UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|                                                      |  |                                                                            
|----------------------------------------------------- |  | ---------------------------------------------------------------------------
|x                                                     |  | QUARTERLY REPORT
        PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
|                                                      |  | EXCHANGE ACT OF 1934                                                       
|                                                      |  |                                                                            
|For
        the quarterly period ended April 30, 2008
|or                                                   
|                                                     
|o                                                     |  | 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                         |  | (IRS. Employer     
|of Incorporation or Organization)                    |  | Identification No.)
|                                                    
|527 Madison Ave, New York, New York                  |  | 10022              
|(Address of Principal Executive office)              |  | (Zip Code)         
|                                                    
|212-583-0100                                         |  |                    
|(Registrant’s telephone number, including area code) |  |                    

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 has required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesx Noo

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

Large accelerated fileroAccelerated filerxNon-accelerated fileroSmaller reporting companyo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)

YesoNox

As of June 1, 2008 the Registrant had approximately 37,205,100 shares of common stock outstanding.







ENZO BIOCHEM, INC.FORM 10-QApril 30, 2008

INDEX

PART I - FINANCIAL INFORMATION

|Item 1.                     | Financial Statements                                                    |  |   
|--------------------------- | ----------------------------------------------------------------------- |  | --
|                            |                                                                         |  |   
|                            | Consolidated Balance Sheets                                             |  |   
|                            | April 30, 2008 (unaudited) and July 31, 2007 (audited)                  |  | 3 
|                            |                                                                         |  |   
|                            | Consolidated Statements of Operations                                   |  |   
|                            | For the three and nine months ended April 30, 2008 and 2007 (unaudited) |  | 4 
|                            |                                                                         |  |   
|                            | Consolidated Statement of Stockholders’ Equity and Comprehensive Loss   |  |   
|                            | For the nine months ended April 30, 2008 (unaudited)                    |  | 5 
|                            |                                                                         |  |   
|                            | Consolidated Statements of Cash Flows                                   |  |   
|                            | For the nine months ended April 30, 2008 and 2007 (unaudited)           |  | 6 
|                            |                                                                         |  |   
|                            | Notes to Consolidated Financial Statements                              |  | 7 
|                            |                                                                         |  |   
|Item 2.                     | Management’s Discussion and Analysis of                                 |  |   
|                            | Financial Condition and Results of Operations                           |  | 17
|                            |                                                                         |  |   
|Item 3.                     | Quantitative and Qualitative Disclosures About Market Risk              |  | 32
|                            |                                                                         |  |   
|Item 4.                     | Controls and Procedures                                                 |  | 32
|                            |                                                                         |  |   
|Part II – OTHER INFORMATION
|                           
|Item 1.                     | Legal Proceedings                                                       |  | 33
|                            |                                                                         |  |   
|Item 1A.                    | Risk Factors                                                            |  | 33
|                            |                                                                         |  |   
|Item 6.                     | Exhibits                                                                |  | 33
|                            |                                                                         |  |   
|Signatures                  |                                                                         |  | 33
|                            |                                                                         |  |   













2

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Part 1Financial InformationItem 1Financial Statements

ENZO BIOCHEM, INC.CONSOLIDATED BALANCE SHEETS(in thousands, except share data)

|                                                                                    |  | April 30,   |          | July 31, 
|----------------------------------------------------------------------------------- |  | ----------- | -------- | ---------
|                                                                                    |  | 2008        |          | 2007     
|                                                                                    |  | (unaudited) |          | (audited)
|ASSETS                                                                              |  |             |          |          
|                                                                                   
|Current assets:                                                                     |  |             |          |          
|Cash and cash equivalents                                                           |  | $           | 96,503   |          
|Accounts receivable, net of allowances                                              |  |             | 14,123   |          
|Inventories                                                                         |  |             | 6,461    |          
|Prepaid expenses                                                                    |  |             | 1,510    |          
|Total current assets                                                                |  |             | 118,597  |          
|                                                                                   
|Property, plant, and equipment, net                                                 |  |             | 7,191    |          
|Goodwill                                                                            |  |             | 14,270   |          
|Intangible assets, net                                                              |  |             | 8,976    |          
|Other                                                                               |  |             | 1,780    |          
|Total assets                                                                        |  | $           | 150,814  |          
|                                                                                   
|LIABILITIES AND STOCKHOLDERS’ EQUITY                                                |  |             |          |          
|                                                                                   
|Current liabilities:                                                                |  |             |          |          
|Accounts payable - trade                                                            |  | $           | 3,486    |          
|Accrued liabilities                                                                 |  |             | 6,298    |          
|Other current liabilities                                                           |  |             | 1,239    |          
|Deferred taxes                                                                      |  |             | 278      |          
|Total current liabilities                                                           |  |             | 11,301   |          
|                                                                                   
|Deferred revenue                                                                    |  |             | 600      |          
|Deferred taxes                                                                      |  |             | 1,920    |          
|                                                                                   
|Commitments and contingencies                                                       |  |             |          |          
|                                                                                   
|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:          |  |             |          |          
|37,630,708 at April 30, 2008 and 37,280,723 at July 31, 2007                        |  |             | 376      |          
|Additional paid-in capital                                                          |  |             | 300,328  |          
|Less treasury stock at cost: 777,719 shares at April 30, 2008 and 596,456 shares at |  |             |          |          
|July 31, 2007                                                                       |  |             | (11,331  | )        
|Accumulated deficit                                                                 |  |             | (152,898 | )        
|Accumulated other comprehensive income                                              |  |             | 518      |          
|Total stockholders’ equity                                                          |  |             | 136,993  |          
|Total liabilities and stockholders’ equity                                          |  | $           | 150,814  |          

The accompanying notes are an integral part of these consolidated financial statements





3

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ENZO BIOCHEM, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)(in thousands, except per share data)

|                                                |  |    | Three Months Ended |   |  |    | Nine Months Ended |  
|----------------------------------------------- |  | -- | ------------------ | - |  | -- | ----------------- | -
|                                                |  |    | April 30,          |   |  |    | April 30,         |  
|                                                |  |    | 2008               |   |  |    | 2007              |  
|Revenues:                                       |  |    |                    |   |  |    |                   |  
|Product revenues                                |  | $  | 6,995              |   |  | $  | 883               |  
|Royalty and license fee income                  |  |    | 1,642              |   |  |    | 1,547             |  
|Clinical laboratory services                    |  |    | 10,312             |   |  |    | 11,530            |  
|                                                |  |    | 18,949             |   |  |    | 13,960            |  
|                                               
|Costs and expenses and other (income):          |  |    |                    |   |  |    |                   |  
|Cost of product revenues                        |  |    | 4,434              |   |  |    | 831               |  
|Cost of clinical laboratory services            |  |    | 5,178              |   |  |    | 5,253             |  
|Research and development expense                |  |    | 1,999              |   |  |    | 2,614             |  
|Selling, general, and administrative expense    |  |    | 8,343              |   |  |    | 6,177             |  
|Provision for uncollectible accounts receivable |  |    | 927                |   |  |    | 1,338             |  
|Legal expense                                   |  |    | 782                |   |  |    | 3,049             |  
|Interest income                                 |  |    | (712               | ) |  |    | (1,548            | )
|Other income                                    |  |    | (62                | ) |  |    | -                 |  
|                                                |  |    | 20,889             |   |  |    | 17,714            |  
|                                               
|Loss before income taxes                        |  |    | (1,940             | ) |  |    | (3,754            | )
|Provision for income taxes                      |  |    | 168                |   |  |    | 79                |  
|Net loss                                        |  | ($ | 2,108              | ) |  | ($ | 3,833             | )
|                                               
|Net loss per common share:                      |  |    |                    |   |  |    |                   |  
|Basic                                           |  | ($ | 0.06               | ) |  | ($ | 0.10              | )
|Diluted                                         |  | ($ | 0.06               | ) |  | ($ | 0.10              | )
|                                               
|Weighted average common shares outstanding:     |  |    |                    |   |  |    |                   |  
|Basic                                           |  |    | 36,834             |   |  |    | 36,630            |  
|Diluted                                         |  |    | 36,834             |   |  |    | 36,630            |  

The accompanying notes are an integral part of these consolidated financial statements





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ENZO BIOCHEM, INCCONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITYAND COMPREHENSIVE  LOSSNine months ended April 30, 2008(UNAUDITED)(In thousands, except share data)

|                                             |  |            |  |          |  |        |     |            |   |          |   |             |    |               |   |               |    |               |   |  | Accumulated |     |  |   |         |   | 
|-------------------------------------------- |  | ---------- |  | -------- |  | ------ | --- | ---------- | - | -------- | - | ----------- | -- | ------------- | - | ------------- | -- | ------------- | - |  | ----------- | --- |  | - | ------- | - | 
|                                             |  | Common     |  | Treasury |  | Common |     | Additional |   | Treasury |   |             |    |               |   | Other         |    | Total         |   |  |             |    
|                                             |  | Stock      |  | Stock    |  | Stock  |     | Paid-in    |   | Stock    |   | Accumulated |    | Comprehensive |   | Stockholders’ |    | Comprehensive
|                                             |  | Shares     |  | Shares   |  | Amount |     | Capital    |   | Amount   |   | Deficit     |    | Income        |   | Equity        |    | loss         
|Balance at July 31, 2007                     |  | 37,280,723 |  | 596,456  |  | $      | 372 |            | $ | 295,899  |   |             | ($ | 8,915         | ) |               | ($ | 145,504       | ) |  | $           | 42  |  | $ | 141,894 |   | 
|                                            
|Net loss for the nine months ended April 30, |  |            |  |          |  |        |     |            |   |          |   |             |    |               |   |               |    |               |   |  |             |     |  |   |         |   | 
|2008                                         |  |            |  |          |  |        |     |            |   |          |   |             |    |               |   |               |    | (7,394        | ) |  |             |     |  |   | (7,394  | ) | 
|Purchase of treasury stock                   |  |            |  | 181,263  |  |        |     |            |   |          |   |             |    | (2,416        | ) |               |    |               |   |  |             |     |  |   | (2,416  | ) | 
|Exercise of stock options                    |  | 255,797    |  |          |  |        | 3   |            |   | 2,808    |   |             |    |               |   |               |    |               |   |  |             |     |  |   | 2,811   |   | 
|Vesting of restricted stock                  |  | 57,638     |  |          |  |        | 1   |            |   |          |   |             |    |               |   |               |    |               |   |  |             |     |  |   | 1       |   | 
|Stock-based compensation charges             |  |            |  |          |  |        |     |            |   | 1,152    |   |             |    |               |   |               |    |               |   |  |             |     |  |   | 1,152   |   | 
|Issuance of stock for 401(k) employer match  |  | 36,550     |  |          |  |        |     |            |   | 481      |   |             |    |               |   |               |    |               |   |  |             |     |  |   | 481     |   | 
|Common stock issuance cost adjustment        |  |            |  |          |  |        |     |            |   | (12      | ) |             |    |               |   |               |    |               |   |  |             |     |  |   | (12     | ) | 
|Foreign currency translation adjustments     |  |            |  |          |  |        |     |            |   |          |   |             |    |               |   |               |    |               |   |  |             | 476 |  |   | 476     |   | 
|Comprehensive loss                           |  |            |  |          |  |        |     |            |   |          |   |             |    |               |   |               |    |               |   |  |             |     |  |   |         |   | 
|Balance at April 30, 2008                    |  | 37,630,708 |  | 777,719  |  | $      | 376 |            | $ | 300,328  |   |             | ($ | 11,331        | ) |               | ($ | 152,898       | ) |  | $           | 518 |  | $ | 136,993 |   | 

The accompanying notes are an integral part of these consolidated financial statements







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ENZO BIOCHEM, INCCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)(in thousands)

|                                                                            |  |    | Nine Months Ended |  
|--------------------------------------------------------------------------- |  | -- | ----------------- | -
|                                                                            |  |    | April 30,         |  
|                                                                            |  |    | 2008              |  
|Cash flows from operating activities:                                       |  |    |                   |  
|Net loss                                                                    |  | ($ | 7,394             | )
|                                                                           
|Adjustments to reconcile net loss to net cash used in operating activities: |  |    |                   |  
|Depreciation and amortization of property, plant and equipment              |  |    | 1,025             |  
|Amortization of intangible assets                                           |  |    | 362               |  
|Provision for uncollectible accounts receivable                             |  |    | 3,050             |  
|Write off and/or reserve taken for obsolete inventory                       |  |    | 154               |  
|Deferred income tax benefit                                                 |  |    | (370              | )
|Share-based compensation charges                                            |  |    | 1,152             |  
|Deferred revenue recognized                                                 |  |    | (338              | )
|Issuance of common stock for 401(k) employer match                          |  |    | 481               |  
|Other                                                                       |  |    | 3                 |  
|                                                                           
|Changes in operating assets and liabilities:                                |  |    |                   |  
|Accounts receivable                                                         |  |    | (2,822            | )
|Other receivables                                                           |  |    | —                 |  
|Inventories                                                                 |  |    | 463               |  
|Prepaid expenses                                                            |  |    | 268               |  
|Recoverable and prepaid income taxes                                        |  |    | —                 |  
|Accounts payable - trade                                                    |  |    | (344              | )
|Accrued liabilities                                                         |  |    | (2,627            | )
|Other current liabilities                                                   |  |    | (48               | )
|Deferred revenue                                                            |  |    | —                 |  
|Total Adjustments                                                           |  |    | 409               |  
|                                                                           
|Net cash used in operating activities                                       |  |    | (6,985            | )
|                                                                           
|Cash flows from investing activities:                                       |  |    |                   |  
|Capital expenditures                                                        |  |    | (1,596            | )
|Increase in cash surrender value                                            |  |    | (47               | )
|Increase in other assets                                                    |  |    | (169              | )
|Acquisition, net of cash acquired                                           |  |    | (229              | )
|Acquisition costs paid                                                      |  |    | (51               | )
|Net cash used in investing activities                                       |  |    | (2,092            | )
|                                                                           
|Cash flows from financing activities:                                       |  |    |                   |  
|Net proceeds (issuance costs) from the issuance of common stock             |  |    | (12               | )
|Proceeds from the exercise of stock options                                 |  |    | 395               |  
|Net cash provided by financing activities                                   |  |    | 383               |  
|                                                                           
|Effect of exchange rate changes on cash and cash equivalents                |  |    | 48                |  
|                                                                           
|(Decrease) increase in cash and cash equivalents                            |  |    | (8,646            | )
|Cash and cash equivalents - beginning of period                             |  |    | 105,149           |  
|Cash and cash equivalents - end of period                                   |  | $  | 96,503            |  

