BioSpecifics Technologies Corp. (NASDAQ: BSTC), a biopharmaceutical company developing first in class collagenase-based products marketed as XIAFLEX® (collagenase clostridium histolyticum or CCH) in the U.S. and XIAPEX® in the EU, today announced its financial results for the fourth quarter and full year ended December 31, 2014 and provided a corporate update.
"This past year has been a year of tremendous growth commercially for XIAFLEX. In the U.S., we saw a significant increase in total XIAFLEX revenues in 2014, driven by the launch in Peyronie's disease. This increase was evident in the royalties and mark-up on COGS revenues in 2014, which more than doubled compared to the previous year. Revenues exceeded expectations and we are eager to see rising sales of XIAFLEX for patients in the U.S. and in Europe in 2015," said Thomas L. Wegman, President of BioSpecifics. "We are also excited about the expansion into new territories, with the approval of XIAPEX for Peyronie's disease in Europe by the EU Commission, and the current review in Japan for approval in Dupuytren's contracture, with an expected decision in mid-2015."
"We are very pleased with Endo's commitment to advancing the CCH pipeline based on its belief in its vast potential. Endo stated its intention to take canine lipoma forward and is also considering opt-in rights to human lipomas, currently in a Phase 2 study. Uterine fibroids and capsular contracture of the breast are two conditions with limited therapeutic options that have been highlighted by Endo as promising pipeline programs. Endo also recently reported preliminary data for the Phase 2b frozen shoulder syndrome trial, which showed improvement in outcome measures from baseline but also an unexpected placebo response with exercise. A full analysis of the study is underway which will involve a deeper look at patient subsets such as those presenting with more recalcitrant symptoms. We expect the next trial to be initiated by the end of 2015. There is also progress being made with the cellulite trial and we look forward to the initiation of a Phase 2b study by the end of the year. Within our own development progress, we expect to complete enrollment in the Phase 2 human lipoma study in the first half of 2015. Endo will have the option to license the rights to this indication after we submit a full study report for their review."
Fourth Quarter & Full Year 2014 Financial Results
BioSpecifics reported net income of $1.9 million for the fourth quarter ended December 31, 2014, or $0.29 per basic share and $0.27 per share on a fully diluted basis, compared to net income of $1.7 million, or $0.27 per basic share and $0.25 per share on a fully diluted basis for the same period in 2013. For the full year ended December 31, 2014, the Company reported a net income of $4.6 million, or $0.72 per basic share and $0.66 per share on a fully diluted basis, compared to net income of $5.3 million, or $0.83 per basic share and $0.76 per share on a fully diluted basis for the same time period in 2013.
Total revenue for the fourth quarter ended December 31, 2014 was $4.7 million, compared to $4.1 million for the same period in 2013. For the full year ended December 31, 2014, total revenue was $14.1 million, compared to $14.5 million for the same period in 2013. Increased XIAFLEX revenues in 2014 more than compensated for the termination of earn-out revenues recognized under the Company's agreement with DFB Biotech, Inc. (DFB) in 2013 ($3.5 million). The decreased total revenue in 2014 was due to lower milestone payments from Auxilium Pharmaceuticals, Inc. (Auxilium).
Royalty and mark-up on cost of goods sold (COGS) revenues recognized under BioSpecifics' agreement with Auxilium for the fourth quarter ended December 31, 2014 were $4.1 million, compared to $2.0 million for the same period in 2013. This represents an increase of approximately 105%. This increase in royalties and mark-up on COGS was due to increased net sales of XIAFLEX for the treatment of Dupuytren's contracture and Peyronie's disease during the 2014 period, as reported by Auxilium and recognized by BioSpecifics with a one quarter lag. Total royalty, mark-up on COGS and earn-out revenues for the year ended December 31, 2014 increased to $13.0 million as compared to $11.8 million in the same period in 2013.
Licensing revenue consists of licensing fees, sublicensing fees and milestones. Licensing revenue for the fourth quarter ended December 31, 2014 was $0.5 million, compared to $2.0 million in the same period in 2013. Licensing revenue, for the year ended December 31, 2014, was $1.1 million, compared to $2.7 million in the same period in 2013.
Research and development expenses for the fourth quarter ended December 31, 2014 and 2013 were $0.4 million in each period. For the year ended December 31, 2014, research and development expenses were $1.3 million, compared to $1.5 million in the same period in 2013.
