BFRI

Please note this event is being recorded. I would like to turn the conference over to Ben Shamsian, Investor Relations. Please go ahead.

Good morning, and welcome to Biofrontera Inc.'s first quarter 2026 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 risks and uncertainties are detailed in and are qualified by the cautionary statements contained in Biofrontera's press releases and SEC filings, including the company's quarterly report on Form 10-Q for the quarter ended March 31, 2026, and the company's annual report on Form 10-K for the year ended December 31, 2025.

This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast. 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 references 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 viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in the press release issued today and is available on the company's website at www.biofrontera-us.com under the Investor Relations section.

Please note management will be referencing adjusted EBITDA, a non-GAAP financial measure defined as net income or loss excluding interest income and expense, income taxes, depreciation and amortization, and certain other non-recurring or non-cash items, including changes in fair value of warrant liabilities and stock-based compensation. With that said, I would like to now turn the call over to Hermann Luebbert, CEO, Chairman, and founder of Biofrontera. Hermann.

Thank you, Ben. Thank you to everyone joining us this morning. The first quarter of 2026 was strong across our key metrics. We delivered product revenues of $10.1 million, an increase of approximately 17% compared to $8.6 million in the first quarter of 2025. This marks the first full quarter reflecting our new cost structure following the strategic transaction with Biofrontera AG. The results demonstrate that our business model transformation is delivered as planned. These results further demonstrate the strength of our commercial execution and the growing adoption of Ameluz PDT across the dermatology community. George Jones, our CCO, will follow up about this in more detail.

As a reminder, the strategic transaction, which closed in October 2025, gave Biofrontera Inc full ownership and control of all U.S. rights, approvals, and patents for Ameluz and RhodoLED, including the New Drug Application, the Investigational New Drug Application, all manufacturing rights and contracts, and all intellectual property. The FDA formally transferred the NDA and IND to us in December 2025. Under the new earnout structure, we pay 12% of net sales when annual U.S. Ameluz revenues are at or below $65 million and 15% when they exceed that threshold. This replaced a transfer pricing model that previously was 25%-35% of revenue. The impact of this is clearly visible in our Q1 results.

Our gross margin expanded to approximately 80% compared to approximately 62% in the prior year quarter. Our cash used in operations was near zero at just $70,000, a dramatic improvement from $4.1 million used in operations in Q1 2025 and sets the path for cash flow break-even this year. Fred Leffler, our CFO, will provide more detail on the financial performance in a few moments. Let me now turn to the significant clinical and regulatory progress we have made during and since the first quarter. First, in superficial basal cell carcinoma. In February 2026, we announced that the FDA completed its filing review and accepted our supplemental New Drug Application for Ameluz PDT for the treatment of superficial basal cell carcinoma. The PDUFA target action date is September 28, 2026.

If approved, Ameluz would be the first PDT drug approved to treat a cancer in the U.S., representing a significant additional commercial opportunity for our platform and providing a significant advantage to what our direct competitor can do. Second, in actinic keratosis on the extremities, neck, and trunk. In February 2026, we announced positive and statistically significant top-line results from our phase III clinical trial. The study met its primary endpoint, demonstrating highly statistically significant superiority for Ameluz versus vehicle gel. Additionally, we announced the database lock of the phase I pharmacokinetics study required for our FDA filing. Combined, these data support our plan to file a supplemental NDA in the third quarter of 2026 to expand the Ameluz label for the treatment of AK beyond the face and scalp on a treatment field of up to 240 sq cm.

With approximately 58 million American adults having at least one AK lesion, treating extensive fields on the extremities, neck, and trunk represents a very large addressable market for our installed base of RhodoLED lamps. Third, in moderate to severe acne vulgaris. In March 2026, we announced the results of our Phase II study with Ameluz PDT. The three-hour incubation protocol demonstrated a 58% reduction in inflammatory lesions with Ameluz compared to 37% with vehicle gel in the per-protocol population. Patient satisfaction was very high, with 86% of patients stating they would choose PDT treatment again. Based on this data, we plan to discuss the design of future Phase III program with the FDA in the second half of 2026.

