WILMINGTON, Del., Nov. 9, 2020 /PRNewswire/ -- BioSpecifics
Technologies Corp. (NASDAQ: BSTC) ("BioSpecifics" or the
"Company"), 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 third
quarter ended September 30, 2020.
"We believe the recently announced acquisition by Endo
International plc marks a great outcome for all BioSpecifics
stakeholders, and is the result of a successful value creation
strategy. We trust that our long-time partner will serve as an
excellent vehicle to advance and maximize the injectable
collagenase (CCH) portfolio," said Joseph
Truitt, Chief Executive Officer of BioSpecifics.
Third Quarter 2020 Financial Results
As of September 30, 2020,
BioSpecifics had cash and cash equivalents and investments of
$121.0 million, compared to
$105.8 million as of December 31, 2019.
BioSpecifics reported GAAP net income of $5.4 million for the third quarter ended
September 30, 2020, or $0.73 per basic share and $0.73 per share on a fully diluted basis,
compared to GAAP net income of $6.3
million, or $0.86 per basic
share and $0.85 per share on a fully
diluted basis, for the same period in 2019.
BioSpecifics reported non-GAAP net income of $5.8 million for the third quarter ended
September 30, 2020, or $0.79 per basic share and $0.79 per share on a fully diluted basis,
compared to non-GAAP net income of $6.5
million, or $0.88 per basic
share and $0.88 per share on a fully
diluted basis, for the same period in 2019.
Total revenue for the third quarter ended September 30, 2020 was $11.3 million, including $2.0 million in license revenues from a milestone
payment received in conjunction with the U.S. Food and Drug
Administration ("FDA") approval of Qwo™. Royalty revenue for the
third quarter ended September 30,
2020 was $9.3 million,
compared to $9.4 million for the same
period in 2019. Revenues decreased 2% year-over-year in the third
quarter ended September 30, 2020, and
increased 137% from the second quarter ended June 30, 2020, due to a recovery from the impacts
of the COVID-19 pandemic experienced in the second quarter of 2020,
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 the third quarter ended
September 30, 2020 and $0.1 million for the same period in 2019.
Non-GAAP research and development expenses for the third quarters
ended September 30, 2020 and
September 30, 2019 were the same as
GAAP research and development expenses.
GAAP general and administrative expenses for the third quarter
ended September 30, 2020 were
$3.1 million, compared to
$2.0 million for the same period in
2019. Non-GAAP general and administrative expenses for the third
quarter ended September 30, 2020 were
$2.6 million, compared to
$1.7 million for the same period in
2019.
Provision for income taxes for the third quarter ended
September 30, 2020 were $1.4 million, compared to $1.6 million for the same period in 2019.
As of September 30, 2020,
7,344,955 shares of BioSpecifics' common stock, par value
$0.001, were outstanding.
Corporate Highlights
BioSpecifics to be acquired by Endo International plc
("Endo"): On October 19,
2020, BioSpecifics entered into a definitive merger
agreement (the "Merger Agreement") with Endo and Beta Acquisition
Corp., a wholly-owned indirect subsidiary of Endo. In accordance
with the Merger Agreement, Endo, through its wholly-owned
subsidiary, commenced an all-cash tender offer for all outstanding
shares of BioSpecifics common stock at a price of $88.50 per share. Promptly following the
completion of the tender offer, Endo's acquisition subsidiary will
be merged with and into BioSpecifics (the "Merger"). The estimated
equity value of the Merger is approximately $658.0 million; the Merger was unanimously
approved by both BioSpecifics' and Endo's Boards of Directors and
is anticipated to close during the fourth quarter of
2020.
Non-GAAP Financial Information
This communication 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 certain investors use
non-GAAP financial measures 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 financial 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. The Company discovered and developed a
proprietary form of injectable collagenase ("CCH"), which is
currently marketed by Endo, as XIAFLEX® in North America for the treatment of Dupuytren's
contracture and Peyronie's disease. Endo announced that it received
FDA approval of CCH for the treatment of moderate to severe
cellulite in the buttocks of adult women; Qwo™ is expected to be
available commercially in the U.S. starting in spring 2021. The CCH
research and development pipeline includes several additional
potential indications including adhesive capsulitis and plantar
fibromatosis. In October 2020,
BioSpecifics entered into a definitive merger agreement pursuant to
which Endo International plc, through a wholly-owned subsidiary,
will acquire the Company. The transaction is expected to close
during the fourth quarter of 2020. For more information,
please visit www.biospecifics.com.
About Endo International plc
Endo International plc (NASDAQ: ENDP) is a specialty
pharmaceutical company committed to helping everyone they serve
live their best life through the delivery of quality,
life-enhancing therapies. Endo's decades of proven success come
from a global team of passionate employees collaborating to bring
the best treatments forward. Together, Endo boldly transforms
insights into treatments benefiting those who need them, when they
need them. Endo has global headquarters in Dublin, Ireland and U.S. headquarters in
Malvern, Pennsylvania. For more
information, please visit www.endo.com.
