Update: BioSpecifics Technologies Earnings

Summary

BioSpecifics reported second quarter 2014 total revenue of $2.7 million, a decrease of 19% year-over-year.

Net income came in at $0.6 million or $0.09 per basic share, compared to net income of $1.0 million or $0.16 per basic share in the year-ago period.

In my original analysis I said that XIAFLEX could boost BioSpecifics' revenue and earnings significantly.

The company saw significant growth in revenues from XIAFLEX in the United States in the second quarter, most notably in Peyronie's disease, which confirms my view.

BioSpecifics Technologies (NASDAQ:BSTC) reported second quarter 2014 total revenue of $2.7 million, compared to $3.3 million for the same period in 2013, a 19% decrease. The company's net income came in at $0.6 million or $0.09 per basic share for the quarter, compared to net income of $1.0 million or $0.16 per basic share for the same period in 2013. The company's revenue and earnings declined primarily as result of the August 2013 expiration of the company's right to receive earn-out payments on Santyl. However, increased XIAFLEX royalties partially offset the decline in revenue.

BioSpecifics owns, co-owns and controls patents and patent applications for XIAFLEX and is entitled to get royalties until 2028 from Auxilium (NASDAQ:AUXL) for Dupuytren's Contracture, Peyronie's Disease, Frozen Shoulder and Cellulite. Thomas L. Wegman, President of BioSpecifics, said, "This was a momentous quarter of milestones for XIAFLEX both commercially and clinically. We saw significant growth in revenues from XIAFLEX U.S. sales, most notably in Peyronie's disease. We are particularly pleased to see the number of vials shipped in the second quarter of 2014; 565 in April, 775 in May and then almost double that number in June with 1,412 vials shipped. This was a significant increase over the first quarter shipments of 598 vials."

In my original article I mentioned that XIAFLEX could boost BioSpecifics' earnings massively. The company's net revenues from XIAFLEX in the United States for the second quarter of 2014 increased 75% to $26.3 million over the second quarter of 2013. Since BioSpecifics is mainly an R&D company and the royalties it earns constitute most of its revenues, its earnings are heavily correlated with its revenues. The company's operating costs largely consist of R&D and SG&A expenses. I believe that going ahead the company will earn significantly higher royalties from XIAFLEX. I'd recommend buying the stock on significant dips. For a comprehensive view on XIAFLEX, read Auxilium earnings update.

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