UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|                                                                           |                                                                                          
|-------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------
|Mark one                                                                  
|                                                                           |                                                                                          
|x                                                                          | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 SECURITIES EXCHANGE ACT OF 1934 
|                                                                           |                                                                                          
|For the quarterly period ended
 April 30, 2009                            
|                                                                           |                                                                                          
|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.

Yes x No o

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 45 of Regulation
S-T (§232.405 of that chapter) during the preceding 12 months (or such shorter
period that the registrant was required to submit and post such files).

Yes o No o

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 filer o     Accelerated
filer x     Non-accelerated filer
o     Smaller reporting company o

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

Yes o No x

As of September 1, 2009 the Registrant had approximately
    37,854,000 shares of common stock outstanding.

---



ENZO BIOCHEM, INC. 
FORM 10-Q 
April 30, 2009

INDEX

|           |  |                                                                                                                              |  |   
|---------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | --
|           |  | PART I - FINANCIAL INFORMATION                                                                                               |  |   
|           |  |                                                                                                                              |  |   
|Item
 1.   |  | Financial
 Statements                                                                                                        |  |   
|           | 
|           |  | Consolidated
 Balance Sheets April 30, 2009 (unaudited) and July 31, 2008 (audited)                                          |  | 3 
|           |  |                                                                                                                              |  |   
|           |  | Consolidated
 Statements of Operations for the three and nine months ended April 30, 2009
 and 2008 (unaudited)              |  | 4 
|           |  |                                                                                                                              |  |   
|           |  | Consolidated
 Statement of Stockholders Equity and Comprehensive Loss for the nine months
 ended April 30, 2009 (unaudited) |  | 5 
|           |  |                                                                                                                              |  |   
|           |  | Consolidated
 Statements of Cash Flows for the nine months ended April 30, 2009 and 2008
 (unaudited)                        |  | 6 
|           |  |                                                                                                                              |  |   
|           |  | Notes
 to Consolidated Financial Statements                                                                                  |  | 7 
|           |  |                                                                                                                              |  |   
|Item
 2.   |  | Managements
 Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 19
|           |  |                                                                                                                              |  |   
|Item
 3.   |  | Quantitative
 and Qualitative Disclosures About Market Risk                                                                  |  | 33
|           |  |                                                                                                                              |  |   
|Item
 4.   |  | Controls
 and Procedures                                                                                                     |  | 33
|           |  |                                                                                                                              |  |   
|           |  | Part
 II  OTHER INFORMATION                                                                                                 |  |   
|           |  |                                                                                                                              |  |   
|Item
 1.   |  | Legal
 Proceedings                                                                                                           |  | 34
|           |  |                                                                                                                              |  |   
|Item
 1A.  |  | Risk
 Factors                                                                                                                |  | 34
|           |  |                                                                                                                              |  |   
|Item
 6.   |  | Exhibits                                                                                                                     |  | 34
|           |  |                                                                                                                              |  |   
|Signatures |  |                                                                                                                              |  | 34

2

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Part 1Financial InformationItem 1Financial Statements

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

|                                                                                                                                          |  |                              |          |                           |   |          |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | ------------------------- | - | -------- | -
|                                                                                                                                          |  | April 30,
 2009
 (unaudited) |          | July 31,
 2008
 (audited) |  
|                                                                                                                                          |  |                              |          |                           |  
|ASSETS                                                                                                                                    |  |                              |          |                           |   |          |  
|Current assets:                                                                                                                           |  |                              |          |                           |   |          |  
|Cash and cash equivalents                                                                                                                 |  | $                            | 7,554    |                           | $ | 78,322   |  
|Short term investments                                                                                                                    |  |                              | 47,704   |                           |   |         |  
|Accounts receivable, net of
allowances                                                                                                    |  |                              | 12,358   |                           |   | 15,348   |  
|Inventories                                                                                                                               |  |                              | 10,458   |                           |   | 9,514    |  
|Prepaid expenses                                                                                                                          |  |                              | 1,973    |                           |   | 2,496    |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total current assets                                                                                                                      |  |                              | 80,047   |                           |   | 105,680  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Property, plant, and equipment, net                                                                                                       |  |                              | 11,012   |                           |   | 9,053    |  
|Goodwill                                                                                                                                  |  |                              | 26,253   |                           |   | 21,321   |  
|Intangible assets, net                                                                                                                    |  |                              | 19,817   |                           |   | 17,656   |  
|Other                                                                                                                                     |  |                              | 456      |                           |   | 812      |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total assets                                                                                                                              |  | $                            | 137,585  |                           | $ | 154,522  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                      |  |                              |          |                           |   |          |  
|Current liabilities:                                                                                                                      |  |                              |          |                           |   |          |  
|Accounts payable  trade                                                                                                                  |  | $                            | 2,952    |                           | $ | 4,299    |  
|Accrued liabilities                                                                                                                       |  |                              | 9,066    |                           |   | 7,370    |  
|Other current liabilities                                                                                                                 |  |                              | 3,610    |                           |   | 1,161    |  
|Deferred taxes                                                                                                                            |  |                              | 233      |                           |   | 458      |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total current liabilities                                                                                                                 |  |                              | 15,861   |                           |   | 13,288   |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Deferred revenue                                                                                                                          |  |                              | 154      |                           |   | 512      |  
|Deferred taxes                                                                                                                            |  |                              | 1,975    |                           |   | 2,433    |  
|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: 38,362,440 at April 30, 2009 and 38,007,581
 at July 31, 2008 |  |                              | 384      |                           |   | 380      |  
|Additional paid-in capital                                                                                                                |  |                              | 306,298  |                           |   | 303,811  |  
|Less treasury stock at cost: 877,704
shares
 at April 30, 2009 and 777,719 shares at July 31, 2008                                        |  |                              | (12,457  | )                         |   | (11,331  | )
|Accumulated deficit                                                                                                                       |  |                              | (174,442 | )                         |   | (156,157 | )
|Accumulated other comprehensive (loss)
 income                                                                                            |  |                              | (188     | )                         |   | 1,586    |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total stockholders equity                                                                                                                |  |                              | 119,595  |                           |   | 138,289  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  
|Total liabilities and stockholders equity                                                                                                |  | $                            | 137,585  |                           | $ | 154,522  |  
|                                                                                                                                          |  |                              |          |                           |   |          |  

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

3

---



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

|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|------------------------------------------------ |  | ------------------------------ | ------ | ----------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                                 |  | Three Months Ended 
 April 30, |        | Nine Months Ended 
 April 30, |  
|                                                 |  | 2009                           |        | 2008                          |   | 2009   |   | 2008 |        
|                                                 |  |                                |        |                               |   |        |   |      |        
|Revenues:                                        |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Product revenues                                 |  | $                              | 10,479 |                               | $ | 6,995  |   | $    | 29,952  |   | $ | 18,885 |  
|Royalty and license fee income                   |  |                                | 1,963  |                               |   | 1,642  |   |      | 6,783   |   |   | 5,458  |  
|Clinical laboratory services                     |  |                                | 10,619 |                               |   | 10,312 |   |      | 28,306  |   |   | 32,276 |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                 |  |                                | 23,061 |                               |   | 18,949 |   |      | 65,041  |   |   | 56,619 |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Costs and expenses and other loss (income):      |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Cost of product revenues                         |  |                                | 6,812  |                               |   | 4,434  |   |      | 20,208  |   |   | 13,078 |  
|Cost of clinical laboratory
services             |  |                                | 6,157  |                               |   | 5,178  |   |      | 17,953  |   |   | 15,278 |  
|Research and development
expense                 |  |                                | 2,425  |                               |   | 1,999  |   |      | 6,645   |   |   | 6,150  |  
|Selling, general, and administrative
 expense    |  |                                | 10,412 |                               |   | 8,343  |   |      | 30,795  |   |   | 25,350 |  
|Provision for uncollectible accounts
 receivable |  |                                | 715    |                               |   | 927    |   |      | 3,949   |   |   | 3,050  |  
|Legal expense                                    |  |                                | 859    |                               |   | 782    |   |      | 3,356   |   |   | 4,458  |  
|Interest income                                  |  |                                | (17    | )                             |   | (712   | ) |      | (569    | ) |   | (3,257 | )
|Other loss (income)                              |  |                                | 43     |                               |   | (62    | ) |      | (108    | ) |   | (188   | )
|Foreign currency (gain) loss                     |  |                                | (119   | )                             |   |       |   |      | 837     |   |   |       |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                 |  |                                | 27,287 |                               |   | 20,889 |   |      | 83,066  |   |   | 63,919 |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Loss before income taxes                         |  |                                | (4,226 | )                             |   | (1,940 | ) |      | (18,025 | ) |   | (7,300 | )
|Provision for income taxes                       |  |                                | (16    | )                             |   | (168   | ) |      | (260    | ) |   | (94    | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Net loss                                         |  | $                              | (4,242 | )                             | $ | (2,108 | ) | $    | (18,285 | ) | $ | (7,394 | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Net loss per common share:                       |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Basic                                            |  | $                              | (0.11  | )                             | $ | (0.06  | ) | $    | (0.49   | ) | $ | (0.20  | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Diluted                                          |  | $                              | (0.11  | )                             | $ | (0.06  | ) | $    | (0.49   | ) | $ | (0.20  | )
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Weighted average common shares outstanding:      |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Basic                                            |  |                                | 37,484 |                               |   | 36,834 |   |      | 37,423  |   |   | 36,771 |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  
|Diluted                                          |  |                                | 37,484 |                               |   | 36,834 |   |      | 37,423  |   |   | 36,771 |  
|                                                 |  |                                |        |                               |   |        |   |      |         |   |   |        |  

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

4

---



ENZO BIOCHEM, INCCONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE LOSS
Nine months ended April 30, 2009 
(UNAUDITED) 
(In thousands, except share data)

|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  
|-------------------------------------------- |  | ----------------- | ---------- | ------------------- |  | ---------------------- |  | ---------------------------- | --- | ----------------------- | - | -------------------- |  | ------------------------------------------------ | ------- | ---------------------------- | - | ------------------- | - | - | ------ | - | - | ------- | - | - | ------- | -
|                                             |  | CommonStockShares |            | TreasuryStockShares |  | Common 
 Stock
 Amount |  | Additional
 Paid-in
 Capital |     | Treasury
 Stock
 Amount |   | Accumulated
 Deficit |  | Accumulated
 Other
 Comprehensive
 (Loss) Income |         | Total
 Stockholders
 Equity |   | Comprehensive
 Loss |  
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |  
|Balance at July 31, 2008                     |  |                   | 38,007,581 |                     |  | 777,719                |  | $                            | 380 |                         | $ | 303,811              |  | $                                                | (11,331 | )                            | $ | (156,157            | ) | $ | 1,586  |   | $ | 138,289 |   |   |         |  
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  
|Net loss for the period ended April 30, 2009 |  |                   |           |                     |  |                       |  |                              |    |                         |   |                     |  |                                                  |        |                              |   | (18,285             | ) |   |       |   |   | (18,285 | ) | $ | (18,285 | )
|Purchase of treasury stock                   |  |                   |           |                     |  | 99,985                 |  |                              |    |                         |   |                      |  |                                                  | (1,126  | )                            |   |                    |   |   |       |   |   | (1,126  | ) |   |        |  
|Exercise of stock options                    |  |                   | 251,162    |                     |  |                       |  |                              | 3   |                         |   | 1,471                |  |                                                  |        |                              |   |                    |   |   |       |   |   | 1,474   |   |   |        |  
|Vesting of restricted stock                  |  |                   | 103,697    |                     |  |                       |  |                              | 1   |                         |   |                     |  |                                                  |        |                              |   |                    |   |   |       |   |   | 1       |   |   |        |  
|Stock based compensation charges             |  |                   |           |                     |  |                       |  |                              |    |                         |   | 1,016                |  |                                                  |        |                              |   |                    |   |   |       |   |   | 1,016   |   |   |        |  
|Foreign currency translation adjustments     |  |                   |           |                     |  |                       |  |                              |    |                         |   |                     |  |                                                  |        |                              |   |                    |   |   | (1,774 | ) |   | (1,774  | ) |   | (1,774  | )
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  
|Comprehensive loss                           |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   | $ | (20,059 | )
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  
|Balance at April 30, 2009                    |  |                   | 38,362,440 |                     |  | 877,704                |  | $                            | 384 |                         | $ | 306,298              |  | $                                                | (12,457 | )                            | $ | (174,442            | ) | $ | (188   | ) | $ | 119,595 |   |   |         |  
|                                             |  |                   |            |                     |  |                        |  |                              |     |                         |   |                      |  |                                                  |         |                              |   |                     |   |   |        |   |   |         |   |   |         |  

