive  the  license to use the  patented
subject matter.  In such cases, we will seek to secure  exclusive  licenses.  In
other  instances,  we might have an  obligation  to pay royalties to, or reach a
royalty  arrangement  with,  a  third  party  in  consideration  of  our  use of
developments of such third party. We have an exclusive  licensing agreement with
Yale  University for the technology  used in nucleic acid probe  products.  That
agreement  covers licensed patents owned by Yale and licensed to us for the life
of the patents,  which expire not earlier than 2004. The Research  Foundation of
the  State  University  of New York has  granted  us the  exclusive  rights to a
genetic   engineering   technology   using   antisense   nucleic   acid  control
methodologies.

         REGULATION OF PHARMACEUTICAL PRODUCTS

         New drugs and biological drug products are subject to regulation  under
the Federal  Food,  Drug and  Cosmetic  Act,  and  biological  products are also
regulated  under the  Public  Health  Service  Act.  We  believe  that  products
developed  by us or our  collaborators  will be regulated  either as  biological
products  or as  new  drugs.  Both  statutes  and  the  regulations  promulgated
thereunder govern,  among other things, the testing,  licensing,  manufacturing,
marketing, distributing,  safety, and efficacy requirements,  labeling, storage,
exporting, record keeping, advertising and other promotional practices involving
biologics  or new drugs,  as the case may be. FDA  review or  approval  or other
clearances must be obtained before clinical  testing,  and before  manufacturing
and  marketing,  of biologics and drugs.  At the FDA, the Center for  Biological
Evaluation and Research ("CBER") is responsible for the regulation of biological
drugs and the Center for Drug  Evaluation  and Research  ("CDER") is responsible
for the regulation of  non-biological  drugs.  Biological drugs are licensed and
other drugs are approved before commercialization.

         Any gene  medicine  products  that we develop will  require  regulatory
review before  clinical  trials,  and additional  regulatory  clearances  before
commercialization.  New human  gene  medicine  products,  as  therapeutics,  are
subject to regulation by the FDA and comparable agencies in other countries. The
precise regulatory  requirements with which we will have to comply are uncertain
at this time because of the novelty of the human gene therapies  currently under
development.  The FDA on a case-by-case  basis currently  reviews each protocol.
The FDA has published  "Points to Consider"  guidance  documents with respect to
the development of gene medicine  protocols.  The National  Institutes of Health
("NIH") is also  involved in the  oversight  of gene  therapies  and the FDA has
required compliance with certain NIH requirements.

         Obtaining   FDA   approval   has   historically   been  a  costly   and
time-consuming process.  Generally, to gain FDA approval, a developer first must
conduct  pre-clinical  studies in the laboratory  evaluating  product chemistry,
formulation and stability and, if appropriate,  in animal model systems, to gain
preliminary  information on safety and efficacy.  Pre-clinical safety tests must
be conducted by  laboratories  that comply with FDA  regulations  governing Good
Laboratory   Practices.   The  results  of  those  studies  are  submitted  with
information  characterizing  the  product  and  its  manufacturing  process  and
controls as a part of an investigational new drug ("IND") application, which the
FDA must  review  and  declare  effective  before  human  clinical  trials of an
investigational  drug  can  start.  The  IND  application  includes  a  detailed
description of the clinical investigations to be undertaken in addition to other
pertinent information about the product,  including descriptions of any previous
human experience and the company's future plans for studying the drug.

         In order to commercialize any products, we (as the sponsor) file an IND
and will be responsible  for  initiating and overseeing the clinical  studies to
demonstrate the safety and efficacy  necessary to obtain FDA marketing  approval
of any such  products.  For INDs that we sponsor,  we will be required to select
qualified   clinical  sites   (usually   physicians   affiliated   with  medical
institutions) to supervise the  administration of the products,  and ensure that
the   investigations   are  conducted  and  monitored  in  accordance  with  FDA
regulations and the general  investigational plan and protocols contained in the
IND. Each  clinical  study is reviewed and approved by an  Institutional  Review
Board (IRB). The IRB will

                                       13
<PAGE>

consider,  among other things, ethical factors and the safety of human subjects.
Clinical  trials are  normally  conducted in three  phases,  although the phases
might overlap. Phase I trials, concerned primarily with the safety and tolerance
of the drug, and its  pharmacokinetics  (or how it behaves in the body including
its  absorption  and  distribution)  involve fewer than 100  subjects.  Phase II
trials  normally  involve a few hundred  patients and are designed  primarily to
demonstrate  preliminary  effectiveness  and the most  suitable dose or exposure
level for treating or diagnosing  the disease or condition for which the drug is
intended,  although  short-term side effects and risks in people whose health is
impaired  may also be  examined.  Phase III trials are  expanded,  adequate  and
well-controlled clinical trials with larger numbers of patients and are intended
to gather the additional information for proper dosage and labeling of the drug.
Clinical  trials  generally  take two to five  years,  but the  period may vary.
Certain  regulations  promulgated  by the FDA may shorten  the time  periods and
reduce  the  number of  patients  required  to be tested in the case of  certain
life-threatening diseases, which lack available alternative treatments.

         The FDA  receives  reports on the  progress  of each phase of  clinical
testing,  and it may require the  modification,  suspension  or  termination  of
clinical  trials if an  unwarranted  risk is presented  to patients.  Human gene
medicine products are a new category of therapeutics.  There can be no assurance
regarding the length of the clinical  trial period,  the number of patients that
the FDA will require to be enrolled in the clinical trials in order to establish
the safety,  purity and  potency of human gene  medicine  products,  or that the
clinical  and other  data  generated  will be  acceptable  to the FDA to support
marketing approval.

         After  completion  of clinical  trials of a new product,  FDA marketing
approval must be obtained  before the product can be sold in the United  States.
If the product is regulated as a new biologic,  CBER requires the submission and
approval of a Biologics License Application (BLA) before commercial marketing of
the biologic product. If the product is classified as a new drug, we must file a
New Drug Application  ("NDA") with CDER and receive  approval before  commercial
marketing  of  the  drug.  The  NDA or  BLA  must  include  results  of  product
development,  pre-clinical studies and clinical trials. The testing and approval
processes require substantial time and effort and there can be no assurance that
any approval  will be granted on a timely  basis,  if at all. The median time to
obtain new product  approvals after  submission to the FDA is  approximately  12
months.  If  questions  arise during the FDA review  process,  approval can take
longer. Before completing its review, the FDA may seek guidance from an Advisory
Committee of outside experts at a public or closed meeting.  While the advice of
these   committees   is  not  binding  on  the  FDA,   it  is  often   followed.
Notwithstanding the submission of relevant data, the FDA might ultimately decide
that the NDA or BLA does not satisfy its  regulatory  criteria for approval and,
thus,  reject  the  application,  refuse to approve  it, or  require  additional
clinical,  preclinical or chemistry studies.  Even after FDA regulatory approval
or licensure, a marketed drug product is subject to continual review by the FDA.
In addition,  if previously unknown problems are discovered or we fail to comply
with  the  applicable  regulatory  requirements,  we might  be  restricted  from
marketing  a product,  we might be required  to  withdraw  the product  from the
market, and we might possibly become subject to seizures, injunctions, voluntary
recalls,  or civil,  monetary or criminal  sanctions.  In addition,  the FDA may
condition marketing approval on the conduct of specific  post-marketing  studies
to further evaluate safety and effectiveness.

         For  commercialization  of our biological or other drug  products,  the
manufacturing  processes  described  in our NDA or BLA must receive FDA approval
and the  manufacturing  facility must  successfully  pass an inspection prior to
approval or  licensure  of the product  for sale within the United  States.  The
pre-approval  inspection  assesses whether,  for example,  the facility complies
with the FDA's current good manufacturing  practices (cGMP)  regulations.  These
regulations elaborate testing, control, documentation, personnel, record keeping
and other quality  assurance  procedure  requirements that must be met. Once the
FDA approves  our  biological  or other drug  products  for  marketing,  we must
continue  to comply with the cGMP  regulations.  The FDA  periodically  inspects
biological and other drug  manufacturing  facilities to ensure  compliance  with
applicable  cGMP  requirements.   Failure  to  comply  with  the  statutory  and
regulatory   requirements   subjects  the  manufacturer  to  possible  legal  or
regulatory  action,  such as suspension of manufacturing,  seizure of product or
voluntary recall of a product.

         If a developer  obtains  designations by the FDA of a biologic or other
drug as an "orphan" for a particular  use, the developer may request grants from
the federal  government  to defray the costs of  qualified  testing  expenses in
connection  with the  development  of such  drug.  Orphan  drug  designation  is
possible for drugs for rare  diseases,  including many genetic  diseases,  which
means  the drug is for a disease  that has a  prevalence  of less  than  200,000
patients in the United States.  The first  applicant who receives an orphan drug
designation  and who obtains  approval of a marketing  application for such drug
acquires the exclusive  marketing  rights to that drug for that use for a period
of seven  years  unless  the  subsequent  drug  can be  shown  to be  clinically
superior.  Accordingly, no other company would be allowed to market an identical
orphan drug with the same active  ingredient for the use approved by the FDA for
seven years after the approval.

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<PAGE>

         REGULATION OF DIAGNOSTICS

         The diagnostic  products that are developed by our  collaborators or us
are likely to be  regulated by the FDA as medical  devices.  Unless an exemption
applies,  medical  devices must receive either "510(k)  clearance" or pre-market
approval  ("PMA") from the FDA before  marketing them in the United States.  The
FDA's 510(k) clearance process usually takes from four to 12 months,  but it can
last longer. The process of obtaining PMA approval is much more costly,  lengthy
and  uncertain.  It generally  takes from one to three years or even longer.  We
cannot be sure that 510(k)  clearance or PMA approval  will ever be obtained for
any product we propose to market.

         The FDA  decides  whether  a device  must  undergo  either  the  510(k)
clearance or PMA approval process based upon statutory criteria.  These criteria
include  the level of risk that the  agency  perceives  is  associated  with the
device and a  determination  whether  the  product  is a type of device  that is
similar to devices that are already  legally  marketed.  Devices  deemed to pose
relatively  less risk are placed in either  class I or II,  which  requires  the
manufacturer to submit a premarket  notification  requesting  510(k)  clearance,
unless an exemption applies.  The pre-market  notification must demonstrate that
the proposed device is "substantially  equivalent" in intended use and in safety
and  effectiveness  to a legally marketed  "predicate  device" that is either in
class I, class II, or is a "pre-amendment"  class III device (i.e., one that was
in  commercial  distribution  before May 28, 1976) for which the FDA has not yet
called for submission of a PMA application.

         After a device receives 510(k)  clearance,  any modification that could
significantly  affect its safety or  effectiveness,  or that would  constitute a
major  change in its  intended  use,  requires a new 510(k)  clearance  or could
require  a PMA  approval.  The FDA  requires  each  manufacturer  to  make  this
determination  in the first instance,  but the FDA can review any such decision.
If the FDA  disagrees  with a  manufacturer's  decision not to seek a new 510(k)
clearance,  the agency may retroactively require the manufacturer to seek 510(k)
clearance or PMA approval.  The FDA also can require the  manufacturer  to cease
marketing  and/or  recall the  modified  device  until  510(k)  clearance or PMA
approval is obtained.

         Devices  deemed  by  the  FDA  to  pose  the  greatest  risk,  such  as
life-sustaining,   life-supporting  or  implantable   devices,   or  deemed  not
substantially  equivalent  to a legally  marketed  class I or class II predicate
device,  or to a  preamendment  class III  device  for which  PMAs have not been
called,  are placed in class III.  Such  devices are required to undergo the PMA
approval  process  in  which  the   manufacturer   must  prove  the  safety  and
effectiveness  of the device to the FDA's  satisfaction.  A PMA application must
provide extensive preclinical and clinical trial data and also information about
the device and its  components  regarding,  among other things,  device  design,
manufacturing and labeling. After approval of a PMA, a new PMA or PMA supplement
is required in the event of a modification  to the device,  it's labeling or its
manufacturing process.

         Although  clinical  investigations  of most  devices are subject to the
investigational device exemption ("IDE") requirements,  clinical  investigations
of in vitro  diagnostic  ("IVDs")  tests are exempt  from the IDE  requirements,
including the need to obtain the FDA's prior  approval,  provided the testing is
noninvasive,  does not require an invasive  sampling  procedure  that presents a
significant risk, does not introduce energy into the subject, and is not used as
a diagnostic  procedure without  confirmation by another  medically  established
test or  procedure.  In addition,  the IVD must be labeled for Research Use Only
(RUO) or  Investigational  Use Only (IUO),  and  distribution  controls  must be
established to assure that IVDs  distributed for research or  investigation  are
used  only  for  those  purposes.  The FDA  expressed  its  intent  to  exercise
heightened   enforcement  with  respect  to  IUO  and  RUO  devices   improperly
commercialized prior to receipt of FDA clearance or approval.

         We have developed  products that we currently  distribute in the United
States on a RUO basis.  There can be no assurance  that the FDA would agree that
our distribution of these products meets the requirements for RUO  distribution.
Furthermore,  failure by us or recipients of our RUO products to comply with the
regulatory  limitations on the distribution and use of such devices could result
in enforcement  action by the FDA,  including the imposition of  restrictions on
our distribution of these products.

         Any devices that we manufacture or distribute will be subject to a host
of regulatory  requirements,  including  the Quality  System  Regulation  (which
requires   manufacturers  to  follow   elaborate   design,   testing,   control,
documentation  and other  quality  assurance  procedures),  the  Medical  Device
Reporting  regulation  (which  requires  that  manufacturers  report  to the FDA
certain types of adverse events involving their products), labeling regulations,
and the FDA's general  prohibition  against promoting products for unapproved or
"off  label"  uses.  Class II devices  also can have  special  controls  such as
performance  standards,  post market surveillance,  patient registries,  and FDA
guidelines  that do not  apply  to class I  devices.  Unanticipated  changes  in
existing regulatory  requirements or adoption of new requirements could hurt our
business, financial condition and results of operations.

         We are  subject to  inspection  and market  surveillance  by the FDA to
determine compliance with regulatory requirements. If the FDA finds that we have
failed to comply,  the  agency  can  institute  a wide  variety  of  enforcement
actions,  ranging from a public warning letter to more severe  sanctions such as
fines, injunction, civil penalties, recall or

                                       15
<PAGE>

seizure of our products,  the issuance of public notices or warnings,  operating
restrictions, partial suspension or total shutdown of production, refusal of our
requests for 510(k)  clearance or PMA approval of new  products,  withdrawal  of
510(k) clearance or PMA approvals already granted, and criminal prosecution.

         The FDA also has the authority to request repair, replacement or refund
of the cost of any medical device manufactured or distributed by us. Our failure
to comply with applicable  requirements could lead to an enforcement action that
may have an adverse effect on our financial condition and results of operations.

         Unanticipated changes in existing regulatory requirements,  our failure
to comply with such  requirements or adoption of new  requirements  could have a
material adverse effect on us.

         We  have   employees  to  expedite  the   preparation   and  filing  of
documentation  necessary for FDA clearances and approvals,  patent issuances and
licensing agreements.

         We cannot assure you that future clinical diagnostic products developed
by us or our collaborators  will not be required to be reviewed by FDA under the
more expensive and time consuming pre-market approval process.

         CLINICAL LABORATORY REGULATIONS

         The clinical  laboratory industry is subject to significant federal and
state  regulation,  including  inspections and audits by governmental  agencies.
Governmental  authorities  may impose fines or criminal  penalties or take other
actions  to  enforce  laws  and  regulations,   including  revoking  a  clinical
laboratory's federal  certification to operate a clinical laboratory  operation.
Changes in regulation may increase the costs of performing  clinical  laboratory
tests, increase the administrative requirements of claims or decrease the amount
of reimbursement. Our Clinical Laboratory and (where applicable) patient service
centers  are  licensed  and  accredited  by the  appropriate  federal  and state
agencies.  CLIA  (The  Clinical  Laboratory  Improvement  Act of  1967,  and the
Clinical  Laboratory  Improvement  Amendments of 1988)  regulates  virtually all
clinical  laboratories  by  requiring  that  they be  certified  by the  federal
government   and  comply  with  various   operational,   personnel  and  quality
requirements  intended to ensure that their clinical laboratory testing services
are  accurate,  reliable and timely.  CLIA does not preempt  state laws that are
more stringent  than federal laws.  Many clinical  laboratories  must meet other
governmental  standards,   undergo  proficiency  testing,  and  are  subject  to
inspection.  Clinical  laboratory  certificates or licenses are also required by
various state and local laws.

         CLIA  places  all  tests  into one of three  categories  of  complexity
(waived,  moderate  complexity  and high  complexity)  and  establishes  varying
requirements  depending upon the complexity  category of the test  performed.  A
laboratory  that  performs  high  complexity  tests  must  meet  more  stringent
requirements  than a laboratory  that performs only moderate  complexity  tests,
while those that perform only waived tests may apply for a certificate of waiver
from most of the  requirements  of CLIA.  Our  facility is  certified to perform
highly  complex  tests.  In general,  the Secretary of Health and Human Services
("HHS")  regulations   require   laboratories  that  perform  high  or  moderate
complexity tests to implement  systems that ensure the accurate  performance and
reporting  of test  results,  establish  quality  control and quality  assurance
systems  ensure hiring of personnel  that meet  specified  standards,  engage in
proficiency testing by approved agencies and undergo biennial inspections.

         Clinical  laboratories  also  are  subject  to state  regulation.  CLIA
provides that a state may adopt  different or more  stringent  regulations  than
Federal  law,  and  permits  states  to apply  for  exemption  from  CLIA if HHS
determines that the state's laboratory laws are equivalent to, or more stringent
than,  CLIA. The State of New York's  clinical  laboratory  regulations  contain
provisions  that are more  stringent than Federal law, and New York has received
exemption from CLIA.  Therefore,  as long as New York maintains its  CLIA-exempt
status,  laboratories in New York, including our laboratory, are regulated under
New York law rather than CLIA.  Our  laboratory  is licensed in New York and has
continuing programs to ensure that its operations meet all applicable regulatory
requirements.

         The  sanction  for  failure  to comply  with these  regulations  may be
suspension,  revocation,  or  limitation  of  a  laboratory's  CLIA  certificate
necessary to conduct  business,  significant fines and criminal  penalties.  The
loss of, or adverse  action  against,  a license,  the  imposition of a fine, or
future changes in Federal,  state and local  laboratory laws and regulations (or
in the  interpretation  of current laws and  regulations)  could have a material
adverse effect on our business.

         CLINICAL LABORATORY REIMBURSEMENT

         Billing and reimbursement for clinical laboratory testing is subject to
significant and complex federal and state  regulation.  Penalties for violations
of laws relating to billing  federal  healthcare  programs and for violations of
federal  fraud and abuse laws  include:  (1)  exclusion  from  participation  in
Medicare/Medicaid programs; (2) asset forfeitures; (3)

                                       16
<PAGE>

civil and criminal  fines and penalties;  and (4) the loss of various  licenses,
certificates and  authorizations  necessary to operate some or all of a clinical
laboratory's business. The Company is not aware of any material violations.

         The health care industry has been undergoing significant change because
third-party  payers, such as Medicare (serving primarily patients 65 and older),
Medicaid serving primarily indigent patients,  health maintenance  organizations
and  commercial  insurers,  have  increased  their  efforts to control the cost,
utilization  and  delivery  of health care  services.  To address the problem of
increasing  health care costs,  legislation has been proposed or enacted at both
the Federal and state  levels to  regulate  health care  delivery in general and
clinical  laboratories in particular.  Additional health care reform efforts are
likely to be proposed in the future.  In particular,  we believe that reductions
in reimbursement for Medicare services will continue to be implemented from time
to time.  Reductions in the  reimbursement  rates of other  third-party  payers,
commercial insurer and health  maintenance  organizations are likely to occur as
well. We cannot  predict the effect that health care reform,  if enacted,  would
have on our  business,  and there can be no  assurance  that  such  reforms,  if
enacted,  would  not  have  a  material  adverse  effect  on  our  business  and
operations.

         Containment of health care costs, including  reimbursement for clinical
laboratory services, has been a focus of ongoing governmental activity. In 1984,
Congress established the Medicare fee schedule for clinical laboratory services,
which is applicable to patients  covered under Part B of the Medicare program as
well as patients receiving  Medicaid.  Clinical  laboratories must bill Medicare
directly  for the  services  provided  to  Medicare  beneficiaries  and may only
collect the amounts permitted under this fee schedule. Reimbursement to clinical
laboratories  under the Medicare Fee Schedule has been steadily  declining since
its inception.  Furthermore, Medicare has mandated use of the Physicians Current
Procedural  Terminology  ("CPT")  for coding of  laboratory  services  which has
altered  the way we bill  these  programs  for  some  of our  services,  thereby
reducing the reimbursement that we receive.

         In March 1996, HCFA (now, the Center for Medicare and Medicaid Services
or CMS) implemented changes in the policies used to administer Medicare payments
to clinical  laboratories  for the most  frequently  performed  automated  blood
chemistry  profiles.  Among other things,  the changes  established a consistent
standard nationwide for the content of the automated chemistry profiles. Another
change  requires  laboratories  performing  certain  automated  blood  chemistry
profiles to obtain and provide  documentation of the medical  necessity of tests
included in the profiles for each Medicare beneficiary. Reimbursements have been
reduced as a result of this change.  Because a significant  portion of our costs
is fixed,  these  Medicare  reimbursement  reductions  and changes have a direct
adverse effect on our net earnings and cash flows.

         Future  changes  in  federal,  state and local  regulations  (or in the
interpretation of current regulations) affecting governmental  reimbursement for
clinical  laboratory  testing  could  have  a  material  adverse  effect  on our
business. We cannot predict,  however, whether and what type of legislation will
be enacted into law. In addition,  reimbursement disapprovals by the third party
payers, commercial insures and health maintenance  organizations,  reductions or
delays in the establishment of reimbursement  rates, and carrier  limitations on
the insurance  coverage of the Company's services or the use of the Company as a
service provider could have a negative effect on the Company's future revenues.

         ANTI FRAUD AND ABUSE LAWS

         Existing Federal laws governing  Medicare,  as well as state laws, also
regulate  certain  aspects of the  relationship  between  healthcare  providers,
including  clinical  laboratories and their referral sources such as physicians,
hospitals  and other  laboratories.  One  provision of these laws,  known as the
"Anti-Kickback Law," contains extremely broad  proscriptions.  Violation of this
provision  may  result in  criminal  penalties,  exclusion  from  Medicare,  and
significant  civil monetary  penalties.  Under another Federal law, known as the
"Stark" law or "self-referral prohibition," physicians who have an investment or
compensation relationship with an entity furnishing clinical laboratory services
(including  anatomic pathology and clinical chemistry services) may not, subject
to certain  exceptions,  refer clinical laboratory testing for Medicare patients
to that entity. Similarly, laboratories may not bill Medicare or Medicaid or any
other party for services furnished pursuant to a prohibited referral.  Violation
of these  provisions  may result in  disallowance  of Medicare  for the affected
testing  services,  as well as the imposition of civil monetary  penalties.  New
York State also has laws similar to the Federal Stark and Anti-Kickback laws.

