Dear ladies and gentlemen, welcome to the conference call of Biofrontera AG. At our customer's request, this conference will be recorded. As a reminder, all participants will be in a listen-only mode. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] May I now hand you over to Pamela Keck, Head of Investor Relations who will lead you through this conference. Please go ahead, madam.

Thank you. Hello and welcome to Biofrontera's earnings conference call for the first half of 2020. Yesterday, we issued a press release announcing financial results for the six months ended June 30, 2020. We encourage everyone to read the press release as well as the interim report both of which are available on Biofrontera's website at www.biofrontera.com. Please note that certain information discussed on the call today is covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that during this call, Biofrontera's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. All risks and uncertainties are detailed in and are qualified by the cautionary statements contained in Biofrontera's press releases and SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast today, August 27. Biofrontera undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this call. And with that, I would now like to turn the call over to our CEO, Hermann Lübbert. Hermann Lübbert: Thank you, Pamela. And thank you very much ladies and gentlemen for taking the time to participate in today's call. With me today is Thomas Schaffer, our Chief Financial Officer. He will present the financial results in a second. I will then afterwards summarize the general business development and clinical updates and will provide an update on the current status of our commercial efforts. I will then also briefly comment on some strategic topics. But first let's have a look at the financial results for the first six months of 2020. For that, I would like to hand over to Thomas Schaffer.

Thank you, Hermann and thank you to everyone on the call for joining us today. I would like to start by giving you an overview of the financial results for the first half of 2020. In the first six months, we achieved a total revenue of €16.1 million, an increase of approximately 16% compared to the same period last year. This however includes the onetime payment from Maruho under the license agreement, which we signed in April this year. Revenues of €9.7 million were generated from product sales, a decrease of 30% compared to the first half of 2019. Sales particularly in the second quarter were strongly influenced by the effects of the global coronavirus crisis. Product sales in the United States experienced a significant impact due to the pandemic and amounted to €6.3 million almost 38% less than in the first half of 2019. This amount included €0.2 million from product sales of Xepi. Given the circumstances, sales in Germany developed very positively. In the first six months of 2020, we were able to generate €2.4 million, an increase of 10% compared to the previous year. Product sales in the remaining European countries amounted to €1 million compared to €1.4 million in the prior year period. Gross profit increased by €3.2 million in the first six months of 2020 to €14.6 million, compared to €11.4 million in the previous year period. The gross margin increased to 91%, compared to 82% in the same period of last year, mainly due to income from the onetime payment from Maruho under the license agreement, which does not have any directly associated cost of sales. Research and development costs of €2.4 million for the first half of 2020 was slightly above last year's level of €2.3 million and include costs for clinical costs…

And we will now begin our question-and-answer session. [Operator Instructions] The first question is from Thomas Flaten of Lake Street Capital Markets. Your line is now open.

Thank you. Good morning. And thanks for taking the question. Just a couple of questions on the financials. Thomas in your comments you mentioned that operating expenses would be back to Q1 levels in Q3, Q4. Does that include the sales line as well? Because that was significantly down and I'm assuming that's because of cost cutting reductions in the U.S. So I just wanted to confirm that we're expecting a significant rebound in sales costs as well.

Yes. That includes all cost profit, yes, and also the sales cost, so. Our sales costs are mainly driven by two factors. One is the personnel expenses, which were reduced significantly due to short-term work in Europe and the furlough program we had in the United States, but also in the United States due to some layoffs. And the second factor is, just the marketing expenses, marketing projects that we pursue. So I would think, as revenue grow in Q3 and Q4, we would then also be able to invest a little more into our marketing projects, thus compensating for at least some of the expenses that we saved due to the layoffs. Sorry.

And then with respect to the revenue guidance, so if we take out the payment from Maruho and just for round numbers say that there was about €10 million of product sales in the first half, you're looking at about a doubling of product sales in the second half over the first half to meet that guidance, am I understanding that correctly?

That's correct.

