Exhibit 99.1

Condensed interim IFRS consolidated financial statements as of June 30, 2019

Consolidated balance sheet as of June 30, 2019

Equity and liabilities

Consolidated statement of comprehensive income for the first six months of 2019 and 2018

Both the profit/loss for the period and the comprehensive income are fully attributable to the shareholders of Biofrontera AG.

Consolidated changes of equity for the first six months of 2019 and 2018

Consolidated cash flow statement for the first six months of 2019 and 2018

Selected explanatory notes to the interim consolidated financial statements as of June 30, 2019

Information about the company

Biofrontera AG (www.biofrontera.com), registered in the commercial register of the Cologne District Court, Division B under No. 49717, and its wholly owned subsidiaries Biofrontera Bioscience GmbH, Biofrontera Pharma GmbH, Biofrontera Development GmbH, and Biofrontera Neuroscience GmbH, all headquartered at Hemmelrather Weg 201, 51377 Leverkusen, Germany, and Biofrontera Inc. based in Woburn, Massachussetts, USA, with its subsidiaries Biofrontera Newderm LLC based in Woburn, Massachussetts, USA and Cutanea Life Sciences, Inc. together with its subsidiaries Dermarc LLC and Dermapex LLC, all based in Wayne, Pennsylvania, USA, research, develop and market dermatological products.

Summary of significant accounting policies

Pursuant to the regulations of Section 115 of the German Securities Trading Act (WpHG), in combination with Section 117 WpHG, this half-year financial report as of 30 June 2019 comprises condensed interim consolidated financial statements, an interim Group management report and a responsibility statement pursuant to the regulations of Section 264 (2) Clause 3, Section 289 (1) Clause 5 of the German Commercial Code (HGB).

The condensed interim consolidated financial statements as of June 30, 2019 of Biofrontera AG were prepared in accordance with the International Financial Reporting Standards (IFRS) of the International Accounting Standards Board (IASB) as well as the interpretations of the International Financial Reporting Standards Interpretations Committee (IFRS IC) for "Interim Financial Reporting" in accordance with IAS 34, as applicable in the European Union. As a consequence, they do not include all information and disclosures required for consolidated financial statements, and for this reason should be read in connection with the consolidated financial statements for the financial year ending December 31, 2018.

As part of preparing the interim consolidated financial statements, the Management Board must make assumptions that affect the application of accounting policies within the Group, and the reporting of assets and liabilities as well as income and expenses. Actual amounts can differ from such estimates.

Apart from the new IFRS standards described below, the accounting policies applied in the preparation of the consolidated financial statements as of December 31, 2018 were adopted unchanged for the preparation of these condensed interim consolidated financial statements. IFRS 16 (Leasing) was applied for the first time as of January 1, 2019.

The first-time application of IFRS 16 resulted in the following effects:

For financial years beginning on or after January 1, 2019, IFRS 16 requires the application of a new lease standard. Contrary to the previous regulation, it provides for lessees to recognize on the balance sheet the rights of use and lease liabilities resulting from leases. The previous distinction between operating leases, which are generally off-balance sheet, and finance leases, which are on-balance sheet, is therefore no longer applicable. The lease liability to be carried as a liability is calculated as the present value of the payments to be made to the lessee with a high degree of probability. They are updated using the effective interest method. The right to use the underlying asset to be recognized in return is to be recognized at cost at the inception of the lease. In addition to the leasing payments, any initial direct costs of the lessee and dismantling costs are included in the calculation. Incentive payments granted by the lessor are to be deducted. The capitalized right of use must be amortized and tested for impairment if indications of impairment exist. The new regulations for lessors essentially correspond to the previous regulations.

The leasing contracts concluded by Biofrontera as lessee mainly relate to buildings and motor vehicles used for operational and administrative purposes. The company will apply the new accounting standard under the modified retrospective method to leases with a remaining term of more than one year as of January 1, 2019. Leases of lesser value are excluded.

The carrying amounts of the rights of use and lease liabilities to be recognized are carried forward as if the new standard had already been applied in the past. Future lease payments are to be discounted at the imputed interest rate of the lessor or, if not available, at the marginal borrowing rate on the date of first application. Differences between the carrying amounts of the lease rights to be recognized for the first time and the lease liabilities change the Group's reserves, taking deferred taxes into account. The previous year's figures have not been adjusted.

