BFRIW

Risk Factors- Risks Related to Our Business Strategy .
Ameluz and RhodoLED Lamps Our principal product is Ameluz, which is a prescription drug approved for use in combination with the RhodoLED Lamps, for PDT (when used together, “Ameluz PDT”).
In the United States, the PDT treatment is used for the lesion-directed and field-directed treatment of AK of mild-to-moderate severity on the face and scalp.
AKs are premalignant lesions of the skin that can potentially develop into skin cancer (squamous cell carcinoma) if left untreated. 1 International treatment guidelines list PDT as the “gold standard” for treating AK, especially multiple AKs and the surrounding photodamaged skin. 2 AKs, the number one indication at a dermatologist visit for those 40 and older, are superficial potentially pre-cancerous skin lesions caused by chronic sun exposure that may, if left untreated, develop into a form of potentially life-threatening skin cancer called squamous cell carcinoma.
AKs typically appear on sun-exposed areas, such as the face, bald scalp, arms or the back of the hands, and are often elevated, flaky, and rough in texture, and appear on the skin as hyperpigmented spots.
AKs are typically treated with cryotherapy, topicals, or PDT.
These treatments can be used in combination as well.
In general, PDT is a two-step process: ● the first step is the application of a drug known as a “photosensitizer,” or a pre-cursor of this type of drug, which tends to accumulate in fast growing cells at a faster rate compared to healthy cells; and ● the second step is activation of the photosensitizer by controlled exposure to a selective light source in the presence of oxygen to selectively destroy the fast growing cells.
During this process, energy from the light activates the photosensitizer.
In PDT, the activated photosensitizer transfers energy to oxygen molecules found in cells, converting the oxygen into a highly reactive oxygen species, which destroys or alters the sensitized cells.
PDT can be a highly selective treatment that targets specific cells while minimizing damage to normal surrounding tissues.
It also can allow for multiple courses of therapy.
Hence the mode of action of PDT requires destruction of the altered cells, and temporary local skin reactions and inflammation of the treated area might be expected.
The Ameluz PDT therapy is highly effective with patients - efficacy is up to 91% clearance after one or two treatments 3 with limited or no scarring.
The therapy also may provide protection from potentially fatal progress of mild AKs. 4 Market and competitive landscape AK is the most common precancer; it affects more than 58 million Americans. 5 Cryotherapy is the traditional and most common form of treatment but may not be as effective and may leave scarring; cryotherapy is estimated to be approximately 86% of the market.
Topicals, medications which patients apply to the lesion multiple times per day for up to several weeks, constitute approximately 12% of the market.
The total market size is estimated to be roughly $4 billion for the three therapy types.
Our primary competitor in the PDT space is Levulan ® and the associated light, Blu-U ® .
Our goal is to continue expansion in the current PDT market and focus on converting cryotherapy treatments of more than 14 lesions to Ameluz PDT as the switch or even combination of cryotherapy and PDT could be more effective and lead to better patient outcomes.
This targeted market is about 11% or $500 million of the total AK market. 6 Ameluz PDT is competitive in the market.
We are leveraging medical affairs, leading educational, CME- and non-CME programs, participating in thought leader advisory boards and focus groups, and offering reimbursement resources in order to educate the market on the use and benefits of Ameluz PDT.
The kinetics of skin cancer: Progression of actinic keratosis to squamous cell carcinoma.
Dermatologic Surgery . 2007 Sep; 33(9):1099-101 Werner RN, Stockfleth E, Connolly SM, et al.
Evidence- and consensus-based (S3) Guidelines for the Treatment of Actinic Keratosis - International League of Dermatological Societies in cooperation with the European Dermatology Forum - Short version.
J Eur Acad Dermatol Venereol. 2015;29(11):2069-2079. doi:10.1111/jdv.13180 For full prescribing information for Ameluz, please see https://bit.ly/AmeluzPI.
DOI 10.1111/bjd. 14498 https://www.skincancer.org/skin-cancer-information/skin-cancer-facts Market data accessible from CMS and IQVIA, 2020 Sales, marketing and distribution We are currently selling our products in the United States through the use of our own commercial organization.
