Q2 2021 Biofrontera AG Earnings Call
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Investor Relations will lead.
This conference. Please go ahead.
Thank you good morning, good afternoon, and welcome to buy it from Trs earnings Conference call for the first six months ended June 30th 2021.
Yesterday, we issued a press release announcing financial results for the six months ended June 30th 'twenty 'twenty. One we encourage everyone to read the press release as well as the half year report both of which are available on our website.
Please note that certain information discussed on this call today.
Covered under the Safe Harbor provisions of the private Securities Litigation Reform Act, we caution listeners that during just caused by <unk> 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 <unk>.
Business.
All risks and uncertainties are detailed in and are qualified by the cautionary statements contained in <unk> press releases and SEC.
This conference call contains time sensitive information that is accurate only as of the date of this live broadcast today August 20th 2021 by a frontier undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances.
But the date of this call.
And with that I would now like to turn the call over to Hermann liberate our CEO.
Yeah.
Okay.
Herman you might be on mute.
Yeah.
I was on mute.
Yeah. Thank you Pamela.
Thank you very much ladies and gentlemen for taking the time to participate in today's call.
With me today is slow takes lotto, our CFO he will present the financial results in the second following that I would like to share with you updates regarding <unk> and the regulatory clinical development as well as the current business performance and activities.
But first now to the financial results of the first six months of 2021 for that I would like to hand over to Ludwig.
Thank you Herman and thank you all for joining us today.
To start by providing you with an overview of the financial results for the first six months ended June 32021.
Following the challenges, resulting from the COVID-19 pandemic the company company's sales experienced a slow start into the first half of 2021. However from mid March onwards, a clear recovery in sales development became apparent this.
Includes our key market the USA, where we have been generating sales comparable to pre pandemic levels again since mid March more information on that in just a moment.
Yeah.
General revenue development of the group for the period January one to January 32021 wells into a group generated a total of <unk> <unk>.
$14.1 million.
A 19% decrease to two.
To $16.1 million in the same in sales in the same period of last year. However, I'd like to draw your attention to the fact that total revenue in 2020 reporting period included a onetime payment of 6 million euros received under a license agreement in April 2020.
For this reason we believe it is important to compare revenue generated from actual product sales and as such revenues from product sales in the first half of 2021 were $13.1 million Euro and that is up 35% compared to $9.7 million euros in the first half of 2020.
The year on year sales recovery, which we already perceived in mid March, especially in our largest market. The U S continued certainly to a large extent.
Attributable to the recovery of the general pandemic situation in the U S as well as in Germany.
Due to the pandemic and for better comparability, where not only comparing our revenue development in the reporting period for a prior year period, but also with the revenue in the first half of 2019 pre pandemic as.
As a result, a slight decline of 5% of product sales were recorded across all markets in the first half of 2021 compared to 2019. However, again the little product sales are mainly due to the month of January and February in 2021, which were still heavily affected by the pandemic and which had a strong impact.
On <unk>, specifically in the U S and the.
Second quarter again of 2021 total product sales already exceeded those of 2019 pre pandemic.
Let's look at our key markets in the U S. Now there are there the company generated revenues from product sales in the amount of $8.7 million in the first half year compared to $6.3 million in the same period last year, an increase of 36% while sales in the U S. In January and February 'twenty one were.
Significantly lower than the previous year during the pandemic.
In the U S. We were able to record a considerable year on year sales recovery starting mid March mid March.
Compared to the U S product sales in 2019 product the company recorded a decrease of 15% in the months of January to June 'twenty, one again product sales in January and February 'twenty, one were still heavily in patent protected by the pandemic. However, second quarter revenue from on the loose in the U S increased by about seven per.
Compared to Q2 of 2019.
Moving on to the German market.
The company generated product sales of $2.7 million compared to $2.4 million euros in the same period last year, an increase of 15% for.
For added transparency. It is worth mentioning that revenues from product sales in Germany increased in 2020, even despite the pandemic related restrictions and the initial Corona shock freeze in April 2020.
This trend was supported by the possibility of daylight PDT, which can now be performed without direct contact with.
With a physician as well as the March 2020, EU approval expand.
The proven expansion to include treatment of actinic keratosis on trunk and extremities.
Compared to the first half of 2019 still pre pandemic. The company recorded an increase of around 26% and Germany for the current reporting compared to their current reporting period.
And the rest of Europe sales improved by 78% to $1.7 million compared to 1 million euros in the first half of 2020.
There the company recorded a large increase in sales in the second quarter, particularly compared to the second quarter of 2020 in part because June 'twenty, one 'twenty 'twenty. One sales included a first batch of amylose for the reintroduction that Scandinavian markets by our partner Atlantica E beam tipping.