The accompanying notes are an integral part of these consolidated financial statements



6

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ENZO BIOCHEM, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSAs of April 30, 2008and for the three and nine month periods endedApril 30, 2008 and 2007(Unaudited)

Note 1 - Basis of Presentation

The accompanying consolidated financial statements include the accounts of Enzo Biochem, Inc. and its wholly-owned subsidiaries, Enzo Clinical Labs, Enzo Life Sciences, Enzo Therapeutics and Enzo Realty LLC,
collectively referred to as the “Company” or “Companies”. Effective May 31, 2007, Enzo Life Sciences, Inc. completed the acquisition of all of the outstanding capital stock of Axxora Life Sciences, Inc (“Axxora”).
The consolidated balance sheet as of April 30, 2008, statement of stockholders’ equity and comprehensive loss for the nine months ended April 30, 2008, the statements of cash flows for the nine months ended April 30, 2008 and 2007, and the
consolidated statements of operations for the three and nine months ended April 30, 2008 and 2007 are unaudited. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial
position and operating results for the interim periods have been made. Certain information and footnote disclosure, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States,
have been condensed or omitted. The consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended July 31, 2007 and notes thereto contained in the Company’s Annual Report on Form
10-K filed with the Securities and Exchange Commission. The consolidated balance sheet at July 31, 2007 has been derived from the audited financial statements at that date. The results of operations for the three and nine months ended April 30, 2008
are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2008.

Recent Accounting Pronouncements

On August 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109” (FIN 48). FIN 48 prescribes a “more-likely-than-not” threshold for the recognition and derecognition of tax positions, provides guidance on the accounting for interest and penalties relating to tax positions and requires that
the cumulative effect of applying the provisions of FIN 48 be reported as an adjustment to the opening balance of retained earnings or other appropriate components of equity or net assets in the statement of financial position. The Company did not
have any significant unrecognized tax positions and there was no material effect on our financial condition or results of operations as a result of adopting FIN 48. See Note 10, “Income Taxes,” for additional information relating to the
Company’s adoption of FIN 48.

In December 2007, the FASB issued Statement No. 141(R),Business Combinations(“Statement 141 (R)”), a replacement of FASB
Statement No. 141. Statement 141(R) is effective for fiscal years beginning on or after December 15, 2008 and applies to all business combinations. Statement 141(R) provides that, upon initially obtaining control, an acquirer shall recognize 100
percent of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100 percent of its target. As a consequence, the current step acquisition model will be
eliminated. Additionally, Statement 141(R) changes current practice, in part, as follows: (1) contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration; (2)
transaction costs will be expensed as incurred, rather than capitalized as part of the purchase price; (3) pre-acquisition contingencies, such as legal issues, will generally have to be accounted for in purchase accounting at fair value; and (4) in
order to accrue for a restructuring plan in purchase accounting, the requirements in FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal Activities, would have to be met at the acquisition date. While there is no expected impact to our consolidated financial statements on the accounting for acquisitions completed prior to July 31, 2009, the adoption of Statement 141(R) on
August 1, 2009 could materially change the accounting for business combinations consummated subsequent to that date.

In September 2006, the FASB issued Statement 157,Fair Value Measurement(“Statement 157”). Statement 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles and establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value. Statement 157 also expands financial
statement disclosures about fair value measurements.

7

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On February 6, 2008, the FASB issued FASB Staff Position (FSP) 157-2 which delays the effective date of Statement 157 for one year for all nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Statement 157 and FSP 157-2 are effective for financial statements issued for fiscal years beginning after November 15, 2007.

When required to adopt Statement 157, the Company expects to elect a partial deferral of Statement 157 as provided for under the provisions of FSP 157-2. The Company does not believe that the impact of partially
adopting Statement 157 effective August 1, 2008 will have a material effect on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS No. 159 is to provide opportunities to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that
choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not completed the assessment as to whether the impact of the adoption
of SFAS No. 159 will have a material impact on its financial condition or results of operations.

Reclassifications

Certain amounts in prior year periods have been reclassified to conform to current year presentation. In the fourth quarter of Fiscal 2007, the Company reclassified shipping and handling costs previously included in
selling expense to cost of sales. The shipping and handling costs reclassed were approximately $58,000 and $154,000, respectively, for the three and nine months ended April 30, 2007.

Note 2 - Acquisitions

On May 29, 2007, Enzo Life Sciences, Inc. (“Enzo Life Sciences”), a wholly owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Agreement”), by and among Enzo Life
Sciences, Axxora Life Sciences, Inc. (“Axxora”) and the stockholders, option holders and warrant holders of Axxora who owned all of the issued and outstanding capital stock, options and warrants, respectively, of Axxora (collectively,
the “Security holders”). Pursuant to the Agreement, Enzo Life Sciences
purchased all of the issued and outstanding capital stock of Axxora from the
Security holders for an aggregate purchase price of $16,322,000, exclusive of
acquisition costs of $1,023,000 and assumed debt of $475,000. The Company acquired
$881,000 in cash which is included in the current assets below. At closing $14,992,000
was paid to the Security holders, $1,280,000 was paid to an escrow agent for
a one-year period following the closing to satisfy any indemnification obligations
of the Security holders under the Agreement during that period and $50,000 was
paid to an escrow agent, for a one-year period following the closing to pay certain
out-of-pocket expenses of the representatives of the Security holders in connection
with the transaction. Upon consummation of the acquisition on June 3, 2007 with
an effective date of May 31, 2007, (“date of acquisition”), Axxora became a
wholly-owned subsidiary of Enzo Life Sciences. The acquisition was financed with the Company’s cash and cash equivalents.

The following table presents the preliminary estimated fair values of the assets acquired and liabilities assumed on the date of acquisition (in thousands):

|Current assets            |  | $ | 9,033 
|------------------------- |  | - | ------
|Property and equipment    |  |   | 360   
|Other assets              |  |   | 82    
|Other intangible assets   |  |   | 8,220 
|Goodwill                  |  |   | 6,470 
|Total assets acquired     |  |   | 24,165
|Less:                     |  |   |       
|Current liabilities       |  |   | 4,394 
|Deferred tax liabilities  |  |   | 2,426 
|Total liabilities assumed |  |   | 6,820 
|                         
|Net assets acquired       |  | $ | 17,345

8

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The purchase accounting is based on a preliminary valuation of acquired intangible assets and will be adjusted based on the final valuation report to be completed in fiscal 2008. The Company has engaged an independent
third-party valuation firm to determine the fair value of the identifiable intangible assets. The excess of the total purchase price over the fair value of the net assets acquired, including the fair value of the identifiable intangible assets, has
been allocated to goodwill. The fair values of the identifiable intangible assets are based on various factors including: cost, discounted cash flow, and relief from royalty approaches in determining the preliminary purchase price allocation and are
subject to change. For financial reporting purposes, useful lives have been assigned as follows:

|Customer relationships     |  | 15 years  
|-------------------------- |  | ----------
|Trade names and trademarks |  | Indefinite
|Other intangibles          |  | 4-5 years 

The following unaudited pro forma financial information presents the combined results of operations of the Company and Axxora as if the acquisition had occurred at the beginning of the fiscal 2007 period presented. The
pro forma financial information reflects appropriate adjustments for amortization of intangible assets and a decrease for interest expense. The pro forma financial information presented is not necessarily indicative of either the actual consolidated
operating results had the acquisition been completed at the beginning of the period or future operating results of the consolidated entities.

|                                               |  |    | Three months ended |   |  |    | Nine months ended |  
|---------------------------------------------- |  | -- | ------------------ | - |  | -- | ----------------- | -
|(In thousands except per share amounts)        |  |    | April 30, 2007     |   |  |    | April 30, 2007    |  
|Net revenues                                   |  | $  | 18,562             |   |  | $  | 47,894            |  
|Net loss                                       |  |    | (3,865             | ) |  |    | (9,792            | )
|Net loss per common share – basic and diluted: |  | ($ | 0.11               | ) |  | ($ | 0.28              | )

On March 7, 2008, Axxora acquired 100% of the
outstanding stock of a distributor of life science products in Belgium for a
total consideration of approximately $229,000 in cash, net of cash acquired,
including transaction costs. Liabilities assumed aggregated $369,000. Prior to
the acquisition, the acquired company was a distributor of Enzo Life Science’s
products as well as other  unrelated manufacturers. The Company recorded goodwill
of $348,000 related to this acquisition. The consolidated financial statements
presented herein include the results of operation for the acquired company from
the date of acquisition.

Note 3 – Net loss per share

Basic net loss per common share is computed using the weighted average number of common shares outstanding during the three and nine months ended April 30, 2008 and 2007. Diluted net loss per common shares is computed
using the weighted average number of shares outstanding during the three and nine months ended April 30, 2008 and 2007, and excludes the effect of dilutive potential common shares (consisting of employee stock options and unvested restricted stock
awards) as their inclusion would be antidilutive. Accordingly, basic and diluted net loss per share is the same during these periods.

The following table summarizes the potential number of shares issued from exercise of “in the money” stock options, net of shares repurchased with the option exercise proceeds and potential shares from
restricted stock awards, which are excluded from the computation of diluted net loss per share.

|                                                             |  | Three months ended |  | Nine months ended
|------------------------------------------------------------ |  | ------------------ |  | -----------------
|                                                             |  | April 30,          |  | April 30,        
|(In thousands)                                               |  | 2008               |  | 2007             
|Potential net shares, issued from exercise of “in the money” |  |                    |  |                  
|employee and director stock options and restricted stock     |  |                    |  |                  
|awards, excluded from diluted net loss per share             |  |                    |  |                  
|calculation                                                  |  | 142                |  | 733              

9

---



The following table summarizes the number of “out of the money” options excluded from the computation of diluted net loss per share because the effect of their potential exercise is anti-dilutive.

|                                                       |  | Three months ended |  | Nine months ended
|------------------------------------------------------ |  | ------------------ |  | -----------------
|                                                       |  | April 30,          |  | April 30,        
|(In thousands)                                         |  | 2008               |  | 2007             
|“Out of the money” employee and director stock options |  | 1,739              |  | 905              

Note 4 – Share-based compensation

The Company adopted SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”) and related interpretations effective August 1, 2005. Compensation costs recognized in the three and nine month periods
ended April 30, 2008 and 2007 include compensation costs for all share-based payments granted prior to, but not yet vested as of July 31, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123,
and compensation costs for all share-based payments granted subsequent to August 1, 2005, based on the grant fair value estimated in accordance with the provisions of SFAS 123(R).

The following table sets forth the amount of share-based compensation expense upon vesting and per share data related to share-based payment arrangements included in the accompanying statements of operations:

|                                                      |  |   | Three months ended |  |   | Nine months ended
|----------------------------------------------------- |  | - | ------------------ |  | - | -----------------
|In thousands, except per share data                   |  |   | April 30,          |  |   | April 30,        
|                                                      |  |   | 2008               |  |   | 2007             
|Stock options                                         |  | $ | 63                 |  | $ | 91               
|Restricted stock awards                               |  |   | 346                |  |   | 221              
|Total                                                 |  | $ | 409                |  | $ | 312              
|                                                     
|Impact on basic and diluted net loss per common share |  | $ | 0.01               |  | $ | 0.01             
|                                                     
|As included in the statements of operations           |  |   |                    |  |   |                  
|Cost of product revenues                              |  | $ | 7                  |  | $ | 4                
|Research and development                              |  |   | 35                 |  |   | 50               
|Selling, general and administrative                   |  |   | 367                |  |   | 258              
|                                                      |  | $ | 409                |  | $ | 312              

No excess tax benefits were recognized during the three or nine month periods ended April 30, 2008 and 2007.

