UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrant |
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| Filed by a party other than the Registrant |
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Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material under §240.14a-12 |
Enzo Biochem, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if
other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
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No fee required. |
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Fee paid previously with preliminary materials. |
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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. |
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section
13 or 15(d)
of the Securities Exchange
Act of 1934
Date of report (Date of
earliest event reported): May 8, 2023
Enzo Biochem, Inc.
(Exact Name of Registrant
as Specified in Its Charter)
New York
(State or Other Jurisdiction
of Incorporation)
| 001-09974 |
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13-2866202 |
| (Commission File Number) |
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(IRS Employer
Identification No.) |
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| 81 Executive Blvd. Suite 3 |
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| Farmingdale, New York |
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11735 |
| (Address of Principal Executive Offices) |
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(Zip Code) |
(212) 583-0100
(Registrant’s Telephone
Number, Including Area Code)
N/A
(Former Name or Former
Address, if Changed Since Last Report)
Check the appropriate
box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following
provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered
pursuant to Section 12(b) of the Act:
| Title of Each Class |
|
Trading Symbol |
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Name of Each Exchange on Which Registered |
| Common Stock, $0.01 par value |
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ENZ |
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The New York Stock Exchange |
Indicate by check mark
whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-1 of this chapter).
Emerging growth company ☐
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 Other Events.
Supplemental Disclosures to Proxy Statement
As previously disclosed,
on March 16, 2023, Enzo Biochem, Inc. (the “Company”), Enzo Clinical Labs, Inc., a New York corporation (the “Subsidiary”
and, together with the Company, the “Seller”), entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”)
with Laboratory Corporation of America Holdings, a Delaware corporation (the “Buyer”). Pursuant
to the Asset Purchase Agreement, the Seller will sell substantially all the assets and assign certain liabilities of its clinical
laboratory business to the Buyer (the “Asset Sale”).
On April 13, 2023, the
Company filed a preliminary proxy statement (the “Preliminary Proxy Statement”) and, on April 24, 2023, the Company filed
a definitive proxy statement (the “Definitive Proxy Statement” and, together with the Preliminary Proxy Statement, the “Proxy
Statement”) with the Securities and Exchange Commission (the “SEC”) and commenced mailing of the Proxy Statement to
the Company’s shareholders to solicit the approval of the Asset Sale and adopt the Asset Purchase Agreement at a special meeting
of shareholders to be held on May 22, 2023 (the “Special Meeting”).
On or about April 27,
2023, Brian Cook, a purported shareholder of the Company, commenced a civil action in the Supreme Court of the State of New York, County
of New York against the Company and the board of directors of the Company (the “Board”) captioned Brian Cook v. Enzo Biochem,
Inc., et al., No.: 652057/2023 (the “Action”), alleging claims for breach of fiduciary duties against the directors,
aiding and abetting against the Company, and failure to disclose against the Company and the directors. The Action generally alleges
that the Proxy Statement misrepresents and/or omits certain purportedly material information.
While the Company believes
that the disclosures set forth in the Proxy Statement comply fully with applicable law, in order to moot the purported shareholder’s
disclosure claims in the Action, to avoid nuisance, cost and distraction, and to preclude any efforts to delay the closing of the Asset
Sale, the Company has determined to voluntarily supplement the Proxy Statement with the supplemental disclosures set forth below (the
“Supplemental Disclosures”). Nothing in the Supplemental Disclosures shall be deemed an admission of the legal necessity or
materiality under applicable laws of any of the disclosures set forth herein. To the contrary, the Company vigorously denied, and continues
to vigorously to deny, all allegations in the Action that any additional disclosure was or is required. The Company believes the allegations
in the Action are without merit. In consideration for the Company producing the Supplemental Disclosures, the plaintiff in the Action
has agreed to voluntarily dismiss the Action.
