Biofrontera Inc. 10-K

Item 1. Business Overview We are a United States based biopharmaceutical company engaging in the development, manufacturing, and commercialization of pharmaceutical products for the treatment of dermatological conditions with a focus on photodynamic therapy (“PDT”). The Company’s products, which include Ameluz as well as the BF-RhodoLED and RhodoLED XL lamp series (together, the “RhodoLED Lamps”), are used for the treatment of actinic keratosis (“AK”), a common skin condition characterized by the growth of pre-cancerous lesions (or “AKs”). With our national commercial team, we generate revenue by selling our products directly to dermatology offices and groups. We were formed in 2015 as Biofrontera Inc., a Delaware corporation, and a wholly owned subsidiary of Biofrontera AG, a stock corporation organized under the laws of Germany. In 2021, we completed our initial public offering. Effective June 1, 2024, we assumed control of all clinical trials relating to Ameluz in the United States, allowing for more effective cost management and direct oversight of trial efficiency through Discovery, our wholly owned subsidiary that was formed in Germany in 2022. Our research and development (“R&D”) programs are focused on label expansion for Ameluz as well as supporting PDT growth by improving the capabilities of the RhodoLED Lamps to better fulfill the needs of dermatologists. On October 20, 2025, we entered into i) an Asset Purchase Agreement (the “Transfer Agreement”) and ii) an Earnout Agreement (together with the Transfer Agreement, the “Agreements”), with the Biofrontera Group, pursuant to which the Company acquired all rights in the United States to Ameluz and RhodoLED (the “Strategic Transaction”). See Note 3. Asset Acquisition and Note 16. Related Party Transactions for additional information. On November 6, 2025, the Company completed the sale of the intangible asset relating to its Xepi product line, a long-lived asset previously classified as held for sale. See Note 9. Assets Held for Sale , for additional information. Our Strategy Our principal objective is to improve patient outcomes in the non-melanoma space through adoption and use of our products. The key elements of our strategy include the following: ● expand our sales in the United States of Ameluz in combination with the RhodoLED Lamps for the treatment of minimally to moderately thick AKs of the face and scalp and positioning Ameluz to be the standard of care in the United States by leveraging new label indications and focusing on acquisition of new customers and growth of the therapy in our current customer base; 4 ● leverage the potential for future approvals and label extensions of our portfolio products that are in the pipeline for the United States market with respect to Ameluz and furthering the clinical development of Ameluz after taking over responsibility for certain ongoing clinical trials since June 1, 2024; and ● strategically manage our portfolio, including opportunistically adding complementary products or services to our portfolio by acquiring or licensing intellectual property to further leverage our commercial infrastructure and customer relationships. By executing these strategic objectives and continually evaluating our product portfolio with strategic options to improve our business, we will fuel growth, deepen our trusted relationships in the dermatology community, and above all, help patients live healthier, more fulfilling lives. Employees As of December 31, 2025, the Company had a total of 92 employees comprised of 75 employees (72 full-time and three part-time) in the United Sates and 19 employees located in Germany (12 full-time and seven part-time). Significant Customers We have a wide and diverse customer base with no single customer dominating our revenues. At December 31, 2025, no customer represented more than 10% of the net accounts receivable balance. For the year ended December 31, 2025, no customer represented more than 10% of net revenues. However, many of our existing and potential customers for our products have combined or could choose to combine in the near future to form GPOs in an effort to lower costs. See GPO Risk Factor in Item 1A. 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. PDT is approximately 2% 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. 1 Fuchs, A., & Marmur, E. The kinetics of skin cancer: Progression of actinic keratosis to squamous cell carcinoma. Dermatologic Surgery . 2007 Sep; 33(9):1099-101 2 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 3 For full prescribing information for Ameluz, please see https://bit.ly/AmeluzPI. 4 Reinhold et al. 2016 Br. J. Derm. DOI 10.1111/bjd. 14498 5 https://www.skincancer.org/skin-cancer-information/skin-cancer-facts 6 Market data accessible from CMS and IQVIA, 2020 5 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 PDT is an in-office procedure. 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. Phase 2 data obtained in Q1 2026. 