         The  Federal  Stark  laws,  and New York  State law,  have also  placed
restrictions  on the supplies and other items that  laboratories  may provide to
their clients.  These laws specify that  laboratories  may only provide  clients
with  items or  devices  that are used  solely to  collect,  transport  or store
specimens for the laboratory or to communicate  results or tests.  Items such as
biopsy needles,  snares and reusable  needles are  specifically  prohibited from
being  supplied  by  laboratories  to their  clients.  These  laws  represent  a
significant  deviation from practices that  previously  occurred  throughout the
industry.  The Company has put in place  procedures  to ensure  compliance  with
these laws and  restrictions  and believes that it is in  compliance  with these
laws.

                                       17
<PAGE>

         In  February  1997,  the OIG  released  a  model  compliance  plan  for
laboratories.  One key aspect of the model compliance plan is an emphasis on the
responsibilities  of laboratories to notify physicians that Medicare covers only
medically  necessary services.  These  requirements,  and their likely effect on
physician test ordering  habits,  focus on chemistry tests,  especially  routine
tests,  rather than on anatomic pathology  services or the non-automated  tests,
which make up the majority of the  Company's  business  measured in terms of net
revenues.  Nevertheless, they potentially could affect physicians' test ordering
habits  more  broadly.  The  Company  is unable to predict  whether,  or to what
extent,  these  developments  may  have  an  impact  or the  utilization  of the
Company's services.

         The Company seeks to structure its  arrangements  with  physicians  and
other  customers to be in  compliance  with the  Anti-Kickback,  Stark and state
laws, and to keep up-to-date on  developments  concerning  their  application by
various means,  including consultation with legal counsel. In addition, in order
to address these various  Federal and state laws,  the Company has developed its
own Corporate Compliance Program based upon the OIG model program. The Company's
Program focuses on establishing clear standards,  training and monitoring of the
Company's  billing and coding practices.  Furthermore,  as part of this Program,
the Company's Corporate  Compliance Committee meets on a regular basis to review
various  operations and  relationships  as well as to adopt policies  addressing
these issues.

         However,  the Company is unable to predict how the laws described above
will  be  applied  in the  future,  and no  assurances  can be  given  that  its
arrangements or processes will not become subject to scrutiny under these laws.

         CONFIDENTIALITY OF HEALTH INFORMATION

         The  Health  Insurance  Portability  and  Accountability  Act  of  1996
("HIPAA")   was  signed   into  law  on  August  21,   1996,   and  it  includes
"administrative   simplification"  provisions  designed  to  standardize  common
electronic  transactions  in health care and to protect the security and privacy
of health  information.  Congress' purpose in promulgating HIPAA was to increase
the efficiency of health care transactions  while, at the same time,  protecting
the confidentiality of patient information.  Final regulations have been adopted
for  electronic  transaction,  privacy and security  standards.  Further,  final
regulations  adopting a national  employer  identifier  to be used in electronic
health care transactions  have been finalized.  These provisions have very broad
applicability  and they  specifically  apply to  health  care  providers,  which
include physicians and clinical laboratories.

         The electronic  transaction standards regulations create guidelines for
certain  common  health  care  transactions.   With  certain  exceptions,  these
standards require that when we conduct certain transactions  electronically with
another provider, clearinghouse or health plan we must comply with the standards
set forth in the regulations.  The regulations  establish  standard data content
and format for  submitting  electronic  claims and other  administrative  health
transactions.  All  health  care  providers  will be able to use the  electronic
format to bill for their  services  and all health plans and  providers  will be
required to accept standard electronic claims,  referrals,  authorizations,  and
other  transactions.  The  Company  believes  it is  in  compliance  with  these
standards.  Despite  the initial  costs,  the use of uniform  standards  for all
electronic  transactions  could lead to greater  efficiency in processing claims
and in handling health care information.

         The privacy  regulations,  which went into effect in April 2003, create
specific requirements for the use and disclosure of protected health information
("PHI").  We are required to maintain  numerous policies and procedures in order
to comply with these requirements.  Furthermore,  we need to continuously ensure
that there  mechanisms to safeguard the PHI,  which is used or maintained in any
format  (e.g.,  oral,  written,  or  electronic).  Failure to comply  with these
requirements can result in criminal and civil penalties.

         The security  regulations,  which were  finalized in February  2003 and
went into effect April 2005, require us to ensure the confidentiality, integrity
and availability of all electronic protected health information ("EPHI") that we
create, receive,  maintain, or transmit. We have some flexibility to fashion our
own security measures to accomplish these goals,  but, in general,  the starting
point is to  determine  what  security  measures we need to take.  The  security
regulations  strongly  emphasize  that we must  conduct an accurate and thorough
assessment of the potential risks and  vulnerabilities  of the  confidentiality,
integrity  and  availability  of our EPHI and then  document our response to the
various security  regulations on the basis of that  assessment.  We will also be
required to create  additional  policies and  procedures in order to comply with
these requirements.

         Complying with the electronic  transaction,  privacy and security rules
will require  significant  effort and expense for  virtually  all entities  that
conduct  health  care  transactions  electronically  and handle  patient  health
information.  We have already  implemented almost all of the requirements of the
privacy and electronic transactions standards and will now focus on the security
regulations;  however,  at this  time,  because  we have not yet  completed  the
required  security risk assessment,  we are unable to estimate the total cost or
impact of the regulations.

                                       18
<PAGE>

         MEDICAL REGULATED WASTE

         We are subject to licensing and  regulation  under  federal,  state and
local  laws  relating  to  the  handling  and  disposal  of  medical  specimens,
infectious  and  hazardous  waste,  as  well  as to the  safety  and  health  of
laboratory employees. All our laboratories are required to operate in accordance
with  applicable  federal and state laws and  regulations  relating to biohazard
disposal of all facilities  specimens and we use outside vendors to dispose such
specimens. Although we believe that we comply in all respects with such federal,
state and local laws,  our failure to comply with those laws could subject us to
denial of the right to conduct business,  fines, criminal penalties and/or other
enforcement actions.

         OCCUPATIONAL SAFETY

         In addition to its comprehensive regulation of safety in the workplace,
the  Federal  Occupational  Safety  and  Health   Administration   ("OSHA")  has
established extensive  requirements relating to workplace safety for health care
employers,  including  clinical  laboratories,  whose  workers may be exposed to
blood-borne  pathogens such as HIV and the hepatitis B virus. These regulations,
among other things,  require work  practice  controls,  protective  clothing and
equipment, training, medical follow-up, vaccinations and other measures designed
to minimize exposure to, and transmission of, blood-borne pathogens. The Federal
Drug Enforcement  Administration  regulates the use of controlled  substances in
testing  for drugs of abuse.  We are also  subject  to OSHA's  requirement  that
employers  using  hazardous  chemicals  communicate  the  properties and hazards
presented  by those  chemicals  to their  employees.  We believe  that we are in
compliance  with  these OSHA  requirements.  Our  failure  to comply  with those
regulations and  requirements  could subject us to tort liability,  civil fines,
criminal penalties and/or other enforcement actions.


         OTHER REGULATION

         Our  business is and will  continue to be subject to  regulation  under
various state and federal  environmental,  safety and health laws, including the
Occupational Safety and Health Act, the Resource  Conservation and Recovery Act,
and the  Atomic  Energy  Act or their  state law  analogs.  These and other laws
govern our use,  handling  and  disposal  of various  biological,  chemical  and
radioactive  substances  used in our  operations  and  wastes  generated  by our
operations.  We are required to possess licenses under, or are otherwise subject
to federal and state  regulations  pertaining  to, the  handling and disposal of
medical specimens, infectious and hazardous waste and radioactive materials.

         We believe that we are in  compliance  with  applicable  environmental,
safety and health laws and that our  continual  compliance  with these laws will
not have a material adverse effect on our business.  All of our laboratories are
operated in accordance  with  applicable  federal and state laws and regulations
relating to hazardous  substances and wastes,  and we use qualified  third-party
vendors to dispose of biological specimens and other hazardous wastes.  Although
we believe that we comply in all  respects  with such  federal,  state and local
laws,  our failure to comply  with those laws could  subject us to denial of the
right  to  conduct  business,  civil  fines,  criminal  penalties  and/or  other
enforcement  actions.  Environmental  contamination  resulting  from  spills  or
disposal of hazardous substances generated by our operations,  even if caused by
a  third-party  contractor  or  occurring at a remote  location  could result in
material liability.

         MANUFACTURING AND FACILITIES

         Most of the manufacturing  and scientific  efforts for our research and
development  segment and  clinical  laboratory  segment take place at our leased
43,000  square feet  facility in  Farmingdale,  New York.  We have a  completely
integrated  laboratory  and  manufacturing   facility,   with  special  handling
capabilities and clean rooms suitable for our operations.

         We also contract with qualified third-party  contractors to manufacture
our products in cases where we deem it appropriate,  for example, when it is not
cost-effective  to produce a product  ourselves or where we seek to leverage the
expertise of another manufacturer in a certain area.

         EMPLOYEES

         As of July  31,  2005,  we  employed  292  full-time  and 50  part-time
employees. Of the full-time employees, 59 were engaged in research, development,
manufacturing, administrative support and marketing of research products and 233
at the clinical  reference  laboratories.  Our  scientific  staff,  including 23
individuals  with post doctorate  degrees,  possesses a wide range of experience
and expertise in the areas of recombinant DNA, nucleic acid chemistry,

                                       19
<PAGE>

molecular  biology and  immunology.  We believe that the  relationships  we have
established with our employees are good.

         INFORMATION SYSTEMS

         Information  systems are used  extensively  in virtually all aspects of
our  clinical  laboratory  business,   including  laboratory  testing,  billing,
customer  service,  logistics,  and  management  of medical  data.  Our  success
depends,  in  part,  on  the  continued  and  uninterrupted  performance  of our
information technology systems. Computer systems are vulnerable to damage from a
variety of sources, including  telecommunications or network failures, malicious
human acts and natural disasters.  Moreover,  despite network security measures,
some of our  servers  are  potentially  vulnerable  to  physical  or  electronic
break-ins,  computer  viruses  and  similar  disruptive  problems.  Despite  the
precautionary measures that we have taken to prevent unanticipated problems that
could affect our information  technology  systems,  sustained or repeated system
failures that interrupt our ability to process test orders, deliver test results
or perform tests in a timely manner could  adversely  affect our  reputation and
result in a loss of customers and net revenues.

         QUALITY ASSURANCE

         We consider the quality of our clinical  reference  laboratory tests to
be of critical  importance,  and,  therefore,  we  established  a  comprehensive
quality  assurance  program  designed  to help assure  accurate  and timely test
results.  In addition to the compulsory  external  inspections  and  proficiency
programs  demanded by the Medicare  program and other regulatory  agencies,  our
clinical  laboratory  has in place  systems to  emphasize  and  monitor  quality
assurance.

         In  addition  to  our  own  internal  quality  control  programs,   our
laboratory  participates  in numerous  externally  administered,  blind  quality
surveillance  programs,  including on-site evaluation by the College of American
Pathologies  ("CAP")  proficiency  testing program and the New York State survey
program.  The blind programs  supplement all other quality assurance  procedures
and give our  management  the  opportunity  to review our  technical and service
performance from the client's perspective.

         The CAP accreditation  program involves both on-site inspections of our
laboratory and  participation in the CAP's  proficiency  testing program for all
categories  in which our  laboratory  is  accredited  by the CAP.  The CAP is an
independent nongovernmental organization of board certified pathologists,  which
offers an accreditation program to which laboratories can voluntarily subscribe.
A  laboratory's  receipt of  accreditation  by the CAP  satisfies  the  Medicare
requirement for participation in proficiency testing programs administered by an
external  source.  Our  clinical  laboratory   facilities  are  accredited  with
distinction, by the CAP.

         AVAILABLE INFORMATION

         We make available free of charge on or through our Internet website our
annual reports on Form 10-K,  quarterly reports on Form 10-Q, current reports on
Form 8-K,  and all  amendments  to those  reports,  if any,  filed or  furnished
pursuant to Section  13(a) or 15(d) of the  Securities  Exchange  Act of 1934 as
soon as  reasonably  practicable  after they are  electronically  filed with, or
furnished  to, the  Securities  and Exchange  Commission.  Our Internet  website
address  is  www.enzo.com  and  you  can  find  these  reports  under  "Investor
Information  - SEC  Filings."  The SEC also  maintains  an  Internet  site  that
contains  reports,  proxy and  information  statements,  and  other  information
regarding issuers that file  electronically  with the SEC, which may be accessed
at  http://www.sec.gov.  The public may read and copy any materials we file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street,  NW, Washington,
DC 20549. To obtain  information on the operation of the Public  Reference Room,
you may call the SEC at 1-800-SEC-0330.

         FORWARD - LOOKING AND CAUTIONARY STATEMENTS

         This Annual Report contains "forward-looking  statements" as defined in
the Private Securities  Litigation Reform Act of 1995. All statements other than
statements of historical fact,  including,  without  limitation,  the statements
under  "Management's  Discussion and Analysis of Financial Condition and Results
of Operations" are "forward-looking  statements." Forward-looking statements may
include the words  "believes,"  "expects,"  "plans,"  "intends,"  "anticipates,"
"continues"  or other similar  expressions.  These  statements  are based on the
Company's  current  expectations of future events and are subject to a number of
risks and  uncertainties  that may cause the Company's  actual results to differ
materially from those described in the forward-looking statements. Should one or
more  of  these  risks  or  uncertainties  materialize,   or  should  underlying
assumptions  prove  incorrect,  actual  results may vary  materially  from those
anticipated,  estimated or projected.  These factors and uncertainties  include,
but are not limited to:

         (a)  Heightened  competition,  including the  intensification  of price
              competition.

                                       20
<PAGE>

         (b)  Impact  of  changes  in  payer  mix,   including  the  shift  from
              traditional, fee-for-service medicine to managed-cost health care.

         (c)  Adverse  actions  by  governmental  or other  third-party  payers,
              including  unilateral  reduction of fee  schedules  payable to the
              Company.

         (d)  The  impact  upon the  Company's  collection  rates or  general or
              administrative  expenses  resulting from  compliance with Medicare
              administrative  policies including  specifically the HCFA's recent
              requirement that laboratories  performing  certain automated blood
              chemistry profiles obtain and provide documentation of the medical
              necessity  of tests  included in the  profiles  for each  Medicare
              beneficiary.

         (e)  Failure to obtain new  customers,  retain  existing  customers  or
              reduction  in tests  ordered or  specimens  submitted  by existing
              customers.

         (f)  Adverse results in significant litigation matters.

         (g)  Denial  of  certification  or  licensure  of any of the  Company's
              clinical  laboratories  under CLIA, by Medicare  programs or other
              Federal, state or local agencies.

         (h)  Adverse  publicity  and news  coverage  about the  Company  or the
              clinical laboratory industry.

         (i)  Inability to carry out marketing and sales plans.

         (j)  Loss or retirement of key executives.

         (k)  Impact of potential patent infringement by others or the Company.

         (l)  Inability  to obtain  patent  protection  or secure  and  maintain
              proprietary positions on its technology.

         (m)  Dependence on new  technologies  for our product  development  and
              dependence  on  product  candidates  which are in early  stages of
              development.

         (n)  Clinical  trials  for our  products  will be  expensive  and their
              outcome is uncertain. We incur substantial expenses that might not
              result in approvable or viable products.

         (o)  If additional capital is not available,  we may need to curtail or
              cease operations.

         (p)  Fluctuations in quarterly  results  resulting from uneven customer
              order flow.

         These and other risks and uncertainties are disclosed from time to time
in the Company's  filings with the  Securities and Exchange  Commission,  in the
Company's  press releases and in oral statements made by or with the approval of
authorized   personnel.   The  Company  assumes  no  obligation  to  update  any
forward-looking  statements as a result of new  information  or future events or
developments.

         Item 2.  PROPERTIES

         The following are the principal facilities of the Company:

<TABLE>
<CAPTION>
                                                                         Approximate                   Lease expiration
         Location                 Principal Operations                   Area (sq. ft.)  Base Rent     Date
         --------                 --------------------                   --------------  ---------     ----
         <S>                      <C>                                    <C>             <C>           <C>
         60 Executive Blvd        Corporate headquarters, clinical       43,000          $1,161,000    March 31, 2017
         Farmingdale, N.Y.        laboratory, research and
                                  manufacturing facilities
                                  (See note 6 of Notes to
                                  Consolidated Financial Statements)

         527 Madison Ave          Executive office                       6,400           $367,000      December 31, 2008
         New York, NY
</TABLE>

                                       21
<PAGE>

         In March 2005,  the  Company  amended  and  extended  the lease for its
Farmingdale laboratory and headquarters for a period of 12 years. We believe the
current facilities are suitable and adequate for the Company's current operating
needs for both its clinical  laboratories and research and development segments,
and  that  the  production  capacity  in  the  Farmingdale   facility  is  being
substantially utilized.

         Item 3.  LEGAL PROCEEDINGS

         On October 14, 2004, the Company as plaintiff  finalized and executed a
settlement  and license  agreement  with Digene  Corporation  to settle a patent
litigation lawsuit (the "Digene  agreement").  Under the terms of the agreement,
the Company  received  an initial  payment of $16.0  million,  would earn in the
first "annual period"  (October 1, 2004 to September 30, 2005) a minimum royalty
payment of $2.5 million,  and receive a minimum  royalty of $3.5 million in each
of the next four annual  periods.  In addition,  the agreement  provides for the
Company  to  receive  quarterly  running  royalties  on the net  sales of Digene
products  subject to the license until the expiration of the patent on April 24,
2018. These quarterly  running  royalties will be fully  creditable  against the
minimum  royalty  payments  due in the first  five years of the  agreement.  The
balance,  if any, of the minimum royalty payment will be recognized in the final
quarter  of the  applicable  annual  royalty  period.  As a result of the Digene
agreement,  the Company recorded a gain on patent litigation settlement of $14.0
million in the first quarter of fiscal 2005, and deferred $2 million which would
be earned  from net sales of the  Company's  licensed  products  covered  by the
agreement  during the first annual  period.  As of July 31, 2005, the balance of
the deferred revenue from the settlement was $359,400.

         In October 2002,  the Company filed suit in the United States  District
Court of the  Southern  District  of New York  against  Amersham  plc,  Amersham
Biosciences, Perkin Elmer, Inc., Perkin Elmer Life Sciences, Inc., Sigma-Aldrich
Corporation,  Sigma Chemical Company,  Inc.,  Molecular Probes,  Inc. and Orchid
Biosciences,  Inc. In January 2003, the Company amended its complaint to include
defendants Sigma Aldrich Co. and Sigma Aldrich, Inc. The counts set forth in the
suit are for breach of contract;  patent infringement;  unfair competition under
state law; unfair  competition  under federal law;  tortious  interference  with
business  relations;  and fraud in the  inducement  of contract.  The  complaint
alleges that these counts arise out of the defendants' breach of distributorship
agreements  with  the  Company  concerning   labeled  nucleotide   products  and
technology,  and the defendants'  infringement of patents  covering the same. In
April,  2003, the Court directed that individual  complaints be filed separately
against each defendant.  The defendants have answered the individual  complaints
and asserted a variety of affirmative defenses and counterclaims. Fact discovery
is ongoing.  The Court  conducted a claim  construction  hearing from July 5-11,
2005. Closing arguments on claim construction issues were conducted on September
30, 2005.  There can be no assurance that the Company will be successful in this
litigation. However, even if the Company is not successful,  management does not
believe that there will be a significant adverse monetary impact to the Company.
The Company recorded revenue from only Perkin Elmer during the fiscal year ended
July 31, 2005.

         On October  28,  2003,  the  Company and Enzo Life  Sciences,  Inc.,  a
subsidiary of the Company, filed suit in the United States District Court of the
Eastern District of New York against Affymetrix, Inc. The Complaint alleges that
Affymetrix improperly transferred or distributed  substantial business assets of
the Company to third parties,  including  portions of the Company's  proprietary
technology, reagent systems, detection reagents and other intellectual property.
The  Complaint  also  charges  that  Affymetrix  failed to account  for  certain
shortfalls in sales of the Company's  products,  and that Affymetrix  improperly
induced   collaborators   and  customers  to  use  the  Company's   products  in
unauthorized  fields or otherwise in violation of the  agreement.  The Complaint
seeks full  compensation  from  Affymetrix  to the Company  for its  substantial
damages,  in addition to injunctive and  declaratory  relief to prohibit,  among
other things,  Affymetrix's  unauthorized use, development,  manufacture,  sale,
distribution  and  transfer  of  the  Company's  products,   technology,  and/or
intellectual   property,  as  well  as  to  prohibit  Affymetrix  from  inducing
collaborators,  joint venture partners, customers and other third parties to use
the  Company's  products  in  violation  of the terms of the  agreement  and the
Company's rights.  Subsequent to the filing of the Complaint against Affymetrix,
Inc. referenced above, on or about November 10, 2003, Affymetrix, Inc. filed its
own complaint against the Company and its subsidiary,  Enzo Life Sciences, Inc.,
in the United  States  District  Court for the  Southern  District  of New York,
seeking among other things,  declaratory  relief that Affymetrix,  Inc., has not
breached the parties'  agreement,  that it has not  infringed  certain of Enzo's
Patents,  and that  certain  of  Enzo's  patents  are  invalid.  The  Affymetrix
complaint  also seeks  damages for  alleged  breach of the  parties'  agreement,
unfair  competition,  and tortuous  interference,  as well as certain injunction
relief to prevent  alleged unfair  competition  and tortuous  interference.  The
Company does not believe that the Affymetrix complaint has any merit and intends
to defend  vigorously.  Affymetrix also moved to transfer venue of Enzo's action
to the Southern District of New York, where other actions commenced by Enzo were
pending as well as Affymetrix's  subsequently filed action. On January 30, 2004,
Affymetrix's  motion  to  transfer  was  granted.   Accordingly,  the  Enzo  and
Affymetrix  actions are now both pending in the  Southern  District of New York.
Initial  pleadings have been  completed and discovery has  commenced.  The Court
conducted a claim construction hearing from July 5 - 11, 2005. Closing arguments
on claim  construction  issues were conducted on September 30, 2005. The Company
did not record any revenue  from  Affymetrix  during the fiscal years ended July
31, 2005 and 2004.