Biofrontera has decided to make use of the simplification of IFRS 16.6 for expenses from leasing relationships with a remaining term of no more than one year and from leasing relationships with a low value, and to immediately expense monthly leasing instalments, in other words, applying the same accounting treatment as with IAS 17.

The transition to the new lease accounting had the following effects on the consolidated balance sheet as of as of January 1, 2019:

Effects on the consolidated income statement as of June 30, 2019 were recognized in the form of higher depreciation (plus EUR 378 thousand) and higher interest expenses (plus EUR 37 thousand). Offsetting this, leasing expenses recorded under other operating expenses have declined.

Biofrontera will not report the rights of use and leasing liabilities separately on the balance sheet, but will include them in items containing comparable assets and liabilities.

In relation to the other accounting policies, we also refer in this connection to the notes to the consolidated financial statements for the financial year ending December 31, 2018.

The interim reporting as of June 30, 2019 contains no separate segment-based reporting, as the activities of the Biofrontera Group are limited to a single business segment in terms of the definition in IFRS 8. All business operations focus on the sale of dermatological products, especially Ameluz^®, including the supplementary products BF-RhodoLED^® (PDT lamp) and Belixos^®, as well as XepiI^®, and are monitored and managed internally on a uniform basis accordingly.

This half-year financial report of Biofrontera AG was approved for publication by a Management Board resolution on August 27, 2019.

Rounding differences can arise in the tables due to commercial rounding.

Basis of consolidation

The financial statements as of June 30, 2019 include the financial statements of the parent company, Biofrontera AG, and the subsidiary companies in which the parent has a direct majority of the voting rights. The following companies have been included in the consolidated financial statements:

The basis for the consolidation of the companies included in the consolidated financial statements are the interim financial statements (or HBII pursuant to IFRS) of these companies prepared for 30 June 2019 pursuant to uniform principles. The financial statements as of June 30, 2019 have been prepared on the basis of uniform accounting policies (IFRS).

The subsidiaries have been fully consolidated from the date of acquisition. The date of acquisition is the date when the parent company obtained control of these subsidiaries. The subsidiaries are included in the consolidated financial statements until control over these companies no longer exists.

All inter-company balances and income and expenses have been eliminated on consolidation. Results of intra-group transactions have been eliminated.

Business combinations

Cutanea Life Sciences, Inc.

On March 25, 2019, Biofrontera Inc. entered into an agreement with Maruho to acquire 100% of the shares of Cutanea Life Sciences, Inc., USA including its subsidiaries Dermark LLC and Dermapex LLC (together "Cutanea") through its wholly owned subsidiary Biofrontera Newderm LLC, USA, ("Biofrontera"), newly founded on March 21, 2019. Cutanea has been marketing AKTIPAK^®, a prescription gel for the treatment of acne, as well as Xepi^®, a prescription cream for the treatment of impetigo, since November 2018.

The strategic goal of the Biofrontera Group is to optimize the global positioning and market potential of Ameluz^® and at the same time to become a leading specialty pharmaceutical company in dermatology thanks to its particular degree of innovation. To this end, the global positioning and market potential of our highly innovative products Ameluz^® and Xepi^® are to be optimized.

Biofrontera acquired Cutanea for an initial purchase price of USD 1.00. Maruho will provide up to USD 7.3 million in start-up financing for Cutanea's redesigned business activities (start-up costs). A purchase price equal to the start-up costs actually paid must be paid to Maruho by 2023.

Subsequently, the profits from the sale of Cutanea products will be shared equally between Maruho and Biofrontera until 2030. Maruho has also agreed to assume all running costs that may be incurred during the first three months after completion of the transaction. Maruho also indemnifies Biofrontera and Cutanea against all liabilities relating to or resulting from the pre-contractual period. In addition, Maruho assumes all Cutanea restructuring costs incurred or arising in the period up to three months after the acquisition.

