Biofrontera(BFRI)

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Biofrontera(BFRI) - 2023 Q3 - Quarterly Report
2023-11-08 16:00
PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) The unaudited condensed consolidated financial statements for the period ended September 30, 2023, show a significant decrease in total assets from $50.9 million at the end of 2022 to $34.1 million, with total liabilities increasing and stockholders' equity substantially reducing, alongside a net loss of $23.7 million and a going concern warning [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, the company's total assets decreased to $34.1 million from $50.9 million, while total liabilities increased to $33.1 million from $27.0 million, resulting in a sharp fall in stockholders' equity to $1.0 million from $23.9 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $3,422 | $17,208 | | Total current assets | $29,611 | $43,140 | | Total assets | $34,104 | $50,884 | | Total current liabilities | $29,124 | $20,894 | | Total liabilities | $33,066 | $27,006 | | Total stockholders' equity | $1,038 | $23,878 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q3 2023, total revenues more than doubled to $8.9 million, but operating expenses led to a higher loss from operations of $4.6 million, with the net loss widening to $6.3 million, and for the nine-month period, the company swung from a net income of $2.1 million to a net loss of $23.7 million Statement of Operations Summary (in thousands) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues, net | $8,896 | $4,322 | $23,475 | $18,530 | | Loss from operations | $(4,620) | $(3,639) | $(18,812) | $(12,961) | | Net income (loss) | $(6,342) | $(2,566) | $(23,657) | $2,145 | | Basic EPS | $(4.64) | $(2.26) | $(17.57) | $2.19 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash used in operating activities significantly increased to $16.0 million, leading to an overall decrease in cash, cash equivalents, and restricted cash by $13.8 million, ending at $3.6 million Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,029) | $(7,928) | | Net cash provided by (used in) investing activities | $546 | $(3,070) | | Net cash provided by financing activities | $1,697 | $14,021 | | Net increase (decrease) in cash | $(13,786) | $3,023 | | Cash at end of period | $3,622 | $27,765 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the company's focus on dermatological products like **Ameluz**, a 1-for-20 reverse stock split in July 2023, significant liquidity challenges leading to a **going concern** warning, and specifics on acquisition liabilities, fair value measurements, related-party transactions, and legal settlements - The company is a U.S.-based biopharmaceutical firm focused on commercializing products for dermatological conditions, primarily photodynamic therapy (PDT) with its main product, **Ameluz**[13](index=13&type=chunk)[37](index=37&type=chunk) - A 1-for-20 reverse stock split was **effective** on July 3, 2023, and all share and per-share amounts in the financial statements have been retrospectively adjusted[15](index=15&type=chunk)[38](index=38&type=chunk)[320](index=320&type=chunk) - Management has determined that **substantial doubt** exists about the Company's ability to continue as a **going concern** due to significant losses, negative cash flows, and the need to raise additional capital to fund operations into 2024[17](index=17&type=chunk)[41](index=41&type=chunk)[322](index=322&type=chunk) - The company has an ongoing legal settlement with DUSA Pharmaceuticals Inc., with a remaining liability of **$6.0 million** as of September 30, 2023. Biofrontera AG is responsible for **50%** of the settlement costs[136](index=136&type=chunk)[157](index=157&type=chunk) - Subsequent to the quarter end, on October 30, 2023, the company entered into a securities purchase agreement for a registered public offering, raising gross proceeds of approximately **$4.5 million**[164](index=164&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a **107%** increase in product revenue for Q3 2023, but a widened net loss due to increased operating expenses and a **$6.6 million** unrealized loss on investment, with critical liquidity challenges leading to **substantial doubt** about its **going concern** ability, mitigated by a recent **$4.1 million** net capital raise [Results of Operations](index=25&type=section&id=Results%20of%20Operations) For Q3 2023, product revenue surged **107%** to **$8.9 million** year-over-year, primarily from increased **Ameluz** sales volume, though loss from operations grew to **$4.6 million**, and for the nine months, product revenue increased **26.8%** to **$23.4 million**, resulting in a net loss of **$23.7 million** compared to a net income of **$2.1 million** in the prior year Comparison of Three Months Ended September 30 (in thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $8,879 | $4,290 | $4,589 (107.0%) | | Loss from operations | $(4,620) | $(3,639) | $(981) | | Net loss | $(6,342) | $(2,566) | $(3,776) | Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Product revenues, net | $23,423 | $18,467 | $4,956 (26.8%) | | Loss from operations | $(18,812) | $(12,961) | $(5,851) | | Net Income (loss) | $(23,657) | $2,145 | $(25,802) | - The increase in SG&A expenses for the nine-month period was primarily driven by **$2.9 million** in personnel-related costs, **$1.2 million** in legal settlement expenses, and **$1.2 million** in other non-recurring legal costs[219](index=219&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges with cash and equivalents at **$3.4 million**, leading management to conclude **substantial doubt** about its **going concern** ability, with primary liquidity sources including product sales and a revolving line of credit, and a recent **$4.1 million** net capital raise aimed at funding operations - The company has generated significant losses since inception, with a loss from operations of **$18.8 million** and **net cash outflows** from operations of **$16.0 million** for the nine months ended September 30, 2023[251](index=251&type=chunk) - Management has determined that **substantial doubt** exists about the company's ability to continue as a **going concern**[233](index=233&type=chunk) - Primary sources of liquidity are existing cash (**$3.4M**), an investment in a related party (**$3.3M**), and a revolving line of credit[271](index=271&type=chunk) - Management believes a recent **net capital raise** of **$4.1 million** and plans to improve working capital will provide the opportunity for the company to continue as a **going concern**, though no assurance can be given[272](index=272&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Biofrontera Inc. is **not required** to provide the information for this item - The company is **not required** to provide information for this item as it qualifies as a "smaller reporting company"[280](index=280&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were **effective** as of September 30, 2023, with **no material changes** in internal control over financial reporting during the quarter - Based on an evaluation as of the end of the period, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were **effective**[281](index=281&type=chunk) - There were **no changes** in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[282](index=282&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is involved in legal proceedings, notably with DUSA Pharmaceuticals, Inc., with a remaining settlement liability of **$6.0 million**, and a new complaint filed in September 2023 alleging breach of contract and unfair trade practices related to **Ameluz** promotion, which the company denies and intends to defend vigorously - On September 13, 2023, DUSA Pharmaceuticals filed a new complaint against Biofrontera, alleging breach of contract and unfair trade practices related to the promotion of its **Ameluz** product[138](index=138&type=chunk) - The company denies the claims and intends to defend the matter vigorously, but cannot currently estimate the possibility or range of a material loss[159](index=159&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=ITEM%201A.%20Risk%20Factors) There have been **no material changes** to the risk factors disclosed in the Annual Report on Form 10-K, except for highlighting specific risks including the uncertainty of research and development efforts and **substantial doubt** about the company's ability to continue as a **going concern** due to its financial condition and need for additional capital - A key risk factor is the **substantial doubt** about the company's ability to continue as a "**going concern**" due to its need to raise additional capital to fund its growth plans and operations[262](index=262&type=chunk)[285](index=285&type=chunk) - The company notes that the results of its research and development efforts are uncertain and may not be technologically successful or achieve market acceptance[261](index=261&type=chunk)[284](index=284&type=chunk)[299](index=299&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) **None** - **None**[264](index=264&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) **None** - **None**[287](index=287&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) **Not Applicable** - **Not Applicable**[265](index=265&type=chunk) [Item 5. Other Information](index=31&type=section&id=ITEM%205.%20Other%20Information) **None** - **None**[266](index=266&type=chunk) [Item 6. Exhibits](index=32&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits filed with the report, including various agreements related to a **securities purchase**, **warrant amendments**, and **officer certifications** as required by the Sarbanes-Oxley Act - Exhibits filed include the **Securities Purchase Agreement**, **Placement Agency Agreement**, and amendments to **Common Stock Purchase Warrants**, all dated October 30, 2023[293](index=293&type=chunk) - **Certifications** of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are included as exhibits[268](index=268&type=chunk)[300](index=300&type=chunk)
Biofrontera(BFRI) - 2023 Q2 - Earnings Call Transcript
2023-08-11 14:12
Biofrontera Inc. (NASDAQ:BFRI) Q2 2023 Earnings Conference Call August 11, 2023 8:30 AM ET Company Participants Tirth Patel - Investor Relations Hermann Luebbert - Executive Chairman and Founder Fred Leffler - Chief Financial Officer Conference Call Participants Jonathan Aschoff - ROTH MKM Bruce Jackson - The Benchmark Company Operator Good morning everyone and welcome to the Biofrontera Inc. Second Quarter 2023 Financial Results and Business Update Conference Call. [Operator Instructions] Please also note ...
