Q3 2024 Biofrontera Inc Earnings Call
Welcome to the Bio Terror, Inc. Third quarter 2024 financial results and business update conference call. At this time all participants are in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays 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.
Please note this event is being recorded.
Speaker Change: I would now like to turn the conference over to Andrew Bar Wiki with Barbara He Investor Relations. Please go ahead.
Speaker Change: Good morning, and welcome to <unk> incorporated third quarter, 2024 financial results and business update conference call.
Speaker Change: Please note that certain information discussed during today's call.
Speaker Change: Hi management is covered under the Safe Harbor provisions of the private Securities Litigation Reform Act, we caution listeners that biomarin terrorists 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.
Speaker Change: Uncertainties are detailed in and are qualified by the cautionary statements contained in bio franchise press releases and SEC filings also this conference call contains time sensitive information that is accurate only as of the date of this slide broadcast November 14th 2020 for bio.
Speaker Change: <unk> undertakes no obligations 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'll be references to certain non-GAAP financial measures Biopharma terribly as these measures provide useful information for investors you should not be considered as a suite.
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 this Wednesday expression in today's press release, more specifically management will be referencing adjusted EBITDA, a non-GAAP financial measure defined as net income or loss.
Speaker Change: <unk> interest income and expense income taxes, depreciation and amortization and certain other non recurring or non cash items with that said I would like to turn the call over to chairman Lu Garg, CEO, chairman and founder of boyfriend.
Speaker Change: Alright.
Lu Garg: Thank you Andrew.
Lu Garg: And my thanks to everyone joining us this morning.
Lu Garg: On today's call I'll provide an overview of our accomplishments during the third quarter and first nine months of 2024.
Lu Garg: So that's the floor well CFO CFO will follow with a discussion on financial results both of US we'd be happy to answer questions. After all the remarks.
Let me start by highlighting the tremendous progress we made in previous months.
Lu Garg: Comparing the first nine months of 2024 with 2000 Twenty's fleet. The total number of I'm, a loose tubes of supply or customer escalate increased Florida, we significantly reduced costs.
Lu Garg: Second we improved our FDA label, adding value to all product.
But we got outstanding clinical results.
Lu Garg: For a new indication for <unk>, we launched <unk> XL and finally fifth we transferred all clinical trial activities on Windows to Biopharma, Inc.
Lu Garg: It was the first point of increasing revenue and reducing cost.
Lu Garg: Revenues in the third quarter increased by one 5% to $9 million loss.
Lu Garg: So the more deliberately or 4600 for the troops on the news.
Lu Garg: At $1.5 million, while still H two October due to hurricanes.
Lu Garg: Without this delay or Q clean coal's had been 19% compared to the previous year.
Lu Garg: All the delayed product was shipped to customers early in October and will it be electric notice the sales and the cold quarter.
Lu Garg: For the first nine months, our sales grew by $1 3 million to $24 8 million and.
Lu Garg: An increase of plus one 6%.
Lu Garg: Without the impact of how we can move deliberately Oklahoma loose the goal would have been 12%.
Lu Garg: We're growing our business, we strongly controlled all cost.
Lu Garg: We're able to reduce our SG&A expenses by 14% in the first nine months of the year compared to last year.
Speaker Change: Both the second point, you pull from the Gulf or FDA label.
Speaker Change: S T. A decided on October 4th to approve the use of up to up to three tubes of avenues for Cleveland.
Speaker Change: The law says got professionals, greater flexibility and nonetheless, seeing larger or multiple treatment lel's for patients undergoing photodynamic therapy for 8-K on the face on scope.
Speaker Change: Leading to greater convenience for both has a couple of items and the patients.
Speaker Change: Okay. This is the second most common diagnosis made by dermatologists in the United States with an estimated 13 million tweet once provided each year in the U S.
The restriction of one two per treatment has slowed the growth of Almond, who says Oh, two and lifting this will help on the loose take a larger piece of the PDT market.
Well I'm pleased because all of us and clinical toys.
