Welcome to the Biofrontera Inc. Fourth Quarter and Full Year 2021 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tirth Patel with LHA Investor Relations. Please go ahead..

Good morning, and welcome to Biofrontera Inc.'s fourth quarter and full year 2021 financial results conference call. Please note that certain information discussed during today's call 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 actual results may differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

All risks and uncertainties are detailed in and are qualified by the cautionary statements contained in Biofrontera's press releases and SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, today, April 8, 2022.

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 also 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 this morning’s press release.

With that, I would like to turn the call over to Hermann Lubbert, Executive Chairman of Biofrontera Inc..

Thank you, Tirth. Welcome, everyone to Biofrontera Inc.'s 2021 fourth quarter and full year financial results conference call. Joining me today is Erica Monaco, Chief Executive Officer of Biofrontera Inc. In a moment, Erica will review the business, our strategy and our recent financial results.

But first, I would like to provide a brief recap of our achievements during 2021. The global dermatology market, and specifically the photodynamic therapy market experienced encouraging growth following a year of the depressed numbers of patients visits to dermatologists during the height of the COVID-19 pandemic.

In the United States, which is the world's largest dermatology market, we have likewise experienced a consistently growing rebound from those pandemic loads.

Due to the management's commercial initiatives, the lifting of some government restrictions and the reopening of our customers businesses, our revenue recovered quickly beginning in about March of 2021.

I'm proud of the work of Biofrontera's management, sales teams and support staff in making 2021 a strong first year for Biofrontera following our successful IPO last fall. Sales for 2021 exceeded $24 million. We're up about 28% versus 2020 and are approaching pre-pandemic levels.

Earlier this week, we also announced very strong over 100% year-over-year of sales growth for the first quarter of 2022, which further demonstrates that our business is back on track. With that, I'll turn the call over to Erica..

first, expanding sales of our principal product Ameluz in combination with the BF-RhodoLED lamp for the treatment of AK on the face and scalp; second, positioning Ameluz as the leading PDT product by optimizing our sales and marketing infrastructure and strengthening our medical affairs outreach; and third, leveraging the potential for future approvals and label expansion of our pipeline products through our existing license agreements.

Our goal is to establish Ameluz as the leading PDT drug for the treatment of AKs in the United States. In addition, we see opportunity to expand the PDT market as a first option treatment of actinic keratosis versus cryotherapy, especially in patients with more than 15 lesions.

We believe dermatologists have favored cryotherapy to date because of reimbursement. However, we also believe there's treatment guideline pressure towards field directed therapy as opposed to single lesion therapy, which may also help support our sales of photodynamic therapy treatments.

In late October 2021, RhodoLED XL was approved in combination with Ameluz for the treatment of mild and moderate actinic keratosis on the face and scalp, which corresponds to the current approval of Ameluz.

This new PDT lamp enables the elimination of larger areas, enabling the simultaneous treatment of several AK lesions that are distant from one another. Despite widespread supply chain issues across the globe, we are on track to launch the XL by the end of this year.

Our market expansion seeks optimizations for deeper penetration in our sales territories and our high value accounts, strengthening medical affairs and becoming a trusted partner in medical communities through scientific data publication, key opinion leader interaction and industry support.

Expanding the Ameluz label allows us to consistently deliver innovative solutions for patients and serve as a key mechanism to unlock the drugs potential. In 2021, there were four U.S. publications investigating Ameluz and PDT, three of which were investigator initiated trials.

Furthermore, continued investment in clinical research by our license partner aimed at least at label expansion, is thus an integral part of our growth. According to our license agreement for Ameluz, the licensor is obliged to conduct and finance the clinical studies required for defined label expansions.

In December of 2021, our licensor Biofrontera AG, received the two notices of allowance from the U.S. Patent and Trademark Office that helped further protect the marketing position of Ameluz. The first patent covers an innovative pain reducing elimination protocol for photodynamic therapy.

As implementation of the patented invention to our medical devices merely requires the installation of software, it can potentially be rolled out to both the BF-RhodoLED and the RhodoLED XL.

The second patent protects the number of innovations in the RhodoLED XL lamp and describe specific features of the LED arrays of the five panels constituting the lamp patent. In addition, we recently announced our BF-RhodoLED XL illumination device is now listed in the U.S. FDA publication, commonly known as the orange book.

This listing provides Ameluz PDT with the protection against generic competition through October of 2040 and further strengthened our competitive positioning. Throughout 2021, we focused on enhancing our medical affairs capabilities, and building awareness of our suite of products.

