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What changed in Biofrontera Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Biofrontera Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+420 added−540 removedSource: 10-K (2025-03-20) vs 10-K (2024-03-15)

Top changes in Biofrontera Inc.'s 2024 10-K

420 paragraphs added · 540 removed · 288 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

62 edited+29 added−38 removed51 unchanged
Biggest changeA summary of our understanding of the Licensor’s clinical trials is below: Clinical Phase Product Indication Pre-clinical I II III Status Ameluz ® Superficial basal cell carcinoma ● Last-patient-in treatment phase in August 2023; Last-patient-out of treatment phase expected in March 2024; Clinical Study Report (CSR) expected Q4 – 2024 Ameluz ® Actinic keratosis ● Phase I safety study applying 3 tubes of Ameluz® to an expanded treatment area of 60 cm²; completed and submitted to FDA Ameluz ® Moderate to severe acne ● Phase II is recruiting; CSR expected in Q3 2025 Ameluz ® Actinic keratosis ● Trunk & extremities applying 1-3 tubes of Ameluz®; First patient dosed in Jan 2023; CSR expected in Q1-2026 Ameluz ® Actinic keratosis ● Combination daylight and conventional PDT, plan to start enrollment in 2025 Ameluz ® Squamous cell carcinoma in situ ● Plan to start enrollment in 2026 In late October 2021, the new, larger RhodoLED ® XL was approved by the FDA in combination with Ameluz ® for the treatment of mild and moderate actinic keratoses on the face and scalp, which corresponds to the current approval of Ameluz ® .
Biggest changeAmeluz ® Actinic keratosis ● Combination daylight and conventional PDT, plan to start enrollment in 2026 Ameluz ® Squamous cell carcinoma in situ ● Plan to start enrollment in 2026 The new, larger RhodoLED ® XL was approved by the FDA in 2021 for use in combination with Ameluz ® for the treatment of mild and moderate actinic keratoses on the face and scalp, which corresponds to the current approval of Ameluz ® .
It also can allow for multiple courses of therapy. Hence the mode of action of PDT requires destruction of the altered cells, temporary local skin reactions and inflammation of the treated area might be expected.
It also can allow for multiple courses of therapy. Hence the mode of action of PDT requires destruction of the altered cells, and temporary local skin reactions and inflammation of the treated area might be expected.
If we pursue this option, the Ameluz Licensor must use its best efforts to assist with the transferring of these manufacturing contracts without delay and at its own cost. No transfer price will be paid to the Ameluz Licensor thereafter for products or lamps that are manufactured by third parties.
If we pursue this option, Ameluz Licensor must use its best efforts to assist with the transferring of these manufacturing contracts without delay and at its own cost. No Transfer Price will be paid to the Ameluz Licensor thereafter for products or lamps that are manufactured by third parties.
The ability to commence and complete clinical trials may be delayed by many factors that are beyond our licensors control, including: ● delays obtaining regulatory approval to commence a trial; ● delays in reaching agreement on acceptable terms with contract research organizations (“CROs”) and clinical trial sites; ● delays in obtaining institutional review board (“IRB”), approval at each site; ● slower than anticipated patient enrollment or an inability to recruit and enroll patients to participate in clinical trials for various reasons; ● inability to retain patients who have initiated a clinical trial; ● lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies; ● negative or inconclusive results; ● deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, good clinical practice, or clinical protocols; ● deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; or ● adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; Delays can also occur if a clinical trial is suspended or terminated by the IRBs of the clinical trial sites in which such trials are being conducted, or by the FDA or other regulatory authorities.
The ability to commence and complete clinical trials may be delayed by many factors that are beyond our control, including: ● delays obtaining regulatory approval to commence a trial; ● delays in reaching agreement on acceptable terms with contract research organizations (“CROs”) and clinical trial sites; ● delays in obtaining institutional review board (“IRB”), approval at each site; ● slower than anticipated patient enrollment or an inability to recruit and enroll patients to participate in clinical trials for various reasons; ● inability to retain patients who have initiated a clinical trial; ● lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies; ● negative or inconclusive results; ● deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, good clinical practice, or clinical protocols; ● deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; or ● adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; Delays can also occur if a clinical trial is suspended or terminated by the IRBs of the clinical trial sites in which such trials are being conducted, or by the FDA or other regulatory authorities.
In addition, the FDA may order a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; and ● post-approval restrictions or conditions, including requirements to conduct post-market surveillance studies to establish additional safety or efficacy data. 12 The FDA has broad post-market and regulatory enforcement powers.
In addition, the FDA may order a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; and ● post-approval restrictions or conditions, including requirements to conduct post-market surveillance studies to establish additional safety or efficacy data. The FDA has broad post-market and regulatory enforcement powers.
Starting on January 1, 2026, until 2032 there will be stepwise increases in the transfer price from 25% to 35% for sales related to actinic keratosis and, if approved by the FDA, basal cell carcinoma and squamous cell carcinoma. The transfer price for sales related to acne, another indication currently in development, will remain at 25% indefinitely.
Starting on January 1, 2026, until 2032 there will be stepwise increases in the Transfer Price from 25% to 35% for sales related to actinic keratosis and, if approved by the FDA, basal cell carcinoma and squamous cell carcinoma indications. The Transfer Price for sales related to acne, another indication currently in development, will remain at 25% indefinitely.
The Licensor has patent protection on its nanoemulsion technology in the United States until 2028 and three new patent family applications on the BF-RhodoLED ® lamps and general PDT illumination procedures, two of which are already granted, and one is listed in the Orange Book, that could jointly extend protection until 2040.
The Licensor has patent protection on its nanoemulsion technology in the United States until 2028 and three new patent family applications on the RhodoLED ® Lamps and general PDT illumination procedures, two of which are already granted, and one is listed in the Orange Book, that could jointly extend protection until 2040.
The laws that may affect our ability to operate include: ● the federal healthcare programs’ Anti-Kickback Law; ● federal false claims laws; ● federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● the federal Civil Monetary Penalties Law, which imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
The laws that may affect our ability to operate include, without limitation: ● the federal healthcare programs’ Anti-Kickback Law; ● federal false claims laws; ● federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● the federal Civil Monetary Penalties Law, which imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
Post-Approval Requirements for Approved Drugs Any of our licensed drug products that require FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among other requirements, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry sponsored scientific and educational activities, and requirements for promotional activities involving the internet.
Any of our licensed drug products that require FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among other requirements, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry sponsored scientific and educational activities, and requirements for promotional activities involving the internet.
These clinical trials, and Phase 3 trials discussed below, are designed to evaluate the product’s overall benefit-risk profile, and to provide information for physician labeling. Phase 3 Clinical Trials: This Phase usually involves a larger number of patients with the targeted disease.
These clinical trials, and Phase 3 trials discussed below, are designed to evaluate the product’s overall benefit-risk profile, and to provide information for physician labeling. Phase 3 Clinical Trials: This Phase usually involves a larger number of patients with the targeted disease/condition.
Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil monetary penalties, administrative penalties and exclusion from participation in federal health care programs. 13 Additionally, the intent standard under the Anti-Kickback Statute was amended by the Affordable Care Act to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil monetary penalties, administrative penalties and exclusion from participation in federal health care programs. 11 Additionally, the intent standard under the Anti-Kickback Statute was amended by the Affordable Care Act to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
The commencement and completion of clinical trials may be delayed by various factors, including scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling patients who meet trial eligibility criteria, failure of patients to complete the clinical trial, delays in accumulating the required number of clinical events for data analysis, delay or failure to obtain the required approval to conduct a clinical trial at a prospective site, and shortages of available drug supply.
The commencement and completion of clinical trials may be delayed by various factors, including, without limitations, scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling patients who meet trial eligibility criteria, failure of patients to complete the clinical trial, delays in accumulating the required number of clinical events for data analysis, delay or failure to obtain the required approval to conduct a clinical trial at a prospective site, and shortages of available drug supply and clinicians.
Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our product label extensions or products under development. 11 FDA Regulation for Medical Devices After a device is placed on the market, regardless of its classification or premarket pathway, numerous regulatory requirements apply.
Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our product label extensions or products under development. 10 FDA Regulation for Medical Devices After a device is placed on the market, regardless of its classification or premarket pathway, numerous regulatory requirements apply.
We make available, free of charge, on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such with, or furnish it to, the SEC. 14
We make available, free of charge, on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such with, or furnish it to, the SEC. 12
Phase 2 Clinical Trials: In Phase 2 clinical trials, controlled studies of human patients with the targeted disease are conducted to assess the drug’s effectiveness.
Phase 2 Clinical Trials: In Phase 2 clinical trials, controlled studies of human patients with the targeted disease/condition are conducted to assess the drug’s effectiveness.
Clinical trials may experience delays or fail to demonstrate the safety and efficacy, which could prevent or significantly delay obtaining regulatory approval. 10 Clinical trials require the investment of substantial financial and personnel resources.
Clinical trials may experience delays or fail to demonstrate the safety and efficacy, which could prevent or significantly delay obtaining regulatory approval. 9 Clinical trials require the investment of substantial financial and personnel resources.
Ameluz ® PDT is covered by code number 96574 which has an average reimbursement of $273.00 per light treatment and has to be performed by a qualified healthcare professional. Public information regarding CPT reimbursement is available at https://www.cms.gov/medicare/physician-fee-schedule/search?Y=0&T=4&HT=0&CT=3&H1=96574&M=5. Our licensors’ R&D programs We are a sales organization with focus on commercializing our portfolio of licensed products that are already FDA-approved.
Ameluz ® PDT is covered by code number 96574 which has an average reimbursement of $262.68 per light treatment and has to be performed by a qualified healthcare professional. Public information regarding CPT reimbursement is available at https://www.cms.gov/medicare/physician-fee-schedule/search?Y=0&T=4&HT=0&CT=3&H1=96574&M=5. Our R&D programs We are a sales organization with a focus on commercializing our portfolio of licensed products that are already FDA-approved.
Among other things, the new law makes HIPAA’s privacy and security standards directly applicable to “business associates,” independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.
Among other things, the HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,” independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity.
In the United States, the PDT treatment is used for the lesion-directed and field-directed treatment of actinic keratoses (“AK”) of mild-to-moderate severity on the face and scalp.
In the United States, the PDT treatment is used for the lesion-directed and field-directed treatment of actinic keratosis (“AK”) of mild-to-moderate severity on the face and scalp.
Among other things, the Second A&R Ameluz LSA reduces the transfer price of Ameluz ® from 50% to 25% for all purchases in 2024 and 2025.
Among other things, the Second A&R Ameluz LSA reduced the Transfer Price of Ameluz ® from 50% to 25% for all purchases in 2024 and 2025.
Penalties for the federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal health care programs, and, although the federal civil False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.
Penalties for the federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, (commonly referred to as treble damages), plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal health care programs, and, although the federal civil False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes.
DOI 10.1111/bjd. 14498 5 www.skincancer.org/skin-cancer-information/actinic-keratosis 6 Market data accessible from CMS and IQVIA, 2020 5 Sales, marketing and distribution We are currently selling our portfolio of licensed products in the United States through the use of our own commercial organization. We have a single sales force who markets all our licensed products across the dermatology space.
DOI 10.1111/bjd. 14498 5 https://www.skincancer.org/skin-cancer-information/skin-cancer-facts 6 Market data accessible from CMS and IQVIA, 2020 5 Sales, marketing and distribution We are currently selling our licensed products in the United States through the use of our own commercial organization. We have a single sales force who markets all our licensed products across the dermatology space.
We license the rights and trademarks related to the products we sell. Ameluz ® and the RhodoLED ® lamp series are approved by the FDA as a combination product, such that the label requires the use of both products together.
We license the rights and trademarks related to the products we sell. Ameluz ® and the RhodoLED ® Lamps are approved by the FDA as a combination product, such that the label requires the use of both products together.
The transfer price covers the cost of goods, royalties on sales, and services including all regulatory efforts, agency fees, pharmacovigilance, and patent administration. Effective June 1, 2024, the Company will take control of all clinical trials relating to Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency.
The Transfer Price covers the cost of goods, royalties on sales, and services including all regulatory efforts, agency fees, pharmacovigilance, and patent administration. Effective June 1, 2024, the Company assumed control of all clinical trials with Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency.
The following general comments about the drug approval process are relevant to the development activities undertaken by our Licensors. Investigational New Drug Application (“IND”): After certain pre-clinical studies are completed, an IND application is submitted to the FDA to request the ability to begin human testing of the drug or biologic.
The following general comments about the drug approval process are relevant to the development activities related to our products. 8 Investigational New Drug Application (“IND”): After certain pre-clinical studies are completed, an IND application is submitted to the FDA to request the ability to begin human testing of the drug or biologic.
AKs are premalignant lesions of the skin that can potentially develop into skin cancer (squamous cell carcinoma) if left untreated. 1 International treatment guidelines list PDT as the “gold standard” for treating AK, especially multiple AKs and the surrounding photodamaged skin. 2 We are currently selling Ameluz ® for this indication in the U.S. under an exclusive license and supply agreement (as amended the “Ameluz LSA”) between Biofrontera, Inc. and the Ameluz Licensors.
AKs are premalignant lesions of the skin that can potentially develop into skin cancer (squamous cell carcinoma) if left untreated. 1 International treatment guidelines list PDT as the “gold standard” for treating AK, especially multiple AKs and the surrounding photodamaged skin. 2 We are currently selling Ameluz ® for this indication in the United States under an exclusive license and supply agreement between Biofrontera Inc. and the Ameluz Licensor, (the “Second A&R Ameluz LSA”).
AKs typically appear on sun-exposed areas, such as the face, bald scalp, arms or the back of the hands, and are often elevated, flaky, and rough in texture, and appear on the skin as hyperpigmented spots. AKs are typically treated with cryotherapy, topicals, or PDT.
AKs typically appear on sun-exposed areas, such as the face, bald scalp, arms or the back of the hands, and are often elevated, flaky, and rough in texture, and appear on the skin as hyperpigmented spots. AKs are typically treated with cryotherapy, topicals, or PDT. These treatments can be used in combination as well.
The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included sweeping expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic and Clinical Health Act, or HITECH, which became effective on February 17, 2010.
The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included sweeping expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic and Clinical Health Act, or HITECH.