Typically sales with distribution partners in other European countries of console only for a small share of total sales.
Given the volatile sales development in our markets due to the constantly changing governmental restrictions we have been publishing preliminary sales numbers on a monthly basis is starting April this year.
The company the company's preliminary unaudited revenue from product sales in July 2021 amounted to approximately $1.6 million euros and increase of 3% compared to July of 2020 preliminary revenues from product sales in the U S where around $1 million compared to 0.8 million in July 2020 and increase.
29%.
In Germany revenues from product sales amounted to approximately <unk> 4 million compared to 0.6 million in July 2020.
As already noted the comparatively higher sales number in July 20th Germany resulted from catch up effects due to the previous week months caused by the pandemic and the possibility of daylight and the label expansion and the rest of Europe. The company generated a plus of 20% compared to about zero point $2 million in July.
2020.
Comparing July 2021 sales.
Sales in July 2019 before depend on it.
Encouraging trend becomes very apparent as such an increase of 9% in July 2021, four total products sales was achieved in all markets compared to July 19th.
In the U S product sales increased by about 15% compared to July 19, and for the same period sales were up by about 6% and Germany, while sales revenue and the remaining European markets decreased by approximately 11% compared to July 2019.
Now back to the reporting period first six months of 2021.
Gross profit decreased by $3.5 million in the first half of 2021 to $11.1 million compared to $14.6 million euros prior year period.
The gross margin decreased to 85% compared to 91% in the prior year period again. This is mainly due to the onetime payment as part of the licensing agreement of Euro 6 million included in past years prior years figure.
Research and development cost increased slightly to $2.9 million in the first half year of 2021 to $2.4 million.
But in the previous year periods, which is mainly due to the effects of the cost cutting measures implemented in 2020 to counter the effects of the COVID-19 pandemic research and development expenses include the costs for clinical trials, but also the expenses for regulatory affairs I E. The granting maintenance and extension of our pools.
G&A expenses increased to $5.6 million in the first half of 2021 from $4.4 million euros in the first half of 'twenty 'twenty may.
Mainly due to the cost saving measures implemented in the previous year as a result of the COVID-19 pandemic as well as the increase in the accrual for anticipated litigation expenses could reduce it litigation in the U S.
Sales and marketing expenses amounted to $10.2 million in the first half of 2021, a decrease of 16% compared to the prior year period. The decrease was primarily due to the impairment loss of 2 million euros of accepting license included in the 2020 figure.
Selling expenses mainly include expense for our own sales force in Germany, Spain, the U K and the United States as well as all marketing expenses.
In 2021 fiscal year, EBITDA and EBIT were introduced as key performance indicators for management reporting both have become established internationally as key performance indicators and are replacing the previously reported API of profit or loss from operating activities group EBITDA includes earnings before interest taxes.
Depreciation amortization and decreased by $5.1 million to a negative $5 eight in the first half of 2021 compared to a negative zero point $7 million in the first half of 2020, which again is for the most part due to the previously mentioned onetime payment in April 2020.
Group EBIT includes earnings before interest and taxes and decreased by $2.9 million to Europe minus euro $7.4 million compared to about minus four points 5 million euros in the first half of 2020.
Cash and equivalents amounted to $32.6 million as of June 32021, compared to Europe $60.5 million on December 31st of 2020. This includes the proceeds the gross proceeds of $24.7 million from the capital increase completed in February 'twenty one.
From today's perspective.
Bio from Tara group has sufficient liquidity to implement the group strategy in the upcoming 12 months.
And with this summary, I will hand, it over back to Jarrod to Harman again.
Who will update you on the operational progress pharma.
Yeah. Thank you Luke.
Let's start with an update on the regulatory and clinical site in February and March 2021.
The company makes two submissions to the U S food and drug administration all FDA.
And they bring the simultaneous use of up to three tubes of I'm, a lose for PDT short photodynamic therapy.
On the one hand.
Also seeking approval for a launch of that large order that excel on the overhead.
In June 2021, the meeting with the FDA for Bulks submissions took place.
And which further proceed ingalls determined.
With regards to the approval process of the Holdall ethics in them.
The FDA has confirmed that the data are sufficient for the submission so that the.
<unk> process has been initiated.
Regarding the application for amendment of the product until nation to extend the pathology, allowing the simultaneous use of fleet tube. So if I'm a loose S.
FTA did not express any concerns related to efficacy or to the results from the phase one pharmacokinetic study underlying the application.
However, two of mens product inflammation, the regulatory agency recommended the submission also expanded safety data.
Agreed with our proposal to observe systemic and local side effects during treatment with three tubes of them loose on the <unk> of 100 patients.
This safety study is scheduled to start in the second half of 2021.
Now a few votes on the colon search for performance.
