Biofrontera Inc. Q4 FY2025 earnings call

• Fiscal year 2025 was transformational with record revenues. The company delivered record annual revenues of $41.7 million and a record fourth quarter. - Closed an asset purchase agreement with former parent company BioFrontera AG, acquiring U.S. rights, approvals, patents, etc. - Secured $11 million in funding through a private placement and sold Xeppy antibiotic cream for initial proceeds of $3 million with potential milestone payments. - Made remarkable clinical progress: submitted a supplemental new drug application for SBCC to the FDA, which was accepted with a PDUFA target action date of September 28, 2026; announced positive phase three results for AK on extremities and plan to file a supplemental NDA in Q3 2026; announced positive phase two results for acne. - Strengthened patent portfolio with approval of new amylose formulation and positive outcome in patent dispute with Sun Pharma. - Commercial execution: Amalu's unit volumes increased, roto-LED lamps placed, low churn rate, over 150 new accounts opened, and an inside sales pilot in Q4 with plan for full rollout in 2026.

Fiscal year 2025 had record annual revenues of $41.7 million, representing about 12% growth over the prior year. The fourth quarter generated revenues of $17.1 million, the highest quarterly revenue in the company's history, approximately 36% year-over-year growth. Related party cost of goods sold decreased 45% in Q4 2025. For the full year 2025, related party cost of goods sold decreased by $7.7 million or 43% to $10.1 million from $17.9 million in 2024. The gross profit on product sales improved significantly, going from about 50% to 74% for the full year of 2025, and the company expects the full benefit of the new cost structure to be realized on an annualized basis in 2026, with gross profit margin expected to range between 80 and 85%.

• Expect gross profit margins between 80 and 85% in 2026. - The full annualized benefit of the new cost structure from the strategic transaction with BioFrontera AG will flow through to results in 2026. - First quarter 2026 will see the new cost of goods fully effective, expected to meaningfully improve the financial trajectory towards cash flow breakeven.

• Risks associated with forward-looking statements where actual results may differ materially. - Risks detailed in press releases and SAC filings. - Sun Pharma may seek further review on the patent decision found in their favor. - Dependence on clinical trial outcomes and regulatory approvals for product launches and market adoption.

Q: Talk about the gross margin improvement that you're anticipating for 2026. The fourth quarter was quite strong. How do you think it plays out over the course of the year, and is it going to kind of drop and then ramp again, and where do you see it exiting 2026?

A: Yeah, nice to talk to you again, Bruce. So the gross profit margins we expect to be between 80 and 85%. And that the reason for the bit of the range is because of the mix between analytics and device sales. But that that is started on Jan one, and we expect to be within that range from Jan one and and throughout 2026. And then, would you say you're going to be? How can I put this? Would you expect it to kind of like start at that 82% level and stay there, or do you think it's going to be variable over the course of the year? I think it's going to start there, and like I said, it could fluctuate a little bit depending on the product mix in our revenue and cost of sales.