Biofrontera (BFRI) Q1 2026 Earnings Transcript

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DATE

Thursday, March 19, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer, Chairman, and Founder — Hermann Lubbert
• Chief Commercial Officer — George Jones
• Chief Financial Officer — Eugene Leffler
• Vice President, Investor Relations — Ben Shamsian

TAKEAWAYS

• Revenue -- $10.1 million, up 17% driven by 16% growth in Ameluz unit volume and a price increase implemented in Q4 2025.
• Ameluz Unit Volume -- Increased to 29,000 tubes from 25,000, representing 16% year-over-year growth.
• Gross Margin -- Approximately 80%, up from 62%, reflecting full benefits of the new earnout structure replacing prior transfer pricing.
• Cost Structure Change -- Cost of revenues dropped 40% year over year, from $3.1 million to $1.8 million, under the new earnout model with a 12%–15% rate, compared to 25%–35% prior transfer price.
• Adjusted EBITDA -- Negative $3.6 million, an improvement of $0.8 million from negative $4.4 million, with margin improving from negative 51% to negative 35%.
• Operating Loss -- $4.3 million, slightly improved from $4.5 million; excluding $0.4 million patent remediation, underlying loss would be $3.9 million.
• Net Loss -- $4.8 million or $0.41 per share, compared with $4.2 million or $0.47 per share, impacted by patent remediation and a $0.7 million swing in fair value of warrant liabilities.
• Cash Used in Operations -- $70,000, a decline from $4.1 million, reflecting near-breakeven cash consumption.
• Cash and Cash Equivalents -- $6.3 million at quarter-end, down marginally from $6.4 million at year-end.
• RhodoLED Lamps -- 32 shipped in the quarter, installed base now 773 lamps in 709 offices as of March 31, 2026.
• FDA Regulatory Milestone -- sNDA for Ameluz in superficial basal cell carcinoma accepted in February; PDUFA action set for September 28, 2026, positioning Ameluz as potentially the first PDT drug cancer approval in the U.S.
• AK Phase III Results -- Top-line data for Ameluz in extremities, neck, and trunk met endpoints; primary endpoint met with statistically significant superiority versus vehicle gel, supporting sNDA filing plan in Q3 2026.
• Acne Vulgaris Study -- Phase II data: Ameluz PDT showed 58% reduction in inflammatory lesions vs 37% for vehicle gel; 86% of patients would choose PDT again.
• Sales Force -- Lower turnover and expanded inside sales coverage; full rollout of inside sales initiated in Q1 is already producing results.
• NASDAQ Compliance -- On May 6, 2026, company regained compliance with $1 minimum bid price rule.

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RISKS

• Eugene Leffler stated, "the company has included a going concern qualification in its statements," driven by current capital resources not yet ensuring sustained operations; company must continue to grow revenue and control expenses.
• Hermann Lubbert cited that "As our products are exclusively imported from Europe, we are routinely assessing the potential impact on our supply chain, product cost and pricing strategy." due to global trade developments.
• General and administrative expenses rose by $0.8 million, primarily from legal costs related to ongoing patent claims and remediation.

SUMMARY

Biofrontera (NASDAQ:BFRI) demonstrated material operational improvement, with significant margin expansion and sharply reduced operational cash burn following adoption of a new earnout-based cost structure. The quarter included positive regulatory progress, with the FDA accepting a supplemental NDA for Ameluz in superficial basal cell carcinoma and the company announcing statistically significant Phase III data for Ameluz in additional actinic keratosis indications, both driving expanded commercialization prospects. Management launched a full rollout of its inside sales program, supporting adoption growth and broader field coverage, while also reporting that the company regained compliance with key NASDAQ listing requirements.

• The reduction in cost of revenue is amplifying the impact of both sales volume and pricing, benefiting gross margins and adjusted EBITDA despite increases in SG&A expense from commercial expansion and legal costs.
• Customer adoption metrics indicate ongoing penetration, with a higher installed base of RhodoLED lamps and lower sales force turnover enhancing commercial leverage.
• Pending FDA milestones and upcoming filings for expanded indications position Ameluz for multiple new market opportunities beyond its current labeled use.
• The company acknowledged ongoing exposure to patent litigation risk and tariff volatility, both monitored but not quantified in financial outlooks.