According to the purchase agreement, the acquisition date is March 25, 2019. As a consequence, the acquisition was made with economic effect from that date. As of the same date, Biofrontera gained control over the acquired companies, which means that Cutanea will be fully consolidated in the consolidated financial statements of Biofrontera in accordance with IFRS 3 with effect from March 25, 2019.

The fair values of the assets and liabilities (in accordance with IFRS 3) on the acquisition date March 25, 2019 are as follows:

The badwill derives from the considerable restructuring expenses and necessary investments in sales that were foreseeable when Cutanea was acquired. The seller (Maruho) hopes that the successful marketing of Cutanea products by Biofrontera and the associated profit share will deliver economic advantages compared with a continuation of the Cutanea business.

The following assets and liabilities were measured at fair value as part of the purchase price allocation. The assumptions for the valuation of the intangible assets are as follows:

The products Xepi^® and Aktipak^® distributed via Cutanea contributed EUR 546 thousand to Biofrontera's sales revenue in the period from the acquisition to 30 June 2019. If the acquisition had occurred as of 1 January 2018, the contribution to sales revenue would have been EUR 1,351 thousand.

The results of operations of Cutanea Life Sciences, Inc. including all subsidiaries is as follows:

Due to the integration of Cutanea’s activities into Biofrontera Inc., the existing deferred tax assets at Cutanea were not capitalized, as these probably cannot be offset against future profits.

Notes to the balance sheet and consolidated statement of comprehensive income

Sales revenue

Revenue from product sales revenues generated in the USA includes sales revenue from finance and operating lease agreements for BF-RhodoLED^® lamps.

In the first half of 2019, we generated EUR 41 thousand of income from operating leases (previous year period: EUR 0). We generated income of EUR 19 thousand from finance leases (previous year period: EUR 0).

Deferred income tax

As of June 30, 2019, deferred taxes in the amount of EUR 10,400 thousand were reported. On an unchanged basis, loss carryforwards are capitalized to the extent that they can probably be offset against future taxable profits. This is based on a planning period of five years. These continue to relate to the deferred tax assets on losses carried forward for Biofrontera Pharma GmbH. For the full 2019 financial year and also in the future, it can still be assumed that Biofrontera Pharma GmbH will generate positive results and thereby utilize its tax loss carryforwards.

Provisions

The companies included in the consolidated financial statements of Biofrontera AG are exposed to several threatened or pending legal proceedings, the outcome of which either cannot be determined or cannot be predicted due to the uncertainty associated with such legal proceedings. The claims asserted against Biofrontera were not carried as liabilities, as the Management Board does not assume that claims can be enforced.

For the pending proceedings in the USA and Germany, provisions for litigation costs totaled EUR 2,183 thousand as of the balance sheet date (previous year: EUR 3,241 thousand). An amount of EUR 1,437 thousand was utilized in the first half of 2019. On the basis of a current estimate of the outstanding legal costs, a further provision of EUR 437 was formed.

Biofrontera assumes that the lawsuits are unjustified and will defend itself vigorously against these lawsuits.

However, Biofrontera cannot guarantee that it will be successful.

Biofrontera may incur additional considerable costs in defending its legal position, as in addition to internal resources, attorneys in the US have also been mandated to defend it. The resultant costs incurred by Biofrontera would not be reimbursed by the plaintiff even in the event of a positive outcome of the proceedings due to practices in the US legal environment.

2010 share option program

In the first half of the 2019 financial year, a total of 5,500 options (previous year period: 72,500 options) were converted from the employee share option program. No expenses were incurred in the first half of 2019 (previous year period: EUR 5 thousand).

2015 share option program

After the end of the 2010 employee share option program, the company’s Annual General Meeting on August 28, 2015 authorized the Management and Supervisory boards to issue to Management Board members and employees up to 1,814,984 subscription rights to up to EUR 1,814,984 of the company’s ordinary registered shares until August 27, 2020 according to the more detailed specifics of the authorization resolutions.

On May 14, 2018, 333,485 options (sixth tranche) were issued with an exercise price of EUR 6.708 each. A total of 130,500 options were forfeited by employees leaving the company. Due to the blocking period, no options have yet been exercised or forfeited. As a consequence, 116,498 options remain outstanding on June 30, 2019. The expenditure recognized in the reporting period was EUR 164 thousand (previous year: EUR 125 thousand).