Trends in the first half of the year shows that we are slowly recovering from the pandemic.
So its development since mid March has benefited from the easing of restrictions due to the pandemic.
As a result, we have been unable to achieve encouraging product sales at pre crisis levels in recent months.
Product sales from all markets in the Q2 2021 showed an increase in sales of 126% compared to Q2, 'twenty Sandeep and owns 10% compared to Q2 2019 prior to the pandemic.
In our largest market the U S product revenue from sales of loose and Bud light lime or doing that.
<unk> increased by approximately 130% in the second quarter of 2021.
Compared to Q2, 2020, and approximately 7% compared to Q2 2019.
So which is encouraging and shows that we have come through the pandemic in good shape in absolute terms to our growth trajectory.
Last week, our sales team came together for the semi annual sales meeting.
Well among among other things new marketing campaigns amongst folks at people who are presented with these we want to leverage the momentum in the markets to further the eyes to expose all of our products among U S. Dermatologists.
On the news as one of the most efficacious products for the treatment of Sunday June total damage in the market with enormous growth potential, particularly in the USA.
Over the next few years, we intend to not only improve the positioning of our modules within the useful to them that makes up your market segment, but also focused on extending PDT on the expense of other options.
And you look we have already succeeded in doing so to some extent in Germany. In particular, we have not only established also as the market leader within PDT, but it's also you also significantly extended the PDT market as a whole.
We also use the U S sales meeting to present, the relaunch campaign for a second product sold in the U S 72 hour you'll have sales team.
Following the extensive opening of dermatology practicing to patients. So it's a preventative or topical antibiotics cannot be marketed with considerably greater efforts than was previously possible underpinned.
<unk>.
Despite its significantly higher price than generic competitor products all major private pay assets have agreed to provide unrestricted reimbursement folks IP.
This together with our co payment assistance program provides a solid foundation for the new marketing campaign.
All in all the business performance in the first half of 2021 was in line with our expectations.
Encouraging development at least in pumps leaves us optimistic.
The company fully maintained the guidance for the 2021 financial year published on April 12.
Accordingly, we expect annual sales between 25 to 32 million as well as EBITDA loss of between $25 million.
EBIT loss of between 13, and 16 million yours.
Details on the forecast can be details on the forecast can be found in our annual report 2020.
To this end however, it must be said that.
The change in the group's structure in connection with the completion of the planned IPO of Biopharma, Inc.
I look forward to the material news release dated July six 2021.
May have an impact on the.
Until our group's guidance for the full year 2021.
However, as long as Vodafone Teva continues to be fully accounted for in the condos consolidated financial statements. After the planned IPO. The IPO will have no impact on the group's guidance.
And that leads me to the next topics review the planned IPO of Biopharma, Inc. Or currently wholly owned subsidiary as a feasible and quite possibly the only way to raise capital.
This will allow all by a frontier Inc. Two funded skulls independently of Biopharma.
Pete.
In many respects the regulatory framework of the German capital markets as well as corporate law clear it unnecessarily hurdle that German companies with a capital intensive business models, such as that of life until AG has to overcome in order to obtain growth capital.
This thing our U S sales company we are.
Allowing the company greater flexibility in structuring its own gold financing after all Biopharma, Inc. <unk>.
Its largest pharmaceutical market in the air.
Aims to increase.
As quickly as possible.
To do this the company needs catheter to optimize it says structures and to enhance the promotion of its product portfolio.
2021 is turning out to be largely positive for the U S capital markets.
We would like to take advantage of this momentum in the capital markets as a springboard for our listing of Biopharma, Inc, and the liquid unfavorable market environment.
With the successful IPO of Biopharma, Inc.
<unk> group would be excellently positioned to fully exploit the growth potential on both sides of the Atlantic in the coming years.
Above all we would like to thank our employees and our supervisory board, whose commitment and flexibility.
Just wanted to consistently pursue this path.
I would now like to open the line for questions.
Thank you very much.
Well now begin the question and answer session.
If you have a question from speakers please star zero and one on your telephone keypad now tend to be key.
Once you're in a spin announce you can ask the question.
Did you find your question as Don said before rejection to speak you Kendall and <unk> to come to your question.
If you are using speaker equipment today, please lift your handset before making a selection.
Please sort of to ask question.
And the first question. We've received is from Bruce Jackson with Benchmark Company. Your line is now open. Please go ahead.
Hi, good morning, and thank you for taking my questions.
Why don't you talk about the launch of the <unk> for a moment. So in terms of the call points is it the same position. That's currently using am losers.
Physicians are there.
Are there people out there who are using.
Both who could potentially as both drugs and it could be.
Hills.
The sales effort.
More efficient because of that.
Was it.