Under the Ameluz LSA, if product or lamps are not delivered in conformance with certain specifications of this Agreement and the Quality Assurance Agreement, and the Ameluz Licensor does not remedy its failure, then we will have the right to organize manufacturing on our own, and step into contracts with the Ameluz Licensor’s manufacturers, such that we will replace the Ameluz Licensor as a party to these contracts.
If product or lamps are not delivered in conformance with certain specifications of this Agreement and the Quality Agreement dated November 1, 2016, between the Company and Biofrontera Pharma, and the Ameluz Licensor does not remedy its failure, then we will have the right to organize manufacturing on our own, and step into contracts with the Ameluz Licensor’s manufacturers, such that we will replace the Ameluz Licensor as a party to these contracts.
The new PDT-lamp enables the illumination of larger areas, thus allowing the simultaneous treatment of several actinic keratoses distant from each other. The smaller BF-RhodoLED ® model will continue to be offered in the U.S. market.
We launched the RhodoLED ® XL in June 2024. The new PDT-lamp enables the illumination of larger areas, thus allowing the simultaneous treatment of several actinic keratoses distant from each other. The smaller BF-RhodoLED ® model will continue to be offered in the United States market.
Our Licensor is responsible for all raw materials, product, and shipment of products to our third-party logistics partner (“3PL”), Cardinal Health for warehousing and distribution. We centralize our customer sales support and back-office functions through our headquarters in Woburn, Massachusetts.
Our Licensor is responsible for all raw materials, product, and shipment of products to our third-party logistics partner (“3PL”), Cardinal Health for warehousing and distribution. We centralize our customer sales support and back-office functions through our headquarters in Woburn, Massachusetts. 6 Intellectual Property We do not own any material patents or trademarks.
The therapy also may provide protection from potentially fatal progress of mild or invisible AKs. 4 Market and competitive landscape AK currently affects approximately 58 million Americans which lead to roughly 13 million treatments annually. 5 Cryotherapy is the traditional and most common form of treatment but may not be as effective and may leave scarring; cryotherapy is estimated to be approximately 86% of the market.
The therapy also may provide protection from potentially fatal progress of mild AKs. 4 Market and competitive landscape AK is the most common precancer; it affects more than 58 million Americans. 5 Cryotherapy is the traditional and most common form of treatment but may not be as effective and may leave scarring; cryotherapy is estimated to be approximately 86% of the market.
Biofrontera Pharma currently manufactures through a single unaffiliated contract manufacturer in Switzerland, Glaropharm AG, and has recently signed an agreement with a second unaffiliated contract manufacturer located in Germany, Pharbil Waltrop GmbH, to ensure stability of the supply chain.
Biofrontera Pharma currently manufactures through a single unaffiliated contract manufacturer in Switzerland, Glaropharm AG, and is in the process of qualifying a second unaffiliated contract manufacturer located in Germany, Pharbil Waltrop GmbH, to ensure stability of the supply chain.
The Second A&R Ameluz LSA amends and restates the Ameluz LSA, originally dated as of October 1, 2016, between the Company and Amulez Licensor, which was subsequently amended on July 1, 2019, June 16, 2021, October 8, 2021, December 5, 2023, and January 26, 2024.
The Second A&R Ameluz LSA amended and restated the Ameluz License and Supply Agreement, originally dated as of October 1, 2016, which was subsequently amended on July 1, 2019, June 16, 2021, October 8, 2021, December 5, 2023, and January 26, 2024.
AKs are superficial potentially pre-cancerous skin lesions caused by chronic sun exposure that may, if left untreated, develop into a form of potentially life-threatening skin cancer called squamous cell carcinoma.
AKs, the number one indication at a dermatologist visit for those 40 and older, are superficial potentially pre-cancerous skin lesions caused by chronic sun exposure that may, if left untreated, develop into a form of potentially life-threatening skin cancer called squamous cell carcinoma.
Patent and Trademark Office, or USPTO, which, if granted, will extend protection of Ameluz ® to 2043. Principal suppliers Our source for the Ameluz ® and the RhodoLED ® lamp series is our Licensor, Biofrontera Pharma. Biofrontera Pharma is considered the responsible manufacturer for Ameluz ® by the FDA.
A corresponding patent application has been filed with the United States Patent and Trademark Office, or USPTO, which, if granted, will extend protection of Ameluz ® to 2043. Principal suppliers Our source for the Ameluz ® and the RhodoLED ® Lamps is our Licensor, Biofrontera Pharma, who is considered the responsible manufacturer for Ameluz ® by the FDA.
Currently, no antibiotic resistance against Xepi ® is known and it has been specifically approved by the FDA for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes. It is approved for use in the United States in adults and children 2 months and older.
Currently, no antibiotic resistance against Xepi ® is known and it has been specifically approved by the Federal Drug Administration (the “FDA”) for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes.
Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval.
Under the Second A&R Ameluz LSA, these requirements are handled by both us and our Licensor. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval.
Item 1. Business Overview We are a U.S.-based biopharmaceutical company commercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”) and topical antibiotics with PDT contribution to the largest amount of our business.
Item 1. Business Overview We are a United States based biopharmaceutical company commercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”).
Under the Ameluz LSA, we hold the exclusive license to sell Ameluz ® and the RhodoLED ® lamp series comprising the RhodoLED ® and the new, more advanced RhodoLED ® XL (available in the second quarter of 2024) in the United States for all indications currently approved by the FDA as well as all future FDA-approved indications identified under the Ameluz LSA.
Under the Second A&R Ameluz LSA, we hold the exclusive license to sell Ameluz ® and the RhodoLED ® Lamps in the United States for all indications currently approved by the FDA as well as all future FDA-approved indications identified under the Second A&R Ameluz LSA.
Furthermore, the FDA recently approved a new formulation of Ameluz ® that lacks propylene glycol and reduces the accumulation of certain contaminants over time. The new formulation will be implemented in all US productions of Ameluz ® starting in 2024. A corresponding patent application has been filed with the U.S.
Furthermore, in 2023, the FDA approved a new formulation of Ameluz ® that lacks propylene glycol and reduces the accumulation of certain contaminants over time. The new formulation was implemented in all US productions of Ameluz ® starting in 2024.
Our primary competitor in the PDT space is Levulan ® and the associated light, Blu-U ® . Our goal is to continue expansion in the current PDT market share and focus on converting cryotherapy treatments of more than 14 lesions as a field therapy such as Ameluz ® PDT could be more effective and lead to better patient outcomes.
Our goal is to continue expansion in the current PDT market and focus on converting cryotherapy treatments of more than 14 lesions to Ameluz ® PDT as the switch or even combination of cryotherapy and PDT could be more effective and lead to better patient outcomes.
Significant customers We have a wide and diverse customer base with no single customer dominating our revenues. At December 31, 2023, no customer represented more than 10% of the net accounts receivable balance. For the year ended December 31, 2023, no customer represented more than 10% of net revenues.
Our commercial team covers the continental United States, and our headquarters is in Woburn, MA. Significant Customers We have a wide and diverse customer base with no single customer dominating our revenues. At December 31, 2024, no customer represented more than 10% of the net accounts receivable balance.
Commercial Partners and Agreements Ameluz ® and RhodoLED ® Lamp Series License Service Agreement Under the terms of the Ameluz LSA, we are granted an exclusive, non-transferable license to use Biofrontera Pharma and Biofrontera Bioscience technology to use, import, export, distribute, market, offer for sale and sell Ameluz ® and the RhodoLED ® lamp series for its approved indications within the United States and certain of its territories.
Under the terms of the Second A&R Ameluz LSA, we have an exclusive, non-transferable license from the Ameluz Licensor technology to use, import, export, distribute, market, offer for sale and sell Ameluz ® and the RhodoLED ® Lamps for its approved indications within the United States and certain of its territories.
Our Licensors are subject to announced and unannounced device inspections by FDA and other regulatory agencies overseeing the implementation and adherence of applicable local, state and federal statutes and regulations. Fraud and Abuse Laws We are subject to healthcare anti-fraud and abuse regulations that are enforced by the U.S. federal government and the states in which we conduct our business.
Our Licensors are subject to announced and unannounced device inspections by FDA and other regulatory agencies overseeing the implementation and adherence of applicable local, state and federal statutes and regulations.
The pursuit of any additional indications would need to be separately negotiated between us and the Ameluz Licensor. Conversely, under the Ameluz LSA, Biofrontera is responsible for obtaining all state licenses or any other similar approvals required to market Ameluz ® and/or the RhodoLED ® lamp in the United States.
Conversely, Biofrontera is responsible for obtaining all state licenses or any other similar approvals required to market Ameluz ® and/or the RhodoLED ® Lamps in the United States.
Evidence- and consensus-based (S3) Guidelines for the Treatment of Actinic Keratosis - International League of Dermatological Societies in cooperation with the European Dermatology Forum - Short version. J Eur Acad Dermatol Venereol. 2015;29(11):2069-2079. doi:10.1111/jdv.13180 3 For full prescribing information for Ameluz, please see https://bit.ly/AmeluzPI. 4 Reinhold et al. 2016 Br. J. Derm.
J Eur Acad Dermatol Venereol. 2015;29(11):2069-2079. doi:10.1111/jdv.13180 3 For full prescribing information for Ameluz, please see https://bit.ly/AmeluzPI. 4 Reinhold et al. 2016 Br. J. Derm.
Ameluz ® and RhodoLED ® Lamp Series Our principal licensed product is Ameluz ® , which is a prescription drug approved for use in combination with the RhodoLED ® lamp series, for PDT (when used together, “Ameluz ® PDT”).
For the year ended December 31, 2024, no customer represented more than 10 % of net revenues. Ameluz ® and RhodoLED ® Lamps Our principal licensed product is Ameluz ® , which is a prescription drug approved for use in combination with the RhodoLED ® Lamps, for PDT (when used together, “Ameluz ® PDT”).
Effective June 1, 2024, the Company will take control of all clinical trials with Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency. The reduced transfer price in the Second A&R Ameluz LSA will allow the Company to finance such R&D activities and continue our commercial growth trajectory. Ferrer Internacional S.A.
Effective June 1, 2024, in accordance with the Second A&R Ameluz LSA, the Company assumed control of all clinical trials relating to Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency.
The key elements of our strategy include the following: ● expand our sales in the United States of Ameluz ® in combination with the BF-RhodoLED ® lamp series for the treatment of minimally to moderately thick actinic keratoses of the face and scalp and positioning Ameluz ® to be standard of care in the United States by focusing on acquisition of new customers and growth of the therapy in our current customer base; 4 ● expand sales of Xepi ® for treatment of impetigo by improving the market positioning of the licensed product; ● leverage the potential for future approvals and label extensions of our licensed portfolio products that are in the pipeline for the U.S. market through our license and supply agreements with the Licensors; and ● opportunistically add complementary products or services to our portfolio by acquiring or licensing IP to further leverage our commercial infrastructure and customer relationships.
The key elements of our strategy include the following: ● expand our sales in the United States of Ameluz ® in combination with the RhodoLED ® Lamps for the treatment of minimally to moderately thick AKs of the face and scalp and positioning Ameluz ® to be the standard of care in the United States by leveraging new label indications and focusing on acquisition of new customers and growth of the therapy in our current customer base; 4 ● leverage the potential for future approvals and label extensions of our licensed portfolio products that are in the pipeline for the United States market with respect to Ameluz and furthering the clinical development of Ameluz ® after taking over responsibility for certain ongoing clinical trials since June 1, 2024, pursuant to the Second A&R Ameluz LSA; and ● strategically manage our licensed portfolio, including opportunistically adding complementary products or services to our portfolio by acquiring or licensing intellectual property to further leverage our commercial infrastructure and customer relationships.
The price we pay per unit will be based upon our sales history. The Ameluz LSA will remain in effect for fifteen years and automatically renew for a period of five years, in perpetuity as long as certain minimum revenues are achieved. See Note 23. Commitments and Contingencies .
The Second A&R Ameluz LSA will remain in effect for 15 years from its effective date and automatically renew for a period of five years, in perpetuity as long as certain minimum revenues are achieved. See Note 19. Commitments and Contingencies.
By executing these four strategic objectives, we will fuel company growth, deepen our trusted relationships in the dermatology community, and above all, help patients live healthier, more fulfilling lives.
By executing these strategic objectives and continually evaluating our product portfolio with strategic options to improve our business, we will fuel growth, deepen our trusted relationships in the dermatology community, and above all, help patients live healthier, more fulfilling lives. Employees As of December 31, 2024, the Company had 93 employees, consisting of 92 full-time employees and one part-time employee.
Our subsidiary, Bio-FRI was formed on February 9, 2022, as a German presence to facilitate our relationship with the Ameluz Licensor. Company Overview We were formed in March 2015 as Biofrontera Inc., a Delaware corporation, and a wholly owned subsidiary of Biofrontera AG, a stock corporation organized under the laws of Germany.
We were formed in March 2015 as Biofrontera Inc., a Delaware corporation, and a wholly owned subsidiary of Biofrontera AG, a stock corporation organized under the laws of Germany. We consummated our initial public offering in November 2021.
Effective June 1, 2024, we will take control of all clinical trials relating to Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency. Biofrontera Inc. includes its wholly owned subsidiary Bio-FRI GmbH, a limited liability company organized under the laws of Germany.
Effective June 1, 2024, we assumed control of all clinical trials relating to Ameluz ® in the United States, allowing for more effective cost management and direct oversight of trial efficiency.
Under the terms of the agreement, the Ameluz Licensor will indemnify us, subject to certain conditions, against claims related to the licensed products. 8 Under the Ameluz LSA, the Ameluz Licensor is responsible for obtaining and maintaining the rights to all FDA approvals (and any required maintenance thereafter) needed for the Ameluz Licensor to manufacture Ameluz ® and/or the RhodoLED ® lamp series and/or for Biofrontera to sell Ameluz ® and/or the RhodoLED ® lamp series in the United States.
Any changes to the pricing of supply of Ameluz ® or RhodoLED ® Lamps would require agreement by both contract parties. 7 The Ameluz Licensor is responsible for obtaining and maintaining the rights to all FDA approvals (and any required maintenance thereafter) needed for the Ameluz Licensor to manufacture Ameluz ® and/or the RhodoLED ® Lamps and/or for Biofrontera to sell Ameluz ® and/or the RhodoLED ® Lamps in the United States.
