On Thursday, Biofrontera (NASDAQ:BFRI) discussed second-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Biofrontera Inc. reported a 33% increase in net product revenue to $12 million and achieved an 80% gross margin, with adjusted EBITDA reaching breakeven.

The company is dealing with a legal issue involving the International Trade Commission concerning its RhodoLED XL lamp but has a remediation plan in place to introduce a modified version outside the patent scope.

Biofrontera is preparing for potential FDA approvals and product launches in 2027, including for superficial basal cell carcinoma and expanded indications for actinic keratosis.

Sales of Ameluz are strong, with a 30% growth in unit volume and continued expansion of the customer base, despite challenges with the RhodoLED XL lamp.

The company is focused on expanding its product indications to drive future growth using its existing infrastructure, while maintaining financial discipline to address liquidity concerns.

Full Transcript

OPERATOR

Welcome to the Biofrontera second quarter 2026 financial results and business update conference call. At this time, all participants are in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star then one on your telephone keypad. To withdraw your question, please press star then two.

Please note this event is being recorded. I would now like to turn the conference over to Ben Shamsian with Lytham Partners Investor Relations. Please go ahead.

Ben Shamsian, Lytham Partners, Investor Relations

Good morning and welcome to Biofrontera Inc.'s second 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 the risks and uncertainties associated with the company's business.

Forward-looking statements on today's call include statements regarding the company's full-year 2026 revenue goals; the anticipated effects of the International Trade Commission orders and the company's remediation plan; the company's liquidity and the ability to continue as a going concern; the outcome of pending patent proceedings; and the potential approval and launch of new indications for Ameluz. All risks and uncertainties are detailed and are qualified by the cautionary statements contained in Biofrontera's press release and SEC filings, including the company's quarterly reports on Form 10-Q for the quarter ended June 30, 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.com under the Investor Relations section. Please note management will be referencing adjusted EBITDA, a non-GAAP financial measure defined as net loss excluding interest expense, net; income taxes; depreciation and amortization; and certain other non-recurring or non-cash items, including changes in fair value of warrant liabilities, panel remediation expense and the related inventory write-down, and stock-based compensation. With that said, I would now like to turn the call over to Herman Lavert, CEO, Chairman and Founder of Biofrontera. Herman, please proceed.

Herman Lavert, CEO, Chairman and Founder

Yes, thank you, Ben, and thank you to everyone joining us this morning. The second quarter of 2026 was the strongest operating Q2, and the first half-year was the strongest H1 in the company's history as a standalone U.S. business. Net product revenue grew 33% to $12 million, gross margin reached approximately 80% compared to approximately 71% a year ago, and adjusted EBITDA came to breakeven of 200,000 against a loss of 5.1 million in Q2 of last year.

These strong results in Q2, which for us is traditionally a weaker quarter, are not just one quarter out of the ordinary. They reflect the build-up of a commercial organization that is executing, along with expense discipline across the entire organization. We are seeing the pace of reorders from our physician accounts accelerate, which reflects the strength of underlying demand generation. George and Fred will take you through the details in a moment.

The results also further reflect the strategic transaction we completed in October 2025, which gave Biofrontera full ownership and control of all U.S. rights, approvals, and patents for the Ameluz and RhodoLED portfolio and replaced the transfer pricing model of 25% to 35% of revenue with a 12% earnout on net sales. Before diving into the business, I want to address the International Trade Commission matter because I expect it is on your minds. On May 6, the Commission issued its final determination finding a violation of Section 337 with respect to two Sun Pharmaceutical patents covering certain components of our RhodoLED XL lamp.

In the decision, the Commission contradicted the conclusion of the U.S. Patent and Trademark Office's Patent Trial and Appeal Board, which, in agreement with our belief, had previously found every challenged claim of one of the patents unpatentable. The Commission issued a limited exclusion order and cease and desist orders, which took effect on July 7th. We can no longer import or sell the current RhodoLED XL lamp in the United States, and we are restricted from selling Ameluz for use with the RhodoLED XL.

Three things you should understand about the scope of this. First, this affects the XL lamp. It does not in any way affect the original BF-RhodoLED lamp, which represents a substantial majority of our installed lamp base. Physicians using those lamps are unaffected, and Ameluz sales to accounts with the BF-RhodoLED lamp continue normally. Second, we have a remediation plan designed to allow selling a modified version of our XL lamp that is outside the scope of both Sun Pharmaceutical patents.