The following Supplemental
Disclosures should be read in conjunction with the Proxy Statement, which should be read in its entirety, and to the extent that the Supplemental
Disclosures differ from or update information contained in the Proxy Statement, the Supplemental Disclosures contained in this Form 8-K
shall supersede the information in the Proxy Statement. All page references are to pages in the Proxy Statement, and terms used below,
unless otherwise defined, have the meanings set forth in the Proxy Statement. Underlined text shows revisions or additions to a referenced
disclosure in the Proxy Statement.
The section of
the Proxy Statement entitled “Questions and Answers about the Special Meeting and the Asset Sale — Q: What will happen if
the Asset Sale is approved by shareholders?” is hereby amended and supplemented as follows:
By adding the underlined
and bolded text below on page 8:
A. If the holders of
at least a majority of all of the outstanding shares of Common Stock approve the Asset Sale, and the conditions to closing the Asset Sale
as set forth in the Asset Purchase Agreement are satisfied or waived, the Company and its subsidiaries will sell substantially all the
operating assets and assign of certain liabilities of our clinical laboratory business to the Buyer for cash. Subject to the terms and
conditions stated in the Asset Purchase Agreement, after shareholder approval of the Asset Sale, Buyer will be obligated to pay a fee
of $75,000 to the Company for each day after the date of such shareholder approval until the closing of the Asset Sale, provided that
such fee shall not exceed an aggregate of $7,000,000. At the closing, such fee will be wholly or partially credited against the purchase
price. For more information, see the section below captioned “PROPOSAL 1 — TO APPROVE THE ASSET SALE — Principal Provisions
of the Asset Purchase Agreement-Conditions to the Closing of the Asset Sale” beginning on page 42.
After the closing,
Enzo will remain a public company. Other than terms of employment or service that are currently in effect, there have not been any agreements
with members of management or directors of Enzo regarding future employment or continued service after the Asset Sale is consummated.
The section of
the Proxy Statement entitled “The Asset Sale— Background of the Proposed Sale” is hereby amended and supplemented as
follows:
By adding the underlined
and bolded text below in the fourth paragraph on page 15:
Between October 2022
and December 2022, at the direction of our board of directors, Jefferies contacted a total of 105 potential buyers, consisting of 59 potential
strategic parties and 46 financial sponsors that could be interested in acquiring the ECL and ELS business segments. Of the potential
buyers, 42 parties executed a confidentiality agreement and received the CIM and a first round process letter in connection with the Sale
Process, which directed the parties to submit initial indications of interest by December 14, 2022. Such confidentiality agreements
did not contain “don’t ask, don’t waive” or similar provisions. During the first half of December 2022,
management conducted executive summary presentations with 14 potential buyers and held due diligence calls as requested. At the conclusion
of the first round, ten parties conveyed initial indications of interest, and our board of directors determined to progress five parties
to the second round of the Sale Process, including the Buyer.
The section of
the Proxy Statement entitled “The Asset Sale— Opinion of the Company’s Financial Advisor” is hereby amended and
supplemented as follows:
By adding the underlined
and bolded text below in the fourth sentence of the first full paragraph on page 20:
With respect to the selected public
companies and selected precedent transactions analyses summarized below, no company or transaction used as a comparison was
identical or directly comparable to the Business or the Asset Sale nor, except as otherwise disclosed, were individual
multiples derived from the selected companies and the selected transactions independently determinative of the results of such
analyses.
By deleting the
text as indicated and adding the underlined and bolded text below in the second sentence of the paragraph under the heading entitled “Discounted
Cash Flow Analysis” on page 24:
Implied terminal values for the Business were
calculated by applying to the fiscal year 2027 estimated revenue of the Business a selected range of revenue
multiples of 1.2x to 2.2x selected based on Jefferies’ professional judgment.
By adding the underlined
and bolded text below in the third sentence of the paragraph under the heading entitled “Discounted Cash Flow Analysis” on
page 24:
The present values (as of March 31, 2023) of the
cash flows and terminal values were then calculated using a selected range of discount rates of 12.5% to 13.5% derived from a weighted
average cost of capital calculation.