Stock option plans

A summary of the activity relating to the Company’s stock option plans for the nine month period ended April 30, 2008 is as follows:

|                                      |  |           |   |                | Weighted |                 |           |  
|------------------------------------- |  | --------- | - | -------------- | -------- | --------------- | --------- | -
|                                      |  |           |   |                | Average  |                 | Aggregate
|                                      |  | Options   |   | Exercise Price |          | Intrinsic Value
|Outstanding at August 1, 2007         |  | 2,700,457 |   |                | $        | 13.32           |           | $
|Exercised                             |  | (255,797  | ) |                | $        | 11.00           |           |  
|Cancelled                             |  | (153,169  | ) |                | $        | 20.64           |           |  
|Outstanding at end of period          |  | 2,291,491 |   |                | $        | 13.10           |           | $
|Exercisable at end of period          |  | 2,265,771 |   |                | $        | 13.09           |           | $
|Available for grant at April 30, 2008 |  | 584,240   |   |                |          |                 |           |  



10

---



As of April 30, 2008, there was approximately $89,000 of total unrecognized compensation cost related to unvested stock option-based compensation, which will be recognized over a weighted average remaining period of
approximately a half a year.

During the nine months ended April 30, 2008 and 2007, the Company received cash proceeds of approximately $395,000 and $293,000, respectively, from the exercise of 35,639 and 28,548 stock options, respectively. The
aggregate intrinsic value of stock options exercised during the nine months ended April 30, 2008 and 2007, including the non-cash transactions (Note 5) was approximately $0.7 million and $0.4 million, respectively.

Restricted Stock Awards

A summary of the activity pursuant to the Company’s restricted stock awards for the nine months ended April 30, 2008 is as follows:

|                                |  |         |   |             | Weighted Average
|------------------------------- |  | ------- | - | ----------- | ----------------
|                                |  | Awards  |   | Award Price
|Unvested at beginning of period |  | 141,062 |   |             |                 
|Granted                         |  | 149,240 |   |             |                 
|Vested                          |  | (57,638 | ) |             |                 
|Forfeited                       |  | (7,000  | ) |             |                 
|Unvested at end of period       |  | 225,664 |   |             |                 

The fair value of a restricted stock award is determined based on the closing stock price on the grant date. As of April 30, 2008, there was approximately $2,130,000 of total unrecognized compensation cost related to
unvested restricted stock-based compensation to be recognized over a weighted average remaining period of twenty months.

Note 5 – Supplemental disclosure for statement of cash flows

Supplemental information with respect to the Company’s consolidated statements of cash flows is as follows (In thousands):

|           |  | Nine months ended April 30,
|---------- |  | ---------------------------
|           |  | 2008                       
|Taxes paid |  | $                          

During the nine months ended April 30, 2008, certain officers and a director of the Company exercised 220,158 stock options in non-cash transactions. The individuals surrendered 181,263 shares of previously acquired
common stock to exercise the stock options. The Company recorded approximately $2.4 million, the market value of the surrendered shares, as treasury stock.

During the nine months ended April 30, 2007, certain officers of the Company exercised 43,112 stock options in non-cash transactions. The officers surrendered 26,697 shares of previously acquired common stock to
exercise the stock options. The Company recorded approximately $0.4 million, the market value of the surrendered shares, as treasury stock.

Note 6 – Comprehensive loss

During the three months ended April 30, 2008 and 2007, total comprehensive loss was approximately $1.9 million and $3.8 million, respectively. During the nine months ended April 30, 2008 and 2007, total comprehensive
loss was approximately $6.9 million and $9.9 million, respectively.

At April 30, 2008 and July 31, 2007, the accumulated other comprehensive income relates to cumulative translation adjustments.

11

---



Note 7 - Inventories

Inventories, net of reserves of $533,000 and $379,000, respectively, consist of the following, as of:

|                                                                                                     |  |  |   |                     |  |   |                   
|---------------------------------------------------------------------------------------------------- |  |  | - | ------------------- |  | - | ------------------
|                                                                                                     |  |  |   | April
          30, |  |   | July
          31,
|(In
              thousands)                                                                         |  |  |   | 2008                |  |   | 2007              
|Raw
          materials                                                                              |  |  | $ | 25                  |  | $ | 34                
|Work
          in process                                                                            |  |  |   | 1,114               |  |   | 1,221             
|Finished
          products                                                                          |  |  |   | 5,322               |  |   | 5,767             
|                                                                                                     |  |  | $ | 6,461               |  | $ | 7,022             
|                                                                                                    
|Note
            8 – Goodwill and intangible assets                                                 
|                                                                                                    
|The
          Company’s goodwill, net of amortization, as of April 30, 2008
          is as follows:
|                                                                                                    
|In
              thousands                                                                           |  |  |   |                     |  |   |                   
|Balance – July
          31, 2007                                                                    |  |  |   |                     |  | $ | 13,676            
|Additional
          purchase price adjustments arising from fiscal 2007 business combination        |  |  |  
|in
          Life Science segment (Note 2)                                                           |  |  |   |                     |  |   | 246               
|Goodwill
          arising from fiscal 2008 business combination in Life Science segment             |  |  |   |                     |  |   |                   
|(Note
          2)                                                                                   |  |  |   |                     |  |   | 348               
|Balance – April
          30, 2008                                                                   |  |  |   |                     |  | $ | 14,270            
|

Intangible assets consist of licenses, trade names, customer relationships and product designs acquired pursuant to acquisitions and patents. Intangible assets, all of which are included in the Life Science segment,
consist of the following (in thousands):

|                                      |  | April 30, 2008 |        | July 31, 2007
|------------------------------------- |  | -------------- | ------ | -------------
|                                      |  |                |        |              
|                                      |  | Gross          |        | Amortization 
|Finite-lived intangible assets:       |  |                |        |              
|                                      |  |                |        |              
|Patents                               |  | $              | 11,027 |              
|                                      |  |                |        |              
|Customer relationships                |  |                | 3,890  |              
|Non-compete and employment            |  |                |        |              
|agreements                            |  |                | 360    |              
|Website and acquired content          |  |                | 270    |              
|Indefinitely-lived intangible assets: |  |                |        |              
|                                      |  |                |        |              
|Trademarks                            |  |                | 3,700  |              
|                                      |  |                |        |              
|Total                                 |  | $              | 19,247 |              

Note 9 – Accrued liabilities and other current liabilities

Accrued liabilities consist of:

|(In thousands)                     |  |   | April 30, 2008 |  |   | July 31, 2007
|---------------------------------- |  | - | -------------- |  | - | -------------
|Legal                              |  | $ | 1,068          |  | $ | 4,542        
|Payroll, benefits, and commissions |  |   | 1,744          |  |   | 1,417        
|Research and development           |  |   | 725            |  |   | 344          
|Professional fees                  |  |   | 678            |  |   | 986          
|Outside reference lab testing      |  |   | 275            |  |   | 276          
|Other                              |  |   | 1,808          |  |   | 881          
|                                   |  | $ | 6,298          |  | $ | 8,446        

12

---



|Other current liabilities consist of: |  |   |                |  |   |              
|------------------------------------- |  | - | -------------- |  | - | -------------
|                                     
|(In thousands)                        |  |   | April 30, 2008 |  |   | July 31, 2007
|Deferred revenue                      |  | $ | 830            |  | $ | 770          
|Other                                 |  |   | 409            |  |   | 517          
|                                      |  | $ | 1,239          |  | $ | 1,287        

Note 10 - Income taxes

At the end of each interim reporting period, the Company estimates its effective income tax rate expected to be applicable for the full year. This estimate is used to determine the income tax provision or benefit on a
year-to-date basis and may change in subsequent interim periods.

The Company’s effective tax rate provision for the three months ended April 30, 2008 was 8.6% compared to 2.1% during the three months ended April 30, 2007. The tax provision for the three months ended April 30,
2008 was based on state and local taxes, taxes and interest from a local tax audit, and book to tax differences for acquired inventory. The Company’s effective tax rate for the three months ended April 30, 2007 was based on state and local
taxes. The Company’s effective tax rate for both periods differed from the expected net operating loss carryforward benefit at the U.S. federal statutory rate of 34% primarily due to the inability to recognize such benefit. The carryforward
benefit cannot be recognized because of uncertainties relating to future taxable income in terms of both its timing and its sufficiency, which would enable the Company to realize the federal carryforward benefit.

The Company’s effective tax rate provision for the nine months ended April 30, 2008 was 1.3% compared to 2.0% during the nine months ended April 30, 2007. The tax provision for the nine months ended April 30,
2008 was based on state and local taxes, taxes and interest from a local tax audit, and book to tax differences for acquired inventory. The Company’s effective tax rate for the nine months ended April 30, 2007 was based on state and local
taxes. The Company’s effective tax rate for both periods differed from the expected net operating loss carryforward benefit at the U.S. federal statutory rate of 34% primarily due to the inability to recognize such benefit. The carryforward
benefit cannot be recognized because of uncertainties relating to future taxable income in terms of both its timing and its sufficiency, which would enable the Company to realize the federal carryforward benefit.

The Company adopted the provisions of FIN 48 on August 1, 2007. The Company did not have any significant unrecognized tax positions and there was no material effect on its financial condition or results of operations
as a result of adopting FIN 48. The Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months.

The Company files a consolidated Federal income tax return. The Company files a combined New York State and City return with certain subsidiaries. Other subsidiaries file separate state and foreign tax
returns.

The tax years that remain subject to Federal examination
are fiscal years ended July 31, 2005 through 2007. The tax years that remain
subject to state examination are fiscal years ended July 31, 2005 through 2007.
The tax years that remain open for local examination are fiscal years ended July
31, 2005 through 2007. The tax years that remain subject to foreign examination
are the years ended December 31, 2003 through 2007.

In connection with an audit of the Company’s New York City tax returns for the fiscal years ended July 31, 2002, 2003 and 2004, the Company accrued a liability of $60,000 for tax and $32,000 for interest during
the three and nine months ended April 30, 2008. In connection with a business combination, the Company recorded as of May 31, 2007 approximately $300,000 for an uncertain tax position, including accrued interest of $39,000, with respect to a deemed
dividend. During the three and nine months ended April 30, 2008, the Company accrued $4,000 and $20,000, respectively, in interest with respect to the uncertain tax position. The Company’s policy is to recognize interest and penalties accrued
on any uncertain tax positions as a component of income tax expense.





13

---



Note 11 – Other income

The Company as plaintiff and Sigma Aldrich (“Sigma”) entered into a Settlement Agreement and Release effective September 15, 2006 (the “Settlement”). Pursuant to the Settlement, the
Company’s litigation with Sigma was dismissed and the Company recognized a $2.0 million gain on patent litigation settlement in the accompanying consolidated statement of operations for the nine months ended April 30, 2007. During the nine
months ended April 30, 2007, the Company received a payment of approximately $699,000 from Perkin Elmer Inc. (“Perkin Elmer”) for amounts due under a Distribution Agreement (the “Distribution Agreement”) which terminated
December 31, 2004. The Distribution Agreement is presently subject to a lawsuit for breach of contract, patent infringement, unfair competition under state law, unfair competition under federal law, tortuous interference with business relations, and
fraud in the inducement of contract. Perkin Elmer advised in a letter to the Company that the payment was owed under the Distribution Agreement and was delayed because of changes to their accounting system and personnel changes and that it was
always their intent to comply with the Distribution Agreement. The Company advised Perkin Elmer that the payment did not represent all amounts owed under the Distribution Agreement. Accordingly, the payment was included in “Other income”
in the accompanying consolidated statements of operations for the nine months ended April 30, 2007.

Note 12 – Royalty and licensing income

In fiscal 2005, the Company as plaintiff finalized and executed a settlement and license agreement with Digene Corporation to settle a patent litigation lawsuit (the “Agreement”). Subsequent to the
settlement, 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 in April 2018. During the three months ended April 30, 2008 and
2007, the Company recorded approximately $1.0 million in royalties from the Agreement and during the nine months ended April 30, 2008 and 2007, recorded approximately $3.9 million and $3.2 million, respectively. Digene was acquired by QIAGEN N.V. in
July 2007.

During the three and nine months ended April 30, 2008, the Company recorded approximately $0.6 million and $1.5 million, respectively, in royalties and license fee income under a licensing agreement with Abbott
Molecular, Inc. (“Abbott”) entered into in the third quarter of fiscal 2007. During the three and nine months ended April 30, 2007, the Company recorded approximately $0.6 million in royalties under the licensing agreement for royalty
payments effective from September 1, 2006, the initial license period.

Note 13 – Segment reporting

The Company has three reportable segments: Life Sciences, Therapeutics, and Clinical Labs. The Company’s Life Sciences segment develops, manufactures, and markets products to research and pharmaceutical
customers. The Company’s Therapeutic segment conducts research and development activities for therapeutic drug candidates. The Clinical Labs 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 three 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.







