Earnings name: Biofrontera experiences Q1 2024 financials amid restoration

May 16, 2024 | blog

Biofrontera Inc. (ticker: BFRI), a pharmaceutical firm specializing in dermatological therapies, has disclosed its monetary outcomes for the primary quarter of 2024. The firm has renegotiated its provide settlement for its flagship product Ameluz, considerably decreasing prices and paving the best way for R&D investments and industrial progress.

Despite a cyberattack impacting revenues, Biofrontera has skilled a rebound in gross sales and is making ready for brand spanking new product launches and medical trial developments.

Key Takeaways

  • Ameluz license and provide settlement renegotiated, decreasing prices from 40-50% to 25% for 2024 and 2025.
  • $8 million raised to assist progress, together with medical trials.
  • 9% lower in quarterly revenues year-over-year because of a cyberattack, with a restoration of over 5% in revenues year-to-date April 2024.
  • 28 BF-RhodoLED lamps positioned in Q1 2024, a 115% improve from the earlier yr.
  • New RhodoLED XL lamp and a propylene glycol-free Ameluz formulation to be launched.
  • Total Q1 2024 revenues of $7.9 million, down from $8.7 million in Q1 2023.
  • Net lack of $10.4 million with whole working bills of $13.4 million.
  • Cash move breakeven projected by the top of 2025.

Company Outlook

  • Anticipated money move breakeven by year-end 2025.
  • Expecting to start promoting RhodoLED XL lamps in Q2 2024.
  • New Ameluz formulation manufacturing to begin quickly, with supply anticipated in August 2024.
  • Clinical trial knowledge for basal cell carcinoma to be offered in Q3 2024, with FDA submission following.

Bearish Highlights

  • Quarterly revenues impacted by a cyberattack towards Change Healthcare (NASDAQ:), resulting in a 9% year-over-year lower.
  • A internet lack of $10.4 million reported for Q1 2024.
  • Voluntary recall of Ameluz batches by Biofrontera AG, with $5.2 million allotted for alternative stock.
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Bullish Highlights

  • Significant price reductions achieved by way of renegotiation of the Ameluz settlement.
  • Successful $8 million financing to bolster progress and enlargement.
  • Over 5% progress in revenues year-to-date April 2024 in comparison with the identical interval final yr.
  • Increase in BF-RhodoLED lamp placements signifies sturdy product demand.


  • Total Q1 2024 revenues fell wanting the earlier yr’s figures, totaling $7.9 million in comparison with $8.7 million in Q1 2023.

Q&A Highlights

  • The FDA requires a one-year follow-up for the medical section of basal cell carcinoma remedy, with knowledge out there in early Q2 2024.
  • FDA software for 3 tubes of Ameluz is underway, with preliminary evaluation outcomes anticipated in early August and a PDUFA date in November.
  • Enrollment for pimples and peripheral AK medical trials is progressing, with 74% and 57% accomplished, respectively.
  • The cyberattack’s influence on gross sales is seen as short-term, with an upswing in gross sales already famous in April 2024.

Biofrontera’s strategic strikes to renegotiate prices and safe extra financing exhibit the corporate’s dedication to sustaining a trajectory of progress and innovation. Despite the setbacks from cyberattacks and recall-related bills, the corporate’s administration stays optimistic about reaching breakeven and persevering with to develop its product choices. Investors and stakeholders can sit up for the anticipated launches and medical trial milestones set for the upcoming quarters.

InvestingPro Insights

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InvestingPro Data reveals a market capitalization of $6.16 million, reflecting the present valuation of the corporate available in the market. Despite a difficult quarter, the corporate has managed to keep up a income progress of 18.82% over the past twelve months as of This fall 2023. This progress is a testomony to the underlying demand for Biofrontera’s merchandise and their market potential. The gross revenue margin stands at a sturdy 48.8%, indicating the corporate’s skill to retain a good portion of its income after accounting for the price of items bought.

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Full transcript – Biofrontera (BFRI) Q1 2024:

Operator: Welcome to the Biofrontera Inc. First Quarter 2024 Financial Results and Business Update Conference Call. At this time, all contributors are in listen-only mode. [Operator Instructions] After right now’s ready remarks, there will probably be a possibility to ask questions. [Operator Instructions] Please word this occasion is being recorded. I might now like to show the convention over to Andrew Barwicki with Barwicki Investor Relations. Please go forward.

