BioSpecifics Reports Second Quarter 2020 Financial and Operating Results

Rhea-AI Summary

BioSpecifics Technologies Corp. (NASDAQ: BSTC) reported a significant decline in financial performance for Q2 2020, with total revenue of $3.9 million, a 56% drop year-over-year, mainly due to COVID-19 impacts. GAAP net income fell to $0.1 million ($0.02 per share) compared to $6.4 million ($0.88 per share) in Q2 2019. Despite these challenges, the company maintains a strong cash position of $119.8 million and anticipates a rebound in XIAFLEX® royalties in the latter half of 2020. New FDA approvals and clinical trials for its products are also underway.

Positive

• Strong cash position of $119.8 million as of June 30, 2020.
• FDA approval of Qwo™ for cellulite treatment potentially expands market opportunities.
• Initiation of clinical trials for XIAFLEX® in plantar fibromatosis and adhesive capsulitis opens new avenues for growth.

Negative

• Total revenue decreased 56% year-over-year due to COVID-19 impacts.
• GAAP net income plummeted from $6.4 million in Q2 2019 to $0.1 million in Q2 2020.
• General and administrative expenses rose significantly to $4.0 million, compared with $1.7 million in the same quarter of 2019.

WILMINGTON, Del., Aug. 10, 2020 /PRNewswire/ -- BioSpecifics Technologies Corp. (NASDAQ: BSTC), a biopharmaceutical company that originated and continues to develop collagenase-based therapies with a first-in-class collagenase-based product marketed as XIAFLEX^® in North America, today announced its financial results for the second quarter ended June 30, 2020.

"While we anticipated an impact on second quarter 2020 royalty revenue due to COVID-19, our cash position remains strong, and we are projecting a rebound in XIAFLEX^® royalties in the second half of 2020. With the recent addition of Alex Monteith as our CBO, the approval of Qwo™, or CCH-aaes, by the FDA and the initiation of patient dosing for XIAFLEX^® in plantar fibromatosis and adhesive capsulitis, we are well positioned to continue to execute on our strategic initiatives of expanding the uses of the XIAFLEX platform and adding additional assets to the BioSpecifics portfolio," said Joseph Truitt, Chief Executive Officer of BioSpecifics.

Second Quarter 2020 Financial Results
As of June 30, 2020, BioSpecifics had cash and cash equivalents and investments of $119.8 million, compared to $105.8 million as of December 31, 2019.

BioSpecifics reported GAAP net income of $0.1 million for the second quarter ended June 30, 2020, or $0.02 per basic share and $0.02 per share on a fully diluted basis, compared to GAAP net income of $6.4 million, or $0.88 per basic share and $0.87 per share on a fully diluted basis, for the same period in 2019.

BioSpecifics reported non-GAAP net income of $0.8 million for the second quarter ended June 30, 2020, or $0.11 per basic share and $0.11 per share on a fully diluted basis, compared to non-GAAP net income of $6.5 million, or $0.89 per basic share and $0.89 per share on a fully diluted basis, for the same period in 2019.

Total revenue for the second quarter ended June 30, 2020 was $3.9 million, compared to $8.9 million for the same period in 2019. Revenues decreased 56% year-over-year in the second quarter ended June 30, 2020, and 60% from the first quarter ended March 31, 2020, due to the impacts of the COVID-19 pandemic, including, without limitation, the effect of significant office closures and less office visits for physician-administered products.

GAAP research and development expenses were $0.2 million for both the second quarter ended June 30, 2020 and for the same period in 2019. Non-GAAP research and development expenses for the second quarter ended June 30, 2020 were $0.1 million, compared to $0.2 million for the same period in 2019.

GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $4.0 million, compared to $1.7 million for the same period in 2019. Non-GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $3.2 million, compared to $1.6 million for the same period in 2019.

Provision for income taxes for the second quarter ended June 30, 2020 were $24,000, compared to $1.1 million for the same period in 2019.

As of June 30, 2020, BioSpecifics had 7,344,955 shares of common stock outstanding.