INDUSTRY GLOSSARY

• PDUFA Date: Prescription Drug User Fee Act target action date established by the FDA for decision on new or supplemental drug applications.
• sNDA (Supplemental New Drug Application): Regulatory submission to the FDA seeking approval for a new indication, dosage, or formulation for an already approved drug.
• PDT (Photodynamic Therapy): A procedure combining a photosensitizing drug with a particular type of light to treat dermatologic conditions, including actinic keratosis and potentially some skin cancers.
• AK (Actinic Keratosis): A precancerous area of thick, scaly, or crusty skin caused by damage from ultraviolet radiation.
• sBCC (Superficial Basal Cell Carcinoma): The superficial form of the most common type of skin cancer.

Full Conference Call Transcript

Ben Shamsian: Good morning, and welcome to Biofrontera Inc.'s First Quarter 2026 Financial Results and Business Update Conference Call. Please note that certain information discussed during today's call by management is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that Biofrontera's management will be making forward-looking statements and that actual results may differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

All risks and uncertainties are detailed in and are qualified by the cautionary statements contained in Biofrontera's press releases and SEC filings, including the company's quarterly report on Form 10-Q for the quarter ended March 31, 2026, and the company's annual report on Form 10-K for the year ended December 31, 2025. Also this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast. 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 issued today and is available on the company's website at www.biofrontera-us.com under the Investor Relations section. Please note, management will be referencing adjusted EBITDA, a non-GAAP financial measure, defined as net income or loss excluding interest income and expense, income taxes, depreciation and amortization and certain other nonrecurring or noncash items, including changes in fair value of warrant liabilities and stock-based compensation.

With that said, I would like to now turn the call over to Hermann Luebbert, CEO, Chairman and Founder of Biofrontera. Hermann?

Hermann Lubbert: Yes. Thank you, Ben, and thank you to everyone joining us this morning. The first quarter of 2026 was strong across our key metrics. We delivered product revenues of $10.1 million, an increase of approximately 17% compared to $8.6 million in the first quarter of 2025. This marks the first full quarter reflecting our new cost structure following the strategic transaction with Biofrontera AG and the results demonstrate that our business model transformation is delivered as planned. These results further demonstrate the strength of our commercial execution and the growing adoption of Ameluz PDT across the dermatology community. George Jones, our CCO, will follow up about this in more detail.

As a reminder, the strategic transaction, which closed in October 2025, gave Biofrontera Inc. full ownership and control of all U.S. rights, approvals and patents for Ameluz and RhodoLED, including the New Drug Application, the Investigational New Drug application, all manufacturing rights and contracts and all intellectual property. The FDA formally transferred the NDA and IND to us in December 2025. Under the new earnout structure, we pay 12% of net sales when annual U.S. Ameluz revenues are at or below $65 million and 15% when they exceed that threshold. This replaced the transfer pricing model that previously was 25% to 35% of revenue. The impact of this is clearly visible in our Q1 results.

Our gross margin expanded to approximately 80% compared to approximately 62% in the prior year quarter. And our cash used in operations was near 0 at just $70,000, a dramatic improvement from $4.1 million used in operations in Q1 2025, and sets the path for cash flow breakeven this year. Fred Leffler, our CFO, will provide more detail on the financial performance in a few moments. Let me now turn to the significant clinical and regulatory progress we have made during and since the first quarter.

First, in superficial basal cell carcinoma, in February 2026, we announced that the FDA completed its filing review and accepted our supplemental New Drug Application for Ameluz PDT for the treatment of superficial basal cell carcinoma. The PDUFA target action date is September 28, 2026. If approved, Ameluz would be the first PDT drug approved to treat a cancer in the United States, representing a significant additional commercial opportunity for our platform and providing a significant advantage to what our direct competitor can do. Second, in actinic keratosis on the extremities, neck and trunk. In February 2026, we announced positive and statistically significant top line results from our Phase III clinical trial.

The study met its primary endpoint, demonstrating highly statistically significant superiority for Ameluz versus vehicle gel. Additionally, we announced the database lock of the Phase I pharmacokinetic study required for our FDA filing. Combined, these data support our plan to file a supplemental NDA in the third quarter of 2026 to expand the Ameluz label for the treatment of AK beyond the face and scalp on the treatment field of up to 240 square centimeters. With approximately 58 million American adults having at least one AK lesion, treating extensive fields on the extremities, neck and trunk represents a very large addressable market for our installed base of RhodoLED lamps. Third, in moderate to severe acne vulgaris.

In March 2026, we announced the results of our Phase II study with Ameluz PDT. The 3-hour incubation protocol demonstrated a 58% reduction in inflammatory lesions with Ameluz compared to 37% with vehicle gel in the protocol population. Patient satisfaction was very high with 86% of patients stating they would choose PDT treatment again. Based on this data, we plan to discuss the design of future Phase III program with the FDA in the second half of 2026. Acne vulgaris is a chronic condition affecting millions of adults and adolescents, and we believe Ameluz PDT has the potential to offer a differentiated treatment option for the moderate to severe form of the disease.