                                       22
<PAGE>

         On June 2, 2004 Roche Diagnostic GmbH and Roche Molecular Systems, Inc.
(collectively  "Roche")  filed suit in the U.S.  District  Court of the Southern
District of New York against Enzo  Biochem,  Inc. and Enzo Life  Sciences,  Inc.
(collectively  "Enzo").  The  complaint  was filed after Enzo  rejected  Roche's
latest cash offer to settle Enzo's  claims for,  INTER ALIA,  alleged  breach of
contract and  misappropriation of Enzo's assets. The complaint seeks declaratory
judgment (i) of patent  invalidity with respect to Enzo's  4,994,373 patent (the
"'373 patent"),  (ii) of no breach by Roche of its 1994  Distribution and Supply
Agreement with Enzo (the "1994  Agreement"),  (iii) that non-payment by Roche to
Enzo for certain  sales of Roche  products  does not  constitute a breach of the
1994  Agreement,  and (iv)  that  Enzo's  claims  of  ownership  to  proprietary
inventions,  technology and products  developed by Roche are without  basis.  In
addition,  the suit claims tortious  interference  and unfair  competition.  The
Company does not believe that the  complaint has merit and intends to vigorously
respond to such action with appropriate  affirmative defenses and counterclaims.
Enzo filed an Answer and  Counterclaims  on November 3, 2004  alleging  multiple
breaches of the 1994  Agreement and related  infringement  of Enzo's 373 patent.
Discovery has commenced.  The Court conducted a claim construction  hearing from
July 5-11, 2005. Closing arguments on claim  construction  issues were conducted
on September 30, 2005.  The Company did not record any revenue from Roche during
the fiscal year ended July 31, 2005.

         In June 1999,  the  Company  filed suit in the United  States  District
Court for the  Southern  District of New York  against  Gen-Probe  Incorporated,
Chugai Pharma U.S.A., Inc., Chugai Pharmaceutical Co., Ltd.,  bioMerieux,  Inc.,
bioMerieux SA, and Becton  Dickinson and Company,  charging them with infringing
the Company's U.S. Patent 4,900,659,  which concerns probes for the detection of
the bacteria that causes  gonorrhea.  On January 26, 2001, the court granted the
defendants' motion for summary judgment that the Company's patent is invalid. On
July 15,  2002,  the Court of  Appeals  for the  Federal  Circuit  reversed  the
judgment of invalidity  and remanded the case to the district  court for further
proceedings. In March 2003, settlements were reached with bioMerieux and Chugai;
the settlements did not have a material monetary impact on the Company.  In July
2004,  the  district  court  again  granted  another  motion  by  the  remaining
defendants  (Gen-Probe  and Becton  Dickinson)  that all claims of the Company's
patent are invalid.  The Company filed an appeal of that judgment.  On September
30, 2005, the Court of Appeals  affirmed the judgment of invalidity.  Management
does not believe that there will be a significant adverse monetary impact to the
Company.

         On March 6, 2002,  the  Company  was named,  along with  certain of its
officers and directors among others, in a complaint  entitled Lawrence F. Glaser
and Maureen Glaser,  individually and on behalf of Kimberly,  Erin,  Hannah, and
Benjamin Glaser v. Hyman Gross,  Barry Weiner,  Enzo  Biochemical  Inc.,  Elazar
Rabbani,  Shahram Rabbani, John Delucca, Dena Engelhardt,  Richard Keating, Doug
Yates, and Does I-50, Case No. CA-02-1242-A,  in the U.S. District Court for the
Eastern  District of Virginia.  This  complaint  was filed by an investor in the
Company who had filed for bankruptcy  protection  and his family.  The complaint
alleged securities fraud, breach of fiduciary duty,  conspiracy,  and common law
fraud and sought in excess of $150 million in damages.  On August 22, 2002,  the
complaint  was  voluntarily  dismissed;  however  a  new  substantially  similar
complaint was filed at the same time.  On October 21, 2002,  the Company and the
other  defendants  filed a motion to dismiss the  complaint,  and the plaintiffs
responded by amending the complaint and dropping their claims against defendants
Keating and Yates.  On November 18, 2002,  the Company and the other  defendants
again moved to dismiss the Amended Complaint. On July 16, 2003, the Court issued
a Memorandum  Opinion  dismissing  the Amended  Complaint  in its entirety  with
prejudice.  Plaintiffs thereafter moved for reconsideration but the Court denied
the motion on September 8, 2003.  Plaintiffs thereafter appealed the decision to
the United  States Court of Appeals for the Fourth  Circuit.  On March 21, 2005,
the Fourth  Circuit  affirmed the lower  Court's  prior  dismissal of all claims
asserted in the action,  with the sole  exception  of a portion of the claim for
common law fraud and remanded that  remaining  portion of the action to the U.S.
District Court for the Eastern District of Virginia. On May 20, 2005, defendants
again moved the District Court to dismiss the sole remaining claim before it. On
July 14, 2005, the District Court granted defendants' renewed motion to dismiss.
On July 29, 2005, Plaintiffs moved to amend their Complaint for reconsideration.
On August 19,  2005,  the Court denied  Plaintiffs'  motion to amend and entered
final judgment  dismissing the complaint.  Thereafter,  Plaintiffs  appealed the
order and judgment to the Fourth Circuit.  That appeal is presently pending. The
Company  continues to believe that the  complaint  has no merit  whatsoever  and
intends to continue to defend the action vigorously.

         On June 7, 2004, the Company and its wholly-owned subsidiary, Enzo Life
Sciences,  Inc., filed suit in the United States District Court for the District
of Connecticut  against  Applera  Corporation  and its  wholly-owned  subsidiary
Tropix, Inc. The complaint alleges  infringement of six patents (relating to DNA
sequencing systems,  labelled nucleotide products,  and other technology).  Yale
University  is the owner of four of the patents and the Company is the exclusive
licensee.  Accordingly,  Yale is also a plaintiff in the lawsuit.  Yale and Enzo
are aligned in protecting the validity and  enforceability of the patents.  Enzo
Life  Sciences is the owner of the remaining  two patents.  The complaint  seeks
permanent   injunction  and  damages   (including   treble  damages  for  wilful
infringement).  Defendants  answered the complaint on July 29, 2004.  The answer
pleads  affirmative  defences  of  invalidity,  estoppel  and laches and asserts
counterclaims of  non-infringement  and invalidity.  Fact discovery is currently
scheduled to close on February 28, 2006.  Dispositive  motions are currently due
on March 27, 2006.  The trial date is currently  scheduled  for October 1, 2006.
There  can  be no  assurance  that  the  Company  will  be  successful  in  this
litigation. Even if the Company is not successful,

                                       23
<PAGE>

management  does not believe that there will be a significant  adverse  monetary
impact on the Company. The Company did not record any revenue from either of the
above during the fiscal years July 31, 2005 and 2004.

         Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were brought to a vote of the Company's  stockholders in the
fourth fiscal quarter ended July 31, 2005.

                                       24
<PAGE>

         PART II

         Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS

         The  common  stock of the  Company  is  traded  on the New  York  Stock
Exchange (Symbol:ENZ).  The following table sets forth the high and low price of
the Company's Common Stock for the periods indicated as reported on the New York
Stock Exchange.
                                                               HIGH      LOW

         2004 Fiscal Year (August 1, 2003 to July 31, 2004):

         1st Quarter                                          $22.45    $17.35
         2nd Quarter                                          $20.95    $15.85
         3rd Quarter                                          $19.88    $14.20
         4th Quarter                                          $15.69    $12.57

         2005 Fiscal Year (August 1, 2004 to July 31, 2005):

         1st Quarter                                          $17.69    $11.15
         2nd Quarter                                          $20.40    $17.27
         3rd Quarter                                          $19.27    $13.62
         4th Quarter                                          $18.24    $14.08

         As  of  October  10,  2005,   the  Company  had   approximately   1,164
stockholders of record of its Common Stock.

         The  Company  has not paid a cash  dividend  on its  Common  Stock  and
intends to  continue a policy of  retaining  earnings  to finance  and build its
operations.  Accordingly,  the Company does not  anticipate  the payment of cash
dividends to holders of Common Stock in the  foreseeable  future.  During fiscal
2005, the Company's  board of directors  declared a 5% stock dividend on October
5, 2004 payable  November 15, 2004 to  shareholders  of record as of October 25,
2004. The fiscal 2004 per share data was adjusted  retroactively  to reflect the
stock dividend  declared on October 5, 2004. In fiscal 2003, the Company's board
declared  a 5%  stock  dividend  on June  10,  2003  payable  July  14,  2003 to
shareholders  of record as of June 30,  2003.  The shares and per share data for
fiscal 2003 have been adjusted to  retroactively  reflect the stock  dividend in
fiscal 2003. The Company recorded a charge to accumulated deficit and offsetting
credits to both common stock and  additional  paid-in  capital of  approximately
$23,433,400 and $37,709,200 in fiscal 2005 and fiscal 2003, respectively,  which
reflects the fair value of the stock dividends on the dates of declaration

                                       25
<PAGE>



         Item 6.  SELECTED FINANCIAL DATA

         The  following  table,  which is derived from the audited  consolidated
financial  statements  of the Company  for the fiscal  years 2001  through  2005
should be read together  with the  discussion in  "Management's  Discussion  and
Analysis of Financial  Condition  and Results of  Operations"  and the Company's
consolidated  financial  statements  and  notes  to  those  statements  included
elsewhere in this Annual Report on Form 10-K.

<TABLE>
<CAPTION>
                                                                              For the fiscal year ended July 31,
OPERATING RESULTS                                                             (In 000's, except per share data)
                                                          --------------------------------------------------------------------------
                                                               2005            2004            2003            2002            2001
                                                               ----            ----            ----            ----            ----
         <S>                                              <C>             <C>             <C>             <C>             <C>
         Operating revenues                               $  43,403       $  41,644       $  52,767       $  54,015       $  52,266
         Gain on patent litigation settlement                14,000             - -             - -             - -             - -
         Interest income                                      1,523           1,152           1,355           1,350           3,003

         Income (loss) before income taxes                    5,217         (11,080)          5,725          10,340          12,231
         (Provision) benefit for income taxes                (2,213)          4,848          (1,881)         (3,417)         (5,418)
                                                          ---------       ---------       ---------       ---------       ---------
         Net income (loss)                                $   3,004       $  (6,232)      $   3,844       $   6,923           6,813
                                                          =========       =========       =========       =========       =========

         Basic net (loss) income per common share:        $    0.09       $    (.20)      $    0.12       $    0.22       $    0.22
                                                          =========       =========       =========       =========       =========
         Diluted net (loss) income per common share:      $    0.09       $    (.20)      $    0.12       $    0.21       $    0.21
                                                          =========       =========       =========       =========       =========

         Denominator for per share calculation:
              Basic                                          32,097          31,700          31,399          31,359          31,254
              Diluted                                        32,763          31,700          32,175          32,327          32,558

         FINANCIAL POSITION:
         Working capital                                  $  97,011       $  92,259       $  97,723       $  92,772       $  85,094
         Total assets                                       116,466         110,334       $ 115,878         109,291         102,931
         Long term obligations                                  150             300            - -             - -              - -
         Stockholders' equity                             $ 108,267       $ 104,166       $ 109,380         104,733       $  97,517
</TABLE>

         No cash dividends have been declared on the Company's common stock.

         Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS

         The  following  discussion  of our  financial  condition and results of
operations  should be read in  conjunction  with our  financial  statements  and
related notes. This discussion contains forward-looking  statements that involve
risks and  uncertainties.  Our actual results could differ materially from those
anticipated  in  these  forward-looking  statements.  See  "Forward-Looking  and
Cautionary Statements." Because of the foregoing factors, you should not rely on
past financial results as an indication of future  performance.  We believe that
period-to-period   comparisons  of  our  financial   results  to  date  are  not
necessarily meaningful and expect that our results of operations might fluctuate
from period to period in the future.

         Enzo Biochem, Inc. (the "Company" or "Enzo") is a leading life sciences
and  biotechnology  company focused on harnessing  genetic  processes to develop
research  tools,  diagnostics  and  therapeutics.  Enzo also  provides  clinical
laboratory  services to the medical  community.  In  addition,  our work in gene
analysis  has  led  to  our  development  of  significant   therapeutic  product
candidates,  several of which are currently in clinical trials,  and several are
in preclinical studies.

         The business  activities  of the Company are performed by the Company's
three  wholly  owned  subsidiaries.  These  activities  are:  (1)  research  and
development,  manufacturing  and marketing of biomedical  research  products and
tools through Enzo Life  Sciences and research and  development  of  therapeutic
products  through  Enzo  Therapeutics,  and  (2)  the  operation  of a  clinical
reference laboratory through Enzo Clinical Labs. For information relating to the
Company's business segments,  see Note 13 of the Notes to Consolidated Financial
Statements.

         The  Company's  source of  revenue  has been from the  direct  sales of
research products consisting of labeling and detection reagents for the genomics
and sequencing markets, as well as through non-exclusive distribution

                                       26
<PAGE>

agreements  with other  companies.  Another  source of revenue has been from the
clinical  laboratory  service market.  Payments for clinical  laboratory testing
services are made by the Medicare  program,  healthcare  insurers and  patients.
Fees billed to  patients,  Medicare,  and third  party  payers are billed on the
laboratory's  standard  gross fee schedule,  subject to any  limitations on fees
negotiated with the third party payers or with the ordering physicians on behalf
of their patients.

         The Company incurs additional costs as a result of our participation in
the Medicare  programs,  as billing and  reimbursement  for clinical  laboratory
testing is subject to considerable and complex federal  regulations.  Compliance
with applicable laws and regulations,  as well as internal  compliance  policies
and procedures, adds further complexity and costs to our operations.  Government
payers such as Medicare, as well as healthcare insurers have taken steps and may
continue  to take  steps to control  the costs,  utilizations  and  delivery  of
healthcare services,  including clinical laboratory  services.  Principally as a
result of  reimbursement  reductions  and  measures  adopted by the  Centers for
Medicare  &  Medicaid  Services,  or  CMS,  which  establishes   procedures  and
continuously  evaluates and implements  changes in the reimbursement  process to
control  utilization,  Despite the added cost and complexity of participating in
the Medicare  program,  we continue to  participate  because we believe that our
other business may depend, in part, on continued participation in Medicare since
certain ordering  physicians may want a single laboratory  capable of performing
all of their clinical  laboratory  testing services,  regardless of who pays for
such services.

         Information  systems are used  extensively  in virtually all aspects of
the  clinical  laboratory  operations,   including  testing,  billing,  customer
service,  logistics,  and  management of medical data. Our success  depends,  in
part,  on  the  continued  and  uninterrupted  performance  of  our  information
technology  systems.  Through  maintenance,  staffing,  and  investments  in our
information  technology system, we expect to reduce the risk associated with our
heavy reliance on these systems

         The  clinical  laboratory  is  subject  to  seasonal   fluctuations  in
operating results and cash flows. Typically,  testing volume declines during the
summer months,  year end holiday periods and other major holidays,  reducing net
revenues and operating cash flows. Testing volume is also subject to declines in
winter  months due to inclement  weather,  which varies in severity from year to
year.

         For the  fiscal  years  ended  July 31,  2005 and  2004,  respectively,
approximately  24% and 31%  percent of the  Company's  operating  revenues  were
derived from research product sales and  approximately  76% and 69% were derived
from clinical laboratory services.

         Research product revenue from Affymetrix represented  approximately 0%,
0% and  22% of  the  consolidated  revenues  in  fiscal  2005,  2004  and  2003,
respectively,  under a non-exclusive  distribution and supply agreement. At July
31, 2005 and 2004,  of the  Company's  net  accounts  receivable  no monies were
included  from this former  major  distributor.  Research  product  revenue from
Perkin-Elmer  represented  approximately  3%,  8%  and  4% of  the  consolidated
revenues in fiscal  2005,  2004 and 2003,  respectively,  under a  non-exclusive
distribution and supply agreement.  At July 31, 2005 and 2004,  approximately 0%
and 5%, respectively, of the Company's net accounts receivable relate to amounts
due from this  distributor.  Research product revenue from Amersham  represented
approximately  0%, 0% and 1% of the  consolidated  revenues in fiscal 2005, 2004
and 2003, respectively, under a terminated non-exclusive distribution and supply
agreement. At July 31, 2004 and 2003, 0% and 2%, respectively,  of the Company's
net  accounts  receivable  relate to amounts due from this  former  distributor.
Research product revenue from Roche  represented  approximately 0%, 8% and 6% of
the consolidated revenues in fiscal 2005, 2004 and 2003,  respectively,  under a
non-exclusive  distribution and supply agreement.  At July 31, 2005 and 2004, 0%
and 0% respectively of the Company's net accounts  receivable  relate to amounts
due from the this distributor.

         The  following  table   summarizes   research   product  revenues  from
non-exclusive  distribution agreements for the fiscal years ended July 31, 2005,
2004 and 2003:

<TABLE>
<CAPTION>
                                                % of Revenue                         % of Accounts Receivable
                                      2005               2004               2003               2005               2004
                                      ----               ----               ----               ----               ----
          <S>                          <C>                <C>                <C>                <C>                <C>
         Affymetrix                    0%                 0%                 22%                0%                 0%
         Perkin-Elmer                  3%                 8%                 4%                 0%                 5%
         Amersham                      0%                 0%                 1%                 0%                 0%
         Roche                         0%                 8%                 6%                 0%                 0%
</TABLE>

         On October 14, 2004, the Company as plaintiff  finalized and executed a
settlement  and license  agreement  with Digene  Corporation  to settle a patent
litigation lawsuit (the "Digene  agreement").  Under the terms of the agreement,
the Company  received  an initial  payment of $16.0  million,  would earn in the
first "annual period"  (October 1, 2004 to September 30, 2005) a minimum royalty
payment of $2.5 million,  and receive a minimum  royalty of $3.5 million in each
of the next four annual  periods.  In addition,  the agreement  provides for the
Company  to  receive  quarterly  running  royalties  on the net  sales of Digene
products  subject to the license until the expiration of the patent on April 24,
2018.

                                       27
<PAGE>

These quarterly running  royalties will be fully creditable  against the minimum
royalty payments due in the first five years of the agreement.  The balance,  if
any, of the minimum  royalty  payment will be recognized in the final quarter of
the applicable annual royalty period.

         LIQUIDITY AND CAPITAL RESOURCES

         At July 31, 2005,  our cash and cash  equivalents  of $77.0 million and
marketable  securities  of $6.7  million  together  totaled  $83.7  million,  an
increase of $12.0  million from July 31, 2004.  We had working  capital of $97.0
million at July 31, 2005 compared to $92.3 million at July 31, 2004. As a result
of the  Digene  agreement,  the  Company  recorded  a gain on patent  litigation
settlement of $14.0 million in the first quarter of fiscal 2005, and deferred $2
million which would be earned from net sales of the Company's  licensed products
covered by the agreement  during the first annual  period.  As of July 31, 2005,
the balance of the deferred revenue from the settlement was $359,400.  See Legal
Proceedings.

         Net cash provided by operating  activities  for the year ended July 31,
2005 was  approximately  $12.8 million as compared to net cash used by operating
activities of $5.6 million for the year ended July 31, 2004. The increase in net
cash  provided  by  operating  activities  in fiscal  2005 of $18.4  million was
primarily  due to fiscal  2005's net income,  which  includes  the gain from the
Digene  agreement,  and by the net change in  operating  assets and  liabilities
compared  to the prior  year,  which  includes  the  receipt  of the  income tax
receivable  amount  of $3.9  million.  In  fiscal  2005,  net cash  provided  by
investing  activities  increased  approximately  $13.2 million from fiscal 2004,
primarily  due to sales of  marketable  securities.  In  fiscal  2005,  net cash
provided by  financing  activities  decreased  approximately  $0.4  million from
fiscal 2004  primarily as a result of the decrease in proceeds from the exercise
of stock options.

         Net accounts  receivable of $13.4 million and $14.8 million represented
119  days  and 141  days of  operating  revenues  at July  31,  2005  and  2004,
respectively.  The change in net  accounts  receivable  is due to a decrease  in
accounts receivable at the clinical laboratory of approximately $0.6 million and
a decrease  of research  products  accounts  receivable  of  approximately  $0.8
million. The decrease in the clinical laboratory  receivable is primarily due to
improvements in the collection  process.  The decrease in the research  products
accounts   receivable  is  primarily  due  to  the  decrease  in  revenues  from
distributors  of research  products.  Net accounts  receivable from our clinical
laboratory  operations of $12.5 million and $13.1 million represented an average
of 143 days and 173 days of clinical  laboratory  services  revenues at July 31,
2005 and 2004, respectively.

         The Company has entered into various real estate and equipment  leases.
The real  estate  lease for the  Company's  Farmingdale  headquarters  is with a
related party. See Note 6 to the Consolidated Financial Statements for a further
description of these various leases.

         The  following  is a summary  of future  payments  under the  Company's
contractual obligations as of July 31, 2005:

<TABLE>
<CAPTION>
                                                                           PAYMENTS DUE BY PERIOD

                                                                 Less than
                                                    Total        1 year           1-3 years       4-5 years     Over 5 years
                                                    -----        ------           ---------       ---------     ------------
         <S>                                      <C>            <C>              <C>             <C>           <C>
         Real estate and equipment leases         $23,637,000    $2,601,000       $5,394,000      $4,664,000    $10,978,000
                                                  -----------    ----------       ----------      ----------    -----------
         Total contractual cash obligations       $23,637,000    $2,601,000       $5,394,000      $4,664,000    $10,978,000
                                                  ===========    ==========       ==========      ==========    ===========
</TABLE>

         We  believe  that our  current  cash  position  is  sufficient  for our
foreseeable  liquidity  and capital  resource  needs,  although  there can be no
assurance that future events will not alter such view.

         Management  is not aware of any  material  claims,  disputes or settled
matters concerning third-party  reimbursements that would have a material effect
on our financial statements.

                                       28
<PAGE>

         CRITICAL ACCOUNTING POLICIES

         GENERAL

         The Company's  discussion  and analysis of its financial  condition and
results of operations are based upon Enzo Biochem, Inc.  consolidated  financial
statements,  which have been prepared in accordance with  accounting  principles
generally  accepted in the United States.  The  preparation  of these  financial
statements  requires the Company to make estimates and judgments that affect the
reported amounts of assets, liabilities,  revenues and expenses; these estimates
and  judgments  also  affect  related   disclosure  of  contingent   assets  and
liabilities.  On an on-going basis,  we evaluate our estimates,  including those
related  to  contractual  allowance,   allowance  for  uncollectible   accounts,
intangible  assets  and  income  taxes.  The  Company  bases  its  estimates  on
experience and on various other  assumptions  that are believed to be reasonable
under  the  circumstances,  the  results  of which  form the  basis  for  making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
estimates under different assumptions or conditions.

         REVENUE RECOGNITION

         RESEARCH PRODUCT REVENUES

         Revenues   from   research   product   sales,   exclusive   of  certain
non-exclusive  distribution  agreements,  are  recognized  when the products are
shipped,  the  sales  price is  fixed  or  determinable  and  collectibility  is
reasonably  assured.   The  Company  has  certain   non-exclusive   distribution
agreements,  which provide for  consideration to be paid to the distributors for
the  manufacture of certain  products.  The Company  records such  consideration
provided to distributors under these non-exclusive  distribution agreements as a
reduction to research  product  revenues.  The revenue from these  non-exclusive
distribution  agreements  are  recognized  when  shipments  are  made  to  their
respective customers and reported to the Company.

         CLINICAL LABORATORY SERVICES

         Revenues from the clinical laboratory are recognized upon completion of
the  testing  process  for a  specific  patient  and  reported  to the  ordering
physician.  The Company's  revenue is based on gross amounts  billed or billable
for  services  rendered,  net of  estimated  contractual  adjustments  and other
arrangements  made with  third-party  payers to  provide  services  at less than
established  billing rates.  Our accounting  system does not record  contractual
adjustments at the time of billing.  Instead,  contractual adjustments,  and the
provision for doubtful  accounts,  are estimated based on historical  collection
experience using a retrospective collection analysis and aging models.

