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
 October 31, 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 xNoo

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 oNoo

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 oNox

As of
December 1, 2009 the Registrant had approximately 37,858,000 shares of common
stock outstanding.

---



ENZO BIOCHEM, INC. 
FORM 10-Q 
October 31, 2009

INDEX

|           |                                                                                                                                 |    |   
|---------- | ------------------------------------------------------------------------------------------------------------------------------- | -- | --
|           | PART I - FINANCIAL INFORMATION                                                                                                  |    |   
|           |                                                                                                                                 |    |   
|Item 1.    | Financial
 Statements                                                                                                           |    |   
|           |                                                                                                                                 |    |   
|           | Consolidated
 Balance Sheets - October 31, 2009 (unaudited) and July 31, 2009 (audited)                                         |    | 3 
|           |                                                                                                                                 |    |   
|           | Consolidated
 Statements of Operations for the three months ended October 31, 2009 and 2008
 (unaudited)                        |    | 4 
|           |                                                                                                                                 |    |   
|           | Consolidated
 Statement of Stockholders Equity and Comprehensive Loss for the three months
 ended October 31, 2009 (unaudited) |    | 5 
|           |                                                                                                                                 |    |   
|           | Consolidated
 Statements of Cash Flows for the three months ended October 31, 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                                          |    | 17
|           |                                                                                                                                 |    |   
|Item 3.    | Quantitative and
 Qualitative Disclosures About Market Risk                                                                     |    | 29
|           |                                                                                                                                 |    |   
|Item 4.    | Controls and
 Procedures                                                                                                        |    | 30
|           |                                                                                                                                 |    |   
|           | Part II  OTHER INFORMATION                                                                                                     |    |   
|           |                                                                                                                                 |    |   
|Item 1.    | Legal
 Proceedings                                                                                                              |    | 30
|           |                                                                                                                                 |    |   
|Item 1A.   | Risk Factors                                                                                                                    |    | 30
|           |                                                                                                                                 |    |   
|Item 6.    | Exhibits                                                                                                                        |    | 30
|           |                                                                                                                                 |    |   
|Signatures |                                                                                                                                 | 31

2

---



Part 1Financial Information Item 1 Financial
Statements

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

|                                                                                                                                            |  |                                |          |                           |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | ------------------------- | - | -------- | -
|                                                                                                                                            |  | October 31,
 2009
 (unaudited) |          | July 31,
 2009
 (audited) |  
|                                                                                                                                            |  |                                |          |                           |  
|ASSETS                                                                                                                                      |  |                                |          |                           |   |          |  
|Current assets:                                                                                                                             |  |                                |          |                           |   |          |  
|Cash and cash equivalents                                                                                                                   |  | $                              | 6,074    |                           | $ | 6,929    |  
|Short term investments                                                                                                                      |  |                                | 40,308   |                           |   | 43,306   |  
|Accounts receivable, net of allowances                                                                                                      |  |                                | 13,699   |                           |   | 12,480   |  
|Inventories                                                                                                                                 |  |                                | 9,686    |                           |   | 9,264    |  
|Prepaid expenses and other                                                                                                                  |  |                                | 2,661    |                           |   | 2,482    |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Total current assets                                                                                                                        |  |                                | 72,428   |                           |   | 74,461   |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Property, plant and equipment, net                                                                                                          |  |                                | 11,824   |                           |   | 11,323   |  
|Goodwill                                                                                                                                    |  |                                | 25,166   |                           |   | 24,896   |  
|Intangible assets, net                                                                                                                      |  |                                | 21,953   |                           |   | 22,009   |  
|Other                                                                                                                                       |  |                                | 389      |                           |   | 439      |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Total assets                                                                                                                                |  | $                              | 131,760  |                           | $ | 133,128  |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                        |  |                                |          |                           |   |          |  
|Current liabilities:                                                                                                                        |  |                                |          |                           |   |          |  
|Accounts payable  trade                                                                                                                    |  | $                              | 4,098    |                           | $ | 4,242    |  
|Accrued liabilities                                                                                                                         |  |                                | 8,150    |                           |   | 8,426    |  
|Other current liabilities                                                                                                                   |  |                                | 794      |                           |   | 1,062    |  
|Deferred taxes                                                                                                                              |  |                                | 210      |                           |   | 213      |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Total current liabilities                                                                                                                   |  |                                | 13,252   |                           |   | 13,943   |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Deferred revenue                                                                                                                            |  |                                |         |                           |   | 38       |  
|Deferred taxes                                                                                                                              |  |                                | 2,328    |                           |   | 2,366    |  
|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: 38,592,705 at October 31, 2009 and
 38,589,880 at July 31, 2009 |  |                                | 386      |                           |   | 386      |  
|Additional paid-in capital                                                                                                                  |  |                                | 306,602  |                           |   | 306,280  |  
|Less treasury stock at cost: 735,554 shares
 at October 31, 2009 and at July 31, 2009                                                       |  |                                | (10,440  | )                         |   | (10,440  | )
|Accumulated deficit                                                                                                                         |  |                                | (181,535 | )                         |   | (179,721 | )
|Accumulated other comprehensive income                                                                                                      |  |                                | 1,167    |                           |   | 276      |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Total stockholders equity                                                                                                                  |  |                                | 116,180  |                           |   | 116,781  |  
|                                                                                                                                            |  |                                |          |                           |   |          |  
|Total liabilities and stockholders equity                                                                                                  |  | $                              | 131,760  |                           | $ | 133,128  |  
|                                                                                                                                            |  |                                |          |                           |   |          |  

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

3

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

|                                                 |  |                                  |        |      |   |        |  
|------------------------------------------------ |  | -------------------------------- | ------ | ---- | - | ------ | -
|                                                 |  | Three Months Ended 
 October 31, |       
|                                                 |  | 2009                             |        | 2008 |  
|                                                 |  |                                  |        |      |  
|Revenues:                                        |  |                                  |        |      |   |        |  
|Product revenues                                 |  | $                                | 10,744 |      | $ | 9,976  |  
|Royalty and license fee income                   |  |                                  | 3,311  |      |   | 2,916  |  
|Clinical laboratory services                     |  |                                  | 11,110 |      |   | 8,172  |  
|                                                 |  |                                  |        |      |   |        |  
|                                                 |  |                                  | 25,165 |      |   | 21,064 |  
|                                                 |  |                                  |        |      |   |        |  
|Operating expenses:                              |  |                                  |        |      |   |        |  
|Cost of product revenues                         |  |                                  | 5,055  |      |   | 6,805  |  
|Cost of clinical laboratory services             |  |                                  | 6,781  |      |   | 6,091  |  
|Research and development expense                 |  |                                  | 2,444  |      |   | 2,003  |  
|Selling, general, and administrative
 expense    |  |                                  | 11,580 |      |   | 9,190  |  
|Provision for uncollectible accounts
 receivable |  |                                  | 912    |      |   | 1,859  |  
|Legal expense                                    |  |                                  | 256    |      |   | 1,210  |  
|                                                 |  |                                  |        |      |   |        |  
|Total operating expense                          |  |                                  | 27,028 |      |   | 27,158 |  
|                                                 |  |                                  |        |      |   |        |  
|                                                 |  |                                  |        |      |   |        |  
|Operating loss                                   |  |                                  | (1,863 | )    |   | (6,094 | )
|                                                 |  |                                  |        |      |   |        |  
|Other income (expense)                           |  |                                  |        |      |   |        |  
|Interest income                                  |  |                                  | 9      |      |   | 410    |  
|Other income                                     |  |                                  | 19     |      |   | 34     |  
|Foreign currency loss                            |  |                                  | (58    | )    |   | (582   | )
|                                                 |  |                                  |        |      |   |        |  
|Loss before income taxes                         |  |                                  | (1,893 | )    |   | (6,232 | )
|Benefit (provision) for income taxes             |  |                                  | 79     |      |   | (138   | )
|                                                 |  |                                  |        |      |   |        |  
|Net loss                                         |  | $                                | (1,814 | )    | $ | (6,370 | )
|                                                 |  |                                  |        |      |   |        |  
|                                                 |  |                                  |        |      |   |        |  
|Net loss per common share:                       |  |                                  |        |      |   |        |  
|Basic                                            |  | $                                | (0.05  | )    | $ | (0.17  | )
|                                                 |  |                                  |        |      |   |        |  
|Diluted                                          |  | $                                | (0.05  | )    | $ | (0.17  | )
|                                                 |  |                                  |        |      |   |        |  
|                                                 |  |                                  |        |      |   |        |  
|Weighted average common shares outstanding:      |  |                                  |        |      |   |        |  
|Basic                                            |  |                                  | 37,855 |      |   | 37,337 |  
|                                                 |  |                                  |        |      |   |        |  
|Diluted                                          |  |                                  | 37,855 |      |   | 37,337 |  
|                                                 |  |                                  |        |      |   |        |  

