Endo Pharmaceuticals, the Malvern-based drugmaker, has agreed to pay around $658 million for BioSpecifics Technologies, a 20-year-old Wilmington company whose collagen-based injection treatments were approved by the Food and Drug Administration earlier this year to fight “moderate to severe cellulite in the buttocks of adult women.”
Endo plans to market the treatment under the brand named Qwo, starting in the spring. Injected through needle shots, Qwo offers an alternative to surgery, scraping, and other more invasive treatments for patients paying to reduce their visible body fat.
Endo shares rose 13.25% for the day to $5.64, the highest the stock has been since February.
BioSpecifics, which employs seven people in its lab and offices at the Bellevue office park just north of Wilmington, had already been collecting large profits by licensing to Endo a collagen-based treatment, sold under the brand name Xiaflex. It fights conditions including Dupuytren’s contracture, which causes involuntarily clenched hands, and Peyronie’s disease, which results in curved penises. The company has applied for other human and animal uses.
Endo chief executive Blaise Coleman in a statement predicted “significant long-term growth potential” for both Xiaflex and Qwo, which he called “durable” products.
The deal caps a recent effort by BioSpecifics directors to chart a future after emerging from two generations of its founding family’s control.Bottom of Form
In a letter to investors April 29, BioSpecifics board chairman Jennifer Chao had called the company “extremely conservative” and risk-averse since the death of its “innovative” founder, Edwin C. Wegman, in 2007, and during the ensuing years when Wegman’s son and successor, Thomas Wegman, ran the company before his own death last year.
Chao had promised to recruit an energetic management team and “raise [BioSpecifics’] strategic trajectory,” with a “myriad of possibilities” for growing the company.
But BioSpecifics sales fell this year, with the company blaming the drop on the decline in elective medical procedures under anti-COVID-19 virus guidelines that shut or cut hours at medical specialists’ offices, and reduced the use of many treatments. This occurred even as emergency and intensive care staff rushed to contain virus cases amid the onslaught of the pandemic.
BioSpecifics rose sharply to close at $88.69, topping its share price. It was a record high for the stock, which went public in 1991, and a 44% increase over its closing Friday.
The purchase values the BioSpecifics business and its potential future sales at around $540 million, plus around $120 million that the company has piled up as cash from previous years’ profits.
Endo is based in Ireland for tax and legal purposes. But its top executives work on Atwater Drive in offices perched atop a rocky point near a lake in a former limestone quarry north of Malvern. Endo was spun off by DuPont Co. and Merck in 1997 after DuPont dropped plans to invest its chemical profits in developing a powerful pharmaceutical affiliate.
Endo’s share price peaked at $95 in 2015. But the stock lost most of its value later that year as it forecast lower profits. It took its Opana line of opiate painkillers off the market in 2017. DEA agents had called Opana one of the most abused prescription narcotics, and state and local governments and plaintiff lawyers have filed civil lawsuits to recover treatment costs and alleged damages against Endo, Purdue Pharmaceuticals, Johnson & Johnson, AmerisourceBergen, and other opioid drugmakers and distributors.
Since then, Endo has speeded up the development of new products. But the two companies’ relationship goes back years earlier: BioSpecifics first agreed to supply Endo with collagen-based products in 2004, as the company sought to build its Endo Aesthetics product lines.
BioSpecifics’ largest owner, the Wegman family heirs, control nearly 13% of the stock and have agreed to sell their shares as part of the deal. Other large holders include the hedge fund Renaissance Technologies LLC, the giant BlackRock investment group, and New York investor Jeffrey K. Vogel.
The deal was unanimously approved by the boards of both companies.
*Article courtesy of Philadelphia Inquirer
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