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spk05: Welcome to the BioFrontera Inc. 4th Quarter and Full Year 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the Start button. After today's prepared remarks, there will be an opportunity to ask questions. To ask questions, you may press Start, then 1 on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Turg Patel with LHA Investor Relations. Please go ahead.
spk04: Good morning, and welcome to BioPrantera Inc.' 's fourth quarter and full year 2021 financial results conference call. Please note that certain information discussed during today's call is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that Biofront Tariffs Management will be making forward-looking statements and that actual results may differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. All risks and uncertainties are detailed in and are qualified by the cautionary statements contained in BioProntera's press releases and SEC filings. This conference call contains time-consumed information that is accurate only as of the date of the live broadcast today, April 8, 2022. BioProntera undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law. During today's call, there will be references to certain non-GAAP financial measures. BioProntera believes these measures provide useful information for investors, yet should not be considered as a substitute for GAAP, nor should they be viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in this morning's press release. With that, I would like to turn the call over to Herman Loubert, Executive Chairman of BioProntera, Inc.
spk02: Thank you, Toast. and welcome everyone to BioFrontera Inc's 2021 Fourth Quarter and Full Year Financial Results Conference call. Joining me today is Erika Monaco, Chief Executive Officer of BioFrontera Inc. In a moment, Erika will review the business, our strategy, and our recent financial results. But first, I would like to provide a brief recap of our achievements during 2021. The global dermatology market, and specifically the photodynamic therapy market, experienced encouraging growth following a year of depressed numbers of patient visits to dermatologists during the height of the COVID-19 pandemic. In the United States, which is the world's largest dermatology market, we have likewise experienced a consistently growing rebound from those pandemic lows due to the management's commercial initiatives the lifting of some government restrictions and the reopening of our customers businesses our revenue recovered quickly beginning in in about march of 2021 i'm proud of the work of biofrontera's management sales teams and support staff in making 2021 a strong first year for BioFrontera following our successful IPO last fall. Sales for 2021 exceeded $24 million, were up about 28% versus 2020, and are approaching pre-pandemic levels. Earlier this week, we also announced very strong Over 100% year-over-year got sales growth for the first quarter of 2022, which further demonstrates that our business is back on track. With that, I'll turn the call over to Erica.
spk01: Thank you, Herman, and good morning, everyone. I'm pleased to be speaking with you today after closing the books on a landmark year for BioPentera Inc. as an independent, publicly traded company, and I'm truly excited about our future. Biophantara commercializes pharmaceutical products and medical devices across the United States for the treatment of dermatological conditions. Our flagship product is amylose for the treatment of actinic keratoses, or AKs, which are skin lesions caused by excessive exposure to sunlight that can lead to skin cancer. We also market Zepi, a topical antibiotic, for the treatment of impetigo, which is a bacterial skin infection. Before providing a business overview, I'll review our fourth quarter and full year 2021 financial results with you. So starting with the fourth quarter, total revenues were $9.2 million for the three months ended December 31st, 2021, an increase of $0.6 million or 7% from a year ago. The increase was primarily due to higher sales of AMALUs reflecting volume increases and to a lesser extent, a higher average selling price. Total operating expenses were $11 million and $8.8 million for the three months ended December 31st, 2021 and 2020 respectively. Costs of revenue increased by 8%, primarily due to higher sales of AMLUs. Selling general and administrative expenses for Q4 of 2021 increased $5.1 million versus the prior year, primarily due to a $.6 million increase in marketing expenses as we launched various marketing campaigns for our licensed products. Headcount costs also increased $1 million, primarily as a result of resumed hiring in 2021. In addition, issuance costs related to the private placement of our stock accounted for $1.4 million. Adjusted EBITDA was negative $3.2 million for the three months ended December 31, 2021, versus negative $3,000 during the same period in 2020. Adjusted EBITDA, a non-GAAP financial measure, is defined as net income or loss excluding interest income and expense, income taxes, depreciation, and amortization. legal settlement expenses, and certain other non-recurring or non-cash items. I refer you to the table in the news release we issued earlier this morning for a reconciliation of GAAP to