Financial liabilities

A further tranche of EUR 5 million of the EIB loan was drawn on February 4, 2019. A further tranche of EUR 5 million can be drawn after the extension of the loan agreement. This was originally available until July 2019 and can now be used until May 2020.

Reporting on financial instruments

The financial instruments held by the Biofrontera Group on the balance sheet date primarily consist of cash and cash equivalents, trade payables and receivables, other non-current financial liabilities as well as financial debt. Biofrontera does not deploy any financial derivatives, apart from the derivative embedded within the EIB loan (so-called performance component).

The financial assets are still allocated to “financial assets at amortized cost”. The carrying amounts correspond to the fair values.

The performance component (financial instrument at level 3 of the fair value hierarchy) as a further variable interest component and embedded derivative requiring separation is subsequently measured at fair value on each balance sheet date and is allocated to the category “financial liabilities at fair value through profit or loss”. The market capitalization at maturity is the same as that of the measurement cut-off date, which is based on the 90 trade days preceding the measurement cut-off date. The performance-based interest payment for the first tranche is calculated based on a notional 0.64% participation rate in the market capitalization. This is discounted to the measurement cut-off date applying a market interest rate.

As of June 30, 2019, the discounted interest payment (carrying amount) or fair value of the performance component of the 2017 EIB loan was EUR 1,279 thousand (previous year: EUR 1,080 thousand) and of the 2019 EIB loan EUR 353 thousand. The net losses on the performance component amounted to EUR 252 thousand (previous year period: EUR 508 thousand).

Other financial liabilities continue to be allocated to the category “financial liabilities measured at amortized cost”. The carrying amounts correspond to the fair values.

Members of the Supervisory Board

By order of the Cologne District Court dated March 22, 2019, Mr. Hansjörg Plaggemars was dismissed as a member of the Supervisory Board of Biofrontera AG pursuant to Section 103 (3) of the German Stock Corporation Act (AktG) for good cause. The ruling was issued on March 22, 2019 and came to the company’s attention on March 26, 2019. The ruling regarding the removal from office is effective immediately. However, an appeal could be lodged within one month, and this occurred. The appeal was rejected by the Cologne District Court on April 30, 2019 and the case was referred to the Higher Regional Court for a further ruling. The Annual General Meeting on July 10, 2019 elected Prof. Dr. Franca Ruhwedel, Professor of Finance and Accounting at the Rhein-Waal University of Applied Sciences, Kamp-Lintfort, Duisburg, to the Supervisory Board as successor to Mr. Plaggemars.

Related party disclosures

The following relationships exist with the Maruho Group as a result of the research partnership and the acquisition of Cutanea:

Events after the interim reporting date

No events subject to mandatory reporting occurred after the interim balance sheet date.

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is designed to provide you with a narrative explanation of our financial condition and results of operations. You should read such discussion in conjunction with our unaudited interim condensed financial information as of and for the six months ended June 30, 2019 included as Exhibit 99.1 to this Report on Form 6-K. You also should read the discussion of our financial condition and results of operations and our audited financial statements and the notes thereto, which appear in our Annual Report on Form 20-F for the year ended December 31, 2018 (the “2018 Form 20-F”) on file with the U.S. Securities and Exchange Commission (the “Commission”).