XIAFLEX^® Franchise Highlights

• BioSpecifics' royalty revenues from the XIAFLEX^® commercial franchise down 56% year-over-year: Royalty revenue from XIAFLEX^® for the second quarter was down as a result of the impacts of the COVID-19 pandemic, including, without limitation, physician office closures and a decline in patients electing to be treated. Endo expects quarter-over-quarter revenue growth in the third quarter of 2020 to be in the mid to high 40 percent range as physician and patient activities continue returning toward pre-COVID-19 levels.
• Qwo™ (collagenase clostridium histolyticum-aaes), the first and only U.S Food and Drug Administration (FDA)-approved injectable treatment for cellulite: In July 2020, CCH-aaes was approved by the FDA for the treatment of cellulite. Endo's commercial launch is expected to occur in the first half of 2021.
• New studies for plantar fibromatosis and adhesive capsulitis initiated in June and July 2020, respectively: Endo dosed the first patient in a clinical trial in plantar fibromatosis in June 2020 and adhesive capsulitis in July 2020. Plantar fibromatosis is a non-malignant thickening of the feet's deep connective tissue or fascia that occurs in five to 11 percent of the adult population in the U.S. Adhesive capsulitis, also known as frozen shoulder, is an inflammation and thickening of the shoulder capsule due to collagen which causes decreased motion in the shoulder that occurs in two to five percent of the adult population in the U.S. There are currently no FDA-approved pharmaceutical therapies available to treat either condition.

Corporate Highlights

• Alex Monteith appointed Chief Business Officer: In July 2020, BioSpecifics announced the appointment of Alex Monteith as Senior Vice President and Chief Business Officer. Mr. Monteith has extensive business development experience and industry knowledge, and last served as Vice President of Business Development for Deerfield Management, LLC.

Non-GAAP Financial Information
This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP net income per share, non-GAAP research and development expense, and non-GAAP general and administrative expense, because such measures exclude stock-based compensation, restructuring expense and separation costs.

These measures supplement BioSpecifics' financial results prepared in accordance with GAAP. BioSpecifics utilizes these financial measures, along with financial measures in accordance with GAAP, to evaluate the Company's operating performance. Additionally, the Company believes that non-GAAP financial measures will be used by certain investors to measure the Company's operating results. In management's opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance of BioSpecifics and its future outlook.  Such measures should not be deemed to be an alternative to GAAP requirements or a measure of BioSpecifics' liquidity. Non-GAAP measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of GAAP to non-GAAP measures.

About BioSpecifics Technologies Corp.
BioSpecifics Technologies Corp. is a commercial-stage biopharmaceutical company that discovered and developed a proprietary form of injectable collagenase (CCH), which is currently marketed by the Company's partner, Endo International plc (Endo), as XIAFLEX^® in North America for the treatment of Dupuytren's contracture and Peyronie's disease. Following U.S. Food and Drug Administration approval of CCH-aaes for the treatment of moderate to severe cellulite in the buttocks of adult woman in July 2020, Endo expects Qwo™ to be commercially available in the first half of 2021. The XIAFLEX^® research and development pipeline includes several additional potential indications including adhesive capsulitis and plantar fibromatosis, which are currently in clinical development by Endo. For more information, please visit www.biospecifics.com.

Forward-Looking Statements 
This press release includes "forward-looking statements" within the meaning of, and made pursuant to the safe harbor provisions of, the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including statements regarding the Company's strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, and objectives of management, shareholder value, the effect of recent management leadership changes, the timing and occurrence of commercial launches, potential indications, research and development plans, indications in development, and the assumptions underlying or relating to such statements, are "forward-looking statements." These forward-looking statements include statements regarding the commercial launch of CCH-aaes for the treatment of cellulite, as well as the impacts of the novel coronavirus (COVID-19) global pandemic. In some cases, these statements can be identified by forward-looking words such as "expect," "plan," "anticipate," "potential," "estimate," "can," "will," "continue," "believe," the negative or plural of these words, and other similar expressions. These forward-looking statements are predictions based on our current expectations and our projections about future events and various assumptions. There can be no assurance that we will realize our expectations or that our beliefs will prove correct. There are a number of important factors that could cause the Company's actual results to differ materially from those indicated by such forward-looking statements, including, but not limited to: the timing of regulatory filings and action; the ability of Endo to achieve its objectives for XIAFLEX® and Qwo™; the market for XIAFLEX® in, and timing, initiation, and outcome of clinical trials for, additional indications, which will determine the amount of milestone, royalty, mark-up on cost of goods sold, license, and sublicense income that the Company may receive; the potential of XIAFLEX® to be used in additional indications; Endo modifying its objectives or allocating resources other than to XIAFLEX® and Qwo™; the impacts of the novel coronavirus (COVID-19) global pandemic; and other risk factors identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, and otherwise in its filings and reports filed with the Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, are expressly qualified in their entirety by the cautionary statements included in this press release and, except as may be required by law, the Company assumes no obligation to update these forward-looking statements.