non-GAAP financial measures. Net loss for the 2021 fourth quarter was $14.5 million compared with the net loss for the 2020 fourth quarter of $0.2 million. Moving on to our full year financial results, total revenues were $24.1 million and $18.8 million for 2021 and 2020 respectively. an increase of $5.3 million, or 28%. The increase included $4.1 million from a higher volume of AMLUs sold and $1.3 million from an increase in the average selling price of AMLUs. Total operating expenses were $49.3 million and $28.5 million for 2021 and 2020, respectively. Cost of revenues was $12.7 million and $9.1 million for 2020 and 2021, respectively. an increase of $3.7 million, or 41%. $2.8 million of the increase was driven by higher AMALU's product revenue. In addition, we received cost reimbursement from the AMALU's licensor in 2020, which resulted in a $1.1 million reduction to cost of revenue for that period. Selling general and administrative expenses increased by $19.1 million compared with 2020. The increase was primarily driven by a legal settlement expense of $11.3 million, and legal expenses associated with the settlement of $0.4 million. The increase was further driven by a $1.8 million increase in marketing expenses as we launched various campaigns for our licensed products. Headcount also increased $2.7 million as a result of resumed hiring in 2021. A higher commissions expense related to improved sales performance and a higher commissions expense related to improved sales performance apologies. In addition, issuance costs related to the private placement of our stock accounted for $1.4 million. Adjusted EBITDA was negative $12.7 million in 2021 and was a negative $9.2 million in 2020. Our net loss was $37.7 million in 2021 and was $11 million in 2020. Cash and cash equivalents as of December 31, 2021, were $24.5 million. During 2021, we raised net proceeds of $41.8 million, including $14.9 million from the sale of common stock in our IPO and $13.6 million from a subsequent private placement. $13.2 million came from the excise of warrants, which also reduced BioFrontier AG's ownership of BioFrontier Inc. to less than 50%. As a result, BioFrontier Inc. is no longer considered a subsidiary of BioFrontier AG. and this represents a major milestone in the development of BioFrontera Inc. as a standalone entity that is independent of its former parent company. Not affected by this will be our license and supply agreement with BioFrontera AG. As a growth stage company, we intend to be opportunistic regarding potential financing activities, but we believe that the funds available today provide sufficient capital to support planned operating activities through at least the next 12 months. To summarize, despite the challenges resulting from COVID-19 pandemic, we returned to top-line growth in 2021, and sales have now recovered to near pre-pandemic levels, including a seasonally strong fourth quarter. In 2021, we increased our market share within the PDT drug segment to approximately 26%, up from approximately 24% in the previous year. We expect that the momentum established in 2021 will continue to drive revenue growth from our top customer accounts as the opportunity to gain share from cryotherapy remains a key focus of our commercial efforts. Our goal is to continue to improve the market positioning of Amaluz to become the leading PDT drug for the treatment of actinic keratosis in the United States. As Herman mentioned earlier this week, we announced preliminary unaudited product revenue for the first quarter of 2022. We expect Q1 revenue will be in the range of approximately $9.5 million to $10 million. which represents an increase of approximately 102 to 113% compared with the first quarter of 2021. Final revenue results may vary from these preliminary revenue estimates as we expect to report Q1 financials in May. March 2022 was our strongest sales month on record, and Q1 2022 was our second highest quarter on record. A price increase went into effect on April 1st, 2022 for Amalus, which contributed some to the advanced buy-in from physicians' offices, yet we did not see as significant of an impact as in previous years when price increases typically took effect on January 1st and the impact we're seeing in the Q4s of the previous years. Therefore, we do not anticipate this most recent increase to have much impact on sales development for the rest of the year. Given the strong business momentum along with the renewed visibility into our markets, today we are introducing 2022 financial guidance. We expect total revenues to increase by at least 30% compared with 2021, including the strong first quarter growth we just announced. Because traditional PDT treatments using a LAMP are performed more frequently during the winter months, our revenue is subject to some seasonality and has historically been higher during the first and fourth quarters than during the second and third quarters. Our commercial focus throughout 2022 will be on achieving deeper sales penetration among current customers with additions to the BioFrontera sales force expected to begin in 2023. The key elements of our commercial strategy include the following. First, expanding sales of our principal product, Amelus, in combination with the BF Rota lead lamp for the treatment of AK on