Quarterly Report 3rd Quarter Q3/2025 (Biofrontera AG Quarterly report Q3 2025 EN)

Biofrontera AG

Quarterly announcement for the third quarter of 2025

MEMORIES FADE OUR SKIN NEVER FORGETS

Year-to-date Highlights 2025

• BIOFRONTERA GROWS 18.5% IN THE EUROPEAN MARKETS COVERED WITH ITS OWN SALES FORCE, AND MANTAINS MARKET LEADERSHIP IN THESE TERRITORIES

• BIOFRONTERA KEEPS GROWING 21,6% IN THE GERMAN MARKET

• BIOFRONTERA SALES GROW 14.8% GLOBALLY

• BIOFRONTERA IMPROVES EBITDA COMPARED WITH THE SAME PERIOD LAST YEAR FROM MINUS 4,460 TO PLUS 1,837 END OF SEPTEMBER 2025

• BIOFRONTERA STARTED IMPLEMENTING THE BINDING TERM SHEET SIGNED JUNE 30TH WITH BIOFRONTERA INC.

• SUNPHARMA LEGAL DEFENCE COST (SINCE JUNE 1ST) AND FIRST EMPLOYEES ALREADY TRANSFERRED TO BIOFRONTERA INC.

• BIOFRONTERA IS NOW MARKETING AUTHORIZATION HOLDER FOR OVIXAN IN THE UK

Key figures in accordance with IFRS

Business performance

Biofrontera AG continues with its European business focus, 14.8% global growth compared with the same period last year.

Biofrontera was once again the growth driver in the German PDT market in the first nine months of 2025 with an impressive 21.6% increase in sales, strengthening our leadership position within this market, and increasing our market share from 69% to 73%.

Sales increased to EUR 6,684 thousand compared to the previous year's figure of EUR 5,497 thousand. Photodynamic therapy with daylight, or short daylight PDT, continued to establish itself on the market, allowing this reimbursable treatment option to be increasingly offered to the much larger group of patients with statutory health insurance.

We are also expanding our revenues in the other two markets operated through our own structure, Spain and the United Kingdom. In Spain, revenues increased by 7.0%, reaching EUR 1,268 thousand compared with EUR 1,185 thousand in the previous year.

In the United Kingdom, we recorded a significant increase of 13.2%, to EUR 788 thousand, up from EUR 696 thousand in the prior reporting period.

Overall, revenues in the markets managed directly by our organization (Germany, Spain, United Kingdom) grew by 18.5% compared with the same period in 2024, demonstrating a very positive trend for Ameluz in these regions.

Sales to our European partners decreased by 62.0%, from EUR 1,164 thousand to EUR 442 thousand during the reporting period. Due to the structure of our license agreements, these markets experience biannual fluctuations, as most partners place large orders every two years to cover their market needs. This results in significant revenue peaks in one year, followed by sharp declines in the next. The current year reflects such a down cycle, while we expect a substantial increase next year, consistent with the pattern observed in the previous cycle.

Because of these fluctuations, the figures cannot be used to accurately assess underlying market performance, although we know that the overall trend remains positive and growing.

Considering factors, revenues in Europe grew by 7.5%, continuing the very good trend in the European business.

As already reported in the previous statement, the Group signed on June 30th, 2025, a binding term sheet under which it committed to transfer most of the assets and liabilities associated with the U.S. market to Biofrontera Inc.

As consideration, the Group will receive a percentage of Biofrontera Inc.'s shares and a monthly earn-out payment of 12% or 15% of its sales, depending on the annual sales volume, during the life of the patents.

This earn-out will apply to the sales generated by Biofrontera Inc. once the inventory it held as of the end of May 2025 has been sold, as those products were commercialized under the previous commercial terms agreed between both companies. The effective date of the new conditions was June 1st, 2025.

Therefore, from that date onwards, the revenues from the U.S. no longer reflect Ameluz and lamp sales based on the transfer price agreed under the prior commercial agreement, but rather the earn-out related to the new arrangement.

During the reporting period, Biofrontera Inc. has mainly sold Ameluz from the stock it held at the end of May, which was practically depleted by September 30th, 2025. Consequently, we expect that from October onwards, most of the Ameluz sold by Biofrontera Inc. will be subject to the terms of the new agreement.