On the corporate front, I am pleased to report that on May 6, 2026, we received written notification from NASDAQ confirming that the company has regained compliance with the Minimum Bid Price Requirement under Listing Rule 5550(a)(2). The closing bid price of our common stock was at or above $1 per share for the required 10 consecutive business days. Finally, I want to note that we continue to monitor the evolving global trade environment, including recently imposed tariffs on imports from certain countries. As our products are exclusively imported from Europe, we are routinely assessing the potential impact on our supply chain, product cost and pricing strategy.

I would now like to turn the call over to George Jones, our Chief Commercial Officer, to provide a more detailed update on our commercial execution. George?

George Jones: Thank you, Hermann, and good morning, everybody. I'm pleased to walk you through our commercial progress for the first quarter of 2026. As Hermann noted, we delivered product revenues of $10.1 million, an increase of approximately 17% year-over-year. The revenue increase was primarily driven by approximately 16% growth in Ameluz unit volume as well as a price increase that we implemented in the fourth quarter of 2025. Looking at the Ameluz unit volume growth, Ameluz unit volumes for the first quarter of 2026 increased from approximately 25,000 tubes in Q1 2025 to approximately 29,000 tubes of Ameluz in Q1 2026, translating to an approximately 16% year-over-year growth. This follows our record sales in Q4.

This continued volume momentum reflects the impact of the execution improvements we have implemented and the growing adoption of Ameluz PDT. Turning to lamps, the RhodoLED lamp placements. During Q1 of 2026, we shipped approximately 32 lamps, increasing our installed base to approximately 773 lamps across 709 dermatology offices as of March 31, 2026. When we look at our sales force execution, our focused commercial strategy is delivering the momentum we're seeing. The strategy is centered on increased accountability across our commercial organization, refined customer segmentation and data-driven targeting assisted by AI. We continue to focus on increased in-person sales activity because we know this drives the highest impact with our customers.

We also saw the benefits of lower sales force turnover in Q1 2026 versus Q1 2025 as our newer reps have been able to get to know their customers and their territories, they're better able to drive results. I also wanted to follow up on something we discussed during our last call. In Q4 2025, we launched an inside sales pilot to cover vacant territories, white space and smaller accounts. I'm excited to share that in Q1, we've begun the full rollout of this program, and it's already started to deliver results for us.

The growing installed lamp base, lower sales force turnover, expanded customer adoption, along with the potential for expanded uses for Ameluz with the near-term label expansion in sBCC and AK in the trunk and extremities as well as the advancement of the acne program give us multiple vectors for continued growth and tailwinds for our business. I look forward to updating you on our progress in coming quarters. With that, I'll turn the call over to Fred Leffler, our Chief Financial Officer, to walk through the financial results. Fred?

Eugene Leffler: Thank you, George, and good morning, everyone. I'll walk through our financial results for the first quarter ended March 31, 2026. All comparisons are to the prior year period unless otherwise noted. A full reconciliation of our GAAP to non-GAAP measures is included in the press release we issued earlier today and also available on our website. Okay. So starting with first quarter 2026 results. Revenues for the first quarter were approximately $10.1 million compared with approximately $8.6 million in the first quarter of 2025, an increase of 17%.

The increase was primarily driven by the 16% growth in Ameluz unit volume and the impact of the price increase we implemented in the fourth quarter of 2025 which contributed about $0.2 million in additional revenue. This was the first full quarter reflecting our new cost structure under the strategic transaction mentioned earlier and our cost of revenues decreased by approximately 40% year-over-year from $3.1 million to $1.8 million. Under the new earnout agreement, our cost of revenue as a percentage of product revenue declined significantly compared to the 25% transfer price that was in effect during Q1 of 2025. During the quarter, we recognized $1.2 million of earnout expense under this new agreement.

As a result, our gross profit on product sales improved significantly with a gross margin of approximately 80% compared with 62% in the first quarter of 2025, an improvement of 18%. This is consistent with our expected annualized benefit of the new cost structure that will be reflected throughout 2026 and is tracking towards our longer-term gross margin target of 80% to 85%. Total operating expenses for the first quarter of 2026 were $14.4 million compared with $13.1 million in the first quarter of 2025. Excluding cost of revenues, operating expenses were $12.3 million compared to $9.9 million in the prior year.

