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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 8, 2023
Biofrontera Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-40943 | 47-3765675 | ||
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
|
120 Presidential Way, Suite 330 Woburn, Massachusetts |
01801 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (781) 245-1325
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common stock, par value $0.001 per share | BFRI | The Nasdaq Stock Market LLC | ||
| Preferred Stock Purchase Rights | The Nasdaq Stock Market LLC | |||
| Warrants, each warrant exercisable for one share of common stock, each at an exercise price of $5.00 per share | BFRIW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) (§240.12b-2 of this chapter).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On March 8, 2023, Biofrontera Inc. (the “Company”) issued a press release announcing its financial and operational results for the fourth quarter and fiscal year ended December 31, 2022. A copy of the press release is being furnished as Exhibit 99.1 attached hereto to this Current Report on Form 8-K.
The Company’s press release contains non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with United States generally accepted accounting principles, or GAAP. Pursuant to the requirements of Regulation G, the Company has provided within the press release quantitative reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
The information contained in this Item 2.02 in the Current Report on Form 8-K (including Exhibit 99.1 attached hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such information be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
| 99.1 | Press release dated March 8, 2023 | |
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| March 8, 2023 | Biofrontera Inc. |
| (Date) | (Registrant) |
| /s/ E. Fred Leffler | |
| E. Fred Leffler | |
| Chief Financial Officer |
Exhibit 99.1
Biofrontera Inc. Reports Fourth Quarter and
Record Full-year 2022 Financial Results
WOBURN, Mass. March 8, 2023 - Biofrontera, Inc. (NASDAQ:BFRI), a biopharmaceutical company specializing in the commercialization of dermatological products, today announced financial results for the three and twelve months ended December 31, 2022.
Highlights
| ● | Record 2022 annual Ameluz® revenues were 12% higher than previous record in pre-COVID 2019 | |
| ● | Grew share in our target market in 2022 by about 12% | |
| ● | Total revenues for the fourth quarter of 2022 grew 11% over the fourth quarter of 2021 | |
| ● | Total revenues for the year 2022 grew 19% over the year 2021 | |
| ● | Average revenue per sales rep grew approximately 20% over 2021 | |
| ● | Continued various education initiatives including seminars, medical conferences, prescriber networking and key opinion leader (KOL) engagement | |
| ● | Showcased our Ameluz therapy at three conference podiums including Fall Clinical, New Frontiers in Cosmetic Medicine & Medical Dermatology Symposium and Mount Sinai 25th Winter Symposium | |
| ● | 4 Poster publications in a peer reviewed dermatology journal, SKIN The Journal of Cutaneous Medicine | |
| ● | Education initiatives included a 3-part webinar series for CME credit, a 3-part video series with over 1,200 views and 4-part podcast series with over 1,400 views | |
| ● | Ameluz new marketing campaign earned “Relaunch/Revitalization of the Year” and “Professional Website/Online Initiative of the Year” awards |
Management Commentary
“2022 was a pivotal year for Biofrontera highlighted by our record annual Ameluz revenues, up 19% over 2021 and 12% higher than our previous record in pre-COVID 2019,” said Erica Monaco, Chief Executive Officer of Biofrontera Inc. “The company continues to make a measurable impact in the AK marketplace in terms of both awareness and market share, and we are pleased that we increased share in our target market by about 12%. We also completed much of the necessary investments to build out our commercial infrastructure including broadening our sales effort and growing our medical affairs, marketing and education tools. I am proud of what the Biofrontera team has accomplished in our first full year as a public company.”
“Our investments have created the necessary strong foundation upon which to execute our growth strategy,” continued Ms. Monaco. “We also believe there is a strong revenue growth potential with the current label for Ameluz®-PDT as we improve our sales coverage and continue to educate the market. Given our plans to expand our salesforce to 50–55 people over the next couple of years plus continued salesforce productivity improvements, we expect to grow 2023 revenues by at least 25% over last year positioning us well to be cashflow positive within approximately two years.”
Fourth Quarter Financial Results
Fourth quarter 2022 total revenues of $10.1 million, compared with $9.2 million in the fourth quarter of 2021. The increase was driven by continued growth in the sales of Ameluz, partially offset by shipping delays and some sales territory vacancies.
Total operating expenses were $15.8 million for the fourth quarter of 2022, compared with $11.0 million in the same period 2021. Cost of revenues in the quarter increased by $483 thousand from the fourth quarter of 2021. The increase was primarily due to higher sales of Ameluz. Selling, general and administrative expenses increased by $931 thousand over the fourth quarter of 2021 generally in line with the increase in revenues.
