Q4 2023 Biofrontera Inc Earnings Call

Operator: Welcome to the Biofrontera Incorporated fourth quarter 2023 financial results and business update conference call. All participants will be in listen-only mode.

Welcome to the bio frontier incorporated fourth quarter, 2023 financial results and business update conference call.

All participants will be in listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prime Ministerial remarks, there will be an opportunity to ask questions. To ask a question, please press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2.

Should you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

After today's prepared remarks, there will be an opportunity to ask questions to ask a question. Please press Star then one on your telephone keypad to withdraw your question. Please press Star then two.

Operator: Please note, this event is being recorded. I would now like to turn the conference over to Andrew Barwicky with Barwicky Investor Relations. Please go ahead.

Please note this event is being recorded.

I would now let's turn the conference over to Andrew Barwick eat with bar Wiki Investor Relations. Please go ahead.

Andrew Barwicky: Thank you. Good morning, and welcome to Biofrontera Incorporated's fourth quarter and 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 risk uncertainties are detailed in and are qualified by the cautionary statements contained in Biofrontera's press release and SEC filing. Also, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, March 18, 2024.

Thank you good morning, and welcome to buy a friend Terror incorporated fourth quarter and fiscal 2023 financial results and business update conference call. Please.

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.

We caution listeners that bio <unk> 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 at Biochar terrorists 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.

18th 2024.

Andrew Barwicky: 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 determining the coordinates for. 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, de With that said, I would now like to turn the call over to Hermann Luebbert, CEO, Chairman, and Founder of Biofrontera. Yes, thank you, Andrew.

Bio friends haven't it takes 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.

During today's call there'll be reference to certain non-GAAP financial measures.

So a friend Sarah 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 nonrecurring or non cash items with that said I would like now to turn the call over to Hubert Libert Zubair C E O.

It found a buyer for terra permit.

Yeah. Thank you.

Hermann Luebbert: And my thanks to everyone joining us this morning. On today's call, I'll provide an overview of our accomplishments and piloting strategy that occurred during the second part of 2023 and how these changes helped 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 of financial results, and then both of us will be available to answer questions after our prepared remarks.

And my thanks to everyone joining us this morning.

On today's call I'll provide an overview of our accomplishments in full evidence strategy. So the Cubs fueling the second part of 2020 to sleep and hold these changes help lays the groundwork for many value driving an ECA initiatives in 2024 and beyond.

Additionally, we have had some significant successes already in the first quarter of 2024 that I will touch upon.

Blood flow or our CFO will follow with a discussion on financial results and then both of US will be available to answer questions. After all puts albemarle.

Hermann Luebbert: 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 AMD and assuming all clinical initiatives on Amelus starting June 2024. This tremendous progress has been recognized by investors.

Starting with the business update we have made tremendous progress so closely critical areas, including first optimizing our customer facing teams to provide support and services to our customers.

Controlling our cost structure, and improving our balance sheet and third advancing R&D and assuming all clinical initiatives.

Starting June 2024.

This tremendous progress has been realized by investors.

Hermann Luebbert: Following the renegotiation of our License and Supply Agreement for Amelus with dramatic reductions in the transfer price we pay to Biofrontera Group in Germany, we very recently secured financing of $8 million, and we 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 AMLU development, which, as mentioned, we will take over from the German Biofrontera Group in June 2024. I would like to commend all our employees as we announced net revenue of $34.1 million, a record for Biofrontera, and a 19% increase for the year. While Ameluth makes up for most of our revenue.

Knowing the renegotiation of a license and supply agreement for <unk> with the magical ejection reductions in defense for price, we paid to buy a phone to have a 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 <unk> development, which as mentioned we will take over from the German life until hug walk in June 2024.

I would like to commend all of our employees as we announced net revenue of $34 1 million Oh that called for Biopharm sale and a 19% increase for the year.

Well I'm a loose makes up for most of all of the new <unk>.

Hermann Luebbert: We are also proud to share that 123 BF-ROTO-LED lamps were placed at physician offices during the year, compared to 66 placed in 2022, an increase of 86% and the highest number we have ever installed in a single year. The growing number of lamps in the field reflects both first-time installations and additional lamps among dermatology practices already familiar with AMLU's PDT, facilitating growth through existing and new customers, more specifically among the 123 installations. Sixty-one sites already had at least one of our lamps in place and bought a further lamp to provide more amylose PDG to their patients. The remaining 62 offices are now set up to start Amelou's Biofrotera PDT.

