On November 9, 2016 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 reported its financial results for the third quarter ended September 30, 2016 and provided a corporate update (Press release, BioSpecifics Technologies, NOV 9, 2016, View Source [SID1234516537]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

"BioSpecifics concentrates on developing XIAFLEX for medically necessary indications, and we look forward to the initiation of our Phase 1 clinical trial for the treatment of uterine fibroids by the end of this year," said Thomas L. Wegman, President of BioSpecifics. "Our partner Endo continues to see XIAFLEX as a core U.S. branded product and growth driver going forward. Cellulite is their main focus for non-marketed indications and they plan to announce Phase 2b data upon the completion of that trial. Endo is conducting a full commercial assessment and analysis of the R&D pipeline which will determine the clinical trial timelines moving forward."

Third Quarter 2016 Financial Results
BioSpecifics reported net income of $3.1 million for the third quarter ended September 30, 2016, or $0.43 per basic share and $0.42 per share on a fully diluted basis, compared to net income of $2.9 million, or $0.42 per basic share and $0.39 per share on a fully diluted basis, for the same period in 2015.

Total revenue for the third quarter ended September 30, 2016 was $6.9 million, compared to $6.3 million for the same period in 2015. The increase in total revenue was due to increased royalties received and licensing fees related to the exercise of an opt-in right by Endo International plc (Endo) for the human lipoma indication.

Royalty and mark-up on cost of goods sold (COGS) revenues recognized under BioSpecifics’ agreement with Endo for the third quarter ended September 30, 2016 were $6.1 million, compared to $5.3 million for the same period in 2015, an increase of $0.8 million, or 15 percent. This increase in royalties and the mark-up on cost of goods sold was primarily due to the increase in sales of XIAFLEX for the treatment of Dupuytren’s contracture and Peyronie’s disease.

Licensing revenue consists of licensing fees, sublicensing fees and milestones. BioSpecifics recognized licensing fees related to the exercise of an opt-in right by Endo for the human lipoma indication of $750,000 for the three months ended September 30, 2016 as compared to zero in the corresponding 2015 period. In addition, the Company recognized certain licensing fees related to the cash payments received under the agreement with Endo in prior years and amortized them over the expected development period. For each of the three month periods ended September 30, 2016 and 2015, the Company recognized licensing revenue related to the development of injectable collagenase of approximately $12,000.

Milestone revenue recognized for the three months ended September 30, 2016 was zero as compared to $1.0 million for the corresponding 2015 period. The $1.0 million milestone revenue recognized in the corresponding 2015 period related to the first commercial sale of XIAFLEX by Asahi Kasei Pharma Corporation for the treatment of Dupuytren’s contracture in Japan.
Research and development (R&D) expenses for each of the third quarters ended September 30, 2016 and 2015 were $0.3 million.
General and administrative expenses for the third quarter ended September 30, 2016 were $1.8 million, compared to $1.7 million for the same period in 2015.

Provision for income taxes for the third quarter ended September 30, 2016 were $1.8 million, compared to $1.5 million for the same period in 2015.

As of September 30, 2016, BioSpecifics had cash and cash equivalents and investments of $51.3 million, compared to $37.1 million as of December 31, 2015.

XIAFLEX U.S. Commercial Highlights
On November 8, 2016, Endo reported U.S. commercial highlights for XIAFLEX for the third quarter of 2016 (Endo’s third quarter 2016 financials are reported in BioSpecifics’ fourth quarter 2016 financials). For the third quarter of 2016, U.S. net sales were $47.7 million, an increase of 19 percent compared to the third quarter of 2015.

CCH Pipeline Updates and Anticipated Upcoming Milestones
BioSpecifics manages the development of collagenase clostridium histolyticum (CCH) for uterine fibroids, and initiates the development of CCH in new potential indications, not licensed by Endo. In addition to Dupuytren’s contracture and Peyronie’s disease, Endo’s licensed rights include human and canine lipoma, adhesive capsulitis, cellulite, lateral hip fat and plantar fibromatosis.

BioSpecifics expects to initiate a Phase 1 clinical trial of CCH in uterine fibroids in the fourth quarter of 2016.
Top-line data for the Phase 2b clinical trial of CCH for cellulite will be reported upon the completion of that trial.
Endo has announced that they are conducting a full commercial assessment and analysis for the R&D pipeline to determine the clinical trial timelines moving forward.

BioSpecifics will present a company update at the upcoming Stifel 2016 Healthcare Conference on Tuesday, November 15, 2016 at 8:00 AM E.T. in New York, NY.