Net loss for the fourth quarter of 2022 was $2.8 million compared with a net loss of $14.5 million for the fourth quarter of 2021.
Adjusted EBITDA was negative $4.4 million for the fourth quarter of 2022, compared with negative $3.2 million for the fourth quarter of 2021. 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.
Full year 2022 Financial Results
Total revenues the full year of 2022 were $28.7 million, compared with $24.1 million for full year 2021. The increase was primarily driven by higher volume of Ameluz orders as well as an Ameluz price increase, partially offset by shipping delays and some sales territory vacancies.
Total operating expenses were $47.3 million for the full year 2022, compared with $49.3 million for the same period in 2021. Cost of revenues increased by $2.4 million compared with the prior-year period primarily due to higher sales of Ameluz. Selling, general and administrative expenses decreased by $1.3 million from full year 2021. This decrease was driven by the one-time legal settlement expense of $11.3 million recognized in 2021 offset by an increase in headcount costs as a result of resumed hiring in 2022 and a broad increase in the costs associated with being a public company.
Net loss for full year of 2022 was $640 thousand compared with a net loss of $37.7 million for the full year 2021.
Adjusted EBITDA was negative $18.1 million for the full year 2022, compared with negative $12.6 million for full year 2021.
Financial Expectations
Full-year 2023 revenue growth of at least 25%
Cash flow positive within approximately two years
Other Developments
The company will no longer regularly provide preliminary, quarterly revenue results. Management believes that, while the data was helpful during the first year as a public company, the revenue results will have more meaning when accompanied by the rest of the financial results and additional context from management discussion. The company continue to provide complete financial results accompanied by a management conference call at a normal quarterly cadence.
Conference Call Details
| Conference call: | Wednesday, March 8, 2023 at 4:30PM ET |
| Toll Free: | 888-506-0062 |
| International: | 973-528-0011 |
| Access Code: | 990014 |
| Webcast: | https://www.webcaster4.com/Webcast/Page/2948/47545 |
About Biofrontera Inc.
Biofrontera Inc. is 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. For more information, visit www.biofrontera-us.com.
Contacts:
Biofrontera Investor Relations
ir@bfinc.com
Forward Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, as amended to date. These statements include, but are not limited to, statements relating to the Biofrontera Inc.’s (the “Company”) revenue guidance for 2023, business and marketing strategy, revenue growth, development and expansion of the Company’s sales force and commercial infrastructure, sales force productivity, growth strategy, liquidity and cash flow, potential to expand the label of Ameluz®, available market opportunities for Ameluz®, ongoing clinical trials conducted by our licensing partners, and educational outreach efforts. We have based these forward-looking statements on our current expectations and projections about future events, nevertheless, actual results or events could differ materially from the plans, intentions and expectations disclosed in, or implied by, the forward-looking statements we make. These risks and uncertainties, many of which are beyond our control, including, but not limited to, the impact of any extraordinary external events; any changes in the Company’s relationship with its licensors; the ability of the Company’s licensors to fulfill their obligations to the Company in a timely manner; the Company’s ability to achieve and sustain profitability; whether the current global disruptions in supply chains will impact the Company’s ability to obtain and distribute its licensed products; changes in the practices of healthcare providers, including any changes to the coverage, reimbursement and pricing for procedures using the Company’s licensed products; the uncertainties inherent in the initiation and conduct of clinical trials; availability and timing of data from clinical trials; whether results of earlier clinical trials or trials of Ameluz® in combination with BF-RhodoLED® in different disease indications or product applications will be indicative of the results of ongoing or future trials; uncertainties associated with regulatory review of clinical trials and applications for marketing approvals; whether the market opportunity for Ameluz® in combination with BF-RhodoLED® is consistent with the Company’s expectations; the Company’s ability to comply with public company requirements; the Company’s ability to regain compliance with Nasdaq continued listing standards, the Company’s ability to retain and hire key personnel; the sufficiency of cash resources and need for additional financing and other factors that may be disclosed in the Company’s filings with the SEC, which can be obtained on the SEC website at www.sec.gov. Readers are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date on which they are made and reflect management’s current estimates, projections, expectations and beliefs. The Company does not plan to update any such forward-looking statements and expressly disclaims any duty to update the information contained in this press release except as required by law.
BIOFRONTERA INC.