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. CSR for treatment phase expected Q2 2026. Reg. filing for sNDA is expected for Q3 2026 for field treatment of AKs on extremities and neck and trunk. Ameluz Actinic Keratosis ● Trunk & extremities pharmacokinetics study applying 3 tubes of Ameluz. Last-patient-out in Q4 2025. CSR expected Q2 2026. Reg. filing expected together with trunk and extremities phase 3 study in Q3 2026. Ameluz Actinic Keratosis ● AK Pain Reduction; Plan to start enrollment in 2027 The new, larger RhodoLED XL was approved by the FDA in 2021 for use in combination with Ameluz for the treatment of mild and moderate AKs on the face and scalp, which corresponds to the current approval of Ameluz and was launched in June 2024. The RhodoLED XL enables the illumination of larger areas, thus allowing the simultaneous treatment of several AKs distant from each other. The smaller BF-RhodoLED model will continue to be offered in the United States market. In October 2024, the FDA approved the Company’s Supplemental New Drug Application to increase the maximally approved dosage of Ameluz from one to three tubes per treatment. This approval allows healthcare professionals greater flexibility in addressing larger or multiple treatment areas for patients undergoing PDT for AK on the face and scalp, leading to greater convenience for both healthcare providers and their patients. In combination with the RhodoLED XL Lamp, providers can now treat a patient’s face more efficiently. Additionally, the change to the label and the RhodoLED XL are both foundational to support trunk and extremities which we expect to add to the label in 2027. Regulatory submission for the trunk and extremities label change is planned for the second quarter of 2026. A lso in October 2024, the Company received results in its Phase III trial evaluating Ameluz PDT as a treatment for superficial basal cell carcinoma (“sBCC”). The primary endpoint was a composite of complete clinical and histological clearance of one preselected “main target” BCC lesion per patient 12 weeks after the start of the last PDT cycle. According to the phase III ALA-BCC-CT013 study, Ameluz-PDT achieved 65.5% success in the composite endpoint, compared to 4.8% success achieved with placebo-PDT. Complete histological clearance was seen in 75.9% of these lesions in the Ameluz arm, compared to 19.0% with placebo. Complete clinical clearance was achieved in 83.4% of patients treated with Ameluz compared to 21.4% with placebo. In November 2025 a Supplemental New Drug Application was submitted to the FDA, applying for the approval of the treatment of sBCC by PDT with Ameluz and the BF-RhodoLED or the RhodoLED XL lamp . The FDA has accepted the filing and set a Prescription Drug User Fee Act date of September 28, 2026. F urthermore, the FDA approved a new formulation of Ameluz that lacks propylene glycol and reduces the accumulation of certain contaminants over time. A corresponding patent application was granted by the United States Patent and Trademark Office, (the “USPTO”), extending protection of Ameluz to 2043. The new formulation has been implemented in all US productions of Ameluz since 2024 . Seasonality Traditional PDT treatments using a lamp are usually performed more frequently during the winter. As such, our revenue is subject to some seasonality and has historically been higher during the first and fourth quarters of the year than during the second and third quarters. 6 Principal Suppliers & Manufacturers Historically, we have relied on Biofrontera Pharma (the “Former Ameluz Licensor”) as the principal supplier and manufacturer of our products. However, in conjunction with a Strategic Transaction, the Company assumed full control of the Ameluz New Drug Application and Investigational New Drug, enabling the Company to take full responsibility for all aspects of manufacturing Ameluz and the RhodoLED Lamps in the U.S. Pursuant to the Strategic Transaction, we will temporarily continue to rely on the Former Ameluz Licensor for the manufacturing of Ameluz until we secure all necessary licenses and implement all necessary contracts to fully assume these responsibilities. In preparation of the same, we have entered into an agreement for the primary procurement of our active pharmaceutical ingredient (“API”) with Midas Pharma GmbH, located in Germany. We have also identified a secondary source of API and anticipate entering into a similar agreement with this supplier. Production of Ameluz is carried out by a contract manufacturer, Glaropharm AG in Switzerland, as well as a second contract manufacturer located in Germany, Pharbil Waltrop GmbH, who has recently been qualified for manufacturing of Ameluz to ensure stability of the supply chain and help manage possible tariff impacts. Production of the RhodoLED Lamps is currently carried out by the Former Ameluz Licensor in Leverkusen, Germany, which responsibility will be transferred to Discovery pursuant to the Strategic Transaction. See Part 1, Item 7, “Overview and Recent Developments” for more information concerning the Strategic Transaction. We centralize our customer sales support and back-office functions through our headquarters in Woburn, Massachusetts. Intellectual Property We rely on a combination of patents, trademarks, copyrights, trade secrets and other proprietary know-how and regulatory exclusivities, as well as contractual protections, to establish and protect our intellectual property rights. We consider the overall protection of our intellectual property rights to be of material value and act to protect these rights from infringement. We have patent protection related to our innovative technologies and developments in connection with our nanoemulsion technology, the RhodoLED Lamps and general PDT illumination procedures. A ll patents awarded by the USPTO to the Company that are material to an understanding of the Company are listed in the table below : No. Patent No./ Application Serial No. Issue Date/ Filing Date Title Expiration Date 1. 