Earnings call transcript: Biofrontera Q4 2024 sees revenue growth and strategic shifts

Biofrontera Inc. (BFRI) reported a strong end to 2024 with notable revenue growth and strategic operational changes. The company recorded a 9.5% increase in total revenues for the year, reaching $37.3 million, and a significant 18.5% year-over-year increase in Q4 revenues. Despite a net loss of $17.8 million for the year, Biofrontera improved its cash position and adjusted EBITDA, signaling progress in its financial health. According to InvestingPro, the company maintains a FAIR Financial Health Score of 2.41, with a current market capitalization of just $7.98 million. The stock price, however, saw a decline, falling by 11.66% to $1.03.

Key Takeaways

• Biofrontera’s total revenue for 2024 increased by 9.5% year-over-year.
• Q4 2024 revenues rose by 18.5% compared to the previous year.
• The company reported a net loss of $17.8 million for 2024.
• Cash reserves improved to $5.9 million by the end of 2024.
• Stock price decreased by 11.66% following the earnings announcement.

Company Performance

Biofrontera demonstrated robust revenue growth in 2024, with total revenues increasing by 9.5% compared to 2023. The fourth quarter was particularly strong, with an 18.5% rise in revenues year-over-year. This growth was driven by increased adoption of the company’s photodynamic therapy product, Ameluz, and strategic cost reductions. The company maintains a healthy gross profit margin of 47.1% and a current ratio of 1.53, according to InvestingPro data. Despite these gains, the company reported a net loss of $17.8 million, reflecting ongoing investments in product development and market expansion.

Financial Highlights

• Revenue: $37.3 million for 2024, up 9.5% year-over-year
• Q4 Revenue: $12.6 million, up 18.5% year-over-year
• Net loss: $17.8 million for 2024
• Cash and cash equivalents: $5.9 million as of December 31, 2024
• Adjusted EBITDA: Improved from -$19.5 million in 2023 to -$15.3 million in 2024

Market Reaction

Following the earnings announcement, Biofrontera’s stock price fell by 11.66%, closing at $1.03. This decline occurred despite the company’s positive revenue growth, possibly reflecting investor concerns over the continued net losses and the broader market conditions. The stock remains in the lower half of its 52-week range, with a high of $2.43 and a low of $0.65. InvestingPro analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

Outlook & Guidance

Biofrontera is optimistic about 2025, expecting another record year with a focus on becoming cash flow positive. The company plans to maintain stable R&D and SG&A expenses while continuing to expand the label for Ameluz. The strategic reduction in the transfer price for Ameluz and control over U.S. clinical trials are expected to support these goals.

Executive Commentary

CEO Herman Louverde emphasized the company’s commitment to achieving another record year in 2025, stating, "We strongly believe our past investments, business plan, and execution will allow us to achieve another record year in 2025." He also highlighted the importance of becoming cash flow positive and managing expenses without sacrificing sales.

Risks and Challenges

• Ongoing net losses may continue to impact investor sentiment.
• Market competition in the dermatology and photodynamic therapy sectors.
• Regulatory hurdles for new product approvals and label expansions.
• Economic conditions affecting healthcare spending and investment.

Q&A

During the earnings call, analysts focused on the growth of Ameluz units, which increased by approximately 2% in Q4. Questions also addressed the company’s sales force stability and the progress of the acne study, which has enrolled 116 patients. Biofrontera’s strategic pricing adjustments and cost management were also key topics of discussion.

Full transcript - Biofrontera Inc (BFRI) Q4 2024:

Conference Operator: Good morning, and welcome to the Biofrontera Fourth Quarter and Fiscal twenty twenty four Financial Results and Business Update Conference Call. All participants will be in listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Barwicki, Investor Relations representative.

Please go ahead.

Andrew Barwicki, Investor Relations Representative, Biofrontera: Thank you. Good morning, and welcome to Biofrontera Incorporated’s fourth quarter and fiscal year twenty twenty four financial results and business update conference call. Actual results may differ materially. 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 frontera’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, 03/21/2025. Biofrontera undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances after the date of this conference call, except as required by law. During today’s call, there will be references to certain non GAAP financial measures. Biofrontera believes these measures provide useful information for investors, yet should not be considered as a substitute for GAAP, nor should they be viewed as a substitute for operating results determined in accordance with GAAP.