Consolidated Balance Sheets
(In thousands, except par value and share amounts)
|
December 31, 2022 |
December 31, 2021 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 17,208 | $ | 24,545 | ||||
| Investment in Equity Securities | 10,548 | - | ||||||
| Accounts receivable, net | 3,748 | 3,784 | ||||||
| Other receivables, related party | 3,658 | 8,647 | ||||||
| Inventories | 7,168 | 4,458 | ||||||
| Prepaid expenses and other current assets | 810 | 4,987 | ||||||
| Total current assets | 43,140 | 46,421 | ||||||
| Other receivables long term, related party | 2,813 | 2,813 | ||||||
| Property and equipment, net | 204 | 267 | ||||||
| Operating lease right-of-use assets | 1,375 | - | ||||||
| Intangible asset, net | 3,032 | 3,450 | ||||||
| Other assets | 320 | 268 | ||||||
| Total assets | $ | 50,884 | $ | 53,219 | ||||
| LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,278 | $ | 658 | ||||
| Accounts payable, related parties | 1,312 | 282 | ||||||
| Acquisition contract liabilities, net | 6,942 | 3,242 | ||||||
| Operating lease liability, current | 498 | - | ||||||
| Accrued expenses and other current liabilities | 10,864 | 9,654 | ||||||
| Total current liabilities | 20,894 | 13,836 | ||||||
| Long-term liabilities: | ||||||||
| Acquisition contract liabilities, net | 2,400 | 9,542 | ||||||
| Warrant liabilities | 2,843 | 12,854 | ||||||
| Operating lease liability, non-current | 848 | - | ||||||
| Other liabilities | 21 | 5,649 | ||||||
| Total liabilities | $ | 27,006 | $ | 41,881 | ||||
| Stockholders’ equity: | ||||||||
| Preferred Stock, $0.001 par value, 20,000,000 shares authorized, zero shares issued and outstanding as of December 31, 2022 and 2021 | - | - | ||||||
| Common Stock, $0.001 par value, 300,000,000 shares authorized; 26,699,0002 and 17,104,749 shares issued and outstanding as of December 31, 2022 and 2021 | 27 | 17 | ||||||
| Additional paid-in capital | 103,370 | 90,200 | ||||||
| Accumulated deficit | (79,518 | ) | (78,879 | ) | ||||
| Total stockholders’ equity | 23,878 | 11,338 | ||||||
| Total liabilities and stockholders’ equity | $ | 50,884 | $ | 53,219 | ||||
BIOFRONTERA INC.
Consolidated Statements of Operations
(In thousands)
| Three Months Ended | For the Year Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Product revenues, net | $ | 10,074 | $ | 9,153 | $ | 28,541 | $ | 24,043 | ||||||||
| Revenues, related party | 70 | 15 | 133 | 57 | ||||||||||||
| Total revenues, net | 10,144 | 9,168 | 28,674 | 24,100 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Cost of revenues, related party | 5,114 | 4,592 | 14,618 | 12,222 | ||||||||||||
| Cost of revenues, other | 142 | 181 | 567 | 520 | ||||||||||||
| Selling, general and administrative | 10,087 | 9,100 | 35,137 | 36,512 | ||||||||||||
| Selling, general and administrative, related party | 121 | 177 | 733 | 697 | ||||||||||||
| Restructuring costs | - | 98 | - | 752 | ||||||||||||
| Impairment loss | - | - | - | - | ||||||||||||
| Change in fair value of contingent consideration | 300 | (3,100 | ) | (3,800 | ) | (1,402 | ) | |||||||||
| Total operating expenses | 15,764 | 11,048 | 47,255 | 49,301 | ||||||||||||
| Loss from operations | (5,620 | ) | (1,880 | ) | (18,581 | ) | (25,201 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of warrant liabilities | 1,121 | (12,801 | ) | 16,388 | (12,801 | ) | ||||||||||
| Change in fair value of investments | 1,747 | - | 1,747 | - | ||||||||||||
| Interest expense, net | (35 | ) | (89 | ) | (195 | ) | (344 | ) | ||||||||
| Other income, net | 3 | 270 | 33 | 689 | ||||||||||||
| Total other income (expense) | 2,836 | (12,620 | ) | 17,973 | (12,456 | ) | ||||||||||
| Loss before income taxes | (2,784 | ) | (14,500 | ) | (608 | ) | (37,657 | ) | ||||||||
| Income tax expense | 1 | 5 | 32 | 56 | ||||||||||||
| Net income (loss) | $ | (2,785 | ) | $ | (14,505 | ) | $ | (640 | ) | $ | (37,713 | ) | ||||
BIOFRONTERA INC.