         The  following is a table of the clinical  laboratory  segment's  gross
billing percentages by billing category:

                                        Fiscal year           Fiscal year
         Gross                        July 31, 2005         July 31, 2004
         Billing category                % to total            % to total
         ----------------                ----------            ----------
         Medicare                               29%                   31%
         Third party carriers                   40%                   40%
         Patient self-pay                       13%                   10%
         HMO's                                  18%                   19%
                                               ----                  ----
         Total                                 100%                  100%
                                               ----                  ----

         CONTRACTUAL ALLOWANCES

         Medicare  regulations  and the various  third party  payers and managed
care  contracts  are  often  complex  and  may  include  multiple  reimbursement
mechanisms for different types of services provided in our clinical  laboratory.
We estimate the allowance for contractual allowances based on our interpretation
of the applicable regulations and historical calculations. The Company estimates
its contractual  allowance  based on historical  collection  experience  using a
retrospective  collection  analysis  and aging  models.  However,  the  services
authorized  and  provided  and  related   reimbursement  are  often  subject  to
interpretation  that could  result in payments  that differ from our  estimates.
Additionally,  updated  regulations  occur  frequently  necessitating  continual
review and assessment of the estimation process by management.

         The  process  the  Company  uses  to  determine  its  estimate  of  the
contractual  allowances  for its  laboratory  services  segment  is based upon a
rolling monthly weighted average of historical reimbursement statistics.  During
the fiscal years ended July 31, 2005, 2004, and 2003, the contractual  allowance
percentages,  determined using the rolling monthly  weighted average  historical
reimbursement statistics, were 72.5%, 70.9%, and 68.0%, respectively.

                                       29
<PAGE>

The Company  projects (by using a sensitivity  analysis)  that each 1% change in
the  contractual  allowance  percentage  could  result  in a  change  in the net
accounts receivable of approximately  $531,000 and $596,000, as of July 31, 2005
and 2004, respectively, and a change in clinical laboratory services revenues of
approximately $1,202,000, $987,000, and $922,000 for the fiscal years ended July
31, 2005, 2004, and 2003, respectively.

         ALLOWANCE FOR DOUBTFUL ACCOUNTS

         The Company  utilizes a  historical  collection  analysis to  establish
allowances for doubtful accounts for each receivable  category,  which considers
the aging of the receivables and results in an increase in the allowances as the
aging of the related receivables  increases.  The Company believes collection of
receivables from self payers is subject to credit risk and the patient's ability
to pay.

         The  allowance for doubtful  accounts  also includes the  uncollectible
balances  from third party  payers for the  insufficient  diagnosis  information
received  from the ordering  physician,  which result in denials of payment.  In
addition, the allowance is increased when a receivable from a third party or HMO
remains open due to a denial of coverage based upon the provider  relationships.
The Company  reserved for or wrote off 100% of all accounts  receivable (for all
payers)  over 210 days during  fiscal 2005 as it assumed all these  accounts are
uncollectible. The written off amounts are kept on the aging for patient billing
and demographic information. The Company also set up reserves for accounts under
210 days in fiscal 2005. The Company  adjusts the estimate for any recoveries on
an ongoing basis through the historical collection analysis.

         The Company's  ability to collect  outstanding  receivables  from third
party  payers is  critical to its  operating  performance  and cash  flows.  The
primary  collection  risk lies with  uninsured  patients  or  patients  for whom
primary  insurance  has paid but a  patient  portion  remains  outstanding.  The
Company estimates the allowance for doubtful  accounts  primarily based upon the
age of the accounts  since invoice date.  The Company  continually  monitors its
accounts  receivable  balances and utilizes cash collections data to support the
basis for its  estimates of the  provision  for doubtful  accounts.  Significant
changes  in payer mix or  regulations  could  have a  significant  impact on the
Company's  results of operations  and cash flows.  In addition,  the Company has
implemented a process to estimate and review the collectibles of its receivables
based on the period they have been outstanding.  Historical collection and payer
reimbursement  experience is an integral part of the estimation  process related
to reserves for doubtful  accounts.  The Company also assesses the current state
of  its  billing  functions  in  order  to  identify  any  known  collection  or
reimbursement  issues in order to assess  the  impact,  if any,  on the  reserve
estimates, which involves judgment. The Company believes that the collectibility
of its receivables is directly  linked to the quality of its billing  processes,
most notably,  those related to obtaining  the correct  information  in order to
bill  effectively for the services  provided.  Revisions in reserve for doubtful
accounts  estimates  are  recorded as an  adjustment  to bad debt  expense.  The
Company  believes that its  collection  and reserves  processes,  along with the
close monitoring of its billing processes, helps reduce the risk associated with
material  revisions  to reserve  estimates  resulting  from  adverse  changes in
collection and reimbursement experience and billing operations.

         INCOME TAXES

         The Company  accounts  for income taxes under the  liability  method of
accounting for income taxes. Under the liability method, deferred tax assets and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their  respective tax bases.  The liability  method requires
that any tax benefits recognized for net operating loss carry forwards and other
items be reduced by a valuation  allowance  where it is more likely than not the
benefits may not be realized.  Deferred tax assets and  liabilities are measured
using  enacted  tax rates  expected  to apply to taxable  income in the years in
which those temporary differences are expected to be recovered or settled. Under
the liability  method,  the effect on deferred tax assets and  liabilities  of a
change in tax rates is  recognized  in income in the period  that  includes  the
enactment date.

                                       30
<PAGE>

         RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                COMPARATIVE FINANCIAL DATA FOR THE FISCAL YEARS ENDED JULY 31,
                                                                                           (in 000's)

                                                                Increase                           Increase
                                                       2005    Decrease)   % Change        2004   (Decrease)   % Change        2003
                                                   ---------------------------------------------------------------------------------
<S>                                                <C>         <C>              <C>    <C>         <C>              <C>    <C>
Revenues:
Research product sales and royalties               $ 10,546    $ (2,426)        (19)   $ 12,972    ($10,281)        (44)   $ 23,253
Clinical laboratory services                         32,857       4,184          15      28,672        (842)         (3)     29,514
                                                   --------    --------    --------    --------    --------    --------    --------
              Total revenue                          43,403       1,758           4      41,644     (11,123)        (21)     52,767


Costs and expenses and other (income):
Cost of research products                             2,196        (322)        (13)      2,518        (871)        (26)      3,389
Cost of laboratory services                          12,548       1,962          19      10,586         993          10       9,593
Research & development                                8,452         374           5       8,078        (233)         (3)      8,311

Selling, general and administrative                  20,069       5,702          40      14,367       2,270          19      12,097
Provision for uncollectible A/R                       4,967      (7,020)        (59)     11,987       2,642          28       9,345
Legal expenses                                        5,476        (864)        (14)      6,340         679          12       5,661
Interest income                                      (1,523)       (371)         32      (1,152)        203         (15)     (1,355)
Gain on patent litigation settlement                (14,000)    (14,000)         --          --          --          --          --
                                                   --------    --------    --------    --------    --------    --------    --------
Costs and expenses                                   38,186     (14,538)        (28)     52,724       5,683          12      47,041

Operating income (loss)                            $  5,217    $ 16,297          --    $(11,080)   $(16,806)         --    $  5,726
                                                   ========                            ========                            ========
</TABLE>

         FISCAL 2005 COMPARED TO FISCAL 2004

         Fiscal 2005  research  product  revenues  and royalty  income was $10.5
million  compared to $13.0 million in fiscal 2004, a decrease of $2.4 million or
19%. The decrease was primarily due to the Company not recording  revenue due to
the ongoing dispute with certain  distributors on the sales of certain  licensed
products,  partially  offset by the  increase  in direct  sales of our  research
products and royalty income from Digene.  The decline in the gross profit margin
on research  product  sales and royalties in fiscal 2005 compared to fiscal 2004
is due to the  decline in  revenues  from  distributors  with whom we had supply
agreements.  Revenues from these  distributors were net of manufacturing  costs.
See Legal Proceedings.

         Fiscal 2005 clinical laboratory revenues were $32.9 million compared to
$28.7 million in fiscal 2004, an increase of $4.2 million or 15%,  primarily due
to the increase in the number of customer accounts being serviced. This increase
in new  customer  accounts  is due to the  expansion  into  the New  Jersey  and
Westchester market that commenced in the fourth quarter of fiscal 2004.

         The cost of research  products revenues in fiscal 2005 was $2.2 million
compared to $2.5  million in fiscal  2004,  a decrease  of $0.3  million or 13%,
primarily due to lower  royalty  costs  because of the  expiration of a licensed
patent agreement with Yale University.

         The cost of  clinical  laboratory  services  in  fiscal  2005 was $12.5
million compared to $10.6 million in fiscal 2004, an increase of $1.9 million or
19%,  primarily due to the increased  number of tests performed and higher costs
incurred to perform certain  esoteric tests.  The increase in tests performed is
due to the new accounts  being  serviced  through the expansion  into New Jersey
markets.

         Fiscal  2005  research  and  development  expenses  were  $8.5  million
compared to $8.1  million in fiscal  2004,  an  increase  of $0.4  million or 5%
primarily due to increases in clinical trial study costs for the  development of
therapeutic products.

         Fiscal 2005  selling,  general and  administrative  expenses were $20.1
million compared to $14.4 million in fiscal 2004, an increase of $5.7 million or
40%.  The  increase  was  primarily  due  to  an  increase  in  direct   selling
expenditures for our clinical  reference  laboratory and life science divisions,
an increase in information technology costs for the expansion of the information
technology  connectivity  system  and  data  center  personnel  costs  including
infrastructure  expenses and accounting related fees for the compliance with the
Sarbanes-Oxley Act of 2002.

         Fiscal 2005  provision  for  uncollectible  accounts  receivable in the
clinical  reference  laboratory  segment  was $5.0  million,  compared  to $12.0
million  during the same period in 2004,  a decrease of $7.0 million or 59%. The
percentage  of  the  provision  for  uncollectible   accounts  receivable  as  a
proportion of clinical laboratory services revenues decreased to 15.0% in fiscal
2005  compared to 36% for the 2004 period.  This  decrease was  primarily due to
improved collection

                                       31
<PAGE>

procedures and due to the change in the mix of the  demographics of the patients
from the New Jersey new customer accounts.

         Fiscal 2005 legal  expenses were $5.5 million  compared to $6.3 million
in fiscal 2004, a decrease of $0.8 million or 14%. The decrease is primarily due
to the  reduction  of legal  activities  because of the  settlement  with Digene
Corporation during fiscal 2005's first quarter ended October 31, 2004.

         Fiscal  2005  interest  income  increased  $0.4  million or 32% to $1.5
million compared to $1.2 million during fiscal 2004, due to the increased amount
of cash  available for  investment and the increase in interest rates offered on
debt securities.. The Company earns interest on its cash and cash equivalents by
investing   primarily  in  short  term  (90  days  or  less)  diverse  financial
instruments with high credit ratings.

         On October 14, 2004, the Company as plaintiff  finalized and executed a
settlement  and license  agreement  with Digene  Corporation  to settle a patent
litigation lawsuit (the "Digene  agreement").  Under the terms of the agreement,
the Company  received  an initial  payment of $16.0  million,  would earn in the
first "annual period"  (October 1, 2004 to September 30, 2005) a minimum royalty
payment of $2.5 million,  and receive a minimum  royalty of $3.5 million in each
of the next four annual  periods.  In addition,  the agreement  provides for the
Company  to  receive  quarterly  running  royalties  on the net  sales of Digene
products  subject to the license until the expiration of the patent on April 24,
2018. These quarterly  running  royalties will be fully  creditable  against the
minimum  royalty  payments  due in the first  five years of the  agreement.  The
balance,  if any, of the minimum royalty payment will be recognized in the final
quarter of the applicable annual royalty period.

         As a result of the above  settlement,  the  Company  recorded a gain on
patent  litigation  settlement  of $14.0  million in the first quarter of fiscal
2005,  and  deferred  $2  million  which  would be earned  from net sales of the
Company's  licensed  products  covered by the agreement  during the first annual
period.  As of July 31,  2005,  the  balance of the  revenue  deferred  from the
settlement was $359,400. See Legal Proceedings.

         In fiscal  2005,  the  Company's  provision  for income  taxes was $2.2
million  which was based on the  effective  federal,  state and local income tax
rates  applied to the fiscal  year's  taxable  income.  The provision for income
taxes,  at an  effective  rate of 42%,  was  different  from  the  U.S.  federal
statutory rate of 34% due to state income taxes, net of federal tax deduction of
approximately  6%, expenses not deductible for income tax return purposes of 2%,
a benefit for foreign  sales(-1%)  and other  adjustments of 1%. In fiscal 2004,
the  Company's  benefit for income taxes was $4.8 million which was based on the
effective federal, state and local income tax rates applied to the fiscal year's
taxable  income.  The benefit for income taxes, at an effective rate of 44%, was
different  from the U.S.  federal  statutory rate of 34% due to state income tax
benefit,  net of federal, of approximately 4%, a benefit for foreign sales of 2%
and other benefits, net, of 4%.

         The research and development segment's fiscal 2005 income before income
taxes was $11.5 million  compared to a loss of $1.3 million in fiscal 2004.  The
fiscal  2005  increase  resulted  from the $14 million  gain and related  earned
royalties from the Digene agreement.  The gain was partially offset by a decline
in  research   product   revenues  due  to  the  ongoing  dispute  with  certain
distributors on the sales of certain licensed  products.  The clinical reference
laboratory  segment's  income before income taxes was $2.8 million versus a loss
of $1.5 million. The increase is due to higher revenues,  due to the increase in
the number of  customer  accounts  being  serviced,  and a lower  provision  for
uncollectible accounts, due to the change in the mix of payers and the expansion
into the New Jersey markets.  The Other segment's (loss) before income taxes was
($9.0) million versus ($8.3) million in fiscal 2004, primarily due to accounting
related fees for compliance with the  Sarbanes-Oxley Act of 2002 not incurred in
the 2004 period.

         FISCAL 2004 COMPARED TO FISCAL 2003

         Revenues from  operations  for the fiscal year ended July 31, 2004 were
$41.6 million a decrease of $11.1 million over revenues from  operations for the
fiscal year ended July 31,  2003.  This  decrease was due to a decrease of $10.3
million in revenues from our research  product sales  operations and decrease of
$.8  million in revenues  from  clinical  reference  laboratory  operation  over
revenues for such activities in fiscal 2004.

         The  decrease in  research  product  sales  resulted  primarily  from a
decrease in direct sales of research products of labeling and detection reagents
for the genomics and sequencing  markets  related to shipments to Affymetrix,  a
major  distributor.  Research  product  revenue from this one major  distributor
accounted for  approximately  0% and 50% of the Company's total research product
revenues in fiscal 2004 and 2003, respectively. See Item 3. Legal Proceedings.

         The decrease of clinical  laboratory services revenue was due primarily
to  the  recent   downward   trends  that  had   indicated  a  decrease  in  the
reimbursements  rates from the Medicare Program,  certain third party payers and
HMO's.  Clinical laboratory services are provided to patients covered by various
third party payer programs, including Medicare

                                       32
<PAGE>

and health  maintenance  organizations  ("HMO's").  Billings  for  services  are
included in revenue net of allowances for  contractual  discounts and allowances
paid for differences  between the amounts billed and the estimated  amount to be
paid.  The effect of such  reduced  reimbursement  rates have been  reflected in
fiscal 2004.  The clinical  laboratory  is subject to seasonal  fluctuations  in
operating  results.  Volume of  testing  generally  declines  during  the summer
months,  the year-end  holiday  periods and other major  holidays.  In addition,
volume  declines due to inclement  weather may reduce net  revenues.  Therefore,
comparison  of the results of  successive  quarters may not  accurately  reflect
trends or results for the full year.

         The cost of research  products sold  decreased by $0.9 million from the
prior fiscal year.  This  decrease was primarily due to the decrease in research
product  revenue  based  on  the  termination  of  a  contract  with  one  major
distributor.

         The cost of clinical  laboratory  services  increased  by $1.0  million
during this period  primarily due to an increase in costs with certain  esoteric
tests and costs related to performing more testing in house.

         Research  and  development  expenses  decreased by  approximately  $0.2
million as a result of a decrease in the expenses  related to the clinical trial
activities and other research projects.

         Selling,  general and administrative expenses increased by $2.2 million
during this fiscal  year,  as compared to the prior  year's  fiscal  year.  This
increase  was  primarily  due to an  increase  in both the sales  personnel  and
marketing  expenditures  for  research  product  sales and  clinical  laboratory
services,  an  increase  at  the  clinical  lab in  the  information  technology
expenditures, and an increase in the in-house legal patent costs

         The Company's provision for uncollectible accounts receivable increased
by $2.6 million to $11.9  million from $9.3 million as compared to last year. At
the  clinical   laboratory   division  the   percentage  of  the  provision  for
uncollectible  accounts  receivable as a  relationship  to revenue  increased to
35.7% this fiscal year as compared to 29.6% for last year.  These increases were
primarily due to the change in the mix of payers during the current fiscal year.
The company wrote off $1.8 million of an  uncollectible  receivable  from one of
its  distributors  at the Life Science  division  this fiscal year.  See Item 3.
Legal Proceedings.

         The Company's legal expenses  increased by $0.6 million to $6.3 million
from $5.7 million as compared to the previous  year.  This increase is primarily
due to the increase in patent  infringement  proceedings and the increase in the
overall legal activities on these infringement proceedings.

         Interest income was comparable to the prior fiscal year.

         In fiscal 2004, we recorded a benefit for income taxes of $4.8 million,
based  upon an $11.1  million  loss  before  benefit  for taxes on income in the
current  year as  compared to a provision  for income  taxes of $1.9  million in
fiscal 2003, which were based on the combined effective federal, state and local
income tax rates.

         Net accounts  receivable  from our clinical  laboratory  operations  of
$13.1 million and $14.4 million  represented an average of 167 days and 174 days
of operating revenues at July 31, 2004 and 2003, respectively.

         Loss  before  provision  for  taxes on  income  from the  research  and
development  segment  activities  and related  costs was $1.3  million in fiscal
2004, as compared to income before provision for taxes on income of $9.4 million
in fiscal 2003. The decrease in the profit resulted primarily from a decrease in
direct  sales of research  products of labeling and  detection  reagents for the
genomics and sequencing markets to Affymetrix a major  distributor.  Loss before
provision for taxes on income from the clinical reference  laboratories  segment
amounted  to a $1.5  million  for fiscal  2004,  as  compared  to income of $3.0
million for fiscal 2003.  The  decrease in income  before taxes for the clinical
laboratory  segment was primarily due to the  reduction in  reimbursement  rates
from third party payers.  Loss before provision for taxes on income at the other
segment  amounted to a loss of $8.3  million for fiscal  2004,  as compared to a
loss of $6.7 million for fiscal 2003,  due to the increase in legal  expenses in
fiscal 2004.

         The Company does not have any "off-balance sheet  arrangements" as such
term is defined in Item 303(a) (4) of Regulation S-K.

         Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company  believes  that it does not have any  material  exposure to
market risk associated with interest rate risk,  foreign currency  exchange rate
risk, commodity price risk, equity price risk, or other market risks.

                                       33
<PAGE>

         Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The response to this item is  submitted  in a separate  section of this
report. See Item 15(a) (1) and (2)

         Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

         Not applicable.

         Item 9A. CONTROLS AND PROCEDURES

         DISCLOSURE CONTROLS AND PROCEDURES.

         The Company's management, with the participation of the Company's Chief
Executive  Officer and Chief Financial  Officer,  evaluated the effectiveness of
the Company's  disclosure  controls and procedures (as defined in Rule 13a-15(e)
and  15d-15(e)  under the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act") as of July 31, 2005.  Based on this  evaluation,  the Company's
Chief Executive  Officer and Chief Financial  Officer concluded that, as of July
31, 2005, the Company's  disclosure  controls and  procedures  were effective to
provide reasonable assurance that information is accumulated and communicated to
the  Company's  management,  including  its Chief  Executive  Officer  and Chief
Financial Officer,  as appropriate to allow timely decisions  regarding required
disclosure,  and ensure that information required to be disclosed in the reports
the Company  files or submits  under the Exchange  Act is  recorded,  processed,
summarized  and reported,  within the time periods  specified in the SEC's rules
and forms.

         MANAGEMENT'S   ANNUAL  REPORT  ON  INTERNAL   CONTROL  OVER   FINANCIAL
REPORTING.

         Management of Enzo Biochem,  Inc. is responsible for  establishing  and
maintaining  adequate  internal  control over financial  reporting as defined in
Rules  13a-15(f)  and 15d-15(f)  under the Exchange Act. The Company's  internal
control over  financial  reporting is a process  designed to provide  reasonable
assurance  regarding the reliability of financial  reporting and the preparation
of financial  statements  for external  purposes in  accordance  with  generally
accepted accounting  principles.  Because of its inherent limitations,  internal
control over financial reporting may not prevent or detect misstatements.  Also,
projections of any evaluation of  effectiveness to future periods are subject to
the risk that controls may become  inadequate  because of changes in conditions,
or  that  the  degree  of  compliance   with  the  policies  or  procedures  may
deteriorate.

         Management    utilized    the   criteria   set   forth   in   "Internal
Control-Integrated   Framework"   issued   by  the   Committee   of   Sponsoring
Organizations of the Treadway  Commission,  or COSO, to conduct an assessment of
the effectiveness of the Company's internal control over financial  reporting as
of July 31, 2005. Based on the assessment,  management has concluded that, as of
July 31,  2005,  the  Company's  internal  control over  financial  reporting is
effective.

         Management's  assessment of the effectiveness of the Company's internal
control over financial  reporting as of July 31, 2005, has been audited by Ernst
& Young LLP an independent  registered public accounting firm. Ernst & Young LLP
has issued an  attestation  report on  management's  assessment of the Company's
internal control over financial reporting, which is included herein.

         CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

         The Company has expended  significant  resource in achieving compliance
with Section 404 of the  Sarbanes-Oxley  Act. Through internal resources and the
assistance of outside consultants,  the Company developed and executed a plan to
evaluate,  document,  test and improve,  where necessary,  its internal controls
over financial  reporting.  Although,  as stated below, the Company has not made
any changes during the most recent fiscal quarter that have materially  affected
internal  controls  over  financial  reporting,   in  the  course  of  achieving
compliance with the Section 404 of the Sarbanes-Oxley  Act, the Company has made
changes  designed  to  improve  several  areas  within  its  system of  internal
controls.   The  nature  of  these  changes  included  greater   segregation  of
responsibilities, better documentation of work procedures and managerial review,
dual  approvals,  revisions to  delegation of authority  and  tightening  access
restrictions to systems, data and assets.

         There  has  been no  change  in the  Company's  internal  control  over
financial  reporting  that occurred  during the Company's  fiscal fourth quarter
ended July 31, 2005 that has  materially  affected,  or is reasonably  likely to
materially affect, the Company's internal control over financial reporting.