Biofrontera(BFRI) - 2023 Q2 - Quarterly Report
2023-08-10 16:00
[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the company's unaudited condensed consolidated financial statements and management's discussion, highlighting going concern issues and a recent reverse stock split - Management has determined that substantial doubt exists about the Company's ability to continue as a going concern for at least one year from the financial statement issuance date, based on growth plans, inventory purchases, and a final settlement payment[166](index=166&type=chunk)[90](index=90&type=chunk)[109](index=109&type=chunk) - On July 3, 2023, the Company effected a **1-for-20 reverse stock split**, with all financial statement information retrospectively adjusted to reflect this split[183](index=183&type=chunk)[194](index=194&type=chunk)[127](index=127&type=chunk) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Biofrontera Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with a key disclosure on going concern uncertainty [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,453 | $17,208 | | Inventories, net | $14,785 | $7,168 | | Total Assets | $36,905 | $50,884 | | Total Liabilities | $29,732 | $27,006 | | Total Stockholders' Equity | $7,173 | $23,878 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance over specific periods, detailing revenues, expenses, and net income or loss Statement of Operations Summary (in thousands) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues, net | $5,848 | $4,457 | $14,580 | $14,208 | | Loss from operations | $(8,699) | $(6,212) | $(14,190) | $(9,322) | | Net income (loss) | $(9,837) | $(850) | $(17,315) | $4,711 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,025) | $(1,987) | | Net cash provided by (used) in investing activities | $164 | $(36) | | Net cash provided by financing activities | $1,106 | $9,391 | | Net decrease in cash | $(12,755) | $7,368 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements - The Company's principal licensed product is Ameluz, used for photodynamic therapy (PDT) treatment of actinic keratoses, while its second product, Xepi, has seen limited revenue and commercialization delays due to third-party manufacturing issues[178](index=178&type=chunk)[179](index=179&type=chunk) - As of June 30, 2023, the Company holds a receivable of **$3.7 million** from its significant shareholder, Biofrontera AG, for its 50% share of a legal settlement for which both parties are jointly and severally liable[219](index=219&type=chunk)[239](index=239&type=chunk) - The Company has a legal settlement liability of **$6.1 million** as of June 30, 2023, related to a lawsuit with DUSA Pharmaceuticals Inc., with Biofrontera AG agreeing to pay 50% of the settlement costs[10](index=10&type=chunk)[268](index=268&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for Q2 and H1 2023, highlighting increased revenue, widened operating losses due to higher SG&A, and decreased liquidity, reinforcing going concern uncertainty [Overview and Strategy](index=31&type=section&id=Overview%20and%20Strategy) This section outlines the company's business focus, strategic objectives, and factors influencing its revenue patterns - The company is a U.S.-based biopharmaceutical firm focused on commercializing products for dermatological conditions, primarily photodynamic therapy (PDT) and topical antibiotics[18](index=18&type=chunk) - Key strategic elements include expanding U.S. sales of Ameluz, leveraging potential future approvals for portfolio products, and opportunistically adding complementary products to its portfolio[42](index=42&type=chunk)[315](index=315&type=chunk) - The company's revenue is subject to seasonality, with sales historically higher in the first and fourth quarters[21](index=21&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, comparing revenues, expenses, and profitability across periods Comparison of Three Months Ended June 30, 2023 and 2022 (in thousands) | Line Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues, net | $5,848 | $4,457 | $1,391 | | Total operating expenses | $14,547 | $10,669 | $3,878 | | Loss from operations | $(8,699) | $(6,212) | $(2,487) | | Net loss | $(9,837) | $(850) | $(8,987) | Comparison of Six Months Ended June 30, 2023 and 2022 (in thousands) | Line Item | 2023 | 2022 | Change | | :--- | :--- | :--- | :--- | | Revenues, net | $14,580 | $14,208 | $372 | | Total operating expenses | $28,770 | $23,530 | $5,240 | | Loss from operations | $(14,190) | $(9,322) | $(4,868) | | Net Income (loss) | $(17,315) | $4,711 | $(22,026) | - Q2 2023 net product revenue increased by **$1.4 million (31.3%)** year-over-year, driven by higher Ameluz sales volume from an expanded sales force and the absence of a prior-year buy-in effect from a price increase[53](index=53&type=chunk) - Q2 2023 SG&A expenses increased by **$1.8 million (18.5%)** year-over-year, primarily due to **$1.0 million** in increased personnel costs (higher headcount and severance) and **$1.0 million** in non-recurring legal expenses[33](index=33&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its short-term and long-term financial obligations and fund its operations - As of June 30, 2023, the company had cash and cash equivalents of **$4.5 million**, a significant decrease from **$17.2 million** as of December 31, 2022[66](index=66&type=chunk) - The company has generated significant losses since inception, with an accumulated deficit of **$96.8 million** as of June 30, 2023, and net cash used in operations was **$14.0 million** for the first six months of 2023[89](index=89&type=chunk)[163](index=163&type=chunk) - Management has concluded that substantial doubt exists about the company's ability to continue as a going concern due to its growth plans, inventory purchases, and a final settlement payment[90](index=90&type=chunk)[76](index=76&type=chunk) [Non-GAAP Financial Measures (Adjusted EBITDA)](index=38&type=section&id=Non-GAAP%20Financial%20Measures%20(Adjusted%20EBITDA)) This section provides a reconciliation and discussion of Adjusted EBITDA, a non-GAAP financial measure, to offer additional insights into operational performance Adjusted EBITDA Reconciliation (in thousands) | Period | Net Income (Loss) | Adjusted EBITDA | | :--- | :--- | :--- | | **Three Months Ended June 30, 2023** | $(9,837) | $(7,918) | | **Three Months Ended June 30, 2022** | $(850) | $(7,139) | | **Six Months Ended June 30, 2023** | $(17,315) | $(11,907) | | **Six Months Ended June 30, 2022** | $4,711 | $(9,526) | - Adjusted EBITDA decreased to **($7.9) million** in Q2 2023 from **($7.1) million** in Q2 2022, primarily driven by a **$1.9 million** increase in SG&A costs, partially offset by a **$1.4 million** increase in revenues[65](index=65&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a "smaller reporting company," is not required to provide the information for this item - As a "smaller reporting company," Biofrontera Inc. is not required to provide the information required by this Item[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[99](index=99&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended June 30, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[100](index=100&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section refers the reader to Note 18, "Commitments and Contingencies," in the Notes to Consolidated Financial Statements for information regarding the company's legal proceedings - Information regarding legal proceedings is available in Note 18 - Commitments and Contingencies in Part I, Item 1 of this report[71](index=71&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K, but specifically highlights two risks: the uncertainty of its research and development efforts and the substantial doubt about its ability to continue as a "going concern" - The results of the company's research and development efforts are uncertain and may not be technologically successful or achieve market acceptance[73](index=73&type=chunk)[75](index=75&type=chunk) - A substantial doubt exists about the company's ability to continue as a "going concern" due to its growth plans, upcoming inventory purchases, and a final settlement payment to DUSA Pharmaceuticals, Inc., with future viability depending on its ability to execute its growth plan and raise additional capital[76](index=76&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - None[79](index=79&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Certificate of Amendment for the reverse stock split and various officer certifications required by the Sarbanes-Oxley Act - Exhibits filed with this report include the Certificate of Amendment for the reverse stock split, a confidential settlement agreement, and officer certifications pursuant to the Sarbanes-Oxley Act[83](index=83&type=chunk)[132](index=132&type=chunk)
Biofrontera(BFRI) - 2023 Q1 - Earnings Call Transcript
2023-05-12 16:33
Biofrontera Inc. (NASDAQ:BFRI) Q1 2023 Earnings Conference Call May 12, 2023 8:30 AM ET Company Participants Tirth Patel - Investor Relations Hermann Luebbert - Executive Chairman and Founder Fred Leffler - Chief Financial Officer Conference Call Participants Bruce Jackson - Benchmark Company Operator Welcome to the Biofrontera Inc. First Quarter 2023 Financial Results and Business Update Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conferen ...
