Biofrontera Inc. (Nasdaq: BFRI) is a biopharmaceutical company providing specialty dermatology therapies and services in the United States. Founded in March 2015, the company has a solid portfolio of pharmaceutical products focused on photodynamic therapy and topical antibiotics. Its flagship product is FDA-approved Ameluz, which is indicated for the treatment of actinic keratosis (AK) of mild to moderate severity.
The Woburn-based drugmaker made its stock market debut a few weeks ago through an initial public offering that fetched around $18 million in gross proceeds. In the third quarter of 2021, total revenues rose 33% year-over-year, mainly reflecting an increase in the sales of Ameluz and higher selling prices.
In an exclusive interview with AlphaStreet, Biofrontera’s chief executive officer Erica Monaco said sales recovered strongly in the first quarter, after regaining momentum at a steady pace since being hit by the pandemic in early 2020.
Excerpts from the conversation:
What factors have led to the improvement in revenue performance recently and how have things changed since the pandemic?
Biofrontera Inc.’s revenue was directly affected by the global COVID-19 pandemic starting in mid-March of 2020. From that point on, rising infection rates and the resulting official recommendation by the American Academy of Dermatology to care for patients through remote diagnosis and treatment led to significant declines in patient numbers and widespread, albeit temporary, practice closures. After negligible product sales in April 2020, we observed a slow recovery of our business in the summer of 2020 and later the first signs of stabilization in line with the usual seasonality.
Doctors’ offices reopened during the second half of 2020, at least in part, and patients showed increasing willingness to undergo in-office treatment for AK (actinic keratosis). 2021 sales started off heavily influenced still by the pandemic. However, since mid-March 2021 we have experienced a strong sales recovery.
What is the kind of potential and ROI that dermatology, as an industry, offers to investors?
This is hard to say and depends a lot on the dermatological indications targeted by a drug/company. As we further advance our market position, we will improve our margin as well as impact the market by providing an innovative treatment that significantly improves patient outcomes. As we further advance our clinical development, we will advance treatment options bringing more value to our customers and patients as well as further expand the market bringing greater ROI to our investors.
Let me provide you with a quick overview of our market and its opportunities. With our flagship PDT-product Ameluz for the treatment of actinic keratosis alone, we are looking at a total addressable market of about $4 billion in the US.
According to the Skin Cancer Foundation, actinic keratosis affects approximately 58 million people in the USA. In 2020, we estimated a total of 12.7 million treatments for actinic keratosis were performed. In the United States, the most common treatment for actinic keratosis remains cryotherapy, with approximately 11 million procedures performed per year in 2020 and an 86.3% market share. Topical drugs for the treatment of AK took a market share of about 11.9% in 2020, followed by PDT drugs at 1.8%.
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The latter is currently shared between our product Ameluz and the only competitor product in the PDT space. In 2020, our market share within the PDT drug segment was 24.5%, compared to approximately 22.6% in 2019. We were thus able to slightly improve our market positioning compared to competing PDT products despite the corona crisis and greatly reduced face-to-face interaction in doctors’ offices.
Our goal is to continue to improve the market positioning of Ameluz to become the leading PDT drug for the treatment of AK in the United States. In addition, we believe there is an opportunity to expand the PDT market as a therapy for the treatment of actinic keratosis as the standard of care.
What is the expected market impact from the recently launched clinical studies to expand the label of Ameluz?
Our clinical development program is designed to complement our commercial strategy by expanding the market positioning for our photodynamic therapy (PDT)-product Ameluz, providing more value to patients, broadening the total addressable market, and offering more favorable treatment options. The studies are performed by Germany-based Biofrontera AG and indirectly financed by us through the license and supply agreement for Ameluz existing between the companies.
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How do you see your balance sheet? Do you expect further fundraising in the near future?
As a growth-stage company, we intend to be opportunistic in regard to potential financing activities. However, we anticipate that funds available today provide sufficient capital to support operating, investing, and financing activities through at least the next 12 months. That said, our IPO gross proceeds of $18 million along with the $15 million private placement that closed early December, as well as over $5 million in cash proceeds from outstanding warrants exercised through today, afford Biofrontera the flexibility and strength to advance our position as a leading commercial dermatology company.
Do you currently have a timeline for profitability?
We’re in aggressive growth mode, which requires a certain balance as well as flexibility regarding investing in sustainable growth and keeping an eye on the cost of such growth.