14

---



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

Three months ended April 30, 2008

|                                                |  |                         |       |              |  |               |        |       |  | Clinical     |        |   |  |   |        |   |  |  
|----------------------------------------------- |  | ----------------------- | ----- | ------------ |  | ------------- | ------ | ----- |  | ------------ | ------ | - |  | - | ------ | - |  | -
|                                                |  | Life
          Sciences |       | Therapeutics |  | Labs          |        | Other |  | Consolidated
|Revenues:                                       |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Product revenues                                |  | $                       | 6,995 |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  | $
|Royalty and license fee income                  |  |                         | 1,642 |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  |  
|Clinical laboratory services                    |  |                         | —     |              |  |               | —      |       |  | $            | 10,312 |   |  |   | —      |   |  |  
|                                                |  |                         | 8,637 |              |  |               | —      |       |  |              | 10,312 |   |  |   | —      |   |  |  
|                                               
|Costs and expenses and other (income):          |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Cost of product revenues                        |  |                         | 4,434 |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  |  
|Cost of clinical laboratory services            |  |                         | —     |              |  |               | —      |       |  |              | 5,178  |   |  |   | —      |   |  |  
|Research and development                        |  |                         | 776   |              |  |               | 1,223  |       |  |              | —      |   |  |   | —      |   |  |  
|Provision for uncollectible accounts receivable |  |                         | —     |              |  |               | —      |       |  |              | 927    |   |  |   | —      |   |  |  
|Selling, general and administrative and legal   |  |                         | 2,404 |              |  |               | —      |       |  |              | 3,864  |   |  | $ | 2,857  |   |  |  
|Interest income                                 |  |                         | —     |              |  |               | —      |       |  |              | (53    | ) |  |   | (659   | ) |  |  
|Other income                                    |  |                         | (62   | )            |  |               | —      |       |  |              | —      |   |  |   | —      |   |  |  
|                                               
|Income (loss) before income taxes               |  | $                       | 1,085 |              |  | $             | (1,223 | )     |  | $            | 396    |   |  | $ | (2,198 | ) |  | $
|                                               
|Depreciation and amortization included above    |  | $                       | 222   |              |  | $             | 10     |       |  | $            | 206    |   |  | $ | 39     |   |  | $
|                                               
|Share-based compensation included in above:     |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Cost of product revenues                        |  | $                       | 2     |              |  |               | —      |       |  |              | 5      |   |  |   | —      |   |  | $
|Research and development                        |  |                         | 10    |              |  | $             | 25     |       |  |              | —      |   |  |   | —      |   |  |  
|Selling, general and administrative and legal   |  |                         | 36    |              |  |               | —      |       |  | $            | 65     |   |  | $ | 266    |   |  |  
|Total                                           |  | $                       | 48    |              |  |               | 25     |       |  | $            | 70     |   |  | $ | 266    |   |  | $
|                                               
|Capital expenditures                            |  | $                       | 201   |              |  | $             | —      |       |  | $            | 364    |   |  | $ | 12     |   |  | $
|                                               
|Three months ended April 30, 2007               |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|                                               
|                                                |  | Life Sciences           |       | Therapeutics |  | Clinical Labs |        | Other |  | Consolidated
|Revenues:                                       |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Product revenues                                |  | $                       | 883   |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  | $
|Royalty and license fee income                  |  |                         | 1,547 |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Clinical laboratory services                    |  |                         | —     |              |  |               | —      |       |  | $            | 11,530 |   |  |   | —      |   |  |  
|                                                |  |                         | 2,430 |              |  |               | —      |       |  |              | 11,530 |   |  |   | —      |   |  |  
|                                               
|Costs and expenses and other (income):          |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Cost of product revenues                        |  |                         | 831   |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  |  
|Cost of clinical laboratory services            |  |                         | —     |              |  |               | —      |       |  |              | 5,253  |   |  |   | —      |   |  |  
|Research and development                        |  |                         | 749   |              |  | $             | 1,865  |       |  |              | —      |   |  |   | —      |   |  |  
|Provision for uncollectible accounts receivable |  |                         | —     |              |  |               | —      |       |  |              | 1,338  |   |  |   | —      |   |  |  
|Selling, general and administrative and legal   |  |                         | 413   |              |  |               | —      |       |  |              | 3,575  |   |  | $ | 5,238  |   |  |  
|Interest income                                 |  |                         | —     |              |  |               | —      |       |  |              | —      |   |  |   | (1,548 | ) |  |  
|Other income                                    |  |                         | —     |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  |  
|                                               
|Income (loss) before income taxes               |  | $                       | 437   |              |  | $             | (1,865 | )     |  | $            | 1,364  |   |  | $ | (3,690 | ) |  | $
|                                               
|Depreciation and amortization included above    |  | $                       | 43    |              |  | $             | 4      |       |  | $            | 212    |   |  | $ | 8      |   |  | $
|                                               
|Share-based compensation included in above:     |  |                         |       |              |  |               |        |       |  |              |        |   |  |   |        |   |  |  
|Cost of product revenues                        |  | $                       | 4     |              |  |               | —      |       |  |              | —      |   |  |   | —      |   |  | $
|Research and development                        |  |                         | 17    |              |  | $             | 33     |       |  |              | —      |   |  |   | —      |   |  |  
|Selling, general and administrative and legal   |  |                         | 8     |              |  |               | —      |       |  | $            | 65     |   |  | $ | 185    |   |  |  
|Total                                           |  | $                       | 29    |              |  | $             | 33     |       |  | $            | 65     |   |  | $ | 185    |   |  | $
|                                               
|Capital expenditures                            |  | $                       | 365   |              |  | $             | 9      |       |  | $            | 385    |   |  | $ | —      |   |  | $



15

---



Nine months ended April 30, 2008

|                                                |  | Life
          Sciences |        | Therapeutics |  | Clinical
          Labs |        | Other |  | Consolidated
|----------------------------------------------- |  | ----------------------- | ------ | ------------ |  | ----------------------- | ------ | ----- |  | ------------
|Revenues:                                       |  |                         |        |              |  |                         |        |       |  |             
|Product revenues                                |  | $                       | 18,885 |              |  |                         | —      |       |  |             
|Royalty and license fee income                  |  |                         | 5,458  |              |  |                         | —      |       |  |             
|Clinical laboratory services                    |  |                         | —      |              |  |                         | —      |       |  | $           
|                                                |  |                         | 24,343 |              |  |                         | —      |       |  |             
|                                               
|Costs and expenses and other (income):          |  |                         |        |              |  |                         |        |       |  |             
|Cost of product revenues                        |  |                         | 13,078 |              |  |                         | —      |       |  |             
|Cost of clinical laboratory services            |  |                         | —      |              |  |                         | —      |       |  |             
|Research and development                        |  |                         | 2,573  |              |  | $                       | 3,577  |       |  |             
|Provision for uncollectible accounts receivable |  |                         | —      |              |  |                         | —      |       |  |             
|Selling, general and administrative and legal   |  |                         | 6,458  |              |  |                         | —      |       |  |             
|Interest income                                 |  |                         | —      |              |  |                         | —      |       |  |             
|Other income                                    |  |                         | (88    | )            |  |                         | (100   | )     |  |             
|                                               
|Income (loss) before income taxes               |  | $                       | 2,322  |              |  | $                       | (3,477 | )     |  | $           
|                                               
|Depreciation and amortization included above    |  | $                       | 622    |              |  | $                       | 25     |       |  | $           
|                                               
|Share-based compensation included in above:     |  |                         |        |              |  |                         |        |       |  |             
|Cost of product revenues                        |  | $                       | 8      |              |  |                         | —      |       |  |             
|Research and development                        |  |                         | 39     |              |  | $                       | 37     |       |  |             
|Selling, general and administrative and legal   |  |                         | 96     |              |  |                         | —      |       |  | $           
|Total                                           |  | $                       | 143    |              |  |                         | 37     |       |  | $           
|                                               
|Capital expenditures                            |  | $                       | 860    |              |  | $                       | 64     |       |  | $           
|                                               
|Nine months ended April 30, 2007                |  |                         |        |              |  |                         |        |       |  |             
|                                               
|                                               
|                                                |  | Life
    Sciences       |        | Therapeutics |  | Clinical
    Labs       |        | Other |  | Consolidated
|Revenues:                                       |  |                         |        |              |  |                         |        |       |  |             
|Product revenues                                |  | $                       | 2,699  |              |  |                         | —      |       |  |             
|Royalty and license fee income                  |  |                         | 3,756  |              |  |                         |        |       |  |             
|Clinical laboratory services                    |  |                         | —      |              |  |                         | —      |       |  | $           
|                                                |  |                         | 6,455  |              |  |                         | —      |       |  |             
|                                               
|Costs and expenses and other (income):          |  |                         |        |              |  |                         |        |       |  |             
|Cost of product revenues                        |  |                         | 1,852  |              |  |                         | —      |       |  |             
|Cost of clinical laboratory services            |  |                         | —      |              |  |                         | —      |       |  |             
|Research and development                        |  |                         | 2,481  |              |  | $                       | 4,454  |       |  |             
|Provision for uncollectible accounts receivable |  |                         | —      |              |  |                         | —      |       |  |             
|Selling, general and administrative and legal   |  |                         | 1,325  |              |  |                         | —      |       |  |             
|Interest income                                 |  |                         | —      |              |  |                         | —      |       |  |             
|Other income                                    |  |                         | (2,699 | )            |  |                         | —      |       |  |             
|                                               
|Income (loss) before income taxes               |  | $                       | 3,496  |              |  | $                       | (4,454 | )     |  | $           
|                                               
|Depreciation and amortization included above    |  | $                       | 135    |              |  | $                       | 11     |       |  | $           
|                                               
|Share-based compensation included in above:     |  |                         |        |              |  |                         |        |       |  |             
|Cost of product revenues                        |  | $                       | 10     |              |  |                         | —      |       |  |             
|Research and development                        |  |                         | 53     |              |  | $                       | 95     |       |  |             
|Selling, general and administrative and legal   |  |                         | 23     |              |  |                         | —      |       |  | $           
|Total                                           |  | $                       | 86     |              |  | $                       | 95     |       |  | $           
|                                               
|Capital expenditures                            |  | $                       | 426    |              |  | $                       | 16     |       |  | $           



16

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Note 14- Subsequent Event

On May 8, 2008, the Company’s wholly-owned
subsidiary, Enzo Life Sciences, acquired substantially
all of the U.S.-based assets of Biomol International, L.P. (“Biomol”)
 through Enzo Life Sciences’ newly-formed subsidiary, Biomol International,
 Inc., and all of the outstanding capital stock of Biomol’s two wholly
 owned United Kingdom subsidiaries through Enzo Life Sciences’ wholly owned
 subsidiary, Axxora (UK) Ltd. (the
“Biomol Acquisition”), for a purchase price of $18 million, comprised
of $15 million in cash, subject to downward adjustment based on net asset value
on the closing date, and $3 million of unregistered common stock of the Company.

In addition, Biomol may be entitled to receive
a maximum of $5 million in earn-out payments over the next two years, payable
in two installments of $2.5 million on each of the next two anniversaries of
the closing date, if certain revenues and EBITDA thresholds for the acquired
business are attained. The earn-out payments, if any, will be payable in a combination
of cash and shares of the Companys common stock, provided no more than
50% of the earn-out payments will be paid in stock. Biomol was a privately owned
global manufacturer and marketer of specialty life sciences research products,
with consolidated revenues of approximately $11.5 million for its fiscal year
ended December 31, 2007. The Biomol Acquisition strengthens the Company’s
position as a global provider of life sciences reagents by broadening our product
offerings and manufacturing capabilities.

At April 30, 2008, the Company has recorded approximately $488,000 in acquisition costs which are included in “Other assets” in the accompanying balance sheet.

Item 2. 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 consolidated financial statements and related notes and other information included elsewhere in this
Quarterly Report on Form 10-Q.

Forward-Looking Statements

Our disclosure and analysis in this report, including but not limited to the information discussed in this Item 2, contain forward-looking information about our Company’s financial results and estimates, business
prospects and products in research that involve substantial risks and uncertainties. From time to time, we also may provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our
current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historic or current facts. They use words such as anticipate,” estimate,” expect,”
project,” intend,” plan,” believe,” will,” and other words and terms of similar meaning in connection with any discussion of future operations or financial performance. In particular, these include statements relating
to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, interest rates, foreign exchange rates, intellectual property matters, the outcome of
contingencies, such as legal proceedings, and financial results.

We cannot guarantee that any forward-looking statement will be realized, although we believe we have been prudent in our plans and assumptions. Achievement of future results is subject to risks, uncertainties and
inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and those anticipated, estimated or projected. As a result,
investors are cautioned not to place undue reliance on any of our forward-looking statements. Investors should bear this in mind as they consider forward-looking statements.

We do not assume any obligation to update or revise any forward-looking statement that we make, even if new information becomes available or other events occur in the future. We are also affected by other factors that
may be identified from time to time in our filings with the Securities and Exchange Commission, some of which are set forth in Item 1A - Risk Factors in our Form 10-K filing for the 2007 fiscal year. You are advised to consult any further
disclosures we make on related subjects in our Forms 10-Q, 8-K and 10-K reports to the Securities and Exchange Commission. Although we have attempted to provide a list of important factors which may affect our business, investors are cautioned that
other factors may prove to be important in the future and could affect our operating results. You should understand that it is not possible to predict or identify all such factors or to assess the impact of each factor or combination of factors on
our business. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

17

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Overview

We are a life sciences and biotechnology company focused on harnessing genetic processes to develop research tools, diagnostics and therapeutics and on serving as a provider of diagnostic services to the medical
community. Since our founding in 1976, our strategic focus has been on the development of enabling technologies in the life sciences field. Our pioneering work in genomic analysis coupled with our extensive patent estate and enabling platforms have
strategically positioned us to play an important role in the rapidly growing life sciences and molecular medicine marketplaces.

