Dear ladies and gentlemen, welcome to the conference call of Biofrontera AG to discuss Full Year 2019 Financial Results. 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.

Thank you and good morning. Welcome to Biofrontera’s earnings conference call for the full year 2019. Yesterday, we issued a press release announcing financial results for the fiscal year ended December 31, 2019. We encourage everyone to read the press release as well as the annual report both of which are available on our website. 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, April 21, 2020. Biofrontera undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call. With that, I would now like to turn the call over to Hermann Lübbert, our CEO. Hermann? Hermann Lübbert: Yes. 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 CFO. I will summarize the general business development and clinical updates achieved during 2019 and will provide an update on the current status of our commercial efforts. Mr. Schaffer will then present the financial results for the year. Over the course of 2019, we continued to achieve tremendous growth with sales growing 48% over the previous year. In addition to all commercial success, we continued to expand our market…

Thank you, Hermann, and thank you everyone for joining this call today. Good morning, good afternoon, wherever you are. I would now like to give you an overview of the financial results for the full year ended 2019 and provide our outlook for 2020. For the full year 2019, we achieved the total revenue of approximately €31.3 million compared to approximately €21.1 million for the full year 2018. This corresponds to revenue growth of approximately 48% year-over-year. I would like to note that the fourth quarter of 2019 was our best quarter ever achieving our highest quarterly sales, which were driven by significant growth in our U.S. business, as well as by growth in Germany and Spain from the increased acceptance of daylight PDT. Sales in the United States which now account for 75% of total sales grew 57% to approximately €23.3 million compared to €14.9 million for 2018. Growth was due to the continued expansion of our sales structures and improvements in the reimbursement of PDT for dermatologists in the U.S. Sales in Germany amounted to around €4.6 million for the full year 2019 compared to approximately €3.3 million in the year before. This corresponds to an increase of 40%. The increase in sales in Germany is mainly due to the introduction of daylight PDT. Our sales in the other European countries decreased in the reporting period by 5%, to approximately €2.6 million compared to approximately €2.7 million in 2018. The decline was primarily due to a decline in deliveries to license partners. I would like to mention though that despite the substantial price reduction in Spain, the volume growth offset these price reductions and led the sales growth of approximately 10% as the number of prescriptions of Ameluz continues to accelerate. Gross profit increased by €9.7 million to…

Thank you very much, and we will now begin our question-and-answer session. [Operator Instructions] And we’ve received the first question, it is from Bruce Jackson of The Benchmark Company. Please go ahead, your line is now open.

Thank you. Good morning. The first place, I’d like to start is with the cash position, and you’re going to be receiving the €6 million payment from Maruho. Is that going to be booked in the first quarter or the second quarter? Hermann Lübbert: That will be booked in the second quarter. We signed the contract yesterday and we expect the payment from Maruho within the next few days.

Okay. And then, you were discussing the operating expenses were originally expected to be flat over 2019. Looking forward, we don’t have much visibility on the revenue side, but maybe we’ve got some visibility on the expense side of things. Where do you – where do you think the expenses could land right now and what proportion of that is fixed costs? Hermann Lübbert: Well, we – unfortunately, we can’t really give a guidance for the remainder of the current financial year. However, with the cost measures in place, we certainly expect a significant reduction in our costs compared to the previous years. Our costs are mainly driven by our personnel expenses. So, force along we – we keep the headcount and the employees that we currently employ, these costs are pretty much fixed. If we wanted to make further significant cuts in our costs that would require layoffs and we certainly try to avoid this if at all possible.

Okay. Last question on the cost side, last year we had the litigation expense, it was fairly active. Is that going to be reduced in 2020 or about the same or what’s the trend for the litigation costs? Hermann Lübbert: Well, legal costs are to – the vast majority of our legal costs refer to the defense of the DUSA litigation. And as the trial stands now, these costs are – I don’t want to say down to zero, but they significantly reduced, as we are waiting for the judge to come forward with a plan as to how this drug is going to go forward. Most of the costs spent were during the investigation period that requires a lot of hours.

Okay. Thank you for taking my questions. I’ll hop back in queue. Hermann Lübbert: Thank you, Bruce.

Thank you. The next question is from Thomas Flaten of Lake Street Capital Markets. Please go ahead, your line is now open.

Thank you, and thanks for taking the questions. Just following up on the questions with respect to cost-cutting, I think you mentioned that you had a 20% reduction enforced in the U.S. Can you comment on, was that primarily on the commercial organization or can you provide some color on where those reductions took place? Hermann Lübbert: They were across the organization, both field–based people as well as office based people.

And just switching gears, the first quarter sales you pre–announced on Friday, the first quarter numbers, which were a bit below, certainly our expectations for where the first quarter could come in, given everything that’s going on. Could you provide some color on the sequence of events in the first quarter, were things proceeding to plan until the middle of March when it seems that most companies started seeing COVID impact or can you provide some, just some commentary around how the first quarter evolved relative to your expectations?