We recorded approximately 500,000 in the first quarter as our best estimate of the remediation cost, and that estimate has not changed. Because a substantial majority of our installed lamp base is unaffected, and we expect to get approval to provide a modified version of the RhodoLED XL that is outside the patent space, we expect the exclusion order to affect the timing of orders rather than total demand. Third, and finally, we are not finished contesting this.

We retain the right to appeal the Commission's determination to the Federal Circuit. I will not speculate on how those proceedings will resolve or when. What I will tell you is that while pursuing every avenue available to us, our commercial plan does not depend on winning any of them. Our commercial success will be because of our continued dedication to doctors and patients, as well as investment in developing Ameluz and PDT to be used in more indications.

Now let me turn to the clinical pipeline because it is the clearest picture of how this company will grow in 2027 and beyond. First, superficial basal cell carcinoma: the FDA accepted filing of our supplemental New Drug Application for Ameluz PDT for the treatment of superficial basal cell carcinoma, with a PDUFA target date of September 28, 2026. If approved, Ameluz will be the first PDT in the United States approved for the treatment of cancerous skin tumors, and we expect a full launch in Q1 of 2027 with initial outreach to customers during Q4 of 2026.

That launch would go directly into our existing installed base of BF-RhodoLED lamps and our existing dermatology call points. The commercial infrastructure is already in place. Second, actinic keratosis on the extremities, neck, and trunk. Earlier this year we announced positive and statistically significant top-line Phase 3 results, with the study meeting its primary endpoint. These data support our plan to file a supplemental NDA around the end of the third quarter of 2026 to expand the Ameluz label beyond AKs on the face and scalp to a treatment field of up to 240 square centimeters.

We anticipate FDA approval in Q3 2027. With approximately 58 million American adults having at least one AK lesion, extending treatment to the extremities, neck, and trunk and a larger area meaningfully expands the addressable use of every lamp already in the field. Third, moderate to severe acne and beyond. Our Phase 2b study showed a 58% reduction in inflammatory lesions with Ameluz compared to 37% with vehicle, and 86% of patients said they would choose PDT treatment again.

We are currently in the process of prioritizing and designing our next phase of clinical development, aiming at expanding the addressable market for our products, and acne will be an important part of this discussion. We'll keep you updated as these plans evolve. Taken together—sBCC expected to launch in the first quarter of 2027, relevant AK label extensions anticipated in Q3 2027, and an acne program advancing towards Phase 3—each of these will drive revenue through the same installed lamp and customer base and the same sales force we have already built and paid for.

That is the growth model for 2027 and beyond: more approved uses flowing through infrastructure that is already in place. I would now like to turn the call over to George Jones, our Chief Commercial Officer. George.

George Jones, Chief Commercial Officer

Thank you, Herman, and good morning, everyone. We delivered product revenues of $12 million in the second quarter, an increase of approximately 33% year over year. The increase was driven by approximately 30% growth in Ameluz unit volume together with the price increase we implemented in the fourth quarter of 2025. Looking at unit volume in the second quarter of 2026, we sold 33,300 tubes of Ameluz. This is compared to approximately 25,300 tubes in the second quarter of 2025.

Volume growth in the quarter included the impact of order timing from certain customers in anticipation of the ITC-related supply restrictions Herman described. The timing of this is good because customers tend to move through Ameluz faster when they have inventory on the shelf, and it sets us up for a strong fourth quarter. Importantly, since the substantial majority of our installed lamp base is unaffected by the exclusion order, we do not expect this shift to impact our full year 2026 revenue goals.

Turning to the RhodoLED lamp placements in Q2 2026, we placed 21 lamps including 16 XL lamps and 5 RhodoLED lamps. This increased our installed base to approximately 801 lamps across approximately 740 physician offices. Turning to sales execution, we are seeing significant traction across all aspects of our business. During the first half of 2026 our order count was up 18.6% versus the first half of 2025, and the average tubes per order was up 10%.

We have also been tracking our largest customers that made large purchases prior to the price increase in Q4 of 2025. Over 81% of those customers placed additional orders during the first half of 2026, and for those that did reorder, their Ameluz volume was up 41%. This is important because it indicates our sales efforts are working and our customers are increasing their Ameluz PDT throughput within their practice. I also want to highlight our new account growth.