Speaker Change: We performed several clinical trials with the aim to improve our labor and then hence the use of our product and the mix.
Speaker Change: A couple of doses, but also to other indications like Motorola to Savannah to the labor.
Speaker Change: We believe that this.
Speaker Change: Indication as a major medical need.
Speaker Change: Medication, that's less than ideal.
Speaker Change: The moderate to severe asthma.
Speaker Change: The potential to be a major potential at least potentially blockbuster market for on the news PDT.
Speaker Change: Our phase two study in this indication is progressing as planned.
Speaker Change: <unk> hundred six or <unk> 26, so this 84% of the patients currently under old we anticipate to eat all of the data in the fall of next year.
Speaker Change: Most recently, however, we have locked the database and almost superficial BCC for sleep study.
Speaker Change: It was also very encouraging that the histological clearance endpoint, achieving 75, 9% of total Cleveland at a high degree of statistical significance.
Speaker Change: We expect the last patient to complete the first year of life, you'll follow up phase this month.
Speaker Change: One year follow up data has seen my the requirement by the approval by the FDA such that in the OBL awaiting this important milestone.
Speaker Change: With this coming up we expect submission to the FDA at the end of the first half of 2025 with approval in the spring of 2026.
As I said, that's a normal of which superficial basal cell carcinoma, Microsoft food is.
Speaker Change: It's the most common form of skin cancer is the most frequently curling form of all cancers.
Speaker Change: In the U S alone an estimated Cleveland 6 million cases are diagnosed each year, a subset of which a superficial basal cell carcinoma.
Speaker Change: You see six Oh, this form up normal uncontrolled coal.
Speaker Change: Basically it says at the bottom of the epidermis.
Speaker Change: So, yes, I mean, I'll just slip beyond the original tumor site.
Speaker Change: If I'm pleased it can become locally invasive go wide and deep into the skin and just call it destroys skin tissue.
Speaker Change: Even the bone.
Speaker Change: The fourth point I mentioned is the launch of all of the effort on that.
Speaker Change: This land of Hudson alternative for doctors, who wish to treat larger skin legions with on the loose PDT.
Many doctors have chosen this option what are those could close the smaller easier to handle and be a photo that's the model.
Speaker Change: Since its launch in June until September 30th.
Speaker Change: Installed 39 older less extra labs, along with an addition of 66 beautiful lumps in the first three quarters of 2024.
Speaker Change: Oh it says.
Speaker Change: Have a good mix of older vehicles.
Speaker Change: Modal.
Speaker Change: All of recently launched all the extra lab.
Speaker Change: Together these are hungry for its new labs out in the field slightly high up in the humble one labs in the same period of 2020 fleet.
We are optimistic that O&M suits will continue to increase at a strong pace supporting increased a manaus usage. That's augusta most canoga, that's all I'm going to lose the embarrassment. Following the recent FDA approval of up to see our Medusa Duke spoke Cleveland.
Speaker Change: Well, we are negotiating the performance of all clinical research early in the year.
Speaker Change: That's possibility for which we have assumed since June 'twenty to 'twenty four we.
Speaker Change: We took control over the further development of our modules in the U S. Since this release its the German biofilm to L. A G from the obligation to perform certain clinic in toys, we agreed on a significantly reduced cancel pause former lose a game changing development and building Biopharmaceuticals, Inc. More profitable.
Speaker Change: Plaguing the break even point closer.
Speaker Change: According to the agreement we assumed control over the management of all clinical trials with our Medusa as of June 1st twenty-three before.
This forces, while seamless well north of the ongoing clinical clients were negatively affected.
Speaker Change: We are in the process of completing preclinical toys I did already mention the superficial BCC phase three and the <unk> tires for.
Speaker Change: A phase III trial.
Speaker Change: It all sits in the police police the beams on the extremities trunk, we have snow in the old humbled Claudie awful Balaton look 65 patients.
Speaker Change: Corresponding to 79%.
Speaker Change: Thus in all of them for all ongoing studies is coming to an end in the coming six to nine months exciting and important events for the development of all product and oil company.
