Biofrontera (BFRI) Q4 2025 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 — Fred Leffler

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TAKEAWAYS

• Quarterly Revenue -- $17.1 million, up 36% year over year to the highest level in company history.
• Annual Revenue -- $41.7 million, representing 12% growth driven primarily by $4.1 million in organic volume increases for Ameluz.
• Quarterly Adjusted EBITDA -- $4.9 million, a $6.3 million improvement from negative $1.4 million in the prior year, with a margin shift to positive 29% from negative 11%.
• Quarterly Net Income -- $5.6 million, turning around from a $1.4 million net loss the previous year, aided by a $700,000 capital gain from the Serpi Investigator divestment.
• Gross Profit Margin -- Improved to 82% in the quarter, with lower cost of goods sold due to a new royalty structure lowering per-unit costs to 15% from 25%-35%.
• Asset Acquisition -- Full regulatory, patent, and manufacturing rights for Ameluz and RhodoLED (NDA and IND ownership, 11 U.S. patents, 10 U.S. patent applications, 19 international filings) acquired from Biofrontera AG, giving the company direct control over U.S. operations.
• Royalty Structure -- Replaced previous transfer pricing of 25%-35% revenue with a new 12%-15% royalty; applies 12% on sales up to $65 million and 15% above that threshold.
• Ameluz Unit Volume -- approximately 121,000 tubes for 2025 (approximately 10% growth); Q4 volume reached approximately 49,840 tubes.
• RhodoLED Lamp Placements -- approximately 85 placements in 2025 (approximately 70 XL units), reaching an installed base of approximately 745 lamps in approximately 686 offices.
• Lowest Account Churn -- 2025 churn was the lowest since 2021, with over 150 new accounts opened.
• Xepi License Sale -- License sold for initial $3 million, plus up to $7 million in milestones.
• Cash & Liquidity -- $6.4 million in cash and equivalents as of 12/31/2025; $11 million raised via Series C preferred stock, and $3 million received from the Xepi divestiture.
• sBCC NDA Progress -- Supplemental New Drug Application filed for superficial basal cell carcinoma (sBCC), with FDA acceptance and a PDUFA target date of September 28, 2026; Phase III data demonstrated 76% histological and 83% clinical clearance with Ameluz PDT versus 19% and 21% for placebo, respectively.
• AK Phase III Results -- Positive outcome for actinic keratosis on extremities/head/trunk, with primary endpoint met and plans to file a supplemental NDA to expand label coverage.
• Acne Phase II Data -- 58% reduction in inflammatory lesions for Ameluz (vs. 37% with vehicle gel); 86% of patients would select PDT again, supporting a future Phase III program discussion with FDA.
• Patent Portfolio -- New formulation patent extends protection to December 2043; U.S. Patent Trial and Appeal Board ruled in favor of the company against Sun Pharma's challenged claims.
• Full-Year Net Loss -- $10.5 million, an improvement from $17.8 million previously, with a 41% reduction.
• Full-Year Adjusted EBITDA -- Negative $10.6 million, improved from negative $15.3 million, reflecting a 31% improvement.
• Gross Margin Outlook -- CFO Fred Leffler stated, “So the gross profit margins, we expect to be between 80% and 85%, and the reason for the range is because of the mix between Ameluz and device sales. But that has started on January 1, and we expect to be within that range from January 1 and throughout 2026.”

SUMMARY

Management attributed the record quarterly and annual revenues to both higher organic Ameluz volume and refined commercial execution, including account expansion and a lower churn rate. Strategic acquisition of U.S. rights, intellectual property, and manufacturing for Ameluz and RhodoLED eliminated the high transfer pricing model, immediately improving profit margins and operational control. Fourth quarter reflected the full benefit of this new royalty structure, leading to the company’s first profitable quarter and marking a pivotal shift in financial performance. Clinical development milestones included FDA acceptance of an sBCC filing, positive Phase III AK data, and supporting Phase II acne results, each opening significant potential for label expansion and commercial growth. New and extended patents, as well as favorable litigation outcomes, reinforced the long-term security of the company’s dermatology franchise.

