Welcome to the Biofrontera Inc. Third Quarter 2024 financial results and business update conference call. At this time, all participants are in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's prepared remarks, there will be an opportunity to ask questions. To ask a question, please press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Andrew Barwicki, with Barwicki Investor Relations. Please go ahead.
Good morning and welcome. By management, it 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. Also, this conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 14, 2024. Biofrontera undertakes no obligations 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 today's press release. More specifically, 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. With that said, I would like to turn the call over to Hermann Luebbert, CEO, Chairman, and Founder of Biofrontera. Hermann?
Yes, thank you, Andrew, and my thanks to everyone joining us this morning. On today's call, I'll provide an overview of our accomplishments during the third quarter and first nine months of 2024. Fred Leffler, our CFO, will follow with a discussion on financial results. Both of us will be happy to answer questions after our prepared remarks. Let me start by highlighting the tremendous progress we made in previous months. First, comparing the first nine months of 2024 with 2023, the total number of AMELUZ tubes ordered by our customers has greatly increased while we significantly reduced costs. Second, we improved our FDA label, adding value to our product. Third, we got outstanding clinical results for a new indication. Four, we launched our RhodoLED XL lamp. And finally, fifth, we transferred all clinical trial activities on AMELUZ to Biofrontera Inc. With the first point of increasing revenue and reducing cost.
Revenues in the third quarter increased by 1.5% to $9 million. Furthermore, delivery of 4,640 tubes of AMELUZ, valued at $1.5 million, was delayed to October due to Hurricane Milton. Without this delay, our Q3 growth had been 19% compared to the previous year. All the delayed product was shipped to customers early in October and will be recognized as sales in the current quarter. For the first nine months, our sales grew by $1.3 million to $24.8 million, an increase of 5.6%. Without the impact of Hurricane Milton on delivery of AMELUZ, the growth would have been 12%. By growing our business, we strongly controlled our costs and were able to reduce our SG&A expenses by 14% in the first nine months of the year compared to last year. About the second point, the improvement of our FDA label.
FDA decided on October 4 to approve the use of up to three tubes of AMELUZ per treatment. This allows healthcare professionals greater flexibility in addressing larger or multiple treatment areas for patients undergoing photodynamic therapy for AK on the face and scalp, leading to greater convenience for both healthcare providers and their patients. AK is the second most common diagnosis made by dermatologists in the United States, with an estimated 13 million treatments provided each year in the U.S. The restriction of one tube per treatment has slowed the growth of AMELUZ sales hitherto, and lifting this will help AMELUZ take a larger piece of the PDT market. Point three is our progress in clinical trials.
We perform several clinical trials with the aim to improve our label and enhance the use of our product in actinic keratosis, but also to add other indications like moderate to severe acne to the label. We believe that this indication has a major medical need as current medication is less than ideal. Thus, moderate to severe acne has the potential to be a major potentially blockbuster market for AMELUZ PDT. Our phase II study in this indication is progressing as planned with 106 of 126, that is 84% of the patients currently enrolled. We anticipate read-out of the data in the fall of next year. Most recently, however, we have locked the database in our superficial BCC phase three study. The results are very encouraging with the histological clearance endpoint achieving 75.9% of total clearance at a high degree of statistical significance.
We expect the last patient to complete the first year of a five-year follow-up phase this month. One-year follow-up data has been made a requirement for approval by the FDA, such that now we are awaiting this important milestone. With this coming up, we expect submission to the FDA at the end of the first half of 2025, with approval in the spring of 2026. Basal cell carcinoma, of which superficial basal cell carcinoma is a subgroup, is the most common form of skin cancer and the most frequently occurring form of all cancers. In the U.S. alone, an estimated 3.6 million cases are diagnosed each year, a subset of which is superficial basal cell carcinoma. BCCs arise from abnormal, uncontrolled growth of so-called basal cells at the bottom of the epidermis.
They rarely spread beyond the original tumor site, but if untreated, can become locally invasive, grow wide and deep into the skin, and destroy skin tissue and even the bone. The fourth point I mentioned is the launch of our RhodoLED XL lamp. This lamp offers an alternative for doctors who wish to treat larger skin regions with AMELUZ PDT. Many doctors have chosen this option, while others prefer the smaller, easier-to-handle BF-RhodoLED lamp model. Since its launch in June and until September 30, we installed 39 RhodoLED XL lamps along with an additional 66 BF-RhodoLED lamps in the first three quarters of 2024. Our sales thus have had a good mix of our older BF-RhodoLED lamp model and our recently launched RhodoLED XL lamp. Together, these are 105 new lamps out in the field, slightly higher than the 101 lamps in the same period of 2023.