As a result of the above, sales to Biofrontera Inc. amounted to EUR 3,120 thousand, compared to EUR 2,064 thousand in the previous year. This apparent increase is due to the accumulated growth as of June 2025, since when analyzing the third quarter of the year, we observe a reduction in revenues - from EUR 1,024 thousand in Q3 2024 to EUR 620 thousand in Q3 2025.

As part of the license agreement concluded with Maruho Ltd., income of EUR 14 thousand was generated from services and the delivery of goods for clinical development in the reporting period (previous year: EUR 118 thousand).

Overall, the Biofrontera Group generated total sales of EUR 12,315 thousand in the period from January 1 to September 30, 2025 compared to EUR 10,724 thousand in 2024, an increase of around 14.8%.

Gross profit amounted to EUR 8,877 thousand in the first nine months, compared to EUR 7,309 thousand in the same period of the previous year. The gross margin amounted to 72.0% (previous year: 68.2%). The main reason for this increase is the reduced weight of the lamps sales, with a very short margin, compared with to last year figures.

As a result of all above mentioned, operating result increased to positive EUR 134 thousand, compared to a negative result of EUR-5,545 thousand in the first nine months of 2024. EBITDA amounted to EUR 1,837 thousand in the reporting period (previous

year: EUR-4,460 thousand). EBIT amounted to EUR 1,181 thousand in the first nine months compared to EUR-5,063 thousand in the first three quarters of 2024.

On the expenses side, significant cost-reduction measures have been implemented during the period.

In addition, this year we can see the full impact of the transfer of clinical trial activities completed in June 2024, as well as the transfer of the legal defense costs related to the Sun Pharmaceuticals lawsuits, which were fully provisioned in December 2024 and transferred to Biofrontera Inc. effective June 1st, 2025.

Research and development costs amounted to EUR 2,929 thousand in the reporting period compared to EUR 4,583 thousand in the same period of the previous year, which corresponds to decrease of 36.1%. As already reported in the first half of 2025, this decrease in costs is partially due to the outsourcing of clinical activities to the US since June 1st. 2024.

General and administrative expenses amounted to EUR 1,152 thousand in the first nine months of 2025, a decrease of

EUR 2,124 thousand compared to the previous year (EUR 3,276 thousand). The decreased costs are due to lower expenses, but also to the reversal of part of the full provision recorded at the end of 2025 for the Sun Pharmaceutical legal defense cases. Additional provisions were also recognized for legal fees in the United States related to the negotiation of the purchase transfer agreement, as well as potential legal claims from an investor concerning the 2021 capital increase prospectus.

Sales and marketing costs amounted to EUR 4,663 thousand in the first nine months of 2025, compared to EUR 4,995 thousand in the same period of the previous year. Although the company had an increase in the markets promoted with its own resources of 18.5%, the expenses decreased by 6.6% compared with the previous year.

Other expenses and income increased from EUR 510 thousand to EUR 1,048 thousand due to USA market expenses invoiced to Biofrontera Inc effective date June 1st 2025.

The financial result also improved from EUR-1,211 thousand, to EUR-90 thousand due to the flat performance of Biofrontera Inc share price within the year.

The Group's cash and cash equivalents amounted to EUR 3,460 thousand as of September 30th, 2025 (September 30th, 2024: EUR 3,124 thousand).

During the period, Biofrontera obtained the UK market authorization to commercialize OVIXAN, a new product that will be launched and promoted in the United Kingdom in the first quarter of 2026.

The company's results as of September 2025 show a stable and solid increase in sales across the European territories, along with improved cost structure efficiency driven by internal cost-containment measures and the restructuring agreement reached with Biofrontera Inc. in June 2025.

As a consequence, the company reports a sustainable improvement in EBITDA and operating profit. Management remains optimistic about the company's future development.

Biofrontera Group financial position and performance

Results of operations of the Biofrontera Group

The results of operations as of September 30th, 2025, are as follows:

in EUR thousands

Sales revenue

The Biofrontera Group generated total sales of EUR 12,315 thousand in the first nine months of 2025, an increase of 14.8% compared to the same period of the previous year (first nine months of 2024: EUR 10,724 thousand).