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

5

---



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

|                                                                             |  |                              |          |      |   |         |  
|---------------------------------------------------------------------------- |  | ---------------------------- | -------- | ---- | - | ------- | -
|                                                                             |  | Nine Months Ended
 April 30, |         
|                                                                             |  | 2009                         |          | 2008 |  
|                                                                             |  |                              |          |      |  
|Cash flows from operating activities:                                        |  |                              |          |      |   |         |  
|Net loss                                                                     |  | $                            | (18,285  | )    | $ | (7,394  | )
|Adjustments to reconcile net loss to net
 cash used in operating activities: |  |                              |          |      |   |         |  
|Depreciation and amortization of property,
 plant and equipment              |  |                              | 1,533    |      |   | 1,025   |  
|Amortization of intangible
assets                                            |  |                              | 818      |      |   | 362     |  
|Provision for uncollectible accounts
 receivable                             |  |                              | 3,949    |      |   | 3,050   |  
|Write off and/or reserve taken for
obsolete
 inventory                       |  |                              | 175      |      |   | 154     |  
|Deferred income tax benefit                                                  |  |                              | (237     | )    |   | (370    | )
|Share based compensation
charges                                             |  |                              | 1,016    |      |   | 1,152   |  
|Deferred revenue recognized                                                  |  |                              | (358     | )    |   | (338    | )
|Foreign currency loss on intercompany
loan                                   |  |                              | 813      |      |   |        |  
|Accrual for 401(k) employer
match                                            |  |                              | 582      |      |   | 481     |  
|Other                                                                        |  |                              |         |      |   | 3       |  
|                                                                             |  |                              |          |      |   |         |  
|Changes in operating assets and
 liabilities:                                |  |                              |          |      |   |         |  
|Accounts receivable                                                          |  |                              | (2       | )    |   | (2,822  | )
|Inventories                                                                  |  |                              | 1,649    |      |   | 463     |  
|Prepaid expenses                                                             |  |                              | 721      |      |   | 268     |  
|Accounts payable  trade                                                     |  |                              | (1,836   | )    |   | (344    | )
|Accrued liabilities                                                          |  |                              | 883      |      |   | (2,627  | )
|Other current liabilities                                                    |  |                              | (158     | )    |   | (48     | )
|                                                                             |  |                              |          |      |   |         |  
|Total adjustments                                                            |  |                              | 9,548    |      |   | 409     |  
|                                                                             |  |                              |          |      |   |         |  
|Net cash used in operating
activities                                        |  |                              | (8,737   | )    |   | (6,985  | )
|                                                                             |  |                              |          |      |   |         |  
|                                                                             |  |                              |          |      |   |         |  
|Cash flows from investing activities:                                        |  |                              |          |      |   |         |  
|Purchases of short term
investments                                          |  |                              | (273,956 | )    |   |        |  
|Maturities of short term
investments                                         |  |                              | 226,253  |      |   |        |  
|Capital expenditures                                                         |  |                              | (2,156   | )    |   | (1,596  | )
|Increase in cash surrender
value                                             |  |                              |         |      |   | (47     | )
|Decrease (increase) in security deposits
 and other assets                   |  |                              | 368      |      |   | (169    | )
|Acquisition, including costs
paid                                            |  |                              | (12,738  | )    |   | (280    | )
|                                                                             |  |                              |          |      |   |         |  
|Net cash used in investing
activities                                        |  |                              | (62,229  | )    |   | (2,092  | )
|                                                                             |  |                              |          |      |   |         |  
|                                                                             |  |                              |          |      |   |         |  
|Cash flows from financing activities:                                        |  |                              |          |      |   |         |  
|Issuance costs from the issuance of common
 stock                            |  |                              |         |      |   | (12     | )
|Proceeds from the exercise of stock
options                                  |  |                              | 348      |      |   | 395     |  
|                                                                             |  |                              |          |      |   |         |  
|Net cash provided by financing
activities                                    |  |                              | 348      |      |   | 383     |  
|                                                                             |  |                              |          |      |   |         |  
|                                                                             |  |                              |          |      |   |         |  
|Effect of exchange rate changes on cash and
 cash equivalents                |  |                              | (150     | )    |   | 48      |  
|                                                                             |  |                              |          |      |   |         |  
|                                                                             |  |                              |          |      |   |         |  
|Decrease in cash and cash equivalents                                        |  |                              | (70,768  | )    |   | (8,646  | )
|Cash and cash equivalents - beginning of
 period                             |  |                              | 78,322   |      |   | 105,149 |  
|                                                                             |  |                              |          |      |   |         |  
|Cash and cash equivalents - end of period                                    |  | $                            | 7,554    |      | $ | 96,503  |  
|                                                                             |  |                              |          |      |   |         |  

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

6

---



ENZO BIOCHEM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of April 30, 2009 
and for the three and nine month periods ended 
April 30, 2009 and 2008 
(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. On March 12, 2009, Enzo Life
Sciences, Inc. (Enzo Life Sciences), a wholly-owned subsidiary of the
Company, acquired substantially all assets and assumed certain liabilities of
Assay Designs, Inc., through its wholly-owned subsidiary Enzo Life Sciences
Acquisition, Inc. (see Note 3). The consolidated balance sheet as of April 30,
2009, consolidated statement of stockholders equity and comprehensive loss and
consolidated statement of cash flows for the nine months ended April 30, 2009,
and the consolidated statements of operations for the three and nine months
ended April 30, 2009 and 2008 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, 2008 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,
2008 has been derived from the audited financial statements at that date. The
results of operations for the three and nine months ended April 30, 2009 are
not necessarily indicative of the results that may be expected for the fiscal
year ending July 31, 2009.

As more fully described in Item 2- Managements Discussion and Analysis of Financial Condition
and Results of Operations, the Company identified certain immaterial errors which were effectively corrected in the fiscal
2009 first and second quarters which related to contractual adjustments and allowance for doubtful accounts.  These errors
were assessed individually and in the aggregate as being immaterial to the current and prior periods.

Recent Accounting Pronouncements

In May
2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165). SFAS 165
is intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. In particular, SFAS 165 sets forth
the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements; the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements; and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date. SFAS 165 is effective for interim or annual financial periods
ending after June 15, 2009.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (SFAS 162). SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with generally accepted accounting principles.
SFAS 162 will become effective 60 days following the SECs approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles. The Company does not anticipate the adoption of SFAS 162 will have
a material impact on its results of operations, cash flows or financial
condition.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the
Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the
factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under FASB Statement No.142, Goodwill and Other Intangible Assets. FSP FAS
142-3 also requires expanded disclosure related to the determination of
intangible asset useful lives. FSP FAS 142-3 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and interim
periods within those fiscal years. Early adoption is prohibited. The Company is
currently evaluating the impact that the adoption of FSP FAS 142-3 will have on
its consolidated results of operations, cash flows or financial condition.

7

---



In December 2007, the FASB issued Statement No. 141 (revised 2007),
Business Combinations (SFAS 141R). SFAS 141R establishes principles and
requirements for how the acquirer in a business combination recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any controlling interest in the business and the goodwill
acquired. SFAS 141R further requires that acquisition-related costs and costs
associated with restructuring or exiting activities of an acquired entity will
be expensed as incurred. SFAS 141R also establishes disclosure requirements
that will require disclosure of the nature and financial effects of the
business combination. SFAS 141R will impact business combinations for the
Company that may be completed on or after August 1, 2009. 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 SFAS 141R
on August 1, 2009 could materially change the accounting for business
combinations consummated subsequent to that date and for tax matters relating
to prior acquisitions settled subsequent to July 31, 2009.

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 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 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 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 159 is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 159 did not have a material impact on the
Companys consolidated results of operations or financial condition as we have
not elected to apply the provisions to our financial instruments or other
eligible items that are not required to be measured at fair value.

Note 2  Short-term Investments

At April 30, 2009 the Companys short-term investments, whose fair
value approximates cost, are in U.S. Government Treasury bills, which are
purchased at discounts with remaining maturities of under ninety days.

Effective August 1, 2008, the Company adopted SFAS No. 157, Fair Value
Measurements (SFAS 157), for assets and liabilities measured at fair value
on a recurring basis. SFAS 157 establishes a common definition for fair value
to be applied to existing GAAP that require the use of fair value measurements,
establishes a framework for measuring fair value and expands disclosure about
such fair value measurements. The adoption of SFAS 157 did not have an impact
on the Companys financial position or operating results, but did expand
certain disclosures.

SFAS 157 defines fair value as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Additionally, SFAS 157 requires
the use of valuation techniques that maximize the use of observable inputs and
minimize the use of unobservable inputs. These inputs are prioritized below:

| |           |                                                                                                                                    
| | --------- | -----------------------------------------------------------------------------------------------------------------------------------
| | Level
 1: | Observable inputs
 such as quoted market prices in active markets for identical assets or
 liabilities.                            
| |           |                                                                                                                                    
| | Level2:   | Observable
 market-based inputs or unobservable inputs that are corroborated by market
 data.                                      
| |           |                                                                                                                                    
| | Level3:   | Unobservable
 inputs for which there is little or no market data, which require the use of
 the reporting entitys own assumptions.

At April 30, 2009, the Companys short-term investments are classified
as Level 1 assets.

8

---



Note 3  Acquisitions

Assay Designs, Inc.

On March 12, 2009, Enzo Life Sciences, Inc. and Enzo Life Sciences
Acquisition, Inc., a newly formed wholly owned subsidiary of Enzo Life
Sciences, Inc. (Acquisition Sub), entered into an asset purchase agreement
(Purchase Agreement) dated as of March 12, 2009 with Assay Designs, Inc.
(Assay Designs). Assay Designs, a privately owned company with annual sales
of approximately $11 million, was engaged in researching, developing,
manufacturing, distributing, marketing and selling specialty immunological and
biochemical protein detection kits, assays, reagents, antibodies, recombinant
proteins and related products and providing related services for use in the
biotechnology, pharmaceutical and life sciences research industries
(Business). Under the terms of the Purchase Agreement, Acquisition Sub
purchased from Assay Designs substantially all of its assets, including trade
accounts receivable, inventory, fixed assets, and intellectual property, used
in or related to the Business and assumed certain of Assay Designs
liabilities, including trade accounts payable, capital lease obligations and
certain other current liabilities.

The execution of the Purchase Agreement and the closing
    of the transaction occurred simultaneously on March 12, 2009. The purchase
    price consisted of $12,228,000 in cash, exclusive of acquisition costs of
approximately $540,000, and is subject to an upward or downward post-closing
purchase price adjustment based on Assay Designs working capital as of
the closing date, $100,000 of which will be held in escrow for approximately
60-90 days to secure the payment of any downward post-closing purchase price
adjustment and $750,000 of which will be held in escrow for 12 months to secure
the payment of any indemnification obligations of Assay Designs under the
Purchase Agreement. Subsequent to the acquisition date, the Company paid $270,000
in additional purchase price in connection with the working capital adjustment and
released the $100,000 escrow amount. The Company expects the cost of the acquisition to be
increased when the integration plan to consolidate a facility and the
involuntary termination of certain employees is finalized and the cost is
determinable. The Assay Design Acquisition strengthens the Companys position
as a global provider of life sciences reagents by broadening our product
offerings and manufacturing capabilities.

The acquisition was funded with the Companys cash. Effective March 12,
2009, Assay Designs became a wholly-owned subsidiary of Enzo Life Sciences. The
consolidated financial statements include the results of operations for Assay
Designs from the date of acquisition.

The following table presents the preliminary estimated fair values of
the assets acquired and liabilities assumed (in thousands) as of April 30,
2009:

|                          |  |   |        | 
|------------------------- |  | - | ------ | 
|Current assets            |  | $ | 4,572  | 
|Property and
 equipment   |  |   | 1,437  | 
|Other assets              |  |   | 12     | 
|Intangible assets         |  |   | 3,917  | 
|Goodwill                  |  |   | 3,587  | 
|                          |  |   |        | 
|Total assets acquired     |  |   | 13,525 | 
|                          |  |   |        | 
|Less:                     |  |   |        | 
|Current
 liabilities      |  |   | 787    | 
|                          |  |   |        | 
|Total liabilities assumed |  |   | 787    | 
|                          |  |   |        | 
|Net assets
 acquired      |  | $ | 12,738 | 
|                          |  |   |        | 

The preliminary purchase price allocation is based on managements
estimate of acquired tangible and intangible assets and will be adjusted based
on the final valuation to be completed within one year from the acquisition
date. The excess of the total purchase price over the fair value of the net
assets acquired, including the estimated fair value of the identifiable
intangible assets, has been allocated to goodwill.

9

---



Biomol International,
L.P.

On May 8, 2008, Enzo Life Sciences, Inc. acquired substantially all of
the U.S. based assets and certain liabilities of Biomol International, LP
(Biomol LP) through a newly formed US subsidiary Biomol International, Inc.
and all of the stock of Biomols wholly-owned United Kingdom subsidiary,
Affinity Limited, through Axxora UK, a wholly-owned subsidiary of Enzo Life
Sciences, collectively referred to as Biomol for approximately $18.1 million
in cash and stock, subject to adjustment, exclusive of acquisition costs of
approximately $800,000 and two contingent earn-out payments accounted for as
additional purchase consideration if and when the contingencies are resolved
beyond a reasonable doubt. At closing, the purchase price was satisfied as
follows: $12.9 million in cash was paid to Biomol LP, issuance of 352,000
shares of Enzo common stock, at fair market value, to Biomol LP, $1.5 million
in cash was paid to an escrow agent for the one-year period following the
closing to satisfy any indemnification obligations of the sellers under the
Agreement and $550,000 was paid to an escrow agent, for the 60 day period
following the closing to satisfy any specified purchase price adjustments. The
$550,000 was released by the escrow agent in August 2008. The earn-outs of $2.5
million on each of the next two anniversaries of the acquisition date will be
based on attaining certain revenue and EBITDA targets, as defined. The
Agreement provides for the delivery of the earn-out statement within 75 days of
the respective anniversary dates. Biomol was a privately owned, closely held
global manufacturer and marketer of specialty life sciences research products.
Effective May 8, 2008, Biomol became a wholly-owned subsidiary of Enzo Life
Sciences. The acquisition was financed with the Companys cash and cash
equivalents and Enzo common stock. The consolidated financial statements
include the results of operations for Biomol from the date of acquisition.
Effective February 2, 2009, the names of Biomol International, Inc. and
Affinity Limited were changed to Enzo Life Sciences International, Inc. and
Enzo Life Sciences (UK) Ltd., respectively.

As of April 30, 2009, the conditions for the first annual earn-out of
$2.5 million were met. The Company recorded $2.5 million of additional goodwill
and other current liabilities in the accompanying balance sheet. Subsequent to April 30, 2009,
the Company issued 202,196 shares of Enzo common stock at fair value and paid $1.5 million in cash
to satisfy the $2.5 million earn-out liability.

The following table presents the estimated fair values of the assets
acquired and liabilities assumed (in thousands) as of April 30, 2009:

|                          |  |   |        | 
|------------------------- |  | - | ------ | 
|Current assets            |  | $ | 5,167  | 
|Property and
 equipment   |  |   | 694    | 
|Other assets              |  |   | 18     | 
|Intangible assets         |  |   | 8,035  | 
|Goodwill                  |  |   | 9,159  | 
|                          |  |   |        | 
|Total assets acquired     |  |   | 23,073 | 
|                          |  |   |        | 
|Less:                     |  |   |        | 
|Current
 liabilities      |  |   | 1,100  | 
|Deferred tax
 liabilities |  |   | 609    | 
|                          |  |   |        | 
|Total liabilities assumed |  |   | 1,709  | 
|                          |  |   |        | 
|Net assets acquired       |  | $ | 21,364 | 
|                          |  |   |        | 

The preliminary purchase price allocation is based on a valuation of
acquired tangible and intangible assets and will be adjusted based on the final
valuation to be completed within one year from the acquisition date. The
Company determined the estimated fair value of the identifiable intangible
assets based on various factors including: cost, discounted cash flow and
relief from royalty approaches in determining the purchase price allocation.
The excess of the total purchase price over the fair value of the net assets
acquired, including the estimated fair value of the identifiable intangible
assets, has been allocated to goodwill.