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Andrew Barwicki: Good morning and welcome to Biofrontera Incorporated’s First Quarter 2024 Financial Results and Business Update Conference Call. Please word that sure info mentioned throughout right now’s name by administration is roofed below the Safe Harbor provisions of the Private Securities Litigation Reform Act. We warning listeners that Biofrontera’s administration will probably be making forward-looking statements and that precise outcomes could differ materially from these acknowledged or implied by these forward-looking statements because of dangers and uncertainties related to the corporate’s enterprise. All dangers and uncertainties are detailed in and are certified by the cautionary statements contained in Biofrontera’s press launch and sure SEC filings. Also, this convention name comprises time-sensitive info that’s correct solely as of the date of this dwell broadcast, May sixteenth, 2024. Biofrontera undertakes no obligations to revise or replace any forward-looking statements to mirror occasions or circumstances after the date of this convention name, besides as required by regulation. During right now’s name, there will probably be references to sure non-GAAP monetary measures. Biofrontera believes these measures present helpful info for traders but shouldn’t be thought-about as an alternative to GAAP nor ought to they be seen as an alternative to working outcomes decided in accordance with GAAP. A reconciliation of non-GAAP to GAAP outcomes is included within the press launch saying Q1 fiscal yr 2024 outcomes. More particularly, administration will probably be referencing adjusted EBITDA, a non-GAAP monetary measure outlined as internet earnings or loss excluding curiosity earnings and expense, earnings taxes, depreciation and amortization and sure nonrecurring or noncash objects. With that mentioned, I want to flip the decision over to Hermann Luebbert, CEO, Chairman and Founder of Biofrontera. Hermann?

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Hermann Luebbert: Thank you, Andrew, and lots of because of everybody becoming a member of us this morning. On right now’s name, I’ll present an summary of our operations throughout the first quarter, some occasions that occurred because the finish of the primary quarter and focus on our enterprise technique for the rest of the yr. Fred Leffler, our CFO, will observe with a dialogue on monetary outcomes after which each of us will probably be glad to reply questions. I want to begin with probably the most optimistic occasion of the primary quarter. We efficiently renegotiated our license and provide settlement for Ameluz with Biofrontera AG, decreasing our prices considerably. We will now be paying 25% for Ameluz throughout 2024 and 2025 in comparison with roughly 40% to 50% of our gross sales worth below the prior settlement. This LSA will steadily step as much as 35% by 2032. Any indication related to pimples will stay at 25% indefinitely. This represents a transformational occasion for Biofrontera Inc., considerably rising our potential to grow to be worthwhile within the close to time period. As a part of this modification, we are going to take over all US medical trials efficient June 1, which can enable for simpler price administration and direct oversight of the trial efficacy. The decreased price of products will enable us to finance R&D actions whereas persevering with our industrial progress trajectory. With Ameluz making up most of our income, we consider this can be a distinctive alternative shifting ahead. Furthermore, I’m happy to announce that in February, we raised $8 million minus financing bills to assist the expansion and enlargement of the corporate, together with medical trials. Later, the price of the medical trials will probably be lined in entirety by the financial savings from the decreased switch worth. Our February financing deal entailed warrants exercisable upon achievement of sure milestones by April 30 on the earliest. As we confirmed earlier this month, now we have already met these milestones and in consequence obtained one other $8 million by way of the train of the warrants in early May. Contrary to those optimistic developments, our quarterly revenues had been negatively impacted when in February, a cyberattack towards Change Healthcare, the most important billing and fee system within the US, affected 1000’s of medical practices. According to the AMA, the American Medical Association, 80% of physicians reported misplaced revenues from unpaid claims. The AMA, which is the nation’s largest medical society, mentioned the assault threatened the viability of doctor practices throughout the nation, with greater than half of survey respondents having to make use of private funds to cowl apply bills. Health care reimbursement is a unending problem with many adjustments occurring on a continuing foundation, purposeful or not. Having mentioned that, I’m extraordinarily pleased with our workforce of their efforts with medical services, medical doctors’ workplaces and insurance coverage corporations to deal with the working capital points created by the Q1 Change Healthcare cyberattacks and to make sure full reimbursement is obtained wherever potential. We are working hand-in-hand with our clients, whether or not they’re a small single supplier workplace or a big medical facility, to make sure they’ve our merchandise out there and are appropriately reimbursed for his or her service to the sufferers. In spite of all people’s efforts, all this culminated in some clients both decreasing their orders in Q1 or shifting their orders into Q2, which drove 9% decrease Q1 income as in comparison with the primary quarter in 2023. However, as we introduced earlier, now we have begun to see this restoration. And as of year-to-date April thirtieth, 2024, in comparison with the identical interval final yr, now we have reported already greater than 5% progress in revenues. Our BF-RhodoLED lamps, the gadgets which are utilized in mixture with Ameluz, proceed to be positioned at doctor workplaces all through the nation. A optimistic indicator for future progress is that within the first quarter 2024, now we have positioned 28 lamps, a rise of 115% in comparison with the primary quarter of the prior yr. The rising variety of lamps within the subject displays each first-time installations and extra lamps amongst dermatology practices already accustomed to Ameluz PDT, facilitating progress for brand spanking new and present clients. We count on to start promoting the RhodoLED XL, our bigger five-panel lamp, in direction of the top of the second quarter this yr. As a part of the settlement with Biofrontera AG, we’re within the midst of preparations for the takeover of the medical trial departments for Biofrontera Bioscience. As of June 1st, 2024, members of the medical trial teams will be a part of our wholly-owned German subsidiary, Biofrontera Discovery (NASDAQ:) GmbH, which subsequently will probably be chargeable for the administration of all medical trials with Ameluz and BF-RhodoLED within the United States. At Biofrontera Discovery, we is not going to solely be chargeable for future medical research, but additionally for all ongoing trials. Currently, two medical research are enrolling sufferers, one for actinic keratosis on the neck and tongue and the arms and fingers. The different for reasonable to extreme pimples. This has recorded 57% and 74% of topics respectively. The third ongoing examine for the remedy of superficial basal cell carcinoma is nearing completion of the one-year follow-up section required for FDA submission. We count on the final affected person to finish this follow-up section earlier than the top of the yr. As I discussed prior to now, the Food and Drug Administration accepted the brand new formulation of Ameluz with out propylene glycol for the remedy of actinic keratosis. The manufacturing of this formulation will start shortly and we count on supply at our wholesaler in August. This will assist enhance tolerability for a few of our sufferers whereas additionally decreasing the technology of impurities over time, which can end in an prolonged shelf life as soon as ample stability knowledge is collected. With that I’ll flip the decision over to Fred to stroll by way of the monetary particulars of the primary quarter. Fred?