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

4

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ENZO BIOCHEM, INC
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
AND COMPREHENSIVE LOSS
Three months ended October 31, 2009 
(UNAUDITED) 
(In thousands, except share data)

|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   |   |        |  
|----------------------------------------------- |  | ----------------- | ----- | ------------------- |  | --------------------- | --- | ---------------------------- | - | ----------------------- |  | -------------------- | ------- | ----------------------------------------- | - | ---------------------------- | - | ------------------- | ----- |  | --- | ------- |  | ------ | - | - | ------ | -
|                                                |  | CommonStockShares |       | TreasuryStockShares |  | Common
 Stock
 Amount |     | Additional
 Paid-in
 Capital |   | Treasury
 Stock
 Amount |  | Accumulated
 Deficit |         | Accumulated
 Other
 Comprehensive
 Income |   | Total
 Stockholders
 Equity |   | Comprehensive
 Loss |      
|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |      
|Balance at
 July 31, 2009                       |  | 38,589,880        |       | 735,554             |  | $                     | 386 |                              | $ | 306,280                 |  | $                    | (10,440 | )                                         | $ | (179,721                     | ) | $                   | 276   |  | $   | 116,781 |  |        |   |  
|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   |   |        |  
|Net loss
 for the period ended October 31, 2009 |  |                   |      |                     |  |                      |     |                              |  |                         |  |                     |         |                                           |  |                              |   | (1,814              | )     |  |    |         |  | (1,814 | ) | $ | (1,814 | )
|Vesting of
 restricted stock                    |  |                   | 2,825 |                     |  |                      |     |                              |   |                         |  |                     |         |                                           |  |                              |   |                    |       |  |    |         |  |        |   |   |       |  
|Stock based
 compensation charges               |  |                   |      |                     |  |                      |     |                              |  |                         |  | 322                  |         |                                           |  |                              |   |                    |       |  |    |         |  | 322    |   |   |       |  
|Foreign
 currency translation adjustments       |  |                   |      |                     |  |                      |     |                              |  |                         |  |                     |         |                                           |  |                              |   |                    |       |  | 891 |         |  | 891    |   |   | 891    |  
|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   |   |        |  
|Comprehensive
 loss                             |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   | $ | (923   | )
|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   |   |        |  
|Balance at
 October 31, 2009                    |  | 38,592,705        |       | 735,554             |  | $                     | 386 |                              | $ | 306,602                 |  | $                    | (10,440 | )                                         | $ | (181,535                     | ) | $                   | 1,167 |  | $   | 116,180 |  |        |   |  
|                                                |  |                   |       |                     |  |                       |     |                              |   |                         |  |                      |         |                                           |   |                              |   |                     |       |  |     |         |  |        |   |  

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

5

---



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

|                                                                             |  |                                 |         |      |   |         |  
|---------------------------------------------------------------------------- |  | ------------------------------- | ------- | ---- | - | ------- | -
|                                                                             |  | Three Months Ended
 October 31, |        
|                                                                             |  | 2009                            |         | 2008 |  
|                                                                             |  |                                 |         |      |  
|Cash flows from
 operating activities:                                       |  |                                 |         |      |   |         |  
|Net loss                                                                     |  | $                               | (1,814  | )    | $ | (6,370  | )
|Adjustments to
 reconcile net loss to net cash used in operating activities: |  |                                 |         |      |   |         |  
|Depreciation and amortization of property,
 plant and equipment              |  |                                 | 529     |      |   | 494     |  
|Amortization of intangible assets                                            |  |                                 | 414     |      |   | 260     |  
|Provision for uncollectible accounts
 receivable                             |  |                                 | 912     |      |   | 1,859   |  
|Write off and/or reserve taken for obsolete
 inventory                       |  |                                 | 174     |      |   | 62      |  
|Income tax benefit                                                           |  |                                 | (119    | )    |   | (105    | )
|Share based compensation charges                                             |  |                                 | 322     |      |   | 394     |  
|Deferred revenue recognized                                                  |  |                                 | (113    | )    |   | (122    | )
|Foreign currency loss on intercompany loan                                   |  |                                 | 16      |      |   | 582     |  
|                                                                             |  |                                 |         |      |   |         |  
|Changes in
 operating assets and liabilities:                                |  |                                 |         |      |   |         |  
|Accounts receivable                                                          |  |                                 | (2,078  | )    |   | 664     |  
|Inventories                                                                  |  |                                 | (487    | )    |   | 410     |  
|Prepaid expenses                                                             |  |                                 | (171    | )    |   | 724     |  
|Accounts payable  trade                                                     |  |                                 | (99     | )    |   | (1,059  | )
|Accrued liabilities                                                          |  |                                 | (141    | )    |   | 779     |  
|Other current liabilities                                                    |  |                                 | (193    | )    |   | (37     | )
|                                                                             |  |                                 |         |      |   |         |  
|Total adjustments                                                            |  |                                 | (1,034  | )    |   | 4,905   |  
|                                                                             |  |                                 |         |      |   |         |  
|Net cash used in operating activities                                        |  |                                 | (2,848  | )    |   | (1,465  | )
|                                                                             |  |                                 |         |      |   |         |  
|                                                                             |  |                                 |         |      |   |         |  
|Cash flows from
 investing activities:                                       |  |                                 |         |      |   |         |  
|Purchases of short term investments                                          |  |                                 | (70,301 | )    |   | (77,701 | )
|Maturities of short term investments                                         |  |                                 | 73,299  |      |   | 37,953  |  
|Capital expenditures                                                         |  |                                 | (1,128  | )    |   | (829    | )
|Decrease in security deposits and other
 assets                              |  |                                 | 49      |      |   | 342     |  
|                                                                             |  |                                 |         |      |   |         |  
|Net cash provided (used in) investing
 activities                            |  |                                 | 1,919   |      |   | (40,235 | )
|                                                                             |  |                                 |         |      |   |         |  
|                                                                             |  |                                 |         |      |   |         |  
|Cash flows from
 financing activities:                                       |  |                                 |         |      |   |         |  
|Proceeds from the exercise of stock options                                  |  |                                 |        |      |   | 348     |  
|                                                                             |  |                                 |         |      |   |         |  
|Net cash provided by financing activities                                    |  |                                 |        |      |   | 348     |  
|                                                                             |  |                                 |         |      |   |         |  
|                                                                             |  |                                 |         |      |   |         |  
|Effect of exchange
 rate changes on cash and cash equivalents                |  |                                 | 74      |      |   | (144    | )
|                                                                             |  |                                 |         |      |   |         |  
|                                                                             |  |                                 |         |      |   |         |  
|Decrease in cash
 and cash equivalents                                       |  |                                 | (855    | )    |   | (41,496 | )
|Cash and cash
 equivalents - beginning of period                             |  |                                 | 6,929   |      |   | 78,322  |  
|                                                                             |  |                                 |         |      |   |         |  
|Cash and cash
 equivalents - end of period                                   |  | $                               | 6,074   |      | $ | 36,826  |  
|                                                                             |  |                                 |         |      |   |         |  

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

6

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ENZO BIOCHEM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of October 31, 2009 
and for the three month period ended 
October 31, 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. The consolidated balance sheet as
of October 31, 2009, consolidated statement of stockholders equity and
comprehensive loss for the three months ended October 31, 2009, and the
consolidated statements of operations and consolidated statements of cash flows
for the three months ended October 31, 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, 2009 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, 2009 has been derived from the audited
financial statements at that date. The results of operations for the three
months ended October 31, 2009 are not necessarily indicative of the results
that may be expected for the fiscal year ending July 31, 2010.

Recent Accounting Pronouncements

Effective August 1, 2009, the Company adopted The Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC or Codification)
of Generally Accepted Accounting Principles  Overall. The Codification
established one source for all U.S. GAAP and became the source of authoritative
accounting principles for nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The Codification is not intended to change existing GAAP and as
such did not have an impact on the consolidated financial statements of the
Company.

The
adoption of the following accounting standards and updates during the first
three months of fiscal 2010 did not result in a significant impact to our
consolidated financial statements.

On June
15, 2009, we adopted the accounting pronouncement that amends the requirements
for disclosures about fair value of financial instruments, regarding the fair
value of financial instruments for annual, as well as interim, reporting
periods. This pronouncement was effective prospectively for all interim and
annual reporting periods ending after June 15, 2009.

