Biofrontera, Opportunities After FDA Approval

Summary

• Ameluz (nano emulsion) is superior to former formulation Levulan (actinic kreatoses) and Metvix (basal cell carcinoma).
• FDA approval for Ameluz as treatment for basal cell carcinoma is likely to follow.
• Biofrontera is a small German biotech company with growth rate over 80% in sales in the last years.
• Anchor investor Deutsche Balaton AG seeking 25% ownership.

It has never been easy for Biotech Startups. Research and development costs have always been incredibly high. Moreover, pharmaceutical products are highly regulated by public department such as the FDA (USA) and EMA (Europe). However, Biofrontera is the first German, founder-led (Prof. Dr. Hermann Lübbert) pharmaceutical company to obtain both EU and U.S. approval for a medical drug it has developed itself. The journey has been long since the Biofrontera Group was founded in 1997 and listed in the Frankfurt Stock Exchange (Prime Standard).

Today Biofrontera is also listed in the NASDAQ with a market capitalization of 268 Mio. € or 327 Mio. $. Its first product Ameluz is approved for actinic kreatoses in Europe and USA.

Actinic keratosis is a pre-cancerous patch of thick, scaly, or crusty skin. These growths are more common in fair-skinned people and those who are frequently exposed to the sun. They are usually formed when skin gets damaged by ultraviolet (UV) radiation from the sun or indoor tanning beds. Generally, Levulan, which contains 5-aminolaevulinic acid (ALA) with photo dynamic therapy is used. Ameluz is a novel formulation of the same compound as nano scale vesicle in a emulsion. However, the new approach has been shown to chemically stabilize the drug and increase liposomal penetration. For instance, nanoemulsion/nanocolloidal formulations of this drug have been observed to be superior to methyl aminolevulinate (MAL) or Metvix in the treatment of actinic keratoses (complete clearance 78.2% versus 64.2%, respectively) and field cancerization. Before that, MAL is reported to have increased lipophilicity and deeper skin penetration when compared to ALA.

MAL is also used in photo dynamic therapy as a treatment option for superficial and thin nodular BCC (thickness <2 mm). In Phase III clinical trials, Ameluz achieved higher clearing rates of all BCCS in comparison with Metvix, 93.4% and 91.8%, respectively. Therefore, Ameluz is already approved by the European medicine agency (EMA) in 2017.

Since the market launch, sales numbers are raising exponentially and Biofrontera is expected to be profitable by the end of 2018. In the last sales release, the preliminary unaudited revenues of Biofrontera group for the three-month period, from January to March 2018, were between 4.6 and 4.7 million €. This corresponds to a sales growth of approx. 80% compared to the previous year, with pure product sales increase by approximately 107%.

Since the IPO in the USA, a lot of hype have been created around Biofrontera. One of the anchor investor Deutsche Balaton AG has publicly announced to buy another 6,250,000 shares (14%) of the company. Deutsche Balaton AG is an investment company with a market cap over 200 mio. €.

Conclusion:

• Ameluz has proven under clinical trials to be superior in comparison with other treatments
• Biofrontera is in an enormous growth phase
• There is a big buy back rate from former and anchor shareholders

Disclosure: I am long Biofrontera.