Two weeks ago, we attended the American Academy of Dermatology Annual Conference and had a strong presence and a booth showcasing our products. Interacting with dermatologists, practitioners and dermatology-focused service providers is critical to growing our trusted brands.

The annual meeting is the world's largest scientific meeting for dermatologists with an average attendance of approximately 18,000, including approximately 10,000 medical personnel. It was wonderful to see so many customers, KOLs and prospective customers in person. And we are quite pleased with the outcomes from this conference.

Our Ameluz and BF-RhodoLED brands have experienced heightened recognition as we've marketed and presented our products at a number of academy and industry conferences in addition to the AAD.

We exhibited at the Winter Clinical Dermatology Conference, Maui Dermatology Conference, which was our first in-person conference since the pandemic started, and also at ODAC, which is a dermatology aesthetic and surgery conference, all of this in Q1 of this year.

As part of our market expansion efforts, we are focused on ways to deepen our relationships with existing customers and also expand access for our therapies to more dermatology clinics and patients. A data-driven commercial approach will allow us to focus our promotional efforts and expansion in an advanced way.

To that end, we recently created a dedicated key accounts team. Expanding our sales efforts with this function addresses the changing landscape of the dermatology industry.

With more and more dermatology clinics being bought out and joining large corporate organizations, building relationships at the corporate and regional levels to understand the drivers of their clinical decisions is a focus for us moving into 2022.

Rolling out a key accounts team expands our market access support as a dedicated partner with these strategic ownership groups. This approach will allow us to build customized support resources that expand the access for innovative solutions to treat disease and meet patient needs.

Additionally, in 2022, our commercial expansion will include a new model of inside sales support. This allows our existing salesforce to deepen customer relationships while our inside sales support can expand the reach and frequency to some of our newer and smaller accounts.

As we move into 2023, additional outside sales regions will round out our commercial footprint. Our 2022 commercial strategy is further supported by a strategic education initiative about our product differentiation, scientific information and patient selection.

We believe there is significant potential to gain market share from cryotherapy, where a patient has more than 15 AK lesions. Educating the industry on the importance of field therapy and the high efficacy of our product will support our efforts to expand utilization of our PDT therapy.

We have pledged support in the coming year to many significant dermatology societies and foundations.

We will take advantage of opportunities to present our company and products to these societies and we'll host demonstrations, roundtables and other educational sessions in the coming months as we strive to provide a deeper scientific understanding of our products to the market.

These efforts align deeply with our company values of commitment, quality and customer focus. Our vision is to be a trusted partner that brings best-in-class therapies and service to dermatology patients and health care providers. We are confident this holistic vision will also lead to maximizing value to our shareholders.

Moving on to an update on our clinical studies. Clinical development programs undertaken by our licensor are designed to complement our commercial strategy by expanding the market position for Ameluz PDT by providing more value to patients, broadening the addressable market and offering more favorable treatment options.

The studies are performed by Biofrontera AG and are indirectly financed by us to the license and supply agreement for Ameluz.

In December, we announced enrollment of the first patient in the acne study, a multicenter randomized double-blind Phase 2 study that will enroll 126 adults with moderate to severe acne who will be treated with Ameluz PDT or placebo. The efficacy of Ameluz PDT is being tested with incubation durations of one and three hours.

The primary endpoint is the change in number of inflammatory lesions and improvement in symptoms as assessed by the physician conducting the study.

The second study is a Phase 1 study evaluating the safety and tolerability of Ameluz for the treatment of AKs located on the face and scalp together with our new RhodoLED XL lamp, which as I mentioned, covers a larger surface area.

In December, we also enrolled the first patient into this open label study that will enroll a total of 100 subjects with mild to severe AKs on the face and scalp across eight trial sites. Each patient receives a field directed treatment with the content of three tubes of Ameluz, better enabling treatment of larger surface areas.

In addition, we have a Phase 3 study underway in the United States evaluating Ameluz PDT in combination with the BF-RhodoLED lamp for the treatment of superficial basal cell carcinoma. This study is approximately 70% enrolled and aims to enroll a total of 186 patients.

We look forward to providing you an update on this and the other studies as we hit our milestones. So in conclusion, 2021 was an exciting and transformational year for us at Biofrontera. We advanced our clinical development and commercial growth. We generated net product revenues of $24.1 million, returning to near pre-pandemic levels.

We became a NASDAQ listed company and raised $14.9 million for the IPO $13.6 million through a subsequent private placement and $13.2 million through warrant execution.

We migrated away from our controlled subsidiary position, moving our former parent with approximately 47% shareholding position and amended our license and supply agreement to strengthen our commercial revenue opportunity and future pipeline for label expansion of Ameluz.