Effective
August 1, 2009, we adopted the revised accounting standard relating to business
combinations, including assets acquired and liabilities assumed arising from
contingencies. This standard requires the use of the acquisition method of
accounting, defines the acquirer, establishes the acquisition date and applies
to all transactions and other events in which one entity obtains control over
one or more other businesses. Upon our adoption of this standard, we will be
required to expense certain transaction costs and related fees associated with
business combinations that were previously capitalized. In addition, with the
adoption of this standard, changes to valuation allowances for acquired
deferred income tax assets and adjustments to unrecognized tax benefits
acquired generally are to be recognized as adjustments to income tax expense
rather than goodwill.

Effective
August 1, 2009, we adopted the accounting standard regarding the determination
of the useful life of intangible assets that removes the requirement to
consider whether an intangible asset can be renewed without substantial cost or
material modifications to the existing terms and conditions, and replaces it
with a requirement that an entity consider its own historical experience in
renewing similar arrangements, or a consideration of market participant
assumptions in the absence of historical experience. This standard also requires
entities to disclose information that enables users of financial statements to
assess the extent to which the expected future cash flows associated with the
asset are affected by the entitys intent and/or ability to renew or extend the
arrangements.

7

---



Reclassifications

Certain amounts in fiscal 2009 have been reclassified to conform to
current year presentation. In Fiscal 2009, the Company reclassified certain
payroll taxes and employee benefits included in selling, general and
administrative expense to cost of sales. The payroll taxes and benefits
reclassed were approximately $285,000 for the three months ended October 31,
2008.

Note 2  Short-term Investments

At October 31, 2009 and July 31, 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
less than ninety days.

The Company has adopted the accounting pronouncement that 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 the pronouncement did not have an impact on the Companys financial position
or operating results, but did expand certain disclosures.

The pronouncement 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,
the pronouncement 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 October 31, 2009 and July 31, 2009, the Companys short-term
investments are classified as Level 1 assets.

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) 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 was 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 was 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 during the measurement period. 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.

8

---



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 the date of
acquisition:

|                          |  |   |        | 
|------------------------- |  | - | ------ | 
|Current assets            |  | $ | 4,235  | 
|Property and
 equipment   |  |   | 1,747  | 
|Other assets              |  |   | 11     | 
|Intangible assets         |  |   | 6,360  | 
|Goodwill                  |  |   | 1,803  | 
|                          |  |   |        | 
|Total assets acquired     |  |   | 14,156 | 
|                          |  |   |        | 
|Less:                     |  |   |        | 
|Current
 liabilities      |  |   | 1,115  | 
|                          |  |   |        | 
|Total liabilities assumed |  |   | 1,115  | 
|                          |  |   |        | 
|Net assets
 acquired      |  | $ | 13,041 | 
|                          |  |   |        | 

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 two-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.

In June 2009, the conditions for the first annual earn-out of $2.5
million were met and the Company recorded $2.5 million of additional goodwill.
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 the date of acquisition:

|                          |  |   |        | 
|------------------------- |  | - | ------ | 
|Current assets            |  | $ | 5,167  | 
|Property and
 equipment   |  |   | 939    | 
|Other assets              |  |   | 18     | 
|Intangible assets         |  |   | 7,660  | 
|Goodwill                  |  |   | 9,226  | 
|                          |  |   |        | 
|Total assets acquired     |  |   | 23,010 | 
|                          |  |   |        | 
|Less:                     |  |   |        | 
|Current
 liabilities      |  |   | 1,100  | 
|Deferred tax
 liabilities |  |   | 609    | 
|                          |  |   |        | 
|Total liabilities assumed |  |   | 1,709  | 
|                          |  |   |        | 
|Net assets
 acquired      |  | $ | 21,301 | 
|                          |  |   |        | 

The purchase price allocation is based on a valuation of acquired
tangible and intangible assets based on the final valuation completed in fiscal
2009. The Company determined the 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 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 the acquisition completed in
fiscal 2009 as if the acquisition had occurred as of August 1, 2008. 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.

|                                              |  |                                      |        |  
|--------------------------------------------- |  | ------------------------------------ | ------ | -
|In thousands, except per share data           |  | Three months ended
 October 31, 2008 |       
|                                              |  |                                      |       
|Net revenues                                  |  | $                                    | 23,887 |  
|Net loss                                      |  | $                                    | (6,525 | )
|Net loss per common share  basic and diluted |  | $                                    | (0.17  | )

Note 4  Net loss 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. Diluted weighted average shares outstanding for the three months ended
October 31, 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 
 October 31, |        
|(In thousands)                                                                                                                                                                       |  | 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 |  |                                  | 153,000 |      |  | 119,000 | 
|                                                                                                                                                                                     |  |                                  |         |      |  |         | 

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 
 October 31, |          
|(In thousands)                                          |  | 2009                             |           | 2008 | 
|                                                        |  |                                  |           |      | 
|Out of the money employee and director
 stock options |  |                                  | 1,181,000 |      |  | 1,659,000 | 
|                                                        |  |                                  |           |      |  |           | 

Note 5  Share-based compensation

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
 October 31, |    
|In thousands                         |  | 2009                            |     | 2008 |  
|                                     |  |                                 |     |      |  
|Cost of product
 revenues            |  | $                               | 3   |      | $ |    | 
|Research and
 development            |  |                                 | 3   |      |   | 22  | 
|Selling, general
 and administrative |  |                                 | 316 |      |   | 372 | 
|                                     |  |                                 |     |      |   |     | 
|                                     |  | $                               | 322 |      | $ | 394 | 
|                                     |  |                                 |     |      |   |     | 

No excess tax benefits were recognized during the three month periods
ended October 31, 2009 and 2008.

11

---



Stock option plans

A summary of the activity relating to the Companys stock option plans
for the three month period ended October 31, 2009 is as follows:

|                                              |  |         |           |                               |   |                            |  |   |   | 
|--------------------------------------------- |  | ------- | --------- | ----------------------------- | - | -------------------------- |  | - | - | 
|                                              |  | Options |           | WeightedAverageExercise Price |   | Aggregate
 Intrinsic Value | 
|                                              |  |         |           |                               |   |                            | 
|Outstanding at August 1, 2009                 |  |         | 1,191,519 |                               | $ | 14.41                      |  | $ |  | 
|                                              |  |         |           |                               |   |                            |  |   |   | 
|Exercised                                     |  |         |          |                               | $ |                            |  |   |   | 
|Cancelled                                     |  |         | (10,485   | )                             | $ | 11.95                      |  |   |   | 
|                                              |  |         |           |                               |   |                            |  |   |   | 
|Outstanding and exercisable at end of
 period |  |         | 1,181,034 |                               | $ | 14.44                      |  | $ |  | 
|                                              |  |         |           |                               |   |                            |  |   |   | 

As of October 31, 2009, there was no unrecognized compensation cost
related to unvested stock option-based compensation.

During the three months ended October 31, 2008, the Company received
cash proceeds of approximately $348,000, from the exercise of 44,586 stock
options. There were no stock option exercises during the three months ended
October 31, 2009. The aggregate intrinsic value of stock options exercised
during the three months ended October 31, 2008, including the non-cash
transactions (Note 6) was approximately $1.4 million.

Restricted Stock Awards

A summary of the activity pursuant to the Companys restricted stock
awards for the three months ended October 31, 2009 is as follows:

|                           |  |        |         |                                |   |       | 
|-------------------------- |  | ------ | ------- | ------------------------------ | - | ----- | 
|                           |  | Awards |         | Weighted
 Average
 Award Price |  
|                           |  |        |         |                                |  
|Unvested at August 1, 2009 |  |        | 377,900 |                                | $ | 6.05  | 
|Awarded                    |  |        |        |                                | $ |       | 
|Vested                     |  |        | (2,825  | )                              | $ | 11.84 | 
|Forfeited                  |  |        | (100    | )                              | $ | 13.79 | 
|                           |  |        |         |                                |   |       | 
|Unvested at end of period  |  |        | 374,975 |                                | $ | 6.02  | 
|                           |  |        |         |                                |   |       | 

The fair value of a restricted stock award is determined based on the
closing stock price on the award date. As of October 31, 2009, there was
approximately $1.3 million of total unrecognized compensation cost related to
unvested restricted stock-based compensation to be recognized over a weighted
average remaining period of one and half years.

The total number of shares available for grant as stock options or
award as restricted stock is approximately 401,300 as of October 31, 2009.

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):

|                 |  |                                 |   |      |   |    | 
|---------------- |  | ------------------------------- | - | ---- | - | -- | 
|                 |  | Three months ended
 October 31, |  
|                 |  | 2009                            |   | 2008 |  
|                 |  |                                 |   |      |  
|Taxes paid  net |  | $                               | 6 |      | $ | 39 | 
|                 |  |                                 |   |      |   |    | 

During the three months ended October 31, 2008, 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. There were no stock options
exercises during the three month ended October 31, 2009.