Total sales in Europe increased by 7.5% to EUR 9,182 thousand in the first nine months of 2025 compared to the same period of the previous year (first nine months of 2024: EUR 8,542 thousand). In Germany, sales rose significantly by 21.6% to EUR 6,684 thousand during the same period (first nine months of 2024: EUR 5,497 thousand). The sales in Spain increased about 7,0% from EUR 1,185 thousand last year to EUR 1,268 thousand. UK increased 13.2%, from EUR 696 thousand to EUR 788 thousand. These increases in European markets have been offset by a 62,0% decrease in sales from our European distributors (markets covered through distribution agreements), as their sales decreased from EUR 1,164 thousand to EUR 442 thousand. The main reason for this significant decrease is the biannual fluctuation in purchases made by our European distributors. Most of them place larger orders every two years, which results in notable increases in one year, followed by sharp declines in the next.

In 2024, we experienced such an increase, while in 2025 we faced the expected decrease, consistent with this biannual cyclical pattern. As already mentioned throughout this report, these figures cannot be used to extrapolate the performance of the final markets in these countries, although we know that the medium-term trend remains positive and shows continued growth.

With our license Partner in the USA, we generated revenues of EUR 3,120 thousand in the first nine months of 2025, compared to EUR 2,064 thousand in the same period of the previous year, representing an increase of 51.2%. This includes service revenues amounting to EUR 19 thousand (first nine months of 2024: EUR 35 thousand). As explained in other sections, on June 30th, 2025, we agreed with Biofrontera Inc. a binding term sheet to restructure our business relation , effective date 1st of June 2025. Since then,

the commercial conditions for Ameluz sales in the U.S. have changed significantly. For further details, please refer to the "Business Performance" section.

Revenues from other regions (Maruho agreement) amounted to EUR 14 thousand in the first nine months of 2025 (first nine months of 2024: EUR 118 thousand) and included both license income and revenue from the sale of study materials.

Gross profit on sales

Gross profit increased to EUR 8,877 thousand in the first nine months of 2025, compared to EUR 7,309 thousand in the same period of the previous year. The gross margin rose from 68.2% to 72.0% in the first nine months of 2025. This increase is attributable to a favorable product mix with higher sales of Ameluz, which generates a significantly higher margin compared to lamp sales. As a result, this reporting reflects a corresponding change in the structure of sales and earnings.

Research and development costs

Research and development expenses decreased by 36.1%, from EUR 4,583 thousand in the first nine months of 2024 to EUR 2,929 thousand in the first nine months of 2025. The main reason for this reduction was the transfer of the entire U.S. clinical trial program to Biofrontera Inc. as of June 1st, 2024, along with cost saving measures. Research and development expenses also include, among other things, costs for regulatory affairs, such as obtaining, maintaining, and expanding our approvals, expenses for patents, pharmacovigilance activities, and personnel costs for employees working in these departments.

General and administrative costs

General administrative expenses amounted to EUR 1,152 thousand in the first nine months of 2025 (first nine months of 2024: EUR 3,276 thousand), representing a decrease of EUR 2,124 thousand compared to the previous year. The main reason for this decline was the reversal of provisions no longer required for legal disputes with Sun Pharma, following the binding agreement on the strategic restructuring of the collaboration between Biofrontera AG and Biofrontera Inc. signed on June 30th, 2025. In addition, the Company has recorded two new significant provisions: one to cover U.S. legal advisory costs related to the asset purchase agreement associated with the binding term sheet signed on June 30th, and another to cover a potential investor claim concerning the 2021 capital increase prospectus.

Sales and marketing costs

Sales and marketing expenses amounted to EUR 4,663 thousand in the first nine months of 2025, which is a decrease of about EUR 332 thousand compared to previous year's period (first nine months of 2024: EUR 4,995 thousand), although the sales in the EU markets covered by our own structure increased by 18.5 %. The main reason for this decrease is the strict internal cost-saving policy implemented in the company.

EBITDA and EBIT

The Group's EBITDA represents earnings before interest, taxes, depreciation of property, plant and equipment, and amortization of intangible assets. EBITDA increased significantly by EUR 6,297 thousand to a positive EUR 1,837 thousand in the first nine months of 2025, compared to the previous year's period (first nine months of 2024: EUR-4,460 thousand). This positive EBITDA was mainly due to the increase on sales, the improvement of the gross profit on sales was driven by a more favorable sales mix, the reduction of R&D cost following the transfer of the clinical trials program effective date June 1st 2024, the implementation of cost-saving policies, and the reversal of provisions no longer required for legal disputes with SunPharma, following the binding agreement on the strategic restructuring of the collaboration between Biofrontera AG and Biofrontera Inc. signed on June 30th, 2025.