With that I'll turn the call over to Fred to walk through the financial details of the third quarter and first nine months.
Fred: Thank you Herman and it's great to be talking with everyone again.
Fred: I will start with our third quarter 2024 results.
Fred: Total revenues for the third quarter of 2024 work nine point <unk> million dollars compared with $8 $9 million for the third quarter of 2023.
Fred: This increase was driven by.
Fred: A 600000 dollar increase and from sales of devices, specifically, the roto <unk> X L lamp.
Fred: Since its launch in June of 2024, this was offset by a net decrease in the sales of <unk>.
Fred: Zero point $5 million.
The decrease of amyloid sales in units was impacted by the delayed shipping of 4640 units at the end of September 2024, due to hurricane Melton, forcing office closures in the shipping delays throughout the southeast.
Fred: Had the orders has been delivered in the third quarter revenues would have been about $10 5 million or growth of about 19% quarter over quarter.
Fred: Total operating expenses were $14 million for the third quarter of 2024, compared with $13 $5 million for the third quarter of 2023 cost of revenues were $4 $9 million for the third quarter of 2024, compared with $4.6 million for the third for the prior year.
Fred: Quarter.
Fred: This was driven by an increase.
Fred: Of <unk>.
Fred: Zero point $5 million due to the increase in road OLED product revenue, partially offset by a decrease of <unk> $2 million due to the <unk>.
Fred: Weather related.
Plays in the sales of <unk>, which I just mentioned earlier, we will see the impact of both the revenue and the associated cost of goods.
Fred: Cost of goods for these delayed shipments in the fourth quarter.
Fred: Selling general and administrative expenses were $8 $4 million for the third quarter of 2024, compared with $8 $6 million for the third quarter of 2023. The decrease was primarily driven by.
About a half million dollar decrease in general business administration expenses as well as a decrease of non personnel sales and marketing expenses of about zero point $2 million and a zero point $3 million decrease in personnel costs due to a.
Fred: Changes in head count and reduced severance that we saw in the prior year.
Fred: This was offset by about.
Zero point $8 million increase in legal expenses related to the complaint followed filed by Tusa Pharmaceuticals with the International Trade Commission ITC in the U S District Court for the district of Massachusetts.
The net loss for the third quarter of 2024 was $5 7 million compared with a net loss of $6 3 million for the prior year quarter. The decrease in the net loss is primarily driven by a lower change in fair value of our investment in related.
Parties as we have unwound that position in the past 12 months and this was off this was partially offset by a loss due to the change in our in the fair value of our warrants.
Fred: Adjusted EBITDA for the third quarter of 2024 was negative $4 6 million compared with negative $3 $9 million for the third quarter of 2023, reflecting a higher SG&A costs, driven primarily by R&D activities that we took over in June of this year.
We look at adjusted EBITDA, a non-GAAP financial measure as a better indication of ongoing operations. In this measurement is defined as net income or loss, excluding interest income and expense income taxes, depreciation and amortization and certain other nonrecurring or non cash items.
Fred: I'll refer you to the table and in our news release, we issued yesterday for a reconciliation of GAAP to non-GAAP financial measures.
Fred: I'll now summarize our the.
Fred: Our performance in the first nine months of 2024.
Fred: Total revenues increased by $1 $3 million or five 6% as compared to the same period last year from $23 4 million to $24 $7 million.
Fred: This increase was driven by both a higher unit sale price of analysts in the first nine months of 2024.
Fred: And revenue.
Our revenue increase associated with device sales due to the launch of the Rado XL lamp in June of 2024.
Fred: After a revenue decline in the first quarter, followed by 8% growth in the first half of 2024, we would now be at about 12% growth year to date had there been no shipping impact from Hurricane Milton.
Fred: Total operating expenses were $42 million for the nine months ended September 32024, compared with $42 3 million.
Fred: For the same period last year cost of revenue increased from the prior year to $13 3 million for the nine months ended September 32024, compared with $12 1 million for the same period last year.