12

---



Note 7  Comprehensive loss and Accumulated Other Comprehensive Income

During the three months ended October 31, 2009 and 2008, total
comprehensive loss was approximately $0.9 million and $7.9 million,
respectively. At October 31, 2009 and July 31, 2009, the accumulated other
comprehensive income relates to foreign currency translation adjustments.

Note 8- Inventories

At October 31, 2009 and July 31, 2009 inventories, net of reserves of
$1.2 million and $1.0 million, respectively, consist of:

|                  |  |                   |       |                |   |       | 
|----------------- |  | ----------------- | ----- | -------------- | - | ----- | 
|In 000s          |  | October 31,
 2009 |       | July 31,
 2009 |  
|                  |  |                   |       |                |  
|Raw materials     |  | $                 | 484   |                | $ | 499   | 
|Work in process   |  |                   | 1,206 |                |   | 1,801 | 
|Finished products |  |                   | 7,996 |                |   | 6,964 | 
|                  |  |                   |       |                |   |       | 
|                  |  | $                 | 9,686 |                | $ | 9,264 | 
|                  |  |                   |       |                |   |       | 

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,
 2009       |  | $                   | 17,444 |                      | $ | 7,452 |  | $ | 24,896 | 
|Other                         |  |                     | 7      |                      |   |      |  |   | 7      | 
|Foreign currency
 translation |  |                     | 263    |                      |   |      |  |   | 263    | 
|                              |  |                     |        |                      |   |       |  |   |        | 
|Balance October
 31, 2009     |  | $                   | 17,714 |                      | $ | 7,452 |  | $ | 25,166 | 
|                              |  |                     |        |                      |   |       |  |   |        | 

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

|                                      |  |                  |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|------------------------------------- |  | ---------------- | ------ | ------------------------- | - | ------- | - | ----- | ------ | ------------------------- | - | ------ |  | - | ------- | - | - | ------ | 
|                                      |  | October 31, 2009 |        | July 31, 2009             |  
|                                      |  |                  |        |                           |  
|                                      |  | Gross            |        | Accumulated
 Amortization |   | Net     |   | Gross |        | Accumulated
 Amortization |   | Net    | 
|                                      |  |                  |        |                           |   |         |   |       |        |                           |   |        | 
|Finite-lived intangible assets:       |  |                  |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Patents                               |  | $                | 11,027 |                           | $ | (10,061 | ) | $     | 966    |                           | $ | 11,027 |  |   | (10,030 | ) | $ | 997    | 
|Customer relationships                |  |                  | 12,283 |                           |   | (1,361  | ) |       | 10,922 |                           |   | 12,125 |  |   | (1,190  | ) |   | 10,935 | 
|Non-compete and employment agreements |  |                  | 483    |                           |   | (310    | ) |       | 173    |                           |   | 469    |  |   | (280    | ) |   | 189    | 
|Website and acquired content          |  |                  | 1,015  |                           |   | (353    | ) |       | 662    |                           |   | 1,005  |  |   | (303    | ) |   | 702    | 
|Licensed technology and other         |  |                  | 589    |                           |   | (179    | ) |       | 410    |                           |   | 588    |  |   | (83     | ) |   | 505    | 
|Indefinitely-lived intangible assets: |  |                  |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Trademarks                            |  |                  | 8,820  |                           |   |        |   |       | 8,820  |                           |   | 8,681  |  |   |        |   |   | 8,681  | 
|                                      |  |                  |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 
|Total                                 |  | $                | 34,217 |                           | $ | (12,264 | ) | $     | 21,953 |                           | $ | 33,895 |  | $ | (11,886 | ) | $ | 22,009 | 
|                                      |  |                  |        |                           |   |         |   |       |        |                           |   |        |  |   |         |   |   |        | 

At October 31, 2009, the weighted average useful life of finite-lived
intangible assets was approximately ten and a quarter years.

13

---



Note 10  Accrued Liabilities and Other Current Liabilities

At October 31, 2009 and July 31, 2009, accrued liabilities consist of:

|                                                                              |  |                   |       |                 |   |       | 
|----------------------------------------------------------------------------- |  | ----------------- | ----- | --------------- | - | ----- | 
|In 000s                                                                      |  | October 31,
 2009 |       | July 31, 
 2009 |  
|                                                                              |  |                   |       |                 |  
|Legal                                                                         |  | $                 | 1,695 |                 | $ | 1,095 | 
|Payroll, benefits,
 and commissions                                           |  |                   | 1,981 |                 |   | 2,737 | 
|Research and development                                                      |  |                   | 721   |                 |   | 656   | 
|Professional fees                                                             |  |                   | 1,421 |                 |   | 1,752 | 
|Other                                                                         |  |                   | 2,332 |                 |   | 2,186 | 
|                                                                              |  |                   |       |                 |   |       | 
|                                                                              |  | $                 | 8,150 |                 | $ | 8,426 | 
|                                                                              |  |                   |       |                 |   |       | 
|                                                                              |  |                   |       |                 |   |       | 
|At October 31,
 2009 and July 31, 2009, other current liabilities consist of:
|                                                                             
|In 000s                                                                      |  | October 31,
 2009 |       | July 31,
 2009  |  
|                                                                              |  |                   |       |                 |  
|Deferred revenue                                                              |  |                   | 738   |                 |   | 850   | 
|Other                                                                         |  |                   | 56    |                 |   | 212   | 
|                                                                              |  |                   |       |                 |   |       | 
|                                                                              |  | $                 | 794   |                 | $ | 1,062 | 
|                                                                              |  |                   |       |                 |   |       | 

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 benefit (provision) for the three
months ended October 31, 2009 was 4.2% compared to (2.2%) during the three
months ended October 31, 2008. The tax benefit and (provision) for the 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.

The Companys effective tax rate for both periods differed from the
expected net operating loss carryforward benefit at the U.S. federal statutory
rate of 34% primarily due to the inability to recognize such benefit. The
carryforward benefit cannot be recognized because of uncertainties relating to
future taxable income in terms of both its timing and its sufficiency, which
would enable the Company to realize the federal carryforward benefit.

The Company 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 2009. In connection with a business combination,
the Company recorded as of May 31, 2007 approximately $300,000 for an uncertain
tax position, including accrued interest of $39,000, with respect to a deemed
dividend. During the three months ended October 31, 2009, the Company reduced
the balance of this liability by approximately $106,000 and recognized a
corresponding tax benefit 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
October 31, 2009 and 2008, the Company recorded royalties from the Agreement of
approximately $2.6 million and $2.3 million, respectively,

During the three
months ended October 31, 2009 and 2008, the Company recorded approximately $0.7
million and $0.6 million, respectively, in royalties and license fee income
under a licensing agreement with Abbott Molecular, Inc. (Abbott) entered into
in fiscal 2007.

14

---



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 October 31, 2009

|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 10,744 |              | $ |               |   | $     |       |              | $ |       |   | $ | 10,744 |  
|Royalty and license fee income                   |  |                | 3,311  |              |   |               |   |       |       |              |   |       |   |   | 3,311  |  
|Clinical laboratory services                     |  |                |       |              |   |               |   |       | 11,110 |              |   |       |   |   | 11,110 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 14,055 |              |   |               |   |       | 11,110 |              |   |       |   |   | 25,165 |  
|Operating expenses:                              |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 5,055  |              |   |               |   |       |       |              |   |       |   |   | 5,055  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 6,781  |              |   |       |   |   | 6,781  |  
|Research and development                         |  |                | 1,777  |              |   | 667            |   |       |       |              |   |       |   |   | 2,444  |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 912    |              |   |       |   |   | 912    |  
|Selling, general, and administrative and
 legal  |  |                | 5,172  |              |   |               |   |       | 4,251  |              |   | 2,413  |   |   | 11,836 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total operating expenses                         |  |                | 12,004 |              |   | 667            |   |       | 11,944 |              |   | 2,413  |   |   | 27,028 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Operating income (loss)                          |  |                | 2,051  |              |   | (667           | ) |       | (834   | )            |   | (2,413 | ) |   | (1,863 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Other income (expense):                          |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Interest income                                  |  |                |       |              |   |               |   |       |       |              |   | 9      |   |   | 9      |  
|Other income                                     |  |                | 3      |              |   |               |   |       | 16     |              |   |       |   |   | 19     |  
|Foreign exchange loss                            |  |                | (58    | )            |   |               |   |       |       |              |   |       |   |   | (58    | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 1,996  |              | $ | (667           | ) | $     | (818   | )            | $ | (2,404 | ) | $ | (1,893 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 666    |              | $ | 13             |   | $     | 235    |              | $ | 29     |   | $ | 943    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  | $              |       |              | $ |               |   | $     | 3      |              | $ |       |   | $ | 3      |  
|Research and development                         |  |                | 3      |              |   |               |   |       |       |              |   |       |   |   | 3      |  
|Selling, general and administrative and
 legal   |  |                | 32     |              |   |               |   |       | 24     |              |   | 260    |   |   | 316    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 35     |              | $ |               |   | $     | 27     |              | $ | 260    |   | $ | 322    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital expenditures                             |  | $              | 455    |              | $ |               |   | $     | 622    |              | $ | 51     |   | $ | 1,128  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

