Welcome to the Biofrontera Incorporated Fourth Quarter 2023 Financial Results and Business Update Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Andrew Barwicki with Barwicki Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Biofrontera Incorporated's fourth quarter fiscal 2023 financial results and business update conference call. Please note that certain information discussed during today's call by management is covered under the safe harbor provisions of the Private Securities Litigation Reform Act. We caution listeners that Biofrontera's management will be making forward-looking statements and that actual results may differ materially from those stated or implied by these forward-looking statements due to 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 release and SEC filings. Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, March 18, 2024. Biofrontera undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law. During today's call, there will be reference to certain non-GAAP financial measures. Biofrontera believes these measures provide useful information for investors, yet should not be considered as a substitute for GAAP, nor should they be reviewed as a substitute for operating rules determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in this Friday's press release. More specifically, management will be referencing adjusted EBITDA and non-GAAP financial measures defined as net income or loss excluding interest income and expense, income taxes, depreciation and amortization, and certain other non-recurring or non-cash items. With that said, I would like now to turn the call over to Hermann Luebbert, CEO, Chairman, and Founder of Biofrontera. Hermann?

Yes. Thank you, Andrew. And my thanks to everyone joining us this morning. On today's call, I'll provide an overview of our accomplishments and [patent] (ph) strategy that occurred during the second part of 2023 and how these changes help lay the groundwork for many value-driving initiatives in 2024 and beyond. Additionally, we have had some significant successes already in the first quarter of 2024 that I will touch upon. Fred Leffler, our CFO, will follow with a discussion on financial results, and then both of us will be available to answer questions after our prepared remarks. Starting with the business update, we have made tremendous progress across three critical areas, including: first, optimizing our customer-facing teams to provide the right support and services to our customers; second, controlling our cost structure and improving our balance sheet; and third, advancing R&D and assuming all clinical initiatives on Ameluz starting June 2024. This tremendous progress has been realized by investors. Following the renegotiation of our license and supply agreement for Ameluz with dramatic deduction -- reductions in the transfer price we paid to Biofrontera Group in Germany, we very recently secured financing of $8 million and expect another tranche of $8 million in Q2. These proceeds will be used to finance our ongoing commercial organization and support the clinical activities for further Ameluz development, which, as mentioned, we will take over from the German Biofrontera Group in June 2024. I would like to comment all our employees as we announced net revenue of $34.1 million, a record for Biofrontera, and a 19% increase for the year. While Ameluz makes up for most of our revenue, we are also proud to share that 123 BF-RhodoLED lamps were placed at physician offices during the year, compared to 66 placed in 2022, an increase…

Thank you, Hermann. And it is great to be talking -- excuse me, talking with everyone again. I will start with our fourth quarter 2023 results. Total revenue for the fourth quarter of 2023 were $10.6 million, an increase of $0.5 million or about 4% compared with $10.1 million for the fourth quarter of 2022. This reflects the continued adoption of Ameluz, but was impacted by -- impacted more than anticipated by a buy in prior to a price increase at the beginning of the quarter. Total operating expenses were $14.5 million for the fourth quarter of 2023 compared with $15.8 million for the fourth quarter of 2022. Cost of revenues were $5.4 million for the fourth quarter of 2023 compared with $5.3 million for the prior-year quarter [Technical Difficulty] compared with $10.2 million for the fourth quarter of 2022, with the decrease primarily driven by lower personnel costs. Net income for the fourth quarter of 2023 was $3.5 million or $1.65 per share compared with a net loss of $2.8 million or a loss of $2.16 per share for the prior-year quarter, with all share -- with all per share figures on a split-adjusted basis. Adjusted EBITDA for the fourth quarter of 2023 was negative $3.2 million compared with negative $4.4 million for the fourth quarter of 2022, reflecting higher revenues partially offset by increased SG&A costs. Adjusted EBITDA, a non-GAAP financial measure, is defined as net income or loss excluding interest income and expense, income taxes, depreciation and amortization and certain other non-recurring or non-cash items. I'll refer you to the table in the news release we issued on Friday, March 15 for a reconciliation of GAAP to this non-GAAP financial measure. Now turning to our full year 2023 results. Total revenues for 2023 were $34.4 million compared…

We will now begin the question-and-answer session. [Operator Instructions] The first question is from Jonathan Aschoff with ROTH. Please go ahead.

Thank you, guys. Good morning. And I want to ask about just your trials. Acne, what is the patients' enrollment number and the timing to data?