In the first half of 2026 we added 66 new accounts versus 69 new accounts during the first half of 2025. This slight dip is likely due to the focus on current XL customers in May and June prior to the ITC orders coming effective. Lastly, I wanted to follow up on our last call and draw attention to our inside sales efforts. Those efforts have continued to bear fruit, generating approximately 1,070 tubes of Ameluz from white space and smaller accounts, as well as another 920 tubes from covering vacant territories in the first half of 2026.

The first half of 2026 has given me great optimism regarding our commercial strategy and the way our team is delivering. This enhanced execution plus our clinical programs, including the near-term sBCC approval and launch, the upcoming label expansion filing for AKs on the extremities, neck and trunk, and the advancement of our ACNE program, give us multiple paths and great opportunities for continued growth. With that, I'll turn the call over to Fred Leffler, our Chief Financial Officer.

Fred Leffler — Chief Financial Officer

Thank you, George, and good morning, everyone. I'll walk through our results for the second quarter and first half of the year ended June 30, 2026. All comparisons are to the same prior period unless otherwise noted. A full reconciliation of GAAP to non-GAAP measures is included in the press release issued earlier today and available on our website. With that, revenues for the second quarter were $12 million compared to $9 million in the second quarter of 2025.

That is an increase of 32.9%. As George described, unit volume grew approximately 30%, with the balance of the growth coming from the price increase that was completed in the fourth quarter of 2025. For the first half of the year, revenues were $22.1 million, up 25.4% from $17.6 million in 2025. Cost of revenue for the quarter was $2.4 million compared to $2.6 million, producing gross profit of $9.6 million and a gross profit margin of about 80% compared to approximately 71% in the prior year quarter.

That's an expansion of roughly 920 basis points. For the first half, gross margin was also 80% against a gross profit margin of 67% in the first half of 2025. The improvement was driven principally by the transition from the prior transfer pricing agreements to a cost structure comprising of Ameluz direct cost plus a 12% earnout on net revenue. That structure is contractual and durable and we will see it continue. Selling, general and administrative expenses for the quarter were $9.7 million compared to $10.6 million in 2025 that we took over following the strategic transaction.

I would note that the litigation-related legal spend is tied to the pace of active matters and can vary quarter to quarter. For the first half, SG&A was $20.7 million compared to $19.3 million, an increase of $1.4 million. This was driven primarily by investment, lower turnover in the commercial organization, and the new manufacturing and regulatory functions I just mentioned, and it was partially offset by lower litigation-related legal fees. Research and development expenses were $0.4 million for the quarter compared to $0.9 million in 2025, and $1.3 million for the first half of 2026 compared to $2.1 million for the first half of 2025, reflecting the current vintage of clinical trials reaching substantial completion. As Herman pointed out, we are planning additional clinical developments for the coming years, aiming to expand the reach of our products but depending on available funds. Net loss for the quarter was $0.6 million, or $0.05 per share, compared to a net loss of $5.3 million, or $0.57 per share, in 2025. For the first half, net loss was $5.4 million, or $0.44 per share, compared to $9.5 million, or $1.05 per share.

Adjusted EBITDA for the quarter was negative $0.2 million compared with negative $5.1 million in the prior year quarter, an improvement of approximately $5 million and an adjusted EBITDA margin of negative 1.4% against negative 56.9% in 2025. For the first half, adjusted EBITDA was negative $3.7 million compared with negative $9.5 million last year, an adjusted EBITDA margin of negative 16.9% versus negative 54%. Now turning to the balance sheet and liquidity, as of June 30, 2026 we had cash and cash equivalents of $4.7 million compared with $6.4 million at December 31, 2025.

Operating cash used in the first half of 2026 was $1.7 million, down from $7.2 million a year ago. That figure also includes a $3.7 million one-time pay down of related-party payables that were connected to the strategic transaction that happened in the first quarter of 2026. Including that item, changes in working capital were a net source of cash for the period. We continue to make progress towards cash flow break-even. In 2026, total liabilities were $18.1 million, essentially unchanged from year-end 2025.