BioSpecifics Technologies Corporation
and Subsidiaries
Consolidated Statements of Operations
(unaudited)
				Three months ended				Six months ended
				June 30				June 30
				2020		2019		2020		2019
Revenues:
Royalties				$  3,903,402		$    8,852,986		$13,572,069		$16,982,127
Total revenues				3,903,402		8,852,986		13,572,069		16,982,127
Costs and expenses:
Research and development				160,461		161,321		282,431		310,857
General and administrative				3,993,861		1,728,125		7,161,907		4,635,284
Restructuring expense				-		-		1,146,045		-
Total cost and expenses				4,154,322		1,889,446		8,590,383		4,946,141
Operating income				(250,920)		6,963,540		4,981,686		12,035,986
Other income:
Interest Income				390,888		517,156		870,597		966,580
Income before income tax expense				139,968		7,480,696		5,852,283		13,002,566
Provision for income tax expense				(24,172)		(1,054,236)		(1,237,681)		(2,159,511)
Net income				$     115,796		$    6,426,460		$  4,614,602		$10,843,055
Basic net income per share				$          0.02		$            0.88		$          0.63		$          1.49
Diluted net income per share				$          0.02		$            0.87		$          0.63		$          1.48
Shares used in computation of basic net income per share				7,337,460		7,308,268		7,337,564		7,292,663
Shares used in computation of diluted net income per share				7,361,764		7,349,696		7,361,256		7,344,008

 

BioSpecifics Technologies Corporation
and Subsidiaries
Reconciliation of GAAP to Non-GAAP Financial Information
(unaudited)
	Three months ended				Six months ended
	June 30				June 30
	2020		2019		2020		2019
GAAP net income	$     115,796		$    6,426,460		$  4,614,602		$10,843,055
Non-GAAP adjustments:
Stock-based compensation	162,464		118,678		472,338		260,466
Restructuring expense (1)	-		-		1,146,045		-
Separation costs	672,025		-		672,025		290,439
Tax effect of adjustments	(144,116)		(16,722)		(484,421)		(91,505)
Non-GAAP net income	$     806,168		$    6,528,416		$  6,420,588		$11,302,455
Basic net income per share	$          0.11		$            0.89		$          0.88		$          1.55
Diluted net income per share	$          0.11		$            0.89		$          0.87		$          1.54
Shares used in computation of basic net income per share	7,337,460		7,308,268		7,337,564		7,292,663
Shares used in computation of diluted net income per share	7,361,764		7,349,696		7,361,256		7,344,008
Notes to the Reconciliation of GAAP to Non-GAAP Financial Information:
(1) Restructuring expense includes $190,433 of stock-based compensation expense.
Research and development expense reconciliation:
GAAP research and development expenses	$     160,461		$       161,321		$     282,431		$     310,857
Separation costs	(31,053)		-		(31,053)		-
Non-GAAP research and development expenses	$     129,408		$       161,321		$     251,378		$     310,857
General and Administrative expense reconciliation:
GAAP general and administrative expenses	$  3,993,861		$    1,728,125		$  7,161,907		$  4,635,284
Stock-based compensation	(162,464)		(118,678)		(472,338)		(260,466)
Separation costs	(640,972)		-		(640,972)		(290,439)
Non-GAAP general and administrative expenses	$  3,190,425		$    1,609,447		$  6,048,597		$  4,084,379

 

BioSpecifics Technologies Corp.
Selected Condensed Consolidated Balance Sheet Data
	(Unaudited)
	June 30,		December 31,
	2020		2019 (1)
Cash and cash equivalents	$16,871,522		$    4,999,183
Investments	102,972,062		100,808,942
Accounts receivable	11,696,598		19,065,919
Working capital	108,217,625		107,848,984
Total assets	133,781,785		126,653,268
Deferred tax liabilities	395,858		572,660
Total stockholders' equity	129,417,438		124,491,102
(1)The selected consolidated balance sheet information for the year ended December 31, 2019 have been derived from the audited financial statements but do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

 

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SOURCE BioSpecifics Technologies Corp.

FAQ

What were BioSpecifics Technologies' financial results for Q2 2020?

BioSpecifics reported a total revenue of $3.9 million and GAAP net income of $0.1 million for Q2 2020.

How did the COVID-19 pandemic affect BioSpecifics Technologies' revenue?

Revenue decreased 56% year-over-year due to significant office closures and reduced patient visits.

What is the current cash position of BioSpecifics Technologies?

As of June 30, 2020, BioSpecifics had cash and cash equivalents totaling $119.8 million.

What new products did BioSpecifics Technologies announce?

BioSpecifics announced FDA approval for Qwo™, the first injectable treatment for cellulite, and progress in clinical trials for XIAFLEX®.

Who was appointed as Chief Business Officer of BioSpecifics Technologies?

Alex Monteith was appointed as Chief Business Officer in July 2020.