the face and scalp. Second, positioning Amelus as the leading PDT product by optimizing our sales and marketing infrastructure and strengthening our medical affairs outreach. And third, leveraging the potential for future approvals and label expansion of our pipeline products through our existing license agreements. Our goal is to establish AMLUZ as the leading PDT drug for the treatment of AKs in the United States. In addition, we see opportunity to expand the PDT market as a first-option treatment of actinic keratosis versus cryotherapy, especially in patients with more than 15 lesions. We believe dermatologists have favored cryotherapy to date because of reimbursement. However, we also believe there is treatment guideline pressure towards field-directed therapy as opposed to single lesion therapy, which may also help support our sales of photodynamic therapy treatment. In late October 2021, the Rotoled XL was approved in combination with Amelus for the treatment of mild and moderate actinic keratosis on the face and scalp, which corresponds to the current approval of Amelus. This new PDT lamp enables the illumination of larger areas, enabling the simultaneous treatment of several AK lesions that are distant from one another. Despite widespread supply chain issues across the globe, we are on track to launch the XL by the end of this year. Our market expansion seeks optimization through deeper penetration in our sales territories and our high-value accounts, strengthening medical affairs and becoming a trusted partner in medical communities through scientific data publication, key opinion leader interaction, and industry support. Expanding the AMLU's label allows us to consistently deliver innovative solutions for patients and serves as a key mechanism to unlock the drug's potential. In 2021, there were four U.S. publications investigating AMLU's and PDT, three of which were investigator-initiated trials. Furthermore, continued investment in clinical research by our licensed partner aimed at label expansion is thus an integral part of our growth. According to our license agreement for amylose, the licensor is obliged to conduct and finance the clinical studies required for defined label expansions. In December of 2021, our licensor, Biofrontera AG, received two notices of allowance from the U.S. Patent and Trademark Office that helped further protect the marketing position of amylose. The first patent covers an innovative pain-reducing illumination protocol for photodynamic therapy. As implementation of the patented invention to our medical devices merely requires the installation of software, it can potentially be rolled out to both the BF RotoLED and the RotoLED XL. The second patent protects a number of innovations in the RotoLED XL lamp and describes specific features of the LED arrays of the five panels constituting the lamp head. In addition, we recently announced our BF RotoLED XL illumination device is now listed in the U.S. FDA publication, commonly known as the Orange Book. This listing provides Amalu's PDT with the protection against generic competition through October of 2040 and further strengthens our competitive positioning. Throughout 2021, we focused on enhancing our medical affairs capabilities and building awareness of our suite of products. Two weeks ago, we attended the American Academy of Dermatology's annual conference and had a strong presence and a booth showcasing our products. Interacting with dermatologists, practitioners, and dermatology-focused service providers is critical to growing our trusted brand. The AAD annual meeting is the world's largest scientific meeting for dermatologists, with an average attendance of approximately 18,000, including approximately 10,000 medical personnel. It was wonderful to see so many customers, KOLs, and prospective customers in person, and we are quite pleased with the outcomes from this conference. Our Amalus and BF Rota-led brands have experienced heightened recognition as we've marketed and presented our products at a number of academy and industry conferences in addition to the AAD. We exhibited at the Winter Clinical Dermatology Conference, Maui Dermatology Conference, which was our first in-person conference since the pandemic started, and also at ODAC, which is the Dermatology, Aesthetic, and Surgery Conference, all of this in Q1 of this year. As part of our market expansion efforts, We are focused on ways to deepen our relationships with existing customers and also expand access for our therapies to more dermatology clinics and patients. A data-driven commercial approach will allow us to focus our promotional efforts and expansion in an advanced way. To that end, we recently created a dedicated key accounts team. Expanding our sales efforts with this function addresses the changing landscape of the dermatology industry. With more and more dermatology clinics being bought out and joining large corporate organizations, Building relationships at the corporate and regional levels to understand the drivers of their clinical decisions is a focus for us moving into 2022. Rolling out a key accounts team expands our market access support as a dedicated partner with these strategic ownership groups. This approach will allow us to build customized support resources that expand