Additional Information and Where to Find It
The tender offer referenced in this communication commenced on
November 2, 2020. This communication
is not an offer to buy nor a solicitation of an offer to sell any
securities of the Company nor is it a substitute for any tender
offer materials that Endo, the Endo acquisition subsidiary, or the
Company has filed with the U.S. Securities and Exchange Commission
(the "SEC"). The solicitation and the offer to buy the shares of
BioSpecifics common stock has been made pursuant to the tender
offer statement on Schedule TO, including an offer to purchase, a
letter of transmittal, and other related materials, filed with the
SEC by Endo on November 2, 2020. In
addition, on November 2, 2020, the
Company filed with the SEC a Solicitation/Recommendation Statement
on Schedule 14D-9 with respect to the tender offer. Investors are
able to obtain a free copy of these materials and other documents
filed by Endo, the Endo acquisition subsidiary, and the Company
with the SEC at the website maintained by the SEC at www.sec.gov.
Investors may also obtain, at no charge, any such documents filed
with or furnished to the SEC by the Company under the "Investors"
section of the Company's website at www.biospecifics.com. INVESTORS
AND SECURITY HOLDERS ARE ADVISED TO READ THESE DOCUMENTS, INCLUDING
THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 OF THE
COMPANY AND ANY AMENDMENTS THERETO, AS WELL AS ANY OTHER DOCUMENTS
RELATING TO THE TENDER OFFER AND THE MERGER THAT ARE FILED WITH THE
SEC, CAREFULLY AND IN THEIR ENTIRETY PRIOR TO MAKING ANY DECISIONS
WITH RESPECT TO WHETHER TO TENDER THEIR SHARES INTO THE TENDER
OFFER BECAUSE THEY CONTAIN IMPORTANT INFORMATION, INCLUDING THE
TERMS AND CONDITIONS OF THE TENDER OFFER.
The offer to purchase, the related letter of transmittal and the
solicitation/recommendation statement are available free of charge
at the SEC's website at www.sec.gov. Additional copies may be
obtained for free by contacting the Company or Endo, as applicable.
Copies of the documents filed with the SEC by the Company,
including the Solicitation/Recommendation Statement on Schedule
14D-9, are available free of charge on the Company's internet
website at
https://investors.biospecifics.com/investors/financials/sec-filings/default.aspx.
Forward-Looking Statements
The statements included above that are not a description of
historical facts are forward-looking statements. Words or phrases
such as "believe," "may," "could," "will," "estimate," "continue,"
"anticipate," "intend," "seek," "plan," "expect," "should,"
"would," or similar expressions are intended to identify
forward-looking statements. These forward-looking statements
include, without limitation, statements regarding the planned
completion and timing of the transactions contemplated by the
Merger Agreement, the intent, belief, and current expectations of
the Company and members of its senior management team and Board of
Directors, potential indications, research and development plans,
indications in development, and the occurrence and timing of the
commercial launch of Qwo™. Risks and uncertainties that could cause
results to differ from expectations include: (i) uncertainties as
to the timing of the Merger; (ii) the risk that the Merger may not
be completed in a timely manner or at all; (iii) uncertainties as
to the percentage of the Company's stockholders tendering their
shares in the tender offer; (iv) the possibility that any or all of
the various conditions to the consummation of the Merger may not be
satisfied or waived; (v) the occurrence of any event, change, or
other circumstance that could give rise to the termination of the
Merger Agreement; (vi) the effect of the announcement or pendency
of the transactions contemplated by the Merger Agreement on the
Company's ability to retain and hire key personnel, its ability to
maintain relationships with whom it does business, or its operating
results and business generally; (vii) risks related to diverting
management's attention from the Company's ongoing business
operations; (viii) the risk that stockholder litigation in
connection with the transactions contemplated by the Merger
Agreement may result in significant costs of defense,
indemnification, and liability; (ix) other business effects,
including the effects of industry, economic or political conditions
outside of the Company's control; (x) transaction costs; (xi)
actual or contingent liabilities; (xii) the timing of regulatory
filings and action; (xiii) the ability of Endo to achieve its
objectives for XIAFLEX® and Qwo™; (xiv) 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; (xv) the potential
of XIAFLEX® to be used in additional indications; (xvi) Endo
modifying its objectives or allocating resources other than to
XIAFLEX® and Qwo™; (xvii) adverse impacts on business, operating
results or financial condition in the future due to pandemics,
epidemics or outbreaks, such as COVID-19; and (xviii) risks and
uncertainties pertaining to the Company's business, including,
without limitation, the risks and uncertainties detailed in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2019, its Quarterly
Report on Form 10-Q for the period ended September 30, 2020, and its other filings with
the SEC, as well as the tender offer materials filed by Endo and
the Endo acquisition subsidiary and the Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company in connection with
the tender offer.
You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
All forward-looking statements are qualified in their entirety by
this cautionary statement and the Company undertakes no obligation
to revise or update these statements to reflect events or
circumstances after the date hereof, except as required by law.