By adding the following
supplemental disclosure is added after the “The Asset Sale — Past Contacts, Transactions or Negotiations” section on
page 25:
Certain Financial Forecasts
Unaudited Prospective Financial Information for the Business
Enzo does not as a matter of course make public
long-term projections as to future revenues, earnings or other results given, among other reasons, the uncertainty of the underlying assumptions
and estimates. However, in connection with the review of the Asset Sale, Enzo’s management prepared five years of unaudited forecasted
financial information for the Business on a standalone basis. The unaudited forecasted financial information prepared by Enzo’s
management is collectively referred to as the “Enzo forecasts.” Enzo is electing to provide a summary of the Enzo forecasts
in this section to provide Enzo shareholders access to certain non-public unaudited prospective financial information that was made available
to the Board for purposes of considering and evaluating the Asset Sale. The Enzo forecasts also were provided to Jefferies for its use
and reliance in connection with its financial analyses and opinion to the Board described under the section entitled “— Opinion
of the Company’s Financial Advisor.” The Enzo forecasts were not prepared with a view toward public disclosure and the inclusion
of a summary of the Enzo forecasts below should not be regarded as an indication that any of the Board, Enzo, any of their respective
advisors or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results.
Certain of the material assumptions made by Enzo’s
management in connection with the preparation of the unaudited prospective financial information set forth in this section include, without
limitation: (i) the Company successfully implements multiple levers to grow core testing revenues, including expansion of its test menu
of current indications and offering tests in new indications such as dermatology and toxicology, enhancement of direct to consumer and
lifestyle testing offerings, and further penetration of serviceable available market and expansion geographically; (ii) COVID testing
waning and the associated revenue continuing to be a lesser part of the Business’ revenue mix; (iii) improvement of margin by renegotiating
send out contracts, exploring new partnerships and transitioning reference testing to in-house; (iv) investment in selling and field service
personnel and other expenses to support revenue growth; (v) capital expenditures are consistent with historical patterns; and (vi) depreciation
expense is consistent with capital expenditure patterns and historical experience.
The following table summarizes the Enzo forecasts.
| (Dollars in millions) | |
2023E | | |
2024E | | |
2025E | | |
2026E | | |
2027E | |
| Core Testing Services | |
$ | 46.3 | | |
$ | 64.2 | | |
$ | 76.1 | | |
$ | 90.6 | | |
$ | 109.6 | |
| COVID Revenue | |
$ | 5.7 | | |
$ | 6.2 | | |
$ | 4.8 | | |
$ | 3.9 | | |
$ | 3.1 | |
| Revenue | |
$ | 52.0 | | |
$ | 70.4 | | |
$ | 80.9 | | |
$ | 94.4 | | |
$ | 112.7 | |
| Total Allocated Costs | |
$ | 19.0 | | |
$ | 25.1 | | |
$ | 27.5 | | |
$ | 30.6 | | |
$ | 34.5 | |
| Total Unallocated Costs | |
$ | 25.1 | | |
$ | 33.4 | | |
$ | 36.2 | | |
$ | 39.5 | | |
$ | 43.7 | |
| Gross Profit | |
$ | 7.9 | | |
$ | 12.0 | | |
$ | 17.2 | | |
$ | 24.3 | | |
$ | 34.5 | |
| Total Operating Expenses | |
$ | 23.8 | | |
$ | 26.3 | | |
$ | 28.6 | | |
$ | 31.2 | | |
$ | 31.9 | |
| EBIT | |
$ | (15.8 | ) | |
$ | (14.4 | ) | |
$ | (11.5 | ) | |
$ | (6.8 | ) | |
$ | 2.6 | |
| Depreciation & Amortization | |
$ | 1.0 | | |
$ | 1.1 | | |
$ | 1.2 | | |
$ | 1.5 | | |
$ | 1.7 | |
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| EBITDA(1) | |
$ | (14.8 | ) | |
$ | (13.3 | ) | |
$ | (10.2 | ) | |
$ | (5.4 | ) | |
| $$4.3 | |
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| | | |
| | | |
| | | |
| | | |
| | |
| Less: Depreciation & Amortization | |
$ | (1.0 | ) | |