Biofrontera(BFRI) - 2023 Q1 - Quarterly Report
2023-05-11 16:00
Financial Performance - Product revenues for Q1 2023 were $8.7 million, a decrease of $1.02 million or 10.5% compared to $9.8 million in Q1 2022, attributed to a lack of customer buy-in prior to a price increase [234]. - The company reported a net loss of $7.478 million for Q1 2023, compared to a net income of $5.561 million in Q1 2022, representing a change of $13.039 million [209]. - Adjusted EBITDA for Q1 2023 was $(3.990) million, a decrease from $(2.439) million in Q1 2022, with the adjusted EBITDA margin dropping from -25.0% to -45.7% [218]. - Operating expenses for Q1 2023 totaled $14.225 million, an increase of $1.364 million or 10.6% from $12.861 million in Q1 2022 [209]. - For the three months ended March 31, 2023, the company incurred a loss from operations of $5.5 million, compared to a loss of $3.1 million for the same period in 2022 [243]. - The company experienced net cash outflows from operations of $3.7 million for the three months ended March 31, 2023, compared to $2.1 million for the same period in 2022 [243]. - The company reported net cash used in operating activities of $3.7 million for the three months ended March 31, 2023, compared to $2.1 million for the same period in 2022 [249]. - As of March 31, 2023, the company had an accumulated deficit of $87.0 million [243]. Cash and Financing - Cash and cash equivalents as of March 31, 2023, were $13.5 million, down from $17.2 million as of December 31, 2022 [219]. - The company anticipates needing additional equity or debt financing to support long-term growth and mitigate operational cost risks [221]. - The company is expecting to collect a receivable of $3.7 million from Biofrontera AG for reimbursement of legal settlement payments [246]. Cost Management - The cost of revenues related to products was $4.547 million in Q1 2023, down 8.6% from $4.975 million in Q1 2022, driven by decreased Ameluz product revenue [211]. - The company expects to continue incurring operating losses due to significant discretionary sales and marketing efforts as it seeks to expand the commercialization of its licensed products in the U.S. [244]. - The company anticipates additional expenses to improve operational, financial, and information systems, as well as to support product commercialization efforts [244]. Market and Operational Outlook - The company plans to expand sales of Ameluz in the U.S. and aims to position it as the standard of care for treating actinic keratoses [199]. - The company continues to monitor the impact of the COVID-19 pandemic on its operations, with optimism for recovery following the end of the Public Health Emergency on May 11, 2023 [200]. Fair Value Adjustments - The fair value of contingent consideration related to the acquisition of Cutanea products was determined to be $6.5 million at acquisition and is re-measured at each reporting date [213]. - The change in fair value of warrant liabilities decreased by $7.7 million for the three months ended March 31, 2023, driven by changes in the underlying value of the common stock [236]. - The change in fair value of investments in equity securities decreased by $2.9 million, influenced by changes in the quoted market price of Biofrontera AG's common stock [237]. Definitions - The adjusted EBITDA margin is defined as adjusted EBITDA expressed as a percentage of revenues for the period [242].
Biofrontera(BFRI) - 2022 Q4 - Annual Report
2023-03-12 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR COMMISSION FILE NUMBER 001-40943 120 Presidential Way, Suite 330 Woburn, Massachusetts 01801 (Address of principal executive offices) (Zip code) Title of Each Class: Trading symbol(s) Name of Each Exchange on Which Registered: Common Stock, par value $0.001 per share BFRI The Nasdaq Stock Market LLC Preferred Stock Purchase Rights The Nas ...
Biofrontera(BFRI) - 2022 Q4 - Earnings Call Transcript
2023-03-09 04:09
Financial Data and Key Metrics Changes - Total revenues for 2022 were $28.7 million, an increase of 19% from $24.1 million in 2021, marking record annual revenues for the company [17][99] - Adjusted EBITDA for 2022 was negative $18.1 million, compared to negative $12.6 million in 2021, primarily due to higher selling, general, and administrative expenses [18][96] - Cash and cash equivalents at year-end 2022 were $17.2 million, with investments totaling $10.5 million [6] Business Line Data and Key Metrics Changes - Cost of revenue was $15.2 million in 2022, up 19% from 2021, with expectations that costs will decrease as revenues grow [3] - The average revenue per sales rep in 2022 was approximately $900,000, with projections to reach cash flow positive at around $1.1 million to $1.2 million in sales per rep [12][57] - The company plans to expand its sales force to between 50 and 55 reps over the next two years, with a focus on optimizing the current team and adding new members [13][27] Market Data and Key Metrics Changes - The treatment of actinic keratosis (AK) represents a $4 billion market, with the company's target market for photodynamic therapy (PDT) for AKs estimated at $440 million [28] - The company holds approximately 30% of the PDT market and has grown its share in the target market by about 12% [29] - The company is addressing sales territory challenges and has seen strong order and shipping volumes in early 2023, indicating ongoing customer demand [22] Company Strategy and Development Direction - The company is focused on expanding its commercial infrastructure, including the addition of an inside sales function and stronger data analytics tools [8][25] - Investments are being made in the sales force, with plans to add a new regional team in 2023 [9][27] - The company aims to achieve cash flow positive status within approximately two years, driven by the growth of its Ameluz PDT therapy [4][57] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing a strong foundation for growth and increased education initiatives to drive demand for PDT therapy [8][23] - The company is committed to maintaining a balance between growth and financing costs to protect shareholder value [6][36] - Management noted that future label expansions or new indications are not necessary to achieve growth targets for the next couple of years [52] Other Important Information - The company completed its first full year as a publicly traded entity in 2022, achieving record revenues and increasing market share without expanding its sales force [35] - The company is working on label expansion opportunities for its products, including clinical trials for additional treatment areas [30][33] Q&A Session Summary Question: How many doctors using Ameluz are using three tubes with the Excel lamp? - The Excel lamp has not yet been launched in the U.S. due to supply chain challenges, and it is unclear how many doctors have it [38] Question: What are the biggest headwinds to hiring or maintaining salespeople? - The company experiences a turnover rate of 25% to 30%, which is better than the industry average, and is focused on making the workplace attractive [61] Question: What was the share count at the end of the fourth quarter? - There are approximately 26.7 million shares outstanding [79]
Biofrontera(BFRI) - 2022 Q3 - Earnings Call Transcript
2022-11-14 20:03
Biofrontera, Inc. (NASDAQ:BFRI) Q3 2022 Earnings Conference Call November 14, 2022 11:00 AM ET Company Participants Tirth Patel - LHA Investor Relations Fred Leffler - CFO Erica Monaco - CEO, COO, Treasurer & Secretary Conference Call Participants Jonathan Aschoff - ROTH Capital Partners Bruce Jackson - The Benchmark Company Operator Good day, and welcome to the Biofrontera Inc. Third Quarter Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to tu ...