the access for innovative solutions to treat disease and meet patient needs. Additionally, in 2022, our commercial expansion will include a new model of inside sales support. This allows our existing sales force to deepen customer relationships while our inside sales support can expand the reach and frequency to some of our newer and smaller accounts. As we move into 2023, additional outside sales regions will round out our commercial footprint. Our 2022 commercial strategy is further supported by a strategic education initiative about our product differentiation, scientific information, and patient selection. We believe there is significant potential to gain market share from cryotherapy where a patient has more than 15 AK lesions. Educating the industry on the importance of field therapy and the high efficacy of our product will support our efforts to expand utilization of our PDT therapy. We have pledged support in the coming year to many significant dermatology societies and foundations. We will take advantage of opportunities to present our company and products to these societies and will host demonstrations, roundtables, and other educational sessions in the coming months as we strive to provide a deeper scientific understanding of our products to the market. These efforts align deeply with our company values of commitment, quality, and customer focus. Our vision is to be a trusted partner that brings best-in-class therapies and service to dermatology patients and healthcare providers. We are confident this holistic vision will also lead to maximizing value to our shareholders. Moving on to an update on our clinical studies. Clinical development programs undertaken by our licensor are designed to complement our commercial strategy by expanding the market position for Amalus PDT by providing more value to patients, broadening the addressable market, and offering more favorable treatment options. The studies are performed by Biofrontera AG and are indirectly financed by us through the License and Supply Agreement for Amalus. In December, we announced enrollment of the first patient in the acne study, a multicenter, randomized, double-blind, Phase II study that will enroll 126 adults with moderate to severe acne who will be treated with amylose PDT or placebo. The efficacy of amylose PDT is being tested with incubation durations of one and three hours. The primary endpoint is the change in number of inflammatory lesions and improvement in symptoms as assessed by the physician conducting the study. The second study is a Phase I study evaluating the safety and tolerability of amylose for the treatment of AKs located on the face and scalp together with our new Rotoled XL lamp, which, as I mentioned, covers a larger surface area. In December, we also enrolled the first patient into this open-label study that will enroll a total of 100 subjects with mild to severe AKs on the face and scalp across eight trial sites. Each patient receives a field-directed treatment with the content of three tubes of amylose, better enabling treatment of larger surface areas. In addition, we have a Phase III study underway in the United States evaluating amylose PDP in combination with the BF roto-led LAMP for the treatment of superficial basal cell carcinoma. This study is approximately 70% enrolled and aims to enroll a total of 186 patients. We look forward to providing you an update on this and the other studies as we hit our milestones. So in conclusion, 2021 was an exciting and transformational year for us at Bayer Funtera. We advanced our clinical development and commercial growth. We generated net product revenues of $24.1 million, returning to near pre-pandemic levels. We became a NASDAQ-listed company and raised $14.9 million through the IPO, $13.6 million through a subsequent private placement, and $13.2 million through warrant execution. We migrated away from our controlled subsidiary position, moving our former parent to approximately 47% shareholding position, and amended our license and supply agreement to strengthen our commercial revenue opportunity and future pipeline for label expansion of AMLU's. Overall, we made tremendous progress in 2021 in establishing our financial footing, advancing our pipeline, and positioning BioFrontera for sustained growth. As we have just exited Q1 2022 with strong business momentum, I look forward to a busy 2022 that will further advance our strong position within the dermatology market. So with that overview, I would like to conclude the business update. We will be opening the line today for questions, and I will be having Erica Gates, our principal accounting officer, join both Herman and myself to answer any questions you may have. Thank you again for taking the time to participate in this conference call today. On operator, we are now ready to take questions. Thank you.
spk05: Thank you. We will now begin the question and answer session. To ask a question, please press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to a similar roster. The first question comes from Jonathan Ascoff with the Roth. Please go ahead.
spk06: Thank you. Good morning, guys, and congrats on the progress. My first question is, what's the reason for the Salesforce additions in 2023 rather than the originally proposed by year end 2022?