                                       34
<PAGE>

         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL
         CONTROL OVER FINANCIAL REPORTING

             Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Enzo Biochem, Inc.

         We have audited management's assessment, included in Item 9A, that Enzo
Biochem,  Inc.  (the  "Company")  maintained  effective  internal  control  over
financial  reporting  as of July 31,  2005,  based on  criteria  established  in
Internal  Control--Integrated  Framework  issued by the  Committee of Sponsoring
Organizations  of the Treadway  Commission  (the COSO  criteria).  Enzo Biochem,
Inc.'s management is responsible for maintaining effective internal control over
financial  reporting  and for its  assessment of the  effectiveness  of internal
control over financial reporting. Our responsibility is to express an opinion on
management's  assessment  and an opinion on the  effectiveness  of the company's
internal control over financial reporting based on our audit.

         We conducted our audit in  accordance  with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and  perform  the audit to obtain  reasonable  assurance  about  whether
effective  internal  control over  financial  reporting  was  maintained  in all
material  respects.  Our audit included  obtaining an  understanding of internal
control over financial reporting,  evaluating management's  assessment,  testing
and evaluating the design and operating  effectiveness of internal control,  and
performing   such  other   procedures   as  we   considered   necessary  in  the
circumstances.  We believe that our audit  provides a  reasonable  basis for our
opinion.

         A company's  internal  control  over  financial  reporting is a process
designed to provide reasonable  assurance regarding the reliability of financial
reporting and the preparation of financial  statements for external  purposes in
accordance with generally accepted accounting  principles.  A company's internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the  transactions  and dispositions of the assets of the company;
(2) provide reasonable  assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting  principles,  and that receipts and  expenditures  of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of  unauthorized  acquisition,  use, or  disposition  of the company's
assets that could have a material effect on the financial statements.

         Because of its inherent  limitations,  internal  control over financial
reporting  may not prevent or detect  misstatements.  Also,  projections  of any
evaluation  of  effectiveness  to future  periods  are  subject to the risk that
controls may become  inadequate  because of changes in  conditions,  or that the
degree of compliance with the policies or procedures may deteriorate.

         In  our  opinion,  management's  assessment  that  Enzo  Biochem,  Inc.
maintained  effective  internal control over financial  reporting as of July 31,
2005, is fairly stated,  in all material  respects,  based on the COSO criteria.
Also, in our opinion, Enzo Biochem,  Inc. maintained,  in all material respects,
effective  internal control over financial  reporting as of July 31, 2005, based
on the COSO criteria.

         We also have audited,  in  accordance  with the standards of the Public
Company  Accounting  Oversight Board (United States),  the consolidated  balance
sheets of Enzo Biochem,  Inc. (the  "Company") as of July 31, 2005 and 2004, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the three years in the period ended July 31, 2005 and our
report dated October 12, 2005 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Melville, NY
October 12, 2005

                                       35
<PAGE>

         ITEM 9B. OTHER INFORMATION

         None

         PART III

         Item 10. DIRECTORS AND EXECUTIVE OFFICERS

         The following sets forth certain  information  with regard to directors
and executive officers of the Company.

         Directors - The  following  sets forth  certain  information  regarding
directors  of the  Company  who  are  not  executive  officers  of the  Company.
Information  with  respect to  directors  of the Company who are also  executive
officers  of  the  Company  appears  below  under  the  sub  caption  "Executive
Officers." The Company has a classified  Board of Directors  consisting of three
classes.

         JOHN B. SIAS (age 78) has been a Director  of the  Company  since 1982.
Mr. Sias had been President and Chief Executive Officer of Chronicle  Publishing
Company from April 1993 to September  2000.  From January 1986 until April 1993,
Mr. Sias was President of ABC Network Division,  Capital  Cities/ABC,  Inc. From
1977 until January 1986, he was the Executive Vice  President,  President of the
Publishing  Division (which includes  Fairchild  Publications) of Capital Cities
Communications, Inc.

         JOHN J. DELUCCA (age 62) has been a Director of the Company since 1982.
From 2003 to 2004, Mr. Delucca was Executive Vice President and Chief  Financial
Officer of REL Consulting  Group. Mr. Delucca was the Chief Financial  Officer &
Executive Vice President,  Finance & Administration  of Coty, Inc., from 1999 to
2002.  From 1993 until 1999,  he was Senior Vice  President and Treasurer of RJR
Nabisco,  Inc. From 1992 to 1993, he was managing  director and Chief  Financial
Officer of Hascoe  Associates,  Inc.  From 1990 to 1992, he was President of The
Lexington Group. From 1989 to 1990, he was Senior Vice  President-Finance of the
Trump  Group.  From 1986 until  1989,  he was senior Vice  President-Finance  at
International  Controls  Corp.  From 1985 to 1986,  he was a Vice  President and
Treasurer of Textron,  Inc. Prior to that, he was a Vice President and Treasurer
of the Avco Corporation, which was acquired by Textron.

         IRWIN C. GERSON  (age 75) has been a Director of the Company  since May
2001.  From 1995 until  December  1998,  Mr.  Gerson  served as Chairman of Lowe
McAdams  Healthcare and prior thereto had been,  since 1986,  Chairman and Chief
Executive  Officer  of  William  Douglas  McAdams,  Inc.,  one  of  the  largest
advertising  agencies in the U.S.  specializing in pharmaceutical  marketing and
communications  to healthcare  professionals.  In February 2000, he was inducted
into the Medical  Advertising Hall of Fame. Mr. Gerson has a Bachelor of Science
in Pharmacy from Fordham  University and an MBA from the NYU Graduate  School of
Business Administration.  He is a director of Andrx Corporation, a NASDAQ listed
company  which  specializes  in  proprietary  drug delivery  technologies.  From
1990-1999,  he was  Chairman of the Council of Overseers of the Arnold and Marie
Schwartz  College of Pharmacy and has served as a trustee of The Albany  College
of Pharmacy and Long Island University.

         MELVIN F. LAZAR,  CPA (age 66) has been a Director of the Company since
August 2002. Mr. Lazar was a founding  partner of the public  accounting firm of
Lazar, Levine & Felix (LLP) from 1969 until October 2002. Mr. Lazar and his firm
served the business and legal  communities for over 30 years. He is an expert on
the topic of business  valuations  and merger and  acquisition  activities.  Mr.
Lazar is a board  member and  chairman of the audit  committee  of Arbor  Realty
Trust, Inc. (ABR:NYSE). Arbor is a real estate investment trust (REIT) formed to
invest in real estate  related  bridge and  mezzanine  loans,  preferred  equity
investments  and other real estate related  assets.  Mr. Lazar is a board member
and serves as the  Chairman of the Audit  Committee  of  privately  owned Active
Media Services,  Inc., the largest  corporate barter company in the nation.  Mr.
Lazar holds a Bachelor of Business  Administration  degree from The City College
of New York (Baruch College).

         MARCUS A.  CONANT,  M.D.  (age 69) was  appointed  to the board in July
2004. Dr. Conant received his B.S. and M.D. degrees from Duke University. He was
an  exchange  student at  Hammersmith  Hospital  in London,  England and held an
Elective Fellowship in Biochemistry at the London Hospital.  Dr. Conant has been
the recipient of numerous awards, and has served as a member of or consultant to
a broad array of scientific societies and associations,  community organizations
and government committees and has authored or co-authored more than 70 published
papers.  Dr. Conant is a Clinical  Professor at the University of California San
Francisco  (UCSF) and has been on the faculty of UCSF since 1967.  He  currently
serves as Chairman of the Board of the Conant Foundation,  an HIV/AIDS education
and research  foundation based in San Francisco.  Dr. Conant served as principal
investigator  for Enzo's Phase I clinical  trial of its gene  medicine for HIV-1
infection.

                                       36
<PAGE>

         Executive  Officers  - The  following  table  sets  forth the names and
positions of all of the current executive officers of the Company:

<TABLE>
<CAPTION>
         Name                                                 Position
         ----                                                 --------
         <S>                                         <C>
         Elazar Rabbani, Ph.D.                       Chief Executive Officer, Chairman of the Board of Directors
         Shahram K. Rabbani                          Chief Operating Officer, Secretary, Treasurer
         Barry W. Weiner                             President, Chief Financial Officer
         Dean Engelhardt, Ph.D.                      Executive Vice President
         Norman E. Kelker, Ph.D.                     Senior Vice President
         Herbert B. Bass                             Vice President of Finance
         Barbara E. Thalenfeld, Ph.D.                Vice President, Corporate Development
         David C. Goldberg                           Vice President, Business Development
</TABLE>

         DR. ELAZAR  RABBANI (age 61) Enzo  Biochem's  founder has served as the
Company's  Chairman of the Board of Directors and Chief Executive  Officer since
its inception in 1976. Dr. Rabbani has authored numerous scientific publications
in the field of molecular  biology,  in  particular,  nucleic acid  labeling and
detection.  He is also the lead  inventor  of many of the  company's  pioneering
patents covering a wide range of technologies and products. Dr. Rabbani received
his Bachelor of Arts degree from New York  University in Chemistry and his Ph.D.
in Biochemistry from Columbia University. He is a member of the American Society
for Microbiology.

         SHAHRAM  K.  RABBANI  (age  53)  Chief  Operating  Officer,  Treasurer,
Secretary  and  Director,  is a founder and has been with the Company  since its
inception. He is also President of Enzo Clinical Labs. Mr. Rabbani serves on the
New York State  Clinical  Laboratory  Association,  a  professional  board.  Mr.
Rabbani is a trustee of Adelphi  University  and serves as Chairman of its audit
committee.  He  received a Bachelor  of Arts Degree in  Chemistry  from  Adelphi
University, located in Long Island, New York.

         BARRY W.  WEINER  (age  55)  President,  Chief  Financial  Officer  and
Director,  is a founder of Enzo  Biochem,  Inc.  He has served as the  Company's
President  since  1996,  and  previously  held the  position of  Executive  Vice
President.  Before his employment with Enzo, he worked in several managerial and
marketing  positions at the Colgate Palmolive Company.  Mr. Weiner is a Director
of the New York  Biotechnology  Association.  He received  his  Bachelor of Arts
degree  in  Economics  from  New  York  University  and  a  Master  of  Business
Administration in Finance from Boston University.

         DR. DEAN  ENGELHARDT  (age 65) Executive  Vice  President has held this
position since July 2000. Since joining the Company in 1981, Dr.  Engelhardt has
held several other executive and scientific  positions  within Enzo Biochem.  In
addition,  Dr.  Engelhardt  has authored many papers in the area of nucleic acid
synthesis and protein  production and has been a featured  presenter at numerous
scientific  conferences  and  meetings.  He holds a Ph.D.  degree  in  Molecular
Genetics from Rockefeller University.

         DR.  NORMAN E.  KELKER  (age 66) Senior  Vice  President  has held this
position  since 1989.  Before this,  he was the  Company's  Vice  President  for
Scientific  Affairs.  Dr.  Kelker has authored  numerous  scientific  papers and
presentations in the biotechnology  field. He is a member of American Society of
Microbiology  and the American  Association of the  Advancement of Science.  Dr.
Kelker received his Ph.D. in Microbiology  and Public Health from Michigan State
University.

         HERBERT B. BASS (age 57) Vice  President of Finance for the Company and
is also Senior Vice  President of Enzo  Clinical  Labs.  Before his promotion in
1989 to Vice President of Finance,  Mr. Bass served as the Corporate  Controller
of the  Company.  Mr.  Bass has been with The Company  since 1986.  From 1977 to
1986, Mr. Bass held various positions at Danziger and Friedman, Certified Public
Accountants, the most recent of which was audit manager. For the preceding seven
(7) years, he held various  positions at Berenson & Berenson,  Certified  Public
Accountants.  Mr. Bass received a Bachelor of Business  Administration degree in
Accounting from Bernard M. Baruch College, in New York City.

         DR.  BARBARA  E.  THALENFELD  (age  65)  Vice  President  of  Corporate
Development  for Enzo Biochem and Vice  President  of Clinical  Affairs for Enzo
Therapeutics.  Dr. Thalenfeld has been employed with the Company since 1982. She
has authored  numerous  scientific  papers in the areas of molecular biology and
genetics,  and  is a  member  of the  American  Society  of  Gene  Therapy,  the
Association  of  Clinical  Research  Professionals,  and  the  Drug  Development
Association.  Dr. Thalenfeld received her Ph.D. at the Institute of Microbiology
at Hebrew  University  in  Jerusalem,  Israel and a Master of Science  degree in
Molecular  Biology  from Yale  University.  She also  completed a Post  Doctoral
Fellowship in the Department of Biological Sciences at Columbia University.

                                       37
<PAGE>

         DAVID C. GOLDBERG (age 48) Vice President of Business  Development  for
Enzo Biochem and Senior Vice  President of Enzo  Clinical Labs has been employed
with the company since 1985.  He has held several  managerial  positions  within
Enzo Biochem.  Mr.  Goldberg also held  management and marketing  positions with
DuPont-NEN and Gallard  Schlesinger  Industries  before joining the Company.  He
received a Master of Science degree in Microbiology from Rutgers  University and
a Master of Business Administration in Finance from New York University.

         Dr.  Elazar  Rabbani and Shahram K.  Rabbani are  brothers and Barry W.
Weiner is their brother-in-law.

         Item 11. EXECUTIVE COMPENSATION

         The  information  required  under  this  item  will be set forth in the
Company's  proxy  statement  to  be  filed  with  the  Securities  and  Exchange
Commission  on or  before  November  28,  2005  and is  incorporated  herein  by
reference.

         Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The  information  required  under  this  item  will be set forth in the
Company's  proxy  statement  to  be  filed  with  the  Securities  and  Exchange
Commission  on or  before  November  28,  2005  and is  incorporated  herein  by
reference.

         Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The  information  required  under  this  item  will be set forth in the
Company's  proxy  statement  to  be  filed  with  the  Securities  and  Exchange
Commission  on or  before  November  28,  2005  and is  incorporated  herein  by
reference.

         Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The  information  required  under  this  item  will be set forth in the
Company's proxy statement  expected to be filed with the Securities and Exchange
Commission  on or  before  November  28,  2005  and is  incorporated  herein  by
reference.

         PART IV

         Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
                  ON FORM 8-K

         (a)  (1) Consolidated Financial Statements
                    Consolidated Balance Sheets - July 31, 2005 and 2004
                    Consolidated  Statements  of  Operations-  Years  ended
                    July 31, 2005,  2004 and 2003
                    Consolidated  Statements of  Stockholders' Equity -
                    Years ended July 31, 2005,  2004 and 2003
                    Consolidated Statements  of Cash Flows - Years ended
                    July 31, 2005,  2004 and 2003
                    Notes to Consolidated Financial Statements.

         (2) Financial Statement Schedule

         Schedule II - Valuation and Qualifying Accounts

         All other schedules have been omitted because the required  information
is included in the  consolidated  financial  statements  or the notes thereto or
because they are not required.

              (3) Exhibits

         The following  documents are filed as Exhibits to this Annual Report on
Form 10-K:

         Exhibit           Description
         No.               -----------
         --------
         3(a)      Certificate of Incorporation, as amended  March 17, 1980. (1)

         3(b)      June 16, 1981 Certificate of Amendment of the  Certificate of
                   Incorporation. (2)

         3(c)      Certificate of Amendment to the Certificate of Incorporation.
                   (3)

         3(d)      Bylaws. (1)

         10(b)     1993 Incentive Stock Option Plan. (5)

                                       38
<PAGE>

         10(c)     Employment Agreement with Elazar Rabbani. (5)

         10(d)     Employment Agreement with Shahram Rabbani. (5)

         10(e)     Employment Agreement with Barry Weiner. (5)

         10(f)     1994 Stock Option Plan. (6)

         10(g)     Agreement  with  Corange  International  Limited  (Boehringer
                   Mannheim) effective April 1994. (19) (7)

         10(h)     Agreement  with  Amersham  International  effective  February
                   1995. (7)

         10(i)     Agreement with Dako A/S effective May 1995. (7)

         10(j)     Agreement with Baxter Healthcare  Corporation (VWR Scientific
                   Products) effective September 1995. (7)

         10(k)     Agreement with Yale University and amendments thereto. (7)

         10(l)     Agreement  with The Research  Foundation  of the State of New
                   York effective May 1987. (7)

         10(m)     1999 Stock Option Plan filed. (8)

         10(n)     Amendment to Elazar Rabbani's employment agreement. (9)

         10(o)     Amendment to Shahram Rabbani's employment agreement. (9)

         10(p)     Amendment to Barry Weiner's employment agreement. (9)

         10(r)     Code of Ethics (10)

         10(s)     Settlement  and License  Agreement  with  Digene  Corporation
                   effective as of September 30, 2004 (10) (12)

         10(t)     Joint Stipulation and Order of Dismissal with Prejudice dated
                   October 14, 2004 (10) (12).

         10(u)     2005 Equity Compensation Incentive Plan (11)

         10(v)     Lease agreement with Pari Management (filed herewith)

         14(a)     Code of Ethics (10)

         21        Subsidiaries of the registrant:
                         Enzo Clinical Labs, Inc., a New York corporation.
                         Enzo Life Sciences, Inc., a New York corporation.
                         Enzo Therapeutics, Inc., a New York corporation.

         23        Consent of  Independent  Registered  Public  Accounting  Firm
                   filed herewith.

         31(a)     Certification   of  CEO   Pursuant  to  Section  302  of  the
                   Sarbanes-Oxley Act of 2002 filed herewith.

         31(b)     Certification   of  CFO   Pursuant  to  Section  302  of  the
                   Sarbanes-Oxley Act of 2002 filed herewith.

         32(a)     Certification   of  CEO   Pursuant  to  Section  906  of  the
                   Sarbanes-Oxley Act of 2002 filed herewith.

         32(b)     Certification   of  CFO   Pursuant  to  Section  906  of  the
                   Sarbanes-Oxley Act of 2002 filed herewith.

                                       39
<PAGE>

         Notes to exhibits

         (1)       The  exhibits   were  filed  as  exhibits  to  the  Company's
                   Registration  Statement  on Form S-18 (File No.  2-67359) and
                   are incorporated herein by reference.

         (2)       This  exhibit was filed as an exhibit to the  Company's  Form
                   10-K for the year  ended  July 31,  1981 and is  incorporated
                   herein by reference.

         (3)       This exhibit was filed with the  Company's  Annual  Report on
                   Form  10-K  for  the  year  ended   July  31,   1989  and  is
                   incorporated herein by reference.

         (5)       This exhibit was filed with the  Company's  Annual  Report on
                   Form  10-K  for  the  year  ended   July  31,   1994  and  is
                   incorporated herein by reference.

         (6)       This exhibit was filed with the  Company's  Annual  Report on
                   Form  10-K  for  the  year  ended   July  31,   1995  and  is
                   incorporated herein by reference.

         (7)       This exhibit was filed with the  Company's  Annual  Report on
                   Form  10-K for the year  ended  July 31,  1996 or  previously
                   filed  amendment  thereto  and  is  incorporated   herein  by
                   reference.

         (8)       This  exhibit  was  filed  with  the  Company's  Registration
                   Statement on Form S-8 (333-87153) and is incorporated  herein
                   by reference.

         (9)       This exhibit was filed with the  Company's  Annual  Report on
                   Form  10-K  for  the  year  ended   July  31,   2000  and  is
                   incorporated herein by reference.

         (10)      This exhibit filed with the  Company's  Annual Report on Form
                   10-K for the year  ended  July 31,  2004 and is  incorporated
                   herein by reference

         (11)      This exhibit was filed as an exhibit to the  Company's  Proxy
                   Statement of Schedule 14A filed on January 19, 2005 and is
                   incorporated herein by reference

         (12)      These  exhibits  are  subject  to  a  confidential  treatment
                   request pursuant to securities exchange act rules.

         (b)       See Item 15(a) (3), above.
         (c)       See Item 15(a) (2), above.

                                       40
<PAGE>

         SIGNATURES

                  Pursuant  to the  requirements  of  Section 13 or 15(d) of the
Securities  Exchange Act of 1934,  the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                                 ENZO BIOCHEM, INC.


      Date:October 14, 2005                      By:   /s/ Elazar Rabbani Ph.D.
                                                       ------------------------
                                                       Chairman of the Board


                  Pursuant to the requirements of the Securities Exchange Act of
1934,  this report has been signed below by the  following  persons on behalf of
the registrant and in the capacities and on the dates indicated.

      By: /s/  Elazar Rabbani Ph.D.                             October 14, 2005
      -----------------------------
      Elazar Rabbani
      Chairman of Board of Directors
      (Principal Executive Officer)

      By: /s/  Shahram K. Rabbani                               October 14, 2005
      ----------------------------
      Shahram K. Rabbani,
      Chief Operating Officer, Secretary and Director

      By: /s/  Barry W. Weiner                                  October 14, 2005
      ------------------------
      Barry W. Weiner,
      President, Chief Financial Officer, and Director

      By: /s/  John B. Sias                                     October 14, 2005
      ---------------------
      John B. Sias, Director

      By: /s/ John J. Delucca                                   October 14, 2005
      ------------------------
      John J. Delucca, Director

      By: /s/  Irwin Gerson                                     October 14, 2005
      ---------------------------
      Irwin Gerson, Director

      By: /s/  Melvin F. Lazar                                  October 14, 2005
      -------------------------
      Melvin F. Lazar, Director


      Marcus A. Conant, Director

                                       41
<PAGE>

FORM 10-K, ITEM 15(a) (1) and (2)
ENZO BIOCHEM, INC.


                  LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND
                          FINANCIAL STATEMENT SCHEDULE


The following consolidated financial statements and financial statement schedule
of Enzo Biochem, Inc. are included in Item 15(a):

Report of Independent Registered Public Accounting Firm                      F-2

Consolidated Balance Sheets -- July 31, 2005 and 2004                        F-3

Consolidated Statements of Operations --
         Fiscal years ended July 31, 2005, 2004 and 2003                     F-4

Consolidated Statements of Stockholders' Equity --
         Years ended July 31, 2005, 2004 and 2003                            F-5

Consolidated Statements of Cash Flows --
         Years ended July 31, 2005, 2004 and 2003                            F-6

Notes to Consolidated Financial Statements                                   F-7

Schedule II - Valuation and Qualifying Accounts --
         Years ended July 31, 2005, 2004 and 2003                            S-1




All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
Enzo Biochem, Inc

We have audited the  accompanying  consolidated  balance sheets of Enzo Biochem,
Inc. (the "Company") as of July 31, 2005, and 2004, and the related consolidated
statements of operations,  stockholders'  equity, and cash flows for each of the
three years in the period  ended July 31,  2005.  Our audits also  included  the
financial statement schedules listed in the Index at Item 15(a). These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedules based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the consolidated financial position of Enzo Biochem, Inc.
at July 31, 2005 and 2004, and the consolidated  results of their operations and
their cash flows for each of the three years in the period  ended July 31, 2005,
in conformity with U.S. generally accepted accounting  principles.  Also, in our
opinion, the related financial statement schedules,  when considered in relation
to the  basic  financial  statements  taken as a whole,  present  fairly  in all
material respects the information set forth therein.