Our only outstanding indebtedness is $4.6 million of convertible notes maturing in November of 2027. We have no bank or term debt. Total shareholders' equity was $6.0 million compared with $10.5 million at December 31, 2025. As we have disclosed in our filings, the company has included a going concern qualification in its financial statements. While we have demonstrated meaningful progress towards cash flow break-even and believe we will achieve that this year, and this quarter is the clearest evidence of that progress, our current capital resources require us to continue expanding our commercial operations and controlling expenses.

We plan to address this through the continued growth of Ameluz revenue, the realization of the next milestone payment of $1 million from the Xepi divestiture, and, if necessary, securing a working capital line of credit or similar facility when and if needed. With that overview of our results, we are now ready to take questions from our covering analysts. I'll hand it back to you, Operator.

OPERATOR

We will now begin the question and answer session from our covering analysts. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time we will pause momentarily to assemble our roster. Our first question comes from Bruce Jackson with Stonex. Please go ahead.

Bruce Jackson, Analyst at Stonex

Hi. Thank you for taking my questions and congratulations on the quarter. I wanted to start off with the basal cell carcinoma launch. So it's the same call point and it works with the existing lamp. Is there anything else that needs to be done in terms of, like, putting the reimbursement in place or getting the salesforce trained? What are the other additional steps that need to be done prior to launch?

George Jones, Chief Commercial Officer

I'll take that one. First of all, thanks for the question. Yeah, the great thing about the sBCC indication is how perfectly it fits within our current call point and our current kind of strategic priorities. The actions that really need to be taken to get ready for this launch are to finalize our marketing materials, pre-clear those with the FDA, and train our sales force, and then finalize our reimbursement strategy as well. But, you know, outside of those, we are ready to go and begin selling this and begin talking about it when it's approved.

Bruce Jackson, Analyst at Stonex

Okay. Okay. And then I wanted to follow up with the ITC commentary. So I believe there are two patents involved here, and you've successfully challenged one in inter partes review. Is it possible to get the other patent reviewed? So can you, like, basically get this whole thing tossed out? That's the first part of the question. And if not, can you tell us more about the remediation plan, and will this require a redesign of the lamp that would then have to go back through the FDA process?

Herman Lavert, CEO, Chairman and Founder

Yeah, I'll take that one. Thanks for asking this, Bruce. Well, first, to the process with the other patent, we cannot do this with the other patent. This other patent is basically identical to the first patent, and the answer would in all likelihood be the same. However, we can't attack that patent through the same mechanism because the current strategy of the Director of the Patent Office is not to allow that strategy for patents which are already discussed in some kind of a court, like the ITC.

So for pure formalities, we cannot do that. However, we can appeal the decision of the ITC, and that will be done for both patents. And at that point we can bring the arguments for both patents together. Now, whether or not that is going to be successful is in the end not as relevant because of the workaround strategy that we are implementing currently. And this workaround strategy is based on very minor changes in the lamp. If you look at patents in a space where there isn't really much new in one of these lamps — I mean, it's a five-panel lamp and the panels are connected by hinges; there were lamps like this out there everywhere — so there's prior art left and right. There's a certain component of hinge that some claim they invented. We obviously disagree, but the ITC has agreed with them, and we have to remove that component of the hinge to actually get beyond the space of those patents. So it's really a minor change that we're introducing into the lamps.

Bruce Jackson, Analyst at Stonex

And then that minor change, does it have to go through the FDA?

Herman Lavert, CEO, Chairman and Founder

Yes, it has to go through the FDA in what's called a 510(k) process. And we have applied for that, and FDA has agreed that this is the process. And from the FDA point of view, we already got permission to ship that.

Bruce Jackson, Analyst at Stonex

Okay. And then one last follow up in terms of the product performance.

Herman Lavert, CEO, Chairman and Founder

Sorry for interrupting. I should add for clarity that this is just the FDA perspective, and now the border control has to agree that this will also take us outside of the space of the ITC ruling. And that is what we are currently waiting for. So we could in principle sell from the FDA perspective, but in practice we cannot because we have to wait for that other step.

UNKNOWN Analyst

Okay, and then last question for me. This feature change in the XLE, will the customer notice any appreciable difference in performance?

George Jones, Chief Commercial Officer

No. For the time being, the lamp will still continue to be used exactly in the same way in which it is supported. Approved currently by the FDA.

UNKNOWN Analyst

Okay, great. That's it for me. Thank you.

OPERATOR

Our next question comes from Jonathan Ashoff with Roth Capital Partners. Please go ahead.