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Fred Leffler: Thank you, Hermann and it’s a pleasure to supply a monetary replace right now on our first quarter outcomes. Total revenues for the primary quarter of 2024 had been $7.9 million in contrast with $8.7 million for the primary quarter of 2023. The lower is because of well being care reimbursement points attributable to the Change Healthcare knowledge breach that created money challenges for your complete well being care business all through the quarter. As Hermann talked about, now we have seen restoration, and I don’t count on this to be a long-term problem, and we’ll proceed to observe for any additional developments. Total working bills had been $13.4 million for the primary quarter of 2024 in contrast with $14.2 million for the primary quarter of 2023. Cost of income was $4.1 million for the primary quarter of 2024 in contrast with $4.6 million for the prior yr quarter, with the decline in price of income pushed by the decrease Ameluz gross sales. I’ve talked about in earlier calls that we’re burning by way of stock that now we have readily available for many of 2024. Later this yr, as soon as we buy new stock, we count on to see the optimistic influence of the LSA amendments on our price of revenues. Selling, normal and administrative bills had been $9.3 million for the primary quarter of 2024 in contrast with $9.8 million for the primary quarter of 2023. The lower was primarily pushed by a $1.1 million lower in nonrecurring authorized prices and a $3,000 lower in gross sales and advertising bills. The lower was primarily offset by a $700,000 improve in charges and issuance prices related to our most up-to-date personal placement transaction in addition to a small improve in personnel bills. The internet loss for the primary quarter of 2024 was $10.4 million or a lack of $2.88 per share in contrast with a internet lack of $7.5 million or a lack of $5.60 per share for the prior yr quarter. I’ll word that the accounting for the B-3 convertible most popular warrants had a big influence on this. We don’t count on to have such an adjustment sooner or later. Adjusted EBITDA for the primary quarter of 2024 was unfavorable $4.6 million in contrast with unfavorable $4.1 million for the primary quarter of 2023. This displays the decrease revenues we noticed within the first quarter of 2024. We have a look at adjusted EBITDA, a non-GAAP monetary measure, as a greater indication of ongoing operations and this measurement is outlined as internet earnings or loss excluding curiosity earnings, and bills, earnings taxes, depreciation and amortization and sure different nonrecurring or noncash objects. I’ll refer you to the desk within the earnings press launch and the 10-Q we issued yesterday for a reconciliation of GAAP to non-GAAP monetary measures. Turning to our stability sheet. As of March thirty first, 2024, we had money and money equivalents of $3.8 million. Keep in thoughts, we obtained $8 million from the train of B-3 convertible most popular warrants on Tuesday, so we’re in a a lot stronger place right now. Our stock stability as of March thirty first, 2024 was $6.9 million. As I discussed, we’re burning by way of our stock and we always monitor our stock ranges to make sure deliveries are made in accordance with our forecast and we get to and preserve an business customary of security inventory. Related to stock, our property embrace $5.2 million for alternative stock. This is because of Biofrontera AG deciding on a voluntary recall of three batches of Ameluz. We had been notified of the difficulty in February of 2024. The batches will probably be changed for gratis to us, and we count on to obtain these batches within the third quarter. This is not going to influence our skill to meet orders within the meantime. Finally, we had an impressive stability of $2.4 million in short-term debt that we count on to pay down by early July 2024. With that overview of our enterprise and monetary efficiency, Hermann and I at the moment are able to take questions from our masking analysts. Operator?