We are optimistic that our lamp sales will continue to increase at a strong pace, supporting increased AMELUZ usage as our customers can now get better AMELUZ reimbursement following the recent FDA approval of up to three AMELUZ tubes per treatment. By renegotiating the performance of all clinical research early in the year, responsibility for which we have assumed since June 2024, we took control over the further development of AMELUZ in the U.S. Since this releases the German Biofrontera AG from the obligation to perform certain clinical trials, we agreed on a significantly reduced transfer price for AMELUZ, a game-changing development rendering Biofrontera Inc. more profitable and bringing the break-even point closer. According to the agreement, we assumed control over the management of all clinical trials with AMELUZ as of June 1, 2024. This process was seamless and none of the ongoing clinical trials were negatively affected.
We are in the process of completing three clinical trials. I did already mention the superficial BCC phase III and the acne phase II trials. For our phase three trial on actinic keratosis in the periphery, that means on extremities and neck and trunk, we have now enrolled 130 of about 165 patients, corresponding to 79%. Thus, enrollment for all ongoing studies is coming to an end in the coming six to nine months, exciting and important events for the development of our product and our company. With that, I'll turn the call over to Fred to walk through the financial details of the third quarter and first nine months. Fred?
Thank you, Hermann. It's great to be talking with everyone again. I will start with our third quarter 2024 results. Total revenues for the third quarter of 2024 were $9.0 million compared with $8.9 million for the third quarter of 2023. This increase was driven by a $600,000 increase from sales of devices, specifically the RhodoLED XL lamp, since its launch in June of 2024. This was offset by a net decrease in the sales of AMELUZ of $0.5 million. The decrease of AMELUZ sales and units was impacted by the delayed shipping of 4,640 units at the end of September 2024 due to Hurricane Milton, forcing office closures and shipping delays throughout the Southeast. Had the orders been delivered in the third quarter, revenues would have been about $10.5 million or growth of about 19% quarter over quarter.
Total operating expenses were $14 million for the third quarter of 2024 compared with $13.5 million for the third quarter of 2023. Cost of revenues were $4.9 million for the third quarter of 2024 compared with $4.6 million for the prior year quarter. This was driven by an increase of $0.5 million due to the increase in RhodoLED product revenue, partially offset by a decrease of $0.2 million due to the weather-related delays in the sales of AMELUZ, which I just mentioned earlier. We will see the impact of both the revenue and the associated cost of goods for these delayed shipments in the fourth quarter. Selling, general, and administrative expenses were $8.4 million for the third quarter of 2024 compared with $8.6 million for the third quarter of 2023.
The decrease was primarily driven by about a $500,000 decrease in general business administration expenses, as well as a decrease of non-personnel sales and marketing expenses of about $0.2 million and a $0.3 million decrease in personnel costs due to changes in headcount and reduced severance that we saw in the prior year. This was offset by about a $0.8 million increase in legal expenses related to the complaints filed by DUSA Pharmaceuticals with the International Trade Commission (ITC) and the U.S. District Court for the District of Massachusetts. The net loss for the third quarter of 2024 was $5.7 million compared with a net loss of $6.3 million for the prior year quarter. The decrease in the net loss is primarily driven by a lower change in fair value of our investment in related parties, as we have unwound that position in the past 12 months.
This was partially offset by a loss due to a change in the fair value of our warrants. Adjusted EBITDA for the third quarter of 2024 was negative $4.6 million compared with negative $3.9 million for the third quarter of 2023, reflecting higher SG&A costs driven primarily by R&D activities that we took over in June of this year. We look at adjusted EBITDA, a non-GAAP financial measure, as a better indication of ongoing operations, and this measurement is 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. I'll refer you to the table in our news release we issued yesterday for reconciliation of GAAP to non-GAAP financial measures. I will now summarize our performance in the first nine months of 2024.
Total revenues increased by $1.3 million or 5.6% as compared to the same period last year, from $23.4 million to $24.7 million. This increase was driven by both a higher unit sale price of AMELUZ in the first nine months of 2024 and revenue increase associated with device sales due to the launch of the RhodoLED XL lamp in June of 2024. After a revenue decline in the first quarter, followed by 8% growth in the first half of 2024, we would now be at about 12% growth year to date had there been no shipping impact from Hurricane Milton. Total operating expenses were $40.2 million for the nine months ended September 30, 2024, compared with $42.3 million for the same period last year.
Cost of revenue increased from the prior year to $13.3 million for the nine months ended September 30, 2024, compared with $12.1 million for the same period last year. Selling, general, and administrative expenses decreased to $25.6 million compared to $29.9 million in the prior year. The decrease was primarily driven by reduced SG&A from lower sales and marketing spend, where we are managing our personnel and non-personnel expenses very closely, along with lower legal expenses to fight the 2024 ITC complaint expenses I mentioned earlier. We expect to see the bulk of these ITC-related legal expenses in the next several months. Adjusted EBITDA was -$13.9 million for the nine months ended September 30, 2024, compared with -$15.8 million for the same period last year. Again, please refer to our press release we issued yesterday for reconciliation of GAAP to non-GAAP financial measures.