Biofrontera(BFRI) - 2022 Q3 - Quarterly Report
2022-11-13 16:00
PART I. FINANCIAL INFORMATION This section provides Biofrontera Inc.'s unaudited consolidated financial statements for the period ended September 30, 2022, detailing financial position, performance, and cash flows [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Biofrontera Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2022, and December 31, 2021 Metric (in thousands) | Metric (in thousands) | Sep 30, 2022 (Unaudited) | Dec 31, 2021 | | :-------------------- | :----------------------- | :----------- | | Total Assets | $55,059 | $53,219 | | Total Liabilities | $32,464 | $41,881 | | Total Stockholders' Equity | $22,595 | $11,338 | - Cash and cash equivalents increased to **$27.5 million** as of September 30, 2022, from **$24.5 million** as of December 31, 2021[6](index=6&type=chunk) - Inventories significantly increased to **$12.1 million** as of September 30, 2022, from **$4.5 million** as of December 31, 2021[6](index=6&type=chunk) - Warrant liability decreased substantially to **$3.96 million** as of September 30, 2022, from **$12.85 million** as of December 31, 2021[6](index=6&type=chunk) [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenues, operating expenses, and net income or loss for the three and nine months ended September 30, 2022 and 2021 Metric (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues, net | $4,322 | $4,334 | $18,530 | $14,932 | | Loss from operations | $(3,639) | $(16,105) | $(12,961) | $(23,321) | | Net income (loss) | $(2,566) | $(16,012) | $2,145 | $(23,208) | | Basic EPS | $(0.11) | $(2.00) | $0.11 | $(2.90) | | Diluted EPS | $(0.11) | $(2.00) | $0.11 | $(2.90) | - For the nine months ended September 30, 2022, the company reported a net income of **$2.145 million**, a significant improvement from a net loss of **$23.208 million** in the prior year period[7](index=7&type=chunk) - Loss from operations decreased for both the three-month and nine-month periods ended September 30, 2022, compared to the prior year, indicating improved operational efficiency[7](index=7&type=chunk) [Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, including common shares, additional paid-in capital, and accumulated deficit, for the nine months ended September 30, 2022 Metric (in thousands) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Common Shares Outstanding | 23,550,960 | 17,104,749 | | Common Stock Amount | $23 | $17 | | Additional Paid-In Capital | $99,306 | $90,200 | | Accumulated Deficit | $(76,734) | $(78,879) | | Total Stockholders' Equity | $22,595 | $11,338 | - Total stockholders' equity increased to **$22.595 million** as of September 30, 2022, from **$11.338 million** as of December 31, 2021, primarily due to increases in common stock and additional paid-in capital from warrant exercises and private placements[9](index=9&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Metric (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(7,928) | $(5,725) | | Net cash used in investing activities | $(3,070) | $(2) | | Net cash provided by (used) in financing activities | $14,021 | $(638) | | Net increase (decrease) in cash and cash equivalents | $3,023 | $(6,365) | - Net cash provided by financing activities significantly increased to **$14.021 million** for the nine months ended September 30, 2022, compared to cash used of **$0.638 million** in the prior year, driven by proceeds from common stock and warrant issuances[12](index=12&type=chunk) - Operating activities used more cash in the nine months ended September 30, 2022 (**$7.928 million**) compared to the same period in 2021 (**$5.725 million**)[12](index=12&type=chunk) [Notes to Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements, covering business operations, accounting policies, and specific financial line items [1. Business Overview](index=8&type=section&id=1.%20Business%20Overview) Biofrontera Inc. is a U.S.-based biopharmaceutical company focused on commercializing dermatological products, primarily Ameluz® for actinic keratoses and Xepi® for impetigo. The company has incurred significant operating losses and an accumulated deficit, but expects current cash to fund operations for at least the next twelve months, with future growth dependent on additional equity financing - Biofrontera Inc. specializes in dermatological products, with Ameluz® (for actinic keratoses) and Xepi® (for impetigo) as its principal licensed products[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) Metric (in millions) | Metric (in millions) | Sep 30, 2022 | Dec 31, 2021 | | :------------------- | :----------- | :----------- | | Cash and cash equivalents | $27.5 | $24.5 |\n| Accumulated Deficit | $(76.7) | N/A |\n| Losses from operations (9 months) | $(13.0) | $(23.3) |\n| Net cash outflows from operations (9 months) | $(7.9) | $(5.7) | - The company expects its current cash and cash equivalents to be sufficient to fund operations for at least the next twelve months, but future growth relies on obtaining additional equity financing[22](index=22&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with U.S. GAAP, using estimates for areas like receivables, inventory, contingent consideration, and warrant liabilities. The company, as an emerging growth company, has elected to use the extended transition period for new accounting standards, including ASU 2016-02 (Leases) and ASU 2016-13 (Credit Losses), which are currently being evaluated for impact - Financial statements are prepared under U.S. GAAP, with key estimates in valuation allowances, contingent consideration, and warrant liabilities[23](index=23&type=chunk)[26](index=26&type=chunk) - The company is evaluating the impact of adopting ASU 2016-02 (Leases), effective for fiscal years beginning after December 15, 2021, and ASU 2016-13 (Credit Losses), effective January 1, 2023[27](index=27&type=chunk)[28](index=28&type=chunk) [3. Acquisition Contract Liabilities](index=11&type=section&id=3.%20Acquisition%20Contract%20Liabilities) Acquisition contract liabilities stem from the 2019 acquisition of Cutanea, including $7.3 million in start-up cost financing repayable by end of 2023 and contingent consideration for profit sharing with Maruho until 2030. The contingent consideration is re-measured at each reporting period using a scenario-based method - The company has **$7.3 million** in start-up cost financing from Maruho, repayable by the end of 2023, and an obligation to share product profits equally with Maruho until 2030[30](index=30&type=chunk)[31](index=31&type=chunk) (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Short-term acquisition contract liabilities, net | $3,242 | $3,242 | | Long-term acquisition contract liabilities, net | $5,711 | $9,542 | | Total acquisition contract liabilities, net | $8,953 | $12,784 | - Long-term contingent consideration decreased from **$6.2 million** at December 31, 2021, to **$2.1 million** at September 30, 2022[34](index=34&type=chunk) [4. Fair Value Measurements](index=13&type=section&id=4.%20Fair%20Value%20Measurements) This section details the fair value measurements for contingent consideration and warrant liabilities, both classified as Level 3. Contingent consideration decreased by $4.1 million for the nine months ended September 30, 2022, while warrant liability decreased by $15.267 million due to changes in common stock value and warrant modifications (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Contingent Consideration | $2,100 | $6,200 | | Warrant liability – 2021 Purchase Warrants | $- | $12,854 | | Warrant liability - 2022 Purchase Warrants | $1,607 | $- | | Warrant liability – 2022 Inducement Warrants | $2,357 | $- | - The fair value of contingent consideration decreased by **$4.1 million** for the nine months ended September 30, 2022, to **$2.1 million**[37](index=37&type=chunk) - The warrant liability decreased by **$15.267 million** for the nine months ended September 30, 2022, to **$3.964 million**, influenced by changes in common stock value and the modification of 2021 Purchase Warrants[43](index=43&type=chunk) [5. Revenue](index=16&type=section&id=5.