We are leveraging medical affairs, advisory boards, reimbursement resources, and key opinion leaders in order to educate the market on the use and benefits of Ameluz ® PDT. 1 Fuchs & Marmur, Dermatol Surg. 2007 Sep; 33(9):1099-101 2 Werner RN, Stockfleth E, Connolly SM, et al.
This targeted market is about 11% or $500 million of the total AK market. 6 Ameluz ® PDT is competitive in the market. We are leveraging medical affairs, advisory boards, reimbursement resources, and key opinion leaders in order to educate the market on the use and benefits of Ameluz ® PDT. 1 Fuchs, A., & Marmur, E.
In addition, under the Ameluz LSA, the Ameluz Licensor agrees to sell us the RhodoLED ® lamp series at cost plus a low double digit handling fee. There are no milestones or royalty obligations associated with this agreement. Any changes to the pricing of supply of Ameluz ® or RhodoLED ® lamps would require agreement by both contract parties.
The reduced Transfer Price in the Second A&R Ameluz LSA will allow the Company to finance such R&D activities and continue our commercial growth trajectory. The Ameluz Licensor sell us the RhodoLED ® Lamps at cost plus a low double digit handling fee. There are no milestones or royalty obligations associated with this agreement.
Biofrontera is required by the Ameluz LSA to use commercially reasonable efforts and resources to exploit the license and market Ameluz ® and the RhodoLED ® lamp in the United States (“commercially reasonable efforts” being defined in terms of comparison against industry standards and practices for a company of comparable size and capability and active in the same business area).
Biofrontera is required to use commercially reasonable efforts and resources to exploit the license and market Ameluz ® and the RhodoLED ® Lamps in the United States.
Compliance with these laws and regulations may be costly and may require significant technical expertise and capital investment to ensure compliance. U.S. Drug Development and Review Drug Development Process General Information about the Drug Approval Process and Post-Marketing Requirements The U.S. system of new drug and biologics approval is a rigorous process.
The U.S. Congress continues to consider and discuss legislation aimed at reducing health care costs, including lowering the price of drugs and biologics. United States Drug Development and Review Drug Development Process General Information about the Drug Approval Process and Post-Marketing Requirements The United States system of new drug and biologics approval is a rigorous process.
The reduced Ameluz LSA transfer price will allow the Company to finance such R&D activities and continue our commercial growth trajectory.
This will allow the Company to finance such R&D activities and continue our commercial growth trajectory. Our R&D programs are focused on label expansion for Ameluz ® as well as supporting PDT growth by improving the capabilities of our RhodoLED ® Lamps to better fulfill the needs of dermatologists.
Additionally, a new patent regarding an Ameluz formulation without propylene glycol filed at USPTO in 2023, if granted, extends protection to 2043. Xepi ® is protected by four patents in the United States held by Ferrer. The primary patent protecting the active ingredient in Xepi ® expired in November 2023.
Additionally, a new patent regarding an Ameluz formulation without propylene glycol filed at USPTO in 2024, if granted, extends protection to 2043. Commercial Partners and Agreements Ameluz ® and RhodoLED ® Lamps License Service Agreement On February 19, 2024, the Company entered into the Second A&R Ameluz LSA with the Ameluz Licensor, effective February 13, 2024.
There has been limited revenue during the current reporting periods and issues with the third-party manufacturer that was providing our supply of Xepi ® impacting the timing of sales expansion and improved market positioning. However, Ferrer is in the process of qualifying a new third-party manufacturer in North America.
The Company did not have any sales of Xepi ® during 2024 and generated limited revenue during 2023 from sales of Xepi due to third-party manufacturing delays that have impacted our commercialization of the product. Ferrer is in the process of qualifying a new contract manufacturer.
Removed
The Company’s licensed products are used for the treatment of actinic keratoses, which are pre-cancerous skin lesions, as well as impetigo, a bacterial skin infection. In May 2023, we began research and development (“R&D”) activities to support PDT growth and will continue to opportunistically invest in these activities going forward.
Added
The Company’s primary licensed products, which include Ameluz ® as well as the BF-RhodoLED ® and RhodoLED ® XL lamps (together, the “RhodoLED ® Lamps”), are used for the treatment of actinic keratoses (“AKs”), which are pre-cancerous skin lesions. With our national commercial team, we generate revenue by selling our licensed products directly to dermatology offices and groups.
Removed
Our R&D program currently aims to improve the capabilities of our BF-RhodoLED® lamps to better fulfill the needs of dermatologists. Our goal is to improve the effectiveness of our commercial team by allowing sales representatives to carry approved devices with them allowing for easier product demonstrations and evaluations.
Added
Discovery was formed on February 9, 2022, as a German presence that manages our clinical trial work and facilitates our relationship with the Ameluz Licensor. We consider the Biofrontera Group to be a related party.
Removed
On November 2, 2021, we consummated our initial public offering and subsequently we ceased to be deemed a company controlled by Biofrontera AG. As of December 31, 2023, Biofrontera AG held 26.4% of the outstanding shares of our common stock. With our national commercial team, we generate revenue by selling our licensed products directly to dermatology offices and groups.
Added
The Biofrontera Group held more than 5% of the outstanding shares of our common stock until December 10, 2024, and we continue to rely on the Biofrontera Group as the sole supplier of Ameluz ® and the RhodoLED ® Lamps.
Removed
Employees As of December 31, 2023, the company had 85 employees, of which 83 were full-time employees and two were part-time employees. Approximately 57% are focused on marketing and sales activities. Our commercial team covers the continental United States, and our headquarters is in Woburn, MA.
Added
Our research and development (“R&D”) programs are focused on label expansion for Ameluz ® as well as supporting PDT growth by improving the capabilities of the RhodoLED ® Lamps to better fulfill the needs of dermatologists.
Removed
Our Strategy Our principal objective is to improve patient outcomes by increasing the sales of our licensed products.
Added
In the third quarter of 2024, the Company reached the decision to divest its Xepi product line and the related intangible asset is currently held for sale. Xepi ® (ozenoxacin cream, 1%), is a topical non-fluorinated quinolone that inhibits bacterial growth.
Removed
These treatments can be used in combination, which is the number one indication for those 45 years of age and older.
Added
If the new contract manufacturer is qualified, we believe that it will be able to supply enough of the Xepi ® product line to meet market demand for as long as we maintain it. However, the Company is working with a potential purchaser and expects to complete a sale of the asset within the next three to six months.
Removed
This targeted market is about 11% or $500 million of the total AK market. 6 Ameluz ® PDT is competitive in the market.
Added
The related intangible asset is presented as held for sale under current assets in the Consolidated Balance Sheets. See Note 9. Assets Held for Sale , for additional information. Our Strategy Our principal objective is to improve patient outcomes through adoption and use of our licensed products.
Removed
R&D efforts for label extensions in order to optimize the market positioning of the products are the responsibility of the respective licensor and are governed by the respective LSAs.
Added
Our primary competitor in the PDT space is Levulan ® and the associated light, Blu-U ® .
Removed
On February 19, 2024, the Ameluz LSA was amended with the Second Amended and Restated License and Supply Agreement (the “Second A&R Ameluz LSA”), effective February 13.
Added
The kinetics of skin cancer: Progression of actinic keratosis to squamous cell carcinoma. Dermatologic Surgery . 2007 Sep; 33(9):1099-101 2 Werner RN, Stockfleth E, Connolly SM, et al. Evidence- and consensus-based (S3) Guidelines for the Treatment of Actinic Keratosis - International League of Dermatological Societies in cooperation with the European Dermatology Forum - Short version.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

154 edited+62 added−147 removed177 unchanged
Biggest changeOur lack of control over some of these functions could adversely affect our ability to implement our strategy for the commercialization of our licensed products. ● Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, which could make it difficult for us to sell our licensed products. ● Healthcare legislative changes may have a material adverse effect on our business and results of operations. ● To date, we have a relatively short history of sales of our licensed products in the United States. ● Competing products and future emerging products may erode sales of our licensed products. ● We face significant competition from other pharmaceutical and medical device companies and our operating results will suffer if we fail to compete effectively.
Biggest changeOur lack of control could adversely affect our ability to implement our strategy for the commercialization of our licensed products. ● Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, which could make it difficult for us to sell our licensed products. ● Healthcare legislative changes may have a material adverse effect on our business and results of operations. ● To date, we have a relatively short history of sales of our licensed products in the United States. ● Competing products and future emerging products may erode sales of our licensed products. ● We face significant competition, and our operating results will suffer if we fail to compete effectively. ● If we are unable to maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our licensed products, we may be unable to generate revenue growth. ● The United States market size for Ameluz ® for the treatment of AK may be smaller than we have estimated. ● If our Licensors are subjected to sanctions due to noncompliance with law, our licensed products could be subject to restrictions or withdrawal from the market. ● Our licensed products may not gain market acceptance among members of the medical community. ● Our failure to comply with healthcare laws and regulations and could have a material adverse effect on our results of operations and financial condition. ● A recall of our licensed drug or medical products, or the discovery of serious safety issues with our licensed drug or medical products, could have a significant negative impact on us. ● Our products subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer. ● Our actual or perceived failure to comply with data and data security regulations could harm our business. ● We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may be unable to successfully implement our business strategy. ● Our employees may engage in misconduct or other improper activities. ● We will need to grow our organization and we may experience difficulties in managing this growth. ● Our business and operations would suffer in the event of system failures or, cyber-attacks. ● If product liability lawsuits are brought against us, we may incur substantial liabilities ● Failure to comply with applicable anti-corruption legislation could result in fines and criminal penalties. ● Our licensed products will be subject to ongoing regulatory requirements. ● Generic manufacturers may launch products at risk of patent infringement. ● The results of our R&D efforts are uncertain.
Each share of Series B-1 Preferred Stock may be converted into approximately 1,413 shares of our common stock (based on the conversion price of $0.7074 per share and a liquidation preference of $1,000 per share of Series B-1 Preferred Stock).
Each share of Series B Preferred Stock may be converted into approximately 1,413 shares of our common stock (based on the conversion price of $0.7074 per share and a liquidation preference of $1,000 per share of Series B Preferred Stock).
See “—If our Licensors’ manufacturing partners fail to manufacture Ameluz ® , RhodoLED ® lamps, Xepi ® or other marketed products in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current good manufacturing practice, or cGMP, or other applicable manufacturing regulations, we may face a bar to, or delays in, the commercialization of the products under license to us or we will be unable to meet market demand, and lose potential revenues” for more information on the risks related to the manufacture of our licensed products.
See “—If our Licensors’ manufacturing partners fail to manufacture Ameluz ® , RhodoLED ® Lamps or other marketed products in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current good manufacturing practice, or cGMP, or other applicable manufacturing regulations, we may face a bar to, or delays in, the commercialization of the products under license to us or we will be unable to meet market demand, and lose potential revenues” for more information on the risks related to the manufacture of our licensed products.
If our Licensor or our Licensors’ manufacturing partners, as applicable, fail to manufacture Ameluz ® , RhodoLED ® lamps, Xepi ® or other marketed products in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current good manufacturing practice, or cGMP, or other applicable manufacturing regulations, we may face a bar to, or delays in, the commercialization of the products under license to us or we will be unable to meet market demand, and lose potential revenues.
If our Licensor or our Licensors’ manufacturing partners, as applicable, fail to manufacture Ameluz ® , RhodoLED ® Lamps, or other marketed products in sufficient quantities and at acceptable quality and cost levels, or to fully comply with current good manufacturing practice, or cGMP, or other applicable manufacturing regulations, we may face a bar to, or delays in, the commercialization of the products under license to us or we will be unable to meet market demand, and lose potential revenues.
Any of these events could disrupt our company’s business and, consequently, have a material adverse effect on our revenue, profitability and financial condition. If our Licensors’ efforts to protect the proprietary nature of their intellectual property related to our licensed products are not adequate, we may not be able to compete effectively in our market.
Any of these events could disrupt our company’s business and, consequently, have a material adverse effect on our revenue, profitability and financial condition. 18 If our Licensors’ efforts to protect the proprietary nature of their intellectual property related to our licensed products are not adequate, we may not be able to compete effectively in our market.
Some of these characteristics may be more appealing to high quality candidates than what we can offer. If we are unable to continue to attract and retain high quality personnel, our ability to commercialize our licensed products will be limited. 34 Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
Some of these characteristics may be more appealing to high quality candidates than what we can offer. If we are unable to continue to attract and retain high quality personnel, our ability to commercialize our licensed products will be limited. Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
If we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price.
If we identify material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect investor confidence in us and, as a result, our stock price.
The results of our R&D efforts are uncertain and there can be no assurance they will enhance the commercial success of our products. We believe that we will need to incur additional R&D expenditures to improve the capabilities of our BF-RhodoLED® lamps to better fulfill the needs of dermatologists and may also incur R&D expenditures to develop new products.
The results of our R&D efforts are uncertain and there can be no assurance they will enhance the commercial success of our products. We believe that we will need to incur additional R&D expenditures to improve the capabilities of our RhodoLED® Lamps to better fulfill the needs of dermatologists and may also incur R&D expenditures to develop new products.
At any time after a person becomes an Acquiring Person, the Board of Directors may, at its option, exchange all or any part of the then outstanding and exercisable Rights for shares of Common Stock at an exchange ratio of one share of Common Stock for each Right, subject to adjustment as specified in the Rights Agreement.
At any time after a person becomes an Acquiring Person, our Board of Directors may, at its option, exchange all or any part of the then outstanding and exercisable Rights for shares of common stock at an exchange ratio of one share of common stock for each Right, subject to adjustment as specified in the Rights Agreement.
Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline. 43 Our quarterly operating results may fluctuate significantly. We expect our operating results to be subject to quarterly fluctuations.
Moreover, if our operating results do not meet the expectations of the investor community, one or more of the analysts who cover our company may change their recommendations regarding our company, and our stock price could decline. Our quarterly operating results may fluctuate significantly. We expect our operating results to be subject to quarterly fluctuations.
Any denial or reduction in reimbursement from Medicare or other programs or governments may result in a similar denial or reduction in payments from private payors, which may adversely affect our future profitability. 27 To date, we have a relatively short history of sales of our licensed products in the United States.
Any denial or reduction in reimbursement from Medicare or other programs or governments may result in a similar denial or reduction in payments from private payors, which may adversely affect our future profitability. To date, we have a relatively short history of sales of our licensed products in the United States.