We are comprised of three operating segments, of which the Therapeutics and Life Sciences segments have evolved out of our core competencies: the use of nucleic acids as informational molecules and the use of compounds
for immune modulation. Below are brief descriptions of each of the three operating segments (see Note 13 in the notes to consolidated financial statements):

Enzo Life Sciencesis
    a company that manufactures, develops and markets biomedical research products
    and tools to research and pharmaceutical customers world-wide and has amassed
    a large patent and  technology portfolio. The pioneering platforms developed
    by Enzo Life Sciences enable the development of a wide range of products
    in the research products marketplace. We are internationally recognized and
    acknowledged as a leader in manufacturing,  in-licensing, and commercialization
    of over 25,000 innovative high quality research reagents in key research
    areas. The division is an established source for a comprehensive panel of
    products to scientific experts in the fields of gene expression,  non-radioactive
    labeling and detection, adipokines & obesity, apoptosis, cell cycle,
    cytoskeletal research, DNA damage & repair, immunology & cancer research,
    inflammation, neurobiology, nitric oxide & oxidative stress, and signal
     transduction.

Enzo Clinical Labsis a regional clinical laboratory to the New York Metropolitan and New Jersey areas. The Company
believes this allows us to capitalize firsthand on our extensive advanced molecular and cytogenetic capabilities and the broader trends in predictive diagnostics. Enzo Clinical Labs offers a menu of routine and esoteric clinical laboratory tests or
procedures used in general patient care by physicians to establish or support a diagnosis, monitor treatment or medication, and search for an otherwise undiagnosed condition. We operate a full-service clinical laboratory in Farmingdale, New York, a
network of 20 patient service centers, a stand alone “stat” or rapid response laboratory in New York City, and a full-service phlebotomy department.

The Company’s sources of revenue have been from the direct sales of products consisting of labeling and detection reagents for the genomics and sequencing markets, as well as through non-exclusive distribution
agreements with other companies, and royalty and license fee income.

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 Clinical Lab’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 we believe 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 limit 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.

Enzo Therapeuticsis a biopharmaceutical company that has developed multiple novel approaches in the areas of
gastrointestinal, infectious, ophthalmic and metabolic diseases, many of which are derived from the pioneering work of Enzo Life Sciences. Enzo Therapeutics has focused its efforts on developing treatment regimens for diseases and conditions for
which current treatment options are ineffective, costly, and/or cause unwanted side effects. This focus has generated a clinical and preclinical pipeline, as well as more than 40 patents and patent applications.

18

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Recent DevelopmentsBiomol International, L.P. Acquisition

On May 8, 2008, the Company’s wholly-owned
subsidiary, Enzo Life Sciences, acquired substantially
all of the U.S.-based assets of Biomol International, L.P. (“Biomol”)
 through Enzo Life Sciences’ newly-formed subsidiary, Biomol International,
 Inc., and all of the outstanding capital stock of Biomol’s two wholly
 owned United Kingdom subsidiaries through Enzo Life Sciences’ wholly owned
 subsidiary, Axxora (UK) Ltd. (the
“Biomol Acquisition”), for a purchase price of $18 million, comprised
of $15 million in cash, subject to downward adjustment based on net asset value
on the closing date, and $3 million of unregistered common stock of the Company.

In addition, Biomol may be entitled to receive
a maximum of $5 million in earn-out payments over the next two years, payable
in two installments of $2.5 million on each of the next two anniversaries of
the closing date, if certain revenues and EBITDA thresholds for the acquired
business are attained. The earn-out payments, if any, will be payable in a combination
of cash and shares of the Companys  common stock, provided no more than
50% of the earn-out payments will be paid in stock. Biomol was a privately owned
global manufacturer and marketer of specialty life sciences research products,
with consolidated revenues of approximately $11.5 million for its fiscal year
ended December 31, 2007. The Biomol Acquisition strengthens the Company’s
position as a global provider of life sciences reagents by broadening the Company’s
product offerings and manufacturing capabilities.

Axxora Life Science, Inc. Acquisition

Effective May 31, 2007, Enzo Life Sciences entered into a Stock Purchase Agreement pursuant to which Enzo Life Sciences purchased all of the issued and outstanding capital stock of Axxora Life Sciences, Inc.
(“Axxora”) for an aggregate purchase price of $16.3 million in cash, exclusive of acquisition costs of approximately $1 million and assumed debt of $475,000. Upon consummation of the acquisition Axxora became a wholly-owned subsidiary of
Enzo Life Sciences. The consolidated statements of operations for the three and nine months ended April 30, 2008 include the results of operations of Axxora. Axxora is included in the Life Sciences segment.

Axxora is a developer, manufacturer and distributor of reagents for the research and biochemical industries and is based in the U.S. with wholly-owned subsidiaries in the U.S., Switzerland, Germany and the United
Kingdom, as well as distributors located in other major markets throughout the world. Axxora’s electronic marketplace enables customers to purchase research reagents from internationally recognized manufacturers covering all areas of the life
sciences research reagents field. As a result of this transaction, Enzo Life Sciences has expanded its product offerings both through internal manufacturing and distribution and increases its geographic distribution. The acquisition was financed
with the Company’s cash and cash equivalents.







19

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Results of OperationsThree months ended April 30, 2008 as compared to April 30, 2007

Comparative Financial Data for the Three Months Ended April 30,

(in thousands)

|                                                |  |      |        |      |  |            |        |          |  | Increase |        |   | 
|----------------------------------------------- |  | ---- | ------ | ---- |  | ---------- | ------ | -------- |  | -------- | ------ | - | 
|                                                |  | 2008 |        | 2007 |  | (Decrease) |        | % Change
|Revenues:                                       |  |      |        |      |  |            |        |          |  |          |        |   | 
|Product sales                                   |  | $    | 6,995  |      |  | $          | 883    |          |  | $        | 6,112  |   | 
|Royalty and license fee income                  |  |      | 1,642  |      |  |            | 1,547  |          |  |          | 95     |   | 
|Clinical laboratory services                    |  |      | 10,312 |      |  |            | 11,530 |          |  |          | (1,218 | ) | 
|Total revenues                                  |  |      | 18,949 |      |  |            | 13,960 |          |  |          | 4,989  |   | 
|                                               
|Costs and expenses and other (income):          |  |      |        |      |  |            |        |          |  |          |        |   | 
|Cost of products                                |  |      | 4,434  |      |  |            | 831    |          |  |          | 3,603  |   | 
|Cost of laboratory services                     |  |      | 5,178  |      |  |            | 5,253  |          |  |          | (75    | ) | 
|Research and development                        |  |      | 1,999  |      |  |            | 2,614  |          |  |          | (615   | ) | 
|Selling, general and administrative             |  |      | 8,343  |      |  |            | 6,177  |          |  |          | 2,166  |   | 
|Provision for uncollectible accounts receivable |  |      | 927    |      |  |            | 1,338  |          |  |          | (411   | ) | 
|Legal expenses                                  |  |      | 782    |      |  |            | 3,049  |          |  |          | (2,267 | ) | 
|Interest income                                 |  |      | (712   | )    |  |            | (1,548 | )        |  |          | 836    |   | 
|Other income                                    |  |      | (62    | )    |  |            | -      |          |  |          | (62    | ) | 
|Total costs and expenses and other- net         |  |      | 20,889 |      |  |            | 17,714 |          |  |          | 3,175  |   | 
|                                               
|Loss before income taxes                        |  | ($   | 1,940  | )    |  | ($         | 3,754  | )        |  | $        | 1,814  |   | 

Consolidated Results:

The “2008 period” and the “2007 period” refer to the fiscal three months ended April 30, 2008 and 2007, respectively.

Product revenues during the three
    months ended April 30, 2008 were $7.0 million compared to $0.9 million in
    the 2007 period, an increase of $6.1 million or 692%. The 2008 period increase
    is due to the contribution of product sales from the Axxora acquisition.

Royalty and license fee income during the three
months ended April 30, 2008 was $1.6 million compared to $1.5 million in the
2007 period, an increase of $0.1 million or 6%. Royalties are earned from the
reported net  sales of Digene products subject to a license and from a License
Agreement with Abbott which was entered into in the third quarter of fiscal 2007.
During the 2008 period, the Company recognized
royalties of approximately $1.0 million from Digene, and royalties and license
fees of approximately $0.6 million under the Abbott License Agreement. During
the 2007 period, the Company recognized royalties of approximately $0.9 million
from Digene, and $0.6 million under the Abbott licensing agreement for royalty
payments effective from September 1, 2006, the initial license period. There
are no expenses relating to royalty and license fee income.









20

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Clinical laboratory revenues during the 2008 period
were $10.3 million compared to $11.5 million in the 2007 period, a decrease of
$1.2 million or 11%. The decrease in the 2008 period is attributable to a reduction
in the number of tests performed. This decrease was partly offset by an increase
in the revenue per test due to a higher number of esoteric tests performed. Revenues
were also negatively impacted by an increase in the contractual adjustment in
the 2008 period, which reduced gross billings by 82.1% as compared to 79.8% in
the 2007 period. The increase in the contractual adjustment is due to continued
competitive pricing throughout the industry which has negatively impacted reimbursement
rates for tests and an increase in revenue mix from lower paying insurance providers.

The cost of product revenues during the 2008 period
was $4.4 million compared to $0.8 million in the 2007 period, an increase of
$3.6 million. The increase is due to the inclusion of Axxora’s cost of
product revenues of $4.1 million for the quarter ended April 30, 2008, which
includes the impact of an inventory fair value adjustment of $0.3 million related
to sales of inventory acquired from Axxora.

The cost of clinical laboratory services during
the 2008 period was $5.2 million as compared to $5.3 million in the 2007 period,
a decrease of $0.1 million or 1%. The decrease is attributable to the decreased
volume of patients serviced and tests performed. The Company’s decreased
costs in the 2008 period primarily relates to lower outside reference testing
costs of $0.2 million, partially offset by an increase in laboratory personnel
costs of $0.1 million. Despite the decrease in overall expenses, costs per test
have increased due to higher costs for certain esoteric and specialized tests
performed.

Research and development expenses were approximately $2.0 million during the 2008 period compared to $2.6 million in the 2007 period, a decrease of $0.6 million or 24%. During the 2008 period, a decrease at the
Therapeutic segment of $0.7 million in R&D costs was offset by the inclusion
of research and development incurred by Axxora of $0.1 million. The decrease
in the Therapeutics segment is due to the timing of clinical trial activities
and lower payroll costs.

Selling, general and administrative expenses were
approximately $8.3 million during the 2008 period as compared
to $6.2 million in the 2007 period, an increase of $2.1 million or 35%. Included
in  the 2008 period is approximately $1.8 million of selling, general and administrative
expenses related to Axxora’s operations. The expense increases for the
other Companies’ operations were primarily in payroll and payroll related
 personnel costs and professional fees excluding legal totaling $0.4 million
 offset by a decrease in information technology costs to service clinical lab
clients of $0.1 million.

The provision for uncollectible accounts receivable,
relating to the clinical laboratory segment was $0.9 million for the 2008 period,
compared to $1.3 million during the year ago period, a decrease of $0.4 million
or 31% due to improved billing and collection procedures.

Legal expense was $0.8 million during the 2008
period compared to $3.0 million in the year ago period, a decrease of $2.2 million
or 74%, due to a decrease in patent litigation activity in the current  period
compared to the 2007 period.

Interest income was $0.7 million during the 2008
period compared to $1.5 million during the 2007 period. The Company earns interest
by investing primarily in short term (30 to 90 days) federal agency paper with
high credit ratings and money market funds. The Company had higher invested balances
during the 2007 period than in the 2008 period due to the net proceeds from the
registered direct offerings of common stock in December 2006 and February 2007.
The 2008 periods invested cash was reduced by the use of $16.9 million
of cash to purchase of Axxora in May 2007 and by the use of cash  to fund
operations. Further, interest income decreased during the 2008 period because
the rates offered on agency paper and money market funds declined in response
to monetary policy actions taken by the U.S. Federal Reserve. During the 2008
period, the average interest rate earned was approximately 3.2%.

The Company’s effective tax rate provision
for the 2008 period was 8.6%, compared to 2.1% during the 2007 period. The provision
for taxes for the 2008 period was based on state and local
taxes, book to tax differences for inventory acquired from Axxora, and interest
and taxes incurred from a local tax audit and differed from the expected net
operating loss carry forward benefit at the U.S. federal statutory rate of 34%
primarily due to the inability to recognize such benefit. The carry forward benefit
cannot be recognized because of uncertainties relating to future taxable income,
in terms of both its timing and its sufficiency.



21

---



The provision for taxes for the 2007 period was
based on state and local taxes, and differed from the expected net operating
loss benefit at the U.S. federal statutory rate of 34% primarily due the inability
to recognize such benefit. The carry forward benefit cannot be recognized because
of uncertainties relating to future taxable income, in terms of both its timing
and its sufficiency, which would enable the Company to realize the federal carry
forward benefit.