%20Revenue) Revenue is primarily generated from sales of Ameluz®, BF-RhodoLED® lamps, and Xepi®, with Ameluz® being the most significant contributor. The company also reports related party revenue from BF-RhodoLED® leasing and installation services. Product revenue allowances and reserves increased to $360 thousand as of September 30, 2022 - Primary revenue sources are Ameluz®, BF-RhodoLED® lamps, and Xepi®, with Ameluz® sales being the most significant[44](index=44&type=chunk) (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Product revenue allowances and reserves | $360 | $246 | [6. Accounts Receivable, net](index=16&type=section&id=6.%20Accounts%20Receivable,%20net) Accounts receivables primarily arise from sales of Ameluz, BF-RhodoLED, and Xepi, with all expected to be settled within twelve months. The allowance for doubtful accounts was $0.1 million as of September 30, 2022 - Accounts receivables are mainly from sales of Ameluz, BF-RhodoLED, and Xepi, with an allowance for doubtful accounts of **$0.1 million** as of September 30, 2022[46](index=46&type=chunk) [7. Other Receivables, Related Party](index=16&type=section&id=7.%20Other%20Receivables,%20Related%20Party) The company has a $6.3 million receivable from Biofrontera AG as of September 30, 2022, primarily for its 50% share of a legal settlement. This receivable is split into $3.5 million short-term and $2.8 million long-term, with no reserve recorded due to contractual repayment rights - As of September 30, 2022, Biofrontera Inc. has a **$6.3 million** receivable from Biofrontera AG, of which **$6.1 million** is for Biofrontera AG's share of a legal settlement[47](index=47&type=chunk) - The receivable is secured by a contractual right to repayment, including interest at **6.0% per annum** for overdue amounts and the ability to offset against payments owed to Biofrontera AG[47](index=47&type=chunk) [8. Inventories](index=17&type=section&id=8.%20Inventories) Inventories consist of Ameluz, Xepi®, and BF-RhodoLED finished products, valued using the FIFO method. A provision of $0.1 million for BF-RhodoLED device obsolescence was recorded for the nine months ended September 30, 2022 - Inventories include Ameluz, Xepi®, and BF-RhodoLED finished products, with a **$0.1 million** provision for BF-RhodoLED obsolescence for the nine months ended September 30, 2022[50](index=50&type=chunk)[51](index=51&type=chunk) [9. Prepaid Expenses and Other Current Assets](index=17&type=section&id=9.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) Prepaid expenses and other current assets totaled $3.823 million as of September 30, 2022. This includes a new short-term loan receivable of $3.017 million from Quirin PrivatBank AG, bearing 1.0% interest and due December 6, 2022, repayable in cash or Biofrontera AG shares (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Loan receivable, short term | $3,017 | $- | | Receivable for common stock warrants proceeds | $- | $3,258 | | Prepaid expenses | $460 | $824 | | Total | $3,823 | $4,987 | - A new short-term loan receivable of **$3.017 million** from Quirin PrivatBank AG was recorded, bearing **1.0%** interest and due December 6, 2022, with repayment optional in cash or Biofrontera AG shares[52](index=52&type=chunk) [10. Property and Equipment, Net](index=17&type=section&id=10.%20Property%20and%20Equipment,%20Net) Net property and equipment totaled $224 thousand as of September 30, 2022, primarily comprising computer equipment, software, furniture, leasehold improvements, and machinery. Depreciation expense for the nine months ended September 30, 2022, was $0.1 million (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Property and equipment, gross | $709 | $673 | | Less: Accumulated depreciation | $(485) | $(406) | | Property and equipment, net | $224 | $267 | - Depreciation expense was **$0.1 million** for the nine months ended September 30, 2022, included in selling, general and administrative expense[53](index=53&type=chunk) [11. Intangible Asset, Net](index=17&type=section&id=11.%20Intangible%20Asset,%20Net) The Xepi® license, recorded at an acquisition-date fair value of $4.6 million, is amortized over 11 years. Amortization expense was $0.3 million for the nine months ended September 30, 2022. An impairment assessment was conducted in October 2022 due to manufacturing delays, but no impairment charges were recognized (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Xepi® license | $4,600 | $4,600 | | Less: Accumulated amortization | $(1,464) | $(1,150) | | Intangible asset, net | $3,136 | $3,450 | - Amortization expense for the Xepi® license was **$0.3 million** for the nine months ended September 30, 2022[55](index=55&type=chunk) - Despite third-party manufacturing delays impacting Xepi® sales, no impairment charges were recognized for the Xepi® license during the three or nine months ended September 30, 2022[56](index=56&type=chunk)[57](index=57&type=chunk) [12. Statement of Cash Flows Reconciliation](index=18&type=section&id=12.%20Statement%20of%20Cash%20Flows%20Reconciliation) This section reconciles cash, cash equivalents, and restricted cash, showing a total of $27.765 million as of September 30, 2022, an increase from $24.742 million at December 31, 2021 (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Cash and cash equivalents | $27,518 | $24,545 | | Short-term restricted cash | $47 | $47 | | Long-term restricted cash | $200 | $150 | | Total cash, cash equivalents, and restricted cash | $27,765 | $24,742 | [13. Accrued Expenses and Other Current Liabilities](index=18&type=section&id=13.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) Accrued expenses and other current liabilities totaled $9.442 million as of September 30, 2022, slightly down from $9.654 million at December 31, 2021. Key components include a legal settlement liability of $5.625 million and employee compensation and benefits of $2.243 million (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Legal settlement | $5,625 | $5,625 | | Employee compensation and benefits | $2,243 | $2,384 | | Professional fees | $676 | $570 | | Product revenue allowances and reserves | $360 | $246 | | Total | $9,442 | $9,654 | [14. Other Long-Term Liabilities](index=18&type=section&id=14.%20Other%20Long-Term%20Liabilities) Other long-term liabilities remained stable at $5.646 million as of September 30, 2022, primarily consisting of a non-current legal settlement liability of $5.625 million (in thousands) | (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :------------- | :----------- | :----------- | | Legal settlement – noncurrent | $5,625 | $5,625 | | Other | $21 | $24 | | Total | $5,646 | $5,649 | [15. Income Taxes](index=18&type=section&id=15.%20Income%20Taxes) Due to cumulative net losses since inception, Biofrontera Inc. has recorded no federal income tax provision for the periods presented, maintaining a full valuation allowance. Income tax expense relates solely to state income taxes - No federal income tax provision was recorded for the three or nine months ended September 30, 2022 and 2021, due to net losses[61](index=61&type=chunk) - The company maintains a full valuation allowance due to its cumulative loss position[62](index=62&type=chunk) [16. Related Party Transactions](index=19&type=section&id=16.%20Related%20Party%20Transactions) Related party transactions include an exclusive license and supply agreement for Ameluz® with Biofrontera Pharma GmbH, service agreements with Biofrontera AG for IT and pharmacovigilance, and reimbursements from Maruho related to the Cutanea acquisition. The company also has a significant receivable from Biofrontera AG for a legal settlement - Purchases of licensed products (Ameluz and RhodoLED lamps) from Biofrontera Pharma GmbH were **$16.6 million** for the nine months ended September 30, 2022, up from **$5.7 million** in the prior year[65](index=65&type=chunk) - Expenses for services from Biofrontera AG (IT, regulatory, medical, pharmacovigilance, investor relations) were **$0.6 million** for the nine months ended September 30, 2022[66](index=66&type=chunk) - The company has a **$6.1 million** receivable from Biofrontera AG as of September 30, 2022, for its **50%** share of a legal settlement, on which **$0.1 million** interest income was recognized[72](index=72&type=chunk) [17. Restructuring costs](index=20&type=section&id=17.