Unless otherwise indicated or the context otherwise requires, all references to “Biofrontera” or the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to Biofrontera AG and its consolidated subsidiaries, Biofrontera Pharma GmbH, Biofrontera Bioscience GmbH, Biofrontera Neuroscience GmbH, Biofrontera Development GmbH and Biofrontera Inc. Our consolidated financial statements and related notes are been presented in euros, or €, and have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. None of our consolidated financial statements in this Form 6-K of which this exhibit forms a part have been prepared in accordance with United States generally accepted accounting principles. For any of our subsidiaries that use a functional currency that is not euros, the assets and liabilities have been translated at the closing exchange rate as of June 30, 2019, which was 1.1374 U.S. dollars to 1 euro, while the income and expenses have been translated at the average exchange rate for the six-month period ended June 30, 2019, which was 1.1293 U.S. dollars to 1 euro. The differences resulting from the valuation of equity at historical rates and applying the period-end exchange rates are reported as a change not affecting profit or loss and carried directly to equity within the other equity components. Transactions realized in currencies other than euros are reported using the exchange rate on the date of the transaction. Assets and liabilities are translated applying the closing exchange rate for each balance sheet date. Gains and losses arising from such currency translations are recognized in income. See “Summary of Significant Accounting Policies — Translation of Amounts in Foreign Currencies” in the notes to our consolidated financial statements included in our 2018 Form 20-F for more information. Unless otherwise indicated, all references to currency amounts in this discussion and analysis are in euros.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This discussion includes forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this annual report regarding our strategy, future operations, regulatory process, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth are forward-looking statements. The words “believe”, “anticipate”, “intend”, “expect”, “target”, “goal”, “estimate”, “plan”, “assume”, “may”, “will”, “predict”, “project”, “would”, “could” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this report include, but are not limited to, statements about:

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this discussion that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

You should read this discussion and the financial statements filed as an exhibit to the report on Form 6-K of which this discussion forms a part completely and with the understanding that our actual future results may be materially different from what we expect. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to risks, uncertainties and assumptions about us, including those listed in the sections of the 2018 Form 20-F entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Factors Affecting our Results of Operations

We believe that the following factors have influenced and will continue to influence the development of our business and our future financial performance:

Sales of Ameluz^® in the United States

Increasing our sales of Ameluz^® in the U.S. is development in the U.S. is the most important growth driver for our overall business. Our ability to continue to grow our revenues in line with our expectations and to become profitable depends on our ability to meet successfully our sales targets in the U.S. Although U.S. sales of Ameluz^® continued to grow throughout 2019, the pace of growth slowed, and U.S. sales did not meet our targets. Despite the positive trend in overall conditions, it remains very difficult to plan sales revenue growth, thereby leading to a considerable fluctuation range in achievable sales revenues. We believe that the success of our sales strategy in the U.S. will influenced heavily by our ability to obtain from the FDA approval for further label expansions for Ameluz^® and our ability to promote our products in the medical community.

Acquisition of Cutanea Life Sciences, Inc.

Overview

On March 25, 2019, we announced that we, through a U.S. subsidiary, had acquired Cutanea Life Sciences, Inc. (“Cutanea”) from Maruho Co., Ltd. (“Maruho”), the parent company of our major shareholder Maruho Deutschland GmbH. For information relating to the acquisition, including a summary of the Share Purchase and Transfer Agreement dated March 25, 2019, by and among Biofrontera Newderm LLC, Biofrontera AG, Maruho and Cutanea Life Sciences, Inc. (the “Cutanea Purchase Agreement”), relating thereto, please refer to our 2018 Form 20-F, including the notes to our audited financial statements included therein. Descriptions of any portion or portions of the Cutanea Purchase Agreement contained herein are qualified in their entirety by reference to the Cutanea Purchase Agreement, a copy of which is filed as Exhibit 4.13 to our 2018 Form 20-F.

At the time of the acquisition, Cutanea had two prescription drugs approved by the U.S. Food and Drug Administration: Xepi^®, a prescription antibiotic cream for the treatment of impetigo (a common bacterial skin infection) and Aktipak^®, a generic drug for the treatment of mild-to-moderate acne. Xepi^® is produced for Biofrontera by Ferrer Internacional S.A., the licensor of Xepi^®, which supplied Cutanea, and now supplies Biofrontera, with the finished product. At the time of the acquisition, Cutanea also had other operations, including significant research and development projects.