We have a single sales force who markets all our products across the dermatology space.
We launched the commercialization of Ameluz in combination with the RhodoLED lamp for the treatment of AK in the United States in October 2016.
Ameluz is distributed as a “buy-and-bill” drug that is purchased by the dermatologist, rather than distribution through pharmacies.
Our customers will purchase our device and Ameluz which will be held in inventory.
When a dermatologist uses our product in a treatment, a payor will be billed, and the provider will be paid for both the product and light treatment.
There are three well established PDT Current Procedural Terminology (“CPT”) Codes related to Ameluz PDT treatments: 1) code number 96567, which has an average reimbursement of $129.26 per light treatment, 2) code number 96573, which has an average reimbursement of $217.44 per light treatment performed by qualified health care professional, or 3) code number 96574 which has an average reimbursement of $266.87 per debridement of a hyperkeratotic AK lesion followed by a light treatment performed by a qualified health care professional.
Our R&D programs Effective June 1, 2024, the Company assumed control of all clinical trials relating to Ameluz in the US, allowing for more effective cost management and direct oversight of trial efficiency.
Our R&D programs are focused on label expansion for Ameluz as well as supporting PDT growth by improving the capabilities of our RhodoLED Lamps to better fulfill the needs of dermatologists.
Effective October 20, 2025, we acquired all rights in the United States to Ameluz and the RhodoLED Lamps for all indications currently approved by the Food and Drug Administration (the “FDA”) as well as all future FDA-approved indications.
A summary of our clinical trials is below: Clinical Phase Product Indication / comments Pre-clinical I II III Approval process Status Ameluz Superficial basal cell carcinoma ● Submitted to FDA in Q4 2025.
Ameluz Moderate to severe acne ● Last-patient-out of treatment phase in Q3 2025.
Clinical Study Report (“CSR”) for treatment phase expected Q3 2026.
Ameluz Actinic Keratosis ● Trunk & extremities applying 1-3 tubes of Ameluz .
Last-patient-out of treatment phase in Q3 2025.

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Gone since FY2024

Risk Factors Investing in our common stock involves a high degree of risk.
You should carefully consider the risks described below, together with other information in this Form 10-K, and our other filings with the SEC, including our financial statements and the related notes and the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such filings, before deciding whether to invest in our common stock.
The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition, results of operations and growth prospects.
In such an event, the market price of our common stock could decline, and you may lose all or part of your investment.
Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.
Our business, results of operations and financial condition and the industry in which we operate are subject to various risks.
We have listed below (in order of importance or probability of occurrence) the most significant risk factors applicable to us, but they do not constitute all of the risks that may be applicable to us.
You should read this summary together with the more detailed description of each risk factor contained below.
Some of these material risks include: Summary of Material Risk Factors Risks Related to the License and Supply Agreements and our Licensed Products ● Currently, our revenue derives solely from sales of products we license from other companies.
If the license agreements are terminated, we could lose license rights that are important to our business. ● Certain important patents for Ameluz ® expired in 2019.
If generic versions of Ameluz ® enter the market, we may need to reduce the price of Ameluz ® significantly, which would reduce revenues, and may lose significant market share. ● Our business depends substantially on the success of Ameluz ® .
If we or the Ameluz Licensor are unable to successfully obtain and maintain regulatory approvals or reimbursement for Ameluz ® for existing and additional indications, our business may be materially harmed. ● If the Ameluz Licensor fails to maintain its relationships with the manufacturers of Ameluz, or if those manufacturers are unable to produce Ameluz, our business could be materially harmed. ● If our Licensors or our Licensors’ manufacturing partners, as applicable, fail to manufacture our licensed products in sufficient quantities and at acceptable quality and cost levels, we may face a bar to, or delays in, the commercialization of those products or we will be unable to meet market demand and lose potential revenues. ● If our Licensors’ efforts to protect the proprietary nature of their intellectual property related to our licensed products are not adequate, we may not be able to compete effectively in our market. ● Third party claims of intellectual property infringement may affect our ability to sell our licensed products and may also prevent or delay our Licensors’ product discovery and development efforts. ● The Biofrontera Group has been involved in lawsuits to defend or enforce patents related to our licensed products, similar suits may arise in the future, which could be expensive, time-consuming and unsuccessful. ● The trade secrets of our Licensors are difficult to protect. ● Our subsidiary and certain third-party employees and our licensed patents are subject to foreign laws. ● Our international dealings with our Licensors may pose currency risks. ● The Company may be unable to effectuate a sale of Xepi® in a timely manner or receive consideration in excess of the carrying value of the asset that is currently held for sale.