Acne vulgaris is a chronic condition affecting millions of adults and adolescents, and we believe Ameluz PDT has the potential to offer a differentiated treatment option for the moderate to severe form of the disease. On the corporate front, I am pleased to report that on May 6, 2026, we received written notification from Nasdaq confirming that the company has regained compliance with the minimum bid price requirement under Listing Rule 5550(a)(2). The closing bid price of our common stock was at or above $1 per share for the required 10 consecutive business days. Finally, I want to note that we continue to monitor the evolving global trade environment, including recently imposed tariffs on imports from certain countries. As all products are exclusively imported from Europe, we are routinely assessing the potential impact on our supply chain, product cost, and pricing strategy.

I would now like to turn the call over to George Jones, our Chief Commercial Officer, to provide a more detailed update on our commercial execution. George?

Thank you, Hermann, and good morning, everybody. I'm pleased to walk you through our commercial progress for the first quarter of 2026. As Hermann noted, we delivered product revenues of $10.1 million, an increase of approximately 17% year-over-year. The revenue increase was primarily driven by approximately 16% growth in Ameluz unit volume as well as a price increase that we implemented in the fourth quarter of 2025. Looking at the Ameluz unit volume growth, Ameluz unit volumes for the first quarter of 2026 increased from approximately 25,000 tubes in Q1 2025 to approximately 29,000 tubes of Ameluz in Q1 2026, translating to an approximately 16% year-over-year growth. This follows our record sales in Q4. This continued volume momentum reflects the impact of the executional improvements we have implemented and the growing adoption of Ameluz PDT.

Turning to lamps, the RhodoLED lamp placements. During Q1 of 2026, we shipped approximately 32 lamps, increasing our installed base to approximately 773 lamps across 709 dermatology offices as of March 31st, 2026. When we look at our sales force execution, our focused commercial strategy is delivering the momentum we're seeing. The strategy is centered on increased accountability across our commercial organization, refined customer segmentation, and data-driven targeting assisted by AI. We continue to focus on increased in-person sales activity because we know this drives the highest impact with our customers. We also saw the benefits of lower sales force turnover in Q1 2026 versus Q1 2025. As our newer reps have been able to get to know their customers and their territories, they're better able to drive results.

I also wanted to follow up on something we discussed during our last call. In Q4 2025, we launched an inside sales pilot to cover vacant territories, white space, and smaller accounts. I'm excited to share that in Q1, we've begun the full rollout of this program, and it's already started to deliver results for us. The growing installed lamp base, lower sales force turnover, expanded customer adoption, along with the potential for expanded uses for Ameluz with the near-term label expansion in SBCC and AK in the trunk and extremities. As well as the advancement of the acne program give us multiple vectors for continued growth and tailwinds for our business. I look forward to updating you on our progress in coming quarters. With that, I'll turn the call over to Fred Leffler, our Chief Financial Officer, to walk through the financial results. Fred?

Thank you, George. Good morning, everyone. I'll walk through our financial results for the first quarter ended March 31st, 2026. All comparisons are to the prior year period, unless otherwise noted. A full reconciliation of our GAAP to non-GAAP measures is included in the press release we issued earlier today and also available on our website. Starting with first quarter 2026 results. Revenues for the first quarter were approximately $10.1 million, compared with approximately $8.6 million in the first quarter of 2025, an increase of 17%. The increase was primarily driven by the 16% growth in Ameluz unit volume and the impact of the price increase we implemented in the fourth quarter of 2025, which contributed about $0.2 million in additional revenue. This was the first full quarter reflecting our new cost structure under the strategic transaction mentioned earlier, and our cost of revenues decreased by approximately 40% year-over-year from $3.1 million to $1.8 million. Under the new earn-out agreement, our cost of revenue as a percentage of product revenue declined significantly compared to the 25% transfer price that was in effect during Q1 of 2025. During the quarter, we recognized $1.2 million of earn-out expense under this new agreement. As a result, our gross profit on product sales improved significantly with a gross margin of approximately 80% compared with 62% in the first quarter of 2025, an improvement of 18%.