For financial reporting purposes, useful lives for the intangibles
acquired in the Biomol and other acquisitions have been assigned as follows:

|                        |  |  |            | 
|----------------------- |  |  | ---------- | 
|Customer
 relationships |  |  | 8-15 years | 
|Trademarks              |  |  | Indefinite | 
|Other intangibles       |  |  | 4-5 years  | 

10

---



The following unaudited pro forma financial information presents the
combined results of operations of the Company and acquisitions completed in
fiscal 2009 and 2008. The pro forma information for fiscal 2008 is as if the
acquisitions had occurred as of August 1, 2007. Pro forma information for the
fiscal 2009 acquisition represents results of operations for the comparable
periods included in fiscal 2009. The pro forma financial information reflects
appropriate adjustments primarily for amortization of intangible assets and
interest expense. The pro forma financial information presented is not
necessarily indicative of either the actual consolidated operating results had
the acquisitions been completed at the beginning of each period or future
operating results of the consolidated entities.

|                                               |  |                                |        |                              |   |        |   |      |         |   |   |        |  
|---------------------------------------------- |  | ------------------------------ | ------ | ---------------------------- | - | ------ | - | ---- | ------- | - | - | ------ | -
|                                               |  | Three months ended 
 April 30, |        | Nine months ended
 April 30, |  
|In thousands
 (except per share amounts)       |  | 2009                           |        | 2008                         |   | 2009   |   | 2008 |        
|                                               |  |                                |        |                              |   |        |   |      |        
|Net revenues                                   |  | $                              | 24,444 |                              | $ | 25,158 |   | $    | 73,079  |   | $ | 73,758 |  
|Net loss                                       |  |                                | (4,258 | )                            |   | (1,886 | ) |      | (18,752 | ) |   | (6,839 | )
|Net loss per
 common share  basic and diluted |  | $                              | (0.11  | )                            | $ | (0.05  | ) | $    | (0.50   | ) | $ | (0.19  | )

Note 4  Net loss per share

The Company applies SFAS No. 128, Earnings per Share (SFAS 128).
SFAS 128 establishes standards for computing and presenting earnings per share.
Basic net income (loss) per share represents net income (loss) divided by the
weighted average number of common shares outstanding during the period. The
dilutive effect of potential common shares, consisting of outstanding stock
options and unvested restricted stock, is determined using the treasury stock
method in accordance with SFAS 128. Diluted weighted average shares outstanding
for the three and nine months ended April 30, 2009 and 2008 do not include the
potential common shares from stock options and unvested restricted stock
because to do so would have been 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 
 April 30, |   | Nine months ended 
 April 30, | 
|(In thousands)                                                                                                                                                                       |  | 2009                           |   | 2008                          |  | 2009 |  | 2008 |   
|                                                                                                                                                                                     |  |                                |   |                               |  |      |  |      |   
|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  |  |      | 39 |  |  | 259 | 
|                                                                                                                                                                                     |  |                                |   |                               |  |      |  |      |    |  |  |     | 

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 
 April 30, |       | Nine months ended 
 April 30, | 
|(In thousands)                                          |  | 2009                           |       | 2008                          |  | 2009  |  | 2008 |      
|                                                        |  |                                |       |                               |  |       |  |      |      
|Out of the money
 employee and director stock options |  |                                | 1,785 |                               |  | 1,485 |  |      | 1,743 |  |  | 1,739 | 
|                                                        |  |                                |       |                               |  |       |  |      |       |  |  |       | 

Note 5  Share-based compensation

The Company records compensation expense associated with stock options
and restricted stock in accordance with SFAS No. 123(R), Share-Based Payment.
The Company adopted the modified prospective application method provided for
under SFAS 123(R) and consequently did not retroactively adjust results from
prior periods. Under this transition method, compensation cost associated with
stock options and awards recognized during the three and nine months ended
April 30, 2009 and 2008 includes: (a) compensation cost of all stock-based
payments granted prior to, but not yet vested as of July 31, 2005 (based on
grant-date fair value), and (b) compensation cost for all stock-based payments
granted on or after August 1, 2005 (based on the grant-date fair value).

11

---



The following table sets forth the amount of expense related to
share-based payment arrangements included in specific line items in the
accompanying statements of operations:

|                                     |  |                               |     |                              |   |      |  |      |       |  |   |       | 
|------------------------------------ |  | ----------------------------- | --- | ---------------------------- | - | ---- |  | ---- | ----- |  | - | ----- | 
|                                     |  | Three months ended
 April 30, |     | Nine months ended
 April 30, |  
|In thousands                         |  | 2009                          |     | 2008                         |   | 2009 |  | 2008 |      
|                                     |  |                               |     |                              |   |      |  |      |      
|Cost of product
 revenues            |  | $                             |    |                              | $ | 7    |  | $    | 3     |  | $ | 13    | 
|Research and
 development            |  |                               | 2   |                              |   | 35   |  |      | 30    |  |   | 76    | 
|Selling, general
 and administrative |  |                               | 299 |                              |   | 367  |  |      | 983   |  |   | 1,063 | 
|                                     |  |                               |     |                              |   |      |  |      |       |  |   |       | 
|                                     |  | $                             | 301 |                              | $ | 409  |  | $    | 1,016 |  | $ | 1,152 | 
|                                     |  |                               |     |                              |   |      |  |      |       |  |   |       | 

No excess tax benefits were recognized during the three or nine month
periods ended April 30, 2009 and 2008.

Stock option plans

A summary of the activity relating to the Companys stock option plans
for the nine month period ended April 30, 2009 is as follows:

|                                              |  |         |           |                               |   |                            |  |   |           | 
|--------------------------------------------- |  | ------- | --------- | ----------------------------- | - | -------------------------- |  | - | --------- | 
|                                              |  | Options |           | WeightedAverageExercise Price |   | Aggregate
 Intrinsic Value | 
|                                              |  |         |           |                               |   |                            | 
|Outstanding at
 August 1, 2008                |  |         | 2,275,415 |                               | $ | 13.13                      |  | $ | 5,700,000 | 
|                                              |  |         |           |                               |   |                            |  |   |           | 
|Exercised                                     |  |         | (251,162  | )                             | $ | 5.87                       |  |   |           | 
|Cancelled                                     |  |         | (238,401  | )                             | $ | 18.57                      |  |   |           | 
|                                              |  |         |           |                               |   |                            |  |   |           | 
|Outstanding and
 exercisable at end of period |  |         | 1,785,852 |                               | $ | 13.51                      |  | $ |          | 
|                                              |  |         |           |                               |   |                            |  |   |           | 

As of April 30, 2009, there was no unrecognized compensation cost
related to unvested stock option-based compensation.

During the nine months ended April 30, 2009 and 2008, the Company
received cash proceeds of approximately $348,000 and $395,000, respectively,
from the exercise of 44,586 and 35,639 stock options, respectively. The
aggregate intrinsic value of stock options exercised during the nine months
ended April 30, 2009 and 2008, including the non-cash transactions (Note 6) was
approximately $1.4 million and $0.7 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, 2009 is as follows:

|                            |  |        |          |                                 |   |       | 
|--------------------------- |  | ------ | -------- | ------------------------------- | - | ----- | 
|                            |  | Awards |          | Weighted 
 Average
 Award Price |  
|                            |  |        |          |                                 |  
|Unvested at August
 1, 2008 |  |        | 220,240  |                                 | $ | 12.34 | 
|Awarded                     |  |        | 283,801  |                                 | $ | 4.04  | 
|Vested                      |  |        | (103,697 | )                               | $ | 12.41 | 
|Forfeited                   |  |        | (5,575   | )                               | $ | 10.13 | 
|                            |  |        |          |                                 |   |       | 
|Unvested at end of
 period  |  |        | 394,769  |                                 | $ | 6.39  | 
|                            |  |        |          |                                 |   |       | 

The fair value of a restricted stock award is determined based on the
closing stock price on the award date. As of April 30, 2009, there was
approximately $2.1 million of total unrecognized compensation cost related to
unvested restricted stock-based compensation to be recognized over a weighted
average remaining period of two and a half years.

The total number of
shares available for grant as stock options or award as restricted stock is
approximately 548,000 as of April 30, 2009.

12

---



Note 6  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, |    
|                 |  | 2009                          |     | 2008 |  
|                 |  |                               |     |      |  
|Taxes paid  net |  | $                             | 181 |      | $ | 204 | 
|                 |  |                               |     |      |   |     | 

During the nine months ended April 30, 2009,
certain officers of the Company exercised 206,576 stock options in a non-cash
transaction. The officers surrendered 99,985 shares of previously acquired
common stock to exercise the stock options. The Company recorded approximately
$1.1 million, the market value of the surrendered shares, as treasury stock.

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.

Note 7  Comprehensive loss

During the three months ended April 30, 2009
and 2008, total comprehensive loss was approximately $4.0 million and $1.9
million, respectively. During the nine months ended April 30, 2009 and 2008,
total comprehensive loss was approximately $20.1 million and $6.9 million,
respectively.

At April 30, 2009 and July 31, 2008, the
accumulated other comprehensive (loss) income relates to foreign currency
translation adjustments.

Note 8- Inventories

At April 30, 2009 and July 31, 2008 inventories,
net of reserves of $804,000 and $637,000, respectively, consist of:

|                  |  |   |                 |  |                |       |  | 
|----------------- |  | - | --------------- |  | -------------- | ----- |  | 
|In 000s          |  |   | April 30,
 2009 |  | July 31,
 2008 |      
|                  |  |   |                 |  |                |      
|Raw materials     |  | $ | 957             |  | $              | 341   | 
|Work in process   |  |   | 1,773           |  |                | 899   | 
|Finished products |  |   | 7,728           |  |                | 8,274 | 
|                  |  |   |                 |  |                |       | 
|                  |  | $ | 10,458          |  | $              | 9,514 | 
|                  |  |   |                 |  |                |       | 

Note 9  Goodwill and intangible assets

The Companys change in the net carrying
amount of goodwill by business segment is as follows (in thousands):

|                                                              |  |                     |        |                      |   |       |  |   |        |  
|------------------------------------------------------------- |  | ------------------- | ------ | -------------------- | - | ----- |  | - | ------ | -
|                                                              |  | Enzo Life
 Sciences |        | Enzo
 Clinical
 Labs |   | Total | 
|                                                              |  |                     |        |                      |   |       | 
|Balance August 1, 2008                                        |  | $                   | 13,869 |                      | $ | 7,452 |  | $ | 21,321 |  
|Goodwill arising from Assay Designs
 acquisition (Note 3)     |  |                     | 3,587  |                      |   |      |  |   | 3,587  |  
|Goodwill arising from Biomol acquisition
 (Note 3)            |  |                     | 2,500  |                      |   |      |  |   | 2,500  |  
|Adjustment for acquired tax liability
 settlement  (Note 11) |  |                     | (184   | )                    |   |      |  |   | (184   | )
|Other                                                         |  |                     | (31    | )                    |   |      |  |   | (31    | )
|Foreign currency translation                                  |  |                     | (940   | )                    |   |      |  |   | (940   | )
|                                                              |  |                     |        |                      |   |       |  |   |        |  
|Balance April 30, 2009                                        |  | $                   | 18,801 |                      | $ | 7,452 |  | $ | 26,253 |  
|                                                              |  |                     |        |                      |   |       |  |   |        |  

13

---



Intangible assets, all of which are included
in the Life Sciences segment, consist of the following (in thousands):

|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|-------------------------------------- |  | -------------- | ------ | ------------------------- | - | ------- | - | ----- | ------ | ------------------------- | - | ------ |  | - | ------- | - | - | ------ | 
|                                       |  | April 30, 2009 |        | July 31, 2008             |  
|                                       |  |                |        |                           |  
|                                       |  | Gross          |        | Accumulated
 Amortization |   | Net     |   | Gross |        | Accumulated
 Amortization |   | Net    | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        | 
|Finite-lived intangible assets:        |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Patents                                |  | $              | 11,027 |                           | $ | (9,992  | ) | $     | 1,035  |                           | $ | 11,027 |  | $ | (9,929  | ) | $ | 1,098  | 
|Customer
 relationships                |  |                | 9,854  |                           |   | (834    | ) |       | 9,020  |                           |   | 8,314  |  |   | (392    | ) |   | 7,922  | 
|Non-compete and
 employment agreements |  |                | 459    |                           |   | (232    | ) |       | 227    |                           |   | 481    |  |   | (126    | ) |   | 355    | 
|Website and
 acquired content          |  |                | 936    |                           |   | (248    | ) |       | 688    |                           |   | 984    |  |   | (117    | ) |   | 867    | 
|Licensed
 technology and other         |  |                | 566    |                           |   | (76     | ) |       | 490    |                           |   | 737    |  |   | (29     | ) |   | 708    | 
|Indefinitely-lived
 intangible assets: |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Trademarks                             |  |                | 8,357  |                           |   |        |   |       | 8,357  |                           |   | 6,706  |  |   |        |   |   | 6,706  | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Total                                  |  | $              | 31,199 |                           | $ | (11,382 | ) | $     | 19,817 |                           | $ | 28,249 |  | $ | (10,593 | ) | $ | 17,656 | 
|                                       |  |                |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 

At April 30, 2009, the weighted average
useful life of finite-lived intangible assets was approximately ten and a half
years.