Hi, Jonathan. In the acne Phase 2 trial, about half of the patients are currently enrolled, little more than -- between 50% and 60% are currently enrolled. And we expect to complete enrollment until the end of the year and then have data available in the middle of next year.

Okay. And then, how about the same two questions for peripheral AK?

So, peripheral AK study has similar enrollment actually. The data will probably come slightly after the acne trial data because the patients are longer in the trial. But...

Okay. So, 2H '25 maybe? Okay. Like 2H '25 for data you would think?

Yes.

Second half of '25. And then, how about enrollment for BCC data? Is that still tracking for mid-'24 or like a few months from now something like that?

Enrollment was completed already.

No. With the data tracking -- data timing, is that still the middle of this year?

Data should be of the -- clinical part of the study should be after the middle of this year and follow-up then in the first half of next year.

Okay. Thank you, Hermann. If I may go to the portable lamp, can you make any estimates as to when derms might have access to the portable lamp?

The portable lamp will still need some time, of course, before it hits the market. That's something that we see on the market in the next two years, just to be clear. However, we believe that this will be a significantly easier entry into PDT for offices that so far haven't been able to do PDT because they don't have sufficient space. And it will also help our reps to actually take a lamp around and do live demonstrations in doctors' offices [on label] (ph). And furthermore, the doctors will have the chance to take the lamp and do -- offer PDTs in retirement homes. So, it will provide much more flexibility to the way in which PDT can actually be done.

Okay. And I think I missed what you had said. The XL lamp, was that going to come on to the market in force by the end of the year, is that what you said?

No, Q2.

Q2 of this year?

Of this year, yes.

All right, excellent. So guys, can you definitely sell all of the annual minimum purchases of Ameluz you must make with the new transaction terms? Like, is that a layup to sell the minimum that you have to buy?

Jonathan, yeah, this is Fred. Yeah, we believe that is, as you put it, a layup. And yeah, the minimums associated with the LSA restructuring should be easily achieved going forward.

Okay. Lastly, you've moved to using the term two-digit growth. I mean that starts with 10%. I would hope that your growth this year over last year would be double that and that that would not be a stretch. Is that a fair way to look at it that 20% would not be a stretch?

Yeah, it ends with 99%, Jonathan, but you are right. I think that we expect similar to growth that we have seen over the past couple of years. And if we maintain that trajectory going forward and as I mentioned depending on how we deploy the spend associated with the clinical trials that we're taking over in June, we should be breakeven in approximately 12 to 18 months.

Okay. Thank you very much, guys.

Thank you, Johnathan.

[Operator Instructions] The next question is from Bruce Jackson with The Benchmark Company. Please go ahead.

Hi, good morning. A question about the sales and marketing efforts. So, have there been any changes to the sales force in terms of numbers? And is the turnover stable?

Yeah, we did, in fact, decide to reduce the sales force slightly in favor of growing the other service functions that are required to actually make the -- help the sales force to be successful. So, currently we have 32 reps out there and seven managers of these 32 reps. What was the second part of the question?

The second -- yeah, so the question, any change in the turnover, so with the reps that you've got right now, is it stable?

Yeah, the turnover is, of course, something that is a problem to every company. When we compare our turnover in the sales force with other companies, so with the industry average, then we are still below that, which is good. On the other hand, we still try to do everything we can to reduce the turnover even further.

Okay, great. And then, getting back to Fred's comments on the sales growth for the coming year, the double digit, you've done roughly 19% year-over-year for the past couple of years. If we like honed in on that number, would that be a reasonable target to begin with?

I think that's a reasonable target. Our CAGR, since 2020, has been 22%. So, yeah, I think those are the two numbers that you could take a look at and I think around that would be a reasonable estimate.

Okay. And then, last question for me. Sometimes the timing of the price increases can have an impact on the calendarization of the quarter. So, what would be looking for this year? Would it be similar to 2023 or might there be any differences?

We're still evaluating our pricing strategy and things like that. We haven't made a concrete decision on any price increases yet for 2024.

So, in terms of like the seasonality of the revenue by quarter then, can we assume it looks similar to 2023?

Yes. I think that's a good working assumption, and if any changes come to that, we will certainly update everyone.

Okay. Great. Thank you very much.

Thank you, Bruce.

Thank you.

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

So, we believe that we had a very successful year in 2023 that we had some transformational changes to the company that makes the status of the company and future of the company look much brighter than what we were looking at a year ago. And with that, I would like to thank all our employees again to taking the company to where we are now. And thank you for taking the time to listen in. Thank you.

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