We're also proud to share that <unk> hundred 20, <unk> be a fortinet lamps were placed at physician offices during the year compared to 66 placed in 2022, an increase of 86% and the highest number we have ever installed in a single year.

The growing the most lumps in the field reflects both first time installations and additional EMS among dermatology practices already familiar with <unk> P. D T.

<unk> gold for existing and new customers.

More specifically <unk> hundred 23 installations.

61 sites already had at least one of our labs in place and Balder further along to provide more on the loose PDT to their patients.

The remaining 62 offices are now set up to start I'm, a loose beautiful would've loved PDT.

Hermann Luebbert: LAMP placements are a leading indicator for future growth, and we are delighted with the increasing recognition of AMLU's PDT as an effective and patient-friendly treatment for atynic keratosis and, in the future, also other diseases. During 2023, we have reduced our cost structure and invested a proportion of the cost savings in our commercial and support. We are continuing to optimize our customer-facing strategy by shifting resources from a Salesforce-focused organization to invest in marketing, strategic accounts, medical, and reimbursement support. Increasing efforts in Salesforce training will further help our territory managers to be more efficient.

Lumped placements are leading indicator for future growth and we are delighted with the increasing recognition of <unk> as an effective and patient friendly treatment for actinic keratosis and in the future also other diseases.

Yeah.

During 2020 sleeves, we have reduced our cost structure and invested a proportion of the cost savings in all of our commercial and support teams.

We are continuing to optimize our customer facing strategy by shifting resources from a sales force focused organization to invest in marketing strategic accounts medical and reimbursement support.

Increasing efforts and sales force training.

Further help volatility totally managers to be more efficient.

Hermann Luebbert: By doing so, we are continuing to develop a team that supports all stakeholders within our customer organizations. We believe this approach will be better suited to supporting our growth in the buy and build PDT market and bringing new customers into PDT. Buy and Bill relates to Amalou's purchases by the doctor's offices, which then need unproblematic patient treatment and reimbursement to make this process financially viable for the office. In December, we settled arbitration regarding a dispute around our acquisition of the XAPI assets. This allowed us to remove significant liabilities from our balance sheet, which Fred will discuss in a moment. Now turning to new developments, research and development, and patents. We expect two significant commercial developments in 2024 that will favorably impact our business. We are planning to launch the larger Odolat XL-LAM for the treatment of extended photo-damaged skin areas with AK in Q2 of this year. While this allows illumination of a larger skin area, a three-tube safety study was completed, and the data was submitted to and accepted by the FDA for review.

By doing so we are continuing to develop a team that supports supports all stakeholders within our customer organizations.

We believe this approach would be better suited to supporting a whole goals is the buy and bill PDT market and bringing new customers into PDT.

To explain but unbilled relates to I'm, a loose purchases by the doctor's offices, which doesn't need unproblematic patient treatment and reimbursement to make this process financially viable to the office.

In December we suffered arbitration regarding a dispute or acquisition of the accept the asset.

This allowed us to remove significant liabilities from our balance sheet, which Fred will discuss in a moment.

Yeah.

Now turning to new development research and development and patents.

We expect two significant commercial developments for 'twenty 'twenty four that will favorably impact all business. We are planning to launch launched the larger order that X L. M for the treatment of extended photo damaged skin Alagoas with AK in Q2 of this year.

Well this allows illumination of the largest skin allele asleep.

<unk> safety study was completed and the data was submitted to and accepted by the FDA for review.

Hermann Luebbert: We expect to include the use of up to three tubes per treatment into the amylose label during Q4 of 2024. In combination with the launch of the XLM, this will allow PDT of larger skin areas, constituting a crucial requirement for our further goals. The U.S. Food and Drug Administration, the FDA, has approved a new formulation of amylose-lacking propylene glycol for the treatment of actinic kerato

We expect to include the use of up to three tubes for treatment into the amine loose labor during Q4 of 2020 full <unk>.

In combination with the launch of the extra them. This will allow PDT of largest skin from.

While instituting a crucial requirement for our further goals.

The U S food and drug administration. The FDA has approved a new formulation of our minerals lurking propylene glycol or the treatment of a clinical analysis.