• Series C private placement and asset sales provided liquidity to fund operational growth and clinical programs without reliance on external debt in the period.
• Inside sales pilot launched in the fourth quarter is being scaled in 2026 to increase touchpoints with new and harder-to-reach dermatology accounts.
• Management reported operational improvements, including improved supply chain, shorter product lead times, and enhanced inventory management, enabled by the new ownership structure.
• Cost savings from reduction in related-party COGS now support management’s projection of positive cash flow trajectory, beginning with an estimated 80%-85% gross margin in 2026.

INDUSTRY GLOSSARY

• PDT (Photodynamic Therapy): A treatment approach using light and photosensitizing drugs, such as Ameluz, for dermatologic conditions including actinic keratosis and potentially basal cell carcinoma.
• PDUFA: Prescription Drug User Fee Act deadline, the legally binding date by which the FDA must take action on a submitted New Drug Application.
• sBCC: Superficial basal cell carcinoma, a type of skin cancer targeted for new Ameluz label expansion.
• AK (Actinic Keratosis): Precancerous skin lesion often treated with photodynamic therapy, part of Biofrontera’s target market for label expansion.
• IND (Investigational New Drug Application): The FDA application needed before initiating clinical trials of a new drug compound in humans.
• NDA (New Drug Application): The regulatory submission to the FDA for approval to market a new drug in the United States.

Full Conference Call Transcript

Ben Shamsian: Thank you. Good morning, and welcome to Biofrontera Inc.'s fourth quarter and full year 2025 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 Inc.'s management will be making forward-looking statements, and actual results may differ materially from those stated or implied by these forward-looking statements. The risks and uncertainties associated with the company's business are detailed in and are qualified by the cautionary statements contained in Biofrontera Inc.'s press releases and SEC filings, including the company's Annual Report on Form 10-K for the year ended 12/31/2025.

Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast. Biofrontera Inc. undertakes no obligation to revise 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 Inc. 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 also available on the company's website at biofronteraus.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, stock-based compensation, gain on sale of assets held for sale, and expense issuance costs. With that said, I would now like to turn the call over to Hermann Lubbert, CEO, Chairman, and Founder of Biofrontera Inc.

Hermann Lubbert: Yes. Thank you, Ben, and thank you to everyone joining us this morning. Fiscal year 2025 was a transformational year for Biofrontera Inc. I am proud to say that we delivered record annual revenues of $41.7 million, representing about 12% growth over the prior year, capped by a record fourth quarter in which we generated revenues of $17.1 million, the highest quarterly revenue in our company's history, representing approximately 36% year-over-year growth. These results demonstrate the strength of our commercial execution and the growing adoption of Ameluz PDT across the dermatology community. As a consequence of the amendment in the contractual relationship with our former parent company, Biofrontera AG, I will explain in a few minutes.

Q4 2025 was highly profitable for Biofrontera Inc., with an adjusted EBITDA of $4.9 million and an additional capital gain of $700,000 from the Serpi Investigator divestment, resulting in net income of $5.6 million. Let me take a moment to summarize what we accomplished in 2025, which resulted in this profitable fourth quarter and set the stage for an exciting 2026 and beyond. In October 2025, we closed a new asset purchase agreement with our former parent company, Biofrontera AG. The financial consequences were active already as of June 2025. This transaction is one of the most significant milestones in our history.

We acquired 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. In December 2025, the FDA formally transferred the NDA and IND to us, giving Biofrontera Inc. full regulatory control in the United States. We also completed the transfer of 11 U.S. patents, 10 U.S. patent applications, and 19 international filings and registered designs. The financial implications of these transactions are significant. The new royalty or earn-out structure is 12% when annual U.S. Ameluz net sales are at or below $65 million and 15% in years where they exceed that threshold.

This replaces a transfer pricing model that previously ranged anywhere from 25% to 35% of revenue. This change has already begun to improve our gross margin profile, leading to the highly profitable Q4, and Svet will provide more detail on the impact in a few moments. To support the AG transaction and our continued growth, we secured $11 million in funding through a private placement of Series C preferred stock led by Roseland Advisors and AIGH Capital Management. These healthcare-focused institutional investors share our belief in the long-term value of the Ameluz platform.

We also completed the sale of our Xepi antibiotic cream license to Pelaos Therapeutics for initial proceeds of $3 million, with the potential for up to an additional $7 million in milestone payments. These transactions, combined with our strong fourth quarter revenue performance, give us the resources and financial flexibility we need to execute on our plan. We made remarkable clinical progress across multiple fronts in 2025, and that momentum has carried into early 2026. First, in superficial basal cell carcinoma, or sBCC, we submitted a supplemental New Drug Application to the FDA in November 2025 based on strong Phase III data from our 187-patient randomized, double-blind, placebo-controlled study.