A reconciliation of non GAAP to GAAP results is included in the press release we issued earlier today. More specifically, management will be referencing adjusted EBITDA, a non GAAP financial measure defined as net income or loss excluding interest income and expenses, income taxes, depreciation and amortization and certain other non recurring or non cash items. With that said, I would like to turn the call over to Herman Louverde, CEO, Chairman and Founder of Biofrontera. Herman?

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Yes. Thank you, Andrew. And my thanks to everyone joining up this morning. On today’s call, I’ll provide an overview of our accomplishments throughout 2024 and how our initiatives and execution have resulted in a record sales year. Fred Leffler, our CFO, will follow with a discussion on financial results and then both of us will be available to answer questions after our prepared remarks.

I am pleased with $37,300,000 in sales in 2024. This represents an annual sales growth of 18.5% for Q4 and almost 10% for the entire year and is a record for our company. We strongly believe our past investments, business plan and execution will allow us to achieve another record year in 2025. The year included some further milestones that we are very pleased with. First and foremost, we placed 52 RODOLET XL lamps in the fourth quarter alone and 100 between the launch in June 2024 and the end of twenty twenty four.

Providing a larger PDT lamp to our customers is an important milestone in our overall strategy to extend the use of AMOLUZ PDT for treating mild to moderate actinic keratosis on the face and scalp and potentially further indications in the future that are currently in development. The state of the art red light emitting LED lamp is designed to revolutionize the photodynamic therapy of actinic keratosis aimed at enhancing the ease of use for healthcare providers by being highly maneuverable and capable of accommodating various patient treatment positions. It provides clinicians with the ability to illuminate a larger treatment area in a single session, which is particularly advantageous for treating extensive fields with multiple actinic keratosis lesions. Second, we obtained FDA approval to use up to three tubes of Ameluz per treatment. Ameluz, a photosensitizing agent and porphyrin precursor, is FDA approved for use in combination with both Rodelet LAMP models and for lesion directed and field directed treatment of actinic keratosis of mild to moderate severity on the face and scalp.

Treating larger fields is a second milestone in our overall strategy and complements the availability of a larger lamp. Third, we achieved significant results in a Phase III study of AMELU’s photodynamic therapy regarding the treatment of superficial basal cell carcinoma. We believe AMELU’s has additional applications other than actinic keratosis and we are committed to explore these opportunities. I can tell you that being able to treat actinic keratosis, which are precancerous lesions that may progress to squamous cell carcinoma is a wonderful thing. But to expand beyond that to treating non melanoma skin tumors is very encouraging and exciting for all of us at Biofrontera.

We expect to submit the new data to the FDA in the second half of this year. Additionally, early in 2024, we successfully negotiated the restructuring of agreements with our former parent company Biofrontera AG, resulting in the transfer price of Ameluz being reduced from 50% to 25% for all purchases in 2024 and 2025. I strongly believe this was accomplished through the demonstration of our strong commitment towards promoting PDT in The USA and exploring the many open opportunities of this wonderful therapy. As part of the renegotiated agreements, we took control of all clinical trials with Ameluz in The USA. This allows us to speed up patient recruitment and the corresponding label expansions with the FDA.

Just recently, we announced the recruitment of the final patient in our Phase III study for multimodal actinic keratosis on the trunk, neck and extremities. The goal is to extend our current label, which is restricted to treatments of AK on the face and scalp to the entire body. This represents another important cornerstone in our overall strategy complementing the use of three tubes and the availability of the larger lamp. As a large building block for this label extension, FDA has requested a Phase I pharmacokinetics study with 16 patients, which started in January and is currently recruiting. More long term, we are aiming at getting AMELUS approved for the treatment of moderate to severe acne.

Our ongoing Phase II study in this indication is close to completing patient recruitment. The further development plan will be discussed with the FDA once the data of this study become available. Based on our recent successes, our continued improvements of sales force effectiveness, positive customer feedback and the heightened level of customer engagement, we are excited about how 2025 is shaping up for the company. With that, I’ll turn the call over to Fred to walk through the financial details of the fourth quarter and full year. Fred?