In addition, if we fail to regain compliance to be eligible to trade on Nasdaq or obtain listing on another reputable national securities exchange, we may have to pursue trading on a less recognized or accepted market, such as the over the counter markets, our stock may be traded as a “penny stock” which would make transactions in our stock more difficult and cumbersome, and we may be unable to access capital on favorable terms or at all, as companies trading on alternative markets may be viewed as less attractive investments with higher associated risks, such that existing or prospective institutional investors may be less interested in, or prohibited from, investing in our common stock.
In addition, if we fail to maintain compliance to be eligible to trade on Nasdaq or obtain listing on another reputable national securities exchange, we may have to pursue trading on a less recognized or accepted market, such as the over the counter markets, our stock may be traded as a “penny stock” which would make transactions in our stock more difficult and cumbersome, and we may be unable to access capital on favorable terms or at all, as companies trading on alternative markets may be viewed as less attractive investments with higher associated risks, such that existing or prospective institutional investors may be less interested in, or prohibited from, investing in our common stock.
The remaining 400,000 shares are currently unregistered and held by Biofrontera AG. In addition, we have issued warrants to purchase our common stock that, if such warrants are exercised, could be sold in the public market.
The remaining 400,000 shares are currently unregistered and held by Biofrontera AG. 38 In addition, we have issued warrants to purchase our common stock that, if such warrants are exercised, could be sold in the public market.
Our lack of control over some of these functions could adversely affect our ability to implement our strategy for the commercialization of our licensed products. We do not own or operate manufacturing facilities for clinical or commercial manufacture of any of our licensed products.
Our lack of control over these functions could adversely affect our ability to implement our strategy for the commercialization of our licensed products. We do not own or operate manufacturing facilities for clinical or commercial manufacture of any of our licensed products.
Additionally, if we are unable to generate revenues from our product sales, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased. 29 Even if our Licensors obtain regulatory approvals for our licensed products, or approvals extending their indications, they may not gain market acceptance or become widely accepted among hospitals, physicians, health care payors, patients and others in the medical community.
Additionally, if we are unable to generate revenues from our product sales, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased. 25 Even if we or our Licensors obtain regulatory approvals for our licensed products, or approvals extending their indications, they may not gain market acceptance or become widely accepted among hospitals, physicians, health care payors, patients and others in the medical community.
Therefore, some of our estimates and judgments are based on various sources which we have not independently verified and which potentially include outdated information, or information that may not be precise or correct, potentially rendering the U.S. market size for treatment of actinic keratosis with Ameluz ® smaller than we have estimated, which may reduce our potential and ability to increase sales of Ameluz ® and revenue in the United States.
Therefore, some of our estimates and judgments are based on various sources which we have not independently verified and which potentially include outdated information, or information that may not be precise or correct, potentially rendering the United States market size for treatment of actinic keratosis with Ameluz ® smaller than we have estimated, which may reduce our potential and ability to increase sales of Ameluz ® and revenue in the United States.
Our actual or perceived failure to comply with such obligations could harm our business. We are subject to diverse laws and regulations relating to data privacy and security in the EU and eventually in the EEA, including Regulation 2016/679, known as the GDPR. The GDPR applies extraterritorially and implements stringent operational requirements for controllers and processors of personal data.
Our actual or perceived failure to comply with such obligations could harm our business. We are subject to diverse laws and regulations relating to data privacy and security in the EU, including Regulation 2016/679, known as the GDPR. The GDPR applies extraterritorially and implements stringent operational requirements for controllers and processors of personal data.
Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. 28 Our competitors may succeed in developing, acquiring or licensing products that are more effective or less costly than our licensed products and product candidates.
Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. 24 Our competitors may succeed in developing, acquiring or licensing products that are more effective or less costly than our licensed products and product candidates.
With respect to our licensed products, we may be subject to healthcare laws, regulation and enforcement. Our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition. We may be subject to additional healthcare regulation and enforcement by the U.S. federal government and by authorities in the United States.
With respect to our licensed products, we may be subject to healthcare laws, regulation and enforcement. Our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition. We may be subject to additional healthcare regulation and enforcement by the United States federal government and by authorities in the United States.
Our licensed drug products Ameluz ® and Xepi ® and any other drug products we license or acquire will be subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling, record-keeping, submission of safety and other post-market approval information, importation and exportation.
Our licensed drug products and any other drug products we license or acquire will be subject to ongoing regulatory requirements for labeling, packaging, storage, advertising, promotion, sampling, record-keeping, submission of safety and other post-market approval information, importation and exportation.
Stockholders’ Equity in our audited financial statements for the fiscal year ended December 31, 2023 and 2022 included in this Form 10-K for more information on the Warrants. Item 1B. Unresolved Staff Comments Not applicable.
Stockholders’ Equity in our audited financial statements for the fiscal year ended December 31, 2024 and 2023 included in this Form 10-K for more information on the Warrants. Item 1B. Unresolved Staff Comments Not applicable.
Although the Ameluz Licensor has received marketing approval in the United States for Ameluz ® for lesion- and field-directed treatment of actinic keratosis in combination with PDT using the BF-RhodoLED ® lamp series, there remains a significant risk that we will fail to generate sufficient revenue or otherwise successfully commercialize the product in the United States.
Although the Ameluz Licensor has received marketing approval in the United States for Ameluz ® for lesion- and field-directed treatment of actinic keratosis in combination with PDT using the BF-RhodoLED ® Lamps, there remains a significant risk that we will fail to generate sufficient revenue or otherwise successfully commercialize the product in the United States.
If the Ameluz Licensor fails to maintain its relationships with these manufacturers or if both of these manufacturers are unable to produce product for the Ameluz Licensor, our business could be materially harmed. Pursuant to the Ameluz LSA, the Ameluz Licensor supplies us with Ameluz ® .
If the Ameluz Licensor fails to maintain its relationships with these manufacturers or if both of these manufacturers are unable to produce product for the Ameluz Licensor, our business could be materially harmed. The Ameluz Licensor supplies us with Ameluz ® .
Despite the implementation of security measures, our internal computer systems and those of our current and future contract and research organizations, or CROs, licensors, and other contractors and consultants are vulnerable to damage from breaches of information systems, attempts to access information, including customer and company information, malicious code, theft, misuse, loss, release, or destruction of data (including confidential customer information), account takeovers, unavailability of service, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
Despite the implementation of security measures, our internal computer systems and those of our current and future contract and research organizations licensors, and other contractors and consultants are vulnerable to damage from breaches of information systems, attempts to access information, including customer and company information, information relating to our clinical trials, malicious code, theft, misuse, loss, release, or destruction of data (including confidential customer information), account takeovers, unavailability of service, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including presenting only the two most recent fiscal years of audited financial statements and reduced disclosure obligations regarding executive compensation in this Form 10-K and our periodic reports and proxy statements.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including presenting only the two most recent fiscal years of audited financial statements and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Reimbursement by a third-party payor may depend upon a number of factors, including the government or third-party payor’s determination that use of a product is: ● a covered benefit under its health plan; ● safe, effective and medically necessary; ● reasonable and appropriate for the specific patient; ● cost-effective; and ● neither experimental nor investigational.
Such reimbursement may depend upon a number of factors, including the government or third-party payor’s determination that use of a product is: ● a covered benefit under its health plan; ● safe, effective and medically necessary; ● reasonable and appropriate for the specific patient; ● cost-effective; and ● neither experimental nor investigational.
Such U.S. laws include, without limitation, state and federal anti-kickback, federal false claims, privacy, security, financial disclosure laws, anti-trust, Physician Payment Sunshine Act reporting, fair trade regulation and advertising laws and regulations. Many states and other jurisdictions have similar laws and regulations, some of which are broader in scope.
Such United States laws include, without limitation, state and federal anti-kickback, federal false claims, privacy, security, financial disclosure laws, anti-trust, Physician Payment Sunshine Act reporting, fair trade regulation and advertising laws and regulations. Many states and other jurisdictions have similar laws and regulations, some of which are broader in scope.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Many of the warrants to purchase shares of our common stock are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock. Under U.S.
Many of the warrants to purchase shares of our common stock are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock.
The market price of our common stock is likely to be volatile and could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including: ● the success of existing or new competitive products or technologies; ● regulatory actions with respect to Ameluz ® , the BF-RhodoLED ® lamp (and its successors) or Xepi ® or our competitors’ products; ● actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; ● announcements of innovations by us, our Licensors or our competitors; ● overall conditions in our industry and the markets in which we operate; ● market conditions or trends in the biotechnology industry or in the economy as a whole; ● addition or loss of significant healthcare providers or other developments with respect to significant healthcare providers; ● changes in laws or regulations applicable to Ameluz ® , the BF-RhodoLED ® lamp (and its successors) or Xepi ® ; ● actual or anticipated changes in our growth rate relative to our competitors; ● announcements by us, our Licensors or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● additions or departures of key personnel; ● issuance of new or updated research or reports by securities analysts; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● disputes or other developments related to the patents covering our licensed products, and our Licensors’ ability to obtain intellectual property protection for our licensed products; ● security breaches; ● litigation matters; ● announcement or expectation of additional financing efforts; ● sales of our common stock by us or our stockholders; ● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ● the expiration of contractual lock-up agreements with our executive officers, directors and stockholders; and ● general economic and market conditions. 42 Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies.
The market price of our common stock is likely to be volatile and could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including: ● the success of existing or new competitive products or technologies; ● regulatory actions with respect to Ameluz ® , the BF-RhodoLED ® lamp (and its successors) or our competitors’ products; ● actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; ● announcements of innovations by us, our Licensors or our competitors; ● overall conditions in our industry and the markets in which we operate; ● market conditions or trends in the biotechnology industry or in the economy as a whole; ● addition or loss of significant healthcare providers or other developments with respect to significant healthcare providers; ● changes in laws or regulations applicable to Ameluz ® , the BF-RhodoLED ® lamp (and its successors); ● actual or anticipated changes in our growth rate relative to our competitors; 37 ● announcements by us, our Licensors or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; ● additions or departures of key personnel; ● issuance of new or updated research or reports by securities analysts; ● fluctuations in the valuation of companies perceived by investors to be comparable to us; ● disputes or other developments related to the patents covering our licensed products, and our Licensors’ ability to obtain intellectual property protection for our licensed products; ● security breaches; ● litigation matters; ● announcement or expectation of additional financing efforts; ● sales of our common stock by us or our stockholders; ● share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; ● the expiration of contractual lock-up agreements with our executive officers, directors and stockholders; and ● general economic and market conditions.
For applications containing a claim not entitled to priority before March 16, 2013, there is greater level of uncertainty in the patent law with the passage of the America Invents Act (2012) which brings into effect significant changes to the U.S. patent laws that are yet untried and untested, and which introduces new procedures for challenging pending patent applications and issued patents.
For applications containing a claim not entitled to priority before March 16, 2013, there is greater level of uncertainty in the patent law with the passage of the America Invents Act (2012) which brings into effect significant changes to the United States patent laws that are yet untried and untested, and which introduces new procedures for challenging pending patent applications and issued patents.
Hermann Lübbert, our Chief Executive Officer and Chairman and Fred Leffler, our Chief Financial Officer. The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could potentially harm our business, prospects, financial condition or results of operations.
Hermann Luebbert, our Chief Executive Officer and Chairman and Fred Leffler, our Chief Financial Officer. The loss of the services of any of our executive officers or other key employees and our inability to find suitable replacements could potentially harm our business, prospects, financial condition or results of operations.
The failure of either manufacturer to supply the Ameluz Licensor with Ameluz ® that satisfies quality, quantity and cost requirements in a timely manner could impair our ability to deliver Ameluz ® to the U.S. market and could increase costs, particularly if the Ameluz Licensor is unable to obtain Ameluz ® from alternative sources on a timely basis or on commercially reasonable terms.
The failure of either manufacturer to supply the Ameluz Licensor with Ameluz ® that satisfies quality, quantity and cost requirements in a timely manner could impair our ability to deliver Ameluz ® to the United States market and could increase costs, particularly if the Ameluz Licensor is unable to obtain Ameluz ® from alternative sources on a timely basis or on commercially reasonable terms.
Our future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to: ● the effects of competing technological and market developments; ● the cost and timing of completion of commercial-scale manufacturing activities; ● the cost of establishing or maintaining sales, marketing and distribution capabilities for Ameluz ® PDT or other licensed products or potential products in the United States; and ● the impact of COVID-19 on our licensor’s clinical trials, the timing of regulatory approvals obtained by our Licensors, demand for our licensed products, our ability to market and sell our licensed products and other matters.
Our future funding requirements, both near- and long-term, will depend on many factors, including, but not limited to: ● the effects of competing technological and market developments; ● the cost and timing of completion of commercial-scale manufacturing activities; ● the cost of establishing or maintaining sales, marketing and distribution capabilities for Ameluz ® PDT or other licensed products or potential products in the United States ● the timing of regulatory approvals obtained by our Licensors, demand for our licensed products, our ability to market and sell our licensed products and other matters.
In the event we are not successful in maintaining our marketing and sales infrastructure, we may not be able to successfully grow the market of our licensed products, which would limit our revenue growth. The U.S. market size for Ameluz ® for the treatment of actinic keratosis may be smaller than we have estimated.
In the event we are not successful in maintaining our marketing and sales infrastructure, we may not be able to successfully grow the market of our licensed products, which would limit our revenue growth. The United States market size for Ameluz ® for the treatment of actinic keratosis may be smaller than we have estimated.
The Ameluz Licensor holds another patent family protecting the technology relating to nanoemulsions for which they have been issued patents in various jurisdictions and which expire in December 2027. A corresponding U.S. patent application has been filed by the Ameluz Licensor but is still pending.
The Ameluz Licensor holds another patent family protecting the technology relating to nanoemulsions for which they have been issued patents in various jurisdictions and which expire in December 2027. A corresponding United States patent application has been filed by the Ameluz Licensor but is still pending.
Recently, following U.S. patent reform, new procedures including inter partes review and post grant review have been implemented. This reform includes changes in law and procedures that are untried and untested and will bring uncertainty to the possibility of challenge to our patents in the future.
Recently, following United States patent reform, new procedures including inter partes review and post grant review have been implemented. This reform includes changes in law and procedures that are untried and untested and will bring uncertainty to the possibility of challenge to our patents in the future.
We are a party to license agreements with Biofrontera Pharma, GmbH and Biofrontera Bioscience, GmbH (for Ameluz ® and the RhodoLED ® lamp series) and with Ferrer (for Xepi ® ) and expect to enter into additional licenses in the future.