spk01: Sure. Thanks, Jonathan. I think the approach of sales development and expansion is beyond just a typical sales territory. And so the expansion of the sales organization includes the key account department that we've recently put together as well as the inside sales force. And the reason we're taking that approach instead of feet out in the field is we think this will have a greater impact on specifically our key accounts that we want to focus on and allowing the existing sales force to deeper penetrate and build the relationships with our existing accounts. So it's all still part of the original growth model. It's just not a typical sales rep that you're looking at.
spk06: Okay. And are you comfortable giving any data timing guidance for the three ongoing trials or no?
spk01: Herman, I would defer to you on that.
spk02: Yeah, we believe that we'll be able to complete recruitment in the BCC trial by the end of the year. And the patients are in the trial for a maximum of six months, so the study could then be completed in the middle of next year and the database closed then a month or two later. For the safety trial, that one we expect to be completed in the course of the year. The ACNA trial, again, recruitment should be completed towards the end of the year, and also here the study results should be available in the middle of next year.
spk06: Okay, thank you very much, Herman. Can you give us a little help with the SG&A for 2022? Should we sort of bring that down sequentially because maybe the fourth quarter had some residual non-recurring expenses? Is that accurate?
spk01: The SG&A that you're looking at for the performance in 2021? No, no.
spk06: The SG&A over 2022, shouldn't that maybe drop a bit further for the first quarter of 2022 because maybe the fourth quarter of 21 still has some residual non-recurring expenses like third quarter was really heavy with the non-recurring expenses?
spk01: I'm not sure there's any non-recurring in the Q4 numbers.
spk03: Just to clarify, some of the major non-recurring items were specific to Q3, so I don't identify much in Q4 that would be coming down.
spk06: Okay, so that looks like a run rate then. Thank you. And, by the way, lastly, the AMALU's price hike, was that to $330 from $315 on the first of this month?
spk01: Yes, $331. Okay.
spk06: Thank you very much.
spk05: As a reminder, if you have a question, please press star, then you'll want to be joined into the queue. The next question comes from Bruce Jackson with the Benchmark Company. Please go ahead.
spk07: Hi, good morning, and thank you for taking my questions. So just generally with dermatology, it was one of the specialties that was more affected by COVID-19 in patient visits. What are you seeing right now out in the marketplace in terms of how the dermatology patient visits are recovering?
spk01: So I think the headwinds from COVID-19, Bruce, are still there, although it's not quite the same as it was during COVID. The biggest impact in the marketplace right now is staffing and retraining. I think the DERM offices that did have to close or reduce staff are trying to get patients back in, but it's a matter of getting the adequate training of their staff up and running. So that's really what we're seeing in terms of getting patients back into treatment.
spk07: Okay, and then a question just about the 2022 revenue guidance. At least 30%, you're coming off of a very strong first quarter. You've got a price increase that's gone into effect. Would you characterize your guidance as being conservative? Because coming off of the strong fourth quarter and first quarter, it sort of feels conservative.
spk01: So I would say that I think framing it as at least 30% is intended to read as conservative. You know, as I just mentioned with the headwinds of COVID, we had a great Q1, but we are still balancing the expectations of how COVID will impact the industry. So hopefully at least 30% is conservative, if that's a good answer. Okay.
spk07: Okay. One last follow-up question on the clinical trials with the safety trial for the three tubes. When do you plan to complete enrollment and then when do you plan to submit the data to the FDA?
spk02: We plan to complete enrollment for this trial sometime in the middle of the year. and we hope to be able to submit this to the FDA before the end of the year.
spk07: All right. Perfect. Thank you very much.
spk02: My pleasure. Thanks for the questions.
spk05: This concludes the question and answer session. I would like to turn the conference back over to the management for a few closing remarks.
spk01: Thank you, and thank you again for joining us all today. I trust that we've shared our enthusiasm for the future of our product portfolio and BioFrontier's position within the dermatology community. We look forward to speaking with you again when we report our first quarter 2022 results in May. In the meantime, thank you all, and have a nice day.
spk05: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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