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Operator: We will now start the question-and-answer session. [Operator Instructions] The first query comes from Jonathan Aschoff with ROTH. Please go forward.

Jonathan Aschoff: Thank you. Good morning, guys. My first query is, does that larger than 5% Jan by way of April gross sales outcome, is {that a} huge underestimation of the particular progress that merely matches the definition of one of many two milestones you needed to hit to set off the second $8 million funding or is it really actually shut to five%?

Fred Leffler: Hi, Jonathan. Fred Leffler right here. I can take that. That was based mostly on the milestone, such as you mentioned, that we needed to hit. We did not problem the precise quantity, however I can provide an replace on Q2, or we’ll give the replace on Q2 in August.

Jonathan Aschoff: Okay. Are you guys nonetheless comfy with money move breakeven across the year-end ’25 or has that modified a bit?

Fred Leffler: That remains to be the expectation. As Hermann mentioned, we’re taking up the medical prices and we are going to begin seeing the financial savings of the LFA amendments later this yr by way of 2025 to assist fund that. And so long as we function and hit our price range numbers, I do not foresee that as being a difficulty.

Jonathan Aschoff: Okay. Did the final basal cell carcinoma affected person have their remaining evaluation final quarter and subsequently, you are still anticipating to present us knowledge within the third quarter of this yr?

Hermann Luebbert: That’s appropriate. So the information we would supply — we count on to supply for the medical section and the FDA needs us to submit the one-year follow-up. So the final affected person on the market could be in November or December. So the follow-up knowledge could be out there early in Q2 after which ready for FDA submission.

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Jonathan Aschoff: Okay. And I bear in mind listening to from the prior administration that dermatologists, in the event that they needed to cowl a larger space and solely allowed to make use of one tube, they might use the Ameluz a bit thinner than indicated so it may cowl a larger space. Wouldn’t that form of, I do not know, indicate that if they will use a couple of tube that they might undoubtedly do this so they may get the next reimbursement per process?

Hermann Luebbert: Well, medical doctors, after all, if they will, have a tendency to make use of the merchandise in accordance with label and the payers are increasingly taking care of that. And so our at the moment ongoing submission, FDA submission for 3 tubes could be very, very related in that respect. So the timeline there hasn’t modified. So we count on some form of preliminary evaluation leads to early August after which the PDUFA date is in November.

Jonathan Aschoff: Okay. Could you simply assist us with the enrollment for pimples and peripheral AK?

Hermann Luebbert: Yes. So the enrollment for pimples and peripheral AK, I’ve the numbers within the presentation. So for, one second, so for peripheral AK, present enrollment is 57% of the sufferers. And for pimples, it is 74% of the themes.

Jonathan Aschoff: Thank you very a lot, guys. That was all.

Hermann Luebbert: Thank you.

Operator: The subsequent query comes from Bruce Jackson with The Benchmark Company. Please go forward.

Bruce Jackson: Hi. Good morning and thanks for taking my questions. I’m making an attempt to form of type by way of the influence from Change Healthcare. So we’re up 5% year-to-date. How do you assume the remainder of the yr unfolds? So second quarter is usually seasonally weak after which the again half yr can produce other anomalies to it. But how do you see the gross sales unfolding for the remainder of the yr?

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Hermann Luebbert: As Fred mentioned, we do not count on this to have a long-term influence. It was an influence principally in February and March when this really occurred, medical doctors weren’t paid for our providers. That’s when all of the providers at medical doctors’ workplaces really got here down, together with, after all, PDT, with Ameluz. But then in April, we did already see the upswing and couldn’t solely make up for these 90% loss. But as we mentioned, it is greater than 5% above final yr. So we do not count on a long-term impact of this and nonetheless count on the identical form of progress that we did at the start of the yr.

Bruce Jackson: Okay. And then my second query is in regards to the XL lamp launch. I feel I heard you are going to be receiving from the, I’m sorry, when is the XL lamp going to launch? That’s my query.

Hermann Luebbert: It’s going to launch by the top of Q2.

Bruce Jackson: End of Q2. Okay. Super. That’s it for me. Thank you.

Hermann Luebbert: Great. Thank you, Bruce.

Fred Leffler: Thanks. Thanks, Bruce.

Operator: This concludes our question-and-answer session. I want to flip the convention again over to administration for any closing remarks.

Hermann Luebbert: Yes. Well, thanks for everyone’s time participation, the questions. And we sit up for our subsequent name, the place hopefully, we are able to once more current optimistic information. Thank you and have a pleasant day.

Operator: The convention has now concluded. Thank you for attending right now’s presentation. You could now disconnect.

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