Note 10  Accrued Liabilities and Other
Current Liabilities

At April 30, 2009 and July 31, 2008, accrued
liabilities consist of:

|                                   |  |   |                 |  |                |       |  | 
|---------------------------------- |  | - | --------------- |  | -------------- | ----- |  | 
|In 000s                           |  |   | April 30,
 2009 |  | July 31,
 2008 |      
|                                   |  |   |                 |  |                |      
|Legal                              |  | $ | 1,390           |  | $              | 1,702 | 
|Payroll, benefits, and commissions |  |   | 3,381           |  |                | 1,989 | 
|Research and development           |  |   | 665             |  |                | 1,200 | 
|Professional fees                  |  |   | 1,454           |  |                | 584   | 
|Outside reference lab testing      |  |   | 287             |  |                | 46    | 
|Other                              |  |   | 1,889           |  |                | 1,849 | 
|                                   |  |   |                 |  |                |       | 
|                                   |  | $ | 9,066           |  | $              | 7,370 | 
|                                   |  |   |                 |  |                |       | 

At April 30, 2009 and July 31, 2008, other
current liabilities consist of:

|                 |  |   |                 |  |                |       |  | 
|---------------- |  | - | --------------- |  | -------------- | ----- |  | 
|In 000s         |  |   | April 30,
 2009 |  | July 31,
 2008 |      
|                 |  |   |                 |  |                |      
|Biomol earn-out  |  | $ | 2,500           |  | $              |      | 
|Deferred revenue |  |   | 861             |  |                | 1,089 | 
|Other            |  |   | 249             |  |                | 72    | 
|                 |  |   |                 |  |                |       | 
|                 |  | $ | 3,610           |  | $              | 1,161 | 
|                 |  |   |                 |  |                |       | 

Note 11 - 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, 2009 was 0.4% compared to 8.6% during the
three months ended April 30, 2008. The tax provision for both periods was based
on state and local taxes, domestic and foreign tax for tax deductible goodwill
and indefinite lived intangibles, and book to tax differences for acquired
inventory.

The Companys effective tax rate provision
for the nine months ended April 30, 2009 was 1.4% compared to 1.3% during the
nine months ended April 30, 2008. The tax provision for both periods was based
on state and local taxes, domestic and foreign tax for tax deductible goodwill
and indefinite lived intangibles, and book to tax differences for acquired
inventory.

The Companys effective tax rate for all
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.

14

---



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, California, and New York State
and City return with certain subsidiaries. Other subsidiaries file separate
state and foreign tax returns.

The Company files income tax returns in the
U.S. Federal jurisdiction, various U.S. state jurisdictions, and several
foreign jurisdictions. With few exceptions, the periods that remain subject to
examination are fiscal years ended July 31, 2006 through 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 nine months
ended April 30, 2009, the Company reduced this liability by approximately
$184,000 as a result of the expiration of the statute of limitations. The
Companys policy is to recognize interest and penalties accrued on any
uncertain tax positions as a component of income tax expense.

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). Digene
Corporation was acquired by QIAGEN. The license agreement with the Company was
assigned to QIAGEN Gaithersburg Inc. (Qiagen). The Agreement provides for the
Company to receive quarterly running royalties on the net sales of Qiagen
products subject to the license until the expiration of the patent in April
2018. During the three months ended April 30, 2009 and 2008, the Company
recorded royalties from the Agreement of approximately $1.3 million and $1.0
million, respectively, and during the nine months ended April 30, 2009 and 2008
recorded approximately $4.8 million and $3.9 million, respectively.

During the three months ended April 30, 2009
and 2008, the Company recorded approximately $0.7 million and $0.6 million,
respectively; and during the nine months ended April 30, 2009 and 2008 recorded
approximately $2.0 million and $1.5 million, respectively, in royalties and
license fee income under a licensing agreement with Abbott Molecular, Inc.
(Abbott) entered into in fiscal 2007.

15

---



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.

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

Three months ended April 30, 2009

|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 10,479 |              | $ |               |   | $     |       |              | $ |       |   | $ | 10,479 |  
|Royalty and license fee income                   |  |                | 1,963  |              |   |               |   |       |       |              |   |       |   |   | 1,963  |  
|Clinical laboratory services                     |  |                |       |              |   |               |   |       | 10,619 |              |   |       |   |   | 10,619 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 12,442 |              |   |               |   |       | 10,619 |              |   |       |   |   | 23,061 |  
|Costs and expenses and other (income):           |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 6,812  |              |   |               |   |       |        |              |   |       |   |   | 6,812  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 6,157  |              |   |       |   |   | 6,157  |  
|Research and development                         |  |                | 1,572  |              |   | 853            |   |       |       |              |   |       |   |   | 2,425  |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 715    |              |   |       |   |   | 715    |  
|Selling, general, and administrative and
 legal  |  |                | 3,909  |              |   |               |   |       | 4,167  |              |   | 3,195  |   |   | 11,271 |  
|Interest income                                  |  |                |        |              |   |                |   |       |       |              |   | (17    | ) |   | (17    | )
|Other (income)                                   |  |                | 54     |              |   |               |   |       | (11    | )            |   |       |   |   | 43     |  
|Foreign exchange (gain)                          |  |                | (119   | )            |   |               |   |       |       |              |   |       |   |   | (119   | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 214    |              | $ | (853           | ) | $     | (409   | )            | $ | (3,178 | ) | $ | (4,226 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 548    |              | $ | 13             |   | $     | 230    |              | $ | 38     |   | $ | 829    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in
above:      |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  | $              |       |              | $ |               |   | $     |       |              | $ |       |   | $ |       |  
|Research and development                         |  |                |       |              |   | 2              |   |       |       |              |   |       |   |   | 2      |  
|Selling, general and administrative and
 legal   |  |                | 22     |              |   | 8              |   |       | 26     |              |   | 243    |   |   | 299    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 22     |              | $ | 10             |   | $     | 26     |              | $ | 243    |   | $ | 301    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital
 expenditures                            |  | $              | 504    |              | $ | 1              |   | $     | 79     |              | $ | 14     |   | $ | 598    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

16

---



Three months ended April 30, 2008

|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ----- | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |       | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |       |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 6,995 |              | $ |               |   | $     |       |              | $ |       |   | $ | 6,995  |  
|Royalty and license fee income                   |  |                | 1,642 |              |   |               |   |       |       |              |   |       |   |   | 1,642  |  
|Clinical laboratory services                     |  |                |      |              |   |               |   |       | 10,312 |              |   |       |   |   | 10,312 |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 8,637 |              |   |               |   |       | 10,312 |              |   |       |   |   | 18,949 |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Costs and expenses and other (income):           |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 4,434 |              |   |               |   |       |       |              |   |       |   |   | 4,434  |  
|Cost of clinical laboratory services             |  |                |      |              |   |               |   |       | 5,178  |              |   |       |   |   | 5,178  |  
|Research and development                         |  |                | 776   |              |   | 1,223          |   |       |       |              |   |       |   |   | 1,999  |  
|Provision for uncollectible accounts
 receivable |  |                |      |              |   |               |   |       | 927    |              |   |       |   |   | 927    |  
|Selling, general, and administrative and legal   |  |                | 2,404 |              |   |               |   |       | 3,864  |              |   | 2,857  |   |   | 9,125  |  
|Interest income                                  |  |                |      |              |   |               |   |       | (53    | )            |   | (659   | ) |   | (712   | )
|Other income                                     |  |                | (62   | )            |   |               |   |       |       |              |   |       |   |   | (62    | )
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 1,085 |              | $ | (1,223         | ) | $     | 396    |              | $ | (2,198 | ) | $ | (1,940 | )
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 222   |              | $ | 10             |   | $     | 206    |              | $ | 39     |   | $ | 477    |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:      |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  | $              | 2     |              | $ |               |   | $     | 5      |              | $ |       |   | $ | 7      |  
|Research and development                         |  |                | 10    |              |   | 25             |   |       |       |              |   |       |   |   | 35     |  
|Selling, general and administrative and
 legal   |  |                | 36    |              |   |               |   |       | 65     |              |   | 266    |   |   | 367    |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 48    |              | $ | 25             |   | $     | 70     |              | $ | 266    |   | $ | 409    |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital
 expenditures                            |  | $              | 201   |              | $ |               |   | $     | 364    |              | $ | 12     |   | $ | 577    |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |       |              |   |                |   |       |        |              |   |        |   |   |        |  

Nine months ended April 30, 2009

|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------- | - | - | ------- | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Product revenues                                 |  | $              | 29,952 |              | $ |               |   | $     |       |              | $ |        |   | $ | 29,952  |  
|Royalty and license fee income                   |  |                | 6,783  |              |   |               |   |       |       |              |   |        |   |   | 6,783   |  
|Clinical laboratory services                     |  |                |       |              |   |               |   |       | 28,306 |              |   |        |   |   | 28,306  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                | 36,735 |              |   |               |   |       | 28,306 |              |   |        |   |   | 65,041  |  
|Costs and expenses and other (income):           |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost of product revenues                         |  |                | 20,208 |              |   |               |   |       |       |              |   |        |   |   | 20,208  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 17,953 |              |   |        |   |   | 17,953  |  
|Research and development                         |  |                | 4,006  |              |   | 2,639          |   |       |        |              |   |        |   |   | 6,645   |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 3,949  |              |   |        |   |   | 3,949   |  
|Selling, general, and administrative and
 legal  |  |                | 10,286 |              |   |               |   |       | 12,561 |              |   | 11,304  |   |   | 34,151  |  
|Interest income                                  |  |                |       |              |   |               |   |       | (57    | )            |   | (512    | ) |   | (569    | )
|Other income                                     |  |                | (76    | )            |   |               |   |       | (32    | )            |   |        |   |   | (108    | )
|Foreign exchange loss                            |  |                | 837    |              |   |               |   |       |       |              |   |        |   |   | 837     |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Income (loss) before income taxes                |  | $              | 1,474  |              | $ | (2,639         | ) | $     | (6,068 | )            | $ | (10,792 | ) | $ | (18,025 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Depreciation and amortization included
 above    |  | $              | 1,503  |              | $ | 36             |   | $     | 714    |              | $ | 98      |   | $ | 2,351   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Share-based compensation included in
above:      |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Cost of product revenues                         |  | $              |       |              | $ |               |   | $     | 3      |              | $ |        |   | $ | 3       |  
|Research and development                         |  |                | 13     |              |   | 17             |   |       |       |              |   |        |   |   | 30      |  
|Selling, general and administrative and
 legal   |  |                | 86     |              |   | 24             |   |       | 120    |              |   | 753     |   |   | 983     |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Total                                            |  | $              | 99     |              | $ | 41             |   | $     | 123    |              | $ | 753     |   | $ | 1,016   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  
|Capital expenditures                             |  | $              | 1,073  |              | $ | 78             |   | $     | 973    |              | $ | 32      |   | $ | 2,156   |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |         |   |   |         |  

17

---



Nine months ended April 30, 2008

|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 18,885 |              | $ |               |   | $     |       |              | $ |       |   | $ | 18,885 |  
|Royalty and license fee income                   |  |                | 5,458  |              |   |               |   |       |       |              |   |       |   |   | 5,458  |  
|Clinical laboratory services                     |  |                |       |              |   |               |   |       | 32,276 |              |   |       |   |   | 32,276 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 24,343 |              |   |               |   |       | 32,276 |              |   |       |   |   | 56,619 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Costs and expenses and other (income):           |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 13,078 |              |   |               |   |       |       |              |   |       |   |   | 13,078 |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 15,278 |              |   |       |   |   | 15,278 |  
|Research and development                         |  |                | 2,573  |              |   | 3,577          |   |       |       |              |   |       |   |   | 6,150  |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 3,050  |              |   |       |   |   | 3,050  |  
|Selling, general, and administrative and
 legal  |  |                | 6,458  |              |   |               |   |       | 11,707 |              |   | 11,643 |   |   | 29,808 |  
|Interest income                                  |  |                |       |              |   |               |   |       | (196   | )            |   | (3,061 | ) |   | (3,257 | )
|Other income                                     |  |                | (88    | )            |   | (100           | ) |       |       |              |   |       |   |   | (188   | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 2,322  |              | $ | (3,477         | ) | $     | 2,437  |              | $ | (8,582 | ) | $ | (7,300 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 622    |              | $ | 25             |   | $     | 624    |              | $ | 116    |   | $ | 1,387  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  | $              | 8      |              | $ |               |   | $     | 5      |              | $ |       |   | $ | 13     |  
|Research and development                         |  |                | 39     |              |   | 37             |   |       |       |              |   |       |   |   | 76     |  
|Selling, general and administrative and
 legal   |  |                | 96     |              |   |               |   |       | 183    |              |   | 784    |   |   | 1,063  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 143    |              |   | 37             |   | $     | 188    |              | $ | 784    |   | $ | 1,152  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital expenditures                             |  | $              | 860    |              | $ | 64             |   | $     | 627    |              | $ | 45     |   | $ | 1,596  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

Note 14 -
Contingencies

1.  Shahram K. Rabbani ("Mr. Rabbani"), the Secretary and Treasurer and a member
of the board of directors of the Company and the former President of Enzo Clinical Labs, Inc., in
connection with the termination of his employment, submitted on April 30, 2009 a demand for arbitration
and related statement of claim to the American Arbitration Association. The statement of claim names the
Company, Dr. Elazar Rabbani, the Chairman of the Board and Chief Executive Officer of the Company, and Barry W.
Weiner, the President and Chief Financial Officer and a member of the board of directors of the Company, as
respondents and alleges, among other things, claims relating to the termination of Mr. Rabbani's employment as
President of Clinical Labs.

The statement of claim purports to allege claims
    for breach of contract against the Company, unlawful retaliation under the
    Sarbanes-Oxleys whistleblower statute (the Claims) against
    the Company, Dr. Rabbani and Mr. Weiner, and tortious interference with contract
    against Dr. Rabbani and Mr. Weiner. Mr. Rabbani seeks damages of no less
    than $10 million including attorneys' fees and costs. The Company believes
the Claims are without merit and intends to defend vigorously against them.

Subsequent to April 30, 2009, the Company conducted
    a review, as directed by a special committee of the Board of Directors, relating
    to the aforementioned Claims pertaining to Enzo Clinical Labs. The review
concluded that the purported Claims were unsubstantiated. See Item 2  Managements
Discussion and Analysis of Financial Condition and Results of Operations.