$ | (1.1 | ) | |
$ | (1.2 | ) | |
$ | (1.5 | ) | |
$ | (1.7 | ) |
| EBIT | |
$ | (15.8 | ) | |
$ | (14.4 | ) | |
$ | (11.5 | ) | |
$ | (6.8 | ) | |
$ | 2.6 | |
| Less: Income Taxes | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (0.5 | ) |
| NOPAT | |
$ | (15.8 | ) | |
$ | (14.4 | ) | |
$ | (11.5 | ) | |
$ | (6.8 | ) | |
$ | 2.0 | |
| Plus: Depreciation & Amortization | |
$ | 1.0 | | |
$ | 1.1 | | |
$ | 1.2 | | |
$ | 1.5 | | |
$ | 1.7 | |
| Less: Capex | |
$ | (1.3 | ) | |
$ | (1.4 | ) | |
$ | (1.6 | ) | |
$ | (1.7 | ) | |
$ | (1.9 | ) |
| Less: Change in Net Working Capital | |
$ | 2.1 | | |
$ | (1.8 | ) | |
$ | (1.0 | ) | |
$ | (1.4 | ) | |
$ | (1.8 | ) |
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| Unlevered Free Cash Flow(2) | |
$ | (14.0 | ) | |
| (16.6 | ) | |
| (12.9 | ) | |
| (8.5 | ) | |
| (0.0 | ) |
| (1) | EBITDA is a non-GAAP measure, and is not typically used by Enzo management, but was calculated in connection
with the review of the Asset Sale. EBITDA is calculated as operating revenues less costs and operating expenses and excluding interest,
amortization and depreciation. |
| (2) | Unlevered free cash flow is calculated as free cash flow before interest expense, net of any benefit of
the tax deductibility of interest. Free cash flow is defined as earnings after taxes, plus depreciation and amortization, less capital
expenditures, surplus retained in the business to support business growth and changes in working capital. Unlevered free cash flow was
calculated by Jefferies based on information approved or provided, as applicable, by Enzo’s management and reviewed and approved
by the Board for purposes of Jefferies’ financial analyses described under the section entitled “— Opinion of the Company’s
Financial Advisor.” |
The unaudited prospective financial information
set forth above was, in general, prepared solely for internal use and is subjective in many respects and thus subject to interpretation.
While presented with numerical specificity, such unaudited prospective financial information reflects numerous estimates and assumptions
made by Enzo’s management at the time the Enzo forecasts were prepared with respect to industry performance and competition, general
business, economic, market and financial conditions and matters specific to the Business, all of which are difficult to predict and many
of which are beyond Enzo’s control, including the assumptions set forth above, and are therefore inherently uncertain.
EisnerAmper LLP has not audited, reviewed, examined,
compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, EisnerAmper
LLP does not express an opinion or any other form of assurance with respect thereto. The EisnerAmper LLP reports related to Enzo incorporated
by reference into this proxy statement relate to Enzo’s previously issued financial statements. They do not extend to the prospective
financial information and should not be read to do so.
The unaudited prospective financial information
was prepared based on the Business as a standalone business. Such information does not take into account the Asset Sale, including the
impact of negotiating or executing the transaction, the expenses that may be incurred in connection with consummating the Asset Sale,
the potential synergies that may be achieved with the Business by Labcorp as a result of the Asset Sale, the effect of any business or
strategic decision or action that has been or will be taken as a result of the Asset Purchase Agreement having been executed, or the effect
of any business or strategic decisions or actions which would likely have been taken if the Asset Purchase Agreement had not been executed
but which were instead altered, accelerated, postponed or not taken in anticipation of the Asset Sale. Enzo shareholders are urged to
review Enzo’s most recent SEC filings for a description of the historical results of operations and financial condition of Enzo
as reported therein.