Complete histological clearance was seen in 76% of these tumors with Ameluz PDT compared to 19% with placebo. Complete clinical clearance was achieved in 83% of the lesions compared to 21% with placebo. I am pleased to report that the FDA has accepted this filing, and we have a PDUFA target action date of 09/28/2026. If approved, Ameluz would be the first PDT drug to treat a tumor in the United States, representing an additional commercial opportunity. Second, in actinic keratosis on the extremities and head, neck, and trunk, the last patient completed the treatment phase in 2025. The database was locked in January 2026.

I am very pleased to report that in February 2026, we announced positive Phase III results; the study met its primary endpoint. Combined with the completed Phase I pharmacokinetic study, we anticipate filing a supplemental NDA in 2026 to expand the label for Ameluz to treat AK beyond the face and scalp on a treatment field of up to 240 square centimeters. With approximately 58 million American adults having at least one actinic keratosis 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, the treatment phase completed in Q3 2025 and the database was locked in January 2026.

Last week, we announced positive Phase II results. The three-hour incubation protocol demonstrated a 58% reduction in inflammatory lesions with Ameluz compared to 37% with vehicle gel. PDT patient satisfaction was very high, with 86% of patients stating they would choose PDT treatment again. Based on these data, we plan to discuss the design of a future Phase III program with the FDA in 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. Our patent portfolio was significantly strengthened in 2025.

We received approval for the new improved formulation of Ameluz, which removes the potentially allergenic propylene glycol, extending patent protection through December 2043. And just recently, we had positive news in our patent dispute with Sun Pharma. The U.S. Patent Trial and Appeal Board issued a final written decision finding all claims of Sun Pharma's patent unpatentable that we had challenged. This decision is a positive outcome in defending our market position, though we note Sun Pharma may seek further review. 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 am pleased to walk you through our commercial progress for 2025. As Hermann noted, we delivered record revenues in the fourth quarter and achieved approximately 11% annual revenue growth. That revenue growth was driven by approximately $4.1 million in organic volume growth. What I want to emphasize today is the underlying quality of that growth and the executional improvements that powered it. First, looking at Ameluz unit volume growth. Ameluz unit volumes for full-year 2025 increased meaningfully. Fourth-quarter unit volumes were particularly strong at approximately 49,840 tubes, bringing the full-year unit volume to approximately 121,000 tubes. This represents approximately 10% volume growth over 2024.

These unit growth milestones underscore the effectiveness of the executional changes we implemented in 2025, which I will discuss later in this section. Looking at RhodoLED lamp placements, during 2025, we placed approximately 85 RhodoLED lamps within dermatology practices, including approximately 70 of the newer XL model. As of 12/31/2025, our installed base stands at approximately 745 lamps across approximately 686 dermatology offices nationwide. Looking at our commercial execution, our revamped commercial strategy centered on refined customer segmentation, a more focused and data-driven targeting approach, and increased accountability delivered tangible results in 2025. We saw a significant increase in sales call activity during the year and, importantly, increased in-person activity, which we know drives the highest impact with our customers.

Looking a little deeper into the business, our 2025 churn rate, which is a measure of lost business from accounts that have purchased from us in the past year, was the lowest since 2021. On top of this, we were able to open over 150 new accounts and gain significant volume of Ameluz tubes through these new accounts. Additionally, we launched an inside sales pilot in Q4 to cover vacant territories, white space, as well as smaller accounts that were harder for our in-person sales team to reach. Based on the success of this pilot, we are planning for a full rollout of inside sales in 2026.

Overall, I am very encouraged by what I have seen in my first six months at Biofrontera Inc. I am impressed by the talent and the drive of the team, and excited by the overall trajectory of the business. The growing installed lamp base, expanding customer adoption, continued commercial strategy refinement, and the potential for near-term label expansions in sBCC and AK of the trunk and extremities give us multiple vectors for continued growth in 2026 and beyond. I look forward to updating you on our progress in coming quarters. With that, I will turn the call over to Fred Leffler, our Chief Financial Officer, to walk through the financial results. Fred?