2.  In January 2006, the Company was named along with certain of its officers
and directors among others, in several complaints titled Francis Scott Hunt, et al. v. Enzo Biochem Inc., et al.,
Index No. 06-CV-00170 (SAS) and Ken Roberts v. Enzo Biochem, Inc. et al., Index No. 06-CV-00213 (SAS), and
Paul Lewicki v. Enzo Biochem Inc., et al., Index No. 06-CV-06347 (SAS) based only upon a claim for common law
fraud. These three consolidated actions were all filed in the United States District Court for the Southern
District of New York (the Court). The actions seek damages in excess
of $8 million and are all based on allegations of a fraudulent scheme to pump
and dump Enzo securities as was initially set forth in a previous action (filed
by the same attorney) which was dismissed by the Eastern District of Virginia
and such dismissal was thereafter affirmed by the Fourth Circuit Court of Appeals
and is now final since the U.S. Supreme Court denied a petition for certiorari.
The Company and the other defendants likewise moved to dismiss all of the Complaints
in these actions and that motion was granted by the Court. As a result, some
of the Plaintiffs were no longer able to pursue their claims or choose not to
pursue them further. Other Plaintiffs amended their Complaints and the Company
and the other defendants moved once again to dismiss those Amended Complaints.
The Court granted in part and denied in part those motions. The remaining Plaintiffs
then conducted discovery, and following the completion of discovery, the Company
and other defendants moved for summary judgment dismissal of the Amended Complaints.
The Court recently granted the defendants motion and
dismissed all the Amended Complaints. Several of the Plaintiffs then filed a notice of appeal to the Second
Circuit Court of Appeals. The Company believes that the Courts decision was correct and that these actions have
no merit, and intends to continue to defend these actions vigorously.

18

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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 2008 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.

Recent Events

In connection with the statement
of claims purporting an alleged breach of contract and unlawful retaliation under the Sarbanes-Oxleys whistleblower
statute by the Company, as discussed in Note 14, the Company conducted a review which concluded that the purported Claims
were unsubstantiated.

The accounting aspect of the review,
which included an analysis of the operating results of Enzo Clinical Labs covered the period August 1, 2005 through April 30, 2009,
identified immaterial errors in the calculation of contractual allowances and the allowance for bad debts which would have increased
the net loss in fiscal 2008, 2007 and 2006 by $0.4 million, $0.5 million and $0.5 million, respectively and a cumulative effect
of $1.5 million for periods prior to August 1, 2005. This aggregate correction of $2.9 million for the aforementioned periods was
recorded in and increased the reported net loss for the nine months ended April 30, 2009 as discussed below. The net effect of the
errors on contractual allowances and net revenues in fiscal 2008, 2007 and 2006 would have increased (decreased) net revenues by
$0.3 million, $(0.5) million and $(0.5) million respectively.  These errors involved
contractual allowance computational errors that affected the calculated expected reimbursement rate for a majority of payers and
credits issued which were not accrued for timely. In addition, an error was identified which resulted in a $0.6 million increase
in the allowance for bad debts in fiscal 2008.  We assessed the impact that the above errors had on the Companys previously
reported financial position and results of operations, during each of the respective fiscal years and for the nine months ended
April 30, 2009 and the projected results for fiscal 2009 and concluded that the errors were immaterial, individually and in the
aggregate to the current and prior periods.

The effect of the
aforementioned immaterial errors were effectively corrected in the fiscal 2009 first and second quarters as a result
of the increased contractual adjustment and the increased provision for uncollectible accounts receivable recorded in those fiscal
2009 periods related to the Enzo Clinical Labs legacy billing system. The aforementioned corrections were related to transactions
processed and accounted for under the legacy billing and system that was replaced in August 2008.

Overview

The Company is a life sciences and biotechnology company focused on
harnessing genetic processes to develop research tools and therapeutics and the
provision of diagnostic services to the medical community. Since its founding
in 1976, Enzos strategic focus has been on the development, for commercial
purposes, of enabling technologies in the life sciences field. Enzos
pioneering work in genomic analysis coupled with its extensive patent estate
and enabling platforms have strategically positioned Enzo to play a crucially
important role in the rapidly growing life sciences and molecular medicine
marketplaces.

We are comprised of three operating companies that have evolved out of
our core competence: the use of nucleic acids as informational molecules and
the use of compounds for immune modulation. These wholly owned operating
companies conduct their operations through three reportable segments. Below are
brief descriptions of each of the three operating segments (see Note 13 in the
notes to consolidated financial statements):

Enzo Life
Sciences is a company that manufactures, develops and markets functional biology
and cellular biochemistry products and tools to research and pharmaceutical customers world-wide and has amassed a large patent
and technology portfolio. 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 licensing fee income. The pioneering platforms developed by Enzo Life Sciences enable the
development of a wide range of products in the research products marketplace.

19

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The
      division is internationally recognized and acknowledged as a leader in
      manufacturing, in-licensing, and commercialization of over 12,000 innovative
      high quality research reagents in the primary key research areas of epigenetics,
      live cell analysis, protein degradation pathways and metabolism. The division
      is an established source for a comprehensive panel of products to scientific
      experts in the fields of Antibiotics, Autophagy, Cancer, Cell Cycle, Cell
      Death, Cell Signaling, Cell trafficking, Genomics/Molecular Biology, Immunology,
      Inflammation, Lipid Signaling, Neurobiology, Protein Degradation, ROS/RNS
and Stress/Heat Shock.

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. The Company has focused its efforts
on developing treatment regimens for diseases and conditions in 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.

Enzo Clinical Labsis
      a regional clinical laboratory to the greater New York and New Jersey medical
      community. The Company believes having clinical diagnostic services allows
      us to capitalize firsthand on our extensive advanced molecular and cytogenetic
      capabilities and the broader trends in predictive diagnostics. We offer
      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, or search for an otherwise undiagnosed
      condition. We operate a full-service clinical laboratory in Farmingdale,
      New York, a network of 30 patient service centers throughout greater New
      York and New Jersey, a stand alone stat or
      rapid response laboratory in New York City, and a full-service phlebotomy
      department. Payments for clinical laboratory testing services are made
      by the Medicare program, healthcare insurers and patients.

Recent Developments

Assay Designs, Inc.

On March 12, 2009, Enzo Life Sciences, Inc. and Enzo Life Sciences
Acquisition, Inc., a wholly owned subsidiary of Enzo Life Sciences, Inc.
(Acquisition Sub), entered into an asset purchase agreement (Purchase
Agreement) dated as of March 12, 2009 with Assay Designs, Inc. (Assay
Designs). Assay Designs, a privately owned company with annual sales of
approximately $11 million, was engaged in researching, developing,
manufacturing, distributing, marketing and selling specialty immunological and
biochemical protein detection kits, assays, reagents, antibodies, recombinant
proteins and related products and providing related services for use in the
biotechnology, pharmaceutical and life sciences research industries
(Business). Under the terms of the Purchase Agreement, Acquisition Sub
purchased from Assay Designs substantially all of its assets, including trade
accounts receivable, inventory, fixed assets, intellectual property and
goodwill, used in or related to the Business and assumed certain of Assay
Designs liabilities, including trade accounts payable, capital lease
obligations and certain other accrued and other current liabilities.

The execution of the Purchase Agreement and the closing
    of the transaction occurred simultaneously on March 12, 2009. The purchase
    price consisted of $12,228,000 in cash exclusive of acquisition costs of
approximately $540,000, subject to an upward or downward post-closing purchase
price adjustment based on Assay Designs working capital as of the closing
date, $100,000 of which will be held in escrow for approximately 60-90 days to
secure the payment of any downward post-closing purchase price adjustment and
$750,000 of which will be held in escrow for 12 months to secure the payment
of any indemnification obligations of Assay Designs under the Purchase Agreement.
Subsequent to the acquisition date, the
Company paid $270,000 in additional purchase price in connection with the working
capital adjustment and released the $100,000 escrow amount. The
Company expects the cost of the acquisition to be increased when the integration
plan to consolidate a facility and the involuntary termination of certain employees
is finalized and the cost is determinable. The Assay Designs acquisition strengthens
the Companys position as a global provider of life
sciences reagents by broadening our product offerings and manufacturing
capabilities. Effective March 12, 2009, Assay Designs became a wholly-owned
subsidiary of Enzo Life Sciences. The acquisition was funded with the Companys
cash. The consolidated financial statements include the results of operations
for Assay Designs from the date of acquisition.

Biomol International L.P.

On May 8, 2008, Enzo Life Sciences, Inc. acquired substantially all of
the U.S. based assets and certain liabilities of Biomol International, LP
(Biomol LP) through a newly formed US subsidiary Biomol International, Inc.
and all of the stock of Biomols wholly-owned United Kingdom subsidiary,
Affinity Limited, through Axxora UK, a wholly-owned subsidiary of Enzo Life
Sciences, collectively referred to as Biomol for approximately $18.1 million
in cash and stock, subject to adjustment, exclusive of acquisition costs of
approximately $800,000 and two contingent earn-out payments which will be
accounted for as additional purchase consideration over the next two years if
and when the contingencies are resolved beyond a reasonable doubt.

20

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At closing, the purchase price was satisfied as follows: $12.9 million
in cash was paid to Biomol LP, issuance of 352,000 shares of Enzo common stock,
at fair market value, to Biomol LP, $1.5 million in cash was paid to an escrow
agent for the one-year period following the closing to satisfy any
indemnification obligations of the sellers under the Agreement and $550,000 was
paid to an escrow agent, for the 60 day period following the closing to satisfy
any specified purchase price adjustments. The $550,000 was released by the
escrow agent in August 2008.

The earn-outs of $2.5 million on each of the next two anniversaries of
the acquisition date will be based on attaining certain revenue and EBITDA
targets, as defined. As of April 30, 2009, the conditions for the first annual
earn-out of $2.5 million were met. The Company recorded $2.5 million of
additional goodwill and other current liabilities in the accompanying balance
sheet. Subsequent to April 30, 2009, the
Company issued 202,196 shares of Enzo common stock at fair value and paid $1.5
million in cash to satisfy the $2.5 million earn-out liability.

Biomol was a privately owned, closely held global manufacturer and
marketer of specialty life sciences research products. Effective May 8, 2008,
Biomol became a wholly-owned subsidiary of Enzo Life Sciences. The acquisition
was financed with the Companys cash and cash equivalents and Enzo common
stock. The consolidated financial statements include the results of operations
for Biomol from the date of acquisition. Effective February 2, 2009, the names
of Biomol International, Inc. and Affinity Limited were changed to Enzo Life
Sciences International, Inc. and Enzo Life Sciences (UK) Ltd., respectively.

Results of
Operations
Three months ended April 30, 2009 as compared to April 30, 2008

Comparative Financial Data for the Three Months Ended April 30,

(in thousands)

|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|------------------------------------------------ |  | ---- | ------ | ---- | - | -------------------- | - | -------- | ------ | - |  | ---- | -
|                                                 |  | 2009 |        | 2008 |   | Increase
 (Decrease) |   | % Change |       
|                                                 |  |      |        |      |   |                      |   |          |       
|Revenues:                                        |  |      |        |      |   |                      |   |          |       
|Product revenues                                 |  | $    | 10,479 |      | $ | 6,995                |   | $        | 3,484  |   |  | 50   |  
|Royalty and
 license fee income                  |  |      | 1,963  |      |   | 1,642                |   |          | 321    |   |  | 20   |  
|Clinical
 laboratory services                    |  |      | 10,619 |      |   | 10,312               |   |          | 307    |   |  | 3    |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|Total revenues                                   |  |      | 23,061 |      |   | 18,949               |   |          | 4,112  |   |  | 22   |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|Costs and expenses
 and other (income):          |  |      |        |      |   |                      |   |          |        |   |  |      |  
|Cost of product
 revenues                        |  |      | 6,812  |      |   | 4,434                |   |          | 2,378  |   |  | 54   |  
|Cost of laboratory
 services                     |  |      | 6,157  |      |   | 5,178                |   |          | 979    |   |  | 19   |  
|Research and
 development                        |  |      | 2,425  |      |   | 1,999                |   |          | 426    |   |  | 21   |  
|Selling, general,
 and administrative            |  |      | 10,412 |      |   | 8,343                |   |          | 2,069  |   |  | 25   |  
|Provision for
 uncollectible accounts receivable |  |      | 715    |      |   | 927                  |   |          | (212   | ) |  | (23  | )
|Legal expenses                                   |  |      | 859    |      |   | 782                  |   |          | 77     |   |  | 10   |  
|Interest income                                  |  |      | (17    | )    |   | (712                 | ) |          | 695    |   |  | (98  | )
|Other loss
 (income)                             |  |      | 43     |      |   | (62                  | ) |          | 105    |   |  | (170 | )
|Foreign currency
 (gain)                         |  |      | (119   | )    |   |                     |   |          | (119   | ) |  | na   |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|Total costs and
 expenses  net                  |  |      | 27,287 |      |   | 20,889               |   |          | 6,398  |   |  | 31   |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  
|Loss before income
 taxes                        |  | $    | (4,226 | )    | $ | (1,940               | ) | $        | (2,286 | ) |  |      |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |      |  

Consolidated Results:

The 2009 period and the 2008 period refer to the three months ended
April 30, 2009 and 2008, respectively. The 2009 period includes the three
months results of Biomol which was acquired on May 8, 2008 and the results of
Assay Designs from the date of acquisition, March 12, 2009.

Product revenues during the 2009 period were $10.5 million compared to
$7.0 million in the 2008 period, an increase of $3.5 million or 50%.
Acquisition growth represented $4.1 million or a 59% increase over product
revenues in the 2008 period, primarily from Biomol and Assay Designs, offset by
$0.5 million or 7% negative effect from foreign currency and a $0.1 million or
2% decline from existing companies.

21

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Royalty and license fee income during the 2009 period was $2.0 million
compared to $1.7 million in the 2008 period, an increase of $0.3 million or
20%. Royalties are primarily earned from the reported net sales of Qiagen
products subject to a license agreement and from a license agreement with
Abbott. During the 2009 period, the Company recognized royalties of
approximately $1.3 million from Qiagen, an increase of approximately $0.3
million over the 2008 period, and royalties and license fees under the Abbott
License Agreement of approximately $0.7 million, comparable to the 2008 period.
There are no direct expenses relating to royalty and license fee income.

Clinical laboratory revenues during the 2009 period were $10.6 million
compared to $10.3 million in the 2008 period. The 2009 periods increase over
the 2008 period was $0.3 million or 3%. During the 2009 period the increased
revenues were due to higher service volume over the 2008 period.

