Biofrontera Inc.

Welcome to the BioFrontera Incorporated first quarter 2023 financial results and business update 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 star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then one 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 Tirth Patel with LHA Investor Relations. Please go ahead.

Good morning and welcome to BioFrontera Inc.' 's first quarter 2023 financial results and business update conference call. Please note that certain information discussed during today's call by management is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that BioFrontier's 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 BioFrontera's press releases and SEC filings. Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, May 12, 2023. BioFrontera 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. Biofrontera 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 was included in this morning's press release. More specifically, management will be referring to adjusted EBITDA, a non-GAAP financial measure defined as net income or loss, excluding interest, income, and expense, income taxes, depreciation, amortization, and certain other non-recurring or non-cash items. I would like to turn the call over to Herman Luber, Executive Chairman and Founder of BioFrontera. Herman?

Yeah, thank you, Tov, and thanks to everyone joining us today. I am here together with our CFO, Brett Leffler. We appreciate your interest in BioFrontera and before we move on to more details on our sales performance, I would like to inform you that Erika Munaco has resigned from the company as CEO. Erika has been part of BioFrontera's team for seven years starting as Director of Finance and Operations and growing to then accompany the company's IPO as Chief Financial Officer. Following the IPO, I stepped back from the role of CEO, which I had hitherto held, to become Executive Chairman, and Erika led BioFrontera as CEO since. We thank Erika for her great contribution to building this company and wish her all the best in future endeavors. As Executive Chairman, I am taking over the responsibilities of the CEO to ensure we maintain uninterrupted focus on our core business priorities and signal confidence to the stock market. With that, I look forward to reviewing our strong start to the year and our plans going forward. I am proud of all our teams for supporting sales execution. There are a number of factors that will drive our goals, both near and long term. Today, I'll discuss our progress across several of these areas, including expanding Amalu's use, the growth and maturation of our sales force, and Amalu's label expansion studies. Let me begin with first quarter revenues. Total revenues for Q1 2023 were $8.7 million. Our prior year results were boosted by customer buy-in ahead of the publicized April 1, 2022 price increase. We didn't have such a price increase this year, so we did not experience a similar buy-in effect. As a result, the year-over-year comparison is not a very useful indicator of actual business strength. In fact, Q1 of 2023 was historically strong in a very significant way. Looking at the first quarter, it was the highest volume first quarter in the company's history, excluding last year's first quarter with the buy-in boost. It was, in fact, 30% higher than the best Q1 we had before that did not profit from a price increase. Driving demand for Amelus PDT requires continued education of the market on the treatment of actinic keratosis with our products. To that end, we attended several industry conferences in the first quarter, including Maui Derm, the Winter Clinical Miami, and the AOCD Spring Meeting in West Palm Beach. We also had a significant presence at the American Academy of Dermatology Annual Meeting the year's largest and most prestigious dermatology conference. Improving brand awareness is critical to sustaining medical education initiatives, so while attending these conferences, we met with many current and potential customers and partners and held live demonstrations at our booth. As a lean organization, we carefully evaluate where our time is best spent to prioritize high visibility events where we are most impactful and can maximize sales leads. Another key driver of success is the size and maturation of our sales force. Maturation is especially important as customer education and relationship building take time, while growth enables broader and deeper reach among customers. It was encouraging to see our sales force continue to improve in the quarter as they nurture customer relationships and gain experience and deliver across the board. We have made a significant investment in growing our sales force. As part of our expansion strategy, we added a new sales region and increased the number of reps by nearly 30%, with coverage now encompassing 40 territories. This larger sales force enables us to cultivate the meaningful relationships with dermatologists that result in heightened brand awareness, broader adoption, and consequently higher sales. Following a productive and exhilarating national sales meeting this past quarter, I see our collective force equipped to deliver on our goals as the more tenured reps continue to execute and the newer ones begin to ramp. While the current label of MLUs and market opportunities sufficiently support our growth expectations for the near term, several clinical studies evaluating MLUs are on the track to maximize our path to potential label extensions and new indications. Every label extension makes another part of the large AK market accessible for us. Earlier this year, The first patient in a Phase III study evaluating the use of amylose PDT in the extremities, neck, and trunk was enrolled. Meanwhile, 10 clinical centers have been initiated in the trial, which has now dosed 23 patients at 10 centers, are screening patients very speedily, and aim to enroll a total of 165 patients stratified by body region. With AK affecting an estimated 58 million Americans and driving approximately 13 million treatments annually, there's a large and growing demand for a highly effective therapy to treat actinic keratosis beyond the face and scalp. In addition, the last patient has recently been treated in an open-label multi-center phase one safety and tolerability study. investigating three tubes of amylose per treatment. Apine keratosis treatments using three tubes benefit both patients and providers by enabling physicians to treat a wider affected surface area, potentially requiring fewer office visits for the patient. This safety study has the potential to be the final study required for FDA approval for free tube treatment, and FDA submission of the study report is planned in Q4. Following the successful outcomes of these and other studies, potential label expansions can significantly improve our competitive position and create opportunities to drive significantly more revenue. We look forward to providing updates later this year. We also continue to evaluate opportunities for portfolio expansion, prioritizing areas of interest along the continuum of diagnosis, treatment, and post-therapy for non-melanoma skin cancer, as well as additional conditions that our dermatologists treat. While we are currently focused on scaling our current assets, we expect a diversified portfolio to be important to our future growth plans. Before Fred gets into our financial results in detail, I would like to address a couple of additional company matters. We will be holding a special meeting of stockholders on May 22nd. The purpose of this meeting is to vote on the proposal to affect a reverse stock split. Given the price of Biofrontera's common stock earlier this year, we received a non-compliance letter from the NASDAQ. The intent of this proposed reverse stock split is to increase the per share price of our stock in order to regain compliance with the minimum bid requirement for continued listing. We also believe The reverse stock split will make our common stock more attractive to a broader range of investors. We encourage all shareholders to vote for the reverse stock split and believe it is in the best interest of the company and all shareholders. We are also taking steps to strengthen our capital position. We now have a line of credit to help address seasonal inventory purchasing requirements. This will help reduce cash drawdowns during the fourth and first quarters when we tend to have the most customer demand. So to summarize, I am very encouraged by our start of the year. While revenues were down year over year due to the tough comparison, the volume trends are positive and show historic strength this past quarter. We remain on track to grow revenues by 25% or more this year, driven primarily by Amalu's revenue and a maturing sales force. We expect to have the financial flexibility to execute and make the necessary investments to accelerate growth. And given our sales expectations and financial discipline, we remain confident that we will reach cash flow breakeven within the next two years. With that, I'll turn the call over to Fred to walk through the financial details of the quarter.