Operating expenses for the quarter include a $0.4 million patent remediation expense, which I will discuss further when I get to operating loss. Selling, general and administrative expenses were $11.0 million for the first quarter of 2026 compared with $8.7 million in the prior year quarter, an increase of $2.3 million or about 27%. I'll walk through and highlight the key components. Selling and marketing expenses increased about $0.8 million, reflecting the full deployment of our direct sales team and higher sales activity levels, including sales meetings, conferences and exhibits. General and administrative expenses increased about $0.8 million as well, primarily driven by legal expenses associated with ongoing patent related claims.

Additionally, in connection with the strategic transaction, we assumed responsibility for the manufacturing operations in the fourth quarter of 2025. Because we are in the process of securing approvals and licenses to commence manufacturing later in 2026, these manufacturing-related costs of $0.6 million were reflected in SG&A during this quarter. Research and development expenses decreased $0.3 million to $0.9 million for the first quarter of 2026, down from $1.2 million in the prior year quarter. The decrease was primarily attributable to certain clinical trials reaching substantial completion during the quarter. And during the quarter, we invested in our AK acne superficial basal cell carcinoma and lamps development programs.

Operating loss for the first quarter of 2026 was $4.3 million compared with a loss of $4.5 million in the first quarter of 2025. The quarter included the $0.4 million of patent remediation expense, which we exclude because they relate to discrete adverse legal and regulatory matters that are not indicative of the company's ongoing operating performance. Excluding this expense, our underlying operating loss for the first quarter of 2026 would have been approximately $3.9 million and an improvement of $0.7 million, driven by $2.7 million increase in gross profit and partially offset by $2.3 million increase in SG&A.

Net loss for the first quarter of 2026 was $4.8 million or $0.41 per share compared with a net loss of $4.2 million or $0.47 per share in the prior year quarter. The net loss comparison was impacted by 2 nonrecurring items: the patent remediation I just discussed, and a $0.8 million swing in the noncash change in fair value -- in the fair value of warrant liabilities, a $0.5 million gain in Q1 of 2025 compared to $0.2 million loss in Q1 of 2026. Adjusting for these items, the underlying improvement is reflected in our adjusted EBITDA, which I'll turn to now.

Turning to adjusted EBITDA, our non-GAAP measure, the first quarter was negative $3.6 million compared with a negative $4.4 million in the prior year quarter, an improvement of approximately $0.8 million. Our adjusted EBITDA margin improved to negative 35% from negative 51% in the prior year. The improvement was primarily driven by the $2.7 million increase in gross profit offset by the $2.3 million increase in SG&A. As a reminder, adjusted EBITDA excludes interest taxes, depreciation and amortization, certain other nonrecurring or noncash items, including changes in fair value of warrant liabilities, stock-based comp and the patent remediation expense and inventory write-down recognized during the quarter.

A full reconciliation from GAAP net loss to adjusted EBITDA is included in the press release we filed earlier today and will be filed as part of our Form 10-Q. Now turning to balance sheet and liquidity. As of March 31, 2026, we had cash and cash equivalents of $6.3 million compared with $6.4 million as of December 31, 2025. Cash used in operating activities for the first quarter was just $70,000 compared with $4.1 million in the prior year quarter.

This near breakeven cash performance represents a dramatic improvement and reflects the combined impact of higher revenues, the significantly lower cost structure under the new earnout agreement and favorable working capital changes, including a $3.4 million collection of accounts receivable. As we have disclosed in our filings, the company has included a going concern qualification in its statements. While we have demonstrated meaningful progress towards cash flow breakeven, our current capital resources require us to continue expanding our commercial operations while controlling expenses.

We plan to address this through continued Ameluz revenue growth, realization of the next milestone payment of $1 million from the Xepi divestiture that happened in 2025, and if necessary, securing a working capital line of credit or the like. So with that overview of our financial results and business activities, we are now ready to take questions from our covering analysts. Operator?

Operator: [Operator Instructions] Our first question comes from Jonathan Aschoff with ROTH Capital Partners.

Jonathan Aschoff: As to what you might know about off-label use...

Operator: Jonathan, I'm sorry, you were not audible. Can you start again, please?

Jonathan Aschoff: Okay. Can you hear me now?

Operator: Yes.

Jonathan Aschoff: Congrats on a nice quarter. Can you guys help me understand the extent to which there's off-label use into probably the least risky is AK in the extremities? Do you have any decent sense as to Ameluz' use outside of what's on label?

