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Operator: Welcome to the BioSpecifics' Third Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session to follow. Please note, this call is being recorded. I would like to introduce the host for today's call, Julie Seidel of Stern Investor Relations. Please go ahead.
Julie Seidel: Good afternoon, everyone, and welcome to BioSpecifics third quarter 2016 financial results conference call. At 4.05 PM Eastern Time this afternoon, we issued our financial results and corporate highlights press release, which is available at www.biospecifics.com. Today, I am joined by Tom Wegman, the President of BioSpecifics, as well as Pat Caldwell. Mr. Wegman, will provide you with the corporate update and a financial summary, and after that we will open the call for your questions. Before we begin, I would like to remind you that today's conference call will include forward-looking statements based on the Company's current expectations within the meaning of, and made pursuant to, the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are only predictions and actual results may vary materially from those projected, based on numerous risk factors that we have identified in our current Quarterly and Annual Reports. The forward-looking statements include statements about; whether Endo is committed to continuing to put resources and efforts behind accelerating traction and growth for the Peyronie's disease and Dupuytren's contracture. The expected growth rate of Endo's Peyronie's disease and Dupuytren's contracture revenue in 2016, whether there is strong potential for CCH in many additional indications, whether and when BioSpecifics will receive top line data for Endo's Phase IIb study of CCH for the treatment of cellulite, whether and when BioSpecifics will hear from Endo the results of their full commercial assessment and analysis regarding the CCH pipeline, and the timing of Endo's determination of clinical trial timelines for additional indications. All forward-looking statements are made as of today's date, are expressly qualified in their entirety by the cautionary statements included in this conference call, and the Company assumes no obligation to update these forward-looking statements except as maybe required by law. I will now turn the call over to Tom.
Tom Wegman: Thank you, Julie, and good afternoon everyone. I'd like to start today's call by reviewing [indiscernible] in its two marketed indications, Peyronie's disease and Dupuytren's contracture. Peyronie's is caused by inelastic collagen causing penile temperature [ph] and is associated with increased pain, painful erections, palpable plaque penile deformity, and erectile dysfunction. Dupuytren's is a deforming condition of the hand in which one or more of the fingers contracts towards the palm, limiting range of motion, and impairing quality of life. On November 8, 2016, our partner, Endo, reported U.S. commercial highlights for the third quarter of 2016. As a reminder, Endo's third quarter 2016 financials are reported in our fourth quarter 2016 financials. For the third quarter of 2016, Endo reported that U.S. net sales for XIAFLEX were 47.7 million. We believe there is strong potential for CCH in many additional indications. At this time, we are focusing our own efforts on the CCH pipeline for medically necessary indications, with a focus on advancing uterine fibroids to Phase I clinical testing this year. Data reported today has shown that purified CCH can reduce the stiffness of human uterine fibroids ex-vivo, and potentially decrease their size. Uterine fibroids are benign tumors in the reproductive tract that contain large amounts of collagen. They can cause pelvic discomfort and pain, decrease fertility, pregnancy complications, increased rate of miscarriage, heavy menstrual bleeding, and frequent urinations. And they are the leading cause of hysterectomies in the United States. Earlier this year, Endo started a Phase IIb study of CCH for the treatment of cellulite, a condition in which lobules of subcutaneous adipose tissue extend into the dermal layer forming an orange peel-like dimpling. This trial is fully enrolled, and we look forward to the anticipated top line results from this 350-patient study. Endo is conducting a full commercial assessment and analysis of the CCH R&D pipeline which will determine the clinical trial timelines moving forward. Just as a reminder, in addition to the two market indications, Endo's license rights include adhesive capsulitis, cellulite, human and canine lipoma, lateral hip fat, and plantar fibromatosis. And with that, I'll now review our financial results for the third quarter of 2016. As I just mentioned, our third quarter 2016 financial results are based on second quarter 2016 XIAFLEX sales as reported to us by Endo. Third quarter sales by Endo will be recorded in our fourth quarter 2016 