Risks Related to Our Business and Strategy ● The sourcing and manufacture of our licensed products as well as, in part, the regulatory approvals and clinical trials related to our licensed products are currently controlled by our existing collaborators.
Our lack of control could adversely affect our ability to implement our strategy for the commercialization of our licensed products. ● Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, which could make it difficult for us to sell our licensed products. ● Healthcare legislative changes may have a material adverse effect on our business and results of operations. ● To date, we have a relatively short history of sales of our licensed products in the United States. ● Competing products and future emerging products may erode sales of our licensed products. ● We face significant competition, and our operating results will suffer if we fail to compete effectively. ● If we are unable to maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our licensed products, we may be unable to generate revenue growth. ● The United States market size for Ameluz ® for the treatment of AK may be smaller than we have estimated. ● If our Licensors are subjected to sanctions due to noncompliance with law, our licensed products could be subject to restrictions or withdrawal from the market. ● Our licensed products may not gain market acceptance among members of the medical community. ● Our failure to comply with healthcare laws and regulations and could have a material adverse effect on our results of operations and financial condition. ● A recall of our licensed drug or medical products, or the discovery of serious safety issues with our licensed drug or medical products, could have a significant negative impact on us. ● Our products subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer. ● Our actual or perceived failure to comply with data and data security regulations could harm our business. ● We are highly dependent on our key personnel, and if we are not successful in attracting and retaining highly qualified personnel, we may be unable to successfully implement our business strategy. ● Our employees may engage in misconduct or other improper activities. ● We will need to grow our organization and we may experience difficulties in managing this growth. ● Our business and operations would suffer in the event of system failures or, cyber-attacks. ● If product liability lawsuits are brought against us, we may incur substantial liabilities ● Failure to comply with applicable anti-corruption legislation could result in fines and criminal penalties. ● Our licensed products will be subject to ongoing regulatory requirements. ● Generic manufacturers may launch products at risk of patent infringement. ● The results of our R&D efforts are uncertain.
Risks Related to Clinical Trials and Regulatory Approvals of Indication Expansion ● Delay or termination of planned clinical trials would result in unplanned expenses and significantly and adversely impact our remaining developmental activities and potential commercial prospects. ● If third parties conducting some of our clinical trials do not carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval to extend the indications of our licensed products. ● Our licensed products may pose safety and other issues that could delay or prevent the regulatory approval of additional indications and result in significant negative consequences. ● If we are ultimately unable to obtain regulatory approval for additional indications of our licensed products on a timely basis or at all, our business will be substantially harmed.
Risks Related to Corporate Governance, Including Being a Public Company ● If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements may be impaired, investors may lose confidence in our financial reporting, and the price of our common stock may decline. ● We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management devotes substantial time to compliance with our public company responsibilities. ● We cannot be certain if the reduced disclosure requirements applicable to us as an emerging growth company or smaller reporting company will make our common stock less attractive to investors.