Segment Results

The Life Sciences segment’s income before
taxes was approximately $1.1 million for the 2008 period
as compared to $0.4 million in the 2007 period. Revenues from product shipments
in the 2008 period increased by $6.1 million primarily due to the contribution
of products sales from the Axxora acquisition. Royalty and license fee income
in the 2008 period increased $0.1 million from the existing Digene agreement
and the Abbott License Agreement entered into in the third quarter of fiscal
2007. The segment’s 2008 period gross margin of $4.2 million was negatively impacted by the $0.3 million fair value adjustment attributed to the sale of inventory acquired from Axxora. As
of April 30, 2008, substantially all of the fair value adjustment attributed to inventory acquired from Axxora had been amortized. Segment operating expenses, including selling, general and administrative and research and development, increased by
approximately $1.9 million during the 2008 period primarily due to the inclusion of $1.8 million of Axxora’s expenses for the three months ended April 30, 2008.

The Clinical Laboratory segment’s income
before taxes was $0.4 million for the 2008 period  as compared
to $1.4 million in the 2007 period. The 2008 period was impacted by a decrease
in laboratory service revenues of $1.2 million or 11%, due to a reduction in
the number of tests performed and lower reimbursements attributed to competitiveness
in the industry and shift in payer mix. Selling, general and administrative costs
increased by approximately $0.3 million during the 2008 period primarily due
to increases in payroll and payroll related costs and insurance of $0.3 million
offset by a decrease in information technology costs of $0.1 million. Segment
operating results in the 2008 period were positively affected by a decrease in
the provision for uncollectible accounts of $0.4 million as compared to the 2007
period.

The Therapeutics segment’s loss before income
taxes was approximately $1.2 million for the 2008 period as compared to a loss
of $1.8 million for the 2007 period. The decrease in the loss of $0.6 million
was primarily due to decreases in clinical trial activities and payroll costs.

The Other segment’s loss before taxes for
the 2008 period  was approximately $2.2 million compared
to $3.7 million in the 2007 period. The change reflects a decrease in legal expenses
of $2.5 million attributable to a decrease in patent litigation activities, offset
by an increase in payroll and benefits and professional fees totaling $0.2 million,
and a decrease in interest income of $0.8 million due to lower levels of cash
available for investment and a decline in interest rates earned on short term
investments.









22

---



Results of OperationsNine months ended April 30, 2008 as compared to April 30, 2007

Comparative Financial Data for the Nine Months Ended April 30,

(in thousands)

|                                                |  |      |        |      |  |            |        |          |  | Increase |        |   | 
|----------------------------------------------- |  | ---- | ------ | ---- |  | ---------- | ------ | -------- |  | -------- | ------ | - | 
|                                                |  | 2008 |        | 2007 |  | (Decrease) |        | % Change
|Revenues:                                       |  |      |        |      |  |            |        |          |  |          |        |   | 
|Product sales                                   |  | $    | 18,885 |      |  | $          | 2,699  |          |  | $        | 16,186 |   | 
|Royalty and license fee income                  |  |      | 5,458  |      |  |            | 3,756  |          |  |          | 1,702  |   | 
|Clinical laboratory services                    |  |      | 32,276 |      |  |            | 28,543 |          |  |          | 3,733  |   | 
|Total revenues                                  |  |      | 56,619 |      |  |            | 34,998 |          |  |          | 21,621 |   | 
|                                               
|Costs and expenses and other (income):          |  |      |        |      |  |            |        |          |  |          |        |   | 
|Cost of products                                |  |      | 13,078 |      |  |            | 1,852  |          |  |          | 11,226 |   | 
|Cost of laboratory services                     |  |      | 15,278 |      |  |            | 12,815 |          |  |          | 2,463  |   | 
|Research and development                        |  |      | 6,150  |      |  |            | 6,935  |          |  |          | (785   | ) | 
|Selling, general and administrative             |  |      | 25,350 |      |  |            | 18,861 |          |  |          | 6,489  |   | 
|Provision for uncollectible accounts receivable |  |      | 3,050  |      |  |            | 3,433  |          |  |          | (383   | ) | 
|Legal expenses                                  |  |      | 4,458  |      |  |            | 7,159  |          |  |          | (2,701 | ) | 
|Interest income                                 |  |      | (3,257 | )    |  |            | (3,627 | )        |  |          | 370    |   | 
|Other income                                    |  |      | (188   | )    |  |            | (2,699 | )        |  |          | 2,511  |   | 
|Total costs and expenses and other – net        |  |      | 63,919 |      |  |            | 44,729 |          |  |          | 19,190 |   | 
|                                               
|Loss before income taxes                        |  | ($   | 7,300  | )    |  | ($         | 9,731  | )        |  | $        | 2,431  |   | 

Consolidated Results:

The “2008 period” and the “2007 period” refer to the fiscal nine months ended April 30, 2008 and 2007, respectively.

Product revenues during the 2008
    period were $18.9 million compared to $2.7 million in the year ago period,
    an increase of $16.2 million or 600%. The 2008 period increase is due to
    the contribution of product sales from the Axxora acquisition.

Royalty and license fee income during the 2008
period was $5.5 million compared to $3.8 million in the 2007 period, a increase
of $1.7 million or 45%. Royalties are earned from the reported net sales of Digene
products subject to a license and from a License Agreement with Abbott which
was entered into in the third quarter of fiscal 2007. During the 2008
period, the Company recognized royalties of approximately $3.9
million from Digene, an increase of approximately $0.7 million over the prior
year ago period, and royalties and license fees under the Abbott License Agreement
of approximately $1.5 million, an increase of approximately $1.0 million over
the year ago period. There are no expenses relating to royalty and license fee
income.









23

---



Clinical laboratory revenues during the 2008
period were $32.3 million compared to $28.5 million in the 2007 period, an increase
of $3.7 million or 13%. The Company experienced an increase in service revenues
during the 2008 period primarily due to an expansion of an insurance provider
agreement with United Healthcare which occurred in January 2007, which was partially
offset by an increase in the contractual adjustment, which reduced gross billings
by 81.2% as compared to 78.4% in the 2007 period. The increase in the contractual
adjustment is due to continued competitive pricing throughout the industry which
has negatively impacted reimbursement rates for tests and an increase in revenue
mix from lower paying insurance providers.

The cost of product revenues during the 2008
period was $13.1 million compared to $1.9 million in the 2007 period, an increase
of $11.2 million. The increase is due to the inclusion of Axxora’s cost of product revenues of approximately $11.8 million for the 2008 period, which includes the impact of an inventory fair value adjustment of $1.3 million related to sales of inventory acquired from Axxora.

The cost of clinical laboratory services during
the 2008 period was $15.3 million as compared to $12.8 million in the prior period,
an increase of $2.5 million or 19%. Due to the increased volume of patients serviced
and tests performed, the Company incurred increased costs primarily relating
to reagent costs of $1.3 million and laboratory personnel costs of $0.9 million.

Research and development expenses were approximately
$6.1 million during the 2008 period, compared to $6.9 million in the 2007 period,
a decrease of $0.8 million or 11%. The decrease was  due to a decrease
of $0.9 million relating to the timing of clinical trial and related activities
at the Therapeutics segment, a decrease of $0.3 million in research supplies
and related costs at Enzo Life Sciences – New York, partially offset by
the inclusion of research and development incurred by Axxora of $0.4 million.

Selling, general and administrative expenses were
approximately $25.4 million during the 2008
period as compared
to $18.9 million in the 2007 period, an increase of $6.5 million or 34%. Included
in the 2008 period is approximately $4.9 million of selling, general and administrative
expenses related to Axxora’s operations. The increase in the other Companies’ operations
of approximately $1.6 million was primarily due to payroll and  payroll related
costs of $1.2 million and professional fees of $0.3 million and insurance costs
of $0.1 million offset by a decrease in information technology costs of $0.2
million.

The provision for uncollectible accounts receivable,
relating to the clinical laboratory segment was $3.1 million for the 2008 period
as compared to $3.4 million in the 2007 period due to improved billing and collections
procedures.

Legal expense was $4.4 million during the 2008
period compared to $7.1 million in the 2007 period, a decrease
of $2.7 million or 38%, due to a decrease in patent litigation activity in the
current period.

Interest income was $3.3 million
    during the 2008
period as compared to $3.6 million during
    the 2007 period. The Company earns interest by investing primarily in short
    term (30 to 90 days) federal agency paper with high credit ratings and money
    market funds. The Company had higher invested balances during the 2007 period
    due to the net proceeds from registered direct offerings of common stock
    in December 2006 and February 2007. The 2008 period’s invested cash was reduced
     by the use of $16.9 million of cash to purchase of Axxora in May 2007
    and by the use of cash to fund operations. Further, interest income decreased
    during the 2008 period because the rates offered on agency paper and
    money market funds declined in response to monetary policy actions taken
    by the U.S. Federal Reserve. During the 2008 period, the average interest
    rate earned was 3.2%.

The Company earned other income of $0.2 million during the 2008 period versus $2.7 million in the 2007 period. During the 2007 period, the Company recognized a $2.0 million gain on a patent litigation settlement and a
$0.7 million payment from a former distributor under an expired distribution agreement which is presently subject to a lawsuit in which the Company is plaintiff.

The Company’s effective tax rate provision
for the 2008 period was 1.3%, compared to 2.0% during the 2007 period. The tax
provision for the 2008
period was based on state and local
taxes, book to tax differences for inventory acquired from Axxora, and taxes
and interest incurred from a local tax audit and differed from the expected net
operating loss carry forward benefit at the U.S. federal statutory rate of 34%
primarily due to the inability to recognize such benefit. The carry forward benefit
cannot be recognized because of uncertainties relating to future taxable income,
in terms of both its timing and its sufficiency.



24

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The tax provision for the 2007 period was based
on state and local taxes, and differed from the expected net operating loss benefit
at the U.S. federal statutory rate of 34% primarily due the inability to recognize
such benefit. The carry forward benefit cannot be recognized because of uncertainties
relating to future taxable income, in terms of both its timing and its sufficiency,
which would enable the Company to realize the federal carry forward benefit.

Segment Results

The Life Sciences segment’s income before
taxes was approximately $2.3 million for the 2008
period
as compared to $3.5 million in the 2007 period. The decrease is primarily due
to the recognition in the 2007 period of the Company’s $2.0 million patent
litigation settlement with Sigma Aldrich and a $0.7 million payment from a former
distributor under an expired distribution agreement which is presently subject
to a lawsuit  in which the Company is plaintiff. Revenues from product shipments
increased by $16.2 million in the 2008 period due to the contribution of products
sales from the Axxora acquisition. Royalty and license fee
income increased $1.7 million from the existing Digene agreement and the Abbott
License Agreement entered into in the third quarter of fiscal 2007. The segment’s
gross margin of $11.3 million was negatively impacted by $1.3 million representing
the fair value adjustment attributed to the sale of inventory acquired from Axxora.
As of April 30, 2008, substantially all of the fair value adjustment attributed
to inventory acquired from Axxora had been amortized. Segment operating expenses,
including selling, general and  administrative and research and development,
increased by approximately $5.1 million during the 2008 period primarily due
to the inclusion of Axxora’s expenses.

The Clinical Laboratory segment’s income
before taxes was $2.4 million for the 2008 period as compared to $1.6 million
in the 2007 period. The 2008 period was positively impacted by an increase in
laboratory service revenues of $3.7 million or 13%, due to the expansion of an
insurance provider agreement effective January 2007, which increased gross profit
by approximately $1.3 million. The increase in the 2008 period’s gross
 profit was offset by an increase in selling, general and administrative costs
of approximately $1.0 million due to increases in sales commissions of $0.4 million
and payroll and related costs of $0.6 million, attributable to the increase in
service revenues. The segment also earned interest in the 2008 period of $0.2
million on its cash generated by operations.

The Therapeutics segment’s loss before income
taxes was approximately $3.5 million for the 2008 period as compared to a loss
of $4.5 million for the 2007 period. The decrease in the loss of $1.0 million
was primarily due to decreases in clinical trial activities, consulting, payroll
and payroll related costs of $0.8 million, and the recognition of $0.1 million
from a government grant, included in other income in the consolidated financial
statements.

The Other segment’s loss
    before taxes for the 2008 period was approximately $8.6, a decrease of $1.8
    million as compared to $10.4 in the 2007 period. The Other segment’s
    2008 period loss  reflects a decrease in legal expenses of $2.8 million due
    to a decrease in patent litigation activity in the current period compared
    to the 2007 period, partially offset by an increase in general and administrative
    expenses of $0.5 million, and a  decrease in interest income of $0.6 million
    due to lower levels of cash available for investment and declining interest
    rates.

Liquidity and Capital Resources

At April 30, 2008, our cash and cash equivalents were $96.5 million, a decrease of $8.6 million from cash and cash equivalents at July 31, 2007. The decrease in cash during the nine months ended April 30, 2008 was
primarily due to the cash flow impacts discussed below. The Company had working capital of $107.3 million at April 30, 2008 compared to $113.9 million at July 31, 2007. The decrease in working capital was primarily the result of the decrease in cash
and cash equivalents primarily impacted by the use of cash to fund the net loss and capital expenditures offset by increases in other current assets of $1.0 million and by decreases in current liabilities of approximately $3.1 million.