We also have  audited,  in accordance  with the standards of the Public  Company
Accounting  Oversight Board (United States),  the effectiveness of the Company's
internal control over financial reporting as of July 31, 2005, based on criteria
established in Internal Control-Integrated  Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated October
12, 2005, expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Melville, NY
October 12, 2005

                                      F-2
<PAGE>

                               ENZO BIOCHEM, INC.
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

ASSETS
                                                                                                               July 31,
                                                                                                 -----------------------------------
Current assets:                                                                                       2005                 2004
                                                                                                      ----                 ----
<S>                                                                                              <C>                  <C>
   Cash and cash equivalents .............................................................       $  76,980,900        $  54,499,100
   Marketable securities .................................................................           6,713,600           17,241,500
   Accounts receivable, net of allowance for doubtful accounts of $2,291,700
     in 2005 and $2,770,300 in 2004 ......................................................          13,420,500           14,794,400
   Income tax receivable .................................................................                  --            3,906,900
   Inventories ...........................................................................           2,876,100            3,434,300
   Prepaid expenses ......................................................................           2,579,900            1,832,500
   Prepaid taxes .........................................................................           1,329,200                   --
   Deferred taxes ........................................................................             899,700            1,974,800
                                                                                                 -------------        -------------
Total current assets .....................................................................         104,799,900           97,683,500

Property and equipment, net of accumulated depreciation
    and amortization of $7,278,700 in 2005 and $7,681,000 in 2004 ........................           2,669,500            2,414,600
Goodwill .................................................................................           7,452,000            7,452,000
Patent costs, net of accumulated amortization of $9,695,300 in 2005
and $8,383,600 in 2004 ...................................................................           1,332,800            2,624,500
Other ....................................................................................             211,600              159,600
                                                                                                 -------------        -------------
                                                                                                 $ 116,465,800        $ 110,334,200
                                                                                                 =============        =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accrued legal fees ....................................................................       $   2,716,800        $   2,050,500
   Trade accounts payable ................................................................           2,413,600            2,092,300
   Other accrued expenses ................................................................           1,347,900              494,300
   Accrued payroll .......................................................................             515,100              475,400
   Deferred revenue ......................................................................             359,400                   --
   Accrued research and development expenses .............................................             286,300              225,000
   Installment payable ...................................................................             150,000                   --
   Deferred rent .........................................................................                  --               86,700
                                                                                                 -------------        -------------
Total current liabilities ................................................................           7,789,100            5,424,200

Deferred taxes ...........................................................................             260,000              444,200
Long term installment payable ............................................................             150,000              300,000

Commitments

Stockholders' equity:
   Preferred Stock, $.01 par value; authorized 25,000,000 shares; no
       shares issued or outstanding
   Common Stock, $.01 par value; authorized 75,000,000 shares; shares
       issued: 32,526,800 in 2005 and 30,864,800 in 2004 .................................             325,300              308,600
   Additional paid-in capital ............................................................         230,643,800          205,920,000
   Less treasury stock at cost: 384,400 shares in 2005
       and 349,900 shares in 2004 ........................................................          (5,994,400)          (5,668,900)
   Accumulated deficit ...................................................................        (116,577,400)         (96,148,000)
   Accumulated other comprehensive loss ..................................................            (130,600)            (245,900)
                                                                                                 -------------        -------------
Total stockholders' equity ...............................................................         108,266,700          104,165,800
                                                                                                 -------------        -------------
                                                                                                 $ 116,465,800        $ 110,334,200
                                                                                                 =============        =============
</TABLE>



                                       F-3

                             See accompanying notes
<PAGE>

                               ENZO BIOCHEM, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                                                            Fiscal years ended July 31,
                                                                           ---------------------------------------------------------
                                                                                   2005                  2004                  2003
                                                                                   ----                  ----                  ----
<S>                                                                        <C>                   <C>                   <C>
Revenues:
   Research product revenues and royalty income ..................         $ 10,546,000          $ 12,972,200          $ 23,253,100
   Clinical laboratory services ..................................           32,856,600            28,672,200            29,513,900
                                                                           ------------          ------------          ------------
                                                                             43,402,600            41,644,400            52,767,000

Costs and expenses and other (income):
   Cost of research product revenues .............................            2,196,400             2,517,800             3,388,900
   Cost of clinical laboratory services ..........................           12,547,600            10,586,200             9,592,900
   Research and development expense ..............................            8,452,400             8,078,300             8,311,200
   Selling, general, and administrative expense ..................           20,069,200            14,367,200            12,097,400
   Provision for uncollectible accounts receivable ...............            4,967,100            11,986,500             9,345,300
   Legal expense .................................................            5,475,500             6,339,900             5,661,000
   Interest income ...............................................           (1,522,900)           (1,151,800)           (1,355,000)
   Gain on patent litigation settlement ..........................          (14,000,000)                   --                    --
                                                                           ------------          ------------          ------------
                                                                             38,185,300            52,724,100            47,041,700

Income (loss) before income taxes ................................            5,217,300           (11,079,700)            5,725,300
(Provision) benefit for income taxes .............................           (2,213,300)            4,848,100            (1,881,300)
                                                                           ------------          ------------          ------------
Net income (loss) ................................................         $  3,004,000          ($ 6,231,600)         $  3,844,000
                                                                           ============          ============          ============

Net income (loss) per common share:
   Basic .........................................................         $       0.09          ($      0.20)         $       0.12
                                                                           ============          ============          ============
   Diluted .......................................................         $       0.09          ($      0.20)         $       0.12
                                                                           ============          ============          ============

Weighted average common shares outstanding:
   Basic .........................................................           32,097,000            31,700,000            31,399,000
                                                                           ============          ============          ============
   Diluted .......................................................           32,763,000            31,700,000            32,175,000
                                                                           ============          ============          ============
</TABLE>



                                       F-4

                             See accompanying notes
<PAGE>

                               ENZO BIOCHEM INC
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                    YEARS ENDED JULY 31, 2005, 2004 AND 2003

<TABLE>
<CAPTION>

                                                          COMMON         TREASURY           Common      Additional        Treasury
                                                           STOCK            STOCK            Stock         Paid-in           Stock
                                                          SHARES           SHARES           Amount         Capital          Amount
                                                          ------           ------           ------         -------          ------
<S>                                                   <C>                  <C>      <C>              <C>                    <C>
Balance at July 31, 2002 .......................      28,459,800               --   $     284,600    $ 160,499,800              --
Net income for the year ended July 31, 2003 ....              --               --              --               --              --
Unrealized loss on available for-sale
    securities, net of tax .....................              --               --              --               --              --

Comprehensive income ...........................

5% stock dividend (fair value on date declared)        1,423,600               --          14,300       37,694,900              --
Increase in common stock and paid-in capital
   due to exercise of stock options ............          73,300               --             700          630,100              --
Issuance of stock for employee 401(k) plan match          18,400               --             200          257,000              --
                                                    --------------------------------------------------------------------------------
Balance at July 31, 2003 .......................      29,975,100               --         299,800      199,081,800              --

Net loss for the year ended July 31, 2004 ......              --               --              --               --              --
Unrealized loss on available for-sale
    securities, net of tax .....................              --               --              --               --              --

Comprehensive loss .............................

Purchase of treasury stock .....................              --          349,900              --               --     ($5,668,900)
Increase in common stock and paid-in capital
   due to exercise of stock options ............         873,900               --           8,700        6,556,100              --
Issuance of stock for employee 401(k) plan match          15,800               --             100          282,100              --
                                                    --------------------------------------------------------------------------------
Balance at July 31, 2004 .......................      30,864,800          349,900         308,600      205,920,000      (5,668,900)

Net income for the year ended July 31, 2005 ....              --               --              --               --              --
Unrealized gain on available for-sale
    securities, net of tax .....................              --               --              --               --              --
Reclassification adjustment for net loss
realized and reported in net income ............              --               --              --               --              --
Valuation reserve ..............................

Comprehensive loss .............................

5% stock dividend (fair value on date declared)        1,543,600           17,500          15,500       23,417,900              --
Purchase of treasury stock .....................              --           17,000                                         (325,500)
Tax benefit for stock options exercised ........                                                           124,300
Increase in common stock and paid-in capital
   due to exercise of stock options ............         100,300               --           1,000          830,200              --
Issuance of stock for employee 401(k) plan match          18,100                              200          351,400              --
                                                    --------------------------------------------------------------------------------
Balance at July 31, 2005 .......................      32,526,800          384,400   $     325,300    $ 230,643,800     ($5,994,400)
                                                    ================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                                          Accumulated
                                                                               Other            Total
                                                        Accumulated    Comprehensive    Stockholders'
                                                            Deficit             Loss           Equity
                                                            -------             ----           ------
<S>                                                   <C>                   <C>         <C>
Balance at July 31, 2002 .......................      ($ 56,051,200)              --    $ 104,733,200
Net income for the year ended July 31, 2003 ....          3,844,000               --        3,844,000
Unrealized loss on available for-sale
    securities, net of tax .....................                 --         ($85,000)         (85,000)
                                                                                        -------------
Comprehensive income ...........................                                            3,759,000
                                                                                        =============
5% stock dividend (fair value on date declared)         (37,709,200)              --               --
Increase in common stock and paid-in capital
   due to exercise of stock options ............                 --               --          630,800
Issuance of stock for employee 401(k) plan match                 --               --          257,200
                                                    -------------------------------------------------
Balance at July 31, 2003 .......................        (89,916,400)         (85,000)     109,380,200

Net loss for the year ended July 31, 2004 ......         (6,231,600)              --       (6,231,600)
Unrealized loss on available for-sale
    securities, net of tax .....................                 --         (160,900)        (160,900)
                                                                                        -------------
Comprehensive loss .............................                                           (6,392,500)
                                                                                        =============
Purchase of treasury stock .....................                 --               --       (5,668,900)
Increase in common stock and paid-in capital
   due to exercise of stock options ............                 --               --        6,564,800
Issuance of stock for employee 401(k) plan match                 --               --          282,200
                                                    -------------------------------------------------
Balance at July 31, 2004 .......................        (96,148,000)        (245,900)     104,165,800

Net income for the year ended July 31, 2005 ....      $   3,004,000               --        3,004,000
Unrealized gain on available for-sale
    securities, net of tax .....................                 --           43,100
Reclassification adjustment for net loss
realized and reported in net income ............                 --          122,000
Valuation reserve ..............................                             (49,800)         115,300
                                                                           ---------    -------------
Comprehensive loss .............................                                            3,119,300
                                                                                        =============
5% stock dividend (fair value on date declared)         (23,433,400)              --               --
Purchase of treasury stock .....................                 --               --         (325,500)
Tax benefit for stock options exercised ........                                              124,300
Increase in common stock and paid-in capital
   due to exercise of stock options ............                 --               --          831,200
Issuance of stock for employee 401(k) plan match                 --               --          351,600
                                                    -------------------------------------------------
Balance at July 31, 2005 .......................      ($116,577,400)       ($130,600)   $ 108,266,700
                                                    =================================================
</TABLE>



                                       F-5

                             See accompanying notes
<PAGE>

                                ENZO BIOCHEM, INC
                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                               Fiscal years ended July 31,
                                                                                 ---------------------------------------------------
                                                                                         2005               2004               2003
                                                                                         ----               ----               ----
<S>                                                                              <C>                <C>                <C>
OPERATING ACTIVITIES
Net income (loss) .........................................................      $  3,004,000       ($ 6,231,600)      $  3,844,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
     Depreciation and amortization of property and equipment ..............         1,020,400          1,076,000          1,058,000
     Amortization of patent costs .........................................         1,311,700          1,285,500            750,000
     Provision for uncollectible accounts receivable ......................         4,967,100         11,986,500          9,345,300
     Deferred taxes .......................................................           890,900         (1,650,700)          (128,100)
     Issuance of stock for 401 K plan employer match ......................           351,600            282,200            257,200
     Deferred rent ........................................................           (86,700)          (232,600)          (195,400)
     Loss on sales of marketable securities ...............................           200,200                 --                 --
     Tax benefit on stock option exercise .................................           124,300                 --                 --
     Other ................................................................           (51,900)             1,400            (14,800)

     Changes in operating assets and liabilities:
        Accounts receivable before provision for
        uncollectible amounts .............................................        (3,593,200)        (9,514,500)        (6,344,200)
        Inventories .......................................................           558,200            (12,500)           768,400
        Income taxes receivable ...........................................         3,906,900         (3,364,600)         1,426,300
        Prepaid expenses ..................................................          (747,400)           400,400           (741,900)
        Prepaid taxes .....................................................        (1,329,200)                --                 --
        Trade accounts payable and other accrued expenses .................         1,174,900            714,600           (374,700)
        Accrued research and development expenses .........................            61,300           (228,400)           453,400
        Deferred revenue ..................................................           359,400                 --                 --
        Accrued legal fees ................................................           666,300            135,300          1,775,200
        Accrued payroll ...................................................            39,700           (227,600)           227,100
                                                                                 ------------       ------------       ------------
        Total adjustments .................................................         9,824,500            651,000          8,261,800
                                                                                 ------------       ------------       ------------

           Net cash provided by (used in) operating activities ............        12,828,500         (5,580,600)        12,105,800
                                                                                 ------------       ------------       ------------

INVESTING ACTIVITIES
    Capital expenditures ..................................................        (1,275,700)        (1,303,800)          (956,700)
    Patent costs deferred .................................................           (19,700)          (443,800)          (353,900)
    Sales (purchases) of marketable securities, net .......................        10,442,800         (2,349,000)       (15,293,400)
                                                                                 ------------       ------------       ------------
           Net cash provided by (used in) investing activities ............         9,147,400         (4,096,600)       (16,604,000)
                                                                                 ------------       ------------       ------------

FINANCING ACTIVITIES
    Proceeds from the exercise of stock options, net ......................           505,900            895,700            630,800
    Proceeds from insurance loss ..........................................                --             13,000                 --
                                                                                 ------------       ------------       ------------
           Net cash provided by financing activities ......................           505,900            908,700            630,800
                                                                                 ------------       ------------       ------------

Net increase (decrease) in cash and cash equivalents ......................        22,481,800         (8,768,500)        (3,867,400)
Cash and cash equivalents at the beginning of the year ....................        54,499,100         63,267,600         67,135,000
                                                                                 ------------       ------------       ------------
Cash and cash equivalents at the end of the year ..........................      $ 76,980,900       $ 54,499,100       $ 63,267,600
                                                                                 ============       ============       ============
</TABLE>

See Note 2 for  supplemental  disclosure  for statement of cash flows - non cash
transactions



                                       F-6

                             See accompanying notes
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


NOTE 1 -    BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Enzo  Biochem,  Inc.  (the  "Company")  is  engaged  in  research,  development,
manufacturing and marketing of diagnostic and research products based on genetic
engineering,  biotechnology and molecular  biology.  These products are designed
for the diagnosis of and/or screening for infectious diseases,  cancers, genetic
defects and other medically  pertinent  diagnostic  information.  The Company is
conducting research and development activities in the development of therapeutic
products based on the Company's  technology  platform of genetic  modulation and
immune  modulation.  The Company also operates a clinical  reference  laboratory
that offers and provides  diagnostic medical testing services to the health care
community.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and  assumptions  that affect the reported  amount of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and  amounts of income and  expenses  during the  reporting  period.
Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The accompanying  consolidated  financial statements include the accounts of the
Company and its wholly owned  subsidiaries.  All  intercompany  transactions and
balances have been eliminated.

CASH AND CASH EQUIVALENTS

The  Company   considers  its  investments  in  highly  liquid   corporate  debt
instruments  with  maturities of three months or less at the date of purchase to
be  cash  equivalents.  The  Company  limits  concentration  of  credit  risk by
diversifying its investments among a variety of high credit quality issuers.

MARKETABLE SECURITIES

Investments  with a maturity  greater  than three months at the date of purchase
are designated as marketable  securities.  At July 31, 2005 and 2004, management
designated  marketable  securities  held by the  Company  as  available-for-sale
securities,  for purposes of Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity  Securities".  Securities
available-for-sale are carried at fair value with the unrealized losses reported
in  stockholders'  equity  under the caption  "Accumulated  other  comprehensive
loss".

The Company  periodically reviews its investment portfolio to determine if there
is an impairment  that is other than temporary.  In testing for impairment,  the
Company considers,  among other factors,  the length of time and the extent of a
security's  unrealized loss, the financial  condition and near term prospects of
the  issuer,  economic  forecasts  and market or  industry  trends.  The cost of
marketable  securities  sold is  based  on the  original  cost  basis  plus  any
reinvested dividends.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments that subject the Company to significant  concentrations of
credit  risk  primarily  consist  of  cash  and  cash  equivalents,   marketable
securities,  net accounts receivable,  accounts payable and accrued liabilities,
which are carried at cost, which management  believes  approximates  fair value.
The  Company's  cash  equivalents  and  marketable  securities  are  invested in
financial instruments with high credit ratings.

                                      F-7
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


CONCENTRATION OF CREDIT RISK

At July 31,  2005 and  2004,  approximately  94% and 89%,  respectively,  of the
Company's net accounts  receivable relates to its clinical reference  laboratory
business, which operates in the New York Metropolitan area. The Company believes
that the  concentration  of credit risk with  respect to  clinical  laboratory's
accounts  receivable  is limited due to the  diversity of the  Company's  client
base,  the  number  of  insurance  carriers  it  deals  with,  and its  numerous
individual  patient  accounts.  As is  standard  in the  health  care  industry,
substantially all of the Company's clinical  laboratory's accounts receivable is
with numerous third party insurance  carriers and individual  patient  accounts.
The  Company  also  provides  services  to certain  patients  covered by various
third-party  payers,  including the Federal Medicare  program.  Revenue,  net of
contractual allowances,  from direct billings under the Federal Medicare program
during the years ended July 31, 2005, 2004 and 2003 were  approximately 20%, 19%
and 11%,  respectively,  of the Company's total revenue.  The clinical reference
laboratory  industry is characterized  by a significant  amount of uncollectible
accounts receivable  resulting from the inability to receive accurate and timely
billing  information  in order to  forward  it to the  third  party  payers  for
reimbursement,   and  the  inaccurate  information  received  from  the  covered
individual patients for unreimbursed unpaid amounts.

INVENTORIES

Inventories  are stated at the lower of cost  (first-in,  first-out)  or market.
Work-in-process  and finished  goods  inventories  consist of  material,  labor,
outside processing costs and manufacturing overhead.

PROPERTY AND EQUIPMENT

Property and equipment is stated at cost, and  depreciated on the  straight-line
basis over the estimated useful lives of the assets.  Leasehold improvements are
amortized over the term of the related  leases or estimated  useful lives of the
assets, whichever is shorter.

PATENT COSTS

The Company capitalizes certain legal costs directly incurred in pursuing patent
applications  as  deferred  patent  costs  under its  research  and  development
segment.  When such applications  result in an issued patent,  the related costs
are  amortized  over a ten year period or the life of the patent,  whichever  is
shorter,  using the straight-line method. The Company reviews its issued patents
and  pending  patent  applications,  and if it  determines  to  abandon a patent
application  or  that an  issued  patent  no  longer  has  economic  value,  the
unamortized  balance  in  deferred  patent  costs  relating  to that  patent  is
immediately expensed.

COMPREHENSIVE INCOME

Statement of Financial  Accounting  Standards No. 130, "Reporting  Comprehensive
Income" (SFAS 130"), requires reporting and displaying of comprehensive loss and
its components.  In accordance  with SFAS 130, the accumulated  balance of other
comprehensive  loss,  which is comprised of net unrealized  losses on marketable
securities, is disclosed as a separate component of stockholders' equity.

REVENUE RECOGNITION

Revenues from the clinical  laboratory  are  recognized  upon  completion of the
testing process for a specific  patient and reported to the ordering  physician.
The  Company's  revenue  is based on amounts  billed or  billable  for  services
rendered,  net of  contractual  adjustments  and  other  arrangements  made with
third-party  payers to provide services at less than established  billing rates.
The Company's contractual adjustments,  and the provision for doubtful accounts,
are estimated based on historical  collection  experience  using a retrospective
collection analysis and aging models. Should circumstances change (e.g. shift in
payer mix, decline in economic conditions,  or deterioration in aging of patient
receivables),  our estimates of the net realizable value of patient  receivables
could be reduced by a material amount.

                                      F-8
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


Revenues  from  research  product  sales,  exclusive  of  certain  non-exclusive
distribution agreements, are recognized when the products are shipped, the sales
price is fixed or determinable and  collectibility  is reasonably  assured.  The
Company has certain  non-exclusive  distribution  agreements,  which provide for
consideration  to be paid to the  distributors  for the  manufacture  of certain
products.  The Company records such consideration provided to distributors under
these non-exclusive  distribution  agreements as a reduction to research product
revenues.  During the fiscal  years ended July 31,  2005,  2004,  and 2003,  the
manufacturing and processing cost of these products sold was $0.7 million,  $7.4
million,  and $7.0 million,  respectively.  The revenue from these non-exclusive
distribution  agreements  are  recognized  when  shipments  are  made  to  their
respective customers and reported to the Company.

REIMBURSEMENT CONTINGENCIES

Laws  and   regulations   governing   Medicare   are   complex  and  subject  to
interpretation for which action for noncompliance  includes fines, penalties and
exclusion  from  the  Medicare  programs.  The  Company  believes  that it is in
compliance  with all  applicable  laws and  regulations  and is not aware of any
pending  or  threatened   investigations   involving  allegations  of  potential
wrongdoing.

SHIPPING AND HANDLING COSTS

Research product revenue shipping and handling costs included in selling expense
amounted to  approximately  $299,000,  $384,000,  and  $414,000 for fiscal years
ended July 31, 2005, 2004, and 2003, respectively.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs are charged to research and development  expenses
as  incurred.  Such  costs  include  costs of  scientific  personnel,  supplies,
consultants,  allocated  facility  costs,  costs  related  to  pre-clinical  and
clinical trials, and amortization of patent expense.

INCOME TAXES

The Company  accounts for income taxes under the liability  method of accounting
for  income  taxes.  Under  the  liability  method,   deferred  tax  assets  and
liabilities  are  recognized  for the future tax  consequences  attributable  to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their  respective tax bases.  The liability  method requires
that any tax benefits  recognized for net operating loss carryforwards and other
items be reduced by a valuation  allowance where it is more likely than not that
the  benefits  may not be  realized.  Deferred  tax assets and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  Under the  liability  method,  the effect on  deferred  tax assets and
liabilities  of a change in tax rates is recognized in income in the period that
includes the enactment date.

RECLASSIFICATIONS

Certain amounts in prior years have been reclassified to conform to current year
presentation.