12,208,278 January 28, 2025 Illumination for photodynamic therapy September 23, 2041 2. 11,219,781 January 11, 2022 Illumination for photodynamic therapy June 5, 2039 3. 11,235,169 February 1, 2022 Illumination device for photodynamic therapy, method for treating a skin disease and method for operating an illumination device October 15, 2040 4. Dl,021,120 April 2, 2024 LED Panel for a photodynamic therapy lamp April 2, 2039 5. Dl,052,103 November 19, 2024 Photodynamic Therapy Lamp Head November 19, 2039 6. D1,067,446 March 18, 2025 Photodynamic Therapy Lamp March 18, 2040 7. 11,540,981 January 3, 2023 Nanoemulsion formulation with improved stability and cell penetration February 7, 2028 8. 12,280,146 April 22, 2025 Nanoemulsion without propylene glycol December 8, 2043 9. 12,409,112 September 9, 2025 Pressurized nanoemulsion April 6, 2043 10. 11,642,411 May 9, 2023 Photodynamic therapy comprising two light exposures at different wavelengths April 23, 2039 Patents pending filed by the Company that are material to an understanding of the Company are as follows: No. Patent No./ Application Serial No. Issue Date/ Filing Date Title Expiration Date 1. 18/984,614 December 17, 2024 Illumination for photodynamic therapy December 17, 2044 2. 17/071,496 October 15, 2020 Illumination device for photodynamic therapy, method for treating a skin disease and method for operating an illumination device October 15, 2040 3. 18/248,672 April 11, 2023 Illumination device for photodynamic therapy, method for treating a skin disease and method for operating an illumination device April 11, 2043 4. 19/122,218 April 17, 2025 Illumination device for photodynamic therapy, method for treating a skin disease and method for operating an illumination device April 17, 2045 5. 29/926,745 January 31, 2024 LED Panel for a photodynamic therapy lamp January 31, 2039 6. 29/968,470 October 16, 2024 Photodynamic Therapy Lamp Head October 16, 2039 7. 29/989,162 February 10, 2025 Photodynamic Therapy Lamp February 10, 2040 8. 19/334,025 April 5, 2024 Nanoemulsion without propylene glycol April 6, 2043 9. 19/334,331 April 5, 2024 Pressurized nanoemulsion April 6, 2043 10. 18/188,373 March 22, 2023 Photodynamic therapy comprising two light exposures at different wavelengths April 23, 2039 7 Commercial Partners and Agreements Ameluz and RhodoLED Lamps License Service Agreement On February 19, 2024, the Company entered into the Second Amended and Restated License and Supply Agreement (the “Second A&R Ameluz LSA”) with the Former Ameluz Licensor, effective February 13, 2024. Among other things, the Second A&R Ameluz LSA established the “Transfer Price” of Ameluz at 25% for all purchases in 2024 and 2025. The Transfer Price covered the cost of goods, royalties on sales, and services including all regulatory efforts, agency fees, pharmacovigilance, and patent administration. Under the Second A&R Ameluz LSA, the Former Ameluz Licensor was responsible for obtaining and maintaining the rights to all FDA approvals (and any required maintenance thereafter) needed for the Former Ameluz Licensor to manufacture Ameluz and/or the RhodoLED Lamps and/or for Biofrontera to sell Ameluz and/or the RhodoLED Lamps in the United States. Likewise, the Former Ameluz Licensor was responsible to maintain a pharmacovigilance database and to respond appropriately to all relevant queries of any regulatory authority pertaining to pharmacovigilance. Biofrontera was required to provide reasonable support relating to any regulatory issues relating to pharmacovigilance and/or product recalls, obtaining all state licenses or any other similar approvals required to market Ameluz and/or the RhodoLED Lamps in the United States, and carrying out all mandatory reporting responsibilities under federal and state law with respect to compliance with the Prescription Drug Marketing Act, the Sunshine Act, or any other similar laws and regulations. The Second A&R Ameluz LSA was terminated in connection with the Strategic Transaction. See Part 1, Item 7, “Overview and Recent Developments” for more information concerning the Strategic Transaction. Government and Industry Regulation Governmental authorities in the United States, at the federal, state and local level, extensively regulate, among other things, the research, development, testing, manufacture, safety surveillance, efficacy, quality control, labeling, packaging, distribution, record keeping, promotion, storage, advertising, distribution, marketing, sale, export and import, pricing (including discounts and rebates), and the reporting of safety and other post-market information of the products we distribute. These laws and regulations may require administrative guidance for implementation, and a failure to comply could subject us to legal and administrative actions. Enforcement measures may include substantial fines and/or penalties, orders to stop non-compliant activities, criminal charges, warning letters, product recalls or seizures, delays in product approvals, exclusion from participation