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 collagenase clostridium histolyticum, or CCH, marketed as XIAFLEX® in the U.S. and Xiapex® in Europe, today announced its financial results for the fourth quarter and full year ended December 31, 2015 and provided a corporate update.
"2015 was an important year of commercial growth as well as pipeline expansion for XIAFLEX. We reported full year revenue growth of 62% and earnings before and after tax growth of 107% over 2014 and in addition our partner Endo continues to show their commitment to the R&D pipeline. In November 2015, they exercised an early opt-in right for two new indications, lateral hip fat and plantar fibromatosis, and also started a Phase 2b trial in cellulite in February 2016," said Thomas L. Wegman, president of BioSpecifics. "Following a positive FDA meeting in late 2015, we look forward to starting a clinical trial in uterine fibroids in the second half of this year as well as reporting top-line data from our Phase 2 placebo-controlled opt-in trial for human lipoma in the second quarter of 2016."
Fourth Quarter and Full Year 2015 Financial Results
BioSpecifics reported net income of $2.7 million for the fourth quarter ended December 31, 2015, or $0.38 per basic share and $0.36 per share on a fully diluted basis, compared to net income of $1.9 million, or $0.29 per basic share and $0.27 per share on a fully diluted basis for the same period in 2014. For the full year ended December 31, 2015, the company reported a net income of $9.6 million, or $1.41 per basic share and $1.32 per share on a fully diluted basis, compared to net income of $4.6 million, or $0.72 per basic share and $0.66 per share on a fully diluted basis for the same period in 2014.
Total revenue for the fourth quarter ended December 31, 2015 was $6.1 million, compared to $4.6 million for the same period in 2014. For the full year ended December 31, 2015, total revenue was $22.8 million, compared to $14.0 million for the same period in 2014. The increase in total revenue in 2015 was due to the increased sales of XIAFLEX reported to BioSpecifics by its partner Endo International plc (Endo).
Royalty and mark-up on cost of goods sold (COGS) revenues recognized under BioSpecifics' agreement with Endo for the fourth quarter ended December 31, 2015 were $5.2 million, compared to $4.1 million for the same period in 2014. This represents an increase of approximately 26%. This increase in royalties and mark-up on COGS was due to increased net sales of XIAFLEX for the treatment of Peyronie's disease and a moderate increase in sales of XIAFLEX for the treatment of Dupuytren's contracture, as reported by Endo and recognized by BioSpecifics with a one quarter lag. Total royalty and mark-up on COGS revenues for the year ended December 31, 2015 increased to $20.8 million as compared to $13.0 million in the same period in 2014.
Licensing revenue consists of licensing fees, sublicensing fees and milestone payments. Licensing revenue recognized for the fourth quarter ended December 31, 2015 was $0.9 million, compared to $0.5 million in the same period in 2014. Licensing revenue for the year ended December 31, 2015, was $1.9 million, compared to $1.1 million in the same period in 2014.
Research and development expenses for the fourth quarter ended December 31, 2015 were $0.3 million, compared to $0.4 million in the same period in 2014. For the year ended December 31, 2015, research and development expenses were $1.0 million, compared to $1.3 million in the same period in 2014.
General and administrative expenses for the fourth quarter ended December 31, 2015 were $2.0 million, compared to $1.4 million for the same period in 2014. For the year ended December 31, 2015, general and administrative expenses were $7.3 million, compared to $5.8 million in the same period in 2014.
Provision for income taxes for the fourth quarter ended December 31, 2015 were $1.3 million compared to $1.0 million for the same period in 2014. For the year ended December 31, 2015, provision for income taxes were $4.9 million as compared to $2.4 million in the same period of 2014.
As of December 31, 2015, BioSpecifics had cash and cash equivalents, and investments of $37.1 million, compared to $22.0 million on December 31, 2014.
XIAFLEX Commercial Highlights
On February 29, 2016, Endo reported U.S. commercial highlights for the fourth quarter of 2015 (Endo's fourth quarter 2015 financials are reported in BioSpecifics' first quarter 2016 financials). For the fourth quarter of 2015, approximately 8,000 vials for Peyronie's disease and approximately 8,400 vials for Dupuytren's contracture were shipped in the U.S.