Statement of Cash Flows
(In thousands)
| For the Year Ended | ||||||||
| December 31, | ||||||||
| Cash flows from/(used in) operations | 2022 | 2021 | ||||||
| Net Loss | $ | (640 | ) | $ | (37,713 | ) | ||
| Adjustments to reconcile net loss to cash flow used in operations | ||||||||
| Depreciation | 101 | 122 | ||||||
| Amortization of right-of-use assets | 653 | - | ||||||
| Amortization of acquired intangible assets | 418 | 418 | ||||||
| Change in fair value of investment in equity securities | (1,747 | ) | - | |||||
| Change in fair value of contingent consideration | (3,800 | ) | (1,402 | ) | ||||
| Change in fair value of warrant liabilities | (16,388 | ) | 12,801 | |||||
| Stock-based compensation | 1,852 | 129 | ||||||
| Provision for inventory obsolescence | 100 | 33 | ||||||
| Provision for doubtful accounts | 106 | 44 | ||||||
| Non-cash interest expense | 358 | 358 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | $ | (70 | ) | $ | (612 | ) | ||
| Other receivables, related party | 4,990 | (11,387 | ) | |||||
| Prepaid expenses and other assets | 4,154 | (3,809 | ) | |||||
| Inventories | (2,810 | ) | 2,592 | |||||
| Accounts payable and related party payables | 912 | (773 | ) | |||||
| Operating lease liabilities | (781 | ) | - | |||||
| Accrued expenses and other liabilities | (3,607 | ) | 12,484 | |||||
| Cash flows used in operating activities | $ | (16,199 | ) | $ | (26,715 | ) | ||
| Cash flows from investing activities | ||||||||
| Purchases of property and equipment | (38 | ) | (11 | ) | ||||
| Purchase of investments in equity securities | (5,118 | ) | - | |||||
| Cash flows provided by investment activities | $ | (5,156 | ) | $ | (11 | ) | ||
| Cash flows from financing activities | ||||||||
| Proceeds from issuance of common stock upon initial public offering, net of issuance costs | - | 14,943 | ||||||
| Proceeds from issuance of common stock & warrants in private placement, net of issuance costs | 9,391 | 14,995 | ||||||
| Proceeds from exercise of warrants | 4,629 | 13,238 | ||||||
| Proceeds from exercise of pre-funded warrants | 1 | 15 | ||||||
| Cash flows provided by financing activities | $ | 14,021 | $ | 43,191 | ||||
| Net increase (decrease) in cash and cash equivalents | (7,334 | ) | 16,465 | |||||
| Cash, cash equivalents and restricted cash, at the beginning of the year | 24,742 | 8,277 | ||||||
| Cash, cash equivalents and restricted cash, at the end of the year | $ | 17,408 | $ | 24,742 | ||||
BIOFRONTERA INC.
Adjusted EBITDA Reconciliation
(In thousands)
| Three Months Ended Dec 31, | Twelve Months Ended Dec 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net income/(loss) | $ | (2,785 | ) | (14,505 | ) | $ | (640 | ) | $ | (37,713 | ) | |||||
| Interest expense, net | 35 | 89 | 195 | 344 | ||||||||||||
| Income tax expenses | 1 | 5 | 32 | 56 | ||||||||||||
| Depreciation and amortization | 126 | 131 | 519 | 540 | ||||||||||||
| EBITDA | (2,623 | ) | (14,280 | ) | 106 | (36,773 | ) | |||||||||
| Change in fair value of contingent consideration | 300 | (3,100 | ) | (3,800 | ) | (1,402 | ) | |||||||||
| Change in fair value of warrant liabilities | (1,121 | ) | 12,801 | (16,388 | ) | 12,801 | ||||||||||
| Legal settlement expenses | 381 | - | 870 | 11,250 | ||||||||||||
| Expensed issuance costs | - | 1,383 | 1,045 | 1,383 | ||||||||||||
| Stock based compensation | 383 | - | 1,852 | 129 | ||||||||||||
| Change in FV of investments | (1,747 | ) | - | (1,747 | ) | - | ||||||||||
| Adjusted EBITDA | $ | (4,427 | ) | (3,196 | ) | $ | (18,062 | ) | (12,612 | ) | ||||||
| Adjusted EBITDA margin | -43.6 | % | -34.9 | % | -63.0 | % | -52.3 | % | ||||||||