We are a party to license agreements with Biofrontera Pharma, GmbH and Biofrontera Bioscience, GmbH (for Ameluz ® and the RhodoLED ® Lamps) and with Ferrer (for Xepi ® ) and expect to enter into additional licenses in the future.
GAAP, we are required to evaluate the outstanding warrants to purchase our common stock to determine whether they should be accounted for as a warrant liability or as equity.
Under United States GAAP, we are required to evaluate the outstanding warrants to purchase our common stock to determine whether they should be accounted for as a warrant liability or as equity.
As of December 31, 2023, we had 85 employees. In the longer term, as our development and commercialization plans and strategies develop, and as we continue operating as a public company, we expect to need additional managerial, operational, sales, marketing, financial and other personnel.
As of December 31, 2024, we had 93 employees. In the longer term, as our development and commercialization plans and strategies develop, and as we continue operating as a public company, we expect to need additional managerial, operational, sales, marketing, financial and other personnel.
Furthermore, for applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the U.S. Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.
Furthermore, for applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. Summary of Material Risk Factors Our business, results of operations and financial condition and the industry in which we operate are subject to various risks.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, results of operations and financial condition and the industry in which we operate are subject to various risks.
Although the process of developing generic topical dermatological products presents specific challenges that may deter potential generic competitors, Patent No. 6,559,183 no longer prevents generic versions of Ameluz ® from entering the U.S. market and competing with Ameluz ® .
Although the process of developing generic topical dermatological products presents specific challenges that may deter potential generic competitors, Patent No. 6,559,183 no longer prevents generic versions of Ameluz ® from entering the United States market and competing with Ameluz ® .
If the Ameluz Licensor is unable to successfully obtain and maintain regulatory approvals or reimbursement for Ameluz ® for existing and additional indications, our business may be materially harmed.
If we or the Ameluz Licensor are unable to successfully obtain and maintain regulatory approvals or reimbursement for Ameluz ® for existing and additional indications, our business may be materially harmed.
We cannot guarantee that this U.S. patent will be issued or, if issued, will adequately protect us against copying by competitors. Our business depends substantially on the success of our principal licensed product Ameluz ® .
We cannot guarantee that this United States patent will be issued or, if issued, will adequately protect us against copying by competitors. Our business depends substantially on the success of our principal licensed product Ameluz ® .
If generic competitors do enter the market, this may cause a significant drop in the price of Ameluz ® and, therefore, a significant drop in our profits. We may also lose significant U.S. market share for Ameluz ® .
If generic competitors do enter the market, this may cause a significant drop in the price of Ameluz ® and, therefore, a significant drop in our profits. We may also lose significant United States market share for Ameluz ® .
See “— Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, which could make it difficult for us to sell our licensed products .” Our industry is subject to rapid, unpredictable and significant technological change and intense competition.
See “— Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, including with respect to future indications of our licensed products, which could make it difficult for us to sell our licensed products .” Our industry is subject to rapid, unpredictable and significant technological change and intense competition.
If other manufacturers launch products to compete with our licensed products or product candidates in spite of our Licensors’ patent position, these manufacturers would likely erode our market and negatively impact our sales revenues, liquidity and results of operations.
Generic manufacturers may launch products at risk of patent infringement. If other manufacturers launch products to compete with our licensed products or product candidates in spite of our Licensors’ patent position, these manufacturers would likely erode our market and negatively impact our sales revenues, liquidity and results of operations.
Regardless of the merits or eventual outcome, liability claims may result in: ● costs to defend litigation and other proceedings; ● a diversion of management’s time and our resources; ● decreased demand for our licensed products; ● injury to our reputation; ● withdrawal of clinical trial participants; ● initiation of investigations by regulators; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● loss of revenue; ● substantial monetary awards to trial participants or patients; ● exhaustion of any available insurance and our capital resources; ● the inability to commercialize our licensed products; and ● a decline in our share price.
Regardless of the merits or eventual outcome, liability claims may result in: ● costs to defend litigation and other proceedings; ● a diversion of management’s time and our resources; ● decreased demand for our licensed products; ● injury to our reputation; ● withdrawal of clinical trial participants; ● decreased enrollment rates of clinical trial participants; ● termination of clinical trial sites or entire trial programs; ● initiation of investigations by regulators; ● product recalls, withdrawals or labeling, marketing or promotional restrictions; ● loss of revenue; ● substantial monetary awards to trial participants or patients; ● exhaustion of any available insurance and our capital resources; ● the inability to commercialize our licensed products; and ● a decline in our share price. 30 We currently maintain product liability insurance.
The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statement of operations. Refer to Note 4. Fair Value Measurements. As of the date of this Form 10-K, 2,192,736 liability classified Warrants remain outstanding. See Note 18.
The resulting warrant liabilities are re-measured at each balance sheet date until their exercise or expiration, and any change in fair value is recognized in the Company’s consolidated statement of operations. Refer to Note 3. Fair Value Measurements. As of the date of this Form 10-K, 2,269,356 liability classified Warrants remain outstanding. See Note 14.
Any of the above events could prevent us from realizing business opportunities or prevent us from growing our business or responding to competitive pressures, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations and could cause the price of our shares to decline.
Any of the above events could prevent us from realizing business opportunities or prevent us from growing our business or responding to competitive pressures, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations and could cause the price of our shares to decline. 33 Our existing and any future indebtedness could adversely affect our ability to operate our business.
On September 13, 2023, Biofrontera was served with a complaint filed in United Stated District Court for the District of Massachusetts by DUSA, Sun Pharmaceutical Industries, Inc., and Sun Pharmaceutical Industries LTD in which DUSA alleges breach of contract, violation of the Lanham Act, and unfair trade practices.
On September 13, 2023, Biofrontera was served with a complaint by DUSA, Sun Pharmaceutical Industries, Inc., and Sun Pharmaceutical Industries LTD in which DUSA alleges breach of contract, violation of the Lanham Act, and unfair trade practices.
Pursuant to the applicable LSA, our Licensors supply us with the licensed product that we sell in the U.S. market. The manufacture of the products we license requires significant expertise and capital investment. Currently, all commercial supply for each of our commercial licensed products are manufactured by single unaffiliated contract manufacturers.
Our Licensors supply us with the licensed product that we sell in the United States market. The manufacture of the products we license requires significant expertise and capital investment. Currently, all commercial supply for each of our commercial licensed products are manufactured by single unaffiliated contract manufacturers.
If our Licensors’ or our Licensors’ contract manufacturers, as applicable, do not successfully maintain cGMP compliance for these facilities, commercialization of our licensed products could be prohibited or significantly delayed.
Our Licensors’ facilities or our Licensors’ contract facilities, as applicable, have been inspected by the FDA for cGMP compliance. If our Licensors’ or our Licensors’ contract manufacturers, as applicable, do not successfully maintain cGMP compliance for these facilities, commercialization of our licensed products could be prohibited or significantly delayed.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We have since enhanced our internal control environment and remediated this material weakness.
Patent No. 6,559,183, which, prior to its expiration, served as a material, significant and possibly the only barrier to entry into the U.S. market by generic versions of Ameluz ® .
This patent family included United States Patent No. 6,559,183, which, prior to its expiration, served as a material, significant and possibly the only barrier to entry into the United States market by generic versions of Ameluz ® .
Any shares of our common stock issued upon exercise of outstanding warrants will result in dilution to the then existing holders of our common stock and increase the number of shares eligible for resale in the public market. In addition, in the Offering we issued shares of Series B-1 Convertible Preferred Stock (“Series B-1 Preferred Stock”).
Any shares of our common stock issued upon exercise of outstanding warrants or conversion of the Series B convertible preferred stock will result in dilution to the then existing holders of our common stock and increase the number of shares eligible for resale in the public market.
Biofrontera AG is a significant stockholder of the Company and, as a result of its control of the manufacture, clinical development and regulatory approval of Ameluz ® may exert greater influence on the Company relative to the percentage of its ownership of the Company’s outstanding common stock.
Biofrontera AG, as a result of its control of the manufacturing and regulatory approval of Ameluz ® , may exert greater influence on the Company relative to the percentage of its ownership of the Company’s outstanding common stock.
Although the process of developing generic topical dermatological products for the first time presents specific challenges that may deter potential generic competitors, generic versions of Ameluz ® may enter the market following the recent expiration of these patents.
Certain important patents for our licensed product Ameluz ® expired in 2019. Although the process of developing generic topical dermatological products for the first time presents specific challenges that may deter potential generic competitors, generic versions of Ameluz ® may enter the market following the recent expiration of these patents.
If our licensed products or potential products fail to comply with applicable regulatory requirements, a regulatory authority may, among other actions against our Licensors or applicable third parties: ● issue warning letters or Form 483 (or similar) notices requiring our Licensors or applicable third parties to modify certain activities or correct certain deficiencies; ● require product recalls or impose civil monetary fines; ● mandate modifications to promotional materials or require our Licensors to provide corrective information to healthcare practitioners; ● require our Licensors or applicable third parties to enter into a consent decree or permanent injunction; ● impose other administrative or judicial civil or criminal actions, including monetary or other penalties, or pursue criminal prosecution; ● withdraw regulatory approval; ● refuse to approve pending applications or supplements to approved applications filed by our Licensors; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products.
If our licensed products or potential products fail to comply with applicable regulatory requirements, a regulatory authority may, among other actions against our Licensors or applicable third parties: ● issue warning letters or Form 483 (or similar) notices requiring our Licensors or applicable third parties to modify certain activities or correct certain deficiencies; ● require product recalls or impose civil monetary fines; ● mandate modifications to promotional materials or require our Licensors to provide corrective information to healthcare practitioners; ● require our Licensors or applicable third parties to enter into a consent decree or permanent injunction; ● impose other administrative or judicial civil or criminal actions, including monetary or other penalties, or pursue criminal prosecution; ● withdraw regulatory approval; ● refuse to approve pending applications or supplements to approved applications filed by our Licensors; ● impose restrictions on operations, including costly new manufacturing requirements; or ● seize or detain products. 31 To the extent that such adverse actions impact our rights under our license and supply agreements or otherwise restrict our ability to market our licensed products, they could adversely impact our business and results of operation.
Third parties may assert that we or our Licensors are employing their proprietary technology without authorization. There may be third party patents of which we or our Licensors are currently unaware with claims to materials, formulations, devices, methods of manufacture or methods for treatment related to the use or manufacture of the products we license.
There may be third party patents of which we or our Licensors are currently unaware with claims to materials, formulations, devices, methods of manufacture or methods for treatment related to the use or manufacture of the products we license.
The warrants issued in connection with the private placement offerings (completed on December 1 , 2021, May 16, 2022, July 26, 2022, and November 2, 2023) (collectively, the “PIPE Warrants”) were accounted for as liabilities as these warrants provide for a redemption right in the case of a fundamental transaction which fails the requirement of the indexation guidance under ASC 815-40.
The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock. 42 The warrants issued in connection with the private placement offerings (completed on December 1 , 2021, May 16, 2022, July 26, 2022, and November 2, 2023) (collectively, the “PIPE Warrants”) were accounted for as liabilities as these warrants provide for a redemption right in the case of a fundamental transaction which fails the requirement of the indexation guidance under ASC 815-40.
To the extent that any disruption or cyberrelated incident were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our licensed products and product candidates could be delayed. 35 If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our licensed products.
To the extent that any disruption or cyberrelated incident were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our licensed products and product candidates could be delayed.
Some of these material risks include: Risks Related to the License and Supply Agreements and our Licensed Products ● Currently, our sole source of revenue is from sales of products we license from other companies, including a related party.
Risks Related to the License and Supply Agreements and Our Licensed Products Currently, our sole source of revenue is from sales of products we license from other companies.
We may also engage in debt financing in the future. Failure to make payments or comply with covenants under such debt could result in an event of default and acceleration of amounts due.
Failure to make payments or comply with covenants under such debt could result in an event of default and acceleration of amounts due.
If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, but not limited to, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal, state or other healthcare programs and imprisonment, any of which could adversely affect our ability to operate our business and our financial results.
If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we may be subject to penalties, including, but not limited to, civil and criminal penalties, damages, fines, the curtailment or restructuring of our operations, the exclusion from participation in federal, state or other healthcare programs and imprisonment, any of which could adversely affect our ability to operate our business and our financial results. 26 A recall of our licensed drug or medical device products, or the discovery of serious safety issues with our licensed drug or medical device products, could have a significant negative impact on us.
The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business.
For the medical device products we license, our Licensors are required to comply with the FDA’s Quality System Regulation, or QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our medical device products. 20 Our Licensors’ facilities or our Licensors’ contract facilities, as applicable, have been inspected by the FDA for cGMP compliance.
For the medical device products we license, our Licensors are required to comply with the FDA’s Quality System Regulation, or QSR, which covers the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our medical device products.
Further, if our Licensors encounter delays in their clinical trials, the period of time during which we could market our licensed products under patent protection would be reduced.
Further, if the clinical trials for our licensed products are related, the period of time during which we could market our licensed products under patent protection would be reduced.
This will require us to be cognizant going forward of the time from invention to filing of a patent application. 21 In addition to the protection afforded by patents, our Licensors may rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our product discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents.
In addition to the protection afforded by patents, our Licensors may rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable, processes for which patents are difficult to enforce and any other elements of our product discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents.
We currently maintain product liability insurance. If such insurance is not sufficient, or if we are not able to obtain such insurance at an acceptable cost in the future, potential product liability claims could prevent or inhibit the commercialization of our licensed products and the products we license in the future.
If such insurance is not sufficient, or if we are not able to obtain such insurance at an acceptable cost in the future, potential product liability claims could prevent or inhibit the commercialization of our licensed products and the products we license in the future. A successful claim could materially harm our business, financial condition or results of operations.
Our subsidiary and certain third-party employees and our licensed patents are subject to foreign laws. All employees of our wholly owned subsidiary, Bio-FRI GmbH, and a majority of the employees of Biofrontera AG, the parent company of the Ameluz Licensor, work in Germany and are subject to German employment law.
All employees of our wholly owned subsidiary, Biofrontera Discovery GmbH, and a majority of the employees of Biofrontera AG, the parent company of the Ameluz Licensor, work in Germany and are subject to German employment law.
You should carefully consider the risks described below, as well as the other information in this Form 10-K, including our financial statements and the related notes and the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock.
