Biofrontera Inc.

Welcome to the BioFrontera, Inc. first quarter 2024 financial results and business update conference call. At this time, all participants are in 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, you may 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 Andrew Barwicki with Barwicki Investor Relations. Please go ahead.

Good morning and welcome to BioFrontera Incorporated's first quarter 2024 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 BioFront Terra's press release and certain SEC filings. Also, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, May 16, 2024. BioFront Terra undertakes no obligations 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 is included in the press release announcing Q1 fiscal year 2024 results. More specifically, management will be referencing adjusted EBITDA, a non-GAAP financial measure defined as net income or loss excluding interest income and expense, income taxes, depreciation, and amortization, and certain non-recurring or non-cash items. With that said, I would like to turn the call over to Herman Lubert, CEO, Chairman, and Founder of BioFrontera. Herman?

Thank you, Andrew, and many thanks to everyone joining us this morning. On today's call, I'll provide an overview of our operations during the first quarter, some events that occurred since the end of the first quarter, and discuss our business strategy for the remainder of the year. Fred Leffler, our CFO, will follow with a discussion on financial results, and then both of us will be happy to answer questions. I would like to start with the most positive event of the first quarter. We successfully renegotiated our license and supply agreement for Amalus with BioFrontera AG, reducing our costs significantly. We will now be paying 25% for Amalus during 2024 and 2025, compared to approximately 40-50% of our sales price under the prior agreement. This LSA will gradually step up to 35% by 2032. Any indication associated with ACNE will remain at 25% indefinitely. This represents the transformational event for BioFrontera Inc., significantly increasing our potential to become profitable in the near term. As part of this amendment, we will take over all US clinical trials effective June 1 which will allow for more effective cost management and direct oversight of the trial efficacy. The reduced costs of goods will allow us to finance R&D activities while continuing our commercial growth trajectory. With Amelus making up most of our revenue, we believe this is a unique opportunity moving forward. Furthermore, I'm pleased to announce that in February we raised $8 million minus financing expenses to support the growth and expansion of the company, including clinical trials. Later, the cost of the clinical trials will be covered in entirety by the savings from the reduced transfer price. Our February financing deal entailed warrants exercisable upon achievement of certain milestones by April 30th at the earliest. As we confirmed earlier this month, we have already met those milestones and as a result received another $8 million through the exercise of the warrants in early May. Contrary to these positive developments, our quarterly revenues were negatively impacted when in February a cyber attack against Change Healthcare, the largest billing and payment system in the US, affected thousands of medical practices. According to the AMA, the American Medical Association, 80% of physicians reported lost revenues from unpaid claims. The AMA, which is the nation's largest medical society, said the attack threatened the viability of physician practices across the country, with more than half of survey respondents having to use personal funds to cover practice expenses. Healthcare reimbursement, is a never-ending challenge with many changes occurring on a constant basis, purposeful or not. Having said that, I'm extremely proud of our team and the efforts with medical facilities, doctors' offices, and insurance companies to tackle working capital issues created by the Q1 Change Health Casaba attacks and to ensure full reimbursement is received wherever possible. We are working hand-in-hand with our customers, whether they are a small single provider office or a large medical facility, to ensure they have our products available and are appropriately reimbursed for their service to the patients. In spite of everybody's efforts, all this culminated in some customers either reducing their orders in Q1 or shifting their orders into Q2. which drove 9% lower Q1 revenue as compared to the first quarter in 2023. However, as we announced earlier, we have begun to see recovery, and as of year-to-date April 30th, 2024, compared to the same period last year, we have reported already more than 5% growth in revenues. Our BF Rotolab lamps, The devices that are used in combination with Amalus continue to be placed at physician offices throughout the country. A positive indicator for future growth is that in the first quarter 2024, we have placed 28 lambs, an increase of 115% compared to the first quarter of the prior year. The growing number of lamps in the field reflects both first-time installations and additional lamps among dermatology practices already familiar with Amalus PDT, facilitating growth through new and existing customers. We expect to begin selling the Rodolat XL, our larger five-panel lamp, towards the end of the second quarter this year. As part of the agreement with BioFrontera AG, we are in the midst of preparations for the takeover of the clinical trial departments for BioFrontera Bioscience. As of June 1st, 2024, members of the clinical trial groups will join our wholly owned German subsidiary, BioFrontera Discovery, GmbH, which subsequently will be responsible for the management of all clinical trials with Amelus and Bay of Odalette in the United States. At BioFrontera Discovery, We will not only be responsible for future clinical studies, but also for all ongoing trials. Currently, two clinical studies are enrolling patients, one for actinic keratosis on the neck and trunk and the arms and hands, the other for moderate to severe acne. These have recruited 57% and 74% of subjects, respectively. The third ongoing study for the treatment of superficial breast cell carcinoma is nearing completion of the one-year follow-up phase required for FDA submission. We expect the last patient to complete this follow-up phase before the end of the year. As I mentioned in the past, the Food and Drug Administration approved a new formulation of amylose without propylene glycol for the treatment of actinic keratosis. The production of this formulation will begin shortly and we expect delivery at our wholesaler in August. This will help improve tolerability for some of our patients while also reducing the generation of impurities over time, which may result in an extended shelf life once sufficient stability data is collected. With that, I'll turn the call over to Fred to walk through the financial details of the first quarter.