EBIT, which represents earnings before interest and taxes, also increased compared to the previous year's period, amounting to EUR 1,181 thousand (first nine months of 2024: EUR 5,063 thousand).

Financial result

The financial result amounted to EUR-90 thousand (first nine months of 2024: EUR-1,211 thousand) and, in addition to interest income and expenses, mainly includes the impairment of the investment in Biofrontera Inc. of EUR -84 thousand (first nine months 2024: EUR -1,241 thousand).

Other income and expenses

Other income and expenses totaled EUR 1,048 thousand in the reporting period (first nine months of 2024: EUR 510 thousand). This mainly includes income and expenses from currency translation and the reversal of provisions from prior years. In addition, the main reason for the increase is the invoicing to Biofrontera Inc. related to the binding agreement on the strategic restructuring of the collaboration between Biofrontera AG and Biofrontera Inc., signed on June 30th, 2025.

Income taxes

This item includes expenses from current income taxes amounting to EUR 60 thousand (previous year: EUR 0 thousand) as well as expenses from deferred taxes amounting to EUR 5,093 thousand (previous year: EUR 0 thousand) The primary reason for this significant write-off of deferred tax assets is the revised projection of future profits by the Group's companies. Future projections have been adjusted in line with the conditions of the new license agreement. During the negotiations of this agreement and following the liquidity problems experienced by Biofrontera Inc. in May 2025 - when Inc. was unable to meet its payment obligations to us - we identified material risks regarding its financial situation and liquidity capacity. Taking into account the evolution of its results over the past months, we believe that the risk associated with income from the U.S. market has increased materially. This significant increase in risk, jointly with the Earn-out conditions, have had a considerable impact on the income projections of the companies and, consequently, on their results.

The increased financial risk associated with our U.S. partner, Biofrontera Inc., jointly with the Earn-out conditions, alters the probability of the Company's future income and, consequently, its ability to utilize accumulated tax loss carry forwards in the coming years.

Similarly, these changes in future scenarios are likely to negatively affect the valuation of subsidiaries in the individual balance sheet of Biofrontera AG, which may lead there to a significant reduction in Equity compared with its value at year-end 2024.

Biofrontera's non-current assets as of September 30th, 2025, amounted to a total of EUR 5,283 thousand (December 31st, 2024: EUR 13,399 thousand). These include recognized deferred tax assets on tax loss carry forwards at Biofrontera Pharma GmbH and Biofrontera Bioscience GmbH of EUR 3,936 thousand (December 31st, 2024: EUR 9,029 thousand), property, plant and equipment of EUR 1,011 thousand (December 31st, 2024: EUR 2,934 thousand), and intangible assets of EUR 0 thousand (December 31st, 2024: EUR 1,001 thousand). Also included is the minority interest in Biofrontera Inc., amounting to EUR 336 thousand (December 31st, 2024: EUR 420 thousand). The reasons for the reduction in deferred tax assets are explained above. The decrease in property, plant and

equipment and intangible assets is primarily attributable to the reclassification to assets held for sale as a result of the agreement signed with Biofrontera Inc. with an amount of EUR 2,474 thousand.

Financial assets

Current financial assets amounted to EUR 5,666 thousand as of September 30th, 2025 (December 31st, 2024: EUR 9,797 thousand). This includes cash and cash equivalents of EUR 3,460 thousand (December 31st, 2024: EUR 3,124 thousand), trade receivables of EUR 2,141 thousand (December 31st, 2024: EUR 6,452 thousand), other current financial assets of EUR 46 thousand (December 31st, 2024: EUR 202 thousand), and current contract assets of EUR 19 thousand (December 31st, 2024: EUR 19 thousand).

Assets held for sale

Another significant item is current assets held for sale. These arose from negotiations with Biofrontera Inc. that began before the reporting date of 30th September 2025. As of the reporting date, this item had a value of EUR 4,261 thousand and includes the book value of all assets to be transferred to Biofrontera Inc. due to the binding term sheet signed on June 30th 2025.

Other current assets

Other current assets comprise inventories, which decreased by EUR 1,453 thousand to EUR 4,095 thousand as of September 30th, 2025 (December 31st, 2024: EUR 5,548 thousand). We reclassified to Asset held for sale EUR 1,787 thousand as a result of the agreement signed with Biofrontera Inc. Without this reclassification stock would have increased by EUR 334 thousand. No impairments on inventories were recognized during the reporting period (December 31st, 2024: EUR 155 thousand). Other current assets also include prepaid expenses totalling EUR 449 thousand (December 31st, 2024: EUR 697 thousand) trade tax of about EUR 55 thousand (December 31st, 2024: EUR 0 thousand) and sales tax receivables of about EUR 0 thousand (December 31st, 2024: EUR 214 thousand).