Following our acquisition of Cutanea, Cutanea has been significantly restructured. Due to technical challenges with the manufacturing process of Aktipak^®, which could not be remedied in the short term, Biofrontera ceased the production and sale of Aktipak^® in August 2019. Biofrontera incurred only de minimis expenses related to Aktipak^® before and in connection with discontinuing that product, and does not expect to incur going forward any expenses relating to Aktipak^® that will not be reimbursed by Maruho in connection with the Cutanea Purchase Agreement. As part of our acquisition of Cutanea, we returned to Maruho or discontinued all of Cutanea’s research and development projects. As of December 31, 2019, approximately 95% of Cutanea’s workforce as of the date of the acquisition had been terminated, and we had dissolved or eliminated through mergers or other internal restructuring all Cutanea legal entities. Thus, because of the discontinuance of Aktipak^® sales and the treatment in the transaction of research and development projects, Biofrontera’s acquisition of Cutanea represented, in substance, the acquisition of only the rights to market a single product, Xepi^®. Accordingly, except for the single Xepi^® product line (and de minimis impacts from Aktipak^®-related operations that have already been discontinued), none of the other historical business activities of Cutanea have impacted our results of operations, and we do not expect that they will impact our results of operations in the future. Xepi^® first became available on the market in November 2018.

Effects of Acquisition of Cutanea on Our Income Statement

Cutanea and its subsidiaries Dermarc LLC and Dermapex LLC were fully consolidated on March 25, 2019, the date we acquired Cutanea. Sales revenues for Xepi^® and Aktipak^® as well as cost of sales calculated applying the cost of sales method, are reported in the respective items of our consolidated income statement for the periods ended June 30, 2019 and September 30, 2019.

The following table sets forth the sales revenue, cost of sales, research and development costs, general administrative costs and sales and marketing costs attributable to Cutanea and its subsidiaries, as included in our consolidated statement of comprehensive income for the periods ended June 30, 2019 and September 30, 2019:

⁽¹⁾ Attributable to Xepi^® and Aktipak^® from and including acquisition date of March 25, 2019
⁽²⁾ Attributable to operations of Cutanea and its subsidiaries from and including acquisition date of March 25, 2019

Pursuant to the Cutanea Purchase Agreement, Maruho agreed to, among other things, assume all (1) ongoing costs that we may incur in connection with our operation of Cutanea’s business during the first three months after completion of the acquisition and (2) restructuring expenses incurred at Cutanea from any restructuring activities commenced or decided within three months from the acquisition date, including a substantial portion of the costs set forth in the table above. These costs will be paid using Cutanea’s cash and cash equivalents acquired by Biofrontera upon the acquisition of Cutanea, or they will be passed on to Maruho in accordance with the Cutanea Purchase Agreement and reported under other income. Other income attributable to reimbursement from Maruho amounted to €5.5 million for the six months ended June 30, 2019 and amounted to €4.5 million for the nine months ended September 30, 2019.

In addition, badwill in the amounts of €17.3 million and €14.8 million was included in our other income for the six months ended June 30, 2019 and nine months ended September 30, 2019, respectively. Badwill results from the negative difference in asset and liability items measured at fair value resulting from the purchase price allocation in connection with our acquisition of Cutanea.

Litigation Relating to Our Intellectual Property and Other Litigation

As a result of our litigation with DUSA Pharmaceuticals, Inc., our legal costs were significantly higher than expected and had a material impact on our financial condition. We expect that this trend may continue to affect our operating results and financial condition in future periods.

Recent Developments

Set forth below is certain limited unaudited financial information as of and for the three months and nine months ended September 30, 2019. In connection with our listing on the Frankfurt Stock Exchange, we published substantially all of this financial information in an announcement issued on November 19, 2019. This financial information has been prepared under IFRS as adopted by the European Union (“EU”). No material differences are believed to exist between the presented financial information in accordance with IFRS as adopted by the EU and IFRS as issued by the IASB.

As compared to the nine-month period ended September 30, 2018, our sales revenue increased by 31% to €19.1 million in the nine-month period ended September 30, 2019, driven primarily by growth in our German and U.S. markets. Our revenue in Germany rose to €3.3 million for the nine-month period ended September 30, 2019, a 59% increase as compared to the nine-month period ended September 30, 2018, while sales revenue in the U.S. amounted to €13.6 million during the nine-month period ended September 30, 2019, an increase of 33% as compared to the nine-month period ended September 30, 2018. In Spain, sales revenue for the nine-month period ended September 30, 2019 was maintained at approximately the same level as the comparable period in 2018, despite a 27% price reduction imposed by the government. We believe that the growth in Germany is a consequence of the European Commission’s approval for label extension for the treatment of mild-to-moderate actinic keratosis on the face and scalp using Ameluz^® in combination with daylight (“PDT”) in March 2018. In the U.S., growth in our sales revenue is primarily the result of further expanded sales infrastructure and improved reimbursement. Nevertheless, the pace of growth in the U.S.—our most important market in terms of sales revenue—slowed somewhat in the summer of 2019.

