Dermatological products-focused biopharmaceutical company Biofrontera Inc. (BFRI) made its stock market debut on October 29, 2021. With Biofrontera AG’s shareholding representing roughly 47% of the currently outstanding shares, BFRI is no longer a subsidiary of Biofrontera AG. Investors’ optimism helped its shares soar 53% over the past month. It was heavily discussed on Twitter, Inc.’s (TWTR) platform on December 21, leading it to hit a 52-week high of $14.63.

However, it is currently trading 55% below its 52-week high. BFRI faces intense competition from India-based Sun Pharma with a patent covering actinic keratosis treatment. The company reached an out-of-court settlement with DUSA Pharmaceuticals, Inc. in November 2021, agreeing to pay $22.50 million in settlement of potential claims.

Also, BFRI said on November 17 that its revenue is expected to be between EUR25 million ($283.19 million) and EUR32 million ($362.37 million) for fiscal 2021. However, its EBITDA is likely to be between negative EUR11 million ($124.56 million) and EUR14 million ($158.54 million), and EBIT between negative EUR13 million ($147.21 million) and EUR16 million ($181.18 million). So, its near-term prospects look uncertain.

Here’s what could influence BFRI’s performance in the near term:

Early Stages of Development

On December 13, BFRI announced that the first subject had been enrolled in the Phase 2b study performed by Bioscience GmbH to evaluate the safety and efficacy of Ameluz in combination with the red-light lamp BF-RhodoLED to treat moderate-to-severe acne with photodynamic therapy. On December 6, it announced that the first subject had been enrolled in a Phase 1 study to evaluate the safety and tolerability of photodynamic therapy to treat actinic keratosis using three tubes of Ameluz together with its BF-RhodoLED XL lamp.

Mixed Financials

BFRI’s revenue increased 14% year-over-year to EUR5.38 million ($6.09 million) for the third quarter ended September 30, 2021. The company’s gross profit increased 29% year-over-year to EUR4.68 million ($5.30 million). However, its loss from operations increased 24% year-over-year to EUR4.99 million ($5.65 million). Its EBITDA came in at a negative EUR3.91 million ($4.43 million) compared to EUR4.71 million ($5.33 million) in the prior-year quarter. Moreover, its EBIT came in at a negative EUR4.75 million ($5.38 million) compared to EUR5.47 million ($6.19 million) in the year-ago period.

POWR Ratings Reflect Uncertainty

BFRI has an overall rating of C which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight different categories. BFRI has a C grade for Quality, consistent with its low profitability.

The stock has a D grade for Sentiment, in sync with analysts’ expectations that its EPS will remain negative in fiscal 2021 and 2022.

BFRI is ranked #77 out of 189 stocks in the Medical – Pharmaceuticals industry. In addition to the POWR Rating grades I’ve just highlighted, we’ve also rated the stock for Growth, Value, Momentum, and Stability. Get all the BFRI ratings here.

Bottom Line

Micro-cap BFRI is a lesser-known company in the biopharmaceutical space. It is still in the early stages of development and is reporting losses. Also, its near-term prospects look uncertain because the COVID-19 pandemic-related restrictions could continue to impact visits to doctors' offices. So, it could be wise to wait before scooping up its shares.

How Does Biofrontera (BFRI) Stack Up Against its Peers?

While BFRI has an overall POWR Rating of C, you could check out these A-rated (Strong Buy) stocks within the Medical - Pharmaceuticals industry: Johnson & Johnson (JNJ), GlaxoSmithKline plc (GSK), and Novartis AG (NVS).

BFRI shares were trading at $6.61 per share on Monday afternoon, down $0.91 (-12.10%). Year-to-date, BFRI has gained 49.89%, versus a 28.86% rise in the benchmark S&P 500 index during the same period.

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.

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