in government programs or contracts as well as limitations on conducting business in applicable jurisdictions and could result in harm to our reputation and business. Compliance with these laws and regulations may be costly and may require significant technical expertise and capital investment to ensure compliance. Cost containment efforts by governmental authorities and health care reform continue to exert pressure on product pricing and market access. Pricing pressure continues to be influenced by the power exerted through entities negotiating on behalf of federal health care programs such as Medicare and Medicaid, as well as managed care programs, and commercial insurance plans. We are also seeing government-mandated pricing restrictions aimed at reducing prices and promoting generic drugs adding increased competition and pricing pressure in the market. The U.S. Congress continues to consider and discuss legislation aimed at reducing health care costs, including lowering the price of drugs and biologics. United States Drug Development and Review Drug Development Process General Information about the Drug Approval Process and Post-Marketing Requirements The United States system of new drug and biologics approval is a rigorous process. The following general comments about the drug approval process are relevant to the development activities related to our products. Investigational New Drug Application (“IND”): After certain pre-clinical studies are completed, an IND application is submitted to the FDA to request the ability to begin human testing of the drug or biologic. An IND becomes effective thirty days after the FDA receives the application (unless the FDA notifies the sponsor of a clinical hold), or upon prior notification by the FDA. Phase 1 Clinical Trials: These trials typically involve small numbers of healthy volunteers or patients and usually define a drug candidate’s safety profile, including the safe dosage range. Phase 2 Clinical Trials: In Phase 2 clinical trials, controlled studies of human patients with the targeted disease/condition are conducted to assess the drug’s effectiveness. These studies are designed primarily to determine the appropriate dose levels, dose schedules and route(s) of administration, and to evaluate the effectiveness of the drug or biologic on humans, as well as to determine if there are any side effects on humans to expand the safety profile following Phase 1. These clinical trials, and Phase 3 trials discussed below, are designed to evaluate the product’s overall benefit-risk profile, and to provide information for physician labeling. Phase 3 Clinical Trials: This Phase usually involves a larger number of patients with the targeted disease/condition. Investigators (typically physicians) monitor the patients to determine the drug candidate’s efficacy and to observe and report any adverse reactions that may result from long-term use of the drug on a large, more widespread, patient population. During the Phase 3 clinical trials, typically the drug candidate is compared to either a placebo or a standard treatment for the target disease. New Drug Application (“NDA”) or Biologics License Application (“BLA”): After completion of all three clinical trial Phases, if the data indicates that the drug is safe and effective, an NDA or BLA is filed with the FDA requesting FDA approval to market the new drug as a treatment for the target disease. 8 Risk Evaluation and Mitigation Strategy Authority under the Food and Drug Administration Amendments Act (“FDAAA”): The FDAAA also gave the FDA authority to require the implementation of a Risk Evaluation and Mitigation Strategy (“REMS”) for a product when necessary to minimize known and preventable safety risks associated with the product. The FDA may require the submission of a REMS before a product is approved, or after approval based on “new safety information,” including new analysis of existing safety information. A REMS may include a medication guide, patient package insert, a plan for communication with healthcare providers, or other elements as the FDA deems are necessary to assure safe use of the product, which could include imposing certain restrictions on distribution or use of a product. A REMS must include a timetable for submission of assessments of the strategy at specified time intervals. Failure to comply with a REMS, including the submission of a required assessment, may result in substantial civil or criminal penalties. Other Issues Related to Product Safety: Adverse events that are reported after marketing approval also can result in additional limitations being placed on a product’s use and, potentially, withdrawal of the product from the market. In addition, under the FDAAA, the FDA has authority to mandate labeling changes to products at any point in a product’s life cycle based on new safety information derived from clinical trials, post-approval studies, peer-reviewed medical literature, or post-market risk identification and analysis systems data. Clinical trials may experience delays or fail to demonstrate safety and efficacy, which could prevent or significantly delay obtaining regulatory approval. Clinical trials require the investment of substantial financial and personnel resources. The commencement and completion of clinical trials may be delayed by various factors, including, without