Biofrontera (BFRI) risk factors, FY2024 10-K

Risks Related to the License and Supply Agreements and Our Licensed Products

1. 01Our 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
2. 02If 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
3. 03Third 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
4. 04The Biofrontera Group has been involved in lawsuits to defend or enforce patents related to our licensed products and they or another licensor may become involved in similar suits in the future, which could be expensive, time-consuming and unsuccessful
5. 05Confidentiality agreements with employees and others may not adequately prevent disclosure of our Licensors’ trade secrets and other proprietary information and may not adequately protect their intellectual property
6. 06Our subsidiary and certain third-party employees and our licensed patents are subject to foreign laws
7. 07Our international dealings with our Licensors may pose currency risks, which may adversely affect our operating results and net income
8. 08The 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

1. 09Biofrontera AG, as a result of its control of the manufacturing and regulatory approval of Ameluz®, may exert greater influence on the Company relative to the percentage of its ownership of the Company’s outstanding common stock
2. 10Insurance coverage and medical expense reimbursement may be limited or unavailable in certain market segments for our licensed products, including with respect to future indications of our licensed products, which could make it difficult for us to sell our licensed products
3. 11In the United States and certain other countries, there have been a number of legislative and regulatory changes to the health care system that could impact our ability to sell our licensed products profitably
4. 12To date, we have a relatively short history of sales of our licensed products in the United States
5. 13Competing products and future emerging products may erode sales of our licensed products
6. 14If 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
7. 15The United States market size for Ameluz® for the treatment of actinic keratosis may be smaller than we have estimated
8. 16If our Licensors face allegations of noncompliance with the law and encounter sanctions, their reputation, revenues and liquidity may suffer, and our licensed products could be subject to restrictions or withdrawal from the market
9. 17Even if we or our Licensors obtain regulatory approvals for our licensed products, or approvals extending their indications, they may not gain market acceptance or become widely accepted among hospitals, physicians, health care payors, patients and others in the medical community
10. 18With respect to our licensed products, we may be subject to healthcare laws, regulation and enforcement. Our failure to comply with those laws could have a material adverse effect on our results of operations and financial condition
11. 19A recall of our licensed drug or medical device products, or the discovery of serious safety issues with our licensed drug or medical device products, could have a significant negative impact on us
12. 20Our licensed medical device product, the RhodoLED® lamp, is subject to extensive governmental regulation, and failure to comply with applicable requirements could cause our business to suffer
13. 21We 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
14. 22Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
15. 23We will need to grow the size of our organization and we may experience difficulties in managing this growth
16. 24Our business and operations would suffer in the event of system failures or cyber-attacks
17. 25If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our licensed products
18. 26Failure to comply with the United States Foreign Corrupt Practices Act or other applicable anti-corruption legislation could result in fines, criminal penalties and an adverse effect on our business
19. 27Our licensed products will be subject to ongoing regulatory requirements and we may face future development, manufacturing and regulatory difficulties
20. 28Generic manufacturers may launch products at risk of patent infringement
21. 29The results of our R&D efforts are uncertain and there can be no assurance they will enhance the commercial success of our products

Risks Related to Our Financial Position and Capital Requirements

1. 30There is substantial doubt about our ability to continue as a “going concern”
2. 31We have a history of operating losses and anticipate that we will continue to incur operating losses in the future and may never sustain profitability
3. 32Our existing and any future indebtedness could adversely affect our ability to operate our business

Risks Related to Clinical Trials and Regulatory Approvals Regulatory Approvals of Indication Expansion

1. 33Delay or termination of planned clinical trials for expanding the indications of Ameluz® would result in unplanned expenses and significantly and adversely impact our remaining developmental activities and potential commercial prospects with respect to, and ability to generate revenues from, such indications
2. 34We rely on third parties to conduct some of our clinical trials. If these third parties do not successfully 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
3. 35The regulatory approval processes of the FDA are lengthy, time-consuming and inherently unpredictable, and 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 could be substantially harmed

Risks Related to Corporate Governance, Including Being a Public Company

1. 36If 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
2. 37We have incurred, and will continue to incur, increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices
3. 38We are an emerging growth company and a smaller reporting company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies or smaller reporting companies will make our common stock less attractive to investors

Risks Related to Our Securities and Ownership of Our Common Stock

1. 39Provisions of our outstanding warrants could discourage an acquisition of us by a third party
2. 40Our share price may be volatile, and you may be unable to sell your shares and/or warrants at or above the offering price
3. 41If we fail to maintain compliance with applicable listing standards, our common stock and publicly-traded warrants could be delisted from Nasdaq
4. 42Future sales of our common stock in the public market could cause our share price to fall
5. 43We have issued several warrants, which are exercisable for our common stock, and issued Series B Convertible Preferred Stock, which, if exercised or converted, as applicable, could substantially increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders
6. 44If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline
7. 45Our quarterly operating results may fluctuate significantly
8. 46Future sales and issuances of our common stock or rights to purchase our common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause the stock price of our common stock to decline
9. 47We have never paid dividends on our common stock and we do not intend to pay dividends for the foreseeable future. Consequently, any gains from an investment in our common stock will likely depend on whether the price of our common stock increases
10. 48Our stockholder rights plan, or “poison pill,” includes terms and conditions which could discourage a takeover or other transaction that stockholders may consider favorable
11. 49The Rights will expire at the earlier of (a) June 30, 2026 or (b) the first day after the Company’s 2025 annual meeting, if stockholder approval has not been obtained prior to such date, the Rights will expire at such time, in each case, unless previously redeemed or exchanged by the Company
12. 50These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management
13. 51Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law
14. 52Many of the warrants to purchase shares of our common stock are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock