Delaware
|
11-3054851
|
|
(State or Other Jurisdiction
of Incorporation or Organization)
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
Emerging growth company ☐
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $0.001 par value per share
|
BSTC
|
The Nasdaq Capital Market
|
Page
|
||
PART I – FINANCIAL INFORMATION
|
||
ITEM 1.
|
Financial Statements
Unaudited Condensed
Consolidated Financial Statements
|
|
4
|
||
5
|
||
6
|
||
7
|
||
8
|
||
ITEM 2.
|
18 | |
ITEM 3.
|
24 | |
ITEM 4.
|
24 |
PART II – OTHER INFORMATION
|
||
ITEM 1.
|
25 | |
ITEM 1A.
|
25 | |
ITEM 2.
|
25 | |
ITEM 6.
|
26 | |
27 |
Item 1: |
Condensed Consolidated Financial Statements
|
March 31,
2019
|
December 31,
2018
|
|||||||
(unaudited)
|
(audited)
|
|||||||
Assets
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
17,597,430
|
$
|
13,176,452
|
||||
Short term investments
|
66,899,660
|
67,707,143
|
||||||
Accounts receivable
|
16,476,790
|
16,518,687
|
||||||
Deferred royalty buy-down
|
-
|
184,931
|
||||||
Prepaid expenses and other current assets
|
604,392
|
646,749
|
||||||
Total current assets
|
101,578,272
|
98,233,962
|
||||||
Long-term investments
|
3,635,115
|
1,099,834
|
||||||
Deferred tax assets, net
|
313,768
|
313,768
|
||||||
Patent costs, net
|
425,678
|
444,478
|
||||||
Total assets
|
$
|
105,952,833
|
$
|
100,092,042
|
||||
Liabilities and stockholders’ equity
|
||||||||
Current liabilities:
|
||||||||
Accounts payable and accrued expenses
|
$
|
1,944,663
|
1,798,588
|
|||||
Income tax payable
|
1,802,847
|
704,934
|
||||||
Total current liabilities
|
3,747,510
|
2,503,522
|
||||||
Commitments and Contingencies
|
||||||||
Stockholders’ equity:
|
||||||||
Series A Preferred stock, $.50 par value, 700,000 shares authorized; none outstanding
|
-
|
-
|
||||||
Common stock, $.001 par value; 10,000,000 shares authorized; 7,740,167 and 7,738,167 shares issued, 7,277,902
and 7,275,902 shares outstanding as of March 31, 2019 and December 31, 2018, respectively
|
7,740
|
7,738
|
||||||
Additional paid-in capital
|
36,502,652
|
36,302,446
|
||||||
Retained earnings
|
76,593,314
|
72,176,719
|
||||||
Treasury stock, 462,265 shares at cost as of March 31, 2019 and December 31, 2018
|
(10,898,383
|
)
|
(10,898,383
|
)
|
||||
Total stockholders’ equity
|
102,205,323
|
97,588,520
|
||||||
Total liabilities and stockholders’ equity
|
$
|
105,952,833
|
$
|
100,092,042
|
Three Months Ended
March 31,
|
||||||||
2019
|
2018
|
|||||||
Revenues:
|
||||||||
Royalties
|
$
|
8,129,141
|
$
|
7,085,000
|
||||
Licensing revenues
|
-
|
4,409
|
||||||
Total Revenues
|
8,129,141
|
7,089,409
|
||||||
Costs and expenses:
|
||||||||
Research and development
|
149,536
|
195,227
|
||||||
General and administrative
|
2,907,160
|
2,069,633
|
||||||
Total Costs and Expenses
|
3,056,696
|
2,264,860
|
||||||
Operating income
|
5,072,445
|
4,824,549
|
||||||
Other income:
|
||||||||
Interest income
|
449,425
|
217,951
|
||||||
Other income
|
-
|
14,678
|
||||||
449,425
|
232,629
|
|||||||
Income before income tax expense
|
5,521,870
|
5,057,178
|
||||||
Provision for income tax expense
|
(1,105,275
|
)
|
(1,078,574
|
)
|
||||
Net income
|
$
|
4,416,595
|
$
|
3,978,604
|
||||
Basic net income per share
|
$
|
0.61
|
$
|
0.55
|
||||
Diluted net income per share
|
$
|
0.60
|
$
|
0.54
|
||||
Shares used in computation of basic net income per share
|
7,276,885
|
7,192,900
|
||||||
Shares used in computation of diluted net income per share
|
7,338,128 |
7,303,336
|
Common Stock
Shares
Amount
|
Additional