Jonathan Ashoff, Analyst at Roth Capital Partners

Thanks. Hey guys, it sounds like you have 243 XLE lamps out there. Out of 101 total, is that accurate? I'm sorry? Out of 801 total, is that accurate?

George Jones, Chief Commercial Officer

Yes, that sounds about right.

Jonathan Ashoff, Analyst at Roth Capital Partners

Okay, so do any docs have both lamps and therefore they can order all the Ameluz they want and use it however they want? I mean, why would they care?

George Jones, Chief Commercial Officer

So the customers that have an XLE in place, an XLE loan in place, we no longer are selling them Ameluz for use with that infringing device. The people that bought Ameluz prior to the order going into effect, we are not encouraging them to use Ameluz with the infringing device. But they own the Ameluz and they own the device.

Jonathan Ashoff, Analyst at Roth Capital Partners

Okay? I mean, what, is someone out there policing this to scare these guys?

George Jones, Chief Commercial Officer

Could you repeat the question? You cut out there.

Jonathan Ashoff, Analyst at Roth Capital Partners

I said, is someone out there policing this to scare these people into not using inventory?

George Jones, Chief Commercial Officer

It is not their obligation. So it's the obligation of Biofrontera in this situation to not sell Ameluz after the order went into effect for use for the infringing device. But Ameluz that they own and a lamp that they own are— they're free to use it as they see fit. So there's— okay. They're under no obligation not to use it. The offices that are—

Jonathan Ashoff, Analyst at Roth Capital Partners

And then in the future you're not going to give them a newly designed lamp. Like, you know, you're not going to swap it out for free. You're going to sell it to them outright. Yes.

George Jones, Chief Commercial Officer

So the people that own— as Herman mentioned, we're working on developing a non‑infringing device. And the plan is once that non‑infringing device is approved by the FDA, which Herman mentioned is complete, and then also passes, you know, passes muster with the border control, border protection, the plan will be to work with those offices to replace their current lamp with a non‑infringing device.

Jonathan Ashoff, Analyst at Roth Capital Partners

Okay, so I guess I'm trying to understand, you know, with 243 out of 801 being lamps for which you can't sell Ameluz, how does that maintain your annual sort of revenue, you know, expectations? It used to be guidance. Now it's kind of just kind of an unwritten expectation. Like, how is that possible?

George Jones, Chief Commercial Officer

So we were able to use the period from when the order was issued to when it went into effect to sell into those customers. And so many of our customers who had an XLE were able to buy in multiple months of inventory to be able to continue to use Ameluz while we are working on creating a non‑infringing device that Herman mentioned. We also have other strategies to ensure that patients are taken care of within these offices.

Jonathan Ashoff, Analyst at Roth Capital Partners

Okay, so they will use Ameluz with the infringing device for as long as they can, like I was alluding to earlier, which is what I would hope and expect. Correct?

George Jones, Chief Commercial Officer

Yeah. We cannot and will not encourage future use of the infringing device. But Ameluz that they purchased before the order went into effect can be used with the XLE.

Jonathan Ashoff, Analyst at Roth Capital Partners

Yeah. As would I do. All right, thank you very much, guys.

OPERATOR

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

Herman Lavert, CEO, Chairman and Founder

Yeah, thank you, operator. And thank you to everyone who joined us today. Let me leave you with three takeaways. First, the second quarter demonstrates the full impact of our transformed business model. Revenue is up 33%, gross margin is approximately 80% and adjusted EBITDA within 200,000 of break-even in a traditionally weak quarter. Second, our growth beyond 2026 is visible and concrete. We have a PDUFA date for superficial basal cell carcinoma on September 28th and expect the full launch in the first quarter of 2027, which, if approved, would make Ameluz the first PDT in the United States approved for the treatment of cancerous tumors.

We are filing a supplemental NDA around the end of this quarter to expand the AK label to the extremities, neck and trunk and 240 cm2. Each of these label expansions flows through the installed lamp base and sales force we have already built. And third, we are managing our two constraints: a cash position that requires discipline and an ITC matter that affects one of our lamps, which we are remediating and actively contesting. Neither changes the trajectory of this business nor our dedication to our customers, to their patients, and, in fact, continues to make Biofrontera more resilient.

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 cancer. Thank you all for your continued support. Have a wonderful day.

OPERATOR

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

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.