Fred: General and administrative expenses decreased.
Fred: $225 $6 million compared to $29 $9 million in the prior year. The decrease was primarily driven by reduced SG&A from lower sales and marketing spend where we are managing our personnel and non personnel expenses very closely along with lower legal expenses to bite the 'twenty 'twenty four I T.
Fred: See complaint expenses I mentioned earlier.
Fred: We expect to see the bulk of these ITC related legal expenses.
Fred: In the next several months.
Fred: Adjusted EBITDA was negative $13 $9 million for the nine months ended September 32024, compared with negative.
$15 8 million for the same period last year.
Fred: Again, please refer to our press release, we issued yesterday for a reconciliation of GAAP to non-GAAP financial measures.
Fred: Now turning to our balance sheet as of September 30th 'twenty 'twenty, four we had cash cash equivalents of $2 $9 million compared with $1.3 million as of December 31, 2023.
Fred: We received the replacement product in January sorry in July for the three.
Recalled lots of amyloid that happened earlier, this year and move that value from other assets related party back to inventory.
Fred: We have successfully reduced our inventory levels closer to industry standards. It was $6 5 million at the end of the third quarter, including both <unk> and Dorado theories lamps and will receive two shipments of amyloid in the fourth quarter.
Fred: We have been evaluating the strategic options for our <unk> product and have concluded to deeply explore disposition of that asset.
Fred: We have progressed in the disposition process far enough that we have moved the zappy asset to held for sale.
Fred: Finally, we paid down the outstanding balance of our bridge loan.
Fred: Early in the third quarter.
Speaker Change: With that overview of our business and recent financial performance permanent and I are now ready to take questions from our cover our covering analysts operator.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Speaker Change: We are 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.
Speaker Change: The first question comes from Jonathan Aschoff with Roth Capital. Please go ahead.
Jonathan Aschoff: Hi, Thank you. Good morning, guys I was curious at first you know when will the cost of revenue start to better reflect the 25% that you said is valid through next year, rather than more closely reflect the older 50% that we still see.
Hi, Jonathan Fred here.
We expect that to.
Jonathan Aschoff: To see that impact in the fourth quarter.
Speaker Change: Oh, Okay I need to go through our older inventory.
Speaker Change: Tori first.
Speaker Change: Okay do you still expect to be cash flow breakeven by the end of next year and to still grow revenue this year, 20% over 2023.
Speaker Change: Yeah.
Speaker Change:
We expect to be in and have have revenue growth similar to prior years. This this year so.
Speaker Change: Mid to high teens.
Speaker Change: And then cash flow cash flow break even.
Speaker Change: Sure.
Speaker Change: Well, we'll we expect that.
Speaker Change: Towards the end of 2025 and the 2026.
Speaker Change: Okay. That's that's totally helpful. You know where the order is that actually with the shipments that fell into October did.
Speaker Change: Did you stick them with the October one price hike or did you know grandfather and the older the older price.
Speaker Change: We had a week.
Grandfathered and the older price.
Speaker Change: All the orders were placed.
Speaker Change: In Q3, it was just that.
Speaker Change: Whether it was office closures in Florida, Georgia, et cetera, or Fedex, having delayed they just got there and therefore, it just rev rec than in Q4.
Speaker Change: But we.
Speaker Change: All of the orders were placed in Q3 and had the.
Speaker Change: Price pre price increase as of October 1st.
Speaker Change: Okay. Lastly, can I just have the enrollment numbers for the acne and the peripheral AK trials.
Speaker Change: Yes.
Speaker Change: So the enrollment for the political AK.
Speaker Change: Is no clue of almost 65 stations.
Okay.
Speaker Change: C and one month of the Artemis study is humbled 626.
Speaker Change: Thank you very much Herman that's all from me.
Jonathan Aschoff: Thank you Jonathan.
Speaker Change: The next question comes from Bruce Jackson with the Benchmark Company. Please go ahead.
Bruce Jackson: Hi, good morning, and congratulations on all of the progress.