Paid in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Stockholders’
Equity
Total
|
||||||||||||||||||||
Balances - December 31, 2017
|
7,600,167
|
$
|
7,600
|
$
|
33,468,323
|
$
|
41,939,115
|
$
|
(7,898,200
|
)
|
$
|
67,516,838
|
||||||||||||
Adjustment due to adoption of ASC606
|
-
|
-
|
-
|
10,184,335
|
-
|
10,184,335
|
||||||||||||||||||
Issuance of common stock upon stock option exercise
|
10,000
|
10
|
132,390
|
-
|
-
|
132,400
|
||||||||||||||||||
Stock compensation expense
|
-
|
-
|
32,512
|
-
|
-
|
32,512
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
3,978,604
|
-
|
3,978,604
|
||||||||||||||||||
Balances – March 31, 2018
|
7,610,167
|
$
|
7,610
|
$
|
33,633,225
|
$
|
56,102,054
|
$
|
(7,898,200
|
)
|
$
|
81,844,689
|
Common Stock
Shares
Amount
|
Additional
Paid in
Capital
|
Retained
Earnings
|
Treasury
Stock
|
Stockholders’
Equity
Total
|
||||||||||||||||||||
Balances - December 31, 2018
|
7,738,167
|
$
|
7,738
|
$
|
36,302,446
|
$
|
72,176,719
|
$
|
(10,898,383
|
)
|
$
|
97,588,520
|
||||||||||||
Issuance of common stock upon stock option exercise
|
2,000
|
2
|
58,418
|
-
|
-
|
58,420
|
||||||||||||||||||
Stock compensation expense
|
-
|
-
|
141,788
|
-
|
-
|
141,788
|
||||||||||||||||||
Net income
|
-
|
-
|
-
|
4,416,595
|
-
|
4,416,595
|
||||||||||||||||||
Balances – March 31, 2019
|
7,740,167
|
$
|
7,740
|
$
|
36,502,652
|
$
|
76,593,314
|
$
|
(10,898,383
|
)
|
$
|
102,205,323
|
|
Three Months Ended
March 31,
|
||||||||
Cash flows from operating activities:
|
2019
|
2018
|
||||||
Net income
|
$
|
4,416,595
|
$
|
3,978,604
|
||||
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
|
||||||||
Amortization
|
153,261
|
699,703
|
||||||
Stock-based compensation expense
|
141,788
|
32,512
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
41,897
|
(6,955,839
|
)
|
|||||
Income tax payable
|
1,097,913
|
1,067,002
|
||||||
Prepaid expenses and other current assets
|
42,359
|
42,582
|
||||||
Patent costs
|
-
|
(44,598
|
)
|
|||||
Accounts payable and accrued expenses
|
146,073
|
308,152
|
||||||
Deferred revenue
|
-
|
(4,409
|
)
|
|||||
Net cash provided by (used in) operating activities
|
6,039,886
|
(876,291
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Maturity of marketable investments
|
20,152,229
|
20,287,000
|
||||||
Purchases of marketable investments
|
(21,829,557
|
)
|
(14,318,018
|
)
|
||||
Net cash (used in) provided by investing activities
|
(1,677,328
|
)
|
5,968,982
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from stock option exercises
|
58,420
|
132,400
|
||||||
Net cash provided by financing activities
|
58,420
|
132,400
|
||||||
Increase in cash and cash equivalents
|
4,420,978
|
5,225,091
|
||||||
Cash and cash equivalents at beginning of year
|
13,176,452
|
7,333,810
|
||||||
Cash and cash equivalents at end of period
|
$
|
17,597,430
|
$
|
12,558,901
|
||||
Supplemental disclosures of cash flow information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
-
|
-
|
||||||
Taxes
|
$
|
7,362
|
-
|
|
• |
An agreement with Swedish Orphan Biovitrum AB (“Sobi”), pursuant to which Sobi has marketing rights for Xiapex® for the treatment of DC and PD in Europe and certain
Eurasian countries;
|
|
• |
An agreement with Asahi Kasei Pharma Corporation (“Asahi”), pursuant to which Asahi has the right to commercialize XIAFLEX® for the treatment of DC and PD in Japan; and
|
|
• |
An agreement with Actelion Pharmaceuticals Ltd. (“Actelion”), pursuant to which Actelion obtained marketing and commercial rights for XIAFLEX® in Australia and New Zealand.