This is consistent with our expected annualized benefit of the new cost structure that will be reflected throughout 2026 and is tracking towards our longer term gross margin target of 80%-85%. Total operating expenses for the first quarter of 2026 were $14.4 million compared with $13.1 million in the first quarter of 2025. Excluding cost of revenues, operating expenses were $12.3 million compared to $9.9 million in the prior year. Operating expenses for the quarter include a $0.4 million patent remediation expense, which I will discuss further when I get to operating loss.

Selling general and administrative expenses were $11.0 million for the first quarter of 2026, compared with $8.7 million in the prior year quarter, an increase of $2.3 million or about 27%. I'll walk through and highlight the key components. Selling and marketing expenses increased about $0.8 million, reflecting the full deployment of our direct sales team and higher sales activity levels, including sales meetings, conferences, and exhibits. General and administrative expenses increased about $0.8 million as well, primarily driven by legal expenses associated with ongoing patent-related claims. Additionally, in connection with the strategic transaction, we assumed responsibility for the manufacturing operations in the fourth quarter of 2025.

Because we are in the process of securing approvals and licenses to commence manufacturing later in 2026, these manufacturing-related costs of $0.6 million were reflected in SG&A during this quarter. Research and development expenses decreased $0.3 million to $0.9 million for the first quarter of 2026, down from $1.2 million in the prior year quarter. The decrease was primarily attributable to certain clinical trials reaching substantial completion during the quarter. During the quarter, we invested in our AK, acne, superficial basal cell carcinoma, and lamp development programs. Operating loss for the first quarter of 2026 was $4.3 million, compared with a loss of $4.5 million in the first quarter of 2025.

The quarter included the $0.4 million of patent remediation expense, which we exclude because they relate to discrete adverse legal and regulatory matters that are not indicative of the company's ongoing operating performance. Excluding this expense, our underlying operating loss for the first quarter of 2026 would have been approximately $3.9 million and an improvement of $0.7 million, driven by a $2.7 million increase in gross profit and partially offset by a $2.3 million increase in SG&A. Net loss for the first quarter of 2026 was $4.8 million or $0.41 per share, compared with a net loss of $4.2 million or $0.47 per share in the prior year quarter.

The net loss comparison was impacted by two non-recurring items, the patent remediation I just discussed and a $0.8 million swing in the non-cash change in the fair value of warrant liabilities. A $0.5 million gain in Q1 of 2025 compared to a $0.2 million loss in Q1 of 2026. Adjusting for these items, the underlying improvement is reflected in our adjusted EBITDA, which I'll turn to now. Turning to adjusted EBITDA, our non-GAAP measure, the first quarter was -$3.6 million compared with -$4.4 million in the prior year quarter, an improvement of approximately $0.8 million. Our adjusted EBITDA margin improved to -35% from -51% in the prior year.

The improvement was primarily driven by the $2.7 million increase in gross profit, offset by the $2.3 million increase in SG&A. As a reminder, adjusted EBITDA excludes interest, taxes, depreciation and amortization, certain other non-recurring or non-cash items, including changes in fair value of warrant liabilities, stock-based comp, and the patent remediation expense and inventory write-down recognized during the quarter. A full reconciliation from GAAP net loss to adjusted EBITDA is included in the press release we filed earlier today and will be filed as part of our Form 10-Q. Turning to balance sheet and liquidity. As of March 31st, 2026, we had cash and cash equivalents of $6.3 million, compared with $6.4 million as of December 31st, 2025.

Cash used in operating activities for the first quarter was just $70,000, compared with $4.1 million in the prior year quarter. This near breakeven cash performance represents a dramatic improvement and reflects the combined impact of higher revenues, the significantly lower cost structure under the new [RhodoLED] agreement, and favorable working capital changes, including a $3.4 million collection of accounts receivable. As we have disclosed in our filings, the company has included a going concern qualification in its statements. While we have demonstrated meaningful progress towards cash flow breakeven, our current capital resources require us to continue expanding our commercial operations while controlling expenses.

We plan to address this through continued Ameluz revenue growth, realization of the next milestone payment of $1 million from the XEPI divestiture that happened in 2025, and if necessary, securing a working capital line of credit or the like. With that overview of our financial results and business activities, we are now ready to take questions from our covering analysts. Operator.