limitations, scheduling conflicts with participating clinicians and clinical institutions, difficulties in identifying and enrolling patients who meet trial eligibility criteria, failure of patients to complete the clinical trial, delays in accumulating the required number of clinical events for data analysis, delay or failure to obtain the required approval to conduct a clinical trial at a prospective site, and shortages of available drug supply and clinicians. Moreover, the outcome of a clinical trial is often uncertain. There may be numerous unforeseen events during, or as a result of, the clinical trial process that could delay or prevent regulatory approval. In addition, the results of early-stage clinical trials do not necessarily predict the results of later-stage clinical trials. Later-stage clinical trials may fail to demonstrate that a drug product is safe and effective despite having progressed through initial clinical testing. Clinical trial data results are susceptible to varying interpretations, and such data may not be sufficient to support approval by the FDA. The ability to commence and complete clinical trials may be delayed by many factors that are beyond our control, including: ● delays obtaining regulatory approval to commence a trial; ● delays in reaching agreement on acceptable terms with contract research organizations (“CROs”) and clinical trial sites; ● delays in obtaining institutional review board (“IRB”), approval at each site; ● slower than anticipated patient enrollment or an inability to recruit and enroll patients to participate in clinical trials for various reasons; ● inability to retain patients who have initiated a clinical trial; ● lack of funding to start or continue the clinical trial, including as a result of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies; ● negative or inconclusive results; ● deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, good clinical practice, or clinical protocols; ● deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold; or ● adverse medical events or side effects experienced by patients during the clinical trials as a result of or resulting from the clinical trial treatments; Delays can also occur if a clinical trial is suspended or terminated by the IRBs of the clinical trial sites in which such trials are being conducted, or by the FDA or other regulatory authorities. Such authorities may impose a suspension or termination of the clinical trial due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, or failure to demonstrate a benefit from using a drug. Post-Approval Requirements for Approved Drugs The FDA’s post-market surveillance programs monitor the safety of drugs once they are approved. Any of our drug products that require FDA approvals are subject to continuing regulation by the FDA, including, among other things, record-keeping requirements, reporting of adverse experiences with the product, providing the FDA with updated safety and efficacy information, product sampling and distribution requirements, and complying with FDA promotion and advertising requirements, which include, among other requirements, standards for direct-to-consumer advertising, restrictions on promoting drugs for uses or in patient populations that are not described in the drug’s approved labeling (known as “off-label use”), limitations on industry sponsored scientific and educational activities, and requirements for promotional activities involving the internet. Until June 1, 2025, under the Second A&R Ameluz LSA, these requirements were handled by both us and our licensor. See Part 1, Item 7, “Overview and Recent Developments” for more information concerning the Second A&R Ameluz LSA. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such off-label uses. In addition, quality control and manufacturing procedures must continue to conform to applicable manufacturing requirements after approval. We rely, in part, on our manufacturing partner’s facilities for the production of clinical and commercial quantities of our products in accordance with Current Good Manufacturing Practices (“cGMP”) regulations. cGMP regulations require among other things, quality control and quality assurance as well as the corresponding maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP. Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product manufacturer or holder of an approved NDA, including, among other things, recall or withdrawal of the product from the market. In addition, changes to the manufacturing process are strictly regulated, and depending on the significance of the change, may require prior FDA approval before being implemented and the development and submission of data to support the change. Other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval, as well as, possibly, the development and submission of data to support the change. The FDA also may require post-approval, sometimes referred to as Phase 4, trials and surveillance to monitor the effects of an approved product or place conditions on an approval that could restrict the distribution or use of the product. Detection of previously unknown problems with a product or the failure to comply with applicable FDA requirements can have negative consequences, including adverse publicity, judicial or administrative enforcement, warning letters from the FDA, mandated corrective advertising or communications with doctors, and civil or criminal penalties, among others. Newly discovered or developed safety or effectiveness data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures, such as a risk evaluation and mitigation strategy. