pursuant to Section 27 of the German Securities Acquisition and Takeover Act (WpÜG) relating to the

relating to the purchase of a total of up to 500,000 ordinary registered shares of Biofrontera AG against payment of a consideration per share in cash of EUR 8.00

ISIN DE000A2TR9S4 (WKN A2TR9S) (shares with dividend entitlement from 1 January 2019)

Deutsche Balaton Biotech AG based in Frankfurt am Main, registered in the commercial register of the Frankfurt am Main District Court under Commercial Register Sheet No. 111190 (“DB Biotech”) and DELPHI Unternehmensberatung Aktiengesellschaft based in Heidelberg, registered in the commercial register of the Mannheim District Court under Commercial Register Sheet No. 705381 (“DELPHI” , DB Biotech and DELPHI also jointly the “Bidders” or “Bidder”), announced on 29 May 2019 pursuant to Section 10 (1) Clause 1 of the German Securities Acquisition and Takeover Act (“WpÜG”) their decision to make a voluntary public purchase offer in the form of a partial offer for up to 500,000 shares of Biofrontera AG, registered in the commercial register of the Cologne District Court under Commercial Register Sheet No. 49717, (“Target Company” or “Biofrontera AG”, Biofrontera AG and its subsidiaries also referred to as the “Biofrontera Group”). The shares of Biofrontera AG are registered shares and have a notional interest in the share capital of EUR 1.00 each (individual share certificates).

On 21 June 2019, the Bidder published the Offer Document pursuant to Section 14 (2) and (3) WpÜG in the meaning of Section 11 WpÜG (“Offer Document”) for the Bidder’s offer (“Offer”) to shareholders of Biofrontera AG (each individually “Biofrontera Shareholder” and together “Biofrontera shareholders”) to acquire a total of up to 500,000 registered shares of Biofrontera AG with ISIN DE0006046113 (hereinafter referred to individually as “Biofrontera share” and together “Biofrontera Shares”) against payment of a cash consideration of EUR 7.20 per Biofrontera share (“Original Consideration”).

On 1 July 2019, the Bidder announced that it had decided to increase the Original Consideration. On 4 July 2019, the Bidder published a modification to the Offer Document (“Modified Offer Document”) pursuant to Sections 21 (2) Clause 1, 14 (3) Clause 1 No. 2 WpÜG) for the Offer .

According to the Modified Offer Document, the Offer now envisages that the Original Consideration be replaced by the

It is recommended that the Offer Document and the Modified Offer Document be read in their entirety.

Pursuant to Section 27 (1) Clause 1 WpÜG, the Target Company’s Management and Supervisory boards are required to issue a substantiated opinion relating to an acquisition offer in the meaning of the WpÜG and relating to any modification of the acquisition offer. The opinion of the Management and Supervisory boards can be issued as a joint opinion. The Management and Supervisory boards of Biofrontera AG hereby issue their joint opinion (“Second Opinion”) in relation to the Offer modified by the Modified Offer Document, pursuant to Section 27 WpÜG, relating to the Bidder’s Modified Offer.

If in this opinion only the “Management and Supervisory boards” (“Management and Supervisory boards”) are referred to, this shall refer to the Management and Supervisory boards of Biofrontera AG, even if no explicit reference is made to Biofrontera AG, unless the management and supervisory boards of another company are specifically named.

Pursuant to Section 27 (1) Clause 1 WpÜG, the Management and Supervisory boards have already commented upon the Bidder’s Offer in the form of the Offer Document (“First Opinion”). The First Opinion was published on 1 July 2019.

In the context of this Second Opinion, the Management and Supervisory boards will address the nature and amount of the Increased Consideration offered pursuant to Section 27 (1) WpÜG. In light of the Increased Consideration, the Management and Supervisory boards will again address in this Second Opinion the Management and Supervisory boards’ intention to accept the Offer to the extent that they are holders of Biofrontera shares.

This Second Opinion is not to further address the prospective consequences of a successful Offer for Biofrontera AG, its employees and representatives, the terms of employment and the locations of Biofrontera AG, as well as the objectives the Bidder is pursuing with the Offers, as to this extent in the Modified Offer Document the Bidder is not communicating any modifications in relation to the Offer Document. In this connection, however, reference is made to the First Opinion.

If the respective Works Council, or, to the extent that such a body does not exist – as is the case with Biofrontera AG – the employees of the Target Company directly convey an opinion relating to the Offer to the Management Board, the Management Board is required to append such an opinion to its opinion. The employees of Biofrontera AG are required to convey to the Management Board their own opinion relating to the Offer (“Employees’ Opinion”).

All information, expectations, forecasts, estimates, valuations and forward-looking statements contained in this Second Opinion as well as statements of intent are based on information available for the Management and Supervisory boards on the date of this opinion based on their tasks and powers. They convey their estimates, assumptions and intentions existing as of this date, which can change after the date of this Second Opinion. Above and beyond obligations pursuant to German law – specifically the German Securities Acquisition and Takeover Act (WpÜG) – the Management and Supervisory boards do not assume any obligation to update or amend this Second Opinion.