Hermann Luebbert: We expect that production of this formulation will begin in 2024 and help improve tolerability for some of our patients, while also reducing the generation of impurities over time, which may result in an extended shelf life. The US Patent and Trademark Office, the USPTO, granted a new patent related to a photodynamic therapy, or PDT, protocol that is expected to be less painful but similarly effective to conventional PDT. Between all of our patents currently granted by the U.S. Patent Office, PDT with Omelouse and Odolat is currently protected until 2040. Further patents are still pending and may extend the protection of our products until 2043 or even further, in 2024. We purchased. Now, in 2023, sorry, we purchased two additional patents for low-cost portable photodynamic therapy lamps for use with AMLUs, and we restarted the Development of the Islam.

We expect that production of this formulation will begin in 2024 and 10 improve tolerability for some of our patients while also reducing the generation of impurities overtime, which may result in an extended shelf life.

The U S patent and trademark office the U S. P T O.

Granted a new patent related to a put to them dynamics are lumpy or PDT protocol that is expected to be less painful, but similarly affected effective two conventional PDT.

Between all of our paid patents currently granted by the U S patent office PDT with AMA loose and although that is currently protected until 2040.

The patents are still pending and may extend the protection of Pall done until 2043 or even further.

In 'twenty to 'twenty four.

We purchased.

In 2023, so we purchased two additional patents for low cost, Portugal, photodynamic therapy labs for use with <unk>.

And we started development of these labs.

Hermann Luebbert: The planning process for building a prototype is nearing completion, and we expect to begin looking at next steps in the near future. We are also pleased to announce that the first patient has been dosed in a phase 3 randomized double-blind vehicle-controlled multi-center clinical study to evaluate the safety and efficacy of Ameluth and Rodolat XL in the field-directed treatment of actinic keratosis on the extrem This is a significant opportunity for our company, as many patients suffer from a cane not only on their face and scalp but also on various exposed areas of the body.

Our planning process for building a prototype is nearing completion and we expect to begin to begin looking at next steps in the near future.

We are also pleased to announce that the first patient has been dosed in a phase III randomized double blind vehicle controlled multicenter clinical studies to evaluate the safety and efficacy of <unk> and <unk> XL and the field directed treatment of actinic keratosis on the extremities the neck.

Punk.

This is significant opex.

The opportunity for our company as many patients suffer from AK not only on their face and scalp, but also on various exposed areas of the body.

Hermann Luebbert: The last two months have seen transformational developments for our company with the successful renegotiation of our LSA, our License and Supply Agreement for Ameluth and Rhodolith lambs with Biofrontera Group in Germany and the subsequent securing of up to $16 million in financing. According to the amended LSA, we have reduced our AMELUS transfer price, which is the price we pay to our licensor, from 50% of our revenues up to 30 million and 40% from 30 to 50 million to a flat 25% for 24 and 25. This amount will then step up to 30% in 2026 and stepwise up to 35% in subsequent years. This structure, however, applies only to actinic keratosis and non-melanoma skin cancers, while we have secured a flat 25% indefinitely for any acne-related indications. As part of this amendment, Biofrontera Inc. is taking over all clinical trials as of June 1, 2024. The additional cost is expected to be only a portion of the savings from the reduced transfer price.

The last two months have seen transformational developments for our company with the successful renegotiation of a L. S. A on a license and supply agreement for him or lose an order lead times with Vodafone tailor group in Germany.

Subsequent to the fueling of up to $16 million in financing.

According to the amended Elisa E. We have reduced a lot on the loose tons for parties. It is the price we paid to our license though.

50% of all other venues up to 30 million and 40% from $30 million to $50 million.

To a flat, 25% for 24 and 25.

This demand will then step up to 30% in 2026 and step wise up to 35% in subsequent years.

This structure, however applies only to our clinical doses and non melanoma skin cancers.

We have secured a flat 25% indefinitely for any acme related indications.

As part of this amendment biofilm silver ink is taking a hobo all clinical trials as of June one 2024.

Cost is expected to be only a portion of the savings from the reduced Huntsville plus this.

Eugene Fredrick Leffler: This arrangement allows us to more effectively run these trials and control their costs. Finally, we have secured sufficient funding for the company in two separate deals. In November 2023, we closed on additional financing of $4.5 million, and in February of this year, we closed on a private placement of up to $16 million that is expected to be paid in two tranches. We have received $8 million and expect to meet the requirements to secure the additional $8 million tranche in either May or June 2024. We look forward to providing updates on all these programs and more on our first quarter 2024 call. With that, I'll turn the call over to Fred to walk through the financial details of the fourth quarter and full year. Thank you, Hermann.