Okay. And then just one final one is there anything qualitative you could provide us with respect to experience in sales in the U.S. in July and August? I know you said you had a nice rebound, in May and June. What we've heard from a number of other companies is that, levels in July were similar to pre-COVID time. Some people have referred back to 2019. Is there anything qualitative you could share there, with respect to what you're seeing in the rebound? Hermann Lübbert: I think we can say a couple of words to that. If you -- if we look back to last year last year we had a very strong seasonality in our sales. This also relates to the expectation of two-thirds of the sales, in the fall. That's exactly what we saw last year. And the PDT market is weak in summer. Now this year what we see in July and August is quite similar. Sales actually to what we had last year but those were the low summer sales. And the big question is will we see the same upswing in the fall, that we saw last year or perhaps even more, since there may be pent-up demand or is that not going to happen or at a lower pace. So that's really the question that we are asking ourselves and that obviously we are not able to answer yet but we are we are actually quite confident that we see a strong market development in the fall similar to last year.

That's great. And then, sorry just one more, with respect to your cash position with the recent raise which was obviously successful you mentioned Thomas that, you had solved the going concern question through April of next year. But if we just maybe think about that a little bit differently, with the cash you have on hand right now and operations that you're projecting what is your cash runway? Is it beyond April of 2021, or should we use that as the date for current cash reserves?

I thought I'd have a question of at this point in time you made that going concern assumption. The €5 million was an assumption. The financing requirement of €5 million was an assumption that we made when we published our last year's financial report. That was in April and we had to explain how much more financial needs do we have to continue operations for another 12 months. So, now we have a going concern assumption based on the June 30th financials. So, that also means we have sufficient liquidity to finance our operations at least until 12 months after June 30th. So, the liquidity that is available to the company goes beyond that date.

Excellent. Thank you very much for taking the questions.

Thank you.

The next question is from Bruce Jackson from The Benchmark Company. Your line is now open.

Hi, thank you for taking my questions. So, in addition to the changes in the sales and marketing organization in the United States, I believe there's going to be a change in 2021 to the reimbursement codes for cryotherapy. Can you run through that real quickly and describe how that might be an advantage for Ameluz?

The biggest change we expect in 2021 with respect to reimbursement isn't really the cryo codes. It's the remuneration the doctors will get starting in January for an office visit. And this office visit will be remunerated much better than in the past. Now, what happened is that in the past, when a patient came into a doctor's office and the doctor did nothing to that patient except diagnosis and write a prescription, he got a certain amount of money. And if he did a cryo at that visit, then he got -- he could file the cryo code. But this code is exclusive of the code used to document the office visits. So, he can get either/or. So, the tendency was to do cryo at the same visit and take the much higher cryo code. Now, this office visit code will be raised to pretty much the same level where the cryo code is. So, if in the future a doctor decides to do cryo, he will not get additional money. Now, with PDT, when a doctor -- when a patient visits a doctor, the doctor gets the office visit code. And usually for PDT, the patient is rescheduled. Now in that second visit, then the doctor can only claim the PDT code. It's also exclusive similar to the cryo code, but since it's always done in a separate visit, it doesn't really eliminate the office visit code. Now, for the doctors, the situation is now that either they do the cryo in the first visit and then they have to do it for free basically or they reschedule the patients for a second visit where they do the cryo and only then they get paid. And this eliminates a major advantage of cryotherapy compared to PDT.

Okay. And then with the timing of the FDA submissions for the XL and the PK/PD study, you said second half of this year. Should we be thinking more like fourth quarter in terms of the timing? Hermann Lübbert: Yes. It will be towards the end of the year. The – we have some delays in the program and our development program, which are mostly related to the availability of parts. Those parts we have to buy from other companies. And a number of these companies currently have difficulties with delivering these parts and that's where the delays actually come from. We are still – we are very confident that we – at least right now we are confident that we will be able to still file around the end of the year or before the end of the year. And I hope that we won't hear any – of any major catastrophe with respect to the availability of parts before that. As you know we have to manufacture a zero series of at least a few lamps with the final procedures and then the protocols for this zero series manufacturing are part of the documentation that you have to submit to the FDA. So before we can successfully manufacture lamps we can also not submit.

Okay. Got it. And then lastly on the seasonality trends in the second half, you also have the timing of price increases. Do you have any plans for a price increase this year? And when might that be?

Last year we increased the price – or this year, we increased the price on January 1, which is what many pharmaceutical companies do, at least a small price increase. To which extent we will do this also next year, we haven't decided yet.

All right. That’s it for me. Thank you. Hermann Lübbert: Thank you, Bruce.

[Operator Instructions] If there are no further questions I hand back to the speakers. Hermann Lübbert: Yes, then I would like to thank you again for attending the presentation and for your interest at the time you have spent. Thank you very much and have a nice day. Bye-bye.

Bye.

Thank you very much. Bye-bye.

Ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect now.