15

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Three months ended October 31, 2008

|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|------------------------------------------------ |  | -------------- | ------ | ------------ | - | -------------- | - | ----- | ------ | ------------ | - | ------ | - | - | ------ | -
|                                                 |  | Life
 Sciences |        | Therapeutics |   | Clinical
 Labs |   | Other |        | Consolidated |  
|                                                 |  |                |        |              |   |                |   |       |        |              |  
|Revenues:                                        |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Product revenues                                 |  | $              | 9,976  |              |   |               |   |       |       |              |   |       |   | $ | 9,976  |  
|Royalty and license fee income                   |  |                | 2,916  |              |   |               |   |       |       |              |   |       |   |   | 2,916  |  
|Clinical laboratory services                     |  |                |       |              |   |               |   | $     | 8,172  |              |   |       |   |   | 8,172  |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                | 12,892 |              |   |               |   |       | 8,172  |              |   |       |   |   | 21,064 |  
|Operating expenses:                              |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  |                | 6,805  |              |   |               |   |       |       |              |   |       |   |   | 6,805  |  
|Cost of clinical laboratory services             |  |                |       |              |   |               |   |       | 6,091  |              |   |       |   |   | 6,091  |  
|Research and development                         |  |                | 1,199  |              | $ | 804            |   |       |       |              |   |       |   |   | 2,003  |  
|Provision for uncollectible accounts
 receivable |  |                |       |              |   |               |   |       | 1,859  |              |   |       |   |   | 1,859  |  
|Selling, general and administrative and
 legal   |  |                | 3,212  |              |   |               |   |       | 3,622  |              | $ | 3,566  |   |   | 10,400 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total operating expenses                         |  |                | 11,216 |              |   | 804            |   |       | 11,572 |              |   | 3,566  |   |   | 27,158 |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Operating income (loss)                          |  |                | 1,676  |              |   | (804           | ) |       | (3,400 | )            |   | (3,566 | ) |   | (6,094 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Other income (expense)                           |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Interest income                                  |  |                |       |              |   |               |   |       | 45     |              |   | 365    |   |   | 410    |  
|Other income                                     |  |                | 34     |              |   |               |   |       |       |              |   |       |   |   | 34     |  
|Foreign exchange loss                            |  |                | (582   | )            |   |               |   |       |       |              |   |       |   |   | (582   | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Income (loss) before income taxes                |  | $              | 1,128  |              | $ | (804           | ) | $     | (3,355 | )            | $ | (3,201 | ) | $ | (6,232 | )
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Depreciation and amortization included
 above    |  | $              | 477    |              | $ | 10             |   | $     | 237    |              | $ | 30     |   | $ | 754    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Share-based compensation included in above:      |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Cost of product revenues                         |  | $              |       |              |   |               |   |       |       |              |   |       |   | $ |       |  
|Research and development                         |  |                | 7      |              | $ | 15             |   |       |       |              |   |       |   |   | 22     |  
|Selling, general and administrative and
 legal   |  |                | 14     |              |   |               |   | $     | 76     |              | $ | 282    |   |   | 372    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Total                                            |  | $              | 21     |              |   | 15             |   | $     | 76     |              | $ | 282    |   | $ | 394    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  
|Capital expenditures                             |  | $              | 238    |              | $ | 28             |   | $     | 545    |              | $ | 18     |   | $ | 829    |  
|                                                 |  |                |        |              |   |                |   |       |        |              |   |        |   |   |        |  

Note 14 -
Contingencies

Shahram K. Rabbani (Mr. Rabbani), former Secretary and Treasurer and
current 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 October 31, 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, costs, and
punitive damages. 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.

16

---



On September 18, 2009, Mr. Rabbani amended his statement of claim to
add a claim for defamation against the Company and a claim against the Company,
Dr. Rabbani and Mr. Weiner seeking a declaratory judgment. The Company also
believes these additional claims are without merit and intends to defend
vigorously against them.

Documentary discovery has commenced, and an arbitration hearing has
been scheduled for March 2, 2010. Mr. Rabbani also filed a complaint for
unlawful retaliation under the Sarbanes-Oxley Acts whistleblower statute with
the Department of Labor against the Company, Dr. Rabbani and Mr. Weiner arising
out of the same facts and occurrences. The Company believes the Claims are
without merit and intends to defend vigorously against them.

Note 15  Subsequent Events

The Company has evaluated events and transactions subsequent to October
31, 2009 through December 10, 2009, the date the financial statements were filed
with the SEC as part of this Form 10-Q. No events require recognition in the
consolidated financial statements or in the notes to the consolidated financial
statements by the Company.

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 2009 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.

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.

17

---



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 Sciencesis 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 is from
the direct sales of products consisting of labeling and detection reagents for
the genomics and sequencing markets 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.

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 Clinical Labsis a regional clinical laboratory
serving 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 and personalized 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.

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.

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) with Assay Designs, Inc. (Assay Designs or ADI). 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 during the measurement period.

18

---



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. 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
two-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 first two
anniversaries of the acquisition date will be based on attaining certain revenue and
EBITDA targets, as defined. In June 2009, the conditions for the first annual
earn-out of $2.5 million were met and the Company recorded $2.5 million of
additional goodwill. 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.

19

---



Results of Operations
Three months ended October 31, 2009 as compared to October 31, 2008

Comparative Financial Data for the Three Months Ended October 31,

(in thousands)

|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|------------------------------------------------ |  | ---- | ------ | ---- | - | -------------------- | - | -------- | ------ | - |  | --- | -
|                                                 |  | 2009 |        | 2008 |   | Increase
 (Decrease) |   | % Change |       
|                                                 |  |      |        |      |   |                      |   |          |       
|Revenues:                                        |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Product revenues                                 |  | $    | 10,744 |      | $ | 9,976                |   | $        | 768    |   |  | 8   | %
|Royalty and license fee income                   |  |      | 3,311  |      |   | 2,916                |   |          | 395    |   |  | 14  |  
|Clinical laboratory services                     |  |      | 11,110 |      |   | 8,172                |   |          | 2,938  |   |  | 36  |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Total revenues                                   |  |      | 25,165 |      |   | 21,064               |   |          | 4,101  |   |  | 19  |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Operating expenses:                              |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Cost of product revenues                         |  |      | 5,055  |      |   | 6,805                |   |          | (1,750 | ) |  | (26 | )
|Cost of laboratory services                      |  |      | 6,781  |      |   | 6,091                |   |          | 690    |   |  | 11  |  
|Research and development                         |  |      | 2,444  |      |   | 2,003                |   |          | 441    |   |  | 22  |  
|Selling, general, and administrative             |  |      | 11,580 |      |   | 9,190                |   |          | 2,390  |   |  | 26  |  
|Provision for uncollectible accounts
 receivable |  |      | 912    |      |   | 1,859                |   |          | (947   | ) |  | (51 | )
|Legal expenses                                   |  |      | 256    |      |   | 1,210                |   |          | (954   | ) |  | (79 | )
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Total operating expenses                         |  |      | 27,028 |      |   | 27,158               |   |          | (130   | ) |  | (1  | )
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Operating loss                                   |  |      | (1,863 | )    |   | (6,094               | ) |          | 4,231  |   |  | 69  |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Other income (expense):                          |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Interest income                                  |  |      | 9      |      |   | 410                  |   |          | (401   | ) |  | (98 | )
|Other income                                     |  |      | 19     |      |   | 34                   |   |          | (15    | ) |  | (44 | )
|Foreign currency loss                            |  |      | (58    | )    |   | (582                 | ) |          | 524    |   |  | (90 | )
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  
|Loss before income taxes                         |  | $    | (1,893 | )    | $ | (6,232               | ) | $        | 4,339  |   |  | 70  |  
|                                                 |  |      |        |      |   |                      |   |          |        |   |  |     |  

Consolidated Results:

The 2009 period and the 2008 period refer to the three months ended
October 31, 2009 and 2008, respectively. The 2009 period includes the three
months results of ADI which was acquired on March 12, 2009.