Thank you, sir. Thank you. We will now begin the question and answer session. To ask a question, you may press star and 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question come from Jonathan Aschoff with ROTH Capital Partners. Please go ahead.

As to what you might know about off-label use, particularly.

Jonathan, I'm sorry, you were not audible. Can you start again, please? Thank you.

Okay. Can you hear me now?

Yes.

Good. Congrats on a nice quarter. Can you guys help me understand the extent to which there's off-label use into probably the least risky is AK, you know, in the extremities? Do you have any decent sense as to Ameluz's use outside of what's on label?

There's certainly some off-label use. However, since some payers are quite sensitive to that and refuse to reimburse the doctors when they do this, doctors are usually hesitant doing off-label use. While we don't have access to any clear numbers, we don't expect that the current off-label use outside AK on the face and scalp, at least in the AK business is small.

Okay. Can you give us a sense of, you know, what kind of directions the acne, the subsequent clinical development in acne could go? I mean, are you definitely, expecting to already be teed up for a Phase III trial, or do you think you could actually have to do some Phase II development again?

That's difficult to say, because it needs to be discussed with the FDA. I don't think we need Phase II again. I think we got the information we need to go into Phase III. There have been quite a number of learnings. The clinical results are well in line with the best other topical products that are out there. We think unless the FDA has a different idea, we could go straight into Phase III.

Okay. Thanks, guys.

Jonathan, I just wanted to add that, you know, while we've heard of some off-label use, we market and ensure that everyone at Biofrontera, you know, markets the product on label and doesn't encourage anything that's outside of the label.

Thank you. Our next question come from Bruce Jackson with StoneX. Please go ahead.

Hi, good morning. Looking at the supplemental NDA for the superficial BCC, I believe you've got a PDUFA date of September 28th. If you do get the approval, are you ready to launch like the next day or is there any other additional preparation activity that needs to take place before you can go out and start marketing aggressively?

I could take that, Hermann. This is George.

I'm sorry to interrupt you, sir. Your voice is breaking. Can you check, please? Thank you.

Can you hear me?

Yes.

Yes.

Okay, perfect. There is no additional work or preparation that has to be done. We're actively preparing for the launch of that indication right now. We're gonna start some initial rollout with our medical team and some light rollout from our commercial team in Q4, really accelerating into the launch into Q1 of next year. We're ready to go and starting right after the approval.

Okay, got it. A question about the SGA expenses. Freddy did a nice job of kind of breaking that out. Is this kind of the run rate we should be looking at for the remainder of the year or were there any other types of sort of one-time things embedded in there that might roll off?

No. Well, as, you know, we've discussed before, there is a bit of seasonality to our business. Like the cash use in operations will most likely dip negative in Q3 and into Q4 unless, you know, we blow it out of the water, and then be positive in Q5 or Q4. Altogether we're still expecting to hit cash flow breakeven. That said, you know, the run rate that I did mention is we don't expect anything to drastically move off of that.

Okay. Okay. Last question on gross margins. It's nice to see the new agreements having some impact on the year-over-year improvement. How does this unfold for the remainder of the year as you try to get closer to your new target?

Well, I think that, you know, we're in the range and we will continue to look at the GPOs. We will continue to look at our discounting and, you know, manage that and 'cause our goal, and I think it's very achievable, is to stay within the 80%-85%. That can shift around because of those and the mix of Ameluz and RhodoLED sales as they develop throughout the year. It's something we'll look at. It's very manageable and we expect to, you know, easily stay in those, within that range.

Okay. All right, that's it for me. Thank you.

Thank you.

All right. It appears we have no further question at this time. I would like to return the program to management for the closing remarks. Over to you, team.

Thank you, Abhay. Thank you to everyone who joined us today. Let me leave you with a few key takeaways. The first is that our Q1 2026 demonstrates the full impact of our transformed business model. Revenue grew 17% year-over-year, gross margin expanded to approximately 80%, our cash consumption was near zero, validating the strategic transaction and giving us confidence in our path to sustain profitability. Second, our clinical pipeline continues to deliver results at an accelerated pace. We have a PDUFA date for SBCC in September 2026, positive Phase III results for AK on neck, trunk, and extremities that position us for an sNDA filing in Q3, encouraging Phase II data in acne that we will discuss with the FDA later this year.