Net cash used
  in operating activities for the nine months ended April 30, 2008 was approximately
    $7.0 million as compared to $6.0 million for the nine months ended April
    30, 2007. The increase in net cash used by operating activities in the 2008
    period over the 2007 period of approximately $1.0 million was primarily due
    to changes in operating assets and liabilities and in particular the changes
    in accounts receivable and other receivables of $3.4 million, accrued liabilities
    of $3.7 million and deferred revenue of $1.0 million in the 2008 period over
    the 2007 period.

Net cash used in investing activities
    was approximately $2.1 million as compared to $1.2 million in the year ago
    period, primarily due to an increase in capital expenditures of $0.5 million,
    cash used for an acquisition and acquisition costs of $0.3 million.



25

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Net cash provided by financing activities was
approximately $0.4 million in the 2008 period primarily from stock options exercise
proceeds. In the 2007 period, net cash provided by financing activities was $57.3
million which reflects $57.0 million in net proceeds from the registered direct
offerings of the Company’s common stock in December 2006 and
January 2007.

On May 8, 2008, the Company’s wholly-owned
subsidiary, Enzo Life Sciences, acquired substantially
all of the U.S. based assets of Biomol International, L.P. (“Biomol”)
 through Enzo Life Sciences’ newly-formed subsidiary, Biomol International,
 Inc., and all of the outstanding capital stock of Biomol’s two wholly
 owned United Kingdom subsidiaries through Enzo Life Sciences’ wholly owned
 subsidiary, Axxora (UK) Ltd. (the
“Biomol Acquisition”), for a purchase price of $18 million, comprised
of $15 million in cash, subject to downward adjustment based on net asset value
on the closing date, and $3 million of unregistered common stock of the Company.

In addition, Biomol may be entitled to receive
a maximum of $5 million in earn-out payments over the next two years, payable
in two installments of $2.5 million on each of the next two anniversaries of
the closing date, if certain revenues and EBITDA thresholds for the acquired
business are attained. The earn-out payments, if any, will be payable in a combination
of cash and shares of the Companys  common stock, provided no more than
50% of the earn-out payments will be paid in stock. Biomol was a privately owned
global manufacturer and marketer of specialty life sciences research products,
with consolidated revenues of approximately $11.5 million for its fiscal year
ended December 31, 2007. The Biomol Acquisition strengthens the Company’s
position as a global provider of life sciences reagents by broadening the Company’s
product offerings and manufacturing capabilities.

The Company believes that its current cash position is sufficient for its foreseeable liquidity and capital resource needs over the next 12 months, although there can be no assurance that future events will not alter
such view.

Contractual Obligations

The following is a summary of future payments under the Company’s contractual obligations as of April 30, 2008, inclusive of obligations related to the business acquisitions effective May 8, 2008 as noted above
and in Recent Developments:

Payments Due by Period

|                                   |  |       |        |                 | Less than |          | 1-3 years |          | 4-5 years |          | Over 5 years
|---------------------------------- |  | ----- | ------ | --------------- | --------- | -------- | --------- | -------- | --------- | -------- | ------------
|(In 000’s)                         |  | Total |        | 1 year (Note 1) |           | (Note 2) |           | (Note 2) |           | (Note 2)
|Real estate and equipment leases   |  | $     | 21,136 |                 | $         | 909      |           | $        | 6,710     |          | $           
|Employment agreements              |  |       | 2,397  |                 |           | 573      |           |          | 1,824     |          |             
|Total contractual cash obligations |  | $     | 23,533 |                 | $         | 1,482    |           | $        | 8,534     |          | $           

Note 1 – represents the three months ending July 31, 2008.

Note 2 – Reflects obligations as of the July 31 fiscal year end.

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

Critical Accounting Policies

General

The Company’s discussion and analysis of its financial condition and results of operations are based upon Enzo Biochem, Inc.’s 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 ongoing basis, we evaluate our estimates, including those related to contractual adjustments, allowance for uncollectible accounts, inventory,
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.



26

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Product revenues

Revenues from product sales are recognized when the products are shipped and title transfers, the sales price is fixed or determinable and collectibility is reasonably assured. The revenue from the non-exclusive
distribution agreements are recognized when shipments are made to their respective customers and reported to the Company. 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 product revenues. The Company did not recognize any revenue from these
distributors during the 2008 and 2007 periods. During the three months ended April 30, 2008, no one customer in the Life Science segment represented 10% or more of total product revenues. During the nine months ended April 30, 2008, one customer in
the Life Science segment represented 13% of total product revenues.

Royalties

Royalty revenues are recorded in the period earned. Royalties received in advance of being earned are recorded as deferred revenues.

License fees and multiple element arrangements

When evaluating multiple element arrangements, the Company considers whether the components of the arrangement represent separate units of accounting as defined in Emerging Issues Task Force (“EITF”) Issue
No. 00-21, Revenue Arrangements with Multiple Deliverables (“EITF 00-21”). Application of this standard requires subjective determinations and requires management to make judgments about the fair value of the individual elements and
whether such elements are separable from the other aspects of the contractual relationship.

Revenues from the clinical laboratory are recognized upon completion of the testing process for a specific patient and reported to the ordering physician. These revenues and the associated accounts receivable are based
on gross amounts billed or billable for services rendered, net of a contractual adjustment, which is the difference between amounts billed to payers and the expected approved reimbursable settlements from such payers.

The following are tables of the Clinical Labs segment’s net revenues and percentages by revenue category for the three and nine months ended April 30, 2008 and 2007:

|Clinical Labs net revenues |  | Three months ended |        | Three months ended
|-------------------------- |  | ------------------ | ------ | ------------------
|                           |  | April 30, 2008     |        | April 30, 2007    
|                           |  | (In thousands)     |        | (in %)            
|Revenue category           |  |                    |        |                   
|Medicare                   |  | $                  | 2,733  |                   
|Third-party payer          |  |                    | 5,095  |                   
|Patient self-pay           |  |                    | 924    |                   
|HMO’s                      |  |                    | 1,560  |                   
|Total                      |  | $                  | 10,312 |                   

|Clinical Labs net revenues |  | Nine months ended |        | Nine months ended
|-------------------------- |  | ----------------- | ------ | -----------------
|                           |  | April 30, 2008    |        | April 30, 2007   
|                           |  | (In thousands)    |        | (in %)           
|Revenue category           |  |                   |        |                  
|Medicare                   |  | $                 | 6,687  |                  
|Third-party payer          |  |                   | 18,229 |                  
|Patient self-pay           |  |                   | 3,747  |                  
|HMO’s                      |  |                   | 3,613  |                  
|Total                      |  | $                 | 32,276 |                  

The Company provides services to certain patients covered by various third-party payers and the Federal Medicare program. Revenue, net of contractual adjustments, from direct billings under the Federal Medicare program
during the three and nine months ended April 30, 2008 and 2007 were approximately 26% and 21%, and 19% and 21%, respectively, of the clinical lab segment’s revenue. 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.



27

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Other than the Medicare program, one provider whose programs are included in the Third-party payer and Health Maintenance Organizations (“HMO’s”) categories represented 31% and 26% of the Clinical
Labs services net revenues for the three and nine months ended April 30, 2008. Other than the Medicare program, no other provider included in the Third-party payer and HMO’s categories exceeded 10% of the Clinical Labs services net revenues
for the three and nine months ended April 30, 2007.

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.

Contractual Adjustment

The Company’s estimate of contractual adjustment is based on significant assumptions and judgments, such as its interpretation of payer reimbursement policies, and bears the risk of change. The estimation process
is based on the experience of amounts approved as reimbursable and ultimately settled by payers, versus the corresponding gross amount billed to the respective payers. The contractual adjustment is an estimate that reduces gross revenue, based on
gross billing rates, to amounts expected to be approved and reimbursed. Gross billings are based on a standard fee schedule we set for all third-party payers, including Medicare, HMO’s and managed care. The Company adjusts the contractual
adjustment estimate quarterly, based on its evaluation of current and historical settlement experience with payers, industry reimbursement trends and other relevant factors. The other relevant factors that affect our contractual adjustment include
the monthly and quarterly review of: 1) current gross billings and receivables and reimbursement by payer, 2) current changes in third party arrangements. 3) the growth of in-network provider arrangements and managed care plans specific to our
Company.

Our clinical laboratory business is primarily dependent upon reimbursement from third-party payers, such as Medicare (which principally serves patients 65 and older) and insurers. We are subject to variances in
reimbursement rates among different third-party payers, as well as constant changes of reimbursement rates. Changes that decrease reimbursement rates or coverage would negatively impact our revenues. The number of individuals covered under managed
care contracts or other similar arrangements has grown over the past several years and may continue to grow in the future. In addition, Medicare and other government healthcare programs continue to shift to managed care. These trends will continue
to reduce our revenues per test.

During the three months ended April 30, 2008 and 2007, the contractual adjustment percentages, determined using current and historical reimbursement statistics, were 82.1% and 79.8%, respectively, of gross billings.
During the nine months ended April 30, 2008 and 2007, the contractual adjustment percentages, determined using current and historical reimbursement statistics, were 81.2% and 78.4%, respectively, of gross billings. The Company believes the negative
impact on revenues from the decline in reimbursement rates or the shift to managed care, other primary third-party payers, or similar arrangements may be offset by the positive impact of an increase in the number of tests we perform. However, there
can be no assurance that we can increase the number of tests we perform or that if we do increase the number of tests we perform, that we can maintain that higher number of tests performed, or that an increase in the number of tests we perform would
result in increased revenue.

The Company estimates (by using a sensitivity analysis) that each 1% point change in the contractual adjustment percentage could have resulted in a change in Clinical Labs services revenues of approximately $1,030,000
for the nine months ended April 30, 2008, and could have resulted in a change in the net accounts receivable of approximately $309,000 as of April 30, 2008.

Our clinical laboratory financial billing system records gross billings using a standard fee schedule for all payers and does not record contractual adjustment by payer at the time of billing. Therefore, we are unable
to quantify the effect of contractual adjustment recorded during the current period that relate to revenue recorded in a previous period. However, we can reasonably estimate our contractual adjustment to revenue on a timely basis based on our
quarterly review process, which includes:

- an analysis of industry reimbursement trends;
- an evaluation of third-party reimbursement rates changes and changes in reimbursement arrangements with third-party payers;
- a rolling monthly analysis of current and historical claim settlement and reimbursement experience with payers;
- an analysis of current gross billings and receivables by payer.

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Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are reported at realizable value, net of allowances for doubtful accounts, which is estimated and recorded in the period of the related revenue.

The following is a table of the Company’s net accounts receivable by segment. The clinical laboratory segment’s net receivables are detailed by billing category and as a percent to its total net
receivables. At April 30, 2008 and July 31, 2007, approximately 66% and 69%, respectively, of the Company’s net accounts receivable relates to its clinical laboratory business, which operates in the New York Metropolitan and New Jersey
Metropolitan areas.

The Life Sciences segment’s accounts receivable, of which $2.1 million or 45% and $1.8 million or 39% represents foreign receivables as of April 30, 2008 and July 31, 2007 respectively, includes royalty
receivables of $1.5 and $1.8 million, as of April 30, 2008 and July 31, 2007, respectively, of which approximately $1.0 and $1.5 million, respectively is from Digene Corporation (Note 12).

Net accounts receivable

|                          |  |   | As of          |  | As of        
|------------------------- |  | - | -------------- |  | -------------
|                          |  |   | April 30, 2008 |  | July 31, 2007
|Billing                   |  |   |                |  |              
|category                  |  |   | (In thousands) |  | (in %)       
|Clinical laboratory       |  |   |                |  |              
|Medicare                  |  | $ | 1,420          |  | 15           
|Third-party payers        |  |   | 4,509          |  | 49           
|Patient self-pay          |  |   | 2,927          |  | 31           
|HMO’s                     |  |   | 493            |  | 5            
|Total Clinical laboratory |  | $ | 9,349          |  | 100          
|Total Life Sciences       |  |   | 4,774          |  |              
|Total accounts receivable |  | $ | 14,123         |  |              

Changes in the Company’s allowance for doubtful accounts are as follows:

|(In thousands)                                  |  | April 30, 2008 |        | July 31, 2007
|----------------------------------------------- |  | -------------- | ------ | -------------
|Beginning balance                               |  | $              | 1,404  |              
|Provision for uncollectible accounts receivable |  |                | 3,050  |              
|Write-offs                                      |  |                | (2,376 | )            
|Ending balance                                  |  | $              | 2,078  |              

For the Clinical Labs segment, the allowance for doubtful accounts represents amounts that the Company does not expect to collect after the Company has exhausted its collection procedures. The Company estimates its
allowance for doubtful accounts in the period the related services are billed and adjusts the estimate in future accounting periods as necessary. It bases the estimate for the allowance on the evaluation of historical collection experience, the
aging profile of accounts receivable, the historical doubtful account write-off percentages, payer mix, and other relevant factors.

