BioSpecifics Technologies: Microcap At Inflection Point Has Upside Potential


  • BioSpecifics is an interesting microcap that licenses an injectable collagenase clostridium histolyticum ("CCH") for multiple indications to partner Endo International.
  • The company earned royalties of $38.2m in 2019 and $9m in Q120 from XIAFLEX®, the only FDA approved neurosurgical treatment for Peyronie's Disease and Dupuytren's contracture.
  • This month, BioSpecifics and Endo saw injectable CCH approved for treatment of cellulite - a potential multi-billion dollar market opportunity.
  • BioSpecifics is also advancing CCH as a treatment for adhesive capsulitis and plantar fibromatosis, providing investors with further upside opportunities.
  • The company filed a $200m shelf in June which suggests BioSpecifics may be looking at options outside of the Endo relationship, with a new management team in place.
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Investment Thesis

BioSpecifics Technologies Corp. 5-year share price performance. Source: TradingView

BioSpecifics (NASDAQ:BSTC) is a small microcap with a market cap of just $474m and revenues of $38.1m in 2019, but the company is entering an exciting phase in its development with the recent FDA approval of its injectable collagenase clostridium histolyticum ("CCH") treatment for cellulite.

BioSpecifics owns and controls the patents for its CCH, marketed and sold as Xiaflex by Endo International (ENDP) currently as a treatment for Dupuytren's contracture ("DC"), and Peyronie's disease ("PD"), and earns royalty payments in the low double digits from Endo's sales - which were $89m in Q120, and $328m in FY19.

That provides a nice income stream for BioSpecifics. The company's net profit margins in FY19 and Q120 were 63% and 47% respectively, and its cash burn is minimal - OPEX in 2017, 2018 and 2019 respectively was $9.2m, $9.8m and $9.6m and the company has no debt to speak of - total liabilities in 2019 were just $2.2m, whilst net income was $24.5m.

Having recently filed for a $200m shelf funding agreement, and with $123m of near term assets and a new management team in place, as well as new board members, BioSpecifics could be set for a period of dynamic growth.

On July 6th Endo won FDA approval to market Qwo for treatment of moderate to severe cellulite in the buttocks of adult women. Qwo also uses BioSpecifics' CCH enzyme, and will target a market that has been forecast to reach $1.5bn in size by 2026, potentially earning BioSpecifics an extra >$100m of annual revenues over the medium to long term.

In addition, BioSpecifics and Endo are hoping to secure approval of Xiaflex for Adhesive Capsulitis - an inflammation or thickening of the shoulder capsule, and plantar fibrosis - a cellulite-related foot problem, potentially opening up 2 further

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This article was written by

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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BSTC over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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