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A New Remedy For What Ails Enzo?


Inside Wall Street

A NEW REMEDY FOR WHAT AILS ENZO?

How low is low in this market? Enzo Biochem (ENZ), whose stock plunged to 9 on Aug. 11, down from 20 a share 10 months ago, probably can't go much lower. So says money manager Ray Hines, president of MarketMetrix.

The stock's drop is "unjustifiable," he argues, because Enzo is cash-flow positive, with $38 million in cash and no debt, and is making money. By Aug. 12, the stock had edged up to 10 3/8. Another reason: Enzo, which makes diagnostic products based on molecular biology and genetic engineering, is close to signing a deal with a European drug giant for its DNA probe kits.

The partner will provide Enzo with the resources to develop and market its probes--designed to detect diseases such as AIDS and hepatitis. The strategic partner could take an equity stake in Enzo. The market for the DNA probe kits is about $1 billion, says Hines.

On July 13, Enzo started Phase I clinical tests of its patented genetic therapeutic product designed to treat people infected with HIV-1. If successful, the new therapy could free such patients from the need for other medications, some of which have debilitating side effects, says Senior Vice-President Dean Engelhardt. At the recent World AIDS Conference in Geneva, he reported that in lab studies, the active genes cloned into the product gave 92% to 99% protection for human immune cells against HIV-1 infection.

Hines sees Enzo's earnings ramping up next year, when he projects profits of 60 cents to 80 cents for fiscal 1999, ending July 31, up from an estimated 25 cents in 1998. It earned 6 cents a share in 1997.BY GENE G. MARCIALReturn to top

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