BioSpecifics
Technologies Corporation
|
and
Subsidiaries
|
Consolidated
Statements of Operations
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30
|
|
September
30
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues:
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
9,255,864
|
|
$
9,442,253
|
|
$
22,827,933
|
|
$
26,424,380
|
License revenues
|
|
2,000,000
|
|
-
|
|
2,000,000
|
|
-
|
Total
Revenues
|
|
11,255,864
|
|
9,442,253
|
|
24,827,933
|
|
26,424,380
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
|
179,450
|
|
143,185
|
|
461,881
|
|
454,042
|
General and
administrative
|
|
3,064,484
|
|
1,978,078
|
|
10,226,391
|
|
6,613,362
|
Milestone fee
|
|
1,500,000
|
|
|
|
1,500,000
|
|
|
Restructuring
expense
|
|
-
|
|
-
|
|
1,146,045
|
|
-
|
Total
Cost and Expenses
|
|
4,743,934
|
|
2,121,263
|
|
13,334,317
|
|
7,067,404
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
6,511,930
|
|
7,320,990
|
|
11,493,616
|
|
19,356,976
|
|
|
|
|
|
|
|
|
|
Other
income:
|
|
|
|
|
|
|
|
|
Interest
income
|
|
264,641
|
|
504,909
|
|
1,135,238
|
|
1,471,489
|
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
|
6,776,571
|
|
7,825,899
|
|
12,628,854
|
|
20,828,465
|
Provision for income tax
expense
|
|
(1,389,964)
|
|
(1,552,966)
|
|
(2,627,645)
|
|
(3,712,477)
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
5,386,607
|
|
$
6,272,933
|
|
$
10,001,209
|
|
$
17,115,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
per share
|
|
$
0.73
|
|
$
0.86
|
|
$
1.36
|
|
$
2.34
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
|
$
0.73
|
|
$
0.85
|
|
$
1.36
|
|
$
2.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic net income per share
|
7,344,955
|
|
7,334,212
|
|
7,340,046
|
|
7,306,665
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted net income per share
|
7,366,768
|
|
7,359,034
|
|
7,363,373
|
|
7,347,701
|
BioSpecifics
Technologies Corporation
|
and
Subsidiaries
|
Reconciliation of
GAAP to Non-GAAP Financial Information
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
|
September
30
|
|
September
30
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
GAAP net
income
|
|
$
5,386,607
|
|
$
6,272,933
|
|
$
10,001,209
|
|
$
17,115,988
|
|
|
|
|
|
|
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
510,944
|
|
259,921
|
|
983,281
|
|
520,387
|
Restructuring expense
(1)
|
|
-
|
|
-
|
|
1,146,045
|
|
-
|
Separation costs
|
|
-
|
|
-
|
|
672,025
|
|
290,439
|
Tax effect of
adjustments
|
|
(107,298)
|
|
(51,568)
|
|
(588,284)
|
|
(144,489)
|
|
|
|
|
|
|
|
|
|
Non-GAAP net
income
|
|
$
5,790,253
|
|
$
6,481,286
|
|
$
12,214,276
|
|
$
17,782,325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income
per share
|
|
$
0.79
|
|
$
0.88
|
|
$
1.66
|
|
$
2.43
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
|
$
0.79
|
|
$
0.88
|
|
$
1.66
|
|
$
2.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of basic net income per share
|
7,344,955
|
|
7,334,212
|
|
7,340,046
|
|
7,306,665
|
|
|
|
|
|
|
|
|
|
Shares used in
computation of diluted net income per share
|
7,366,768
|
|
7,359,034
|
|
7,363,373
|
|
7,347,701
|
|
|
|
|
|
|
|
|
|
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
|
|
$
179,450
|
|
$
143,185
|
|
$
461,881
|
|
$
454,042
|
Separation
costs
|
|
-
|
|
-
|
|
(31,053)
|
|
-
|
Non-GAAP research and
development expenses
|
|
$
179,450
|
|
$
143,185
|
|
$
430,828
|
|
$
454,042
|
|
|
|
|
|
|
|
|
|
General and
Administrative expense reconciliation:
|
|
|
|
|
|
|
|
|
GAAP general and
administrative expenses
|
|
$
3,064,484
|
|
$
1,978,078
|
|
$
10,226,391
|
|
$
6,613,362
|
Stock-based
compensation
|
|
(510,944)
|
|
(259,921)
|
|
(983,281)
|
|
(520,387)
|
Separation
costs
|
|
-
|
|
-
|
|
(640,972)
|
|
(290,439)
|
Non-GAAP general and
administrative expenses
|
|
$
2,553,540
|
|
$
1,718,157
|
|
$
8,602,138
|
|
$
5,802,536
|
BioSpecifics
Technologies Corp.
|
Selected Condensed
Consolidated Balance Sheet Data
|
|
|
|
(Unaudited)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2020
|
|
2019
(1)
|
Cash and cash
equivalents
|
|
$
2,873,726
|
|
$
4,999,183
|
Investments
|
|
118,166,637
|
|
100,808,942
|
Accounts
receivable
|
|
13,593,641
|
|
19,065,919
|
Working
capital
|
|
100,528,206
|
|
107,848,984
|
Total
assets
|
|
137,270,096
|
|
126,653,268
|
Deferred tax
liabilities
|
|
307,457
|
|
572,660
|
Total stockholders'
equity
|
|
135,314,989
|
|
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.