The cost of product revenues during the 2009 period was $6.8 million
compared to $4.4 million in the 2008 period, an increase of $2.4 million or
54%. The increase is primarily due to the impact of Biomols and Assay Designs
cost of product revenues of approximately $3.2 million for the 2009 period. In
accordance with purchase accounting rules, the acquired inventory is adjusted
to fair value which increased the cost of product revenues by $0.9 million and
$0.3 million in the 2009 and 2008 periods, respectively. We believe that cost
of product revenues for future periods will be affected by, among other things,
the integration of acquired businesses in addition to sales volumes,
competitive conditions and foreign currency rates.

The cost of clinical laboratory services during the
    2009 period was $6.2 million as compared to $5.2 million in the 2008 period,
    an increase of $1.0 million or 19%. The Company incurred increased costs
    primarily relating to reagent costs and supplies of $0.4 million, laboratory
    personnel costs of $0.4 million, outside reference lab costs of $0.1 million,
    and other related laboratory costs of $0.1 million. Laboratory personnel
    costs increased primarily due to additional headcounts in phlebotomists to
    expand patient collection sites and other personnel to manage expanded internal
operations.

Research and development expenses were approximately $2.4 million
during the 2009 period, compared to $2.0 million in the 2008 period, an
increase of $0.4 million or 21%. The increase was principally attributed to
higher costs of $0.7 million at Enzo Life Sciences related to Biomol and Assay
Designs offset by $0.3 million in lower clinical trial and related activities
at the Therapeutics segment.

Selling, general and administrative expenses were approximately $10.4
million during the 2009 period as compared to $8.3 million in the 2008 period,
an increase of $2.1 million or 25%. The increase was primarily due to the net
increase at the Enzo Life Sciences segment of $1.5 million in the 2009 period
which included approximately $1.5 million of selling, general and
administrative expenses related to Biomol and Assay Designs operations. The
increase from the other segments operations of approximately $0.4 million was
primarily due to consulting and professional fees, other operating costs, and
information technology costs.

The provision for uncollectible accounts receivable, primarily relating
to the Clinical Labs segment was $0.7 million for the 2009 period as compared
to $0.9 million in the 2008 period, a decrease of $0.2 million or 23%. The
decline was due to the improved collections experience attributable to the
Clinical Labs new billing system.

Legal expense was $0.9 million during the 2009 period compared to $0.8
million in the 2008 period, an increase of $0.1 million or 10%, due to the
timing of services provided relating to patent litigation matters.

Interest income was $0.02 million during the 2009 period as compared to
$0.7 million during the 2008 period. The interest income decrease during the
2009 period is attributed to the decline in interest rates in response to
monetary policy actions taken by the U.S. Federal Reserve. Further, the Company
had higher average invested balances during the 2008 period. The Company earns
interest by investing primarily in short term and liquid US government
instruments, and money market accounts.

The gain on foreign currency was $0.1 million during the 2009 period,
due to the slight strengthening of foreign currencies relative to the US dollar
during the period and the positive impact that had on settled transactions
during the period and on an intercompany term loan denominated in pounds
sterling.

The Companys effective income tax rate for the
    2009 period was 0.4% compared to 8.6% during the 2008 period. The tax provisions
    for the 2009 and 2008 periods were based on state and local taxes, domestic
    and foreign tax for tax deductible goodwill and indefinite lived intangibles,
    and book to tax differences for acquired inventory 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.

22

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Segment Results

The Life Sciences segments income before taxes
    was $0.2 million for the 2009 period and $1.1 million for the 2008 period.
    Product revenues increased by $3.5 million in the 2009 period primarily due
    to the contribution of product revenues from the fiscal 2008 and 2009 acquisitions.
    Royalty and license fee income increased $0.3 million from the existing Qiagen
    agreement and the Abbott license agreement. The segments gross margin
    of $5.6 million was negatively impacted by $0.9 million representing the
    fair value adjustment attributed to the sale of inventory acquired from Assay
    Designs and Biomol. The remaining fair value adjustment attributed to inventory
    acquired from Assay Designs and Biomol of $0.8 million will negatively impact
    gross margins through the first half of fiscal 2010. Segment operating expenses,
    including selling, general and administrative, legal and research and development,
    increased by approximately $2.3 million during the 2009 period primarily
    due to the inclusion of Biomols and Assay Designs expenses, which includes
    the increase in amortization of intangibles of $0.2 million. The segment
    experienced a non-cash foreign currency gain of $0.1 million during the 2009
    period resulting from the impact that  slightly strengthening foreign currencies
    had on settled transactions and on an intercompany loan denominated in pounds
    sterling. In aggregate, the inventory fair value adjustment and amortization
    of intangibles negatively impacted the segment operating results in the 2009
    period by $1.1 million as compared to $0.4 million in the 2008 period.

The Clinical Laboratory segments loss before taxes was $0.4 million
for the 2009 period as compared to income of $0.4 million in the 2008 period.
The revenue from laboratory services increased in the 2009 period by $0.3
million due to increased service volume. The gross profit was negatively
impacted by the increase in the cost of laboratory services of $1.0 million as
compared to the 2008 period. In the 2009 period, the selling, general and
administrative costs increased by approximately $0.3 million primarily due to
increases in payroll and payroll related costs of $0.2 million and other
operating costs of $0.1 million. The provision for uncollectible accounts
receivables decreased by $0.2 million. The interest earned in the 2009 period
decreased $0.1 million due to declining interest rates.

The Therapeutics segments loss before income taxes was approximately
$0.9 million for the 2009 period as compared to a loss of $1.2 million for the
2008 period. The decrease in the segment loss of $0.3 million was primarily due
to decreases in clinical trial activities of $0.3 million and salaries and
related costs of $0.1 million offset by increases in patent related costs of
$0.1 million.

The Other segments loss before taxes for the 2009 period was approximately
$3.2 million, an increase of $1.0 million as compared to $2.2 million in the
2008 period. The Other segments 2009 period loss reflects an increase in
consulting costs and public relations of $0.2 million and increases in legal
expenses of $0.1 million due to the timing of services provided relating to
patent litigation activity. Interest income declined $0.6 million due to the
decline in interest rates in response to monetary policy actions taken by the
U.S. Federal Reserve and lower levels of cash available for investment and
declining interest rates. The Company earns interest by investing primarily in
short term and liquid US government instruments, and money market accounts.

23

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Results of
Operations 
Nine months ended April 30, 2009 as compared to April 30, 2008

Comparative Financial Data for the Nine Months Ended April 30,

(in thousands)

|                                                 |  |      |         |      |   |                      |   |          |         |   |  |     |   | 
|------------------------------------------------ |  | ---- | ------- | ---- | - | -------------------- | - | -------- | ------- | - |  | --- | - | 
|                                                 |  | 2009 |         | 2008 |   | Increase
 (Decrease) |   | % Change |         |  
|                                                 |  |      |         |      |   |                      |   |          |         |  
|Product revenues                                 |  | $    | 29,952  |      | $ | 18,885               |   | $        | 11,067  |   |  | 59  |   | 
|Royalty and
 license fee income                  |  |      | 6,783   |      |   | 5,458                |   |          | 1,325   |   |  | 24  |   | 
|Clinical
 laboratory services                    |  |      | 28,306  |      |   | 32,276               |   |          | (3,970  | ) |  | (12 | ) | 
|                                                 |  |      |         |      |   |                      |   |          |         |   |  |     |   | 
|Total revenues                                   |  |      | 65,041  |      |   | 56,619               |   |          | 8,422   |   |  | 15  |   | 
|                                                
|Costs and expenses
 and other (income):          |  |      |         |      |   |                      |   |          |         |   |  |     |   | 
|Cost of product
 revenues                        |  |      | 20,208  |      |   | 13,078               |   |          | 7,130   |   |  | 55  |   | 
|Cost of laboratory
 services                     |  |      | 17,953  |      |   | 15,278               |   |          | 2,675   |   |  | 18  |   | 
|Research and
 development                        |  |      | 6,645   |      |   | 6,150                |   |          | 495     |   |  | 8   |   | 
|Selling, general,
 and administrative            |  |      | 30,795  |      |   | 25,350               |   |          | 5,445   |   |  | 21  |   | 
|Provision for
 uncollectible accounts receivable |  |      | 3,949   |      |   | 3,050                |   |          | 899     |   |  | 29  |   | 
|Legal expenses                                   |  |      | 3,356   |      |   | 4,458                |   |          | (1,102  | ) |  | (25 | ) | 
|Interest income                                  |  |      | (569    | )    |   | (3,257               | ) |          | 2,688   |   |  | (83 | ) | 
|Other income                                     |  |      | (108    | )    |   | (188                 | ) |          | 80      |   |  | (43 | ) | 
|Foreign currency
 loss                           |  |      | 837     |      |   |                     |   |          | 837     |   |  | na  |   | 
|                                                 |  |      |         |      |   |                      |   |          |         |   |  |     |   | 
|Total costs and
 expenses - net                  |  |      | 83,066  |      |   | 63,919               |   |          | 19,147  |   |  | 30  |   | 
|                                                 |  |      |         |      |   |                      |   |          |         |   |  |     |   | 
|                                                
|Loss before income
 taxes                        |  | $    | (18,025 | )    | $ | (7,300               | ) | $        | (10,725 | ) |  |     |   | 
|                                                 |  |      |         |      |   |                      |   |          |         |   |  |     |   | 

Consolidated Results:

The 2009 period and the 2008 period refer to the fiscal nine months
ended April 30, 2009 and 2008, respectively. The 2009 period includes the nine
months results of Biomol which was acquired on May 8, 2008 and the results of
Assay Designs from the date of acquisition, March 12, 2009.

Product revenues during the 2009 period were $30.0 million compared to
$18.9 million in the 2008 period, an increase of $11.1 million or 59%.
Acquisition growth represented $9.5 million or a 50% increase over product
revenues in the 2008 period, primarily from Biomol and Assay Designs, $2.2
million or 12% was from organic growth, offset by $0.6 million or 3% negative
effect from foreign currency.

Royalty and license fee income during the 2009 period was $6.8 million
compared to $5.5 million in the 2008 period, an increase of $1.3 million or
24%. Royalties are primarily earned from net sales of Qiagen products subject
to a license and from a License Agreement with Abbott. During the 2009 period,
the Company recognized royalties of approximately $4.8 million from Qiagen, an
increase of approximately $0.9 million over the 2008 period, and royalties and
license fees under the Abbott License Agreement of approximately $2.0 million,
an increase of $0.4 million over the 2008 period. There are no direct expenses
relating to royalty and license fee income.

Clinical laboratory revenues during the 2009
    period were $28.3 million compared to $32.3 million, in the 2008 period,
    a decrease of $4.0 million or 12%. Revenues were adversely affected by lower
    service volume during the 2009 period and contractual adjustments of $2.3
    million,  of which $2.2 million was corrected in the
    first quarter, as identified in the aforementioned accounting review completed
    subsequent to April 30, 2009. As discussed previously, contractual allowance
    computational errors, deemed to be immaterial, were noted that affected the
    calculated expected reimbursement rate in fiscal 2008, 2007 and 2006 and
    for periods prior to August 1, 2005 for the majority of payers and credits
    issued which were not accrued for timely. The reduced service volume was
    partially impacted by reduced billings on our legacy billing system in fiscal
    2009, including the investigation of and rebilling of denials during the
    period, as a result of the realignment of certain billing personnel to implement
    our new comprehensive billing and accounts receivable system. This new system
    was effective for all laboratory services performed after August 1, 2008.
We believe that the new billing and accounts receivable system enhances our
billing and collection process.

24

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The cost of product revenues during the 2009 period was $20.2 million
compared to $13.1 million in the 2008 period, an increase of $7.1 million or
55%. The increase is principally due to the inclusion of Biomol and Assay
Designs cost of product revenues of approximately $7.3 million in the 2009
period, which includes the impact of an inventory fair value adjustment of $1.8
million related to sales of inventory acquired from Biomol and Assay Designs,
in accordance with purchase accounting rules.

The cost of clinical laboratory services during the 2009 period was
$18.0 million as compared to $15.3 million in the prior period, an increase of
$2.7 million or 18%. The Company incurred increased costs primarily relating to
reagent and supplies costs of $0.7 million, laboratory personnel costs of $1.1
million, and outside testing labs of $0.5 million, and other related lab costs
of $0.4 million. Laboratory personnel costs increases resulted from additional
headcounts in phlebotomists to expand patient collection sites and other
personnel to manage expanded internal operations.

Research and development expenses were approximately $6.6 million
during the 2009 period compared to $6.1 million in the 2008 period an increase
of $0.5 million or 8%. Research and development costs increased $1.4 million at
the Life Sciences segment, principally related to the inclusion of Biomol and
Assay Designs, offset by a decrease at the Therapeutic segment of $0.9 million
due to a decrease in clinical trial activities.

Selling, general and administrative expenses were
    approximately $30.8 million during the 2009 period as compared to $25.4 million
    in the 2008 period, an increase of $5.5 million or 21%. Life Sciences selling,
    general and administrative costs increased by $3.8 million over the 2008
    period, of which approximately $3.0 million related to the inclusion of Biomol
    and Assays Designs. The increase in the Companys other segments selling, general and
administrative expenses of approximately $1.9 million was primarily due to
payroll and related personnel costs approximating $0.1 million, consulting and
professional fees of $0.8 million, other overhead cost of $0.7 million and
information technology costs of $0.1 million.

The provision for uncollectible accounts receivable,
    primarily relating to the Clinical Labs segment, was $3.9 million for the
    2009 period as compared to $3.0 million in the 2008 period. The increase
    in the 2009 period of $0.9 million or 29% was attributed to 1) increased
    provisions for the Clinical Labs legacy billing system, which was replaced
    in August 2008, due to reduced collection efforts relating to the legacy
    billing system and 2) the correction of the aforementioned $0.6 million immaterial
    error in the allowance for doubtful accounts determined during the completion
    of the accounting review subsequent to April 30, 2009 relating to 2008. These
    increases were offset by improved experience with the new billing system.
    Outstanding receivables will remain on the legacy system until invoices are
    collected, all collection efforts are exhausted, or the balances are fully
reserved and written off in accordance with our critical accounting policy.

Legal expense was $3.4 million during the 2009 period compared to $4.5
million in the 2008 period, a decrease of $1.1 million or 25%, primarily due to
a decrease in patent litigation activity in the current period of $1.4 million
offset by increases in the Life Science segment of $0.3 million for realignment
of existing and establishment of new global operating units and other increases
in general legal costs.