The allowance for doubtful accounts includes the balances, after receipt of the approved settlements from third-party payers for the insufficient diagnosis information received from the ordering physician, which result
in denials of payment, and the uncollectible portion of receivables from self payers, including deductibles and copayments, which are subject to credit risk and patients’ ability to pay. During the three and nine months ended April 30, 2008
and 2007, the Company determined an allowance for doubtful accounts less than 210 days and wrote off 100% of accounts receivable over 210 days, as it assumed those accounts are uncollectible, except for certain fully reserved balances, principally
related to Medicare, until the payer’s filing date deadline occurs.

The Company’s collection experience on Medicare receivables beyond 210 days has been insignificant. The Company adjusts the historical collection analysis for recoveries, if any, on an ongoing basis.

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 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 allowance estimates, which involves judgment.

29

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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. Should circumstances change (e.g. shift in payer mix, decline in economic conditions or deterioration in aging of receivables), our estimates of net realizable value of receivables could be reduced by a material
amount.

Billing for laboratory services is complicated because of many factors, especially: the differences between our standard gross fee schedule for all payers and the reimbursement rates of the various payers we deal with,
disparity of coverage and information requirements among the various payers, and disputes with payers as to which party is responsible for reimbursement.

The following tables indicate the Clinical Labs Aged Gross Receivables by Payer Group (in thousands), which is prior to adjustment to gross receivables for 1) contractual adjustment, 2) fully reserved balances not yet
written off and 3) other revenue adjustments.

|                        |  |   |        |  |     |   |  |   |          |  |     |   |  |   | Third  |  |     |   |  |   |          |  |     |   |  |   |        |   |  |     |  
|----------------------- |  | - | ------ |  | --- | - |  | - | -------- |  | --- | - |  | - | ------ |  | --- | - |  | - | -------- |  | --- | - |  | - | ------ | - |  | --- | -
|                        |  |   |        |  |     |   |  |   |          |  |     |   |  |   | Party  |  |     |   |  |   |          |  |     |   |  |   |        |   |  |     |  
|(in thousands)          |  |   | Total  |  |     |   |  |   | Medicare |  |     |   |  |   | Payers |  |     |   |  |   | Self-pay |  |     |   |  |   | HMO’s  |   |  |     |  
|As of April 30, 2008    |  |   | Amount |  | %   |   |  |   | Amount   |  | %   |   |  |   | Amount |  | %   |   |  |   | Amount   |  | %   |   |  |   | Amount |   |  | %   |  
|1-30 days               |  | $ | 15,502 |  | 50  |   |  | $ | 2,818    |  | 36  |   |  | $ | 7,064  |  | 63  |   |  | $ | 2,054    |  | 26  |   |  | $ | 3566   |   |  | 95  |  
|31-60 days              |  |   | 3,629  |  | 12  |   |  |   | 636      |  | 8   |   |  |   | 1,824  |  | 16  |   |  |   | 1,037    |  | 13  |   |  |   | 132    |   |  | 4   |  
|61-90 days              |  |   | 1,993  |  | 7   |   |  |   | 395      |  | 5   |   |  |   | 891    |  | 8   |   |  |   | 663      |  | 8   |   |  |   | 44     |   |  | 1   |  
|91-120 days             |  |   | 1,680  |  | 5   |   |  |   | 455      |  | 6   |   |  |   | 551    |  | 5   |   |  |   | 657      |  | 8   |   |  |   | 17     |   |  |     |  
|121-150 days            |  |   | 1,233  |  | 4   |   |  |   | 406      |  | 6   |   |  |   | 399    |  | 4   |   |  |   | 424      |  | 5   |   |  |   | 4      |   |  | –   |  
|Greater than 150 days*  |  |   | 6,604  |  | 22  |   |  |   | 3,045    |  | 39  |   |  |   | 424    |  | 4   |   |  |   | 3,141    |  | 40  |   |  |   | (6     | ) |  | –   |  
|Totals                  |  | $ | 30,641 |  | 100 | % |  | $ | 7,755    |  | 100 | % |  | $ | 11,153 |  | 100 | % |  | $ | 7,976    |  | 100 | % |  | $ | 3,757  |   |  | 100 | %
|                       
|                        |  |   |        |  |     |   |  |   |          |  |     |   |  |   | Third  |  |     |   |  |   |          |  |     |   |  |   |        |   |  |     |  
|                        |  |   |        |  |     |   |  |   |          |  |     |   |  |   | Party  |  |     |   |  |   |          |  |     |   |  |   |        |   |  |     |  
|(in thousands)          |  |   | Total  |  |     |   |  |   | Medicare |  |     |   |  |   | Payers |  |     |   |  |   | Self-pay |  |     |   |  |   | HMO’s  |   |  |     |  
|As of July 31, 2007     |  |   | Amount |  | %   |   |  |   | Amount   |  | %   |   |  |   | Amount |  | %   |   |  |   | Amount   |  | %   |   |  |   | Amount |   |  | %   |  
|1-30 days               |  | $ | 18,120 |  | 50  |   |  | $ | 3,630    |  | 40  |   |  | $ | 8,561  |  | 59  |   |  | $ | 2,309    |  | 30  |   |  | $ | 3,620  |   |  | 69  |  
|31-60 days              |  |   | 5,306  |  | 15  |   |  |   | 614      |  | 7   |   |  |   | 2,731  |  | 19  |   |  |   | 1,434    |  | 19  |   |  |   | 527    |   |  | 10  |  
|61-90 days              |  |   | 3,795  |  | 10  |   |  |   | 629      |  | 7   |   |  |   | 1,735  |  | 12  |   |  |   | 1,222    |  | 16  |   |  |   | 209    |   |  | 4   |  
|91-120 days             |  |   | 2,811  |  | 8   |   |  |   | 530      |  | 6   |   |  |   | 881    |  | 6   |   |  |   | 732      |  | 10  |   |  |   | 668    |   |  | 13  |  
|121-150 days            |  |   | 1,589  |  | 4   |   |  |   | 405      |  | 4   |   |  |   | 263    |  | 2   |   |  |   | 779      |  | 10  |   |  |   | 142    |   |  | 2   |  
|Greater than 150 days** |  |   | 4,760  |  | 13  |   |  |   | 3,246    |  | 36  |   |  |   | 226    |  | 2   |   |  |   | 1,173    |  | 15  |   |  |   | 115    |   |  | 2   |  
|Totals                  |  | $ | 36,381 |  | 100 | % |  | $ | 9,054    |  | 100 | % |  | $ | 14,397 |  | 100 | % |  | $ | 7,649    |  | 100 | % |  | $ | 5,281  |   |  | 100 | %

|*  | Total includes $4,226 fully reserved over 210 days as of April 30, 2008.
|-- | ------------------------------------------------------------------------
|  
|** | Total includes $2,432 fully reserved over 210 days as of July 31, 2007. 

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 not more likely than not the benefits will be realized in the foreseeable future. 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 of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that
includes the enactment date.

On August 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No.
109” (FIN 48). FIN 48 prescribes a “more-likely-than-not” threshold for the recognition and derecognition of tax positions, provides guidance on the accounting for interest and penalties relating to tax positions and requires that
the cumulative effect of applying the provisions of FIN 48 be reported as an adjustment to the opening balance of retained earnings or other appropriate components of equity or net assets in the statement of financial position. The Company did not
have any significant unrecognized tax positions and there was no material effect on our financial condition or results of operations as a result of implementing FIN 48.

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Inventory

The Company values inventory at the lower of cost (first-in, first-out) or market. Work-in-process and finished goods inventories consist of material, labor, and manufacturing overhead. On a quarterly basis, we review
inventory quantities on hand and analyze the provision for excess and obsolete inventory based on our estimate of sales forecasts based on sales history and anticipated future demand. Our estimate of future product demand may not be accurate and we
may understate or overstate the provision for excess and obsolete inventory. Accordingly, unanticipated changes in demand could have a significant impact on the value of our inventory and results of operations. At April 30, 2008 and July 31, 2007,
respectively, the reserve for excess and obsolete inventory was $533,000 and $379,000.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement No. 141(R),Business Combinations(“Statement 141 (R)”), a replacement of FASB
Statement No. 141. Statement 141(R) is effective for fiscal years beginning on or after December 15, 2008 and applies to all business combinations. Statement 141(R) provides that, upon initially obtaining control, an acquirer shall recognize 100
percent of the fair values of acquired assets, including goodwill, and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100 percent of its target. As a consequence, the current step acquisition model will be
eliminated. Additionally, Statement 141(R) changes current practice, in part, as follows: (1) contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration; (2)
transaction costs will be expensed as incurred, rather than capitalized as part of the purchase price; (3) pre-acquisition contingencies, such as legal issues, will generally have to be accounted for in purchase accounting at fair value; and (4) in
order to accrue for a restructuring plan in purchase accounting, the requirements in FASB Statement No. 146,Accounting for Costs Associated with Exit or Disposal Activities, would have to be met at the acquisition date. While there is no expected impact to our consolidated financial statements on the accounting for acquisitions completed prior to July 31, 2009, the adoption of Statement 141(R) on
August 1, 2009 could materially change the accounting for business combinations consummated subsequent to that date.

In September 2006, the FASB issued Statement 157,Fair Value Measurement(“Statement 157”). Statement 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles and establishes a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value. Statement 157 also expands financial
statement disclosures about fair value measurements. On February 6, 2008, the FASB issued FASB Staff Position (FSP) 157-2 which delays the effective date of Statement 157 for one year for all nonfinancial assets and nonfinancial liabilities, except
those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). Statement 157 and FSP 157-2 are effective for financial statements issued for fiscal years beginning after November 15, 2007.
When required to adopt Statement 157, the Company expects to elect a partial deferral of Statement 157 as provided for under the provisions of FSP 157-2. The Company does not believe that the impact of partially adopting Statement 157 effective
August 1, 2008 will have a material effect on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities - Including an amendment of FASB Statement No. 115.” SFAS No. 159 permits entities to
choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS No. 159 is to provide opportunities to mitigate volatility in reported earnings
caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that
choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not completed the assessment as to whether the impact of the adoption
of SFAS No. 159 will have a material impact on its financial condition or results of operations.







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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risk

The financial reporting of our non-U.S. subsidiaries
is denominated in currencies other than the U.S. dollar. Since the functional
currency of our non-U.S. subsidiaries is the local currency, foreign currency
translation  adjustments are accumulated as a component of accumulated other
comprehensive income in stockholders’ equity. Assuming a hypothetical aggregate
change of 10% in the exchange rates of foreign currencies against the U.S. dollar
at April 30,  2008, our assets and liabilities would increase or decrease by
approximately $1,477,000 and $452,000, respectively, and our net sales and net
earnings would increase or decrease by approximately $1,445,000 and $65,000,
respectively, on an annual  basis. We also maintain intercompany balances and
loans receivable with subsidiaries with different local currencies. These amounts
are at risk of foreign exchange gains or losses if exchange rates fluctuate.
Assuming a hypothetical aggregate change of 10% in the exchange rates of foreign
currencies against the U.S. dollar at April 30, 2008, our pre-tax earnings would
be favorably or unfavorably impacted by approximately $227,000 on an annual basis.

Interest Rate Risk

Our excess cash is invested in highly liquid,
short term (30 – 90
days) federal agency paper and money market funds with high credit ratings. Changes
in interest rates  affect the investment income we earn on cash and cash equivalents
 and therefore affect our cash flows and results of operations. As of April
30, 2008, we were exposed to interest rate change market risk with respect to
our short-term investments of $94.5 million. The short-term investments earn
interest ranging from 2.0% to 2.6% . Each 100 basis point (or 1%) fluctuation
in interest rates would increase or decrease interest income on the short-term
investments by approximately $0.9 million on an annual basis.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, the Company’s management conducted an evaluation (as required under Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) of the Company’s “disclosure controls and procedures” (as such term is defined under the Exchange Act), under the supervision and with the participation of the principal executive officer and the
principal financial officer. Based on this evaluation, the principal executive officer and the principal financial officer concluded that the Company’s disclosure controls and procedures are effective as of the end of the period covered by
this report. Notwithstanding the foregoing, a control system, no matter how well designed and operated can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information
otherwise required to be set forth in the Company’s periodic reports.

(b) Changes in Internal Controls over Financial Reporting

There was no change in the Company’s internal controls over financial reporting during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.











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PART II – OTHER INFORMATION

Item 1.Legal Proceedings

There have been no material developments with respect to previously reported legal proceedings discussed in the annual report on Form 10-K for the fiscal year ended July 31, 2007 filed with the Securities and Exchange
Commission.

Item 1A.Risk
Factors

There have been no material changes from the risk factors disclosed in Part 1, Item 1, of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2007.

Item 6.Exhibits

| | Exhibit No. |  | Exhibit                                                                                                                                     
| | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------
| | 31.1        |  | Certification of Elazar Rabbani, Ph.D. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                           
|
| | 31.2        |  | Certification of Barry Weiner pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                    
|
| | 32.1        |  | Certification of Elazar Rabbani, Ph.D. pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
| | 32.2        |  | Certification of Barry Weiner pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.          
|

SIGNATURES

Pursuant to the requirements 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.          |                        
|                   |  | (Registrant)  |                        
|                  
|Date: June 9, 2008 |  | by:           | /s/ Barry Weiner       
|                   |  |               | Chief Financial Officer















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