Looking further ahead, we have planned studies in squamous cell carcinoma in situ and reduced pain PDT. Biofrontera is the only company in the U.S. actively running FDA-controlled clinical studies in PDT for dermatology, and our patent protection extends through 2043. Finally, the combination of revenue growth, the full benefit of our new cost structure, and disciplined expense management is driving meaningful improvement in our financial trajectory. We remain focused on our goal of reaching cash flow breakeven and building long-term value for our shareholders. I want to thank our entire team for their dedication and hard work. I also want to thank our shareholders, the healthcare professionals who use our products, and most importantly, the patients whose lives we are helping to improve in their fight against skin disease. Thank you for your continued support. Have a wonderful day.

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

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

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

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

Yes. Thank you, Ben, and thank you to everyone joining us this morning. Fiscal year 2025 was a transformational year for Biofrontera Inc. I am proud to say that we delivered record annual revenues of $41.7 million, representing about 12% growth over the prior year, capped by a record fourth quarter in which we generated revenues of $17.1 million, the highest quarterly revenue in our company's history, representing approximately 36% year-over-year growth. These results demonstrate the strength of our commercial execution and the growing adoption of Ameluz PDT across the dermatology community. As a consequence of the amendment in the contractual relationship with our former parent company, Biofrontera AG, I will explain in a few minutes. Q4 2025 was highly profitable for Biofrontera Inc., with an adjusted EBITDA of $4.9 million and an additional capital gain of $700,000 from the Serpi Investigator divestment, resulting in net income of $5.6 million. Let me take a moment to summarize what we accomplished in 2025, which resulted in this profitable fourth quarter and set the stage for an exciting 2026 and beyond. In October 2025, we closed a new asset purchase agreement with our former parent company, Biofrontera AG. The financial consequences were active already as of June 2025. This transaction is one of the most significant milestones in our history. We acquired all U.S. rights, approvals, and patents for Ameluz and RhodoLED, including the New Drug Application, the Investigational New Drug Application, all manufacturing rights and contracts, and all intellectual property. In December 2025, the FDA formally transferred the NDA and IND to us, giving Biofrontera Inc. full regulatory control in the United States. We also completed the transfer of 11 U.S. patents, 10 U.S. patent applications, and 19 international filings and registered designs. The financial implications of these transactions are significant. The new royalty or earn-out structure is 12% when annual U.S. Ameluz net sales are at or below $65 million and 15% in years where they exceed that threshold. This replaces a transfer pricing model that previously ranged anywhere from 25% to 35% of revenue. This change has already begun to improve our gross margin profile, leading to the highly profitable Q4, and Svet will provide more detail on the impact in a few moments. To support the AG transaction and our continued growth, we secured $11 million in funding through a private placement of Series C preferred stock led by Roseland Advisors and AIGH Capital Management. These healthcare-focused institutional investors share our belief in the long-term value of the Ameluz platform. We also completed the sale of our Xepi antibiotic cream license to Pelaos Therapeutics for initial proceeds of $3 million, with the potential for up to an additional $7 million in milestone payments. These transactions, combined with our strong fourth quarter revenue performance, give us the resources and financial flexibility we need to execute on our plan. We made remarkable clinical progress across multiple fronts in 2025, and that momentum has carried into early 2026. First, in superficial basal cell carcinoma, or sBCC, we submitted a supplemental New Drug Application to the FDA in November 2025 based on strong Phase III data from our 187-patient randomized, double-blind, placebo-controlled study. Complete histological clearance was seen in 76% of these tumors with Ameluz PDT compared to 19% with placebo. Complete clinical clearance was achieved in 83% of the lesions compared to 21% with placebo. I am pleased to report that the FDA has accepted this filing, and we have a PDUFA target action date of 09/28/2026. If approved, Ameluz would be the first PDT drug to treat a tumor in the United States, representing an additional commercial opportunity. Second, in actinic keratosis on the extremities and head, neck, and trunk, the last patient completed the treatment phase in 2025. The database was locked in January 2026. I am very pleased to report that in February 2026, we announced positive Phase III results; the study met its primary endpoint. Combined with the completed Phase I pharmacokinetic study, we anticipate filing a supplemental NDA in 2026 to expand the label for Ameluz to treat AK beyond the face and scalp on a treatment field of up to 240 square centimeters. With approximately 58 million American adults having at least one actinic keratosis lesion, treating extensive fields on the extremities, neck, and trunk represents a very large addressable market for our installed base of RhodoLED lamps. Third, in moderate to severe acne vulgaris, the treatment phase completed in Q3 2025 and the database was locked in January 2026. Last week, we announced positive Phase II results. The three-hour incubation protocol demonstrated a 58% reduction in inflammatory lesions with Ameluz compared to 37% with vehicle gel. PDT patient satisfaction was very high, with 86% of patients stating they would choose PDT treatment again. Based on these data, we plan to discuss the design of a future Phase III program with the FDA in 2026. Acne vulgaris is a chronic condition affecting millions of adults and adolescents, and we believe Ameluz PDT has the potential to offer a differentiated treatment option for the moderate to severe form of the disease. Our patent portfolio was significantly strengthened in 2025. We received approval for the new improved formulation of Ameluz, which removes the potentially allergenic propylene glycol, extending patent protection through December 2043. And just recently, we had positive news in our patent dispute with Sun Pharma. The U.S. Patent Trial and Appeal Board issued a final written decision finding all claims of Sun Pharma's patent unpatentable that we had challenged. This decision is a positive outcome in defending our market position, though we note Sun Pharma may seek further review. I would now like to turn the call over to George Jones, our Chief Commercial Officer, to provide a more detailed update on our commercial execution. George?