Hermann Lubbert: Yes. There's certainly some off-label use. However, since some payers are quite sensitive to that and refuse to reimburse the doctors when they do this, doctors are usually hesitant doing off-label use. So the -- while we don't have access to any clear numbers, we don't expect that the current off-label use outside AK on the face and scalp at least in the AK business is small.

Jonathan Aschoff: Okay. Can you give us a sense of what kind of directions the acne, the subsequent clinical development in acne could go? I mean, are you definitely expecting to already be teed up for a Phase III trial? Or do you think you could actually have to do some Phase II development again?

Hermann Lubbert: That's difficult to say because it needs to be discussed with the FDA. I don't think we need Phase II again. I think we got the information we need to go into Phase III. There have been quite a number of learnings and the clinical results are well in line with the best other topical products that are out there. So we think if the -- unless the FDA has a different idea, we could go straight into Phase III.

Eugene Leffler: And Jonathan, I just want to add that while we've heard of some off-label use, we market and ensure that everyone at Biofrontera markets the product on label and doesn't encourage anything that's outside of the label.

Operator: Our next question comes from Bruce Jackson with StoneX.

Bruce Jackson: So looking at the supplemental NDA for the superficial BCC, I believe you've got a PDUFA date of September 28. So if you do get the approval, are you ready to launch like the next day? Or is there any other additional preparation activity that needs to take place before you can go out and start marketing aggressively?

George Jones: I could take that, Hermann. This is George. We -- there is...

Operator: Sorry to interrupt you, but your voice is breaking. Can you check, please?

George Jones: Can you hear me?

Hermann Lubbert: Yes.

Operator: Yes.

George Jones: Okay. Perfect. There is no additional work or preparation that has to be done. We're actively preparing for the launch of that indication right now, and we're going to start some initial rollout with our medical team and some rollout from our commercial team in Q4, really accelerating into the launch into Q1 of next year, but we're ready to go and starting right after the approval.

Bruce Jackson: Okay. Got it. And then a question about the SG&A expenses. So Fred, you did a nice job of kind of breaking that out. Is this kind of the run rate we should be looking at for the remainder of the year? Or were there any other types of sort of onetime things embedded in there that might roll off?

Eugene Leffler: No. Well, as we've discussed before, there is a bit of seasonality to our business. So like the cash used in operations will most likely dip negative in Q3 and into Q4, unless we blow it out of water, and then be positive in Q4. And altogether, we're still expecting to hit cash flow breakeven. That said, the run rate that I did mention, we don't expect anything to drastically move off of that.

Bruce Jackson: Okay, okay. And then last question on gross margins. It's nice to see the agreements having some impact on the year-over-year improvement. How does this unfold for the remainder of the year as you try to get closer to your new target?

Eugene Leffler: Well, I think that we're in the range and we will continue to look at the GPOs, we will continue to look at our discounting and manage that and -- because our goal, and I think it's very, very achievable, is to stay within the 80% to 85%. And that can shift around because of those and the mix of Ameluz and lamp sales as they develop throughout the year. So it's something we'll look at. It's very manageable, and we expect to easily stay in those -- within that range.

Operator: All right. So it appears we have no further questions at this time. I would like to return the program to management for the closing remarks. Over to you, team.

Hermann Lubbert: Yes. Thank you, operator, and thank you to everyone who joined us today. Let me leave you with a few key takeaways. The first is that our first quarter 2026 demonstrates the full impact of our transformed business model. Revenue grew 17% year-over-year, gross margin expanded to approximately 80%, and our cash consumption was near 0, validating the strategic transaction and giving us confidence in our path to sustained profitability. Second, our clinical pipeline continues to deliver results at an accelerated pace.

We have a PDUFA date for sBCC in September 2026, positive Phase III results for AK on neck, trunk and extremities that position us for an sNDA filing in Q3 and encouraging Phase II data in acne that we will discuss with the FDA later this year. Looking further ahead, we have planned studies in squamous cell carcinoma in situ and reduced pain PDT. Biofrontera is the only company in the United States actively running FDA controlled clinical studies in PDT for dermatology, and our patent protection extends through 2043. And finally, the combination of revenue growth, the full benefit of our new cost structure and disciplined expense management is driving meaningful improvement in our financial trajectory.

We remain focused on our goal of reaching cash flow breakeven and building long-term value for our shareholders. I want to thank our entire team for their dedication and hard work. I also want to thank our shareholders, the health care professionals who use our products and most importantly, the patients whose lives we are helping to improve in the fight against skin disease. Thank you for your continued support. Have a wonderful day.

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

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