Bruce Jackson: Two questions around the fourth quarter so traditionally.
Bruce Jackson: With revenue forecasting after a price increase it's a little bit difficult to know what the drop off might be so I'm curious to know given the dynamics with the.
Bruce Jackson: The delayed order and everything how you see the fourth quarter developing in terms of revenue. After the price increase and also can you tell us remind us what the price increase was.
Speaker Change: Uh huh.
Speaker Change: Sure.
Speaker Change: So.
Speaker Change: The.
Price increase was 5%.
Speaker Change: Similar to what we did in 2023.
Speaker Change:
We expect.
Speaker Change: Mentioned, just a moment ago, we expect growth to be in line with prior years.
Speaker Change: Not high teens.
Speaker Change: So we expect to have a very strong Q4 traditionally Q4 is.
Speaker Change: Typically our strongest quarter as its quote unquote PDT season.
Speaker Change: Alright.
Speaker Change: If you want to leave.
Speaker Change: Is there anything on there.
Ross.
Yes.
Speaker Change: So you know that Q4 is always the strongest Claude on the question is of course, how much just being pulled into Q fleet because of the because of supply this increase.
Speaker Change: We did the same kind of pause increase also felt the same plus the son last year. So we couldn't use that U S.
Speaker Change: Something to all your analysis.
Speaker Change: In spite of the pause increase in Q3 and Io sets in Q3 Q4 will still with.
With quite some distance the.
Speaker Change: The school.
Speaker Change: So the fixed dose actually importance.
Speaker Change: For Q4, and those factors are probably that doctors tend to do more PTT tooling. The windchill. So that shows the automotive the user although more in Q4.
Speaker Change: But also there may be a text lesions as well as the tenants to all the before the end of the year.
Speaker Change: So those those lesions.
Speaker Change: Stew all still the same in spite of supplies inclusive so even with the price increase we expect a very strong.
Speaker Change: Q4, and on top of that we have the 4000 plus tubes, the apps to the normal development.
Speaker Change: Come on top.
Speaker Change: Okay, and then one other.
Speaker Change: One other element to the fourth quarter as the new three tubes approval. So I'm kind of curious to know if you've seen any customer response, yet to the new label anything if that said any impact on the orders.
Hello.
Speaker Change: We have some bought so far because we didn't we.
We didn't want to and we actively prevented it.
Speaker Change: The reason this.
In the.
Speaker Change: The fleet tubes in the label.
Speaker Change: It doesn't automatically mean that the Doctor is also currently in booths walnuts.
Speaker Change: I wanted to avoid a situation where the doctor believes that because of the labor children. She can all do it and that he doesn't get paid.
Speaker Change: So before we wanted to go ahead services, we had to remove the <unk>.
Speaker Change: So called M U E.
Speaker Change: CMS well.
Speaker Change: No. This is happened so there is no M U E any more on that.
Speaker Change: On the loose.
Speaker Change: So that Oh no on all the all the insurance companies also the pilot thing that's just been notified.
Speaker Change: We'll change the systems.
Speaker Change: So we believe starting next week, we can actually actively promote.
Speaker Change: The possibility of using <unk> tubes, all done in December.
Speaker Change:
Speaker Change: We hopefully see see the uptake based on this.
Speaker Change: Okay great.
Speaker Change: That's it for me. Thank you for taking my questions.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: This concludes our question and answer session I.
Speaker Change: I would like to turn the conference back over to management for any closing remarks.
Speaker Change: Yeah, well. Thank you all for later, so let's see who is the first quarter and.
Speaker Change: Just the first nine months of this year, that's been very positive with a significant increase in unbelievable stoops old even if a few thousands couldnt be delivered due to the hurricane.
Speaker Change: And taking into account the FDA approval and also non clinical results.
Speaker Change: Optimistic about the future of flow from Taylor.
Speaker Change: I would like to thank everyone for participating in this call and we look forward to speaking with you again, when we report our fourth quarter 2020 full results. Thank.
Speaker Change: Thank you and have a nice day.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.