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

Thank you, George, and good morning, everyone. I will walk through our financial results for the fourth quarter and full year ended 12/31/2025. All comparisons are to the prior-year period unless otherwise noted. A full reconciliation of our GAAP to non-GAAP measures is included in the press release we issued earlier today and is available on our website. Starting with fourth-quarter 2025 results. Revenues for the quarter were approximately $17.1 million compared with $12.6 million in 2024. This is an increase of approximately 36%. This was the highest quarterly revenue in our company's history and was driven by strong Ameluz sales execution and pricing adjustments that we introduced in December 2025. Our related-party cost of goods sold, or COGS, decreased 45% year over year, driven by the transition from the transfer pricing model under our prior license and supply agreement to the significantly lower earn-out structure that came with the strategic transaction with Biofrontera AG that Hermann talked about a few moments ago. Under the new arrangement, the cost of revenues per unit declined steadily to about 15% compared with a range of 25% to 35% under the prior agreement. As a result, our gross profit on sales improved significantly, going from about 58% to 82% in 2025, which is a great outcome of all the hard work that everyone at Biofrontera Inc. put into this transaction. Total operating expenses for the quarter were $12.5 million compared with $14.3 million in 2024. With COGS excluded, costs were about $9.4 million in both years. Selling, general, and administrative expenses, SG&A, increased $300,000, or approximately 4%, to $4.8 million in 2025. This was mainly driven by legal costs. Research and development expenses were the same for the fourth quarters year over year at $800,000. This investment directly supported the clinical programs Hermann discussed a moment ago, including the work to complete the Phase III AK extremities trial and the Phase II acne trial. Operating income for the quarter was $4.6 million, a $6.3 million improvement from a net loss of $1.7 million in 2024. Net income for the quarter was $5.6 million, a $7.0 million improvement from a net loss of $1.4 million in 2024. This improvement was driven by the higher revenues and the materially lower cost of revenues resulting from the strategic transaction, which were partially offset by higher legal and R&D expenses. Turning to our non-GAAP measure, adjusted EBITDA for the quarter was $4.9 million compared with negative $1.4 million in 2024. This is an improvement of $6.3 million. Our adjusted EBITDA margin improved to positive 29% from negative 11% in the prior year, reflecting the favorable impact of higher gross profit and improved operating cost management. As a reminder, adjusted EBITDA excludes interest, taxes, depreciation, amortization, changes in the fair value of warrant liabilities, stock-based compensation, gain on sale of assets, and expense issuance costs. A full reconciliation can be found in our press release or on our website. Now turning to full-year 2025 results. Total GAAP net revenues for 2025 were $41.7 million compared with $37.3 million for the full year 2024, an increase of approximately 12%. The increase was primarily driven by $4.1 million in organic Ameluz growth associated with volume. Our related-party cost of goods sold decreased by $7.7 million, or 43%, to $10.1 million from $17.9 million in 2024, again driven by the transition from our former transfer pricing model under the prior license and supply agreement to the significantly lower earn-out structure that took effect in 2025. Under the new arrangement, beginning in July 2025, cost of revenue per unit declined steadily to about 15% compared to a range of approximately 25% to 30% under the prior agreement. Additionally, $2.0 million of purchase price accruals under the prior agreement were forgiven in connection with the closing. These reductions were offset by $2.2 million in earn-out payments under the new agreements. As