Fred Leffler: Thank you, George, and good morning, everyone. I will walk through our financial results for the fourth quarter and full year ended 12/31/2025. 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 is available on our website. Starting with fourth-quarter 2025 results. Revenues for the quarter were approximately $17.1 million compared with $12.6 million in 2024. This is an increase of approximately 36%. This was the highest quarterly revenue in our company's history and was driven by strong Ameluz sales execution and pricing adjustments that we introduced in December 2025.

Our related-party cost of goods sold, or COGS, decreased 45% year over year, driven by the transition from the transfer pricing model under our prior license and supply agreement to the significantly lower earn-out structure that came with the strategic transaction with Biofrontera AG that Hermann talked about a few moments ago. Under the new arrangement, the cost of revenues per unit declined steadily to about 15% compared with a range of 25% to 35% under the prior agreement. As a result, our gross profit on sales improved significantly, going from about 58% to 82% in 2025, which is a great outcome of all the hard work that everyone at Biofrontera Inc. put into this transaction.

Total operating expenses for the quarter were $12.5 million compared with $14.3 million in 2024. With COGS excluded, costs were about $9.4 million in both years. Selling, general, and administrative expenses, SG&A, increased $300,000, or approximately 4%, to $4.8 million in 2025. This was mainly driven by legal costs. Research and development expenses were the same for the fourth quarters year over year at $800,000. This investment directly supported the clinical programs Hermann discussed a moment ago, including the work to complete the Phase III AK extremities trial and the Phase II acne trial. Operating income for the quarter was $4.6 million, a $6.3 million improvement from a net loss of $1.7 million in 2024.

Net income for the quarter was $5.6 million, a $7.0 million improvement from a net loss of $1.4 million in 2024. This improvement was driven by the higher revenues and the materially lower cost of revenues resulting from the strategic transaction, which were partially offset by higher legal and R&D expenses. Turning to our non-GAAP measure, adjusted EBITDA for the quarter was $4.9 million compared with negative $1.4 million in 2024. This is an improvement of $6.3 million. Our adjusted EBITDA margin improved to positive 29% from negative 11% in the prior year, reflecting the favorable impact of higher gross profit and improved operating cost management.

As a reminder, adjusted EBITDA excludes interest, taxes, depreciation, amortization, changes in the fair value of warrant liabilities, stock-based compensation, gain on sale of assets, and expense issuance costs. A full reconciliation can be found in our press release or on our website. Now turning to full-year 2025 results. Total GAAP net revenues for 2025 were $41.7 million compared with $37.3 million for the full year 2024, an increase of approximately 12%. The increase was primarily driven by $4.1 million in organic Ameluz growth associated with volume.

Our related-party cost of goods sold decreased by $7.7 million, or 43%, to $10.1 million from $17.9 million in 2024, again driven by the transition from our former transfer pricing model under the prior license and supply agreement to the significantly lower earn-out structure that took effect in 2025. Under the new arrangement, beginning in July 2025, cost of revenue per unit declined steadily to about 15% compared to a range of approximately 25% to 30% under the prior agreement. Additionally, $2.0 million of purchase price accruals under the prior agreement were forgiven in connection with the closing. These reductions were offset by $2.2 million in earn-out payments under the new agreements.

As a result, our gross profit on product sales improved significantly, going from about 50% to 74% for the full year 2025. We expect the full benefit of the new cost structure to be realized on an annualized basis in 2026, as the new 12% rate applied only to about 45% of the Ameluz sales volume in 2025. In the long run, we expect our gross profit margin to range between 80% and 85%. Total operating expenses for 2025 were $53.1 million compared with $54.5 million in 2024, a decrease of $1.5 million or about 3%. Within this, selling, general, and administrative expenses increased $4.0 million, or approximately 12%, to $38.4 million.

The increase was driven by a $6.0 million increase in legal expenses related to patent claims, partially offset by a $1.1 million reduction in direct sales personnel expense from a lower headcount, $500,000 in savings from lower sales support activity levels, a $300,000 decrease in intangible asset amortization, and a $200,000 decrease in bad debt expense. Research and development expense increased $1.6 million to $3.7 million in 2025, reflecting our responsibility for all U.S. clinical trials for the full year, which only started in June 2024. This investment directly supported clinical programs Hermann discussed, including wrapping up all of the clinical trials mentioned earlier.