Product revenues increased overall by $0.8 million in 2009 to $10.7
million as compared to the 2008 period. Our core product revenues demonstrated
strong organic growth of 26% or $1.0 million and the revenue from the recently
acquired ADI contributed acquisition growth of 27% or $2.7 million. This
overall growth was partially offset by declines in our low margin third-party
distribution business of $2.9 million of which one customer accounted for $2.0
million of the decline.

Royalty and license fee income during the 2009 period was $3.3 million
compared to $2.9 million in the 2008 period, an increase of $0.4 million or 14%.
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 $2.6 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, an increase of $0.1 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 $11.1 million
compared to $8.2 million in the 2008 period. The 2009 periods increase over
the 2008 period was $2.9 million or 36%. During the 2009 period revenue increased
due to higher service volume. In addition, during the 2008 period revenues were
adversely affected by contractual adjustments of $2.2 million. These immaterial
contractual adjustments related to computational errors 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 cost of product revenues during the 2009 period was $5.1 million
compared to $6.8 million in the 2008 period, a decrease of $1.7 million or 26%.
The decrease is primarily due to the impact of $1.8 million in lower costs from
non  recurring low margin third-party distribution business, reduced fair value
accounting adjustments of $0.4 million in accordance with purchase accounting
rules and reclassification of $0.8 million in costs relating from the
realignment of manufacturing facilities and personnel.

20

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Such amounts in 2009 were partially offset by product cost relating to
ADI of $1.0 million. We believe that cost of product revenues for future
periods will be affected by, among other things, the further 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
$6.8 million as compared to $6.1 million in the 2008 period, an increase of
$0.7 million or 11%. The Company incurred increased costs partially due to
increased service volume in 2009. Increases occurred in reagent costs and
supplies of $0.3 million, laboratory personnel costs of $0.2 million and
outside reference lab costs of $0.2 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 22%. The increase was principally attributed to
higher costs of $0.5 million at Enzo Life Sciences primarily related to Assay
Designs offset by $0.1 million in lower clinical trial and related activities
at the Therapeutics segment.

Selling, general and administrative expenses were approximately $11.6
million during the 2009 period as compared to $9.2 million in the 2008 period,
an increase of $2.4 million or 26%. The increase was primarily due to the net
increase at the Enzo Life Sciences segment of $2.0 million in the 2009 period
which included approximately $1.1 million of selling, general and
administrative expenses related to Assay Designs operations, the impact of
realigning manufacturing facilities and certain personnel of $0.8 million and
$0.2 million in costs relating to the on-going corporate identity program. The
Clinical Lab segments selling general and administrative increased $0.6
million primarily due to increased payroll and related benefits of $0.2
million, professional fees of $0.2 million, and other expenses of $0.2 million.
These increases were offset by a decrease in the Other segments selling
general and administrative of approximately $0.2 million, primarily due to
decreases in payroll and payroll related costs of $0.1 million and consulting
and professional fees of $0.1 million.

The provision for uncollectible accounts receivable, primarily relating
to the Clinical Labs segment was $0.9 million for the 2009 period as compared
to $1.9 million in the 2008 period, a decrease of $1.0 million or 51%. During
the 2008 period, the Company recorded a charge of $1.1 million attributed to
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 increased provisions required based on changes in
payer mix.

Legal expense was $0.3 million during the 2009 period compared to $1.2
million in the 2008 period, a decrease of $0.9 million or 79%, due to reduction
in services provided relating to certain patent litigation matters and the
reimbursement of $0.5 million in legal costs under our Directors and Officers
insurance policy.

Interest income was $9,000 during the 2009 period as compared to $0.4
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. Furthermore, the Company had
higher average invested balances during the 2008 period. The Company earns
interest by investing primarily in short term US treasury bills, and money
market accounts.

The loss 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. During the 2008 period, the loss on foreign currency
transactions was $0.6 million primarily due to an inter-company term loan
denominated in British pounds sterling. The currency depreciated significantly
against the US dollar during the 2008 period but not the 2009 period.

The Companys effective income tax rate benefit for the 2009 period was
4.2% compared to a provision of (2.2%) during the 2008 period. The tax benefit
(provision) 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. In the 2009 period, the Company recognized a benefit of $0.1
million primarily as a result of the expiration of the statute of limitations
for an uncertain tax position.

21

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Segment Results

The Life Sciences segments income before taxes was $2.0 million for
the 2009 period as compared to $1.1 million for the 2008 period. Product
revenues increased by $0.8 million in the 2009 period primarily due to the
contribution of product revenues from the March 2009 acquisition of Assay Designs
and organic growth from our core products which replaced low margin, high
volume distribution product revenues principally to one customer. Royalty and
license fee income increased $0.4 million from the Qiagen agreement and the
Abbott license agreement. The segments gross margin of $9.0 million, which
increased $3.0 million in 2009, was negatively impacted by $0.1 million
representing the fair value adjustment attributed to the sale of inventory
acquired from Assay Designs. The remaining fair value adjustment attributed to
inventory acquired from Assay Designs of $0.2 million will negatively impact
gross margins through the third quarter of fiscal 2010. Gross profit margins
increased to 64% from 47% due to favorable impact from ADIs higher margin,
which replaced lower margin revenue in 2008, lower inventory fair value
adjustments and realignment of personnel from manufacturing to trading
activity. The segments other operating expenses, including selling, general
and administrative, legal and research and development, increased by
approximately $2.5 million during the 2009 period primarily due to the
inclusion of Assay Designs expenses and the impact of the aforementioned
realignment of personnel. The segment experienced a non-cash foreign currency
loss 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 $0.5 million.

The Clinical Laboratory segments loss before
    taxes was $0.8 million for the 2009 period as compared to a loss of $3.4
    million in the 2008 period. The revenue from laboratory services increased
    in the 2009 period by $2.9 million due to increased service volume and during
    the 2008 period revenues were adversely affected by contractual adjustments
    of $2.2 million. The gross profit of $4.3 million, which increased $2.2 million
    in 2009, was impacted by the non-recurring charge to contractual expense
    of $2.2 million in 2008 and higher service volume in 2009 offset by the increase
    in the cost of laboratory services of $0.7 million. In the 2009 period, the
    selling, general and administrative costs increased by approximately $0.6
    million primarily due to increases in payroll and payroll related costs of
    $0.2 million and other operating costs of $0.4 million. The provision for
    uncollectible accounts receivables decreased by $1.0 million as compared
    to the 2008 period.

The Therapeutics segments loss before income taxes was approximately
$0.7 million for the 2009 period as compared to a loss of $0.8 million for the
2008 period. The decrease in the segment loss of $0.1 million was primarily due
to decreases in clinical trial activities of $0.1 million and salaries and
related costs.

The Other segments loss before taxes for the 2009 period was
approximately $2.4 million as compared to $3.2 million in the 2008 period, a
decrease of $0.8 million. The Other segments 2009 period loss reflects a
decrease in payroll and payroll related costs of $0.1 million, a decline in
professional fees and consulting costs and public relations of $0.2 million and
a decrease in legal expenses of $0.9 million due to the reimbursement of $0.5
million in legal fees and reduced services provided relating to certain patent
litigation activity. Interest income declined $0.4 million due to the decline
in interest rates. The Company earns interest by investing primarily in short
term US government treasury bills, and money market accounts.

Liquidity and Capital Resources

At October 31, 2009, the Company had cash and cash equivalents of $6.1
million and short-term investments of $40.3 million, or $46.4 in aggregate as
compared to $50.2 million at July 31, 2009. Short term investments are in US
Government treasury bills. The Company had working capital of $59.2 million at
October 31, 2009 compared to $60.5 million at July 31, 2009. The decrease in
working capital was primarily the result of funding capital expenditures and
the period net loss during the 2009 period.

Net cash used in operating activities for the three
    months ended October 31, 2009 was approximately $2.9 million as compared
    to $1.5 million for the three months ended October 31, 2008. The increase
    in net cash used in operating activities in the 2009 period over the 2008
    period of approximately $1.4 million was primarily due to changes in operating
    assets and liabilities of $4.7 million from 2008 to 2009, offset by the
    decrease in the period net loss and by the effect of lower non-cash adjustments
    in the 2009 period over the 2008 period aggregating $3.3 million.

Net cash provided by investing activities was approximately $1.9
million as compared to a use of cash of $40.2 million in the year ago period.
The change is primarily due to the net increase in short term investments in US
Government instruments of $39.8 million in the 2008 period. In the 2009 period
net maturities of short-term investments of $3.0 million were offset by capital
expenditures of $1.1 million.

22

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There were no financing activities in 2009. Net cash provided by
financing activities was approximately $0.3 million in the 2008 period,
attributed primarily to stock options exercise proceeds. There were no stock
option exercises in the 2009 period.