Readers of this proxy statement are cautioned
not to rely on the unaudited prospective financial information set forth above. No representation or warranty is or has been made to Enzo
shareholders by the Board, Enzo, any of their respective advisors or any other person regarding the information included in the unaudited
prospective financial information described herein or the ultimate performance of Enzo or the Business compared to the information included
in the above prospective financial information. The inclusion of unaudited prospective financial information in this proxy statement should
not be regarded as an indication that such prospective financial information will be necessarily predictive of actual future events or
construed as financial guidance, and should not be relied on as such. Factors that could cause the above future results to differ from
the above prospective financial information include the timing, outcome and results of integration of the Business with Labcorp, general
economic, regulatory and market conditions, changes in actual or projected cash flows, competitive pressures, changes in tax laws or accounting
rules, changes in government regulations and regulatory requirements, and the other matters discussed in Enzo’s most recent SEC
filings.
EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW, ENZO
DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE PROSPECTIVE FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH PROSPECTIVE
FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.
By
deleting the text as indicated and adding the underlined and bolded text below in the second sentence of the first paragraph under the
heading entitled “U.S. Antitrust” on page 35:
The
parties made the filings required under the HSR on March 30, 2023, and the waiting period under the HSR expired May 1, 2023, at 11:59
p.m. Eastern time.
Forward-Looking Statements
Except for historical information, the matters
discussed in this Current Report on Form 8-K (this “8-K”) may be considered “forward-looking” statements within
the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.
Such statements include declarations regarding the intent, belief or current expectations of the Company and its management, including
those related to cash flow, gross margins, revenues, and expenses which are dependent on a number of factors outside of the control of
the Company including, inter alia, the markets for the Company’s products and services, costs of goods and services, other expenses,
government regulations, litigation, and general business conditions. See Risk Factors in the Company’s Form 10-K for the fiscal
year ended July 31, 2022 and the Proxy Statement filed on April 24, 2023 regarding the proposed transactions. Investors are cautioned
that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that
could materially affect actual results. The Company disclaims any obligations to update any forward-looking statement as a result of developments
occurring after the date of this 8-K.
Additional Information and Where to Find It
The Company is holding the Special Meeting to
approve the Asset Sale and adopt the Asset Purchase Agreement. In connection with seeking shareholder approval, the Company has filed
with the SEC the Proxy Statement and other documents describing the proposed transaction. Shareholders are urged to read the Proxy Statement
because it contains important information about the transaction. The Definitive Proxy Statement was sent to the shareholders of the Company
seeking their approval of the Asset Sale. Shareholders may obtain a free copy of the Proxy Statement and other documents filed by the
Company with the SEC at the SEC’s Web site at www.sec.gov, or by directing a request to Enzo Biochem, Inc., 81 Executive Blvd. Suite
3, Farmingdale, New York 11735, Attn.: Investor Relations.
Participants in Solicitation
The Company and its directors and executive officers
may be deemed to be participants in the solicitation of proxies from the shareholders of the Company in connection with the transactions.
Information about the directors and executive officers of the Company is set forth in the Company’s Form 10-K for the fiscal year
ended July 31, 2022 filed with the SEC on October 14, 2022, as amended by Amendment No. 1 on Form 10-K/A filed with the SEC on November
25, 2022, and the proxy statement filed with the SEC on December 21, 2022. Additional information regarding the interests of these participants
and other persons who may be deemed participants in the transactions may be obtained by reading the Proxy Statement filed on April 24,
2023 regarding the proposed transactions.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
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ENZO BIOCHEM, INC. |
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| Date: May 8, 2023 |
By: |
/s/ Hamid Erfanian |
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Hamid Erfanian |
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|
Chief Executive Officer |
7
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