BioSpecifics to merge with Endo in $540M deal

WILMINGTON – BioSpecifics Technologies Corp. announced Monday morning that it has entered into a merger deal with pharmaceutical giant Endo International PLC worth $540 million.

As a small commercial-stage biopharmaceutical company, BioSpecifics develops injectable enzymes that break down collagen, a fibrous protein that can build up and cause debilitating conditions. It has a 16-year relationship with Endo, receiving royalties from licensing agreements on its product Xiaflex and the impending Qwo from the Ireland-based pharmaceutical maker.

The acquisition was set at a price of $88.50 per share of BioSpecifics’ stock, which closed trading Friday at $61.02 per share. The deal, unanimously approved by the boards of directors of both companies, is expected to close late this year with Endo funding the transaction with cash on hand.

The merger will drop one of the 15 publicly traded companies headquartered in Delaware off of the NASDAQ, where it traded as BSTC.

“Acquiring BioSpecifics is consistent with our strategic priority to expand and enhance our portfolio through additional investment in the significant long-term growth potential of both Xiaflex and Qwo – two of our most durable and differentiated products,” said Blaise Coleman, president and CEO of Endo, in a statement announcing the deal. “This transaction will also immediately enhance Endo’s adjusted EBITDA and create significant value for shareholders of both organizations.”

It was a short-lived Delaware life for BioSpecifics, which just relocated its corporate headquarters to the Wilmington suburbs from Long Island, N.Y., in April. The 30-year-old small company that reported only seven full-time employees last year has seen a rollercoaster year even outside of the COVID-19 pandemic.

The company paid out $1.1 million in severance costs for five employees and a consultant who didn’t make the move to Delaware, according to U.S. Securities and Exchange Commission records. The day before opening its new headquarters at the Delaware Corporate Center II off U.S. Route 202, the company’s CEO J. Kevin Buchi agreed to resign after just seven months at the company. He is receiving about $600,000 in a separation agreement.

BioSpecifics named Joseph Truitt its interim CEO and made him the permanent leader in May. Truitt spent much of his career at Achillion Pharmaceuticals Inc., working his way up to CEO through several executive roles over a decade. Under his tenure, Achillion was acquired by Alexion Pharmaceuticals Inc. for $1.2 billion.

BioSpecifics was quiet about its reasoning for moving to Delaware, telling shareholders and regulators that “in light of the new management appointments … the board determined that relocating the company’s headquarters to Delaware was in the best interest of the company.”

At the time, there were no apparent ties from BioSpecifics’ executives at the First State, but Truitt’s Achillion, headquartered in Blue Bell, Pa., was about 25 miles northeast of the Wilmington area. That clinical-stage company was absorbed by Alexion in December 2019.

With Truitt at the helm, the company obtained a key U.S. Food and Drug Administration approval for Qwo in July. While Xiaflex treats Dupuytren’s contracture and Peyronie’s disease, both rare medical conditions, Qwo is the first FDA-approved injectable treatment for moderate to severe cellulite in the buttocks of adult women – an aesthetic condition likely to find a larger market utilization. Endo, which holds the rights to the drug, has postponed the commercial launch until the first half of 2021, citing the effects of the COVID-19 pandemic on the market for aesthetic treatments.

Despite the impact of the pandemic, the company reported $3.9 million in second quarter revenue, finishing the difficult period in the black and ahead of analysts’ expectations. It ended last year with more than $24 million in net income and more than $125 million in total assets.

According to SEC filings, Truitt will earn a $1.12 million bonus for helping facilitate the Endo merger while Jennifer Chao, board chairwoman, will receive $1.2 million. The company’s chief financial officer, Patrick Hutchinson, will receive a $90,000 bonus while Alex Monteith, the chief business officer, will receive $154,000.

Centerview Partners LLC acted as the exclusive financial advisor to BioSpecifics while Morgan, Lewis & Bockius LLP served as legal counsel. Endo’s financial advisor is PJT Partners LP and legal counsel is Skadden, Arps, Slate, Meagher & Flom LLP.

By Jacob Owens

jowens@delawarebusinesstimes.com