You should carefully consider the risks described below, together with other information in this Form 10-K, and our other filings with the SEC, including our financial statements and the related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such filings, before deciding whether to invest in our common stock.
We are subject, however, to the risk that our officers, directors, employees, agents and collaborators may take action determined to be in violation of such anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010 and the European Union Anti-Corruption Act, as well as trade sanctions administered by the U.S.
We are subject, however, to the risk that our officers, directors, employees, agents and collaborators may take action determined to be in violation of such anti-corruption laws, including the United States Foreign Corrupt Practices Act of 1977, the U.K.
The future viability of the Company is dependent on its ability to continue to execute its growth plan and raise additional capital or find alternative methods of financing to fund its operations during the first half of 2024, and until cash flow from operations is sufficient, if ever.
The future viability of the Company is dependent on its ability to continue to execute its growth plan and raise additional capital or find alternative methods of financing to fund its operations during the second half of 2025, and until cash flow from operations is sufficient, if ever. As of March 12, 2025 our unaudited cash was approximately $2.2 million.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our securities. The trade secrets of our Licensors are difficult to protect.
If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our securities. The trade secrets of our Licensors are difficult to protect.
If we are unable to maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our licensed products, we may be unable to generate revenue growth.
If we are unable to maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our licensed products, we may be unable to generate revenue growth. In order to grow the market for our licensed products, we must continue to build our marketing, sales and distribution capabilities in the United States.
Disputes may arise between us and any of our Licensors regarding intellectual property subject to such agreements, including: ● the scope of rights granted under the agreement and other interpretation-related issues; ● whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement; ● our right to sublicense patent and other rights to third parties; ● our diligence obligations with respect to the use of the licensed intellectual property, and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our Licensors and us, should any such joint creation occur; ● our right to transfer or assign the license; and ● the effects of termination. 18 These, or other disputes over intellectual property that we have licensed may prevent or impair our ability to maintain our current arrangements on acceptable terms or may impair the value of the arrangement to us.
For a summary of the terms of the license agreements, see “ Business—Commercial Partners and Agreements ” in this Form 10-K. 15 Disputes have arisen and may continue to arise between us and any of our Licensors regarding intellectual property subject to such agreements, including: ● the scope of rights granted under the agreement and other interpretation-related issues; ● whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement; ● our right to sublicense patent and other rights to third parties; ● our diligence obligations with respect to the use of the licensed intellectual property, and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our Licensors and us, should any such joint creation occur; ● our right to transfer or assign the license; and ● the effects of termination.
In the case of marketed products that depend upon a license agreement, we could be required to cease our commercialization activities, including sale of the affected product. For a summary of the terms of the license agreements, see “ Business—Commercial Partners and Agreements ”.
In the case of marketed products that depend upon a license agreement, we could be required to cease our commercialization activities, including sale of the affected product.
To counter infringement or unauthorized use, we or our Licensors may be required to file infringement claims, which can be expensive and time-consuming.
Competitors may infringe upon the patents for our licensed products. To counter infringement or unauthorized use, we or our Licensors may be required to file infringement claims, which can be expensive and time-consuming.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee charter provides that the Committee is responsible for considering the effectiveness of the Company’s internal control system, including information technology security and control. The Director of IT reports significant cybersecurity events to our Vice President of Administration or Chief Financial Officer, who then reports such events to our Audit Committee.
Biggest changeThe Audit Committee charter provides that the Committee is responsible for considering the effectiveness of the Company’s internal control system, including information technology security and control. The Director of IT reports significant cybersecurity events to our Chief Financial Officer, who then reports such events to our Audit Committee.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. Information regarding our material legal proceedings is included in Note 23, Commitments and Contingencies , to the consolidated financial statements in Item 8 of this Form 10-K, which is incorporated herein by reference.
Biggest changeItem 3. Legal Proceedings From time to time, we may be involved in legal proceedings arising in the ordinary course of our business. Information regarding our material legal proceedings is included in Note 19. Commitments and Contingencies , to the consolidated financial statements in Item 8 of this Form 10-K, which is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Capital Market, under the symbol “ BFRI ,” and our warrants are traded on the NASDAQ Capital Market, under the symbol “ BFRIW .” Holders As of December 31, 2023, there were two holders of record of our common stock.
Biggest changeMarket for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Capital Market, under the symbol “ BFRI ,” and our warrants are traded on the NASDAQ Capital Market, under the symbol “ BFRIW .” As of December 31, 2024, there were three holders of record of our common stock.
Issuer Purchases of Equity Securities There were no repurchases made by us, or on our behalf, of shares of our common stock during the year ended December 31, 2023. Item 6. [Reserved]
Issuer Purchases of Equity Securities There were no repurchases made by us, or on our behalf, of shares of our common stock during the year ended December 31, 2024. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and December 31, 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and December 31, 2022: For the Year Ended December 31, ( in thousands) 2023 2022 Change % Change Product revenues, net $ 34,005 $ 28,541 $ 5,464 19.1 % Related party revenues 66 133 (67 ) -50.4 % Revenues, net 34,071 28,674 5,397 18.8 % Operating expenses: Cost of revenues, related party 16,789 14,618 2,171 14.9 % Cost of revenues, other 655 567 88 15.5 % Selling, general and administrative 38,975 35,137 3,838 10.9 % Selling, general and administrative, related party 152 733 (581 ) -79.3 % Research and development 77 - 77 N/A Change in fair value of contingent consideration 100 (3,800 ) 3,900 -102.6 % Total operating expenses 56,748 47,255 9,493 20.1 % Loss from operations (22,677 ) (18,581 ) (4,096 ) 22.0 % Change in fair value of warrant liabilities 6,456 19,017 (12,561 ) -66.1 % Warrant inducement expense (1,045 ) (2,629 ) 1,584 -60.3 % Excess of warrant fair value over offering proceeds (2,272 ) - (2,272 ) N/A Change in fair value of investment, related party (7,421 ) 1,747 (9,168 ) -524.8 % Gain on legal settlement 7,385 - 7,385 N/A Interest expense, net (468 ) (195 ) (273 ) -140.0 % Other income, net (75 ) 33 (108 ) -327.3 % Loss before income taxes (20,117 ) (608 ) (19,509 ) -3208.7 % Income tax expenses 14 32 (18 ) -56.3 % Net loss $ (20,131 ) $ (640 ) $ (19,491 ) -3045.5 % 52 Revenues, net Net product revenue for 2023 increased $5.5 million, or 19.1% compared to 2022.
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2024 and December 31, 2023 The following table summarizes our results of operations for the years ended December 31, 2024 and December 31, 2023: ( in thousands) 2024 2023 Change Product revenues, net $ 37,303 $ 34,005 3,298 Revenues, related party 18 66 (48 ) Revenues, net 37,321 34,071 (3,250 ) Operating expenses: Cost of revenues, related party 17,855 16,789 1,066 Cost of revenues, other 752 655 97 Selling, general and administrative 33,793 38,975 (5,182 ) Selling, general and administrative, related party 42 152 (110 ) Research and development 2,089 77 2,012 Change in fair value of contingent consideration - 100 (100 ) Total operating expenses 54,531 56,748 (2,217 ) Loss from operations (17,210 ) (22,677 ) 5,467 Change in fair value of warrant liabilities 1,680 6,456 (4,776 ) Warrant inducement expense - (1,045 ) 1,045 Excess of warrant fair value over offering proceeds - (2,272 ) 2,272 Change in fair value of investment, related party (14 ) (7,421 ) 7,407 Loss on debt extinguishment (316 ) - (316 ) Gain on legal settlement - 7,385 (7,385 ) Interest expense, net (2,035 ) (468 ) (1,567 ) Other income (expense), net 158 (75 ) 233 Loss before income taxes (17,737 ) (20,117 ) 2,380 Income tax expenses 22 14 8 Net loss $ (17,759 ) $ (20,131 ) $ 2,372 50 Product Revenues, net Net product revenue for 2024 increased $3.3 million, or 9.7% compared to 2023.
Net Income to Adjusted EBITDA Reconciliation for years ended December 31, 2023 and 2022 We define adjusted EBITDA as net income or loss before interest income and expense, income taxes, depreciation and amortization, and other non-operating items from our statements of operations as well as certain other items considered outside the normal course of our operations specifically described below.
Net Income to Adjusted EBITDA Reconciliation for years ended December 31, 2024 and 2023 We define adjusted EBITDA as net income or loss before interest income and expense, income taxes, depreciation and amortization, and other non-operating items from our statements of operations as well as certain other items considered outside the normal course of our operations specifically described below.
Any forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law. 47 Overview Biofrontera Inc.
Any forward-looking statements made by us or on our behalf speak only as of the date they are made. We do not undertake to publicly update or revise our forward-looking statements as a result of new information, future events or otherwise, except as required by law. 44 Overview Biofrontera Inc.
Other selling, general and administrative expenses include marketing, trade, and other commercial costs necessary to support the commercial operation of our licensed products and professional fees for legal, consulting and accounting services. Selling, general and administrative expenses also include the amortization of our intangible asset and our legal settlement expenses.
Other selling, general and administrative expenses include marketing, trade, and other commercial costs necessary to support the commercial operation of our licensed products and professional fees for legal, consulting and accounting services. Selling, general and administrative expenses also include the amortization of our intangible assets and our legal settlement expenses.
Due to the relatively limited period during which our stock has been publicly traded, volatility is based on a weighted average of our historical volatility and of a selected peer group of publicly traded companies within a similar industry.
Most significantly, due to the relatively limited period during which our stock has been publicly traded, volatility is based on a weighted average of our historical volatility and of a selected peer group of publicly traded companies within a similar industry.
The Black-Scholes option-pricing model considers several variables and assumptions in estimating the fair value of financial instruments, including the per-share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected stock price volatility over the expected term, and expected annual dividend yield.
The BSM option-pricing model considers several variables and assumptions in estimating the fair value of financial instruments, including the per-share fair value of the underlying common stock, exercise price, expected term, risk-free interest rate, expected stock price volatility over the expected term, and expected annual dividend yield.
Fair Value – Warrant Liability The Warrants issued in conjunction with our private placement offerings including warrants issued to induce conversion were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying consolidated balance sheet.
Fair Value – Warrant Liabilities The warrants issued in conjunction with our private placement offerings, including warrants for common stock, preferred stock and warrants issued to induce conversion, were accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities in the accompanying consolidated balance sheet.
An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount and if the carrying value is also determined to be greater than its fair value.
An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset group were less than its carrying amount and if the carrying value was also determined to be greater than its fair value.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations. The Company utilizes a Black-Scholes option pricing model to estimate the fair value of the Warrants which is considered a Level 3 fair value measurement.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations. The Company utilizes a Black-Scholes-Merton (“BSM”) option pricing model to estimate the fair value of the warrants for common stock which is considered a Level 3 fair value measurement.
In determining future cash flows, we take various factors into account, including the remaining useful life of each asset group, forecasted growth rates, pricing, working capital, capital expenditures, and other cash needs specific to the asset group.
In determining future cash flows, various factors were taken into account, including the remaining useful life of each asset group, forecasted growth rates, pricing, working capital, capital expenditures, and other cash needs specific to the asset group.
Certain inputs utilized in our Black-Scholes pricing model may fluctuate in future periods based upon factors which are outside of the Company’s control.
Certain inputs utilized in our BSM pricing model may fluctuate in future periods based upon factors which are outside of the Company’s control.
In connection with this review, assets are grouped at the lowest level at which identifiable cash flows are largely independent of other asset groupings. If indications of impairment exist, projected future undiscounted cash flows associated with the asset grouping are compared to the carrying amount to determine whether the asset’s value is recoverable.
In connection with this review, assets were grouped at the lowest level at which identifiable cash flows were largely independent of other asset groupings. If indications of impairment existed, projected future undiscounted cash flows associated with the asset grouping were compared to the carrying amount to determine whether the asset’s value was recoverable.
Adjusted EBITDA margin is adjusted EBITDA for a particular period expressed as a percentage of revenues for that period. We use adjusted EBITDA to measure our performance from period to period and to compare our results to those of our competitors.
Adjusted EBITDA margin is adjusted EBITDA for a particular period expressed as a percentage of revenues for that period. Our management uses adjusted EBITDA to measure our performance from period to period and to compare our results to those of our competitors.
We currently have statements of work in place regarding information technology, regulatory affairs, medical affairs, pharmacovigilance, and investor relations services, and are continuously assessing the other services historically provided to us by Biofrontera AG to determine 1) if they will be needed, and 2) whether they can or should be obtained from other third-party providers.
We currently have statements of work in place regarding regulatory affairs, medical affairs, and pharmacovigilance, and are continuously assessing the other services historically provided to us by Biofrontera AG to determine (i) if they will be needed, and (ii) whether they can or should be obtained from other third-party providers.
Gain on Legal Settlement Under a Confidential Settlement Agreement and Mutual Release (the “Release”) dated as of December 27, 2023, entered into with Maruho, the Company was released from its obligations to 1) repay $7.3 million in start-up cost financing to Maruho for Cutanea’s redesigned business activities (“start-up cost financing”), and 2) make certain profit-sharing payments pursuant to the Share Purchase and Transfer Agreement dated March 25, 2019 entered into with Maruho (as amended, the “Share Purchase Agreement” or “SPA”).
Gain on Legal Settlement Under the Release, the Company was released from its obligations to (i) repay $7.3 million in start-up cost financing to Maruho for Cutanea’s redesigned business activities (“start-up cost financing”), and (ii) make certain profit-sharing payments pursuant to the Share Purchase and Transfer Agreement, dated March 25, 2019, entered into with Maruho (as amended, the “Share Purchase Agreement” or “SPA”).
Off-balance Sheet Arrangements Besides the contractual obligations and commitments as discussed in the Liquidity and Capital Resources , we did not have during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Off-balance Sheet Arrangements Besides the contractual obligations and commitments discussed in the section entitled “Liquidity and Capital Resources” above, we did not have during the periods presented, and we do not currently have, any other off-balance sheet arrangements, as defined in the rules and regulations of the SEC.
Additional considerations when assessing impairment include changes in our strategic operational and financial decisions, economic conditions, demand for our product and other corporate initiatives which may eliminate or significantly decrease the realization of future benefits from our long-lived assets.