|
|
Maturities as of
March 31, 2019
|
Maturities as of
December 31, 2018
|
||||||||||||||
1 Year or
Less
|
Greater than 1
Year
|
1 Year or
Less
|
Greater
than 1
Year
|
|||||||||||||
Municipal bonds
|
$
|
11,560,848
|
$
|
-
|
$
|
1,295,350
|
$
|
-
|
||||||||
Corporate bonds
|
49,787,288
|
3,435,177
|
61,321,162
|
1,099,834
|
||||||||||||
Certificates of deposit
|
5,551,524
|
199,938
|
5,090,631
|
|||||||||||||
Total
|
$
|
66,899,660
|
$
|
3,635,115
|
$
|
67,707,143
|
$
|
1,099,834
|
March 31, 2019
|
Type of Instrument
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Cash equivalents
|
Institutional Money Market
|
$
|
10,370,601
|
$
|
10,370,601
|
$
|
-
|
$
|
-
|
|||||||||
Cash equivalents
|
Municipal Bonds
|
330,000
|
330,000
|
-
|
-
|
|||||||||||||
Investments
|
Municipal Bonds
|
11,560,848
|
-
|
11,560,848
|
-
|
|||||||||||||
Investments
|
Corporate Bonds
|
53,222,465
|
-
|
53,222,465
|
-
|
|||||||||||||
Investments
|
Certificates of Deposit
|
5,751,462
|
5,751,462
|
-
|
-
|
December 31, 2018
|
Type of Instrument
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Cash equivalents
|
Institutional Money Market
|
$
|
6,078,025
|
$
|
6,078,025
|
$
|
-
|
$
|
-
|
|||||||||
Investments
|
Municipal Bonds
|
1,295,350
|
-
|
1,295,350
|
-
|
|||||||||||||
Investments
|
Corporate Bonds
|
62,420,996
|
-
|
62,420,996
|
-
|
|||||||||||||
Investments
|
Certificates of Deposit
|
5,090,631
|
5,090,631
|
-
|
-
|
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at December 31, 2018
|
175,500
|
$
|
37.73
|
6.33
|
$
|
4,014,235
|
||||||||||
Grants
|
-
|
-
|
-
|
-
|
||||||||||||
Exercised
|
(2,000
|
)
|
29.21
|
-
|
66,240
|
|||||||||||
Outstanding at March 31, 2019
|
173,500
|
$
|
37.83
|
6.14
|
$
|
4,251,610
|
||||||||||
Exercisable at March 31, 2019
|
92,000
|
$
|
26.13
|
3.51
|
$
|
3,330,690
|
March 31,
2019
|
December 31,
2018
|
|||||||
Trade accounts payable
|
$
|
60,125
|
$
|
122,199
|
||||
Accrued legal and other professional fees
|
843,117
|
308,725
|
||||||
Accrued payroll and related costs
|
427,705
|
173,123
|
||||||
Third party royalties
|
379,000
|
1,168,837
|
||||||
Other accruals
|
234,716
|
25,704
|
||||||
Total
|
$
|
1,944,663
|
$
|
1,798,588
|
March 31,
2019
|
December 31,
2018
|
|||||||
Patents
|
$
|
1,046,216
|
$
|
1,046,216
|
||||
Accumulated amortization
|
(620,538
|
)
|
(601,738
|
)
|
||||
$
|
425,678
|
$
|
444,478
|
April 1, 2019 – December 31, 2019
|
$
|
56,400
|
||
2020
|
58,300
|
|||
2021
|
41,500
|
|||
2022
|
41,400
|
|||
2023
|
41,500
|
|||
Thereafter
|
186,600
|
|
• |
An agreement with Swedish Orphan Biovitrum AB (“Sobi”), pursuant to which Sobi has marketing rights for Xiapex® for the treatment of DC and PD in Europe and certain
Eurasian countries;
|
|
• |
An agreement with Asahi Kasei Pharma Corporation (“Asahi”), pursuant to which Asahi has the right to commercialize XIAFLEX® for the treatment of DC and PD in Japan; and
|
|
• |
An agreement with Actelion Pharmaceuticals Ltd. (“Actelion”), pursuant to which Actelion obtained marketing and commercial rights for XIAFLEX® in Australia and New Zealand.
|
Three Months Ended
March 31, 2019
|
Three Months Ended
March 31, 2018
|
|||||||
Program
|
||||||||