financial results. As of September 30, 2016, we had cash and cash equivalents, and investments of $51.3 million, compared to $37.1 million on December 31, 2015. Net income for the third quarter of 2016 was $3.1 million, or $0.43 per basic share, and $0.42 per share on a fully diluted basis, compared to net income of $2.9 million or $0.42 per basic or $0.39 per share on a fully diluted basis for the same period in 2015. Total revenue for the third quarter of 2016 was $6.9 million compared to $6.3 million for the same period in 2015. Royalty and mark-up on COGS, cost of goods revenues, recognized under our agreement with Endo for the third quarter of 2016 were $6.1 million compared to $5.3 million for the same period in 2015, an increase of 15% or $800,000. This increase was due to increased net sales of XIAFLEX for the treatment of Dupuytren's contracture and Peyronie's disease as reported by our partner, Endo, and recognized by us with the one-quarter lag. Licensing revenue consists of licensing fees, sub-licensing fees, and milestone payments. Licensing revenue recognized for the third quarter ended September 30, 2016 was approximately $750,000 as compared to zero in the corresponding 2015 period. R&D expenses for each of the third quarters of 2016 and 2105 were $300,000. G&A expenses for the third quarter of 2016 were $1.8 million compared to $1.7 million for the same period in 2015. Provision for income taxes for the third quarter of 2016 were $1.8 million compared to $1.5 million for the same period in 2015. And with that I'd like to open up the call now for any questions you might have. Operator?
Operator: Thank you. We will now take any questions you may have. [Operator Instructions] And it looks like our first question comes from Yi Chen with Rodman and Renshaw. Please go ahead.
Yi Chen: Hi, thank you for taking my questions. First question is for the uterine fibroids Phase I study, what is the estimated cost for the study, and when can we expect to see the result from these Phase I studies?
Tom Wegman: Hi, thanks for the question, Yi. Usually, studies take at least a year from initiation in my experience. And we'll be having some patients who will be injected with placebo cell. I would say at least a year is going to be reasonable. And in my experience, most of these types of studies, even though it's small, going to be like $1 million plus. I would certainly say less than $2 million, but probably $1 million all in. So hopefully that answers your questions.
Yi Chen: What is the estimated number of patients that's currently being enrolled in the study?
Tom Wegman: I'll be a little broken that out, but I can say, I think for this call, which is public, we're looking at 15 patients.
Yi Chen: Okay. Second question, is Endo still planning to start a late-stage trial for Dupuytren's disease nodules by the end of this year?
Tom Wegman: I think in general Endo has now a new CEO, and that -- he is examining, and as we say, he's assessing the commercial pipeline, the R&D pipeline, and I think that we're just going to have to wait until they've done that assessment, and wait until they give us some further word on these pipeline indications. So I don't really have an update for you at this time. Hopefully we'll hear from Endo [indiscernible] the assessments will be completed.
Yi Chen: Regardless of the assessment we should still be expecting to see the top line data from the cellulite Phase IIb trial in 2017, correct?
Tom Wegman: Cellulite has a special place in their heart. So I think -- I am expecting to hear -- and they said we're going to see these, the top line data from the Phase IIb. They haven't said exactly when, but it's clear that it's going to be shortly.
Yi Chen: Okay. So it possible that BioSpecifics is going to start initiate any other trial for different indication besides uterine fibroids next year?
Tom Wegman: I would say it's possible, but it's something we haven't announced yet. We continue to, I think -- there are a lot of exciting, other possibilities. And as we collaborate with Endo, and the new team at Endo, I think there'll be a place for new ideas and expansion for XIAFLEX. But I think it's too early to say definitively about any of that.
Yi Chen: Okay, thank you.
Tom Wegman: Thanks, Yi.
Operator: [Operator Instructions] We have no further questions, so I would like to turn the conference back over to Tom Wegman for any closing remarks.
Tom Wegman: Okay, thanks everyone for attending today. This concludes this late afternoon conference call. We will be presenting a corporate overview at the upcoming 2016 Stifel Healthcare Conference on Tuesday, November 15, at 8:00 AM ET, in New York City. And thanks again for your interest in BioSpecifics.
Operator: The conference has now concluded. Thank you all for attending the presentation. You may now disconnect your lines.
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