Additional considerations when assessing impairment included changes in our strategic, operational, and financial decisions, economic conditions, demand for our product, and other corporate initiatives that may have eliminated or significantly decreased the realization of future benefits from our long-lived assets.
Under the Release, our obligation relating to contingent consideration was relieved as of December 31, 2023. 50 Change in Fair Value of Warrant Liabilities For warrants that are classified as liabilities, the Company records the fair value of the warrants at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the consolidated statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liabilities to be reclassified to stockholders’ equity or deficit.
Change in Fair Value of Warrant Liabilities For warrants that are classified as liabilities, the Company records the fair value of the warrants at each balance sheet date and records changes in the estimated fair value as a non-cash gain or loss in the consolidated statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liabilities to be reclassified to stockholders’ equity or deficit.
In addition to adjusted EBITDA being a significant measure of performance for management purposes, we also believe that this presentation provides useful information to investors regarding financial and business trends related to our results of operations and that when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.
We believe that adjusted EBITDA provides useful information to investors regarding financial and business trends related to our results of operations and that, when non-GAAP financial information is viewed with GAAP financial information, investors are provided with a more meaningful understanding of our ongoing operating performance.
Accordingly, we are focused on licensed product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management.
Accordingly, we are focused on licensed product sales expansion to drive revenue growth and improve operating efficiencies, including effective resource utilization, information technology leverage, and overhead cost management. 1 Werner RN, Stockfleth E, Connolly SM, et al.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above, that might be necessary should the Company be unable to continue as a going concern.
For the investments held in foreign currencies, the change in fair value attributable to changes in foreign exchange rates is included in gains and losses in the consolidated statement of operations.
For the investments held in foreign currencies, the change in fair value attributable to changes in foreign exchange rates is included in gains and losses in the consolidated statement of operations. We exclude the impact of the realized and unrealized change in fair value of investments as this is non-cash.
During the year ended December 31, 2022, net cash provided by financing activities was $14.0 million which consisted of proceeds of $9.4 million from the issuance of common stock and warrants in private placement, net of issuance costs, and $4.6 million from the exercise of common stock warrants. 57 Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States, or GAAP.
During the year ended December 31, 2023, net cash provided by financing activities was $8.4 million which consisted of net proceeds received from our loan and line of credit of $3.9 million and net proceeds of $4.5 million from the issuance of common stock and warrants in a public offering. 54 Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles of the United States, or GAAP.
As such, our future results of operations will not be impacted by the change in fair value. Gain on legal settlement : Under the Release, we were relieved of our obligations relating to the start-up cost financing and profit sharing under the Share Purchase Agreement in exchange for 5,451,016 shares of Biofrontera AG.
Gain on legal settlement : Under the Release, we were relieved of our obligations relating to the start-up cost financing and profit sharing under the Share Purchase Agreement in exchange for 5,451,016 shares of Biofrontera AG.
Research and Development Our current R&D programs aim to improve the capabilities of our BF-RhodoLED ® lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them allowing for easier product demonstrations and evaluations.
Along with our Ameluz ® clinical trials, our R&D program also aims to improve the capabilities of our RhodoLED ® Lamps to better fulfill the needs of dermatologists and improve the effectiveness of our commercial team by letting sales representatives carry approved devices with them, allowing for easier product demonstrations and evaluations.
Cash Flows The following table summarizes our cash provided by and (used in) operating, investing and financing activities: For the Year Ended December 31, (in thousands) 2023 2022 Net cash used in operating activities $ (24,895 ) $ (16,199 ) Net cash provided by (used in) investing activities 619 (5,156 ) Net cash provided by financing activities 8,411 14,021 Net increase (decrease) in cash and restricted cash $ (15,865 ) $ (7,334 ) 56 Operating Activities During the year ended December 31, 2023, operating activities used $24.9 million of cash, primarily resulting from our net loss of $20.1 million, adjusted for the add back of non-cash income of $0.4 million and offset by net cash used by changes in our operating assets and liabilities of $4.4 million.
Cash Flows The following table summarizes our cash provided by (and used in) operating, investing and financing activities: For the Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (10,270 ) $ (24,895 ) Net cash provided by (used in) investing activities (3 ) 619 Net cash provided by financing activities 14,835 8,411 Net increase (decrease) in cash and restricted cash $ 4,562 $ (15,865 ) 53 Operating Activities During the year ended December 31, 2024, operating activities used $10.3 million of cash, primarily resulting from our net loss of $17.8 million, adjusted for the add back of non-cash income of $1.3 million and offset by net cash used by changes in our operating assets and liabilities of $6.2 million.
The below table presents a reconciliation from net loss to Adjusted EBITDA for the years ended December 31, 2023 and 2022: Years ended December 31, 2023 2022 Net loss $ (20,131 ) $ (640 ) Interest expense, net 468 195 Income tax expenses 14 32 Depreciation and amortization 504 519 EBITDA (19,145 ) 106 Gain on legal settlement (7,385 ) - Change in fair value of contingent consideration 100 (3,800 ) Change in fair value of warrant liabilities (6,456 ) (19,017 ) Warrant inducement expense 1,045 2,629 Excess of warrant fair value over offering proceeds 2,272 - Change in fair value of investment, related party 7,421 (1,747 ) Legal settlement expenses 1,225 870 Stock based compensation 1,045 1,852 Expensed issuance costs 422 1,045 Adjusted EBITDA $ (19,456 ) $ (18,062 ) Adjusted EBITDA margin -57.1 % -63.0 % Adjusted EBITDA Adjusted EBITDA decreased from ($18.1) million for the year ended December 31, 2022 to ($19.5) million for the year ended December 31, 2023.
The below table presents a reconciliation from net loss to Adjusted EBITDA for the years ended December 31, 2024 and 2023: Years ended December 31, 2024 2023 Net loss $ (17,759 ) $ (20,131 ) Interest expense, net 2,035 468 Income tax expenses 22 14 Depreciation and amortization 421 504 EBITDA (15,281 ) (19,145 ) Change in fair value of contingent consideration - 100 Change in fair value of warrant liabilities (1,680 ) (6,456 ) Warrant inducement expense - 1,045 Excess of warrant fair value over offering proceeds - 2,272 Change in fair value of investment, related party 14 7,421 Gain on legal settlement - (7,385 ) Loss on debt extinguishment 316 - Legal settlement expenses - 1,225 Stock based compensation 1,019 1,045 Expensed issuance costs 354 422 Adjusted EBITDA $ (15,258 ) $ (19,456 ) Adjusted EBITDA margin -40.9 % -57.1 % Adjusted EBITDA Adjusted EBITDA increased from ($19.5) million for the year ended December 31, 2023 to ($15.3) million for the year ended December 31, 2024.
During the year ended December 31, 2022, operating activities used $16.2 million of cash, primarily resulting from our net loss of $0.6 million, adjusted for the add back of non-cash income of $18.3 million and offset by net cash provided by changes in our operating assets and liabilities of $2.7 million.
During the year ended December 31, 2023, operating activities used $24.9 million of cash, primarily resulting from our net loss of $20.1 million, adjusted for the add back of non-cash income of $0.4 million and offset by net cash used by changes in our operating assets and liabilities of $4.4 million.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business.
Liquidity and Capital Resources The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Since we commenced operations in 2015, we have generated significant losses.
These expenses are charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Contact Services Agreement, (the “2021 Services Agreement”), entered into in December 2021.
Selling, General and Administrative Expenses, Related Party Selling, general and administrative expenses, related party, relate to the services provided by Biofrontera AG, primarily for regulatory support and pharmacovigilance. These expenses are charged to us based on costs incurred plus 6% in accordance with the Amended and Restated Master Contact Services Agreement, (the “2021 Services Agreement”), entered into in December 2021.
Selling, General and Administrative Expense Selling, general and administrative expenses consist principally of costs associated with our sales force, commercial support personnel, personnel in executive and other administrative functions, as well as medical affairs professionals.
Cost of Revenues, Other Cost of revenues, other, is comprised of third-party logistics and distribution costs including packaging, freight, transportation, shipping and handling costs. Selling, General and Administrative Expense Selling, general and administrative expenses consist principally of costs associated with our sales force, commercial support personnel, personnel in executive and other administrative functions, as well as medical affairs professionals.
The exchange of the shares of Biofrontera AG for the release of the liabilities mentioned above, both of which were recorded at their respective fair values at the exchange date, resulted in a gain. We exclude the impact of the gain on legal settlement as this is non-cash and non-recurring.
The exchange of the shares of Biofrontera AG for the release of the liabilities mentioned above, both of which were recorded at their respective fair values at the exchange date, resulted in a gain.
Related Party Revenues We also generate insignificant related party revenue in connection with an agreement with Biofrontera Bioscience GmbH to provide BF-RhodoLED ® lamps and associated services for the clinical trials performed by Biofrontera Bioscience GmbH.
Revenues, Related Party Prior to June 1, 2024, the date on which we took over clinical trials, we generated insignificant related party revenue in connection with an agreement with Biofrontera Bioscience to provide RhodoLED ® Lamps and associated services for the clinical trials performed by Biofrontera Bioscience.
We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted EBITDA (a non-GAAP measure as defined below). Our sole source of product revenue is sales of products that we license from certain related and unrelated companies. Our long-term financial objectives include consistent revenue growth and expanding operating margins.
Our sole source of product revenue is sales of products that we license from certain related and unrelated companies. Our long-term financial objectives include consistent revenue growth and expanding operating margins.
A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of our warrant liability which could also result in material non-cash gain or loss being reported in our consolidated statement of operations.
A significant change in one or more of the aforementioned inputs used in the calculation of the fair value may cause a significant change to the fair value of our warrant liability which could also result in material non-cash gain or loss being reported in our consolidated statement of operations. 55 Contingencies and Litigation In the ordinary course of our business, we are subject to various legal proceedings, claims and other regulatory matters, the outcomes of which are subject to significant uncertainty.
Operating Expenses Cost of Revenues, Related Party Cost of revenues, related party increased $2.2 million, or 14.9% compared to 2022. The increase was primarily driven by the increase in Ameluz ® product revenue.
Operating Expenses Cost of Revenues, Related Party Cost of revenues, related party increased $1.1 million, or 6.3% compared to 2023, driven by the increase in revenue.
Revisions of our estimates of the potential liability could materially impact our results of operations. Additionally, if the final outcome of such litigation and contingencies differs adversely from that currently expected, it would result in a charge to operating results when determined.
Additionally, if the final outcome of such litigation and contingencies differs adversely from that currently expected, it would result in a charge to operating results when determined. See Note 19. Commitments and Contingencies – Legal Claims for more details .
Currently, no antibiotic resistance against Xepi ® is known and it has been specifically approved by the FDA for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes. It is approved for use in the United States in adults and children 2 months and older.
Currently, no antibiotic resistance against Xepi ® is known and it has been specifically approved by the FDA for the treatment of impetigo, a common skin infection, due to Staphylococcus aureus or Streptococcus pyogenes. Our exclusive license and supply agreement, as amended (“Xepi LSA”), with Ferrer Internacional S.A.
A different outcome in any of these assumptions could adversely affect our financial condition and liquidity over the next twelve months. Recently issued accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2, Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements .
Recently issued accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is included in Note 2, Summary of Significant Accounting Policies—Recently Issued Accounting Pronouncements .
The fair value of such contingent consideration was determined to be $6.5 million on the acquisition date of March 25, 2019 and was re-measured at each reporting date until the contingency was resolved.
The fair value of such contingent consideration was determined to be $6.5 million on the acquisition date and was re-measured at each reporting date until the contingency was resolved. Our obligation relating to contingent consideration was relieved under a Confidential Settlement Agreement and Mutual Release (the “Release”) dated December 27, 2023.
Our principal objective is to increase the sales of our licensed products in the United States.
Our principal objective is to improve patient outcomes through adoption and use of our licensed products in the United States.
The key elements of our strategy include the following: ● expanding our sales in the United States of Ameluz ® in combination with the BF-RhodoLED ® lamp for the treatment of minimally to moderately thick actinic keratoses of the face and scalp and positioning Ameluz ® to be the standard of care in the United States by growing our dedicated sales and marketing infrastructure in the United States; ● leveraging the potential for future approvals and label extensions of our portfolio products that are in the pipeline for the U.S. market through the LSAs with our Licensors; and ● opportunistically adding complementary products or services to our portfolio by acquiring or licensing IP to further leverage our commercial infrastructure and customer relationships.
The key elements of our strategy include the following: ● expanding our sales in the United States of Ameluz ® in combination with the RhodoLED ® Lamps for the treatment of minimally to moderately thick actinic keratoses of the face and scalp and positioning Ameluz ® to be the standard of care in the United States by focusing on acquisition of new customers and growth of the therapy in our current customer base; ● leveraging the potential for future approvals and label extensions of our licensed portfolio products that are in the pipeline for the United States market with respect to Ameluz ® and f urthering the clinical development of this product after taking over responsibility for certain ongoing clinical trials since June 1, 2024, pursuant to the Second A&R Ameluz LSA ; and ● strategically managing our licensed portfolio, including opportunistically adding complementary products or services to our portfolio by acquiring or licensing IP to further leverage our commercial infrastructure and customer relationships.
These conditions raise substantial doubt about our ability to continue as a going concern for at least twelve months from the issuance date of this report, which management believes has been alleviated through its plans to mitigate these conditions and obtain additional liquidity.
Management believes that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for at least twelve months from the date of this Annual Report on Form 10-K.
Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations. 58 We perform an impairment assessment in accordance with FASB ASC Topic 360-10-S99, Impairment or Disposal of Long-Lived Assets .
Since the determination of future cash flows is an estimate of future performance, future impairments may arise in the event that future cash flows do not meet expectations.
The transfer price covers the cost of goods, royalties on sales, and services including all regulatory efforts, agency fees, pharmacovigilance, and patent administration. Effective June 1, 2024, we will take control of all clinical trials relating to Ameluz ® in the US, allowing for more effective cost management and direct oversight of trial efficiency.
Effective June 1, 2024, we assumed control of all clinical trials relating to Ameluz ® in the United States, allowing for more effective cost management and direct oversight of trial efficiency.
Set forth below is a brief discussion of the key factors impacting our results of operations. 1 Werner RN, Stockfleth E, Connolly SM, et al. Evidence- and consensus-based (S3) Guidelines for the Treatment of Actinic Keratosis - International League of Dermatological Societies in cooperation with the European Dermatology Forum - Short version.