Our operating loss for full-year 2025 was $11.3 million, a significant improvement from a net loss of $17.2 million in 2024, a reduction of approximately 34%. Our net loss for 2025 was $10.5 million, a significant improvement from the net loss of $17.8 million in 2024, a reduction of approximately 41%. This improvement was driven by higher revenues, materially lower costs from the strategic transaction, and a decrease in interest expense, partially offset by higher legal and R&D expenses. Turning to our non-GAAP measure, adjusted EBITDA for full-year 2025 was negative $10.6 million compared to negative $15.3 million in 2024, an improvement of $4.7 million or 31%.

Our adjusted EBITDA margin improved to negative 25.4% from negative 40.9% in the prior year, reflecting the favorable impact of higher gross profit and improved operational cost management. I will refer you to our press release or website for more details. Finally, looking at our balance sheet and liquidity, as of 12/31/2025, we had cash and cash equivalents of $6.4 million compared with $5.9 million at 12/31/2024. During 2025, we received $11.0 million in gross proceeds from the private placement of Series C preferred stock, $3.0 million from the initial closing of the Xepi divestiture, and we generated $41.7 million in product revenue.

Cash used in operating activities for the full year was $13.4 million, reflecting our net loss as well as changes in working capital. With the completion of the strategic transaction, we now have greater control over the supply chain, shorter lead times for our products, and improved inventory management. These operational improvements, combined with the significantly lower cost structure under the new earn-out agreement, are expected to reduce our cash consumption as we advance towards our goal of cash flow breakeven. As we have discussed in our filings, the support of our institutional investors, Roslyn and Biters and AIGH Capital, has been instrumental in positioning us to execute the strategic transaction and invest in our clinical pipeline.

We are grateful for their confidence and commitment. With that overview of our business and financial results, we are ready to take questions from our covering analysts. Operator?

Operator: Thank you. We will now begin the question-and-answer session. Today's first question comes from Bruce Jackson at The Benchmark Company. Please go ahead.

Bruce Jackson: Hi, good morning, and thanks for taking my questions. I want to talk about the gross margin improvement that you are anticipating for 2026. Fourth quarter was quite strong. How do you think it plays out over the course of the year? And is it going to drop and then ramp again? And where do you see it exiting 2026?

Fred Leffler: Yes, nice to talk to you again, Bruce. So the gross profit margins, we expect to be between 80% and 85%, and the reason for the range is because of the mix between Ameluz and device sales. But that has started on January 1, and we expect to be within that range from January 1 and throughout 2026.

Bruce Jackson: And then, would you say you are going to be—how can I put this? Would you expect it to start at that 82% level and stay there? Or do you think it is going to be variable over the course of the year?

Fred Leffler: I think it is going to start there. As I said, it could fluctuate a little bit depending on the product mix in our revenue and cost of goods sold.

Bruce Jackson: Okay. Okay. That is all I have got right now. Thank you.

Fred Leffler: Thanks, Bruce. Thank you.

Operator: That concludes our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

Hermann Lubbert: Yes. Thank you. So if I summarize what we have said, first, we delivered record annual revenues and record first quarter revenues, demonstrating that our refined commercial strategy is working and that the Ameluz PDT platform continues to gain traction with dermatologists and their patients. Second, the completion of the strategic transaction with Biofrontera AG has fundamentally changed our business model. We now own and control all of our key U.S. assets, intellectual property, regulatory approvals, and manufacturing rights, and the new earn-out structure has materially improved our cost profile. The full annualized benefit of this new structure will flow through to our results in 2026. And third, our clinical pipeline is delivering results.

We have a PDUFA date for superficial basal cell carcinoma in September 2026, positive Phase III results for AK on the extremities, and encouraging Phase II data in acne. Looking further ahead, we have planned studies in squamous cell carcinoma in situ and reduced-pain PDT. Biofrontera Inc. is the only company in the United States running FDA-controlled clinical studies in PDT for dermatology, and our patent protection extends through 2043.

And finally, the combination of revenue growth, lower cost of revenues based on our new contracts, and disciplined expense management led to a strong profit in Q4, the first quarter where the new cost of goods became fully effective, and we expect these to meaningfully improve our financials in 2026 as we continue to advance towards cash flow breakeven. I want to thank our entire team for their dedication and hard work. I also want to thank our shareholders, the healthcare 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 all for your continued support. Have a wonderful day.

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

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