The statements made in this Second Opinion relating to the Bidder, its affiliated companies and individuals acting in concert with the Bidder, as well as their intentions, assumptions and objectives, are based exclusively on publicly accessible information, especially the Offer Document and the Modified Offer Document. The Management and Supervisory boards draw attention to the fact that they are unable to verify disclosures made by the Bidder in the Offer Document and the Modified Offer Document – apart from those originating directly within the Biofrontera Group – or the Bidder’s communicated intentions and objectives, and to ensure that they are implemented or complied with. The Management and Supervisory boards draw attention to the fact that the Bidder’s intentions and objectives as conveyed in the Offer Document can change at a later time.

To the extent that this Second Opinion includes forward-looking statements, these do not represent facts, and are characterized by the words “become”, “expect”, “believe”, “estimate”, “intend”, “endeavor”, “assume” and similar or comparable expressions. Such disclosures express intentions, opinions or current expectations and assumptions of the Management and Supervisory boards. Forward-looking statements are based on current plans, estimates and forecasts, which the Management and Supervisory boards have prepared according to the best of their knowledge, but they do not make assertions concerning their future correctness or occurrence. Forward-looking statements are subject to risks and uncertainties which are mostly very difficult to predict and do not lie within the Management and Supervisory boards’ sphere of influence.

References to time in this Second Opinion relate, unless stated otherwise, to local time in Frankfurt am Main, Germany. To the extent that formulations such as “currently”, “at present”, “now”, “presently” or “today” are utilized in this Opinion, they relate to the date of this Second Opinion.

This Second Opinion and any supplements or updates will be published on the Internet on the website of Biofrontera AG at

in the section “Investors” under “Acquisition Offer of Deutsche Balaton Biotech AG and DELPHI Unternehmensberatung AG”: https://www.biofrontera.com/de/investoren/erwerbsangebot-db-biotech-und-delphi.html

Copies of the Second Opinion are available free of charge from Biofrontera AG, Hemmelrather Weg 201, 51377 Leverkusen, Germany (order by fax to +49(0)214-87632-90 or by email to ir@biofrontera.com). It is also announced in the German Federal Gazette (Bundesanzeiger) under www.bundesanzeiger.de that the Second Opinion is available at the aforementioned address, and that the publication of the opinion on the Internet has been realized on the aforementioned Internet page.

This Second Opinion is published in German. Furthermore, in the USA, because of the stock market listing there of American Depositary Shares , each of which securitizes two ordinary shares of Biofrontera AG (ISIN: US09075G1058) (Biofrontera “ADS”), a publication of the Second Opinion will occur there in accordance with the relevant provisions and instructions of the United States Securities and Exchange Commission (“SEC”).

The above information applies mutatis mutandis to the First Opinion and the Employees’ Opinion.

The Management and Supervisory boards draw attention to the fact that their statements and judgments in this Second Opinion are in no manner binding for Biofrontera shareholders. Instead, Biofrontera shareholders are themselves responsible for drawing conclusions deriving from the Offer or from other accessible sources, and for acting accordingly. In this context, they themselves are responsible for deciding whether to accept the Offer or not.

To the extent legally permissible, the Management and Supervisory boards as well as Biofrontera AG assume no liability for the instance that an acceptance or non-acceptance of the Offer should prove economically disadvantageous for Biofrontera shareholders or for Biofrontera AG.

Above and beyond this, the Management and Supervisory boards draw attention to the fact that they can provide no assessment as to the tax consequences that can arise for the individual Biofrontera shareholder from acceptance or non-acceptance of the Offer. The Management and Supervisory boards recommend that Biofrontera shareholders obtain tax advice that takes into consideration their personal tax situation before deciding whether to accept or not.

If and to the extent that Biofrontera shareholders are unable to make an independent assessment of the Offer, they should consider obtaining expert advice, such as through contacting their personal investment adviser and tax adviser.

3	Summary of the main statements of the First and Second opinions

The following summary of the main points of the First and Second opinions serves as an overview. It does not include all of the information included in the First and Second opinions. Biofrontera shareholders should therefore, in their own interest, not rely solely on this summary but should fully and thoroughly examine the First Opinion and the Second Opinion as well as the Offer Document and the Modified Offer Document.

The main points of this Opinion are as follows:

	-	The Management and Supervisory boards appraise the consideration offered by the Bidder to be financially inappropriate.
	-
	-	The Bidder’s statement that these and the persons acting in concert with them are pursuing the objective of being represented on the Supervisory Board of Biofrontera AG only “in accordance with their participating interest” does not appear credible. In the Management and Supervisory boards’ opinion, it is clear from the request of Deutsche Balaton AG, Heidelberg, (“Deutsche Balaton”) to amend the Annual General Meeting of Biofrontera AG on 10 July 2019 and from the countermotions submitted by the bidders and persons acting in concert with them that the Bidders and Deutsche Balaton already had the goal at the Annual General Meeting of Biofrontera AG on 10 July 2019 to fill at least three Supervisory Board mandates according to their ideas. In addition, amendments to the bylaws of Biofrontera AG that are intended to be made lead to the conclusion, that in the following, the Bidder intends to fill the Supervisory Board mandates in a more extensive and thus majority manner in accordance with its ideas. The Annual General Meeting of Biofrontera AG that was held on 10 July 2019 had rejected the corresponding resolution proposals, which were put to the vote.

