Welcome to the Biofrontera Inc. Fourth Quarter and Full Year 2025 Financial Results and Business Update Conference Call.

At this time, all participants are in listen-only mode. After today's prepared remarks, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Ben Shamsian, with Lithium Partners Investor Relations. Please go ahead.

Thank you. Good morning, and welcome to Biofrontera Inc.'s fourth quarter and full year 2025 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 Inc.'s management will be making forward-looking statements, and actual results may differ materially from those stated or implied by these forward-looking statements. The risks and uncertainties associated with the company's business are detailed in and are qualified by the cautionary statements contained in Biofrontera Inc.'s press releases and SEC filings, including the company's Annual Report on Form 10-K for the year ended 12/31/2025. Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast. Biofrontera Inc. undertakes no obligation to revise 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 references to certain non-GAAP financial measures. Biofrontera Inc. believes these measures provide useful information for investors, yet should not be considered as a substitute for GAAP nor should they be viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in the press release issued today and is also available on the company's website at biofronteraus.com under the Investor Relations section. Please note management will be referencing adjusted EBITDA, a non-GAAP financial measure defined as net income or loss excluding interest income and expense, income taxes, depreciation and amortization, and certain other nonrecurring or noncash items, including changes in fair value of warrant liabilities, stock-based compensation, gain on sale of assets held for sale, and expense issuance costs. With that said, I would now like to turn the call over to Hermann Lubbert, CEO, Chairman, and Founder of Biofrontera Inc.

Yes. Thank you, Ben, and thank you to everyone joining us this morning. Fiscal year 2025 was a transformational year for Biofrontera Inc. I am proud to say that we delivered record annual revenues of $41.7 million, representing about 12% growth over the prior year, capped by a record fourth quarter in which we generated revenues of $17.1 million, the highest quarterly revenue in our company's history, representing approximately 36% year-over-year growth. These results demonstrate the strength of our commercial execution and the growing adoption of Ameluz PDT across the dermatology community. As a consequence of the amendment in the contractual relationship with our former parent company, Biofrontera AG, I will explain in a few minutes. Q4 2025 was highly profitable for Biofrontera Inc., with an adjusted EBITDA of $4.9 million and an additional capital gain of $700,000 from the Serpi Investigator divestment, resulting in net income of $5.6 million. Let me take a moment to summarize what we accomplished in 2025, which resulted in this profitable fourth quarter and set the stage for an exciting 2026 and beyond. In October 2025, we closed a new asset purchase agreement with our former parent company, Biofrontera AG. The financial consequences were active already as of June 2025. This transaction is one of the most significant milestones in our history. We acquired all U.S. rights, approvals, and patents for Ameluz and RhodoLED, including the New Drug Application, the Investigational New Drug Application, all manufacturing rights and contracts, and all intellectual property. In December 2025, the FDA formally transferred the NDA and IND to us, giving Biofrontera Inc. full regulatory control in the United States. We also completed the transfer of 11 U.S. patents, 10 U.S. patent applications, and 19 international filings and registered designs. The financial implications of these transactions are significant.…

Thank you, Hermann, and good morning, everybody. I am pleased to walk you through our commercial progress for 2025. As Hermann noted, we delivered record revenues in the fourth quarter and achieved approximately 11% annual revenue growth. That revenue growth was driven by approximately $4.1 million in organic volume growth. What I want to emphasize today is the underlying quality of that growth and the executional improvements that powered it. First, looking at Ameluz unit volume growth. Ameluz unit volumes for full-year 2025 increased meaningfully. Fourth-quarter unit volumes were particularly strong at approximately 49,840 tubes, bringing the full-year unit volume to approximately 121,000 tubes. This represents approximately 10% volume growth over 2024. These unit growth milestones underscore the effectiveness of the executional changes we implemented in 2025, which I will discuss later in this section. Looking at RhodoLED lamp placements, during 2025, we placed approximately 85 RhodoLED lamps within dermatology practices, including approximately 70 of the newer XL model. As of 12/31/2025, our installed base stands at approximately 745 lamps across approximately 686 dermatology offices nationwide. Looking at our commercial execution, our revamped commercial strategy centered on refined customer segmentation, a more focused and data-driven targeting approach, and increased accountability delivered tangible results in 2025. We saw a significant increase in sales call activity during the year and, importantly, increased in-person activity, which we know drives the highest impact with our customers. Looking a little deeper into the business, our 2025 churn rate, which is a measure of lost business from accounts that have purchased from us in the past year, was the lowest since 2021. On top of this, we were able to open over 150 new accounts and gain significant volume of Ameluz tubes through these new accounts. Additionally, we launched an inside sales pilot in Q4 to cover vacant territories, white space, as well as smaller accounts that were harder for our in-person sales team to reach. Based on the success of this pilot, we are planning for a full rollout of inside sales in 2026. Overall, I am very encouraged by what I have seen in my first six months at Biofrontera Inc. I am impressed by the talent and the drive of the team, and excited by the overall trajectory of the business. The growing installed lamp base, expanding customer adoption, continued commercial strategy refinement, and the potential for near-term label expansions in sBCC and AK of the trunk and extremities give us multiple vectors for continued growth in 2026 and beyond. I look forward to updating you on our progress in coming quarters. With that, I will turn the call over to Fred Leffler, our Chief Financial Officer, to walk through the financial results. Fred?