This arrangement allows us to more effectively around these tires and controlling our costs.

Finally, we have secured sufficient funding for the company for two was a blip deals in November 2023 we closed on additional financing of $4 5 million and in February of this year, we closed on a private placement of up to $16 million that is expected to be <unk>.

Paid in two tranches, we have received $8 million and expect to meet the requirements to secure the additional $8 million tranche in either may or June 2024.

We look forward to providing updates on all of these programs and more on our first quarter 2020 full cold.

With that I'll turn the call over to flat to walk through the financial details of the first fourth quarter and full year.

But thank.

Thank you Herman.

Eugene Fredrick Leffler: 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 was $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 Amelus but was 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 was $5.4 million for the fourth quarter of 2023, compared with $5.3 million for the prior year quarter, driven by higher AMLU product revenue. Selling general and administrative expenses were $9.1 million for the fourth quarter of 2023, compared with $10.2 million for the fourth quarter of 2022, with a decrease primarily driven by lower personnel costs.

And it is great to be talking excuse me talking with everyone again.

I will start with our fourth quarter 2020 results total revenue for the fourth quarter of 2023 were $10 6 million, an increase of <unk> 5 million or about 4% compared with $10 1 million for the fourth quarter of 2022.

This reflects the continued adoption of AMOLED is always impacted by impacted more than anticipated by a buy in prior to the 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, driven by higher amyloid as product revenue selling general.

And administrative expenses were $9 1 million for the fourth quarter of 2023, compared with $10 2 million for the fourth quarter of 2022 with a 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.

Eugene Fredrick Leffler: 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 or 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.

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 of <unk> <unk>.

Excluding interest income and expense income taxes, depreciation and amortization and certain other nonrecurring and noncash items I'll refer you to the table in the news release, we issued on Friday March 15th for a regular 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 to $28 7 million for 2022.

A growth of approximately 19% the increase was primarily driven by higher volume of analyst sales due to a restructured discount program higher adoption of amyloid by dermatologists and a higher average <unk> selling price.

Total operating expenses were 30.

Eugene Fredrick Leffler: I'll refer you to the table in the news release we issued on Friday, March 15th for 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 to $28.7 million for 2022, a growth of approximately 19%. The increase was primarily driven by higher volume of amelus sales due to a restructured discount program, higher adoption of amelus by dermatologists, and a higher average selling price.

$56 7 million for 2023, compared with $47 3 million for 2022 cost of revenues increased from the prior year to $17 4 million for 2023 from $15 2 million in 2022, primarily driven by the increased AMOLED is volume.

Selling general and administrative expenses for 2023 were $39 1 million compared with $35 9 million for 'twenty 2022, an increase of about 9% compared with the prior year.

Driven by personnel related expenses and higher.

Legal expenses.

The net loss for 2023 was $20 1 million or $13 <unk> per share compared with a net loss of zero point $6 million or 61 cents per share for the fiscal year 2022.

Eugene Fredrick Leffler: Total operating expenses were $56.7 million for 2023 compared with $47.3 million for 2022. Cost of revenues increased from the prior year to $17.4 million for 2023 from $15.2 million in 2022, primarily driven by the increased AMELUS volume. Selling general and administrative expenses for 2023 were $39.1 million compared with $35.9 million for 2022, an increase of about 9% compared with the prior year, driven by personnel-related expenses and The net loss for 2023 was $20.1 million, or $13.02 per share, compared with a net loss of $0.6 million, or $0.61 per share, for the fiscal year 2020.

Adjusted EBITDA was negative $19 5 million for 2023, compared with negative $18 1 million for 2022. The decrease was primarily driven by the commercial team expansion that took place in the second quarter of 2023.

Please refer to the table in a news release on Friday March 15th for a reconciliation of GAAP to non-GAAP financial measures.

Now.

Turning to our balance sheet as of December 31, 2023, we had cash and cash equivalents of $1 $3 million compared with $17 2 million as of December 31, 2022.

Our investment in related parties.

0.1 million compared with $10 5 million as of December 31, 2022.

This is due to the increase or the decrease in share price of the investment and the fact that we used a large portion of the shares to settle.

And the arbitration dispute as a result, we eliminated lab.