General and administrative expenses for the fourth quarter ended December 31, 2014 were $1.4 million, compared to $1.1 million for the same period in 2013. For the year ended December 31, 2014, general and administrative expenses were $5.8 million, compared to $5.0 million in the same period in 2013.
Provision for income taxes for the fourth quarter ended December 31, 2014 were $1.0 million compared to $0.9 million for the same period in 2013. For the year ended December 31, 2014, provision for income taxes were $2.4 million as compared to $2.7 million in the same period of 2013.
As of December 31, 2014, BioSpecifics had cash and cash equivalents, and investments of $22.0 million, compared to $17.5 million on September 30, 2014.
- BioSpecifics' strategic partner Auxilium was acquired by Endo International plc (Endo), with the transaction closing on January 29, 2015. Auxilium is now a wholly-owned subsidiary of Endo, and XIAFLEX will be marketed by Endo's specialty pharmaceuticals business unit in the U.S. for Dupuytren's contracture and Peyronie's disease. Endo will also continue to manage the research and development of CCH.
- BioSpecifics will hold its Annual Meeting of Stockholders on Thursday, June 18, 2015 in New York City.
XIAFLEX Commercial Highlights and Expansion:
The following commercial highlights occurred in the fourth quarter of 2014 and in recent months:
- XIAPEX approved in the EU for Peyronie's disease. In January 2015, the EU Commission approved XIAPEX for the treatment of adult men with Peyronie's disease with a palpable plaque and curvature deformity of at least 30 degrees at the start of therapy. This followed a positive opinion by the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA). XIAPEX is marketed in the EU by Swedish Orphan Biovitrum AB (Sobi).
- XIAFLEX label expansion approved in the U.S. for Dupuytren's contracture. In October 2014, the U.S. Food and Drug Administration (FDA) approved the supplemental Biologics License Application (sBLA) submitted by Auxilium for XIAFLEX for the treatment of up to two Dupuytren's contracture cords in the same hand during a single treatment visit.
BioSpecifics manages the development of CCH for human lipomas and uterine fibroids, and initiates the development of CCH in new potential indications. Endo's licensed rights cover three pipeline indications including frozen shoulder syndrome, cellulite and canine lipomas. On March 12, 2015, Endo provided a pipeline update for CCH, which included the following highlights:
- Preliminary data presented from the Phase 2b study of CCH in frozen shoulder syndrome. This was a double-blind, placebo-controlled Phase 2b study in 321 adults in the U.S. and Australia. It was designed to evaluate the change in forward flexion and improvement in function and pain. The results showed a strong, similar drug effect as was seen in the Phase 2a study for key measures including forward flexion, shoulder abduction, external and internal rotation. Similar CCH patient improvement in pain was seen across both trials. There was also an increased and unexpectedly robust placebo effect in those patients who did not receive XIAFLEX and only performed home exercises. Endo anticipates that it will move into the next trial by year-end, following more full-scale analysis of the Phase 2b study results.
- Phase 2b study of CCH in cellulite expected to initiate by the end of 2015. Endo has met directly with the FDA to discuss protocols, endpoints and timelines and expects the start of a Phase 2b clinical trial by year-end 2015.
- Expansion of the pipeline announced with licensed indications, including canine lipoma. In November 2014, Auxilium exercised its option to expand its rights to CCH to include the potential treatment of canine lipomas. This prompted an opt-in milestone payment of $500,000 to BioSpecifics.
Endo also announced the potential expansion of its CCH development pipeline into currently un-licensed assets including uterine fibroids, human lipoma, and capsular contracture of the breast. Highlights from these programs include:
- In October 2014, promising preclinical data from a collaboration with Duke Medicine were presented on the potential of CCH in uterine fibroids at the Mechanotransduction in the Reproductive Tract conference. Data demonstrated that CCH can reduce the rigidity of human uterine fibroid tissue and potentially shrink uterine fibroid tumors.
- Phase 2 study of CCH for human lipomas enrolling. Enrollment in this Phase 2 study is expected to be completed in the first half of 2015. The study is an opt-in study and Endo will have the opportunity to expand the field of its license to include this indication based on a full analysis of the final data from this study.
Webcast and Conference Call
BioSpecifics will host a conference call today at 8:30 a.m. ET to discuss these fourth quarter and full year 2014 results.
BioSpecifics Technologies Corp.