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our product label extensions or products under development. 9 FDA Regulation for Medical Devices After a device is placed on the market, regardless of its classification or premarket pathway, numerous regulatory requirements apply. These include, but are not limited to: ● creating and maintaining registration and device listings with the FDA; ● Quality System Regulation (“QSR”) which requires manufacturers, including third party manufacturers and certain other parties, to follow stringent design, testing, process control, documentation, corrective action/preventive action, complaint handling and other quality assurance procedures, as applicable; ● labeling statutes and regulations, which prohibit the promotion of products for uncleared or unapproved, or off-label uses and impose other restrictions on labeling; ● clearance or approval of product modifications that could affect (or for 510(k) devices, significantly affect) safety or effectiveness or that would constitute a change (or for 510(k) devices, a major change) in intended use; ● medical device reporting regulations, which require that manufacturers report to the FDA if an event reasonably suggests that their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction of the same or a similar device of the manufacturer were to recur; ● corrections and removals reporting regulations, which require that manufacturers report to the FDA field corrections and product removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA, that may present a risk to health. In addition, the FDA may order a mandatory recall if there is a reasonable probability that the device would cause serious adverse health consequences or death; and ● post-approval restrictions or conditions, including requirements to conduct post-market surveillance studies to establish additional safety or efficacy data. The FDA has broad post-market and regulatory enforcement powers. The agency may conduct announced and unannounced inspections to determine compliance with the QSR and other regulations, and these inspections may include the manufacturing facilities of subcontractors. Failure by us or our suppliers to comply with applicable regulatory requirements can result in enforcement action by the FDA or other regulatory authorities, which may result in sanctions and related consequences including, but not limited to: ● untitled letters or warning letters; ● fines, injunctions, consent decrees and civil penalties; ● recall, detention or seizure of our products; ● operating restrictions, partial suspension or total shutdown of production; ● refusal of or delay in granting our requests for 510(k) clearance or premarket approval of new products or modified products; ● withdrawing 510(k) clearance or premarket approvals that are already granted; ● refusal to grant export approval for our products; ● criminal prosecution; and ● unanticipated expenditures to address or defend such actions. We are subject to announced and unannounced device inspections by FDA and other regulatory agencies overseeing the implementation and adherence of applicable local, state and federal statutes and regulations. Safe Medical Devices Act The Safe Medical Devices Act of 1990, as amended (“SMDA”), amended the Federal Food, Drug, and Cosmetic Act to require medical device manufacturers and user facilities such as hospitals and ambulatory surgical centers to report any adverse events associated with a medical device to the FDA. It also imposes two additional post-market requirements on manufacturers, including monitoring of products after market clearance and device tracking for maintaining traceability of certain devices to the user level. The SMDA makes it mandatory for facilities, manufacturers, and importers to submit medical device reporting forms to the FDA after becoming aware of a serious event associated with a device. Manufacturers are required to submit baseline reports and reports of deaths, serious injuries, and malfunctions associated with the device to the FDA. 10 Fraud and Abuse Laws We are subject to healthcare anti-fraud and abuse regulations that are enforced by the United States federal government and the states in which we conduct our business. The laws that may affect our ability to operate include, without limitation: ● the federal healthcare programs’ Anti-Kickback Law; ● federal false claims laws; ● federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters; ● the federal Civil Monetary Penalties Law, which imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent; and ● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers. The federal Anti-Kickback Statute makes it illegal for any person or entity, including a prescription drug manufacturer (or a party acting on its behalf) to knowingly and willfully, directly or indirectly, solicit, receive, offer, or pay any remuneration that is intended to induce the referral of business, including the purchase, order, or lease of any good, facility, item or service for which payment may be made under a