We eliminated liabilities of approximately $9 8 million and recorded a gain of approximately $7 4 million.

Eugene Fredrick Leffler: Adjusted EBITDA was negative $19.5 million for 2023, compared with negative $18.1 million for 2022. The decrease was primarily driven by the commercial team expansion that took place in the second quarter of 2020. Again, please refer to the table in the news release on Friday, March 15th for reconciliation of gap-to-non-gap financial measures. Now, turning to our balance sheet as of December 31st, 2023, we had cash and cash equivalents of $1.3 million compared with $17.2 million as of December 31st, 2022. Our investment in related parties is $0.1 million compared with $10.5 million as of December 31, 2022. This is due to the decrease in share price of the investment and the fact that we used a large portion of the shares to settle an arbitration dispute. As a result, we eliminated liabilities of approximately $9.8 million and recorded a gain of approximately $7.4 million.

I have talked about our increasing inventory in 2023.

Quite a bit and as of today, we have received and paid for all orders our inventory balance as of December 31, 2023 is $10 9 million compared to $7 2 million on hand as of December 31, 2022, I would like to clarify this amount a bit we also have an asset or replacement inventory.

Lori up $5 2 million as well.

This is due to a voluntary recall of three batches of analysts from our supplier.

Of which we were notified of the issue in February of 2024, the batches will we be replaced at no cost to us and we expect to receive those batches over the summer months. This will not impact our ability to fulfill orders in the meantime, so we are now in a position to sell off our inventory over 'twenty 'twenty, four and achieve a reasonable safety stock which <unk>.

Proves our working capital position.

We are not we are still not anticipating on making any inventory purchases for until at least the second half of 2024 and as a result, we will continue to manage our working capital very closely.

Finally.

We entered into a bridge loan for $4 million at the end of December of 2023 in order to finance the company through the most recent capital raise that Herman mentioned earlier.

Eugene Fredrick Leffler: I have talked about our increasing inventory in 2023 quite a bit, and as of today, we have received and paid for all orders. Our inventory balance as of December 31st, 2023, is $10.9 million, compared to $7.2 million on hand as of December 31st, 2022. I would like to clarify this amount a bit. We also have an asset for replacement inventory of $5.2 million as well. This is due to a voluntary recall of three batches of amylase from our supplier, of which we were notified of the issue in February of 2020.

We will pay down this loan through early July of 2024, and do not expect to need such a facility in the near future.

Just on bulk posit multiple positive indicators for the year, we expect two digit growth in revenue compared to 2023 and expect to be cash flow positive within approximately 12 to 18 months, depending on our spend associated with.

With our additional spend associated with the U S clinical studies.

With that overview of our business and recent financial performance permanent I are now ready to take questions from our covering analysts operator.

We will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad if.

Eugene Fredrick Leffler: The batches will be replaced at no cost to us, and we expect to receive those batches over the summer months. This will not impact our ability to fulfill orders in the meantime. So we are now in a position to sell off our inventory in 2024 and achieve a reasonable safety stock, which improves our working capital position. However, we are not, and we are still not, anticipating making any inventory purchases until at least the second half of 2024. And as a result, we will continue to manage our working capital very closely. Finally, we entered into a bridge loan for $4 million at the end of December of 2023 in order to finance the company through the most recent capital raise that Hermann mentioned earlier. We will pay down this loan through early July of 2024 and do not expect to need such a facility in the near future.

If youre using a speakerphone please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

The first question is from Jonathan Aschoff with Roth. Please go ahead.

Thank you guys.

Good morning, and I wanted to ask about just your trials.

Acme what is the are the patients enrolment number and the timing to data.

Yeah, Hi, Jonathan.

In the.

Phase II trial about half of the patients come to your own little Morden between 50, and 60% are currently on hold.

Some we expect to complete enrollment.

Until the end of the year and then have the data available in the middle of next year.

Okay, and then how about the same two questions for peripheral NK.

Okay.

Eugene Fredrick Leffler: Based on multiple positive indicators for the year, we expect two-digit growth in revenue compared to 2023 and expect to be cash flow positive within approximately 12 to 18 months, depending on our spend associated with our additional spend associated with the U.S. clinical study. So, with that overview of our business and recent financial performance, Hermann and I are now ready to take questions from our covering company, Operator. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key.

Hum.

Peripheral a case study is.

It was similar in Holzman actually.