Yes. We can certainly do that. So when we went into the year, the first quarter was quite strong in Europe. So most European – or all our European markets particularly Germany was above – strongly above budget. And then the sales dropped close to zero on the middle of March. And still, Europe came out pretty much at budget more or less by the end of March, because it had been so strong before that. The U.S. market hasn’t been as strong, in January particularly we were still seeing effects of some stocking that went on by the end of last year due to the current price increase on January 1st. So the U.S. went comparably slowly into the year, picked up in February and then by the beginning of March was actually where we expected U.S. sales to be, and we thought it would still be a very strong quarter when this pandemic actually happened and then all the offices either closed down or they are trying to avoid seeing patients in physically, in the offices.

So, for the sales team that remains in place, are there activities that they’re conducting either virtually or some other way to continue educating because I’m assuming physicians are still available to be contacted may be outside of the office setting obviously, but can you comment on any ongoing commercial activities you have going on? Hermann Lübbert: This is again different between Europe and the U.S. because of the different approvals. In Europe, the major focus obviously right now is to use some sort of distant approaches like sending letters or telephone calls to advertise daylight PDT and the new label extension that we had. While in the U.S. the reps try to stay in touch with the customers through the same kind of measures, but not so much with the goal of short–term selling because nobody is going to buy now, but with the goal of preparing the upswing that we expect once the offices can open again. So most of the time, what the – what our reps do is try to stay in touch with the customers as good as possible and at the same time analyze the customer market, the PDT market and try to prioritize the customers better particularly with respect to the balance between Ameluz and Xepi and use the time that we have now to again prepare for what comes after this entire thing is over.

And then one final question assuming that you are able to raise the capital following approval of the May shareholders meeting. Given your cash position today, what kind of cash runway does that provide you against your maybe most conservative models internally? Hermann Lübbert: That’s never a guarantee, but in all likelihood this should be more than sufficient to bring the company to breakeven.

Excellent. Thank you so much for taking the questions. Hermann Lübbert: Thank you, Thomas.

Thank you. Then we’ll now take the questions of Bruce Jackson. Your line is now open.

Hi, thanks for the follow-up questions. First, so you said that the FDA trial designed for acne is ready to go and you are ready – you are prepared to start the trial, can you maybe give us a few details on what that trial is going to look like in terms of the number of sites, the number of patients you have to recruit, things like that? Hermann Lübbert: Yes, certainly. So the total – the first trial will be a Phase 2b trial in which we look at different incubation times. So, if you recall, the process of PDT, first the drug is applied and then there is an incubation, which first of all allows the active ingredients to enter the cells and then the active ingredient has to be metabolized to the actual, a light–sensitive compound and that takes a certain time and the longer you wait, the more sensitive the skin eventually gets for the PDT treatment. And so here, we will look at different time points and form different groups of 30 patients each to actually compare the effect in these – with different incubation times.

So 30 patients each for how many groups? Hermann Lübbert: Three groups.

Three groups, okay. And then if we could move over to Xepi, the availability of the reimbursement is certainly a positive development. One of the other questions about Xepi was the marketing channel piece of it. So the dermatologists do prescribe some of it, I believe there is also a fair amount that is used in hospitals. So how do you feel about your channel coverage for Xepi and is there a different marketing strategy for the product compared to Ameluz? Hermann Lübbert: Yes, there is certainly a different marketing strategy in that Ameluz is a buy-and-bill drug. So we sell directly to the doctor and the doctor has to buy the drug with his personal money and then try to get reimbursement afterwards, while Xepi is a normal drug, like most other drugs that are actually bought into the pharmacy and then sold out of the pharmacy if a patient presents with a prescription. And here, we still have an open issue with Xepi. So when we took the product over, there were basically three major issues that we had to work on. One was reimbursement, and we have been very successful with that one, with pretty much 150 million people are now covered without any restrictions and the second was an improved and more adequate with respect also to our profit, more adequate co-pay system, which we introduced in April 1. And now the next step would be to then improve the availability in local pharmacies and this is a little bit of a catch-22 situation, if you sell little, then the pharmacies won’t stock it. And then if a patient comes, it takes a while to actually get the product. And obviously, since we are looking at an acute infection, the patient wants treatment to start immediately and not wait a day or two for the product to arrive and this is currently bridged with a sample that we give to the doctors, but that is a solution, which we hope is temporary and with growing sales we can actually move away from that and make the product readily available at local pharmacies.

Okay. Okay, great. And then the last question from me, with the branded generic project with Maruho, what’s the next step for that project? Hermann Lübbert: Well, the next step for that would be clinical trial. So, it would go straight into Phase 2 and so we are actually looking at bringing this into dose-finding studies.

Okay, great. Thank you very much. Hermann Lübbert: Thank you.

Thank you. As there are no further questions, I would like to hand back to you. Hermann Lübbert: Well, then I would like to thank you all again for the time that you took to participate in this telephone conference and the interest in Biofrontera and wish you a very nice day. Thank you.

Yes. Thank you very much and stay healthy everyone.

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