Uterine Fibroids
|
$
|
60,285
|
$
|
22,331
|
||||
Pre-clinical/other research projects
|
89,251
|
172,896
|
||||||
Total R&D expenses
|
$
|
149,536
|
$
|
195,227
|
|
• |
the nature, timing and estimated costs of the efforts necessary to complete the development of our drug candidate projects;
|
|
• |
the anticipated completion dates for our drug candidate projects;
|
|
• |
the scope, rate of progress and cost of our clinical trials that we are currently running or may commence in the future with respect to our drug candidate projects;
|
|
• |
the scope, rate of progress of our preclinical studies and other R&D activities related to our drug candidate projects;
|
|
• |
clinical trial results for our drug candidate projects;
|
|
• |
the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights relating to our drug candidate projects;
|
|
• |
the terms and timing of any strategic alliance, licensing and other arrangements that we have or may establish in the future relating to our drug candidate projects;
|
|
• |
the cost and timing of regulatory approvals with respect to our drug candidate projects; and
|
|
• |
the cost of establishing clinical supplies for our drug candidate projects.
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes‑Oxley Act of 2002
|
BIOSPECIFICS TECHNOLOGIES CORP.
|
|
(Registrant)
|
|
Date: May 10, 2019
|
/s/ Ronald E. Law
|
Ronald E. Law
|
|
Principal Executive Officer
|
|
1. |
I have reviewed this annual report on Form 10-K of BioSpecifics Technologies Corp. for the
quarterly
period ended
March 31, 2019;
|
|
2. |
Based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) |
Disclosed in this report any change in the
registrant’s
internal control over financial reporting that
occurred during the
registrant’s
most recent fiscal quarter (the
registrant’s
fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
|
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
|
1. |
I have reviewed this annual report on Form 10-K of BioSpecifics Technologies Corp. for the quarterly period ended May 10, 2019;
|
|
2. |
Based on my knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3. |
Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
(d) |
Disclosed in this report any change in the
registrant’s
internal control over financial reporting that
occurred during the
registrant’s
most recent fiscal quarter (the
registrant’s
fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and to the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect
the registrant’s ability to record, process, summarize and report financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date:
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May 10, 2019
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/s/ Ronald Law
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Ronald Law
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Principal Executive Officer
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/s/ Pat Caldwell
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Pat Caldwell
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Principal Financial Officer
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