%20Restructuring%20costs) No restructuring costs were incurred for the three and nine months ended September 30, 2022. In the prior year, restructuring costs of $0.2 million and $0.7 million were incurred for the three and nine months ended September 30, 2021, respectively, related to winding down Cutanea's operations - No restructuring costs were incurred for the three and nine months ended September 30, 2022[73](index=73&type=chunk) - Restructuring costs of **$0.2 million** (three months) and **$0.7 million** (nine months) were incurred in 2021, primarily for winding down Cutanea's operations[73](index=73&type=chunk) [18. Stockholders' Equity](index=20&type=section&id=18.%20Stockholders'%20Equity) The company is authorized to issue 300 million common shares and 20 million preferred shares. Key equity activities in 2022 include a May private placement raising $9.4 million and the exercise of 2022 Pre-Funded Warrants and 2021 Purchase Warrants, generating $4.6 million in proceeds - The company is authorized to issue **300,000,000 shares** of common stock and **20,000,000 shares** of preferred stock[74](index=74&type=chunk) - A May 2022 private placement generated **$9.4 million** in gross cash receipts from the issuance of common stock and warrants[76](index=76&type=chunk) - In July 2022, the exercise of 2021 Purchase Warrants, following a price reduction and issuance of Inducement Warrants, generated **$4.6 million** in proceeds[77](index=77&type=chunk) [19. Equity Incentive Plans and Share-Based Payments](index=21&type=section&id=19.%20Equity%20Incentive%20Plans%20and%20Share-Based%20Payments) The 2021 Omnibus Incentive Plan authorizes 2.75 million shares for awards, with 2.58 million remaining eligible. Share-based compensation expense for stock options and RSUs totaled $0.3 million and $0.1 million, respectively, for the three months ended September 30, 2022, and $0.6 million and $0.9 million for the nine months ended September 30, 2022 - The 2021 Omnibus Incentive Plan has **2,750,000 shares** authorized for awards, with **2,579,932 shares** remaining eligible as of September 30, 2022[79](index=79&type=chunk) Metric (in millions) | Metric (in millions) | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2022 | | :------------------- | :-------------------------- | :-------------------------- | | Stock option compensation expense | $0.3 | $0.6 | | RSU compensation expense | $0.1 | $0.9 | - As of September 30, 2022, unrecognized compensation cost for unvested stock options was **$2.6 million** (expected over 2.5 years) and for unvested RSUs was **$0.7 million** (expected over 1.6 years)[84](index=84&type=chunk)[87](index=87&type=chunk) [20. Interest Expense, net](index=22&type=section&id=20.%20Interest%20Expense,%20net) Net interest expense for the nine months ended September 30, 2022, was $(160) thousand, primarily driven by contract asset interest expense related to the Cutanea acquisition financing, partially offset by interest income from a related party (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Interest expense | $(3) | $- | $(10) | $- | | Contract asset interest expense | $(89) | $(90) | $(268) | $(268) | | Interest income – related party | $1 | $- | $110 | $- | | Interest expense, net | $(89) | $(86) | $(160) | $(255) | - Interest income from a related party was **$110 thousand** for the nine months ended September 30, 2022, compared to none in the prior year[88](index=88&type=chunk) [21. Other Income (Expense), net](index=22&type=section&id=21.%20Other%20Income%20(Expense),%20net) Other income (expense), net, for the nine months ended September 30, 2022, was $30 thousand, a decrease from $419 thousand in the prior year. This change is primarily due to the absence of reimbursed SPA costs in 2022, which were $472 thousand in 2021 (in thousands) | (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Reimbursed SPA costs | $- | $188 | $- | $472 | | Other, net | $(22) | $(3) | $30 | $(53) | | Other income (expense), net | $(22) | $185 | $30 | $419 | - Reimbursed SPA costs, which contributed **$472 thousand** to other income in the nine months ended September 30, 2021, were zero in the same period of 2022[89](index=89&type=chunk) [22. Net Earnings per Share](index=22&type=section&id=22.%20Net%20Earnings%20per%20Share) Basic and diluted net earnings per share are calculated based on net income and weighted-average common shares outstanding. For the nine months ended September 30, 2022, basic and diluted EPS were $0.11, a significant improvement from a loss of $(2.90) in the prior year. The company also identified potential common shares that were anti-dilutive Metric | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $(0.11) | $(2.00) | $0.11 | $(2.90) | | Diluted EPS | $(0.11) | $(2.00) | $0.11 | $(2.90) | | Basic weighted average common shares outstanding | 22,725,821 | 8,000,000 | 19,560,351 | 8,000,000 | | Diluted weighted average common shares outstanding | 22,725,821 | 8,000,000 | 19,605,014 | 8,000,000 | - Potential common shares that were anti-dilutive for the nine months ended September 30, 2022, included **9,197,109 common stock warrants** and **1,112,395 common stock options and RSUs**[93](index=93&type=chunk) [23. Commitments and Contingencies](index=24&type=section&id=23.%20Commitments%20and%20Contingencies) The company has various commitments, including facility and auto leases totaling $1.659 million in future payments, obligations to Maruho for Cutanea acquisition financing ($7.3 million) and profit sharing, and potential milestone payments to Ferrer for Xepi® sales. A legal settlement liability of $11.3 million remains, with Biofrontera AG responsible for $5.6 million. The company also maintains a 401(k) plan with matching contributions (in thousands) | (in thousands) | Future lease commitments | | :------------- | :----------------------- | | Remainder of 2022 | $164 | | 2023 | $565 | | 2024 | $541 | | 2025 | $389 | | Total | $1,659 | - The company is obligated to repay Maruho **$3.6 million** by December 31, 2022, and **$3.7 million** by December 31, 2023, for start-up cost financing related to the Cutanea acquisition[97](index=97&type=chunk) - A legal settlement liability of **$11.3 million** remains, with Biofrontera AG responsible for **$5.6 million**, though both parties are jointly and severally liable[102](index=102&type=chunk) [24. Retirement Plan](index=25&type=section&id=24.%20Retirement%20Plan) The company offers a 401(k) Plan to all eligible employees, matching 50% of employee contributions up to 6% of their salary. Matching contribution costs were $0.1 million for the three months and $0.2 million for the nine months ended September 30, 2022 - The company matches **50% of employee 401(k) contributions** up to a maximum of **6% of their salary**[103](index=103&type=chunk) (in millions) | (in millions) | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2022 | | :------------ | :-------------------------- | :-------------------------- | | Matching contribution costs | $0.1 | $0.2 | [25. Subsequent Events](index=25&type=section&id=25.%20Subsequent%20Events) Subsequent events after September 30, 2022, include the adoption of a stockholder rights plan on October 13, 2022, to prevent hostile takeovers, and the acquisition of 4,224,683 shares (7.45%) of Biofrontera AG's outstanding ordinary shares through private exchange agreements and a loan amendment - On October 13, 2022, the Board adopted a Stockholder Rights Plan, effective immediately, to protect against beneficial ownership of **20% or more** of common stock without Board approval[106](index=106&type=chunk)[107](index=107&type=chunk) - As of November 8, 2022, the company acquired a total of **4,224,683 shares**, representing **7.45% of Biofrontera AG's outstanding ordinary shares**, through private exchange agreements and a loan amendment[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and future outlook, discussing key factors affecting operations, detailed results for the three and nine months ended September 30, 2022, liquidity, capital resources, and critical accounting estimates [Forward-Looking Statements](index=27&type=section&id=Forward-Looking%20Statements) This section highlights inherent uncertainties and risks associated with forward-looking statements regarding future financial performance, product development, and regulatory outcomes - The report contains forward-looking statements regarding expenses, future revenue, capital requirements, product efficacy, market timelines, and regulatory approvals, which are subject to various known and unknown risks[115](index=115&type=chunk) - Key risk factors include reliance on licensed product sales, competitor success, supply chain issues, COVID-19 impact, insurance coverage, regulatory changes, competition, profitability, financing needs, and internal control weaknesses[116](index=116&type=chunk) [Overview](index=28&type=section&id=Overview) Biofrontera Inc. is a U.S.