Interest income decreased by $2.7 million or 83% to
    $0.6 million during the 2009 period compared to $3.3 million during the 2008
    period. Interest income decreased during the 2009 period due to the decline
    in interest rates in response to monetary policy actions taken by the U.S.
    Federal Reserve and lower invested balances. The Company earns interest by
    investing primarily in short term and liquid U.S. government instruments,
    and money market accounts.

Other income was $0.1 million during the 2009 period versus $0.2
million in the year ago period.

The loss on foreign currency was $0.8 million during the 2009 period.
During the 2009 period, the Companys Life Sciences segment incurred a non-cash
foreign currency loss of approximately $0.8 million on an intercompany term
loan denominated in pounds sterling due to the strengthening of the US dollar
as at April 30, 2009 versus July 31, 2008.

The Companys effective income tax rate for the
    2009 period was 1.4%, compared to 1.3% during the 2008 period. The tax provision
    for both periods was based on state and local taxes and book to tax differences
    for inventory acquired from Biomol 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.

25

---



Segment Results

The Life Sciences segments income before taxes was approximately $1.5
million for the 2009 period and $2.3 million for the 2008 period. Revenues from
product shipments increased by $11.1 million primarily due to the inclusion of
products sales of $9.5 million from Biomol and Assay Designs in the 2009
period. Royalty and license fee income increased $1.3 million primarily from
the existing Qiagen and Abbott licensing and royalty agreements. The segments
gross margin of $16.5 million increased $5.3 over the prior year period, after
being negatively impacted by $1.8 million representing the fair value
adjustment attributed to the sale of inventory acquired from Biomol and Assay
Designs. Segment operating expenses, including selling, general and
administrative, legal and research and development, increased by approximately $5.3
million during the 2009 period primarily due to the inclusion of Biomol and
Assay Designs expenses, which includes the increase in amortization of
intangibles of $0.4 million, $0.3 million in legal costs to establish new and
realign existing global entities, and marketing costs of $0.2 million relating
to the integration of our brands. The segment experienced a non-cash foreign
currency loss of $0.8 million resulting from an intercompany loan denominated
in pounds sterling. In aggregate, the inventory fair value adjustment,
amortization of intangibles, the one-time legal and marketing costs and the
non-cash foreign currency loss, negatively impacted the segment operating
results by $3.7 million.

The Clinical Labs segments loss before
    taxes was $6.1 million for the 2009 period as compared to income before taxes
    of $2.4 million in the 2008 period. The 2009 results were negatively impacted
    by lower service volume of $4.0 million partially due to a charge of $2.3
    million relating to contractual adjustments discussed above, The decrease
    in the 2009 periods gross margin of $6.6 million was due to the decreased
    laboratory service revenues and reduced payer reimbursement previously discussed,
    and increased cost of laboratory services. Selling, general and administrative
    increased approximately $0.8 million primarily due to increases in office
    support salaries and operational costs to maintain the facility. The provision
    for uncollectible accounts increased by $0.9 million primarily due to an
    increased provision related to the legacy billing system and the correction
    of the previously noted $0.6 million in the allowance for doubtful accounts
    related to fiscal 2008. The segment earned interest in the 2009 period of
$0.1 million and $0.2 million in the 2008 period.

The Therapeutics segments loss before income
    taxes was approximately $2.6 million for the 2009 period as compared to a
    loss of $3.5 million for the 2008 period. The decrease in the loss of $0.9
    million was primarily due to a decrease in clinical trial activities of $1.0
    million offset by a non-recurring government grant of $0.1 million which
    was recognized in the 2008 period.

The Other segments loss before taxes for the 2009 period was approximately $10.8 million compared to $8.6 million in the 2008 period, an increase of $2.2 million. Selling, general, and administrative and legal
declined by $0.3 million as the result of a $1.3 million decrease in legal expenses due to decreased patent litigation activity, partially offset by increases in professional and consulting fees of $0.7 million, and payroll and related
costs of $0.2 million. The decline in selling, general, and administrative and legal expense was offset by the decrease in interest income of $2.5 million due to the decline in interest rates in response to monetary policy actions taken by
the U.S. Federal Reserve and lower levels of cash available for investment.

Liquidity and Capital Resources

At April 30, 2009, the Company had cash and cash equivalents
    of $7.6 million and short-term investments of $47.7 million, or $55.3 in
    aggregate as compared to $78.3 at July 31, 2008. Short term investments are
    in US Government instruments. The Company had working capital of $64.2 million
    at April 30, 2009 compared to $92.4 million at July 31, 2008. The decrease
    in working capital was primarily the result of the use of cash to acquire
    Assay Designs, fund capital expenditures, the period net loss, and the $2.5
million liability relating to the Biomol acquisition earn-out.

Net cash used in operating activities for the nine months ended April
30, 2009 was approximately $8.7 million as compared to $7.0 million for the
nine months ended April 30, 2008. The increase in net cash used in operating
activities in the 2009 period over the 2008 period of approximately $1.8
million was primarily due to the increase in the period loss and by the effect
of non-cash adjustments in the 2009 period over the 2008 period aggregating
$2.8 million and the change in operating assets and liabilities of $6.4 million
from 2008 to 2009.

Net cash used in investing activities was approximately $62.2 million
as compared to $2.1 million in the year ago period, primarily due to the net
increase in short term investments in US Government instruments of $47.7
million and the use of cash to acquire Assay Designs of $12.7 million.

Net cash provided by financing activities was approximately $0.3
million in the 2009 and the 2008 periods, attributed primarily to stock options
exercise proceeds.

26

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Assay Designs, Inc.

On March 12, 2009, Enzo Life Sciences, Inc. acquired substantially all
of the assets and assumed certain liabilities of Assay Designs, Inc. (Assay
Designs), for approximately $12.2 million in cash, subject to adjustment,
exclusive of acquisitions cost of approximately $0.5 million. The acquisition
was funded with the Companys cash. Assay Designs was a privately owned,
closely held manufacture and marketer of specialty lice sciences research
products. Effective March 12, 2009 Assay Designs became a wholly owned
subsidiary of Enzo Life Sciences. The consolidated financial statements include
the results of operations for Assay Designs from the date of acquisition.

Biomol International L.P.

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 targets
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. As
of April 30, 2009, the conditions for the first annual earn-out of $2.5 million
were met. The Company recorded $2.5 million of additional goodwill and other
current liabilities in the accompanying balance sheet. Subsequent
to April 30, 2009, the Company issued 202,196 shares of Enzo common stock at
fair value and paid $1.5 million in cash to satisfy the $2.5 million earn-out
liability.

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

There have been no material changes to our Contractual Obligations as
reported in our Form 10-K for the fiscal year ended July 31, 2008, except for
an increase in future minimum lease obligations aggregating $2 million over the
next 4 years in connection with the acquisition of Assay Designs on March 12,
2009.

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

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.

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 2009 and 2008 periods.
During the three and nine months ended April 30, 2009 and 2008, one customer in
the Life Science segment represented $1.2 million and $5.6 million and $0.7
million and $2.5 million of total product revenues, respectively. As of April
30, 2009, there were no accounts receivable from this customer.

27

---



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  Clinical laboratory services

Revenues from the clinical laboratory are recognized upon completion of
the testing process for a specific patient and reported to the ordering
physician. 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, 2009 and 2008:

Clinical Labs net revenues

|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|----------------- |  | ---------------------------------- | ------ | ---------------------------------- |  | -------------- | - | ------ | ------ |  |  | --- | -
|                  |  | Three months ended
 April 30, 2009 |        | Three months ended
 April 30, 2008 | 
|                  |  |                                    |        |                                    | 
|                  |  | (In thousands)                     |        | (in %)                             |  | (In thousands) |   | (in %) |       
|                  |  |                                    |        |                                    |  |                |   |        |       
|Revenue category  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Medicare          |  | $                                  | 2,137  |                                    |  | 20             |   | $      | 2,733  |  |  | 26  |  
|Third-party payer |  |                                    | 5,445  |                                    |  | 51             |   |        | 5,095  |  |  | 50  |  
|Patient self-pay  |  |                                    | 1,759  |                                    |  | 17             |   |        | 924    |  |  | 9   |  
|HMOs             |  |                                    | 1,278  |                                    |  | 12             |   |        | 1,560  |  |  | 15  |  
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  
|Total             |  | $                                  | 10,619 |                                    |  | 100            | % | $      | 10,312 |  |  | 100 | %
|                  |  |                                    |        |                                    |  |                |   |        |        |  |  |     |  

|                  |  |                                   |        |                                   |  |                |   |        |        |  |  |     |  
|----------------- |  | --------------------------------- | ------ | --------------------------------- |  | -------------- | - | ------ | ------ |  |  | --- | -
|                  |  | Nine months ended
 April 30, 2009 |        | Nine months ended
 April 30, 2008 | 
|                  |  |                                   |        |                                   | 
|                  |  | (In thousands)                    |        | (in %)                            |  | (In thousands) |   | (in %) |       
|                  |  |                                   |        |                                   |  |                |   |        |       
|Revenue category  |  |                                   |        |                                   |  |                |   |        |        |  |  |     |  
|Medicare          |  | $                                 | 6,738  |                                   |  | 24             |   | $      | 6,687  |  |  | 21  |  
|Third-party payer |  |                                   | 14,010 |                                   |  | 49             |   |        | 18,229 |  |  | 57  |  
|Patient self-pay  |  |                                   | 4,544  |                                   |  | 16             |   |        | 3,747  |  |  | 12  |  
|HMOs             |  |                                   | 3,014  |                                   |  | 11             |   |        | 3,613  |  |  | 10  |  
|                  |  |                                   |        |                                   |  |                |   |        |        |  |  |     |  
|Total             |  | $                                 | 28,306 |                                   |  | 100            | % | $      | 32,276 |  |  | 100 | %
|                  |  |                                   |        |                                   |  |                |   |        |        |  |  |     |  

The Company provides services to certain patients covered by various
third-party payers, including the Federal Medicare program. Laws and
regulations governing Medicare are complex and subject to interpretation for
which action for noncompliance includes fines, penalties and exclusion from the
Medicare programs. The Company believes that it is in compliance with all
applicable laws and regulations and is not aware of any pending or threatened
investigations involving allegations of potential wrongdoing.

Other than the Medicare program, one provider whose programs are
included in the Third-party payer and Health Maintenance Organizations
(HMOs) categories represented 25% and 31% of the Clinical Labs net revenues
for the three months ended April 30, 2009 and 2008, respectively and 25% and
26% for the nine months ended April 30, 2009 and 2008, respectively.

28

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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 may negatively affect
our revenues per test.

During the three and nine months ended April
    30, 2009 and 2008, the contractual adjustment percentages, determined using
    current and historical reimbursement statistics, were 83.0% and 79.9%, and
    82.1% and 81.2%, respectively, of gross billings. During the nine months
    ended April 30, 2009 changes to the Companys standard fee schedule
    offset by a $2.3 million increase in contractual adjustments, which include
    adjustments to correct immaterial computational errors on the expected collection
    percentages affecting the periods August 1, 2005 through July 31, 2008 and
    periods prior to August 1, 2005 and credits not recorded timely, as previously
    discussed, (which increased the nine months loss before income taxes and
    net loss by $2.9 million or $0.08 per basic and fully diluted share), resulted
    in a decrease in the contractual adjustment percentage for the nine months
    ended April 30, 2009. 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 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 result in a change
in clinical laboratory services revenues of approximately $1,389,000, and
$1,030,000 for the nine months ended April 30, 2009 and 2008, respectively, and
a change in the net accounts receivable of approximately $258,000 as of April
30, 2009.

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. Adjustments to our standard fee
schedule will impact the contractual adjustment recorded. Therefore, we are
unable to quantify the effect of contractual adjustment recorded during the
current period that relates 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 variance
 reimbursement analysis of current and historical claim settlement and
 reimbursement experience with payers;     
| |   |                                                                                                                              
| |  | an analysis of
 current gross billings and receivables by payer.                                                             

29

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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,
2009 and July 31, 2008, approximately 43% and 58%, 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 $2.0 million
or 29% and $3.3 million or 51% represents foreign receivables as of April 30,
2009 and July 31, 2008 respectively, includes royalty receivables of $1.8
million and $2.1 million, as of April 30, 2009 and July 31, 2008, respectively,
of which approximately $1.3 million and $1.5 million, respectively is from
Qiagen Corporation (Note 12).

Net accounts receivable

|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|------------------------------------------------------------------------- |  | ---------------------- | ------ | --------------------- |  | ---------- | - | ------ | ------ |  |  | --- | -
|                                                                          |  | As of 
 April 30, 2009 |        | As of 
 July 31, 2008 | 
|                                                                          |  |                        |        |                       | 
|Billing category                                                          |  | (In 000s)             |        | (in %)                |  | (In 000s) |   | (in %) |       
|                                                                          |  |                        |        |                       |  |            |   |        |       
|Clinical Labs                                                             |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|Medicare                                                                  |  | $                      | 215    |                       |  | 4          |   | $      | 1,600  |  |  | 18  |  
|Third party payers                                                        |  |                        | 3,879  |                       |  | 72         |   |        | 4,610  |  |  | 52  |  
|Patient self-pay                                                          |  |                        | 1,151  |                       |  | 22         |   |        | 2,144  |  |  | 24  |  
|HMOs                                                                     |  |                        | 106    |                       |  | 2          |   |        | 537    |  |  | 6   |  
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|Total clinical
 labs                                                      |  | $                      | 5,351  |                       |  | 100        | % | $      | 8,891  |  |  | 100 | %
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|Total life
 sciences                                                      |  |                        | 7,007  |                       |  |            |   |        | 6,457  |  |  |     |  
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|Total accounts
 receivable                                                |  | $                      | 12,358 |                       |  |            |   | $      | 15,348 |  |  |     |  
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  
|Changes in the
 Companys allowance for doubtful accounts are as follows:
|                                                                          |  |                        |        |                       |  |            |   |        |        |  |  |     |  

|                                 |  |                |       |                 |   |        |  
|-------------------------------- |  | -------------- | ----- | --------------- | - | ------ | -
|In 000s                         |  | April 30, 2009 |       | July 31, 
 2008 |  
|                                 |  |                |       |                 |  
|Beginning balance                |  | $              | 886   |                 | $ | 1,404  |  
|Provision for
 doubtful accounts |  |                | 3,949 |                 |   | 3,716  |  
|Write-offs, net                  |  |                | (757  | )               |   | (4,234 | )
|                                 |  |                |       |                 |   |        |  
|Ending balance                   |  | $              | 4,078 |                 | $ | 886    |  
|                                 |  |                |       |                 |   |        |  

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, 2009 and 2008, 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. These accounts have not been written
off because the payers filing date deadline has not occurred or the collection
process has not been exhausted. 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. 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.