Largely overlapping.
Our meals is sold goes to those offices that.
Do PDT in general these are the larger offices.
They also use more antibiotics.
On smaller offices in general However, there are exceptions, where youll find doctors too.
A lot of prescription blocks, particularly.
Stay away from generic drugs, that's possible and of course potential customers folks that we're going to revisit that metal.
On top of that.
Dermatologists, who are specialized on pediatrics dermatology.
Yes.
<unk> infections in general and <unk> in particular.
Frequently occur in children and young children.
They would rather go to these these dermatologist.
And they hardly see any actinic keratosis because they are specialized.
Dermatology in children.
Certainly they are very important customers for us so.
A large overlap until the guidance just extend these all at the same customers.
All other niches that we have to go to Mississippi.
Okay great.
That was very helpful.
The question I had was just with regard to the general U S market trends right now and COVID-19 has been a little bit of a resurgence since the close of the quarter.
Are you seeing anything anything.
Regionally or geographically.
And could potentially impact your your outlook on how the rest of the year.
<unk>.
Well, obviously we are.
We are carefully watching the development of COVID-19 measures.
And you know.
Some countries.
The COVID-19 measures becomes stronger again.
When you look to our mosques again.
In California and to a certain extent, Massachusetts.
So not yet reflected on our ability to visit the doctor's offices.
We also don't expect another another shutdown to come I think nobody expects stops.
But we don't know more than anybody else does.
Okay.
Thats helpful. So thank you very much for answering my questions.
Thanks Bruce.
The next question is from Thomas slate.
<unk> kept some markets London. Please go ahead.
Thank you and thanks for taking my questions as well.
Just on the XL lamp in the absence of having the.
The label change for three tubes can you just walk us through what the sales pitch is going to be on the larger lamp compared to the smaller current land.
Absolutely.
So usually.
Okay, Nick apoptosis actually occurs on the on the hips, So Faisal al skull both Scott.
And.
And that as soon as you lead tweet.
It was one two.
No if you treat the entire phase.
Spot stomach the treatment of actinic keratosis on various spots office space off the face.
Misty Copeland lamp.
You'll need several illuminations.
That has actually allowed according to label. So this is in the Eagle to illuminate several times. However, it is obviously an additional burden to the patients on this extra work for the Doctor's office.
The larger lamp.
What prevents that burden.
Is that a decent number looks so we do believe that this actually has a large impact of convincing offices to switch over to him to add lives as opposed to avail themselves to us.
And subsequently also also use off hold up.
Great.
And then to follow up on Bruce's question about.
The outlook for the year, if I just double your first half revenues that puts me well inside your guidance range.
Are you not.
Are you not increasing the range because of concerns about COVID-19 or how should we think about the low end of your guidance range, which would be which would represent a downtick second half over first half.
Yeah.
Yes.
Well you're right.
We could we could be thinking about increasing increasing the range. We have decided not to do this because too many valuable stu towards the rest of the year and Thats Journal.
We have a.
A seasonal business.
Q4 is always the best sales month for us.
If everything develops as positively as it does develop novel and continues to develop this way than the oil guidance may turn out to be low.
But at this point, we simply saying, who don't and we don't have any information, but it will purely clients choice to guidance.
If I may insert so much with you.
You can blame it on the CFO, who is always the conservative Guy who looks into the glass Bowl and says you know.
Way too early to really make a statement so lets stick with preferably a conservative outlook from today's point of view as opposed to having to change that again, so just simply not enough information that we have let's look into Q4, and then we'll know more.
Got it and then one final question of the R&D projects.
So for example, the acne study or the or the illumination protocol.
How many of those are dependent on the Biopharma, Inc. IPO and how many have you contemplated just with your current cash reserves at the at the group level.
None of these.
Maybe some of the laid out amongst like.
Like squamous cell carcinoma in situ.
Also the phase III cause for the auction a projects.
Which which are not listed and all reports yet, but obviously after phase II comes firstly.
Those would probably be delayed.
Until we have further financing.
But the smaller ones. So we have.
We're planning now intend to stop.
None of this will be will depend on the of the IPO because all of these studies will actually be page all of those players from Taylor Bioscience.
Perspective.
It will happen or not.
Excellent I appreciate you taking the questions. Thank you.
Thank you Thomas.
At the moment there are no further questions. So as a reminder to ask a question you have to.
Yes.
One on your telephone keypad.
How should we haven't received any further questions I would like to turn it back to you.
Yes.
I would like to say, thank you for taking the times.
I wish you.
A nice Friday afternoon, so most weekend.
So but same for same for me. Thank you very much.
Ladies and gentlemen, thank you for your attendance this call has been completed.
Disconnect.
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Yes.
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Okay.
Okay.