Fred Leffler, CFO, Biofrontera: Thank you, Herman. It’s my pleasure to be here today and provide you an overview of our 2024 financial performance. I’ll start off with the fourth quarter twenty twenty four results. Total revenues for the fourth quarter of twenty twenty four were $12,600,000 an increase of $2,000,000 or 18.5% compared with the $10,600,000 in revenue for the fourth quarter of twenty twenty three. This growth reflects the continued adoption of Ameluz, the launch of the Roto XL lamps and a price increase in Q4 of twenty twenty four.

Total operating expenses were $14,300,000 for the fourth quarter of twenty twenty four compared with $14,500,000 for the fourth quarter of twenty twenty three. Cost of revenues was $5,300,000 for the fourth quarter of twenty twenty four compared with $5,400,000 for the prior year quarter. This reflects the lower transfer pricing Herman mentioned a moment ago. Selling, general and administrative expenses were $8,200,000 for the fourth quarter of twenty twenty four compared with $9,100,000 for the fourth quarter of twenty twenty three. The net loss for the fourth quarter of twenty twenty four was $1,400,000 or $0.19 per share versus a net income of $3,500,000 or $1.65 per share for the prior year quarter with all share figures on a split adjusted basis.

This change was driven by a gain from a legal settlement recognized in Q4 of twenty twenty three. Adjusted EBITDA for the fourth quarter of twenty twenty four was negative $1,400,000 compared with negative $3,200,000 for the fourth quarter of twenty twenty three, reflecting higher revenues, partially offset by increased SG and A costs. Adjusted EBITDA, a non GAAP financial measure, is defined as net income or loss excluding interest income, expenses, income taxes, depreciation and amortization and certain other non recurring or non cash items. I’ll refer you to the table in the press release we issued earlier today for a reconciliation. I will now summarize our full year 2024 results.

Total revenues for 2024 were $37,300,000 compared with $34,100,000 for 2023, an increase of approximately 9.5% and was primarily driven by higher volume, a higher average selling price of Ameluz and the launch of the RotoLED XL lamps. Total operating expenses were $54,500,000 for 2024 compared with $56,700,000 for 2023. Cost of revenues increased to $18,600,000 for 2024 from $17,400,000 in 2023, and this increase was due to sales but offset by the lower transfer prices that impacted Q4 twenty twenty four cost of goods sold. Selling, general and administrative expenses for 2024 decreased $5,300,000 or 13.5% compared to 2023. This was primarily driven by $3,000,000 reduction in general administrative expenses, primarily attributable to a decrease in external legal expenses and expenses related to financing activities.

The decrease was further driven by more strategic investment of promotional spend, which resulted in savings in general sales and marketing of about $1,800,000 The net loss for 2024 was $17,800,000 or $3.22 per diluted share compared with a net loss of $20,100,000 or $13.02 per share for 2023. Adjusted EBITDA was negative $15,300,000 for 2024 compared with negative $19,500,000 for 2023. The decrease was primarily driven by an increase in gross profit due to the increased sales and the reduction in transfer price and a decrease in SG and A expenses. Again, I’ll refer you to the table in the news release earlier today for a reconciliation of GAAP to non GAAP financial measures. Turning to our balance sheet, as of 12/31/2024, we had cash and cash equivalents of $5,900,000 compared with $1,300,000 as of 12/31/2023.

This is due to our strong growth and additional capital raised in the fourth quarter. Our inventory balance as of 12/31/2024 was $6,600,000 compared to $10,900,000 for or on 12/31/2023. We believe we’ve gotten our inventory levels to an adequate level and expect inventory to be around to maintain around this level. During the year ended 12/31/2024, net cash provided by financing activities was $14,800,000 which consisted of proceeds of $7,700,000 net of capitalized issuance costs from the issuance of preferred stock and warrants, $7,400,000 from the exercise of warrants for preferred stock, plus $4,100,000 net of issuance costs received from the issuance of convertible notes. This was offset by repayments of $4,300,000 for our short term debt.

So with that overview of our business and recent financial performance, Herman and I are now ready to take questions from our covering analysts. Operator?