Results of Operations

Sales Revenue

During the nine month period ended September 30, 2019, we generated sales revenue of €19.1 million, an increase of 31% over the comparable period in 2018 (nine months ended September 30, 2018: €14.6 million). Sales in the U.S. for the nine months ended September 30, 2019 increased by 33% to €13.6 million (nine months ended September 30, 2018: €10.2 million). This includes sales of €677 thousand relating to new products Xepi^TM and Aktipak^®. We believe that the growth is primarily due to the further expansion of our sales infrastructure and improvements in the reimbursement of PDT for dermatologists in the U.S. since the beginning of 2019. Sales in Germany for the nine months ended September 30, 2019 increased by €1.2 million, or 59%, to €3.3 million compared to the same period in 2019 (nine months ended September 30, 2018: €2.1 million). In other European countries, sales revenue for the nine months ended September 30, 2019 decreased by 14% to €1.8 million (nine months ended September 30, 2018: €2.1 million). We believe that the reason for the decline in 2019 compared to 2018 was a decrease in deliveries to our license partners. We believe that the sales increase in Europe as a whole is due in particular to the introduction of daylight-PDT, which was approved in March 2018. Sales from other regions for the nine months ended September 30, 2019 amounted to €367 thousand (nine months ended September 30, 2018: €169 thousand).

Gross Profit

Gross profit for the nine months ended September 30, 2019 increased by €3.1 million to €14.9 million compared to €11.8 million in the same period in 2018. The gross margin decreased from 81% in the first nine months of 2018 to 78% in the first nine months of 2019.

Research and Development Costs

Research and development costs for the nine months ended September 30, 2019 amounted to €3.2 million, which was the same as costs during the nine months ended September 30, 2018. Research and development costs include costs for clinical studies as well as regulatory expenses, i.e. the granting, maintenance and extension of our approvals.

General Administrative Costs

General administrative expenses amounted to €12.1 million in the nine months ended September 30, 2019 (nine months ended September 30, 2018: €7.3 million), an increase of €4.8 million. This was due to significantly higher legal and consulting costs as well as administrative costs in the U.S. In addition, administrative expenses of €2.1 million for Cutanea were included in the nine months ended September 30, 2019.

Sales and Marketing Costs

Sales and marketing costs amounted to €20.6 million in the nine months ended September 30, 2019, an increase of €8 million compared to the nine months ended September 30, 2018 (€12.7 million). This increase was principally due to two reasons: (1) costs for the further expansion of our sales activities in the U.S. and (2) sales costs incurred by Cutanea of €4.6 million. Sales costs include the expenses for our own sales force in Germany, Spain, the UK and the U.S. as well as marketing expenses.

Loss on Operations

The loss on operations for the nine months ended September 30, 2019 amounted to €21.1 million, an increase of €9.7 million compared to the previous year (nine months ended September 30, 2018: €11.4 million). The increase is primarily due to the first-time consolidation of Cutanea. Cutanea’s operating expenses of €6.5 million were offset by the reimbursement of expenses, to date, in the amount of €4.5 million paid by Maruho pursuant to the Cutanea Purchase Agreement.

Other Income and Expenses

Other income and expenses totaled €20.8 million for the nine months ended September 30, 2019. This includes the negative difference of €14.8 million in asset and liability items measured at fair market value resulting from the purchase price allocation, including income of €6.3 million from the offsetting of start-up costs to Maruho. This item also includes settlements to Maruho under the Cutanea Purchase Agreement in the amount of €4.5 million. The previously reported estimate income from the purchase price allocation as well as income from the offsetting of expenses incurred by Cutanea to Maruho were adjusted to €(3.6) million in the nine months ended September 30, 2019. Expenses and income from currency translation are also included in this item.