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. In June 2009, the conditions for the first annual earn-out of $2.5
million were met and the Company recorded $2.5 million of additional goodwill.
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, 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. During the three months ended October 31,
2008, one customer in the Life Science segment represented $2.2 million of
total product revenues.

Royalties

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

License fees and multiple element
arrangements

When evaluating multiple element arrangements, the Company considers
whether the components of the arrangement represent separate units of
accounting, which 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.

23

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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 months ended October 31, 2009
and 2008:

|                  |  |                                      |        |                                      |  |                |   |        |       |  |  |     |  
|----------------- |  | ------------------------------------ | ------ | ------------------------------------ |  | -------------- | - | ------ | ----- |  |  | --- | -
|                  |  | Three months ended
 October 31, 2009 |        | Three months ended
 October 31, 2008 | 
|                  |  |                                      |        |                                      | 
|                  |  | (In thousands)                       |        | (in %)                               |  | (In thousands) |   | (in %) |      
|                  |  |                                      |        |                                      |  |                |   |        |      
|Revenue category  |  |                                      |        |                                      |  |                |   |        |       |  |  |     |  
|Medicare          |  | $                                    | 2,852  |                                      |  | 26             |   | $      | 2,300 |  |  | 28  |  
|Third-party payer |  |                                      | 4,867  |                                      |  | 44             |   |        | 3,880 |  |  | 48  |  
|Patient self-pay  |  |                                      | 2,149  |                                      |  | 19             |   |        | 1,227 |  |  | 15  |  
|HMOs             |  |                                      | 1,242  |                                      |  | 11             |   |        | 765   |  |  | 9   |  
|                  |  |                                      |        |                                      |  |                |   |        |       |  |  |     |  
|Total             |  | $                                    | 11,110 |                                      |  | 100            | % | $      | 8,172 |  |  | 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 26% and 27% of the Clinical Labs net revenues
for the three months ended October 31, 2009 and 2008.

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 months ended October 31, 2009 and 2008, the
contractual adjustment percentages, determined using current and historical
reimbursement statistics, were 82.5% and 77.9%, respectively, of gross
billings. During the three months ended October 31, 2008 the Company also made
a $2.2 million adjustment increasing the contractual allowance to correct
immaterial errors in the computation of the contractual allowance percentages
affecting the periods August 1, 2005 through July 31, 2008 and periods prior to
August 1, 2005, and credits not recorded correctly. The adjustment increased
the 2008 periods loss before income tax by $2.2 million or $0.06 per share.

24

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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 $636,000, and
$348,000 for the three months ended October 31, 2009 and 2008, respectively,
and a change in the net accounts receivable of approximately $295,000 as of
October 31, 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.                                                             

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 October 31,
2009 and July 31, 2009, approximately 38% and 40%, respectively, of the
Companys net accounts receivable relates to its clinical laboratory business,
which operates in the New York and New Jersey Metropolitan areas.

The Life Sciences segments accounts receivable, of which $2.0 million
or 23% and $2.1 million or 28% represents foreign receivables as of October 31,
2009 and July 31, 2009 respectively, includes royalty receivables of $3.2
million and $2.5 million, as of October 31, 2009 and July 31, 2009,
respectively, of which approximately $2.6 million and $1.9 million,
respectively is from Qiagen Corporation (Note 12).

Net accounts receivable

|                          |  |                          |        |                       |  |            |   |        |        |  |  |     |  
|------------------------- |  | ------------------------ | ------ | --------------------- |  | ---------- | - | ------ | ------ |  |  | --- | -
|                          |  | As of 
 October 31, 2009 |        | As of 
 July 31, 2009 | 
|                          |  |                          |        |                       | 
|Billing category          |  | (In 000s)               |        | (in %)                |  | (In 000s) |   | (in %) |       
|                          |  |                          |        |                       |  |            |   |        |       
|Clinical Labs             |  |                          |        |                       |  |            |   |        |        |  |  |     |  
|Medicare                  |  | $                        | 1,150  |                       |  | 22         |   | $      | 1,113  |  |  | 22  |  
|Third party payers        |  |                          | 2,170  |                       |  | 42         |   |        | 2,003  |  |  | 40  |  
|Patient self-pay          |  |                          | 1,510  |                       |  | 30         |   |        | 1,635  |  |  | 32  |  
|HMOs                     |  |                          | 314    |                       |  | 6          |   |        | 303    |  |  | 6   |  
|                          |  |                          |        |                       |  |            |   |        |        |  |  |     |  
|Total clinical labs       |  | $                        | 5,144  |                       |  | 100        | % | $      | 5,054  |  |  | 100 | %
|                          |  |                          |        |                       |  |            |   |        |        |  |  |     |  
|Total life sciences       |  |                          | 8,555  |                       |  |            |   |        | 7,426  |  |  |     |  
|                          |  |                          |        |                       |  |            |   |        |        |  |  |     |  
|Total accounts receivable |  | $                        | 13,699 |                       |  |            |   | $      | 12,480 |  |  |     |  
|                          |  |                          |        |                       |  |            |   |        |        |  |  |     |  

25

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

|                                 |  |                 |       |                |   |        |  
|-------------------------------- |  | --------------- | ----- | -------------- | - | ------ | -
|In 000s                         |  | October 31,2009 |       | July 31,
 2009 |  
|                                 |  |                 |       |                |  
|Beginning balance                |  | $               | 4,786 |                | $ | 886    |  
|Provision for
 doubtful accounts |  |                 | 912   |                |   | 5,189  |  
|Write-offs, net                  |  |                 | (814  | )              |   | (1,289 | )
|                                 |  |                 |       |                |   |        |  
|Ending balance                   |  | $               | 4,884 |                | $ | 4,786  |  
|                                 |  |                 |       |                |   |        |  

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 months ended October 31,
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.

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 three month period ended October 31, 2009 versus 2008, our bad debt
expense decreased by $0.9 million. During the 2008 period, the Company recorded
a charge of $1.1 million attributed to 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 increased
provisions required based on changes in payer mix. 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.

26

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The following table indicates the Clinical Labs aged gross receivables
by payer group (in thousands), which is prior to adjustment to gross
receivables for: 1) contractual adjustment, 2) fully reserved balances not yet
written off, and 3) other revenue adjustments.

|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  
|----------------------- |  | ------------- | ------ | - | --- | ---------------- | - | ----- |  | ---------------------------- | - | - | ------ | ---------------- | --- | - | - | ------------- |  | --- | - | - | ----- |  | --- | -
|As of October
 31, 2009 |  | Total
 Amount |        | % |     | Medicare
 Amount |   | %     |  | Third 
 Party Payers
 Amount |   | % |        | Self-pay
 Amount |     | % |   | HMOs
 Amount |  | %   |  
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |  
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |  
|1-30 days               |  | $             | 19,775 |   | 65  | %                | $ | 3,836 |  | 69                           | % | $ | 9,668  |                  | 69  | % | $ | 2,783         |  | 39  | % | $ | 3,488 |  | 98  | %
|31-60 days              |  |               | 3,674  |   | 12  | %                |   | 331   |  | 6                            | % |   | 2,025  |                  | 15  | % |   | 1,280         |  | 18  | % |   | 38    |  | 2   | %
|61-90 days              |  |               | 2,383  |   | 8   | %                |   | 305   |  | 5                            | % |   | 973    |                  | 7   | % |   | 1,093         |  | 15  | % |   | 12    |  |    | %
|91-120 days             |  |               | 1,718  |   | 6   | %                |   | 185   |  | 3                            | % |   | 554    |                  | 4   | % |   | 972           |  | 14  | % |   | 7     |  |    | %
|121-150 days            |  |               | 962    |   | 3   | %                |   | 133   |  | 2                            | % |   | 348    |                  | 3   | % |   | 480           |  | 7   | % |   | 1     |  |    | %
|Greater than 150 days*  |  |               | 1,691  |   | 6   | %                |   | 791   |  | 14                           | % |   | 346    |                  | 2   | % |   | 552           |  | 8   | % |   | 2     |  |    | %
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  
|Totals                  |  | $             | 30,203 |   | 100 | %                | $ | 5,581 |  | 100                          | % | $ | 13,914 |                  | 100 | % | $ | 7,160         |  | 100 | % | $ | 3,548 |  | 100 | %
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  
|As of July 31,
 2009    |  | Total
 Amount |        | % |     | Medicare
 Amount |   | %     |  | Third
 Party Payers
 Amount  |   | % |        | Self-pay
 Amount |     | % |   | HMOs
 Amount |  | %   |  
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |  
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |  
|1-30 days               |  | $             | 19,251 |   | 70  | %                | $ | 3,193 |  | 61                           | % | $ | 9,695  |                  | 73  | % | $ | 2,882         |  | 51  | % | $ | 3,481 |  | 99  | %
|31-60 days              |  |               | 4,508  |   | 17  | %                |   | 894   |  | 16                           | % |   | 1,957  |                  | 15  | % |   | 1,635         |  | 29  | % |   | 22    |  | 1   | %
|61-90 days              |  |               | 1,783  |   | 6   | %                |   | 256   |  | 5                            | % |   | 680    |                  | 5   | % |   | 836           |  | 15  | % |   | 11    |  |    | %
|91-120 days             |  |               | 1,019  |   | 4   | %                |   | 249   |  | 5                            | % |   | 483    |                  | 4   | % |   | 280           |  | 5   | % |   | 7     |  |    | %
|121-150 days            |  |               | 340    |   | 1   | %                |   | 134   |  | 3                            | % |   | 202    |                  | 2   | % |   |              |  |    | % |   | 4     |  |    | %
|Greater than 150 days** |  |               | 636    |   | 2   | %                |   | 536   |  | 10                           | % |   | 100    |                  | 1   | % |   |              |  |    | % |   |      |  |    | %
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  
|Totals                  |  | $             | 27,537 |   | 100 | %                | $ | 5,262 |  | 100                          | % | $ | 13,117 |                  | 100 | % | $ | 5,633         |  | 100 | % | $ | 3,525 |  | 100 | %
|                        |  |               |        |   |     |                  |   |       |  |                              |   |   |        |                  |     |   |   |               |  |     |   |   |       |  |     |  