Risks Related to Our Securities and the Ownership of Our Common Stock ● Provisions of our outstanding warrants could discourage an acquisition of us by a third party. ● Our share price may be volatile. ● If we fail to maintain compliance with applicable listing standards, our common stock and publicly-traded warrants could be delisted from Nasdaq. ● Future sales of our common stock in the public market could cause our share price to fall. ● Warrants are exercisable for our common stock, which, if exercised, would result in dilution to our stockholders. ● If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline. ● Our quarterly operating results may fluctuate significantly. ● Future sales and issuances of our common stock or rights to purchase our common stock could result in dilution and could cause the stock price of our common stock to decline. ● Any gain on an investment in our common stock likely depends on increases in the price of our common stock. ● Our stockholder rights plan could discourage a takeover or other transaction that stockholders may favor. ● Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock. ● Our certificate of incorporation could limit our stockholders’ ability to obtain a judicial forum other than the Court of Chancery of the State of Delaware for disputes with us or our directors, officers or employees. ● Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us for our common stock increases. ● Many of our warrants are accounted for as a liability and recorded at fair value with changes in fair value each period, which may have an adverse effect on the market price of our common stock.
Risks Related to the License and Supply Agreements and Our Licensed Products Currently, our sole source of revenue is from sales of products we license from other companies.
If we fail to comply with our obligations in the agreements under which we license rights from such third parties, or if the license agreements are terminated for other reasons, we could lose license rights that are important to our business.
We are a party to license agreements with Biofrontera Pharma, GmbH and Biofrontera Bioscience, GmbH (for Ameluz ® and the RhodoLED ® Lamps) and with Ferrer (for Xepi ® ) and expect to enter into additional licenses in the future.
Our existing license agreements impose, and we expect that future license agreements will impose, on us various development, regulatory diligence obligations, payment of milestones or royalties and other obligations.
If we fail to comply with our obligations under our license agreements, the licensor may have the right to terminate the license.
In the event that any of our existing or future important licenses were to be terminated by the licensor, we would likely need to cease further commercialization of the related licensed product or be required to spend significant time and resources to modify the licensed product to not use the rights under the terminated license.
In the case of marketed products that depend upon a license agreement, we could be required to cease our commercialization activities, including sale of the affected product.
For a summary of the terms of the license agreements, see “ Business—Commercial Disputes have arisen and may continue to arise between us and any of our Licensors regarding intellectual property subject to such agreements, including: ● the scope of rights granted under the agreement and other interpretation-related issues; ● whether and the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the agreement; ● our right to sublicense patent and other rights to third parties; ● our diligence obligations with respect to the use of the licensed intellectual property, and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our Licensors and us, should any such joint creation occur; ● our right to transfer or assign the license; and ● the effects of termination.
These, or other disputes over intellectual property that we have licensed may prevent or impair our ability to maintain our current arrangements on acceptable terms or may impair the value of the arrangement to us.
Any such dispute, or termination of a necessary license, could have a material adverse effect on our business, financial condition and results of operations.
Certain important patents for our licensed product Ameluz ® expired in 2019.
Although the process of developing generic topical dermatological products for the first time presents specific challenges that may deter potential generic competitors, generic versions of Ameluz ® may enter the market following the recent expiration of these patents.
If this happens, we may need to reduce the price of Ameluz ® significantly and may lose significant market share.
The patent family that protected the technology relating to nanoemulsion of 5-aminolevulinic acid, the active ingredient in Ameluz ® , against copying by competitors expired on November 12, 2019.
This patent family included United States Patent No. 6,559,183, which, prior to its expiration, served as a material, significant and possibly the only barrier to entry into the United States market by generic versions of Ameluz ® .
Although the process of developing generic topical dermatological products presents specific challenges that may deter potential generic competitors, Patent No. 6,559,183 no longer prevents generic versions of Ameluz ® from entering the United States market and competing with Ameluz ® .
If generic competitors do enter the market, this may cause a significant drop in the price of Ameluz ® and, therefore, a significant drop in our profits.
We may also lose significant United States market share for Ameluz ® .
The Ameluz Licensor holds another patent family protecting the technology relating to nanoemulsions for which they have been issued patents in various jurisdictions and which expire in December 2027.
A corresponding United States patent application has been filed by the Ameluz Licensor but is still pending.
We cannot guarantee that this United States patent will be issued or, if issued, will adequately protect us against copying by competitors.
Our business depends substantially on the success of our principal licensed product Ameluz ® .
If we or the Ameluz Licensor are unable to successfully obtain and maintain regulatory approvals or reimbursement for Ameluz ® for existing and additional indications, our business may be materially harmed.

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