-based biopharmaceutical company focused on commercializing dermatological products, with strategic objectives for sales expansion and portfolio growth - Biofrontera Inc. is a U.S.-based biopharmaceutical company commercializing dermatological products, primarily Ameluz® for actinic keratoses and Xepi® for impetigo[120](index=120&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) - Strategic objectives include expanding Ameluz® and Xepi® sales in the U.S., leveraging future approvals, and expanding the product portfolio through in-licensing, asset acquisition, or share acquisition, including potentially acquiring shares of former parent Biofrontera AG[123](index=123&type=chunk)[124](index=124&type=chunk) - The company's long-term financial objectives are consistent revenue growth and expanding operating margins, driven by licensed product sales expansion and improved operating efficiencies[126](index=126&type=chunk) [Key factors affecting our performance](index=29&type=section&id=Key%20factors%20affecting%20our%20performance) Key factors influencing performance include seasonality, the lingering impact of COVID-19 on demand, and supply chain disruptions, particularly for Xepi® - Revenue is subject to seasonality, historically higher in the first and fourth quarters due to traditional photodynamic therapy treatments[127](index=127&type=chunk) - COVID-19 significantly impacted demand for licensed products, causing declines in 2020, with a revenue recovery observed in late 2021 and early 2022, though the full extent of future impact remains uncertain[128](index=128&type=chunk) - Supply chain issues, particularly third-party manufacturing delays for Xepi® due to a manufacturer's bankruptcy, are expected to delay Xepi® shipments for the next 15 months, though Ameluz® sales are expected to mitigate the impact on total revenues[130](index=130&type=chunk) [Components of Our Results of Operations](index=30&type=section&id=Components%20of%20Our%20Results%20of%20Operations) This section details the components of the company's financial results, including product revenue, operating expenses, and non-operating items like fair value adjustments - Product revenue is generated from sales of Ameluz, RhodoLED lamps, and Xepi, net of discounts, rebates, and other incentives, with Ameluz being the primary contributor[131](index=131&type=chunk) - Operating expenses include cost of revenues (related party for Ameluz/RhodoLED, other for Xepi), selling, general and administrative expenses (including sales force, marketing, professional fees, and intangible asset amortization), and related party SG&A for services from Biofrontera AG[134](index=134&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - Non-operating items affecting results include changes in fair value of contingent consideration (from Cutanea acquisition) and warrant liabilities (from private placement financings), as well as interest expense and other income[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three and nine months ended September 30, 2022 and 2021 Comparison of Three Months Ended September 30, 2022 and 2021 (in thousands) | Metric | 2022 | 2021 | Change | | :----- | :--- | :--- | :----- | | Revenues, net | $4,322 | $4,334 | $(12) | | Total operating expenses | $7,961 | $20,439 | $(12,478) | | Loss from operations | $(3,639) | $(16,105) | $12,466 | | Net loss | $(2,566) | $(16,012) | $13,446 | - Selling, general and administrative expenses decreased by **$9.3 million** (**54.6%**) for the three months ended September 30, 2022, primarily due to a **$11.3 million** legal settlement expense incurred in 2021[144](index=144&type=chunk)[145](index=145&type=chunk) Comparison of Nine Months Ended September 30, 2022 and 2021 (in thousands) | Metric | 2022 | 2021 | Change | | :----- | :--- | :--- | :----- | | Product revenues, net | $18,467 | $14,890 | $3,577 | | Revenues, net | $18,530 | $14,932 | $3,598 | | Total operating expenses | $31,491 | $38,253 | $(6,762) | | Loss from operations | $(12,961) | $(23,321) | $10,360 | | Net income (loss) | $2,145 | $(23,208) | $25,353 | - Net product revenue increased by **$3.6 million** (**24.0%**) for the nine months ended September 30, 2022, driven by higher Ameluz orders and a price increase[151](index=151&type=chunk) [Net Income (Loss) to Adjusted EBITDA Reconciliation](index=36&type=section&id=Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA%20Reconciliation) This section reconciles net income (loss) to Adjusted EBITDA, a non-GAAP measure, providing insights into operational performance excluding certain non-cash and non-operating items - Adjusted EBITDA is a non-GAAP measure that excludes interest, taxes, depreciation, amortization, and certain non-operating items like changes in fair value of contingent consideration and warrant liabilities, stock-based compensation, and expensed issuance costs[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) Adjusted EBITDA Reconciliation (in thousands) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) | $(2,566) | $(16,012) | $2,145 | $(23,208) | | EBITDA | $(2,346) | $(15,786) | $2,730 | $(22,493) | | Adjusted EBITDA | $(5,011) | $(3,836) | $(14,123) | $(9,545) | | Adjusted EBITDA margin | -115.9% | -88.5% | -76.2% | -63.9% | - Adjusted EBITDA decreased for both the three-month and nine-month periods ended September 30, 2022, compared to the prior year, with margins also decreasing[165](index=165&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, current liquidity position, and future capital requirements for operations and strategic initiatives - Primary liquidity sources are existing cash balances and equity financing transactions; cash and cash equivalents were **$27.5 million** as of September 30, 2022[166](index=166&type=chunk) - The company incurred operating losses of **$13.0 million** and net cash outflows from operations of **$7.9 million** for the nine months ended September 30, 2022, with an accumulated deficit of **$76.7 million**[167](index=167&type=chunk) - Short-term cash requirements include working capital, auto leases, Maruho start-up payments (**$7.3 million**), and legal settlement expenses (**$5.6 million** after reimbursement)[168](index=168&type=chunk) Cash Flow Summary (in thousands) | Activity | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(7,928) | $(5,725) | | Net cash used in investing activities | $(3,070) | $(2) | | Net cash provided by (used) in financing activities | $14,021 | $(638) | | Net increase (decrease) in cash and restricted cash | $3,023 | $(6,365) | [Accounting Policies and Significant Judgments and Estimates](index=39&type=section&id=Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section outlines the critical accounting policies and significant management judgments and estimates used in preparing the financial statements - The preparation of financial statements requires management to use estimates and assumptions, particularly in fair value measurements of contingent consideration and warrant liabilities, and stock compensation[180](index=180&type=chunk) [Off-balance Sheet Arrangements](index=39&type=section&id=Off-balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements during the reporting periods - The company did not have any off-balance sheet arrangements during the periods presented[183](index=183&type=chunk) [Emerging Growth Company Status](index=39&type=section&id=Emerging%20Growth%20Company%20Status) This section notes the company's status as an 'emerging growth company' and its election to use an extended transition period for new accounting standards - As an 'emerging growth company,' Biofrontera Inc. has elected to take advantage of the extended transition period for complying with new or revised accounting standards[184](index=184&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Biofrontera Inc. is not required to provide quantitative and qualitative disclosures about market risk in this Form 10-Q - The company is not required to provide market risk disclosures as it qualifies as a 'smaller reporting company'[185](index=185&type=chunk) [ITEM 