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Enzo Biochem Inc., a prominent life sciences and diagnostics company, has recently settled multiple patent litigation cases and is currently dealing with ongoing legal challenges, as stated in its quarterly report. The company has resolved patent litigation against Hologic, Gen-Probe, and Grifols, among others, and is currently involved in legal disputes with Harbert Discovery Fund and Laboratory Corporation of America Holdings.
Agreement with Hologic
Regarding the patent litigation, Enzo reached an agreement with Hologic, resulting in the dismissal of cases related to the ‘180 and ‘197 patents. The company also withdrew its Federal Circuit appeal against the Board’s ruling in the inter partes review proceedings concerning the ‘197 patent. The Patent and Trademark Office (PTO) issued a non-final office action in an ex parte reexamination of the ‘197 patent, rejecting certain claims. Enzo has responded to the office action, and the proceeding is still ongoing. Becton Dickinson has also requested an ex parte reexamination of the ‘197 patent, and the PTO has ordered the reexamination, although no office action has been issued yet. Enzo has filed a petition to terminate the second reexamination proceeding.
Regarding the legal challenges, Enzo has been engaged in lawsuits with Harbert Discovery Fund. HDF initially filed a complaint against the company and its directors, alleging violations of the Securities and Exchange Act, breach of fiduciary duty, and a derivative claim about shareholder approval of an amendment. HDF subsequently dismissed the claims without prejudice, and the court granted the dismissal. Enzo then filed a lawsuit against Harbert, accusing them of false and misleading statements made in proxy materials distributed by Harbert. HDF counterclaimed, alleging similar violations and breach of fiduciary duty by Enzo. The court dismissed most of HDF’s counterclaims but allowed the Section 14(a) claim against Enzo concerning the delay of the 2019 Annual Meeting and the Section 20(a) and breach of fiduciary duty counterclaims against certain individuals. Recently, the court granted HDF’s motion for voluntary dismissal without prejudice.
Enzo’s former executives, Elazar Rabbani and Barry Weiner, have also been involved in legal disputes with the company. Rabbani’s employment was terminated, and he filed a demand for arbitration, claiming a breach of his employment agreement regarding severance and bonus. Weiner terminated his employment for “Good Reason” and also filed a demand for arbitration, seeking a higher bonus for fiscal year 2021 and severance payments. Arbitration proceedings have been halted as the parties strive to reach a settlement agreement.
Asset Purchase Agreement with Labcorp
In a significant development, Enzo has entered into an Asset Purchase Agreement with Laboratory Corporation of America Holdings (Labcorp), wherein Enzo has agreed to sell its clinical labs business for approximately $146 million in cash. The transaction is subject to customary closing conditions, including shareholder approval and regulatory requirements. Shareholders approved the transaction at a Special Meeting held in May 2023. The net proceeds from the sale have yet to be determined.
Securities Purchase Agreement
Enzo recently completed a Securities Purchase Agreement with specific purchasers, involving the issuance of 10% Original Issue Discount Secured Convertible Debentures and warrants. These debentures earn interest and can be converted into shares of Enzo’s common stock. The debentures also include provisions related to the company’s sale of assets and business to Labcorp. The warrants are exercisable for a period of five years at an exercise price based on the average of three daily volume-weighted average prices of Enzo’s common stock prior to the closing date.
In conclusion, Enzo Biochem Inc. has settled some patent litigation cases and is currently dealing with legal challenges involving various parties. The company has dismissed certain lawsuits, reached settlements, and is engaged in arbitration proceedings with former executives. Additionally, Enzo has entered into a significant agreement to sell its clinical labs business to Labcorp. The outcomes of these legal matters and the sale transaction will impact Enzo’s financial position and results of operations.
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