a result, our gross profit on product sales improved significantly, going from about 50% to 74% for the full year 2025. We expect the full benefit of the new cost structure to be realized on an annualized basis in 2026, as the new 12% rate applied only to about 45% of the Ameluz sales volume in 2025. In the long run, we expect our gross profit margin to range between 80% and 85%. Total operating expenses for 2025 were $53.1 million compared with $54.5 million in 2024, a decrease of $1.5 million or about 3%. Within this, selling, general, and administrative expenses increased $4.0 million, or approximately 12%, to $38.4 million. The increase was driven by a $6.0 million increase in legal expenses related to patent claims, partially offset by a $1.1 million reduction in direct sales personnel expense from a lower headcount, $500,000 in savings from lower sales support activity levels, a $300,000 decrease in intangible asset amortization, and a $200,000 decrease in bad debt expense. Research and development expense increased $1.6 million to $3.7 million in 2025, reflecting our responsibility for all U.S. clinical trials for the full year, which only started in June 2024. This investment directly supported clinical programs Hermann discussed, including wrapping up all of the clinical trials mentioned earlier. Our operating loss for full-year 2025 was $11.3 million, a significant improvement from a net loss of $17.2 million in 2024, a reduction of approximately 34%. Our net loss for 2025 was $10.5 million, a significant improvement from the net loss of $17.8 million in 2024, a reduction of approximately 41%. This improvement was driven by higher revenues, materially lower costs from the strategic transaction, and a decrease in interest expense, partially offset by higher legal and R&D expenses. Turning to our non-GAAP measure, adjusted EBITDA for full-year 2025 was negative $10.6 million compared to negative $15.3 million in 2024, an improvement of $4.7 million or 31%. Our adjusted EBITDA margin improved to negative 25.4% from negative 40.9% in the prior year, reflecting the favorable impact of higher gross profit and improved operational cost management. I will refer you to our press release or website for more details. Finally, looking at our balance sheet and liquidity, as of 12/31/2025, we had cash and cash equivalents of $6.4 million compared with $5.9 million at 12/31/2024. During 2025, we received $11.0 million in gross proceeds from the private placement of Series C preferred stock, $3.0 million from the initial closing of the Xepi divestiture, and we generated $41.7 million in product revenue. Cash used in operating activities for the full year was $13.4 million, reflecting our net loss as well as changes in working capital. With the completion of the strategic transaction, we now have greater control over the supply chain, shorter lead times for our products, and improved inventory management. These operational improvements, combined with the significantly lower cost structure under the new earn-out agreement, are expected to reduce our cash consumption as we advance towards our goal of cash flow breakeven. As we have discussed in our filings, the support of our institutional investors, Roslyn and Biters and AIGH Capital, has been instrumental in positioning us to execute the strategic transaction and invest in our clinical pipeline. We are grateful for their confidence and commitment. With that overview of our business and financial results, we are ready to take questions from our covering analysts. Operator?

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

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

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

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

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

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

Thanks, Bruce. Thank you.

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

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

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