Equity

In accordance with IFRS, the Group reported equity of EUR 14,800 thousand (December 31st, 2024: EUR 18,856 thousand). The equity ratio increased from 64% to 75%.

Current liabilities

Other current liabilities amounted to EUR 2,617 thousand (December 31st, 2024: EUR 7,861 thousand) and mainly include provisions of EUR 775 thousand (December 31st, 2024: EUR 5,253 thousand), debts related to assets held for sale EUR 38 thousand (December 31st, 2024: EUR 0 thousand), other accrued liabilities of EUR 1,727 thousand (December 31st, 2024: EUR 2,226 thousand), and income tax liabilities of EUR 76 thousand (December 31st, 2024: EUR 382 thousand).

Financial liabilities mainly include trade payables of EUR 1,333 thousand (December 31st, 2024: EUR 2,124 thousand) as well as current financial debt of EUR 517 thousand (December 31st, 2024: EUR 436 thousand), thereof current lease liabilities in accordance with IFRS 16 in the amount of EUR 414 thousand (December 31st, 2024: EUR 436 thousand). Other financial liabilities increased from EUR 48 thousand to EUR 523 thousand.

Non-current liabilities

The financial liabilities reported under non-current liabilities contain the liabilities from leases to be recognized in accordance with IFRS 16 in the amount of EUR 19 thousand (December 31st, 2024: EUR 329 thousand).

Cash and cash equivalents

Cash and cash equivalents in the Group amount to EUR 3,460 thousand as of September 30th, 2025 (December 31st, 2024: EUR 3,124 thousand).

Outlook

On May 27, 2025, Biofrontera AG announced to the market that it could no longer maintain the sales and earnings guidance for 2025 that it had published in April 2025. The financial difficulties of Biofrontera Inc. and its failure to settle invoices at maturity led the Company to enter into negotiations to restructure the relationship, with the aim of establishing a sustainable agreement for both parties.

After several weeks of negotiations, the companies signed a binding Term Sheet to restructure their commercial relationship, transferring all assets and liabilities associated with the U.S. market to Biofrontera Inc. in exchange for a percentage of shares in Biofrontera Inc. and an earn out until 2043. The agreement was subject to a number of conditions precedent linked to the injection of new capital into Biofrontera Inc., which were fulfilled in due course.

Following the restructuring, the Company published new sales and EBITDA guidance on August 1, 2025, reflecting the newly agreed terms. The guidance indicated a sales range for 2025 between EUR 17,000 thousand and EUR 20,000 thousand, and an EBITDA range between EUR 1,500 thousand and EUR 3,500 thousand. This guidance remains valid as of today.

On October 20th 2025, the final transfer agreement was signed between the companies, in line with the main conditions agreed in the previous binding term sheet.

Following the restructuring, and assuming Biofrontera Inc. fulfills all its obligations on time, the year-end cash forecast is expected to improve. As mentioned in the H1 report, we estimate a range between EUR 1,000 thousand to EUR 3,000 thousand.

Forecast of key figures relevant to management (as of April 2025):

Key Figure Forecast 2025

Group sales EUR 20 to 24 million

EBITDA EUR 0 million to 3 million

Cash and cash equivalents at 31. December 2025 EUR 0,5 to 1,5 million

Non-financial key figures

Employees Decrease in the number of employees

Trainings constant

External and internal audits constant

The changes made in August 2025 in the forecast key performance indicators are shown below:

Key Figure Revised Forecast 2025

Group sales EUR 17 to 20 million

EBITDA EUR 1,5 million to 3,5 million

Cash and cash equivalents at 31. December 2025 EUR 1 to 3 million

As of September 30, 2025, the Biofrontera Group had cash and cash equivalents in the amount of EUR 3,460 thousand. Based on the current corporate planning for 2025, the Group will have sufficient liquidity to meet all obligations for the next 12 months from the date of publication.

Consolidated interim financial statements as of September 30, 2025

Consolidated interim balance sheet as of September 30, 2025

Assets

Consolidated interim statement of comprehensive income for the first nine months of the fiscal year 2025