WILMINGTON - 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.
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.
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.
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.
Contact:
Tel: 302-842-8450
BIOSPECIFICS TECHNOLOGIES CORP. 