Overall, we made tremendous progress in 2021 in establishing our financial footing, advancing our pipeline and positioning Biofrontera for sustained growth. As we have just exited Q1 2022 with strong business momentum, I look forward to a busy 2022 that will further advance our strong position within the dermatology market.

So with that overview, I would like to conclude the business update. We will be opening the line today for questions, and I will be having Erica Gates, our Principal Accounting Officer join both Hermann and myself to answer any questions you may have. Thank you again for taking the time to participate in this conference call today.

And operator, we are now ready to take questions. Thank you..

[Operator Instructions] The first question comes from Jonathan Aschoff with the ROTH. Please go ahead..

Thank you. Good morning, guys and congrats on the progress.

The first question is, what's the reason for the sales force additions in 2023 rather than the originally proposed by year end 2022?.

Sure. Thanks, Jonathan. I think the approach of sales development and expansion is beyond just a typical sales territory. And so, the expansion of the sales organization includes the key account department that we've recently put together, as well as the inside sales force.

And the reason we're taking that approach instead of feet out in the field, as we think this will have a greater impact on specifically our key accounts that we want to focus on and allowing the existing sales force to deeper penetrate and build the relationships with our existing accounts. So it's all still part of the original growth model.

It's just not a typical sales rep that you're looking at..

Okay.

And are you comfortable giving any data, timing guidance for the three ongoing trials or no?.

Hermann, I would defer to you on that..

Yes, we believe that we will be able to complete recruitment in the BCC trial by the end of the year. The patients are in the trial for a maximum of six months. So the study could then be completed in the middle of next year. The database closed a month or two later. For the safety trial, that one, we expect to be completed in the course of the year.

The acne trial, again, recruitment should be completed towards the end of the year. And also here, the study results should be available in the middle of next year..

Okay. Thank you very much, Hermann. Can you give us a little help with the SG&A for 2022? Should we sort of bring that down sequentially, because maybe the fourth quarter has some residual non-recurring expenses.

Is that accurate?.

The SG&A that you're looking at for the performance in 2021?.

No, the SG&A over 2022, shouldn't that maybe drop a bit further for the first quarter of 2022 because maybe the fourth quarter of '21 still has some residual non-recurring expenses like third quarter was really heavy with the non-recurring expenses?.

I'm not sure there's any non-recurring in the Q4 numbers. Just to clarify, some of the major non-recurring items were specific to Q3. So I don't identify much in Q4 that will be coming down..

Okay. So that looks like a run rate then, thank you.

And by the way, lastly, the Ameluz price hike was that to $330 from $315 on the first of this month?.

Yes, $331..

Thank you very much..

[Operator Instructions] The next question comes from Bruce Jackson with the Benchmark Company. Please go ahead..

Good morning and thank you for taking my questions. So just generally with dermatology, it was one of the specialties that was more affected by COVID-19 inpatient visits.

What are you seeing right now out in the marketplace in terms of how the dermatology patient visits are recovering?.

So I think the headwind from COVID-19, those are still there, although it's not quite the same as it was during COVID. The biggest impact in the marketplace right now is staffing and retraining.

I think the derm offices that did have to close or reduce staff are trying to get patients back in, but it's a matter of getting the adequate training of their staff up and running. So that's really what we're seeing in terms of getting patients back into treatment..

Okay. And then a question just about the 2022 revenue guidance, at least 30%. You're coming off of a very strong first quarter, you've got a price increase that's gone into effect. Would you characterize your guidance as being conservative? Because coming off of the strong fourth quarter and first quarter, it sort of feels conservative..

So I would say that I think the -- framing it as at least 30% is intended to read as conservative, as I just mentioned with the headwinds of COVID. We had a great Q1, but we are still balancing the expectations of how COVID will impact the industry. So hopefully, at least 30% is conservative. That's a good answer..

Okay. Okay. And then, one last follow-up question on the clinical trials with the safety trial for the three tubes.

When do you plan to complete enrollment? And then when do you plan to submit the data to the FDA?.

We plan to complete enrollment for this trial sometime in the middle of the year. We hope to be able to submit this to the FDA before the end of the year..

All right. Perfect. Thank you very much..

My pleasure. Thanks for the questions..

This concludes the question-and-answer session. I would like to turn the conference back over to the management for any closing remarks..

Thank you and thank you again for joining us all today. I've trust that we've shared our enthusiasm for the future of our product portfolio and Biofrontera's position within the dermatology community. We look forward to speaking with you again when we report our first quarter 2022 results in May. In the meantime, thank you all and have a nice day..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..