Conference Operator: We will now begin the question and answer session. Our first question today is from Jonathan Ashoff with Roth Capital. Please go ahead.

Jonathan Ashoff, Analyst, Roth Capital: Thank you. Good morning, Herman and Fred. I was curious, what was the 4Q twenty twenty four AMALU’s unit growth year over

Fred Leffler, CFO, Biofrontera: year? Herman, do you want me to take that one?

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Yes. If you have the number in front of you, yes please.

Fred Leffler, CFO, Biofrontera: Yes. Approximately 2%.

Jonathan Ashoff, Analyst, Roth Capital: Two %. Thank you. And was there any sales force addition or attrition over 2024?

Fred Leffler, CFO, Biofrontera: As far as number of

Jonathan Ashoff, Analyst, Roth Capital: Number of salespeople, sure any number of salespeople.

Fred Leffler, CFO, Biofrontera: Yes. Commercial, no, it was it held approximately constant.

Jonathan Ashoff, Analyst, Roth Capital: Okay. And lastly, what’s the ACME enrollment number? Maybe I missed that in your call. And are you still comfortable with the data timing you gave last?

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Yes. The enrollment number is 116. However, as the data look right now, we may be able to conclude that trial a bit earlier.

Jonathan Ashoff, Analyst, Roth Capital: Okay. So with 01/2016 or maybe a few more?

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Maybe a few more.

Jonathan Ashoff, Analyst, Roth Capital: All right. And okay, so clearly the data timing I guess if that number is going to be lower should still be safe, right? Yes. Thank you very much.

Conference Operator: The next question is from Bruce Jackson with The Benchmark Company. Please go ahead.

Andrew Barwicki, Investor Relations Representative, Biofrontera: Hi, good morning and thanks for taking my questions. Moving over to the income statement, now that you’ve got the more advantageous transfer pricing, how do you think that could impact gross margins in 2025?

Fred Leffler, CFO, Biofrontera: Yes. So we have a transfer price of 25% through 2025. And so while Q4 we saw the impact of that in Q4, as I mentioned, we had higher sales in Q4, higher revenues and yet the cost of goods sold was slightly down. So Q4 had a slight mix of that, but for 2025, it’s going to be almost exclusively at the lower 25% transfer price.

Andrew Barwicki, Investor Relations Representative, Biofrontera: Okay, great. And then, you mentioned that there was a price increase in the fourth quarter. Can you tell us how much of a price increase there was in percentage terms? And then also, did it have any effect on forward buying?

Fred Leffler, CFO, Biofrontera: Yes. So that was a 5% price increase. So our tube of amylose is $3.63 and there was certain customers we do see customers do a bit of a buy in before price increases. So that was reflected in Q3.

Andrew Barwicki, Investor Relations Representative, Biofrontera: Okay. Then last income statement question for me. The SG and A and the R and D have been kind of coming down a little bit. Is that going to continue to trend that way in 2025?

Fred Leffler, CFO, Biofrontera: For the SG and A piece of it, we’re expecting to hold approximately approximately steady. We’ve adjusted some of the cost structure like the headcount and things like that to what we believe is an appropriate level. So no adjustments on the commercial SG and A or anything like that. I’ll pass it over to Herman to speak about R and D, if that was part of your question.

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Yes, it’s the same about R and D. It’s going to be stable compared to the last couple of months.

Andrew Barwicki, Investor Relations Representative, Biofrontera: Okay, great. That’s it for me. Thank you very much.

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Thank you. Thank you.

Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Herman Lubberts for any closing remarks.

Herman Louverde, CEO, Chairman and Founder, Biofrontera: Yes. Thank you to everyone for your participation today. We are pleased with the sales growth we had in 2024. And as we plan for the future, we are putting a great deal of emphasis on becoming cash flow positive and managing our expenses without sacrificing sales. Although we reached record sales annually of 37,300,000.0 in 2024, which is more than double from the 18,000,000 in 2020, we continue to make changes and pivot at times to improve our sales and marketing effort.

Every day, our sales team gets new clients, which is a victory for the customer facing strategy we previously implemented. We look forward to speaking with you again when we report our first quarter twenty twenty five results. Thank you and have a nice day.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

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