M D.

The data will.

Ultimately come slightly after the acuna.

Data because the patients are longer in the toys.

So the case in two weeks.

Hello.

Hmm, Okay like to age 25 for data you would think.

Yes second half of 'twenty, five and then how about enrolment for our BCC data is that still tracking for mid 'twenty four.

Few months from now something like that.

Animal and almond was completely ready.

And with the data tracking.

<unk>.

The middle of this year.

Data should be of the or the clinical part of the study should be.

Operator: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question is from Jonathan Aschoff with Roth.

After the middle of this year.

And follow up on in the first half of next year.

Okay.

One of them.

Thank you Herman and finally go too deep.

Jonathan Matthew Aschoff: Please go ahead. Thank you guys. Good morning, and I want to ask about just your trials. Acne, what is the patient enrollment number and the timing for data? Yeah, hi Jonathan.

The portable ramp, but can you make any estimates as to when <unk> might have access to the portable lamp.

Portable armed with student needs some time of course before before it hits the market.

So it's not something that we that we see on the market in the next in the next two years just to be clear.

Hermann Luebbert: In the ACNA Phase II trial, about half of the patients are currently enrolled, a little more than between 50 and 60 percent 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 a peripheral AK study is..., will have similar enrollment.

However, we believe that this will be.

Significantly easier entry.

Into PDT for offices.

So far I haven't I haven't been able to.

Two to do P. G T. Because they don't have sufficient sufficient space and that will also help all along.

To actually take a loan bond and do.

We have life stem installations in doctors' offices on labor.

Hermann Luebbert: Actually, the data will probably come slightly after the ACNE trial data because the patients are longer in the trial. Okay, by 2H25 for data, you would say, "Yes, second half of 25."

And Furthermore, the doctors will have the chance to take the lamp and do offer pdt's in retirement homes.

So it will provide much more flexibility to the way in which <unk> can actually be done.

Okay, and I think I missed what you had said the XL lamp with that kind of come onto them.

Hermann Luebbert: And then how about enrollment for BCC data, is that still tracking for mid-24, or a few months from now, something like that? after the middle of this year and follow up in the first half of next year. Thank you, Hermann. If I may go to the portable lamp, can you make any estimates as to when the derms might have access to the portable lamp? The portable lamp will still need some time, of course, before it hits the market. But that's just something that we will 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 we don't have sufficient space, and it will also help our labs to actually take a lamp around and do... We have live demonstrations in doctors' offices on the label, and furthermore, doctors will have the chance to take the lamp and offer PDTs in retirement homes.

Onto the market and enforced by the end of the year is that what you said.

I don't know what Q2.

Q2 of this year.

Of this year he is excellent.

Excellent.

Can you definitely sell all of the annual minimum purchases.

You must make with the new transaction terms.

Is that a a day up to sell the minimum that you have to buy it.

Jonathan Yeah. This is this is fred.

Yeah, we believe that is.

But at a lay up.

And yeah, the minimums associated with the LSA restructuring should be.

Easily achieved.

Going forward.

Okay. Lastly, you know you've moved to see using the term two digit growth.

And that starts with <unk>.

I would hope that your growth this year over last year would be.

You know double that and that that would not be a stretch.

For me to look at it at 20% would not be a stretch.

Yeah.

Hermann Luebbert: 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 about the XL lamp. Was that going to come into force by the end of the year, is that what you said? Q2. Q2 of this year. Unknown Speaker 05.01.2010 Transcripts provided by Transcription Outsourcing, www.TranscriptionOutsourcing.com. Like, is that a payout to sell the minimum that you have to buy? Jonathan, yeah, this is this is Fred.

It ends with 99, Jonathan but that.

Yeah Yeah.

Youre right I think that.

We expect.

Similar to growth that we've seen over the past the past couple of years and and if we.

Maintain that 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.

Breakeven.

In approximately 12 to 18 months.

Okay. Thank you very much guys.

Thank you Jonathan.

Again towards the west.

Again, if you have a question. Please press Star then one.

The next question is from Bruce Jackson with the Benchmark Company. Please go ahead.

Eugene Fredrick Leffler: Yeah, we believe that is, as you put it, a layup. And yeah, the minimums associated with the LSA restructuring should be easily achieved. Okay, lastly, you've moved to using the term two-digit growth. I mean, that starts with 10.

Hi, Good morning Quest.