|   |                                                                          
|-- | -------------------------------------------------------------------------
|*  | Total includes
 $486 fully reserved over 210 days as of October 31, 2009.
|   |                                                                          
|** | Total includes
 $340 fully reserved over 210 days as of July 31, 2009.   

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.

In fiscal 2008, the Company adopted the accounting pronouncement that
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 the pronouncement 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 the pronouncement.

27

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Inventory

The Company values inventory at the lower of cost
    (first-in, first-out) or market. Work-in-process and finished goods inventories
    consist of material, labor, and manufacturing overhead. On a quarterly basis,
    we review inventory quantities on hand and analyze the provision for excess
    and obsolete inventory based on our estimate of sales forecasts based on
    sales history and anticipated future demand. Our estimate of future product
    demand may not be accurate and we may understate or overstate the provision
    for excess and obsolete inventory. Accordingly, unanticipated changes in
    demand could have a significant impact on the value of our inventory and
    results of operations. At October 31, 2009 and July 31, 2009, our reserve
for excess and obsolete inventory was $1.2 million and $1.0 million, respectively.

Goodwill and Indefinite-Lived Intangibles

Goodwill,
representing the cost of acquired businesses in excess of the fair value of net
assets acquired, and indefinite-lived intangibles are not amortized, but are
evaluated annually for impairment. The Company performs its annual impairment
test as of the first day of its fiscal fourth quarter or if indicators of
potential impairment exist. Goodwill is considered impaired if the carrying
amount of the reporting unit exceeds its estimated fair value. In assessing the
recoverability of goodwill, the Company reviews both quantitative as well as
qualitative factors to support its assumptions with regard to fair value. The
fair value of a reporting unit, which is based on geographic region, is
estimated using both a discounted cash flow model and a weighted average
multiple of earnings before interest and taxes from comparable companies. To
date, there have been no impairment charges recorded. As of May 1, 2009, one of
the Companys reporting units fair value exceeded its carrying value by 10%.
This reporting units goodwill was $5.3 million at the date of our annual
impairment test. In determining fair value, the Company makes certain
judgments, including the identification of reporting units and the selection of
comparable companies. If these estimates or their related assumptions change in
the future as a result of changes in strategy and/or market conditions, the
Company may be required to record an impairment charge.

Intangible Assets

Intangible
assets (exclusive of patents), arose primarily from acquisitions and primarily
consist of customer relationships, trademarks, licenses, employment and
non-compete agreements, and website and database content. Finite-lived intangible
assets are amortized according to their estimated useful lives, which range
from 4 to 15 years. The Company has capitalized certain legal costs directly
incurred in pursuing patent applications as patent costs. When such
applications result in an issued patent, the related costs are amortized over a
ten year period or the life of the patent, whichever is shorter, using the
straight-line method. The Company reviews its issued patents and pending patent
applications, and if it determines to abandon a patent application or that an
issued patent no longer has economic value, the unamortized balance in deferred
patent costs relating to that patent is immediately expensed.

Recent Accounting Pronouncements

Effective August 1, 2009, the Company adopted The Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC or Codification)
of Generally Accepted Accounting Principles  Overall. The Codification established one source for
all U.S. GAAP and became the source of authoritative accounting principles for
nongovernmental entities. Rules and
interpretive releases of the Securities and Exchange Commission (SEC) under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. The Codification is not intended to change existing GAAP and
as such did not have an impact on the consolidated financial statements of the
Company.

The
adoption of the following accounting standards and updates during the first
three months of fiscal 2010 did not result in a significant impact to our
consolidated financial statements.

On June
15, 2009, we adopted the accounting pronouncement that amends the requirements
for disclosures about fair value of financial instruments, regarding the fair
value of financial instruments for annual, as well as interim, reporting
periods. This pronouncement was effective prospectively for all interim and
annual reporting periods ending after June 15, 2009.

28

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Effective
August 1, 2009, we adopted the
revised accounting standard
relating to business combinations, including assets acquired and liabilities
assumed arising from contingencies. This standard requires the use of the
acquisition method of accounting, defines the acquirer, establishes the
acquisition date and applies to all transactions and other events in which one
entity obtains control over one or more other businesses. Upon our adoption of
this standard, we will be required to expense certain transaction costs and
related fees associated with business combinations that were previously
capitalized. In addition, with the adoption of this standard, changes to
valuation allowances for acquired deferred income tax assets and adjustments to
unrecognized tax benefits acquired generally are to be recognized as
adjustments to income tax expense rather than goodwill.

Effective
August 1, 2009, we adopted the accounting standard regarding the determination
of the useful life of intangible assets that removes the requirement to
consider whether an intangible asset can be renewed without substantial cost or
material modifications to the existing terms and conditions, and replaces it
with a requirement that an entity consider its own historical experience in
renewing similar arrangements, or a consideration of market participant
assumptions in the absence of historical experience. This standard also
requires entities to disclose information that enables users of financial
statements to assess the extent to which the expected future cash flows
associated with the asset are affected by the entitys intent and/or ability to
renew or extend the arrangements.

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 2009 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 October 31,
2009, our assets and liabilities would increase or decrease by $2.1 million and
$0.4 million, respectively, and our net sales and net (loss) or earnings would
increase or decrease by $1.6 million and $0.4 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 October 31, 2009, our pre-tax earnings would be favorably or
unfavorably impacted by approximately $0.3 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 October 31, 2009, we were
exposed to interest rate change market risk with respect to our money market
accounts and short term investments totaling $41.2 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 $0.4 million on an annual basis.

As of October 31, 2009, we did not maintain any fixed or variable
interest rate financing.

29

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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.

PART II  OTHER
INFORMATION

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

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, 2009 filed with the Securities and
Exchange Commission. See Note 14.

|          |             
|--------- | ------------
|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, 2009.

|         |         
|-------- | --------
|Item
 6. | Exhibits

|            |  |                                                                                                                                                                                                                              | 
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|Exhibit No. |  | Exhibit                                                                                                                                                                                                                      | 
|            |  |                                                                                                                                                                                                                              | 
|3.1         |  | Certificate of
 Incorporation, as amended March 17, 1980 (previously filed as an exhibits to
 the Companys Registration Statement on Form S-18 (File No. 2-67359) and
 incorporated herein by reference)                   
|            |  |                                                                                                                                                                                                                              | 
|3.2         |  | Certificate of
 Amendment of the Certificate of Incorporation, dated June 3, 1981 (previously
 filed as an exhibit to the Companys Form 10-K for the year ended July 31,
 1981 and incorporated herein by reference)       
|            |  |                                                                                                                                                                                                                              | 
|3.3         |  | Certificate of
 Amendment to the Certificate of Incorporation, dated March 13, 1980
 (previously filed with the Companys Annual Report on Form 10-K for the year
 ended July 31, 1989 and incorporated herein by reference)
|            |  |                                                                                                                                                                                                                              | 
|3.4         |  | Amended and
 Restated Bylaws (previously filed with the Companys Current Report on Form
 8-K January 29, 2008 and is incorporated herein by reference)                                                                     
|            |  |                                                                                                                                                                                                                              | 
|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.                                                                                          

30

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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: December 10,
 2009 | by:                | /s/ Barry Weiner                                                              
|                         |                    |                                                                               
|                         |                    | Chief Financial
 Officer, Principal Accounting Officer, Treasurer and Director

31

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