Interest Expenses

Interest expenses amounted to €2.6 million in the nine months ended September 30, 2019 and mainly is comprised of the interest expenses for the loan under our credit facility with the European Investment Bank (“EIB”) made available in July 2017, which was increased by a further tranche in February 2019. In addition, higher amounts from the compounding of long-term liabilities are reported under interest expenses.

Non-Current Assets

Non-current assets totaling €40 million include deferred tax assets on tax losses carried forward at Biofrontera Pharma GmbH in the amount of €10.4 million reported for the first time as of December 31, 2018 and the license relating to Xepi™ in the amount of €23.3 million that we acquired through our acquisition of Cutanea.

Current Financial Assets

Current financial assets totaled €26.8 million as of September 30, 2019. This includes cash and cash equivalents of €12 million (December 31, 2018: €19.5 million), trade receivables of €3.8 million (December 31, 2018: €3.4 million) as well as receivables from Maruho from its contractual obligations to us under the Cutanea Purchase Agreement of €11.3 million.

Other Current Assets

Other current assets mainly include inventories amounting to €4.3 million as of September 30, 2019 (December 31, 2018: €3.2 million). This includes inventories at Cutanea amounting to €458 thousand.

Equity

The fully paid in share capital of the parent company, Biofrontera AG, amounted to €44.8 million as of September 30, 2019. It was divided into 44,849,365 registered shares with a nominal par value of €1.00 each. Total equity as of September 30, 2019 amounted to €14.3 million compared to €16.4 million as of December 31, 2018.

Non-Current Liabilities

Non-current liabilities include financial liabilities (€22.2 million as of September 30, 2019; December 31, 2018: €13.5 million), non-current provisions (€1 million as of September 30, 2019; December 31, 2018: €1.5 million) and other non-current financial liabilities from the purchase price for Cutanea (€18.6 million as of September 30, 2019). The non-current financial liabilities include the loan from the EIB under our credit facility with it, including the performance component in the amount of €17.2 million as September 30, 2019 (December 31, 2018: €11 million), the non-converted portion of the convertible bond 2017-22 in the amount of €2 million as of September 30, 2019 (December 31, 2018: €2.5 million) and, for the first time, liabilities from leasing agreements in the amount of €3 million to be recognized under IFRS 16.

Current Financial Liabilities

Current financial liabilities mainly include trade payables of €3.2 million as of September 30, 2019 (December 31, 2018: €1.8 million), including trade payables of Cutanea in the amount of €941 thousand.

Other Current Liabilities

Other current liabilities amounted to €12 million as of September 30, 2019 (December 31, 2018: €5.8 million) and relate, in particular, to outstanding obligations of Cutanea totaling €5.8 million.

Cash and Cash Equivalents

Compared to December 31, 2018, cash and cash equivalents decreased by €7.5 million to €12 million as of September 30, 2019. This includes cash on the balance sheet of Cutanea in the amount of €2.1 million.

Condensed consolidated balance sheet as of September 30, 2019

Equity and liabilities

Condensed consolidated statement of comprehensive income for the first nine months of the 2019 and 2018 financial years

Selected Consolidated Financial Data

The following tables set forth a summary of the consolidated historical financial information of, and for the periods ended on, the dates indicated for Biofrontera. We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The selected consolidated statement of operations data for the fiscal years ended December 31, 2018, December 31, 2017 and December 31, 2016, and the selected consolidated balance sheet data as of December 31, 2018, December 31, 2017 and December 31, 2016 have been derived from our audited consolidated financial statements. Our selected consolidated statement of operations data for the six months ended June 30, 2019 and June 30, 2018 and the selected consolidated balance sheet data as of June 30, 2019 have been derived from our unaudited interim condensed consolidated financial statements included as an exhibit to the report on Form 6-K of which this exhibit forms a part. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and include all normal recurring adjustments that we consider necessary for a fair statement of our financial position and operating results for the periods presented.

The following selected consolidated financial data for the periods and as of the dates indicated are qualified by reference to and should be read in conjunction with our consolidated financial statements and related notes included as an exhibit to the report on Form 6-K of which this discussion forms a part.

Our historical results for any prior period do not necessarily indicate our results to be expected for any future period.