GOODWILL AND OTHER INTANGIBLES

The Company follows the provisions of the Financial  Accounting  Standards Board
("FASB") Statement No. 142 ("SFAS 142"),  Goodwill and Other Intangibles.  Under
SFAS 142,  goodwill  is no longer  subject to  amortization  over its  estimated
useful life.  Rather,  goodwill is subject to at least an annual  assessment for
impairment  by  applying a  fair-value  based  test.  Additionally,  an acquired
intangible  asset  should  be  separately  recognized  if  the  benefit  of  the
intangible  asset is obtained through  contractual or other legal rights,  or if
intangible  asset  can be sold,  transferred,  licensed,  rented  or  exchanged,
regardless of the acquirer's  intent to do so. All of the Company's  goodwill is
related to their clinical reference laboratory segment. The Company adopted SFAS
No. 142 as of August 1, 2002 and has performed the requisite impairment testing.
The Company has performed their annual

                                      F-9
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


impairment  testing during the fourth quarter of its fiscal year.  Based on this
testing,  there is no  impairment to the goodwill  recorded on the  accompanying
balance sheet as of July 31, 2005 and 2004.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company accounts for its investments in long-lived assets in accordance with
FASB  Statement  No. 144 ("SFAS No.  144"),  Accounting  for the  Impairment  or
Disposal of Long-Lived  Assets and Long-Lived  Assets.  The Company adopted SFAS
No.  144 on August 1,  2002.  SFAS No.  144  requires  a company  to review  its
long-lived  assets for impairment  whenever  events or changes in  circumstances
indicate that the carrying  amount of an asset may not be  recoverable.  Factors
the Company  considers  important,  which could  trigger an  impairment  review,
include, among others, the following:

     o   a  significant  adverse  change  in the  extent  or  manner  in which a
         long-lived asset is being used;

     o   a significant  adverse change in the business climate that could affect
         the value of a long-lived asset; and

     o   a significant decrease in the market value of assets.

The Company periodically  evaluates the recoverability of the net carrying value
of its property,  and intangible  assets.  An impairment loss is recognized when
the carrying value of the long-lived asset exceeds its undiscounted  future cash
flows and its fair value.  A loss on impairment  would be  recognized  through a
charge to earnings. No impairment charges were required in fiscal 2005, 2004, or
2003.

SEGMENT REPORTING

The  FASB  issued   Statement  of  Financial   Accounting   Standards  No.  131,
"Disclosures  About  Segments of an Enterprise  and Related  Information"  which
establishes standards for reporting information on operating segments in interim
and annual financial statements.  An enterprise is required to separately report
information  about each  operating  segment that engages in business  activities
from which the segment may earn  revenues  and incur  expenses,  whose  separate
operating results are regularly  reviewed by the chief operating  decision maker
regarding  allocation of resources and  performance  assessment and which exceed
specific  quantitative  thresholds related to revenue and profit or loss. During
all  fiscal  periods  presented,   the  Company  met  these  requirements,   and
accordingly has two reportable segments (see Note 13).

STOCK DIVIDENDS

During  fiscal  2005,  the  Company's  board of  directors  declared  a 5% stock
dividend on October 5, 2004 payable  November 15, 2004 to shareholders of record
as  of  October  25,  2004.   The  fiscal  2004  per  share  data  was  adjusted
retroactively  to reflect the stock  dividend  declared  on October 5, 2004.  In
fiscal 2003,  the Company's  board declared a 5% stock dividend on June 10, 2003
payable July 14, 2003 to  shareholders of record as of June 30, 2003. The shares
and per share data for fiscal 2003 have been adjusted to  retroactively  reflect
the stock dividend in fiscal 2003. The Company  recorded a charge to accumulated
deficit and  offsetting  credits to both  common  stock and  additional  paid-in
capital  of  $23,433,400  and  $37,709,200  in  fiscal  2005  and  fiscal  2003,
respectively,  which reflects the fair value of the stock dividends on the dates
of declaration

NET INCOME (LOSS) PER SHARE

The Company applies SFAS No. 128, "Earnings per Share." SFAS No. 128 establishes
standards  for  computing and  presenting  earnings per share.  Basic net income
(loss) per share  represents net income (loss)  divided by the weighted  average
number of common shares  outstanding  during the period.  The dilutive effect of
potential common shares,  consisting of outstanding stock options, is determined
using the  treasury  stock  method in  accordance  with  SFAS No.  128.  Diluted
weighted average shares outstanding for 2004 do not include the potential common
shares  from  stock  options  because  to do so would  have  been  antidilutive.
Accordingly,  basic and  diluted  net loss per share is the same.  The number of
potential  common shares excluded from the  calculation of diluted  earnings per
share during the year ended July 31, 2004 was 798,349 shares.

                                      F-10
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


The following  table sets forth the  computation of basic and diluted net income
(loss) per share pursuant to SFAS No. 128.

<TABLE>
<CAPTION>
Fiscal years ended July 31,                                                 2005            2004               2003
                                                                            ----            ----               ----
<S>                                                                   <C>            <C>                 <C>
Numerator:
    Net income  (loss) for numerator for basic and diluted net
    income per common share                                           $3,004,000     $(6,231,600)        $3,844,000
                                                                      ==========     ============        ==========

Denominator:
    Denominator   for  basic  net  income  (loss)  per  common
    share-weighted-average shares                                     32,097,000       31,700,000        31,399,000

Effect of dilutive employee and director stock options
                                                                         666,000              - -           776,000
                                                                         -------              ---           -------

Denominator  for diluted net income (loss) per  share-adjusted
weighted-average shares                                               32,763,000       31,700,000        32,175,000

Basic net income (loss) per share                                           $.09           $(.20)              $.12
                                                                            ====           ======              ====

Diluted net income (loss) per share                                         $.09           $(.20)              $.12
                                                                            ====           ======              ====
</TABLE>


Basic earnings per share have been computed using the weighted-average number of
shares of common stock outstanding. Diluted earnings per share has been computed
using the basic weighted-average  shares of common stock issued plus outstanding
stock options, in the periods in which such options have a dilutive effect under
the treasury stock method.

For the  fiscal  years  ended  July 31,  2005,  2004 and  2003,  the  effect  of
approximately 818,300, 554,500, and 79,900, respectively, of outstanding options
to purchase  common  shares were excluded  from the  calculation  of diluted net
income (loss) per share because their effect would be anti-dilutive.

STOCK COMPENSATION PLANS

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123 "Share-Based  Payment" ("SFAS 123(R)").  The statement requires that the
compensation cost relating to share-based payment  transactions be recognized in
financial statements.  That cost will be measured based on the fair value of the
equity or liability  instrument  issued.  The  statement  covers a wide range of
share-based compensation arrangements including share options,  restricted share
plans,  performance-based  awards, share appreciation rights, and employee share
purchase  plans.  The Company was  required to adopt SFAS 123(R) as of August 1,
2005,  the first day of its fiscal year ending July 31,  2006.  The  adoption of
SFAS 123(R) will have a material impact on the consolidated financial statements
of the Company.

For the fiscal year ending July 31, 2005,  the Company  continued to account for
stock  option  grants  to  employees   under  the  recognition  and  measurement
principles of APB Opinion No. 25,  "Accounting  for Stock Issued to  Employees,"
and related Interpretations. Under APB No. 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recorded.

Pro  forma  information   regarding  net  income  (loss)  applicable  to  common
stockholders is required by FASB Statement No. 123 ("SFAS 123"), "Accounting for
Stock-Based   Compensation,"   which  also  requires  that  the  information  be
determined  as if the Company has accounted for its stock options under the fair
value  method of that  statement.  For  purposes of pro forma  disclosures,  the
estimated  fair value of the options is  amortized  to expense over the options'
vesting  period.  The fair  value  for these  options  was  estimated  using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions used for all grants in the years ended July

                                      F-11
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


31, 2005, 2004, and 2003: no dividend yield,  weighted-average  expected life of
the option of seven years,  risk-free  interest rate ranges of 3% to 6.88% and a
volatility of 0.71, 0.74, and 0.77, respectively, for all grants.

During the fiscal years ended July 31, 2005 and 2004,  the Company  followed the
provisions of FASB Statement No. 148 ("SFAS 148"),  "Accounting  for Stock-Based
Compensation  - Transition  and  Disclosure."  SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition  to SFAS No. 123's fair value method of  accounting  for  stock-based
employee  compensation.  SFAS No. 148 also amends the  disclosure  provisions of
SFAS No. 123 to require  disclosure  in the  summary of  significant  accounting
policies  of the  effects  of an  entity's  accounting  policy  with  respect to
stock-based employee compensation on reported net income. While SFAS No. 148 did
not amend SFAS No. 123 to  require  companies  to  account  for  employee  stock
options  using the fair value  method,  as SFAS No.  123(R) did, the  disclosure
provisions  of SFAS No. 148 are  applicable to all  companies  with  stock-based
employee  compensation,  method of SFAS No. 123 or the intrinsic value method of
APB No.  25. The  Company  adopted  the  disclosure  provisions  of SFAS No. 148
effective January 31, 2004.

On June 3, 2005, the Board of Directors  approved the acceleration of vesting of
unvested "out of the money" stock options held by employees, including executive
officers,  and directors.  The stock options considered as out of the money were
those with an exercise price that was $1.50 or greater than $14.82,  the closing
price of the  Company's  common  stock on June 3,  2005.  All  other  terms  and
conditions of these "out of the money" options remain unchanged.  As a result of
the  acceleration,  options  to  purchase  approximately  666,000  shares of the
Company's  common stock (which  represents  approximately  21% of the  Company's
currently  outstanding  stock  options)  became  exercisable  immediately.   The
accelerated  options  range in  exercise  prices  from  $16.39 to $19.02 and the
weighted average exercise price of the accelerated options was $17.55 per share.
The total number of options subject to acceleration  include options to purchase
575,000  shares held by executive  officers and  directors of the Company.  This
action was taken to avoid expense  recognition  in future  financial  statements
upon  adoption  of SFAS  123(R).  The  accelerated  vesting of these "out of the
money"  options  does not  result  in a charge  in the  Company's  statement  of
operations  for the  fiscal  year ended  July 31,  2005 based on U.S.  generally
accepted accounting principles. The Company reported approximately $10.1 million
of pro forma compensation expense for the fiscal year ended July 31, 2005 in the
pro forma SFAS footnote disclosure below, of which $6.0 million is applicable to
these "out of the money" options.

The following  table  illustrates the effect on net income (loss) if the Company
had applied the fair value recognition provisions of SFAS No. 123:

Fiscal years ended July 31,                   2005           2004          2003
                                              ----           ----          ----

Reported net income (loss)              $3,004,000    ($6,231,600)   $3,844,000

Pro forma compensation expense         (10,128,600)    (3,239,800)   (3,010,900)
                                       -----------     ----------    ----------

Pro forma net income (loss)            ($7,124,600)   ($9,471,400)     $833,100
                                       ===========    ===========      ========

Pro forma net income (loss) per share:
Basic                                        ($.22)         ($.30)         $.03

Diluted                                      ($.22)         ($.30)         $.03

                                      F-12
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


NOTE 2 -  SUPPLEMENTAL DISCLOSURE FOR STATEMENT OF CASH FLOWS

In the years  ended July 31,  2005,  2004 and 2003,  the  Company  paid cash for
income taxes of approximately $3,566,000, $219,000 and $583,000 respectively.

In fiscal 2005, a director  exercised  31,660 shares of incentive stock options.
The director  surrendered 17,000 previously owned shares of the Company's common
stock to be utilized to exercise  the stock  options.  The Company  recorded the
market value of surrendered  shares as treasury stock of approximately  $325,500
as a non cash transaction.

In fiscal 2004,  certain  officers  exercised  769,300 shares of incentive stock
options.  The officers  surrendered  349,900 of  previously  owned shares of the
Company's common stock to be utilized to exercise the stock options. The Company
recorded the 349,900 of surrendered  shares as treasury  stock of  approximately
$5.7 million as a non cash transaction.

In fiscal 2004, the Company purchased the assets of a privately held company for
$650,000,  of  which  $350,000  was  paid in cash  during  fiscal  2004  and the
remaining  $300,000 is to be paid in two $150,000  installments on the 18 and 36
month anniversary date of the acquisition.

NOTE 3 - MARKETABLE SECURITIES

Marketable  securities are recorded at fair value. The following is a summary of
available-for-sale securities:

<TABLE>
<CAPTION>
                                                                     Fair Value                    Unrealized Holding (Loss)
                                                                     ----------                    -------------------------
Fiscal Years Ended July 31,                                          2005               2004               2005                2004
                                                                     ----               ----               ----                ----
<S>                                                           <C>                <C>                <C>                 <C>
Income bond mutual fund                                       $ 5,638,600        $15,401,300        $  (125,900)        $  (271,600)

Marketable debt securities:
 U.S. Government and agency securities                            449,100          1,063,100                ---                 ---
 Corporate debt securities                                        625,900            777,100             (4,700)           (129,400)
                                                              -----------        -----------        -----------         -----------
(Average of remaining maturity of debt                        $ 6,713,600        $17,241,500        $  (130,600)        $  (401,000)
 securities was approximately four months at                  ===========        ===========        ===========         ===========
 July 31, 2005 and 2004)
</TABLE>

During fiscal 2005, the Company realized proceeds of approximately $10.7 million
from maturities and sales of marketable securities,  on which it realized a loss
of  approximately  $200,000,  based on the average cost.  There were no realized
gains or losses on marketable security transactions during fiscal 2004 or fiscal
2003.  The Company's  cost basis in these  marketable  securities as of July 31,
2005 and 2004 was $6,844,200 and $17,642,500, respectively.

The following is a summary of other comprehensive  (loss),  which relates to the
Company's investments in marketable securities:

<TABLE>
<CAPTION>
                                                                       Tax (Expense)       Net-of-Tax
                                              Before-Tax Amount           or Benefit           Amount
                                              -----------------           ----------           ------
<S>                                                   <C>                    <C>             <C>
Fiscal 2003 unrealized (loss)                         $(139,300)             $54,300         $(85,000)
Fiscal 2004 unrealized (loss)                          (261,700)             100,800         (160,900)
Fiscal 2005 realized loss                               200,000              (78,000)         122,000
Fiscal 2005 unrealized gain                              70,400              (27,300)          43,100
                                                         ------              -------           ------
                                                       (130,600)              49,800          (80,800)
Valuation reserve                                           - -              (49,800)         (49,800)
                                                            ---              -------          -------
Cumulative balance at July 31, 2005....               ($130,600)                  $0        ($130,600)
                                                      ==========                  ==        =========
</TABLE>

                                      F-13
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


NOTE 4 -  INVENTORIES

At July 31, 2005 and 2004 inventories consist of:

                                                            2005           2004
                                                            ----           ----
Raw materials                                            $51,700       $124,900
Work in process                                        1,767,200      2,188,000
Finished products                                      1,057,200      1,121,400
                                                      ----------     ----------
                                                      $2,876,100     $3,434,300
                                                      ==========     ==========

NOTE 5 - PROPERTY AND EQUIPMENT

At July 31, 2005 and 2004 property and equipment consist of:

                                                            2005           2004
                                                            ----           ----
Laboratory machinery and equipment                    $2,098,100     $1,901,900
Leasehold improvements                                 2,771,100      2,543,400
Office furniture and equipment                         5,079,000      5,650,300
                                                       ---------      ---------
                                                       9,948,200     10,095,600
Accumulated depreciation and amortization             (7,278,700)    (7,681,000)
                                                      ----------     ----------
                                                      $2,669,500     $2,414,600
                                                      ==========     ==========

The Company's  fixed assets have been assigned useful lives of between three and
five years.  In fiscal 2005, the Company  removed the cost basis and accumulated
depreciation  and  amortization of fixed assets that were fully  depreciated and
disposed.

NOTE 6 -  LEASE OBLIGATIONS

The Company leases office and laboratory  space under several leases that expire
between  December 31, 2005 and March 2017. An entity owned by certain  executive
officers/directors  of the Company owns the building that the Company  leases as
its main facility for  laboratories and research and  manufacturing  operations,
and corporate headquarters.  In March 2005, the Company amended and extended the
lease for another 12 years.  In addition to the minimum annual rentals of space,
the lease is subject to annual  increases,  based on the  consumer  price index.
Annual  increases  are limited to 3% per year.  Rent expense  under this renewed
lease and the prior lease approximated $1,289,000,  $1,370,000 and $1,302,000 in
fiscal years 2005, 2004 and 2003, respectively.

Total consolidated rent expense incurred by the Company during fiscal 2005, 2004
and 2003 was approximately  $2,140,000,  $1,801,000 and $1,742,000 respectively.
Minimum annual rentals under operating lease commitments for fiscal years ending
July 31, are as follows:

Fiscal Year ended July 31,                                  Minimum Annual Rents
--------------------------                                  --------------------
2006                                                                  $2,601,000
2007                                                                   2,750,000
2008                                                                   2,644,000
2009                                                                   2,464,000
2010                                                                   2,200,000
Thereafter                                                            10,978,000
                                                                     -----------
                                                                     $23,637,000
                                                                     ===========

                                      F-14
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


NOTE 7 -  LITIGATION

On  October  14,  2004,  the  Company  as  plaintiff  finalized  and  executed a
settlement  and license  agreement  with Digene  Corporation  to settle a patent
litigation lawsuit (the "Digene  agreement").  Under the terms of the agreement,
the Company  received  an initial  payment of $16.0  million,  would earn in the
first "annual period"  (October 1, 2004 to September 30, 2005) a minimum royalty
payment of $2.5 million,  and receive a minimum  royalty of $3.5 million in each
of the next four annual  periods.  In addition,  the agreement  provides for the
Company  to  receive  quarterly  running  royalties  on the net  sales of Digene
products  subject to the license until the expiration of the patent on April 24,
2018. These quarterly  running  royalties will be fully  creditable  against the
minimum  royalty  payments  due in the first  five years of the  agreement.  The
balance,  if any, of the minimum royalty payment will be recognized in the final
quarter  of the  applicable  annual  royalty  period.  As a result of the Digene
agreement,  the Company recorded a gain on patent litigation settlement of $14.0
million in the first quarter of fiscal 2005, and deferred $2 million which would
be earned  from net sales of the  Company's  licensed  products  covered  by the
agreement  during the first annual  period.  As of July 31, 2005, the balance of
the deferred revenue from the settlement was $359,400.

In October 2002,  the Company filed suit in the United States  District Court of
the Southern  District of New York against Amersham plc,  Amersham  Biosciences,
Perkin Elmer, Inc., Perkin Elmer Life Sciences, Inc., Sigma-Aldrich Corporation,
Sigma Chemical Company,  Inc.,  Molecular Probes,  Inc. and Orchid  Biosciences,
Inc. In January 2003,  the Company  amended its complaint to include  defendants
Sigma Aldrich Co. and Sigma  Aldrich,  Inc. The counts set forth in the suit are
for breach of contract; patent infringement; unfair competition under state law;
unfair  competition  under  federal law;  tortious  interference  with  business
relations;  and fraud in the inducement of contract.  The complaint alleges that
these counts arise out of the defendants' breach of  distributorship  agreements
with the Company concerning labeled nucleotide products and technology,  and the
defendants' infringement of patents covering the same. In April, 2003, the Court
directed that individual  complaints be filed separately against each defendant.
The defendants have answered the individual complaints and asserted a variety of
affirmative  defenses and  counterclaims.  Fact discovery is ongoing.  The Court
conducted a claim  construction  hearing from July 5-11, 2005. Closing arguments
on claim construction  issues were conducted on September 30, 2005. There can be
no assurance  that the Company will be successful in this  litigation.  However,
even if the Company is not  successful,  management  does not believe that there
will be a  significant  adverse  monetary  impact to the  Company.  The  Company
recorded  revenue  from only Perkin  Elmer during the fiscal year ended July 31,
2005.

On October 28, 2003, the Company and Enzo Life  Sciences,  Inc., a subsidiary of
the  Company,  filed suit in the United  States  District  Court of the  Eastern
District  of New York  against  Affymetrix,  Inc.  The  Complaint  alleges  that
Affymetrix improperly transferred or distributed  substantial business assets of
the Company to third parties,  including  portions of the Company's  proprietary
technology, reagent systems, detection reagents and other intellectual property.
The  Complaint  also  charges  that  Affymetrix  failed to account  for  certain
shortfalls in sales of the Company's  products,  and that Affymetrix  improperly
induced   collaborators   and  customers  to  use  the  Company's   products  in
unauthorized  fields or otherwise in violation of the  agreement.  The Complaint
seeks full  compensation  from  Affymetrix  to the Company  for its  substantial
damages,  in addition to injunctive and  declaratory  relief to prohibit,  among
other things,  Affymetrix's  unauthorized use, development,  manufacture,  sale,
distribution  and  transfer  of  the  Company's  products,   technology,  and/or
intellectual   property,  as  well  as  to  prohibit  Affymetrix  from  inducing
collaborators,  joint venture partners, customers and other third parties to use
the  Company's  products  in  violation  of the terms of the  agreement  and the
Company's rights.  Subsequent to the filing of the Complaint against Affymetrix,
Inc. referenced above, on or about November 10, 2003, Affymetrix, Inc. filed its
own complaint against the Company and its subsidiary,  Enzo Life Sciences, Inc.,
in the United  States  District  Court for the  Southern  District  of New York,
seeking among other things,  declaratory  relief that Affymetrix,  Inc., has not
breached the parties'  agreement,  that it has not  infringed  certain of Enzo's
Patents,  and that  certain  of  Enzo's  patents  are  invalid.  The  Affymetrix
complaint  also seeks  damages for  alleged  breach of the  parties'  agreement,
unfair  competition,  and tortuous  interference,  as well as certain injunction
relief to prevent  alleged unfair  competition  and tortuous  interference.  The
Company does not believe that the Affymetrix complaint has any merit and intends
to defend  vigorously.  Affymetrix also moved to transfer venue of Enzo's action
to the Southern District of New York, where other actions commenced by Enzo were
pending as well as Affymetrix's  subsequently filed action. On January 30, 2004,
Affymetrix's  motion  to  transfer  was  granted.   Accordingly,  the  Enzo  and
Affymetrix  actions are now both pending in the  Southern  District of New York.
Initial  pleadings have been  completed and discovery has  commenced.  The Court
conducted a claim construction hearing from July 5 - 11, 2005. Closing arguments
on claim

                                      F-15
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


construction  issues were  conducted on September 30, 2005.  The Company did not
record any revenue from  Affymetrix  during the fiscal years ended July 31, 2005
and 2004.

On June 2,  2004  Roche  Diagnostic  GmbH  and  Roche  Molecular  Systems,  Inc.
(collectively  "Roche")  filed suit in the U.S.  District  Court of the Southern
District of New York against Enzo  Biochem,  Inc. and Enzo Life  Sciences,  Inc.
(collectively  "Enzo").  The  complaint  was filed after Enzo  rejected  Roche's
latest cash offer to settle Enzo's  claims for,  INTER ALIA,  alleged  breach of
contract and  misappropriation of Enzo's assets. The complaint seeks declaratory
judgment (i) of patent  invalidity with respect to Enzo's  4,994,373 patent (the
"'373 patent"),  (ii) of no breach by Roche of its 1994  Distribution and Supply
Agreement with Enzo (the "1994  Agreement"),  (iii) that non-payment by Roche to
Enzo for certain  sales of Roche  products  does not  constitute a breach of the
1994  Agreement,  and (iv)  that  Enzo's  claims  of  ownership  to  proprietary
inventions,  technology and products  developed by Roche are without  basis.  In
addition,  the suit claims tortious  interference  and unfair  competition.  The
Company does not believe that the  complaint has merit and intends to vigorously
respond to such action with appropriate  affirmative defenses and counterclaims.
Enzo filed an Answer and  Counterclaims  on November 3, 2004  alleging  multiple
breaches of the 1994  Agreement and related  infringement  of Enzo's 373 patent.
Discovery has commenced.  The Court conducted a claim construction  hearing from
July 5-11, 2005. Closing arguments on claim  construction  issues were conducted
on September 30, 2005.  The Company did not record any revenue from Roche during
the fiscal year ended July 31, 2005.