4. Controls and Procedures](index=39&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to an un-remediated material weakness in the oversight of work performed by third-party service providers, specifically regarding valuation errors for the Xepi intangible asset - Disclosure controls and procedures were not effective as of September 30, 2022, due to a material weakness[185](index=185&type=chunk) - The material weakness relates to insufficient management review control over information produced by third-party service providers, leading to computational and information errors in the valuation of the Xepi intangible asset[187](index=187&type=chunk) - Remediation efforts, including formalized reviews and additional steps for engaging specialists, are in process but not yet fully remediated as of September 30, 2022[188](index=188&type=chunk)[189](index=189&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, safety disclosures, other information, and exhibits for the reporting period [ITEM 1. Legal Proceedings](index=41&type=section&id=ITEM%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 23 – Commitments and Contingencies in Part I, Item 1 of this report - Legal proceedings information is detailed in Note 23 – Commitments and Contingencies[193](index=193&type=chunk) [ITEM 1A. Risk Factors](index=41&type=section&id=ITEM%201A.%20Risk%20Factors) As a smaller reporting company, Biofrontera Inc. is not required to provide risk factor disclosures in this Form 10-Q, but refers readers to its Annual Report on Form 10-K for a comprehensive discussion - The company, as a smaller reporting company, is not required to provide risk factor disclosure in this Form 10-Q[194](index=194&type=chunk) - Readers are directed to the Annual Report on Form 10-K for the fiscal year ended December 31, 2021, for a discussion of important risk factors[194](index=194&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) All proceeds from the company's Initial Public Offering (IPO), which became effective on October 28, 2021, have been used for working capital and general corporate purposes as of September 30, 2022, with no material change in the planned use of proceeds - All IPO proceeds have been used for working capital and general corporate purposes as of September 30, 2022[196](index=196&type=chunk) - There was no material change in the planned use of proceeds from the IPO[196](index=196&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=41&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[196](index=196&type=chunk) [ITEM 4. Mine Safety Disclosures](index=41&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[196](index=196&type=chunk) [ITEM 5. Other Information](index=41&type=section&id=ITEM%205.%20Other%20Information) No other information is reported under this item - No other information is reported[196](index=196&type=chunk) [ITEM 6. Exhibits](index=42&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications, XBRL documents, and other agreements, some of which are incorporated by reference - Exhibits include certifications (Sections 302 and 906 of Sarbanes Oxley Act), Inline XBRL documents, and forms related to inducement warrants[198](index=198&type=chunk)[199](index=199&type=chunk) [Signatures](index=42&type=section&id=Signatures) The report is duly signed on November 14, 2022, by Erica Monaco, Chief Executive Officer, and Fred Leffler, Chief Financial Officer, certifying its contents - The report was signed by Erica Monaco, Chief Executive Officer, and Fred Leffler, Chief Financial Officer, on November 14, 2022[201](index=201&type=chunk)
Biofrontera(BFRI) - 2022 Q2 - Earnings Call Transcript
2022-08-12 21:37
Financial Data and Key Metrics Changes - Total revenues for the first half of 2022 were $14.2 million, an increase of 34% compared to $10.6 million in the same period last year, primarily driven by a $3.5 million increase in Ameluz revenue [13][14] - Total operating expenses for the first half of 2022 were $23.5 million, up from $17.8 million in the first half of 2021, with selling, general and administrative expenses increasing by 66% [14] - Net income for the first half of 2022 was $4.7 million or $0.26 per diluted share, compared to a net loss of $7.2 million or a loss of $0.90 per share for the first half of 2021 [14] - Adjusted EBITDA was negative $11.3 million for the first half of 2022, compared to negative $5.7 million for the same period in 2021 [15] Business Line Data and Key Metrics Changes - In Q2 2022, total revenues were $4.5 million, a decrease of 24% from $5.9 million a year ago, attributed to advanced purchasing of Ameluz in Q1 prior to a price increase [17] - Cost of revenues declined by 18% in Q2 2022, primarily due to lower Ameluz sales [17] - The net loss for Q2 2022 was $0.9 million, compared to a net loss of $3.7 million in Q2 2021 [18] Market Data and Key Metrics Changes - Biofrontera's revenue for the first half of 2022 was the highest ever, up more than 102% compared to 2020 and up more than 22% versus the pre-COVID year 2019 [19] - The company has increased headcount by approximately 20% since Q2 2021, positioning for greater market penetration [21] Company Strategy and Development Direction - The company aims to achieve deeper sales penetration among current customer accounts and plans to expand the salesforce in 2023 [22][23] - Biofrontera's commercial strategy focuses on educating the industry on the importance of field therapy and raising awareness of product efficacy [24][25] - The company is committed to strengthening its intellectual property and has received patents for PDT and Ameluz, enhancing its competitive position [32][35] Management's Comments on Operating Environment and Future Outlook - Management reaffirmed financial guidance for 2022, expecting total revenues to increase by at least 30% compared to 2021 [22] - The management highlighted the importance of recent changes in CPT codes for PDT, which have improved reimbursement for practitioners [78] - The company believes that the growing therapeutic value and recognition among dermatologists will drive market share growth [51] Other Important Information - Biofrontera's new Ameluz marketing campaign received a Gold Award of Excellence from The Communicator Awards [27] - The company has initiated support for patient advocacy and awareness events to address solar damage and non-melanoma skin cancer [26] Q&A Session Summary Question: Can you help us with the likely magnitude of pre-price hike buy-in in the first quarter? - Management acknowledged a dip in Q2 due to advanced purchasing in Q1 but did not specify an exact amount [53] Question: Is the current quarterly SG&A rate a good go-forward rate for the quarters and the second half? - Management indicated that some expenses in SG&A were related to financing transactions and legal expenses, which are not part of a normal run rate [54] Question: Can we have a trial by trial update of ongoing trials and any changes to the timing of the expectation of data release? - Management provided updates on various clinical trials, including a Phase 3 study for superficial basal cell carcinoma and a Phase 2 study for moderate to severe acne, with expectations for readouts in 2023 [56][61] Question: Have you been generating any revenue from Xepi? - Management confirmed that they have not focused on Xepi recently due to manufacturing issues but are managing inventory while supporting sales [64] Question: Looking forward, what can we expect regarding sales and marketing expenses? - Management indicated that while there won't be massive financial expansion, there will be development in sales and marketing, with benefits expected to pick up in Q3 and Q4 [66] Question: What is the IP position in the United States regarding the novel illumination protocol? - Management confirmed that a patent has been filed in the U.S. and they are confident in its approval, which would further protect Ameluz [70] Question: Is Biofrontera considering M&A as an additional lever for growth? - Management stated they are open to evaluating various ways to expand the business, including potential M&A opportunities [74][75] Question: Why do you believe that revenue growth is going to accelerate compared to earlier years? - Management cited investments in commercial infrastructure and changes in reimbursement as key factors for expected revenue acceleration [78][80]