30

---



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. During the nine month period ended April 30, 2009 versus
    2008, our bad debt expense and related allowance for doubtful accounts increased
by $0.9 million, as a result of the impact of  1) increased provisions for the
    Clinical Labs legacy billing system, which was replaced in August 2008, due
    to reduced collection efforts relating to the legacy billing system and 2)
    the correction of the aforementioned $0.6 million immaterial error in the
    allowance for doubtful accounts determined during the completion of the accounting
    review subsequent to April 30, 2009 relating to fiscal 2008. The Company
    is presently managing two systems until the legacy system collection efforts
    are deemed completed. 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.

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, 3) other revenue adjustments. The amounts as of April 30, 2009 are
from the Companys new billing system, and the amounts as of July 31, 2008 are
from the Companys legacy billing system. The fully reserved amount as of April
30, 2009 is for billings from the new system only. As of April 30, 2009, all
uncollected receivables from the legacy billing system have been fully
reserved.

|                       |  |             |        |   |  |                |   |   |       |                          |  |     |   |                 |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  
|---------------------- |  | ----------- | ------ | - |  | -------------- | - | - | ----- | ------------------------ |  | --- | - | --------------- | ------ | - |  | ----------- | - | - | ----- |  |  | --- | - | - | ----- |  |  | --- | -
|As of April 30,
 2009  |  | TotalAmount |        | % |  | MedicareAmount |   | % |       | ThirdParty Payers Amount |  | %   |   | Self-pay Amount |        | % |  | HMOsAmount |   | % |      
|                       |  |             |        |   |  |                |   |   |       |                          |  |     |   |                 |        |   |  |             |   |   |      
|                      
|1-30 days              |  | $           | 18,109 |   |  | 71             | % | $ | 3,099 |                          |  | 71  | % | $               | 9,798  |   |  | 79          | % | $ | 1,873 |  |  | 36  | % | $ | 3,339 |  |  | 93  | %
|31-60 days             |  |             | 3,418  |   |  | 13             | % |   | 463   |                          |  | 11  | % |                 | 1,728  |   |  | 14          | % |   | 1,062 |  |  | 20  | % |   | 165   |  |  | 5   | %
|61-90 days             |  |             | 2,946  |   |  | 11             | % |   | 170   |                          |  | 4   | % |                 | 489    |   |  | 4           | % |   | 2,229 |  |  | 42  | % |   | 58    |  |  | 2   | %
|91-120 days            |  |             | 410    |   |  | 2              | % |   | 153   |                          |  | 4   | % |                 | 178    |   |  | 1           | % |   | 72    |  |  | 1   | % |   | 7     |  |  |    | %
|121-150 days           |  |             | 212    |   |  | 1              | % |   | 148   |                          |  | 3   | % |                 | 56     |   |  |            | % |   |      |  |  |    | % |   | 8     |  |  |    | %
|Greater than 150 days* |  |             | 456    |   |  | 2              | % |   | 311   |                          |  | 7   | % |                 | 126    |   |  | 1           | % |   | 15    |  |  |    | % |   | 4     |  |  |    | %
|                       |  |             |        |   |  |                |   |   |       |                          |  |     |   |                 |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  
|Totals                 |  | $           | 25,551 |   |  | 100            | % | $ | 4,344 |                          |  | 100 | % | $               | 12,375 |   |  | 100         | % | $ | 5,251 |  |  | 100 | % | $ | 3,581 |  |  | 100 | %
|                       |  |             |        |   |  |                |   |   |       |                          |  |     |   |                 |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  

|                        |  |             |        |   |  |                |   |   |       |                         |  |     |   |                |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  
|----------------------- |  | ----------- | ------ | - |  | -------------- | - | - | ----- | ----------------------- |  | --- | - | -------------- | ------ | - |  | ----------- | - | - | ----- |  |  | --- | - | - | ----- |  |  | --- | -
|As of July 31,
 2008    |  | TotalAmount |        | % |  | MedicareAmount |   | % |       | ThirdParty PayersAmount |  | %   |   | Self-payAmount |        | % |  | HMOsAmount |   | % |      
|                        |  |             |        |   |  |                |   |   |       |                         |  |     |   |                |        |   |  |             |   |   |      
|                       
|1-30 days               |  | $           | 15,879 |   |  | 56             | % | $ | 3,278 |                         |  | 44  | % | $              | 7,019  |   |  | 62          | % | $ | 1,654 |  |  | 29  | % | $ | 3,928 |  |  | 94  | %
|31-60 days              |  |             | 4,038  |   |  | 14             | % |   | 725   |                         |  | 10  | % |                | 2,196  |   |  | 19          | % |   | 960   |  |  | 17  | % |   | 157   |  |  | 4   | %
|61-90 days              |  |             | 1,836  |   |  | 6              | % |   | 468   |                         |  | 6   | % |                | 636    |   |  | 6           | % |   | 682   |  |  | 12  | % |   | 50    |  |  | 1   | %
|91-120 days             |  |             | 1,460  |   |  | 5              | % |   | 291   |                         |  | 4   | % |                | 534    |   |  | 5           | % |   | 614   |  |  | 11  | % |   | 21    |  |  | 1   | %
|121-150 days            |  |             | 1,074  |   |  | 4              | % |   | 192   |                         |  | 3   | % |                | 548    |   |  | 5           | % |   | 323   |  |  | 6   | % |   | 11    |  |  |    | %
|Greater than 150 days** |  |             | 4,300  |   |  | 15             | % |   | 2,412 |                         |  | 33  | % |                | 380    |   |  | 3           | % |   | 1,506 |  |  | 25  | % |   | 2     |  |  |    | %
|                        |  |             |        |   |  |                |   |   |       |                         |  |     |   |                |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  
|Totals                  |  | $           | 28,587 |   |  | 100            | % | $ | 7,366 |                         |  | 100 | % | $              | 11,313 |   |  | 100         | % | $ | 5,739 |  |  | 100 | % | $ | 4,169 |  |  | 100 | %
|                        |  |             |        |   |  |                |   |   |       |                         |  |     |   |                |        |   |  |             |   |   |       |  |  |     |   |   |       |  |  |     |  

|   |                                                                         
|-- | ------------------------------------------------------------------------
|*  | Total includes
 $119 fully reserved over 210 days as of April 30, 2009. 
|   |                                                                         
|** | Total includes
 $2,796 fully reserved over 210 days as of July 31, 2008.

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 on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.

31

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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.

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, 2009 and
July 31, 2008, our reserve for excess and obsolete inventory was $804,000 and
$637,000, respectively.

Recent Accounting Pronouncements

In May
2009, the FASB issued SFAS No. 165, Subsequent Events (SFAS 165). SFAS 165
is intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. In particular, SFAS 165 sets forth
the period after the balance sheet date during which management of a reporting
entity should evaluate events or transactions that may occur for potential
recognition or disclosure in the financial statements; the circumstances under
which an entity should recognize events or transactions occurring after the
balance sheet date in its financial statements; and the disclosures that an
entity should make about events or transactions that occurred after the balance
sheet date. SFAS 165 is effective for interim or annual financial periods
ending after June 15, 2009.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally
Accepted Accounting Principles (SFAS 162). SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in preparing financial statements
that are presented in conformity with generally accepted accounting principles.
SFAS 162 will become effective 60 days following the SECs approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles. The Company does not anticipate the adoption of SFAS 162 will have
a material impact on its results of operations, cash flows or financial
condition.

In April 2008, the FASB issued FSP FAS 142-3, Determination of the
Useful Life of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the
factors that should be considered in developing renewal or extension
assumptions used to determine the useful life of a recognized intangible asset
under FASB Statement No.142, Goodwill and Other Intangible Assets. FSP FAS
142-3 also requires expanded disclosure related to the determination of
intangible asset useful lives. FSP FAS 142-3 is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is prohibited. The
Company is currently evaluating the impact that the adoption of FSP FAS 142-3
will have on its consolidated results of operations, cash flows or financial
condition.

In December 2007, the FASB issued Statement No. 141 (revised
2007),Business Combinations (SFAS 141R). SFAS 141R establishes principles
and requirements for how the acquirer in a business combination recognizes and
measures in its financial statements the identifiable assets acquired, the
liabilities assumed, any controlling interest in the business and the goodwill
acquired. SFAS 141R further requires that acquisition-related costs and costs
associated with restructuring or exiting activities of an acquired entity will
be expensed as incurred. SFAS 141R also establishes disclosure requirements
that will require disclosure of the nature and financial effects of the
business combination. SFAS 141R will impact business combinations for the
Company that may be completed on or after August 1, 2009. 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 SFAS 141R
on August 1, 2009 could materially change the accounting for business
combinations consummated subsequent to that date and for tax matters relating
to prior acquisitions settled subsequent to July 31, 2009.

32

---



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 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 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 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 159 is effective for fiscal years beginning after November
15, 2007. The adoption of SFAS 159 did not have a material impact on the
Companys consolidated results of operations or financial condition as we have
not elected to apply the provisions to our financial instruments or other
eligible items that are not required to be measured at fair value.

Item 3. Quantitative and
Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in foreign currency exchange
rates and, to a much lesser extent, interest rates on investments in short-term
instruments, which could impact our results of operations and financial
position. We do not currently engage in any hedging or market risk management
tools. There have been no material changes with respect to market risk
previously disclosed in our Annual Report on Form 10-K for our 2008 fiscal
year.

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, 2009, our assets and liabilities would increase or decrease by $2.0 million
and $0.5 million, respectively, and our net sales and net (loss) or earnings
would increase or decrease by $1.6 million and $0.1 million, 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 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, 2009, our pre-tax earnings would be favorably or
unfavorably impacted by approximately $0.4 million, on an annual basis.

Interest Rate Risk

Our excess cash is invested in highly liquid short term money market
funds and short term investments in US Government agency discount notes with
high credit ratings. Changes in interest rates may affect the investment income
we earn on money market funds and short term investments and therefore affect
our cash flows and results of operations. As of April 30, 2009, we were exposed
to interest rate change market risk with respect to our money market accounts
and short term investments totaling $50.2 million. The money market accounts
and short-term investments yield or bear interest rates ranging from 0% to
0.5%. Each 100 basis point (or 1%) fluctuation in interest rates will increase
or decrease interest income on the money market funds and short-term
investments by approximately $0.5 million on an annual basis.

As of April 30, 2009, we did not maintain any fixed or variable
interest rate financing.

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.

33

---



PART II  OTHER
INFORMATION

|        |                   
|------- | ------------------
|Item 1. | Legal
 Proceedings

1.  Shahram K. Rabbani ("Mr. Rabbani"), the Secretary and Treasurer and a member of the board of
directors of the Company and the former President of Enzo Clinical Labs, Inc., in connection with the termination of his
employment, submitted on April 30, 2009 a demand for arbitration and related statement of claim to the American Arbitration
Association. The statement of claim names the Company, Dr. Elazar Rabbani, the Chairman of the Board and Chief Executive
Officer of the Company, and Barry W. Weiner, the President and Chief Financial Officer and a member of the board of directors
of the Company, as respondents and alleges, among other things, claims relating to the termination of Mr. Rabbani's employment
as President of Clinical Labs.

The
    statement of claim purports to allege claims for breach of contract against
    the Company, unlawful retaliation under the Sarbanes-Oxleys whistleblower
    statute (the Claims) against the Company, Dr. Rabbani and Mr.
    Weiner, and tortious interference with contract against Dr. Rabbani and Mr.
    Weiner. Mr. Rabbani seeks damages of no less than $10 million including attorneys'
    fees and costs. The Company believes the Claims are without merit and intends
to defend vigorously against them.

Subsequent
    to April 30, 2009, the Company conducted a review, as directed by a special
    committee of the Board of Directors, relating to the aforementioned Claims
    pertaining to Enzo Clinical Labs. The review concluded that the purported
    Claims were unsubstantiated. See Item 2  Managements Discussion
and Analysis of Financial Condition and Results of Operations.

2.  In January 2006, the Company was named along with certain of its officers and directors among
others, in several complaints titled Francis Scott Hunt, et al. v. Enzo Biochem Inc., et al., Index No. 06-CV-00170 (SAS) and
Ken Roberts v. Enzo Biochem, Inc. et al., Index No. 06-CV-00213 (SAS), and Paul Lewicki v. Enzo Biochem Inc., et al.,
Index No. 06-CV-06347 (SAS) based only upon a claim for common law fraud. These three consolidated actions were all filed in
the United States District Court for the Southern District of New York (the Court).
The actions seek damages in excess of $8 million and are all based on allegations
of a fraudulent scheme to pump and dump Enzo securities as was initially set
forth in a previous action (filed by the same attorney) which was dismissed by
the Eastern District of Virginia and such dismissal was thereafter affirmed by
the Fourth Circuit Court of Appeals and is now final since the U.S. Supreme Court
denied a petition for certiorari. The Company and the other defendants likewise
moved to dismiss all of the Complaints in these actions and that motion was granted
by the Court. As a result, some of the Plaintiffs were no longer able to pursue
their claims or choose not to pursue them further. Other Plaintiffs amended their
Complaints and the Company and the other defendants moved once again to dismiss
those Amended Complaints. The Court granted in part and denied in part those
motions. The remaining Plaintiffs then conducted discovery, and following the
completion of discovery, the Company and other defendants moved for summary judgment
dismissal of the Amended Complaints. The Court recently granted the defendants motion and dismissed all the Amended Complaints. Several of the Plaintiffs then filed a notice of appeal to
the Second Circuit Court of Appeals. The Company believes that the Courts decision was correct and that these actions have
no merit, and intends to continue to defend these actions vigorously.

There have
been no other 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, 2008 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, 2008.

|        |         
|------- | --------
|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. §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. §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: September 4, 2009 | by:                | /s/ Barry Weiner                                         
|                        |                    |                                                          
|                        |                    | Chief Financial
 Officer and Principal Accounting Officer

34

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