Thank you, George, and good morning, everyone. I will walk through our financial results for the fourth quarter and full year ended 12/31/2025. All comparisons are to the prior-year period unless otherwise noted. A full reconciliation of our GAAP to non-GAAP measures is included in the press release we issued earlier today and is available on our website. Starting with fourth-quarter 2025 results. Revenues for the quarter were approximately $17.1 million compared with $12.6 million in 2024. This is an increase of approximately 36%. This was the highest quarterly revenue in our company's history and was driven by strong Ameluz sales execution and pricing adjustments that we introduced in December 2025. Our related-party cost of goods sold, or COGS, decreased 45% year over year, driven by the transition from the transfer pricing model under our prior license and supply agreement to the significantly lower earn-out structure that came with the strategic transaction with Biofrontera AG that Hermann talked about a few moments ago. Under the new arrangement, the cost of revenues per unit declined steadily to about 15% compared with a range of 25% to 35% under the prior agreement. As a result, our gross profit on sales improved significantly, going from about 58% to 82% in 2025, which is a great outcome of all the hard work that everyone at Biofrontera Inc. put into this transaction. Total operating expenses for the quarter were $12.5 million compared with $14.3 million in 2024. With COGS excluded, costs were about $9.4 million in both years. Selling, general, and administrative expenses, SG&A, increased $300,000, or approximately 4%, to $4.8 million in 2025. This was mainly driven by legal costs. Research and development expenses were the same for the fourth quarters year over year at $800,000. This investment directly supported the clinical programs Hermann…

Thank you. We will now begin the question-and-answer session. Today's first question comes from Bruce Jackson at The Benchmark Company. Please go ahead.

Hi, good morning, and thanks for taking my questions. I want to talk about the gross margin improvement that you are anticipating for 2026. Fourth quarter was quite strong. How do you think it plays out over the course of the year? And is it going to drop and then ramp again? And where do you see it exiting 2026?

Yes, nice to talk to you again, Bruce. So the gross profit margins, we expect to be between 80% and 85%, and the reason for the range is because of the mix between Ameluz and device sales. But that has started on January 1, and we expect to be within that range from January 1 and throughout 2026.

And then, would you say you are going to be—how can I put this? Would you expect it to start at that 82% level and stay there? Or do you think it is going to be variable over the course of the year?

I think it is going to start there. As I said, it could fluctuate a little bit depending on the product mix in our revenue and cost of goods sold.

Okay. Okay. That is all I have got right now. Thank you.

Thanks, Bruce. Thank you.

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

Yes. Thank you. So if I summarize what we have said, first, we delivered record annual revenues and record first quarter revenues, demonstrating that our refined commercial strategy is working and that the Ameluz PDT platform continues to gain traction with dermatologists and their patients. Second, the completion of the strategic transaction with Biofrontera AG has fundamentally changed our business model. We now own and control all of our key U.S. assets, intellectual property, regulatory approvals, and manufacturing rights, and the new earn-out structure has materially improved our cost profile. The full annualized benefit of this new structure will flow through to our results in 2026. And third, our clinical pipeline is delivering results. We have a PDUFA date for superficial basal cell carcinoma in September 2026, positive Phase III results for AK on the extremities, and encouraging Phase II data in acne. Looking further ahead, we have planned studies in squamous cell carcinoma in situ and reduced-pain PDT. Biofrontera Inc. is the only company in the United States running FDA-controlled clinical studies in PDT for dermatology, and our patent protection extends through 2043. And finally, the combination of revenue growth, lower cost of revenues based on our new contracts, and disciplined expense management led to a strong profit in Q4, the first quarter where the new cost of goods became fully effective, and we expect these to meaningfully improve our financials in 2026 as we continue to advance towards cash flow breakeven. I want to thank our entire team for their dedication and hard work. I also want to thank our shareholders, the healthcare professionals who use our products, and, most importantly, the patients whose lives we are helping to improve in the fight against skin disease. Thank you all for your continued support. Have a wonderful day.

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