In September 2015, Asahi Kasei Pharma Corporation announced the first commercial sale of XIAFLEX for the treatment of Dupuytren's contracture in Japan. As a result, BioSpecifics recognized $0.9 million (net of foreign tax withholding) of a $1.0 million milestone from Endo in the third quarter of 2015 and will receive future royalties on net sales and potential sales-based milestone payments.
XIAFLEX Pipeline Updates and Anticipated Upcoming Milestones
BioSpecifics manages the development of XIAFLEX for human lipomas and uterine fibroids, and initiates the development of XIAFLEX in new potential indications. In addition to Dupuytren's contracture and Peyronie's disease, Endo's licensed rights include adhesive capsulitis, cellulite, canine lipoma, lateral hip fat and plantar fibromatosis. Endo has also discussed the potential expansion into currently un-licensed indications including uterine fibroids, human lipoma, capsular contracture of the breast, Dercum's disease, knee arthrofibrosis, urethral strictures, hypertrophic scars and keloids.
On February 17, 2016, Endo announced the initiation of a Phase 2b study of XIAFLEX for the treatment of cellulite. The study will enroll approximately 350 women aged 18 years or older. Each subject will receive up to three treatment sessions of (0.84 mg / session) or placebo with each treatment session occurring approximately 21 days apart. Twelve injections will be administered into cellulite dimples during each session across an entire treatment quadrant – left or right buttock or left or right posterior thigh. The primary endpoint is the proportion of composite responders at Day 71 defined as subjects with a 2-point improvement from baseline in the clinician-rated 5-point Photonumeric Cellulite Severity Scale (PCSS) and a 2-point improvement in the patient-rated PCSS. An independent 5-member panel of trained aesthetic clinicians will also evaluate pre-treatment and end-of-study photos using the PCSS.
On November 5, 2015, BioSpecifics announced that its partner Endo exercised an early opt-in right for XIAFLEX to include two new potential indications, lateral hip fat and plantar fibromatosis. The company received a $0.5 million opt-in fee for each indication in December 2015. As a result of Endo's early opt-in for these two indications, Endo is now responsible for all costs for future clinical development. All other terms and conditions of the agreement remain the same, however, including Endo's obligations with respect to developmental milestone payments and royalties and mark-up on COGS payments.
Following a positive U.S. Food and Drug Administration (FDA) meeting in late 2015, BioSpecifics expects to initiate a clinical trial of XIAFLEX in uterine fibroids in the second half of 2016.
The company also expects to report Phase 2 top-line results for its ongoing trial of XIAFLEX in human lipomas in the second quarter of 2016. 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.
On February 5, 2016, the company announced that it had entered into with Endo Global Ventures the First Amendment to the Second Amended and Restated Development and Licensing Agreement, by and between the company and Auxilium Pharmaceuticals, Inc., now a wholly-owned subsidiary of Endo (the "Auxilium Agreement"), to amend certain provisions of the Auxilium Agreement (the "First Amendment"). The First Amendment has an effective date of January 1, 2016. Pursuant to the First Amendment, the company and Endo Global Ventures mutually agreed that in exchange for an $8.25 million lump sum payment, BioSpecifics will not receive future additional mark-up on COGS for sales by non-affiliated sublicensees of Endo Global Ventures outside of the U.S.; provided, however, that Endo Global Ventures will still be required to pay a mark-up on COGS for sales made in the "Endo Territory," which will always include sales made in the U.S. and sales made in any other country where Endo Global Ventures sells the product directly or through affiliated sublicensees. BioSpecifics received this $8.25 million lump sum payment in February 2016 and will recognize this income over time based on sales by non-affiliated sublicensees of Endo Global Ventures outside of the U.S.
Additionally both companies agreed that Endo Global Ventures may opt-in early to indications, prior to the company's submission of a clinical trial report, with BioSpecifics' consent, such consent not to be unreasonably withheld. For early opt-ins, Endo Global Ventures will be required to make an opt-in payment of $0.5 million on a per indication basis. For regular opt-ins, Endo Global Ventures will be required to make an opt-in payment on a per indication basis, following the submission of a clinical trial report.
BioSpecifics will hold its Annual Meeting of Stockholders on Thursday, June 2, 2016 in New York City.
BioSpecifics Technologies Corp.