federal health care program, such as Medicare or Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneficiaries on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal health care covered business, the Anti-Kickback Statute has been violated. Violations of this law are punishable by up to five years in prison, and can also result in criminal fines, civil monetary penalties, administrative penalties and exclusion from participation in federal health care programs. Additionally, the intent standard under the Anti-Kickback Statute was amended by the Affordable Care Act to a stricter standard such that a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the Affordable Care Act codified case law that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act. Because of the breadth of these laws and the narrowness of the safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws. 11 Federal false claims and false statement laws, including the federal civil False Claims Act, prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, for payment to, or approval by, federal programs, including Medicare and Medicaid, claims for items or services, including drugs, that are false or fraudulent or not provided as claimed. Entities can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers, promoting a product off-label, or for providing medically unnecessary services or items. In addition, activities relating to the sale and marketing of products are subject to scrutiny under this law. Penalties for the federal civil False Claims Act violations may include up to three times the actual damages sustained by the government, (commonly referred to as treble damages), plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal health care programs, and, although the federal civil False Claims Act is a civil statute, False Claims Act violations may also implicate various federal criminal statutes. Physician Payments Sunshine Act The Physician Payments Sunshine Act is a national disclosure program created by the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 that aims to increase transparency in payments from medical device manufacturers and pharmaceutical companies to physicians and teaching hospitals. In 2018, the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act expanded these covered recipients to include physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, anesthesiologist assistants and certified nurse midwives. Common payments in the industry to physicians and other “covered recipients” can include consulting fees, honoraria, fees for training and education, research fees, gifts, vacations, food and beverage, travel and lodging, charitable contributions, grants, ownership and investment interests, royalty or license fees, and compensation for serving as faculty or a speaker. Inflation Reduction Act (“IRA”) The IRA, passed by Congress in 2022, makes significant changes to how drugs are covered and paid for under the Medicare Program. Creates financial penalties for drugs whose prices rise faster than the rate of inflation, makes changes to the Medicare Part D program to require manufacturers to bear more liability for certain drug benefits, which has taken effect in 2025, and includes government price setting for certain Medicare Part D drugs starting in 2026 and Medicare Part B drugs starting in 2028. 340B Drug Discount Program and legislative changes The 340B drug discount program (part of the Public Health Service Act) requires pharmaceutical manufacturers to sell certain outpatient drugs at significantly reduced prices to eligible healthcare providers known as “covered entities” that serve a large number of low-income patients. Participation in this program by manufacturers is often required in exchange for access to the Medicaid market. Healthcare Privacy and Security Laws We may be subject to, or our marketing activities may be limited by, the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its implementing regulations, which established uniform standards for certain “covered entities” (healthcare providers, health plans and healthcare clearinghouses) governing the conduct of certain electronic healthcare transactions and protecting the security and privacy of protected health information. The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package, included sweeping expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic and Clinical Health Act, or HITECH. Among other things, the HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,” independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions. 12 Available Information We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Exchange Act requires us to file periodic reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These materials may be obtained electronically by accessing the SEC’s website at http://www.sec.gov . We also maintain a website at https://www.biofrontera-us.com . The Information on our website is not incorporated by reference into this Form 10-K and does not constitute a part of this Form 10-K. We make available, free of charge, on our website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such with, or furnish it to, the SEC. Our code of conduct, Board committee charters, and certain other corporate governance policies are also posted on the Investor Relations section of our website.