BioSpecifics reports $0.3M net income for third quarter 2011 vs. $0.5M net loss for third quarter 2010

BioSpecifics Technologies Corp. (NASDAQ: BSTC), a biopharmaceutical company developing first in class collagenase-based products marketed as XIAFLEX® in the U.S. and XIAPEX® in Europe today announced its financial results for the third quarter ended September 30, 2011 and provided a corporate update. For the quarter, the Company reported net income of $0.3 million or $0.04 per share on a basic and on a fully diluted basis.

"We were pleased that, as promised, we continue to be profitable and expect to be profitable on an ongoing annual basis," reflected Thomas L. Wegman, President of BioSpecifics. "We look forward to the new U.S. commercialization initiatives for XIAFLEX for Dupuytren's contracture as well as sales progress for XIAPEX in Europe and Eurasia. Regarding clinical development of XIAFLEX, we expect the Phase 3 top-line data for Peyronie's disease in the second quarter of next year. Our recent settlement with Auxilium has ushered in a new spirit of cooperation concerning new clinical investigations and we will initiate our internal human and canine lipoma clinical trials shortly. We now plan to collaboratively expand the use of XIAFLEX into six clinical indications and we know that XIAFLEX has strong potential for the treatment of a wide variety of medical conditions because the extensive clinical experience is very compelling."  

Financial Results

BioSpecifics reported net income of $0.3 million for the third quarter of 2011, or $0.04 per basic and diluted share, compared to a net loss of $0.5 million, or $0.08 per basic and diluted common share, for the same period in 2010.

Total revenue for the third quarter of 2011 was $1.9 million, compared to $1.0 million for the same period in 2010.

Royalty, mark-up on cost of goods sold, and earn-out revenues for the third quarter of 2011 were $1.8 million, compared to $0.8 million for the same period in 2010. Royalty and mark-up on cost of goods sold revenues recognized under the Company's agreement with Auxilium Pharmaceuticals, Inc. (Auxilium) for the third quarter of 2011 were $1.1 million, compared to $0.6 million for the same period in 2010. Royalty revenues recognized from DFB Biotech, Inc. for the third quarter of 2011 were $0.8 million, compared to $0.6 million for the same period in 2010.

Licensing revenue recognized from Auxilium for the third quarters of 2011 and 2010 was $0.1 million in each period. These licensing revenues related to cash payments received in prior years and amortized over the expected development period.

Consulting revenues recognized for the third quarters of 2011 and 2010 were zero and $0.1 million, respectively. The decrease in the 2011 period was due to the expiration of the consulting obligations under the DFB Agreement in March 2011.

Research and development expenses for the third quarters of 2011 and 2010 were $0.2 million in each period. Research and development expenses include, but are not limited to, internal costs, such as salaries and benefits, costs of materials, lab expense, facility costs and overhead. Research and development expenses also consist of third party costs, such as medical professional fees, product costs used in clinical trials, consulting fees and costs associated with clinical study arrangements.

General and administrative expenses for the third quarter of 2011 were $1.2 million, compared to $1.3 million for the same period in 2010. The decrease in general and administrative expenses was due to lower stock based compensation and consulting services partially offset by general legal expenses, director fees and third party royalties.

As of September 30, 2011, BioSpecifics had cash and cash equivalents and investments of $8.8 million, compared to $7.8 million on June 30, 2011.

Recent Corporate Highlights:

• Auxilium reported worldwide net revenues for XIAFLEX for the treatment of Dupuytren's contracture of $13.1 million for the third quarter of 2011; $10.3 million of which were in the U.S.
• XIAPEX is now available for sale in 9 EU markets: Austria, Denmark, Finland, Germany, Norway, Spain, Switzerland, Sweden, and the United Kingdom. BioSpecifics will receive 8.5% of the up to $15 million in additional regulatory milestone payments that Auxilium is eligible to receive from Pfizer Inc. (Pfizer) for Dupuytren's contracture, following Pfizer's first sale of XIAPEX in Italy and France, the two remaining major markets of the EU.
• At the end of August, Auxilium and BioSpecifics dismissed all pending litigation between the two companies and announced their plans to develop several additional indications using XIAFLEX in the near future.
  • Auxilium will advance XIAFLEX in the clinic for the treatment of Frozen Shoulder and cellulite.
  • BioSpecifics will advance XIAFLEX in the clinic for the treatment of human and canine lipomas.
• On November 2, 2011, Auxilium announced that the Center for Medicare and Medicaid Services (CMS) released the payment rates for the 2012 Current Procedural Terminology (CPT) codes that will be used with XIAFLEX for the treatment of adult Dupuytren's contracture patients with a palpable cord beginning January 1, 2012.

Upcoming Anticipated Milestones

• BioSpecifics XIAFLEX Clinical Indications:
  • BioSpecifics will initiate a 14 patient, single center dose escalation study for the treatment of human lipomas shortly.
  • BioSpecifics will initiate a Phase II study for the treatment of canine lipomas shortly. The study will evaluate 32 dogs randomized 1:1 XIAFLEX to placebo. At completion of this trial, Auxilium has the right to opt-in for this indication.
• Dupuytren's Contracture:
  • Pfizer will launch XIAPEX in additional major European markets: France and Italy.
  • Auxilium plans to report top-line results for its Phase IIIb Dupuytren's contracture multicord study in the second half of 2012. The study is anticipated to enroll approximately 60 patients.
  • BioSpecifics will recognize $637,000 in milestone payments in Q4 related to the launch in Spain by Pfizer in Q3.
• Additional XIAFLEX Clinical Indications:
  • Auxilium anticipates reporting top-line data in the second quarter of next year for the double-blind placebo-controlled Phase III program of XIAFLEX for the treatment of Peyronie's disease. Auxilium believes that potentially 3-5% of the adult Caucasian male population is affected by this disease.
  • Auxilium plans to initiate a Phase II trial of XIAFLEX for the treatment of Frozen Shoulder in the fourth quarter of 2011.
  • Auxilium plans to initiate a Phase I study for the treatment of cellulite in the first quarter of 2012.

SOURCE BioSpecifics Technologies Corp.