Biofrontera Inc.

Good day and welcome to the Biofrontera Inc. second quarter 2024 financial results and business update conference call. All participants will be 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 presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. 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. Please go ahead.

Thank you. Good morning and welcome to BioFrontier's second quarter fiscal year 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 BioFrontera'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 this live broadcast, August 15, 2024. 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 that 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. Reconciliation of non-GAAP to GAAP results is included in this week's press release. 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 other non-recurring or non-cash items. With that said, I'm pleased now to turn the call over to Hermann Louvert, CEO, Chairman and Founder of BioFrontera. Hermann?

Yes, thank you, Ambrut, and my thanks to everyone joining us this morning. On today's call, I'll provide an overview of our accomplishments during the second quarter and first half of 2024. Fred Leffler, our CFO, will follow with a discussion on financial results, And then both of us will be happy to answer questions after our prepared remarks. Starting with the business update, we have made tremendous progress across three critical areas, including one, first and foremost, our sales approach. Increasing sales during the second quarter and first half of the year has been accomplished. We grew our sales by 34% for the quarter. In Q2, We managed to compensate the negative influence of the reimbursement challenges stemming from the change healthcare cybersecurity event and the consecutive sales decline in Q1, achieving a little over 8% growth compared to 2023 for the half year. Two, managing our total operating expenses. For example, during the second quarter of 2024, Total operating expenses were $12.9 million compared to $14.5 million in the second quarter of last year. Another example relates to our SG&A expenses, where in Q2 this year, the SG&A was $7.9 million compared to $11.6 million last year. Three, strengthening our balance sheet by paying down all outstanding debt in the second quarter. I believe these three simple yet significant accomplishments on the commercial side of the company have enhanced our day-to-day operations and put us in a position for long-term growth. Together with the rise of gross $8 million in May from exercised warrants, the company is in a stable financial condition. The second quarter, was also a very anticipated time for us as we began to sell the FDA approved Rodolet XL lamp. Keep in mind, sales only began on June 10th, which is the end of the quarter, but we feel very optimistic about the potential as we continue rolling it out and making it available to all our customers. It is important to understand the benefits for doctors and patients as we look to increase sales. The BF Rodolet XL lamp is designed to facilitate the treatment of extended photodamaged skin areas with actinic keratosis, which may require several illuminations with the original small BF Rodolet lamp. While Amelus makes up most of our revenue, we are also proud to announce that in addition to the initial Rodolet XL lamp cells, 57 of the original BF Rodolet lamps were placed at physician offices during the first half of the year, compared to 52 in the same period last year. The growing number of lamps in the field reflects both first-time installations and additional lamps among dermatology practices already familiar with Amelus PDT, facilitating growth through new and existing customers. Although we are very pleased with some reductions in costs such as SG&A and total operating expenses, we continue to invest in our commercial and support teams by increasing a Salesforce-focused organization to invest in marketing, strategic accounts, medical and reimbursement support. We believe this approach will increase Amalu's purchases by the doctor's offices which then need unproblematic patient treatment and reimbursement to make this process financially viable for them. Although the Rodolet XL lamp began selling at the end of the quarter, which means sales were minimal, it is important to understand the benefits for patients as we look to increase sales. The Rodolet XL is for the treatment of extended photodamaged skin areas with alginic keratosis. To eliminate restrictions on reimbursement for the use of more than one tube of Amalus in a single treatment, a three-tube phase one safety study was completed and the data was submitted to the FDA and accepted for review. We expect to get FDA approval for including the use of up to three tubes for treatment into the Amalus label during Q4 of 2024. In combination with the launch of the XL lamp, This will allow PDT of larger skin areas, constituting a crucial requirement for our further growth. As previously announced, the US Food and Drug Administration, the FDA, has approved a new film formulation of amylose lacking propylene glycol for the treatment of actinic keratosis. First batches with this formulation have now reached the market. The formulation will improve tolerability for some of our patients while also reducing the generation of impurities over time, which may result in an extended shelf life. Between all our patents currently granted by the U.S. Patent Office, PDT with Ameluz and 3F Rodolat is currently protected until 2040. A patent application for the new formulation is still pending and may extend the protection of our products until 2043 or even further. A transforming event for our company was the successful renegotiation of our license and supply agreement for Amelus and Rodolet lamps in February. According to the agreement, we purchased Amelus and the lamps from the German BioFrontera Pharma And upon arrival in the United States, we pay a percentage of our anticipated net sales price for Amelus and the actual cost of manufacturing plus 10% for the lamps. The cost of Amelus has in the new LSA been reduced to almost half of what we have paid thus far. This will become effective when we order new batches, which we did not have to do in the first half of this year due to an over stacking situation by the end of 2023. However, we will need to purchase more AMELUS in the second half of the year. Only then will the beneficial effects of the new LSA become effective, lowering our cost of AMELUS from about 50% to 25% of our net sales price for all orders in 2024 and 2025. On June 1, We transferred all clinical research with Amelus from BioFrontera Bioscience to our wholly owned German subsidiary, BioFrontera Discovery. While all our clinical trials are performed at centers in the US, the trials will nevertheless be organized and managed out of BioFrontera Discovery. We are planning to complete all ongoing trials and in parallel decide on new trials based on maximal commercial benefit for BioFrontera Inc. Three ongoing trials are close to completion. The last patient in the one-year follow-up period for a Phase III trial for superficial basal cell carcinoma will be complete in November or December. This time point provides the data required for FDA approval for this new indication for amylose. Enrollment in a Phase III study for actinic keratosis on the extremities, neck, and trunk and a phase two trial for moderate to severe acne is expected around the turn of the year. Currently, the extremity study is 69% enrolled, the acne trials is 78%. As the cost savings due to the renegotiated LSA have not started, but we consume the cost of the clinical trials since June, We will for a few months have an increased burn rate until the reduced cost of goods balances this off towards the end of the year. With that, I'll turn the call over to Fred to walk through the financial details of the second quarter and first half.