In June 1999, the Company filed suit in the United States District Court for the
Southern  District of New York against  Gen-Probe  Incorporated,  Chugai  Pharma
U.S.A., Inc., Chugai Pharmaceutical Co., Ltd., bioMerieux,  Inc., bioMerieux SA,
and Becton  Dickinson and Company,  charging them with  infringing the Company's
U.S. Patent  4,900,659,  which concerns probes for the detection of the bacteria
that causes  gonorrhea.  On January 26, 2001, the court granted the  defendants'
motion for summary  judgment that the Company's  patent is invalid.  On July 15,
2002,  the Court of Appeals for the Federal  Circuit  reversed  the  judgment of
invalidity and remanded the case to the district court for further  proceedings.
In March  2003,  settlements  were  reached  with  bioMerieux  and  Chugai;  the
settlements  did not have a material  monetary  impact on the  Company.  In July
2004,  the  district  court  again  granted  another  motion  by  the  remaining
defendants  (Gen-Probe  and Becton  Dickinson)  that all claims of the Company's
patent are invalid.  The Company filed an appeal of that judgment.  On September
30, 2005, the Court of Appeals  affirmed the judgment of invalidity.  Management
does not believe that there will be a significant adverse monetary impact to the
Company.

On March 6, 2002, the Company was named,  along with certain of its officers and
directors among others,  in a complaint  entitled Lawrence F. Glaser and Maureen
Glaser,  individually  and on behalf of  Kimberly,  Erin,  Hannah,  and Benjamin
Glaser v. Hyman Gross,  Barry Weiner,  Enzo  Biochemical  Inc.,  Elazar Rabbani,
Shahram Rabbani, John Delucca, Dena Engelhardt, Richard Keating, Doug Yates, and
Does I-50,  Case No.  CA-02-1242-A,  in the U.S.  District Court for the Eastern
District of Virginia. This complaint was filed by an investor in the Company who
had filed for  bankruptcy  protection  and his  family.  The  complaint  alleged
securities fraud, breach of fiduciary duty, conspiracy, and common law fraud and
sought in excess of $150 million in damages.  On August 22, 2002,  the complaint
was voluntarily  dismissed;  however a new  substantially  similar complaint was
filed at the  same  time.  On  October  21,  2002,  the  Company  and the  other
defendants filed a motion to dismiss the complaint, and the plaintiffs responded
by amending the complaint and dropping their claims against  defendants  Keating
and Yates.  On November 18,  2002,  the Company and the other  defendants  again
moved to dismiss the Amended  Complaint.  On July 16,  2003,  the Court issued a
Memorandum  Opinion  dismissing  the  Amended  Complaint  in its  entirety  with
prejudice.  Plaintiffs thereafter moved for reconsideration but the Court denied
the motion on September 8, 2003.  Plaintiffs thereafter appealed the decision to
the United  States Court of Appeals for the Fourth  Circuit.  On March 21, 2005,
the Fourth  Circuit  affirmed the lower  Court's  prior  dismissal of all claims
asserted in the action,  with the sole  exception  of a portion of the claim for
common law fraud and remanded that  remaining  portion of the action to the U.S.
District Court for the Eastern District of Virginia. On May 20, 2005, defendants
again moved the District Court to dismiss the sole remaining claim before it. On
July 14, 2005, the District Court granted defendants' renewed motion to dismiss.
On July 29, 2005, Plaintiffs moved to amend their Complaint for reconsideration.
On August 19,  2005,  the Court denied  Plaintiffs'  motion to amend and entered
final judgment  dismissing the complaint.  Thereafter,  Plaintiffs  appealed the
order and judgment to the Fourth Circuit.  That appeal is presently pending. The
Company  continues to believe that the  complaint  has no merit  whatsoever  and
intends to continue to defend the action vigorously.

On June  7,  2004,  the  Company  and its  wholly-owned  subsidiary,  Enzo  Life
Sciences,  Inc., filed suit in the United States District Court for the District
of Connecticut  against  Applera  Corporation  and its  wholly-owned  subsidiary
Tropix, Inc.

                                      F-16
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


The complaint  alleges  infringement of six patents  (relating to DNA sequencing
systems, labelled nucleotide products, and other technology). Yale University is
the owner of four of the  patents  and the  Company is the  exclusive  licensee.
Accordingly,  Yale is also a plaintiff in the lawsuit. Yale and Enzo are aligned
in protecting the validity and enforceability of the patents. Enzo Life Sciences
is the  owner of the  remaining  two  patents.  The  complaint  seeks  permanent
injunction  and damages  (including  treble  damages  for wilful  infringement).
Defendants   answered  the  complaint  on  July  29,  2004.  The  answer  pleads
affirmative   defences   of   invalidity,   estoppel   and  laches  and  asserts
counterclaims of  non-infringement  and invalidity.  Fact discovery is currently
scheduled to close on February 28, 2006.  Dispositive  motions are currently due
on March 27, 2006.  The trial date is currently  scheduled  for October 1, 2006.
There  can  be no  assurance  that  the  Company  will  be  successful  in  this
litigation.  Even if the Company is not successful,  management does not believe
that there will be a significant  adverse  monetary  impact on the Company.  The
Company  did not record any revenue  from either of the above  during the fiscal
years July 31, 2005 and 2004.

NOTE 8 - INCOME TAXES

The  Company  accounts  for income  taxes under the  provisions  of SFAS No. 109
"Accounting for Income Taxes".  The  (provision)  benefit for income taxes is as
follows:

Fiscal year ended July 31,                   2005           2004           2003
                                             ----           ----           ----

Current (provision) benefit:
  Federal                             $(1,386,700)   $ 3,288,000    $(1,828,000)
  State and local                          64,300       (191,500)      (181,400)
Deferred (provision) benefit             (890,900)     1,751,600        128,100
                                      -----------    -----------    -----------
(Provision) benefit for income taxes  $(2,213,300)   $ 4,848,100    $(1,881,300)
                                      ===========    ===========    ===========

Deferred tax assets and liabilities arise from temporary differences between the
tax basis of assets and liabilities and their reported  amounts in the financial
statements.  The components of deferred tax assets  (liabilities) as of July 31,
2005 and 2004 are as follows:

<TABLE>
<CAPTION>
                                                                                   July 31, 2005          July 31, 2004
                                                                                   -------------          -------------
<S>                                                                                      <C>                    <C>
Current deferred tax assets (liabilities):
  Provision for uncollectible accounts receivable                                       $889,000             $1,072,500
  State and local tax carry forward losses                                               244,700                720,900
  Other, net                                                                            (234,000)               181,400
  Realized and unrealized losses on marketable securities                                129,100                     --
  Less: Valuation reserve for realized and unrealized losses                            (129,100)                    --
                                                                                        --------             ----------
Net current deferred tax assets                                                          899,700              1,974,800
                                                                                        --------             ----------

Non current deferred tax (liability):
  Deferred patent costs                                                                 (293,000)              (906,200)
Non current deferred tax asset:
  Depreciation                                                                            33,000                462,000
                                                                                        --------             ----------
Deferred tax liability non current, net                                                 (260,000)              (444,200)
                                                                                        --------             ----------
Deferred tax assets - net                                                               $639,700             $1,530,600
                                                                                        ========             ==========
</TABLE>

In assessing if deferred tax assets are realizable, management considers whether
it is more likely than not that some  portion or the entire  deferred  tax asset
will be  realized.  The  ultimate  realization  of the  deferred  tax  asset  is
dependent  upon the  generation of future  taxable  income against which the the
deferred tax asset can be applied.  Management  considers scheduled reversals of
deferred  tax  liabilities,  projected  future  taxable  income and tax planning
strategies  that can be  implemented  by the Company in making this  assessment.
During fiscal 2005,  the Company  determined  that it is not likely that it will
generate  taxable  income  against which the deferred tax asset for the realized
and unrealized losses on marketable securities can be applied. Therefore, it has
established a valuation  reserve against this deferred tax asset. As of July 31,
2005 and 2004,  there were no carry forward losses for federal taxes. As of July
31, 2005 and 2004,  the Company has state and local tax carry forward  losses of
approximately $4.2 million and $11.2 million, respectively.

                                      F-17
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


The  (provision)  benefit  for income  taxes were at rates  different  from U.S.
federal statutory rates for the following reasons:

<TABLE>
<CAPTION>
Fiscal year ended July 31,                                                     2005      2004    2003
                                                                               ----      ----    ----
<S>                                                                            <C>        <C>    <C>
Federal statutory rate                                                         (34%)      34%    (34%)
Expenses not deductible for income tax return purposes                          (2%)      (3%)    (2%)
State income taxes, net of (benefit) of federal tax deduction.                  (6%)       4%     (3%)
Benefit of foreign sales                                                         1%        2%      4%
Fixed asset basis difference                                                     -         8%      -
Other                                                                           (1%)      (1%)     2%
                                                                               ----      ----    ----
                                                                               (42%)      44%    (33%)
                                                                               ====      ====    ====
</TABLE>

NOTE 9 -  STOCKHOLDERS' EQUITY

TREASURY STOCK

In fiscal 2005, a director  exercised  31,660 shares of incentive stock options.
The director  surrendered 17,000 previously owned shares of the Company's common
stock to be utilized to exercise  the stock  options.  The Company  recorded the
market value of surrendered shares as treasury stock of approximately  $325,500,
and is a non cash transaction.

In fiscal 2004,  certain  officers  exercised  769,300 shares of incentive stock
options.  The officers  surrendered  349,900 of  previously  owned shares of the
Company's common stock to be utilized to exercise the stock options. The Company
recorded  the  market  value  of   surrendered   shares  as  treasury  stock  of
approximately $5.7 million, and is a non cash transaction.

INCENTIVE STOCK OPTION PLANS

The Company has incentive stock option plans ("1994 plan" and "1999 plan") under
which the Company may grant  options for up to 1,336,745  shares (1994 plan) and
up to 2,312,356 shares (1999 plan) of common stock. No additional options may be
granted under the 1994 plan. In fiscal 2005,  the Company set up a new incentive
stock  options  plan  ("2005  plan")  under  which the  Company  may grant up to
1,000,000  shares of common stock.  The exercise price of options  granted under
such plans is equal to or greater  than fair market value of the common stock on
the date of  grant.  The  options  granted  pursuant  to the plans may be either
incentive  stock  options or non  statutory  options.  Incentive  stock  options
generally become exercisable at 25% per year after one year and expire ten years
after the date of grant.  To date, the Company has only granted  incentive stock
options under these plans.

                                      F-18
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


A summary of the information pursuant to the Company's stock option plan for the
years ended July 31, 2005, 2004 and 2003 under SFAS No. 123 is as follows:

<TABLE>
<CAPTION>
                                                 2005                           2004                              2003
                                   ------------------------------   -----------------------------    -------------------------------
                                                                                   Weighted -                         Weighted -
                                                                                   Average                            Average
                                   Options         Exercise Price   Options        Exercise Price    Options          Exercise Price
                                   -------         --------------   -------        --------------    -------          --------------
<S>                                <C>             <C>              <C>             <C>              <C>               <C>
Outstanding at
beginning of year                  2,856,801          $11.86        3,397,087           $9.88        2,841,401             $9.38
Granted                              431,975          $16.57          428,925          $17.02          661,225            $11.76
Exercised                           (100,332)          $7.39         (917,539)          $7.16          (79,838)            $6.85
Cancelled                            (34,319)         $11.64          (51,672)         $10.13          (25,701)           $12.51
                                   ---------             -          ---------                        ---------
Outstanding at
end of year                        3,154,125          $12.61        2,856,801          $11.86        3,397,087             $9.88
                                   =========                        =========                        =========
Exercisable at
end of year                        2,126,442          $11.28        1,770,492          $10.54        2,490,003             $8.98
                                   =========                        =========                        =========
Weighted  average fair
value  of options
granted during year                                   $11.76                           $12.40                              $8.49
                                                      ======                           ======                              =====
</TABLE>

The following table summarizes information for stock options outstanding at July
31, 2005:


<TABLE>
<CAPTION>
                                                 Options outstanding                             Options exercisable
                                                 -------------------                             -------------------
                                                 Weighted-Average         Weighted-                           Weighted-
    Range of Exercise                                Remaining          Average Exercise                   Average Exercise
          Prices            Shares               Contractual Life            Price         Shares               Price
          ------            ------               ----------------            -----         ------               -----
<S>                          <C>                    <C>                      <C>          <C>                    <C>
         $5.45-8.08           291,451                3.2 years                $5.64        291,451                $5.64
        $8.33-12.25         1,830,092                4.7 years               $11.06      1,540,066               $10.91
       $12.93-19.02           952,706                8.3 years               $16.72        215,050               $16.60
       $20.20-24.42            61,644                6.0 years               $21.42         61,644               $21.42
             $36.05            18,233                4.4 years               $36.05         18,233               $36.05
                            ---------                                                    ---------
                            3,154,125                                                    2,126,444
                            =========                                                    =========
</TABLE>

As of July 31, 2005, there were approximately 806,800 shares available for grant
under the arrangements described above.

NOTE 10 -  COMMITMENTS

The Company had an exclusive  licensing  agreement  to an  invention  covered by
licensed patents. Under this agreement, the Company was required to make certain
minimum  royalty  payments of $200,000 per year through the life of the patents.
The patent expired in December, 2004.

NOTE 11 -  EMPLOYEE BENEFIT PLAN

The Company has a qualified  Salary  Reduction  Profit Sharing Plan (the "Plan")
for eligible  employees  under Section 401(k) of the Internal  Revenue Code. The
Plan provides for voluntary employee  contributions through salary reduction and
voluntary employer contributions at the discretion of the Company. For the years
ended July 31, 2005,  2004 and 2003,  the Company  authorized  employer  matched
contributions of 50% of the employees'  contribution up to 10% of the employees'
compensation,  payable in Enzo Biochem,  Inc. common stock.  The 401(k) employer
matched  contributions  expense was $351,600,  $282,200,  and $257,200 in fiscal
years 2005, 2004 and 2003, respectively.

                                      F-19
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003


NOTE 12 -  SUMMARY OF SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The  following  table  contains  statement of  operations  information  for each
quarter of the fiscal years ended July 31, 2005 and 2004.  The Company  believes
that  the  following  information  reflects  all  normal  recurring  adjustments
necessary for a fair presentation of the information for the periods  presented.
The operating results for any quarter are not necessarily  indicative of results
for any future period.

Unaudited quarterly financial data (in thousands,  except per share amounts) for
fiscal 2005 and 2004 is summarized as follows:

<TABLE>
<CAPTION>
FISCAL 2005

                                                                                Quarter Ended
                                                        ------------------------------------------------------------
                                                        October 31,        January 31,      April 30,       July 31,
                                                        -----------        -----------      ---------       --------
                                                               2004               2005           2005           2005
                                                               ----               ----           ----           ----
<S>                                                         <C>                <C>            <C>            <C>
Total revenues                                              $10,301            $11,235        $11,000        $10,867
Gross profit                                                  6,812              7,821          7,035          6,991
Income (loss) before income taxes                            12,173              (944)        (2,553)        (3,459)
Net income (loss)                                             7,021              (528)        (1,497)        (1,992)
Basic income (loss) per common share                          $0.22            ($0.02)        ($0.05)        ($0.06)
Diluted income (loss) per common share                        $0.22            ($0.02)        ($0.05)        ($0.06)


<CAPTION>
FISCAL 2004

                                                                                Quarter Ended
                                                        ------------------------------------------------------------
                                                        October 31,        January 31,      April 30,       July 31,
                                                        -----------        -----------      ---------       --------
                                                               2003               2004           2004           2004
                                                               ----               ----           ----           ----
<S>                                                         <C>                <C>            <C>             <C>
Total revenues                                              $10,273            $11,028        $11,765         $8,578
Gross profit                                                  7,567              8,099          8,705          4,167
Loss before income taxes                                      (816)            (2,755)          (891)        (6,618)
Net loss                                                      (323)            (1,455)          (460)        (3,994)
Basic loss per common share                                 ($0.01)            ($0.05)        ($0.02)        ($0.12)
Diluted loss per common share                               ($0.01)            ($0.05)        ($0.02)        ($0.12)
</TABLE>

                                      F-20
<PAGE>

                               ENZO BIOCHEM, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          JULY 31, 2005, 2004 AND 2003

Note 13--Segment Reporting

The Company applies SFAS No. 131,  "Disclosures  about Segments of an Enterprise
and Related  Information."  SFAS No. 131  establishes  standards  for  reporting
information  regarding  operating  segments in annual  financial  statements and
requires  selected  information  for those  segments to be  presented in interim
financial  reports  issued  to  stockholders.  SFAS  No.  131  also  establishes
standards for related  disclosures  about  products and services and  geographic
areas. The chief operating decision maker, or  decision-making  group, in making
decision how to allocate resources and assess performance,  identifies operating
segments as components of an enterprise about which separate discrete  financial
information is available for evaluation.

The Company has two reportable  segments:  research and development and clinical
laboratories.  The Company's research and development  segment conducts research
and development activities and sells products derived from these activities. The
clinical  laboratories  segment provides  diagnostic services to the health care
community.  The Company  evaluates  segment  performance based on segment income
(loss) before taxes.  Costs excluded from segment income (loss) before taxes and
reported as other consist of corporate  general and  administrative  costs which
are not  allocable to the two  reportable  segments.  Management  of the Company
assesses assets on a consolidated basis only and therefore, assets by reportable
segment have not been included in the reportable  segments below. The accounting
policies  of the  reportable  segments  are the same as those  described  in the
summary of significant accounting policies

The following  financial  information  (in thousands)  represents the reportable
segments of the Company:

<TABLE>
<CAPTION>
                                           Research and Development       Clinical Reference Laboratories
                                           ------------------------       -------------------------------
                                           Fiscal Year Ended July 31,        Fiscal Year Ended July 31,
                                           --------------------------        --------------------------
                                          2005        2004        2003       2005       2004        2003
                                          ----        ----        ----       ----       ----        ----
<S>                                       <C>         <C>           <C>        <C>        <C>         <C>
Operating revenues:
Research product and royalty income    $ 10,546    $ 12,972    $ 23,253         --         --          --
expenses and (other income):
Clinical laboratory services                 --          --          --   $ 32,857   $ 28,672    $ 29,514

Expenses and (other income):
Cost of research product                  2,196       2,518       3,389         --         --          --
revenues
Cost of clinical laboratory                  --          --          --     12,548     10,586       9,593
services
Research and development                  8,452       8,078       8,311         --         --          --
expense
Depreciation and amortization             1,396       1,414         881        887        902         893
amamoramortization
Provision for uncollectible                  --       1,753         616      4,967     10,234       8,729
accounts
Other expenses                            1,009         508         609     11,618      8,429       7,294
eexpenses
Interest income                              --          --          --         --         --          --
Gain on patent litigation settlement    (14,000)         --          --         --         --          --
                                       --------    --------    --------   --------   --------    --------

Income (loss) before income taxes      $ 11,493    $ (1,299)   $  9,447   $  2,837   $ (1,479)   $  3,005
                                       ========    ========    ========   ========   ========    ========
</TABLE>

<TABLE>
<CAPTION>
                                                      Other                         Consolidated
                                                      -----                         ------------
                                           Fiscal Year Ended July 31,        Fiscal Year Ended July 31,
                                           --------------------------        --------------------------
                                          2005        2004        2003        2005        2004        2003
                                          ----        ----        ----        ----        ----        ----
<S>                                        <C>     <C>         <C>            <C>         <C>         <C>
Operating revenues:
Research product and royalty income          --          --          --    $ 10,546    $ 12,972    $ 23,253
expenses and (other income):
Clinical laboratory services                 --          --          --      32,857      28,672      29,514

Expenses and (other income):
Cost of research product                     --          --          --       2,196       2,518       3,389
revenues
Cost of clinical laboratory                  --          --          --      12,548      10,586       9,593
services
Research and development                     --          --          --       8,452       8,078       8,311
expense
Depreciation and amortization                50    $     45    $     34       2,333       2,361       1,808
amamoramortization
Provision for uncollectible                  --          --          --       4,967      11,987       9,345
accounts
Other expenses                           10,586       9,409       8,048      23,213      18,346      15,951
eexpenses
Interest income                          (1,523      (1,152)     (1,355)     (1,523)     (1,152)     (1,355)
Gain on patent litigation settlement         --          --          --     (14,000)         --          --
                                       --------    --------    --------    --------    --------    --------

Income (loss) before income taxes      $ (9,112)   $ (8,302)   ($ 6,727)   $  5,217    $(11,080)   $  5,725
                                       ========    ========    ========    ========    ========    ========
</TABLE>

The  Company's  reportable  segments are  determined  based on the services they
performed and the products they sell, not on the  geographic  area in which they
operate. The Company's clinical laboratories segment operates 100% in the United
States with all revenue derived from this country.  The research and development
segment  earns  revenue  both in the United  States and foreign  countries.  The
following  is a summary of research and  development  revenues  attributable  to
customers located in the United States and foreign countries:

                                            2005            2004            2003
                                            ----            ----            ----

United States ..................         $ 7,985         $ 8,029         $19,492
Foreign countries ..............           2,561           4,943           3,761
                                         -------         -------         -------
                                         $10,546         $12,972         $23,253
                                         =======         =======         =======

                                      F-21
<PAGE>

                               ENZO BIOCHEM, INC
                            SCHEDULE II - VALUATION
                            AND QUALIFYING ACCOUNTS
                    Years ended July 31, 2005, 2004 and 2003


<TABLE>
<CAPTION>
                                                                               Additions
                                                                               ---------

                                                  Balance at              Charged    Charged
                                                   Beginning  (credited) to costs   to other     (Additions)             Balance at
Description                                        of period         and expenses   accounts     Deductions           end of period
-----------                                        ---------         ------------   --------     ----------           -------------
<S>                                              <C>                  <C>            <C>              <C>               <C>
2005
Allowance for doubtful accounts receivable       $ 2,770,300          $ 4,967,100         --     $  5,445,700   (1)      $ 2,291,700

2004
Allowance for doubtful accounts receivable       $ 2,257,400          $11,986,500         --     $ 11,473,600   (1)      $ 2,770,300

2003
Allowance for doubtful accounts receivable       $ 2,862,600          $ 9,345,000         --     $  9,950,200   (1)      $ 2,257,400
</TABLE>


     (1) Write-off of uncollectible accounts receivable.

                                      S-1