On August 10, 2020 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 marketed as XIAFLEX in North America, reported its financial results for the second quarter ended June 30, 2020 (Press release, BioSpecifics Technologies, AUG 10, 2020, View Source [SID1234563356]).

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"While we anticipated an impact on second quarter 2020 royalty revenue due to COVID-19, our cash position remains strong, and we are projecting a rebound in XIAFLEX royalties in the second half of 2020. With the recent addition of Alex Monteith as our CBO, the approval of Qwo, or CCH-aaes, by the FDA and the initiation of patient dosing for XIAFLEX in plantar fibromatosis and adhesive capsulitis, we are well positioned to continue to execute on our strategic initiatives of expanding the uses of the XIAFLEX platform and adding additional assets to the BioSpecifics portfolio," said Joseph Truitt, Chief Executive Officer of BioSpecifics.

Second Quarter 2020 Financial Results
As of June 30, 2020, BioSpecifics had cash and cash equivalents and investments of $119.8 million, compared to $105.8 million as of December 31, 2019.

BioSpecifics reported GAAP net income of $0.1 million for the second quarter ended June 30, 2020, or $0.02 per basic share and $0.02 per share on a fully diluted basis, compared to GAAP net income of $6.4 million, or $0.88 per basic share and $0.87 per share on a fully diluted basis, for the same period in 2019.

BioSpecifics reported non-GAAP net income of $0.8 million for the second quarter ended June 30, 2020, or $0.11 per basic share and $0.11 per share on a fully diluted basis, compared to non-GAAP net income of $6.5 million, or $0.89 per basic share and $0.89 per share on a fully diluted basis, for the same period in 2019.

Total revenue for the second quarter ended June 30, 2020 was $3.9 million, compared to $8.9 million for the same period in 2019. Revenues decreased 56% year-over-year in the second quarter ended June 30, 2020, and 60% from the first quarter ended March 31, 2020, due to the impacts of the COVID-19 pandemic, 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 both the second quarter ended June 30, 2020 and for the same period in 2019. Non-GAAP research and development expenses for the second quarter ended June 30, 2020 were $0.1 million, compared to $0.2 million for the same period in 2019.

GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $4.0 million, compared to $1.7 million for the same period in 2019. Non-GAAP general and administrative expenses for the second quarter ended June 30, 2020 were $3.2 million, compared to $1.6 million for the same period in 2019.

Provision for income taxes for the second quarter ended June 30, 2020 were $24,000, compared to $1.1 million for the same period in 2019.

As of June 30, 2020, BioSpecifics had 7,344,955 shares of common stock outstanding.

XIAFLEX Franchise Highlights

BioSpecifics’ royalty revenues from the XIAFLEX commercial franchise down 56% year-over-year: Royalty revenue from XIAFLEX for the second quarter was down as a result of the impacts of the COVID-19 pandemic, including, without limitation, physician office closures and a decline in patients electing to be treated. Endo expects quarter-over-quarter revenue growth in the third quarter of 2020 to be in the mid to high 40 percent range as physician and patient activities continue returning toward pre-COVID-19 levels.
Qwo (collagenase clostridium histolyticum-aaes), the first and only U.S Food and Drug Administration (FDA)-approved injectable treatment for cellulite : In July 2020, CCH-aaes was approved by the FDA for the treatment of cellulite. Endo’s commercial launch is expected to occur in the first half of 2021.
New studies for plantar fibromatosis and adhesive capsulitis initiated in June and July 2020, respectively: Endo dosed the first patient in a clinical trial in plantar fibromatosis in June 2020 and adhesive capsulitis in July 2020. Plantar fibromatosis is a non-malignant thickening of the feet’s deep connective tissue or fascia that occurs in five to 11 percent of the adult population in the U.S. Adhesive capsulitis, also known as frozen shoulder, is an inflammation and thickening of the shoulder capsule due to collagen which causes decreased motion in the shoulder that occurs in two to five percent of the adult population in the U.S. There are currently no FDA-approved pharmaceutical therapies available to treat either condition.
Corporate Highlights

Alex Monteith appointed Chief Business Officer: In July 2020, BioSpecifics announced the appointment of Alex Monteith as Senior Vice President and Chief Business Officer. Mr. Monteith has extensive business development experience and industry knowledge, and last served as Vice President of Business Development for Deerfield Management, LLC.
Non-GAAP Financial Information
This press release 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 non-GAAP financial measures will be used by certain investors 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 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. See the tables below for a reconciliation of GAAP to non-GAAP measures.