A question about the the sales and marketing effort so has.

Have there been any changes to the sales force in terms of numbers and.

Is it is it turnover stable.

Yeah, we did in fact decided to reduce the sales force slightly.

Jonathan Matthew Aschoff: I would hope that your growth this year over last year would be, you know, 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, well, it ends with 99, Jonathan, but you're, you're, you're right.

In favor of going the other the other service functions.

All required to actually make the head of the sales force to be too.

To be successful.

So currently we have 32 lamps all of them.

And so and seven managers of these 32 hubs.

What was the second.

Although the second yeah. So the question.

Eugene Fredrick Leffler: I think that we expect, you know, similar growth that we've seen over the past couple years, and if we maintain that, that trajectory going forward, and, as I mentioned, depending on, you know, how we deploy the spend associated with the clinical trials that we're taking over in June, we should be break even in approximately 12 days. Okay, thank you very much, guys. Thank you, John, again. Again, if you have a question, please press star then 1. The next question is from Bruce Jackson with The Benchmark Company. Please go ahead. Hi, good morning.

Any change in that turn it over so.

With the reps that you've got right now is it.

Is it stable.

<unk> is of course something that.

As a problem to every company when we compare our turnover in the sales force with other companies so that the industry evolution.

We are still below that which is good.

On the other hand, we still tied to.

To do everything we can to reduce the turnover even further.

Yeah.

Okay, Great and then.

Do you think back to our friends are.

That's on the sales growth for the for the coming year, the double digit you've done roughly 19% year over year for the past couple of years, if we like come down that number would that be a reasonable target to begin with.

Bruce David Jackson: 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?

Hermann Luebbert: Yeah, we did in fact decide to reduce the sales force slightly in favor of going the other service functions that are required to actually make the help the salesforce to be successful. So currently, we have 32 reps out there. What was the second?

I.

I think that's a reasonable target.

Our CAGR since our.

'twenty 'twenty has been 22%. So yeah I think those are the the two numbers that you could take a look at and I think around that would be a reasonable.

Hermann Luebbert: All of the questions. The second question is, "Any change in the turnover, so with the reps that you've got right now, is it stable?". The turnover is, of course, something that is a problem for every company. However, when we compare our turnover in the sales force with other companies, so with the industry average, 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.

Estimate.

Okay, and then last question for me.

Sometimes the timing of the price increases can have an impact on the calendar station of the quarters. So what would be looking for this year would it be similar to 2023 or might there be any differences.

But.

We're still evaluating the.

Eugene Fredrick Leffler: Okay, great. And then getting back to Fred's comments on the sales growth for the coming year, the double digits. 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 kegger since 2020 has been 22%.

Our pricing strategy and things like that and we haven't made a concrete decision on on any price increases yet.

2024.

So in terms of the in terms of like the seasonality of the revenue by quarter then.

Can we assume that look similar to 2023.

Yes, I think that's a good working assumption and if any changes come to that.

Eugene Fredrick Leffler: So yeah, I think those are the two numbers that you could take a look at. And I think around that would be a good, Okay, and then last question for me: sometimes the timing of price increases can have an impact on the calendarization of the quarters.

We will certainly update.

Everyone.

Okay great.

Great. Thank you very much.

And google's. Thank you.

This concludes our question and answer session.

I'd like to turn the conference back over to management for any closing remarks.

Bruce David Jackson: So what would we be looking for this year? Would it be similar to 2023? Or might there be any differences?

Yes, so we.

Beliefs that we had a very successful year in 2023.

Eugene Fredrick Leffler: We're still evaluating the, You know, our pricing strategy and things like that. We haven't made a concrete decision on any price increases yet, for 2020. So in terms of the in terms of like the seasonality of the revenue by quarter, then.

So we had some transformational changes to the company that.

Makes the status of the company and the future of the company look <unk>.

Much volatile.

We'll be we're looking at a year ago.

Eugene Fredrick Leffler: 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 let you know, everyone. Okay, great. Thank you very much. Thank you. Thank you. This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks. Yes, we believe that we had a very successful year in 2023, that we made some transformational changes to the company that make the status of the company and the 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 for taking the company to where we are now, and thank you for taking the time to listen in. Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. BF-WATCH TV 2021

And with that I would like to thank all of our employees again to taking the company to well beyond <unk> and.

Thank you for taking the time to listen in.

Yeah.

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

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