Now, turning to our balance sheet as of September 30, 2024, we had cash and cash equivalents of $2.9 million compared with $1.3 million as of December 31, 2023. We received the replacement product in July for the three recalled lots of AMELUZ that happened earlier this year and moved that value from other assets related party back to inventory. We have successfully reduced our inventory levels closer to industry standards. It was $6.5 million at the end of the third quarter, including both AMELUZ and the Rhodo series lamps, and we'll receive two shipments of AMELUZ in the fourth quarter. We have been evaluating the strategic options for our XEPI product and have concluded to deeply explore disposition of that asset. We have progressed in the disposition process far enough that we have moved the XEPI asset to held for sale.
Finally, we paid down the outstanding balance of our bridge loan early in the third quarter. So, with that overview of our business and recent financial performance, Hermann and I are now ready to take questions from our covering analysts. Operator?
We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Jonathan Aschoff with Roth Capital. Please go ahead.
Thank you. Good morning, guys. I was curious at first, when will the cost of revenue start to better reflect the 25% that you said is valid through next year rather than more closely reflect the older 50% that we still see?
Hi, Jonathan. Fred here. We expect to see that impact in the fourth quarter.
Okay.
We needed to go through our older inventory first.
Okay. Do you still expect to be cash flow break-even by the end of next year and to still grow revenue this year 20% over 2023?
We expect to have revenue growth similar to prior years this year, so mid- to high teens. And then cash flow break-even, we expect that towards the end of 2025 into 2026.
Okay. That's totally helpful. You know, with the shipments that fell into October, did you stick them with the October 1 price hike, or did you grandfather in the older price?
We grandfathered in the older price. All the orders were placed in Q3. It was just that whether it was office closures in Florida, Georgia, etc., or FedEx having delayed, they just got there and therefore just resurrected in Q4. But all the orders were placed in Q3 and had the price increase as of October 1.
Okay. Lastly, can I just have the enrollment numbers for the acne and the peripheral AK trials?
Yes, so the enrollment for the peripheral AK is now 130 of 165 patients, and the enrollment of the acne study is 106 of 126.
Thank you very much, Hermann. That's all from me.
Thank you, Jonathan.
The next question comes from Bruce Jackson with The Benchmark Company. Please go ahead.
Hi, good morning, and congratulations on all of the progress. Two questions around the fourth quarter so traditionally, with revenue forecasting after a price increase, it's a little bit difficult to know what the drop-off might be so I'm curious to know, given the dynamics with the delayed order and everything, how you see the fourth quarter developing in terms of revenue after the price increase and also, can you remind us what the price increase amount was?
Sure. So the price increase was 5%, similar to what we did in 2023. Like I mentioned just a moment ago, we expect growth to be in line with prior years, high teens. So we expect to have a very strong Q4. Traditionally, Q4 is typically our strongest quarter as it's "PDT season." Hermann, if you want to layer anything on there, I'll pause.
Yes. Yeah, you know that Q4 is always the strongest quarter, and the question is, of course, how much has been pulled into Q3 because of the price increase. We did the same kind of price increase also for the same 5% last year, so we can use that year as something to orient ourselves. And in spite of the price increase in Q3 and higher sales in Q3, Q4 was still, with quite some distance, the strongest quarter, so the factors that are actually important for Q4, and those factors are probably that doctors tend to do more PDT during the winter, so that they use and order more in Q4. But also, there may be tax reasons why they tend to order before the end of the year, so those reasons are still the same in spite of the price increase.
So even with the price increase, we expect a very strong Q4. And on top of that, we have the 4,000+ tubes that add to the normal development and come on top.
Okay. And then one other element of the fourth quarter is the new three-tube approval. So I'm kind of curious to know if you've seen any customer response yet to the new labeling, if that's had any impact on the orders.
We have not so far because we didn't want to, and we actively prevented it. The reason is that having the three tubes in the label doesn't automatically mean that the doctors also get reimbursed. And we wanted to avoid a situation where a doctor believes that because of the label change, he can now do it, and then he doesn't get paid. And so before we wanted to go ahead with this, we had to remove the so-called MUE at CMS. Now, this has happened, so there is no MUE anymore on AMELUZ. So that from now on, and all the insurance companies, also the private payers, have been notified that they should change their systems. So we believe that starting next week, we can actually actively promote the possibility of using three tubes. And then in December, we hopefully see the uptake based on this.
Okay. Great. That's it for me. Thank you for taking my questions.
Thank you.
Thank you.
This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.
Yeah. Well, thank you, Operator. So as you heard, the third quarter and the first nine months of this year have been very positive, with a significant increase in AMELUZ tubes ordered, even if a few thousand couldn't be delivered due to the hurricane. And taking into account the FDA approval and outstanding clinical results, we are very optimistic about the future of Biofrontera. I would like to thank everyone for participating in this call, and we look forward to speaking with you again when we report our fourth quarter 2024 results. Thank you and have a nice day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.