Evidence- and consensus-based (S3) Guidelines for the Treatment of Actinic Keratosis - International League of Dermatological Societies in cooperation with the European Dermatology Forum - Short version.
Change in Fair Value of Contingent Consideration In connection with the Cutanea acquisition, we recorded contingent consideration related to the estimated profits from the sale of Cutanea products to be shared equally with Maruho.
All costs associated with research and development are expensed as incurred. 48 Change in Fair Value of Contingent Consideration In connection with our acquisition of Cutanea Life Sciences, Inc (“Cutanea”) from Maruho Co., Ltd (“Maruho”) on March 25, 2019, we recorded contingent consideration related to the estimated profits from the sale of Cutanea products to be shared equally with Maruho.
Change in fair value of warrant liabilities: The Warrants issued in conjunction with our private placement offerings and registered public offering were accounted for as liabilities in accordance with ASC 815-40. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations.
As such, our future results of operations will not be impacted by the change in fair value. Change in fair value of warrant liabilities: The Warrants issued in conjunction with our private placement offerings and registered public offering were accounted for as liabilities in accordance with Accounting Standards Codification (“ASC”) 815-40.
The decrease was primarily driven by an increase in selling, general, and administrative expenses (excluding legal settlement expenses) (“SG&A expenses”) due to increased headcount. Our Adjusted EBITDA margin increased from (63.0%) for the year ended December 31, 2022 to (57.1%) for the year ended December 31, 2023, as the increase in revenue outpaced the decline in our Adjusted EBITDA.
Our Adjusted EBITDA margin increased from (57.1%) for the year ended December 31, 2023 to (40.9%) for the year ended December 31, 2024, as the impact of the decrease in cost of revenue and the decrease in selling, general and administrative expenses outweighed the impact of the increase in revenue.
Non-cash items include stock-based compensation of $1.9 million, non-cash interest expense of $0.4 million, and depreciation and amortization in the aggregate of $1.2 million, netted against a change in fair value of investment of warrant liabilities of $19.0 million, change in fair value of contingent consideration of $3.8 million, and change in fair value of equity securities of $1.7 million.
Non-cash income includes a change in fair value of warrant liabilities of $1.7 million offset by stock-based compensation of $1.0 million, non-cash interest expense of $0.3 million, loss on debt extinguishment of $0.3 million, provision for doubtful accounts of $0.2 million and depreciation and amortization in the aggregate of $1.1 million.
On February 19, 2024, we entered into the Second Amended and Restated License and Supply Agreement (the “Second A&R Ameluz LSA”), effective as of February 13, 2024, by and among the Company, Pharma, and Bioscience.
We are currently selling Ameluz ® in the United States under a n exclusive license and supply agreement, the Second Amended and Restated License and Supply Agreement, effective as of February 13, 2024 with the Ameluz Licensor (the “Second A&R Ameluz LSA”).
We exclude the impact of the change in fair value of warrant liabilities as this is non-cash.
The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the consolidated statement of operations. We exclude the impact of the change in fair value of warrant liabilities as this is non-cash.
As a result of the amendment to the existing warrants, the Company recognized inducement expense which was determined using the Black-Scholes option pricing model before and after the warrant amendment (see Note 18 Stockholders’ Equity within our consolidated financial statements for details).
As a result of the amendment to the existing warrants, the Company recognized inducement expense which was determined using the Black-Scholes option pricing model before and after the warrant amendment. Excess of Warrant Fair Value Over Offering Proceeds On November 2, 2023, the Company issued common shares and warrants for common shares for net proceeds of $4.1 million.
We exclude the impact of the realized and unrealized change in fair value of investments as this is non-cash. 54 Legal settlement expenses : To measure operating performance, we exclude legal settlement expenses.
We exclude the impact of this loss as it is attributed to the prepayment fee, which is considered non-recurring and the write-off of deferred financing costs, which is considered non-cash. Legal settlement expenses : To measure operating performance, we exclude legal settlement expenses.
In determining whether a loss should be accrued, we evaluate, among other factors, the probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. As additional information becomes available, we reassess the potential liability related to our pending litigation and other contingencies and revise our estimates as applicable.
As additional information becomes available, we reassess the potential liability related to our pending litigation and other contingencies and revise our estimates as applicable. Revisions of our estimates of the potential liability could materially impact our results of operations.
The increase was primarily driven by the expansion of our salesforce in 2023, which resulted in a higher volume of Ameluz ® orders and, therefore, an increase in Ameluz ® revenue of $5.2 million. The remaining increase was attributed to an increase in the price of Ameluz ® .
The increase was primarily driven by organic growth of Ameluz ® sales volume of $0.5 million, a $1.7 million increase due to an increased Ameluz ® unit price, and the launch of our RhodoLED ® XL Lamp, which resulted in sales of RhodoLED ® XL Lamps of $1.1 million.
Investing Activities During the year ended December 31, 2023, investing activities provided $0.6 million, primarily resulting from the sale of shares of Biofrontera AG. During the year ended December 31, 2022, investing activities used $5.2 million, primarily resulting from the purchase of shares of Biofrontera AG (See Note 4. Fair Value Measurements and Note 6.
Investing Activities During the year ended December 31, 2024, the Company had minimal investing activities which consisted of proceeds from the sales of equity investments which were partially offset by capitalized software and computer purchases. During the year ended December 31, 2023, investing activities provided $0.6 million, primarily resulting from the sale of shares of Biofrontera AG.
The Company’s primary sources of liquidity are its cash collected from the sales of its products, and cash flows from financing transactions. During the year ended December 31, 2023, we received proceeds of $4.1 million from the issuance of common stock and warrants, net of issuance costs (See Note 18. Stockholders’ Equity ).
The Company incurred net cash outflows from operations of $10.3 million and $24.9 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company’s accumulated deficit was $117.4 million. The Company’s primary sources of liquidity are its cash collected from the sales of its products and cash flows from financing transactions.
Investment, related party within our consolidated financial statements ) Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $8.4 million which consisted of net proceeds received from our loan and line of credit of $3.9 million and net proceeds of $4.5 million from the issuance of common stock and warrants in a public offering.
Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $14.8 million which consisted of proceeds of $7.7 million, net of capitalized issuance costs, from the issuance of preferred stock and warrants, $7.4 million from the exercise of warrants for preferred stock, plus $4 million, net of issuance costs received from the issuance of convertible notes, offset by repayments of $4.2 million on our short-term debt, and prepayment fees of $0.2 million to extinguish our line of credit.
We are a U.S.-based biopharmaceutical company commercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”) and topical antibiotics. The Company’s licensed products are used for the treatment of actinic keratoses, which are pre-cancerous skin lesions, as well as impetigo, a bacterial skin infection.
(the “Company” or “Biofrontera”) is a United States based biopharmaceutical company commercializing a portfolio of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”).
Cost of Revenues, Related Party Cost of revenues, related party, is comprised of purchase costs of our licensed products, Ameluz ® and BF-RhodoLED ® lamps from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products. 49 Under the Ameluz LSA the price we pay per unit will be based upon our sales history.
Cost of Revenues, Related Party Cost of revenues, related party, is comprised of purchase costs of our licensed products, Ameluz ® and RhodoLED ® Lamps from Biofrontera Pharma GmbH and insignificant inventory adjustments due to scrapped, expiring and excess products. 47 Effective February 12, 2024, the Second A&R Ameluz LSA, among other things, was amended to change the Transfer Price from 50% to 25% of the anticipated net selling price per unit through 2025 and then increasing over time pursuant to the schedule set forth in the Second A&R Ameluz LSA to a maximum of 35% of the anticipated net selling price starting in 2032, subject to a minimum dollar amount per unit.
In May 2023, we began research and development (“R&D”) activities to support PDT growth and will continue to opportunistically invest in these activities going forward. Our R&D program currently aims to improve the capabilities of our BF-RhodoLED® lamps to better fulfill the needs of dermatologists.
Our research and development (“R&D”) program is focused on label expansion for Ameluz ® as well as supporting PDT growth by improving the capabilities of our RhodoLED ® Lamps to better fulfill the needs of dermatologists. The reduced LSA transfer price will allow the Company to finance such R&D activities and continue our commercial growth trajectory.
The exchange pursuant to the Release resulted in a gain of $7.4 million, recorded in December 2023. Change in Fair Value of Contingent Consideration The change in fair value of contingent consideration was an increase of $0.1 million and a decrease of $3.8 million for 2023 and 2022, respectively.
The exchange pursuant to the Release resulted in a gain of $7.4 million, recorded in December 2023. There were no legal settlements that occurred in 2024.
Accordingly, changes in assumptions described above, could have a material impact on the amount of contingent consideration expense we record in any given period. Intangible Assets and Impairment Assessment The Company regularly reviews the carrying amount of its long-lived assets to determine whether indicators of impairment may exist, which warrant adjustments to carrying values or estimated useful lives.
Assets Held for Sale. Prior to the classification as held for sale, the Company regularly reviewed the carrying amount of its long-lived assets to determine whether indicators of impairment may have existed that warranted adjustments to carrying values or estimated useful lives.
We devote a substantial portion of our cash resources to the commercialization of our licensed products, Ameluz ® and the BF-RhodoLED ® lamp series. We have financed our operating and capital expenditures through cash proceeds generated from our product sales, our line of credit, short term debt and proceeds received in equity financings.
We have financed our operating and capital expenditures through cash proceeds generated from our product sales, short term debt and proceeds received from convertible notes and equity financings. We believe that important measures of our results of operations include product revenue, operating income (loss) and adjusted EBITDA (a non-GAAP measure as defined below).
On February 19, 2024, we entered into the Second Amended and Restated License and Supply Agreement with the Ameluz Licensor under which, with immediate effect, the transfer price of Ameluz ® will be reduced from 50% to 25% for all purchases in 2024 and 2025.
The Second A&R Ameluz LSA reduced the Transfer Price of Ameluz ® from 50% to 25% which covers the cost of goods, royalties on sales, and services including all regulatory efforts, agency fees, pharmacovigilance and patent administration for all purchases in 2024 and 2025.
Further, in 2023, due to the uncertainty relating to the timing of resolution of the previously identified supply chain issues, the Company used a probability-weighted approach to estimate the future cash flows under several scenarios. While we believe these assumptions were reasonable, the level of future sales may vary significantly from the levels assumed.
Due to the uncertainty of the how the convertible preferred warrants would ultimately settle, the Company used a probability-weighted approach along with a BSM model equation to estimate the fair value of the preferred warrants under different scenarios. While we believe these assumptions were reasonable, the manner or timeframe in which the warrants ultimately settle may differ.
Components of Our Results of Operations Product Revenue, net We generate product revenues through the third-party sales of our licensed products Ameluz ® , BF-RhodoLED ® lamps and to a much lesser extent Xepi ® covered by our exclusive LSAs with our Licensors .
J Eur Acad Dermatol Venereol. 2015;29(11):2069-2079. doi:10.1111/jdv.13180. 46 Components of Our Results of Operations Product Revenues, net We generate product revenues through the third-party sales of our licensed products Ameluz ® and RhodoLED ® Lamps . Revenues from product sales are recorded net of trade discounts and allowances and government rebates.
Removed
(the “Company” or “Biofrontera”) includes its wholly owned subsidiary Bio-FRI GmbH (“Bio-FRI” or “subsidiary”). Our subsidiary, Bio-FRI was formed on February 9, 2022, as a German presence to facilitate our relationship with Biofrontera Pharma GmbH and Biofrontera Bioscience GmbH, our Ameluz Licensor and related parties.
Added
The Company’s primary licensed products, which include Ameluz ® as well as the BF-RhodoLED ® and RhodoLED ® XL lamps (the “RhodoLED ® Lamps”), are used for the treatment of actinic keratoses, which are pre-cancerous skin lesions. With our national commercial team, we generate revenue by selling our licensed products directly to dermatology offices and groups.
Removed
Our goal is to improve the effectiveness of our commercial team by allowing sales representatives to carry approved devices with them allowing for easier product demonstrations and evaluations.
Added
In October 2024, the FDA approved the Company’s Supplemental New Drug Application to increase the maximally approved dosage of Ameluz ® from one to three tubes per treatment.
Removed
The reduced LSA transfer price will allow the Company to finance such R&D activities and continue our commercial growth trajectory. Our principal licensed product is Ameluz ® , which is a prescription drug approved for use in combination with the BF-RhodoLED ® lamp series, for PDT, or PDT (when used together, “Ameluz ® PDT”).
Added
This approval allows healthcare professionals greater flexibility in addressing larger or multiple treatment areas for patients undergoing PDT for AK on the face and scalp, leading to greater convenience for both healthcare providers and their patients. In combination with the RhodoLED ® XL Lamp, providers can now treat a patient’s face more efficiently.
Removed
In the United States, the PDT treatment is used for the lesion-directed and field-directed treatment of actinic keratoses (“AK”) of mild-to-moderate severity on the face and scalp. AKs are premalignant lesions of the skin that can potentially develop into skin cancer (squamous cell carcinoma) if left untreated.
Added
Additionally, the change to the label and the RhodoLED ® XL are both foundational to support trunk and extremities which we expect to add to the label in the next couple years.
Removed
International treatment guidelines list PDT as the “gold standard” for treating AK, especially multiple AKs and the surrounding photodamaged skin. 1 We are currently selling Ameluz ® for this indication in the U.S. under the Ameluz LSA. Our second prescription drug licensed product in our portfolio is Xepi ® (ozenoxacin cream, 1%), a topical non-fluorinated quinolone that inhibits bacterial growth.
Added
Also, in October 2024, the Company received results in its Phase III trial evaluating its drug-device therapy, Ameluz ® with the BF-RhodoLED lamp, as a treatment for superficial basal cell carcinoma (“sBCC”).
Removed
Our exclusive license and supply agreement, as amended (“Xepi LSA”), with Ferrer Internacional S.A. (“Ferrer”) that was assumed by Biofrontera on March 25, 2019 through our acquisition of Cutanea Life Sciences, Inc. (“Cutanea”) enables us to market and sell this product in the United Sates.
Added
The primary endpoint was a composite of complete clinical and histological clearance of one preselected “main target” BCC lesion per patient 12 weeks after the start of the last PDT cycle. According to the phase III ALA-BCC-CT013 study, Ameluz®-PDT achieved 65.5% success, compared to 4.8% success achieved with placebo-PDT.

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