	-	In the assessment of Biofrontera AG, the Bidder and individuals acting in concert with it have no proven practical experience of any type or other relevant expertise in the Biofrontera Group’s area of activity. For this reason, implementing the Bidder’s ideas for the future composition of the Management and Supervisory boards poses a serious risk to the further development and growth of the Biofrontera Group.

	-	Pursuant to the employees’ opinion, the employees of Biofrontera AG reject the Bidder’s objectives relating to the modification of the Management and Supervisory boards. A partnership with the Deutsche Balaton Group is completely out of the question for a considerable proportion of the employees, with the consequence that Biofrontera AG faces the risk of a mass exodus of highly qualified employees. In particular, the risk exists of a loss of important key personnel.

	-	The Management and Supervisory boards draw attention to the fact that in the event of a successful Offer and if the Bidder achieves the desired influence on Biofrontera AG, a potential risk would in any case exist that an attempt will be made to access the assets of the Biofrontera Group, especially its available liquidity.

	-	Overall, the Management and Supervisory boards appraise the targets and intentions communicated by the Bidder as negative. The Management and Supervisory boards cannot identify that the Bidder’s objectives, which, if the Bidder’s approach were to prove successful, would potentially entail an effective control of the Biofrontera Group, are borne out by a comprehensible operative strategy that lies in the interests of the Biofrontera Group. Instead, in the Management and Supervisory boards’ opinion, the overall approach of the Bidder and the persons acting in concert with the Bidder makes it clear that they intend to make substantial modifications to the structure of Biofrontera AG, especially in relation to the very successful management to date by the Management and Supervisory boards, by appointing persons closely associated with the Bidders and Deutsche Balaton. In particular, the related risks encompass the loss of key personnel. In the Management and Supervisory boards’ opinion, this would pose a huge risk to the further success and profitability of the Biofrontera Group.

	-	The Management Board members do not intend to accept the Offer. Instead, they continue to intend to accept the Maruho Offer for all Biofrontera shares they hold (see Note 6.5 of the First Opinion).

	-	The Management and Supervisory boards continue to recommend that Biofrontera shareholders do not accept the Offer.

On 9 July 2019, Biofrontera AG announced preliminary unaudited sales revenue for the first half of the 2019 financial year. Accordingly, the Biofrontera Group generated sales revenue of approximately EUR 13.8 million to EUR 14.0 million in the period from 1 January to 30 June 2019. This corresponds to sales revenue growth of in excess of 50 % compared to the same period of the previous year. Preliminary unaudited half-year sales revenues of Ameluz in the USA ranged between EUR 9.5 million and EUR 9.7 million, compared to EUR 6.4 million (+50 %) in the same period in 2018. Product sales revenues of Xepi and AKTIPAK contributed approximately EUR 0.6 million to revenues since the acquisition of Cutanea Life Sciences, Inc. at the end of March 2019. Sales revenues in Germany in the first half of 2019 grew by around 82 % to between EUR 2.1 million and EUR 2.2 million, compared with EUR 1.2 million in the first half of 2018. Product sales revenues of between EUR 1.3 and 1.4 million were achieved in the rest of Europe, compared with EUR 1.2 million (+12 %) in the same period of the previous year.

Mr. Hansjörg Plaggemars was recalled from office as a member of the Supervisory Board of Biofrontera AG with immediate effect by court order of 22 March 2019. Mr. Plaggemars had been elected to the Supervisory Board by the AGM on 31 May 2016 until the end of the AGM that passes a resolution concerning the discharge for the financial year ending 31 December 2020. For this reason, a successor to Mr. Plaggemars was to be elected.

As successor to Mr. Plaggemars, the Annual General Meeting of Biofrontera AG on 10 July 2019 elected Prof. Dr. Franca Ruhwedel, resident in Duisburg, Professor of Finance and Accounting at the Rhein-Waal University of Applied Sciences, Kamp-Lintfort, to the Supervisory Board with effect from the end of the Annual General Meeting.

The Annual General Meeting of Biofrontera AG on 10 July 2019 rejected the resolutions proposed by Deutsche Balaton in accordance with its additional request under agenda items 7 to 15 as well as all countermotions of the Bidders and persons acting in concert with them. According to the votes cast, an attempt was in fact made to fill three of the six Supervisory Board positions at Biofrontera AG at the Annual General Meeting on 10 July 2019 with this group of persons. In addition, an attempt was made to amend Section 13 of the bylaws of Biofrontera AG in such a way that in future the dismissal of Supervisory Board members would have been possible with a simple majority of the votes cast (currently Section 13 of the bylaws provides for a 3/4 majority).

The Management and Supervisory boards draw attention to the fact that the description of the Offer in this Second Opinion makes no claim to completeness, and that solely the provisions of the Offer Document and the Modified Offer Document are of relevance for the content and processing of the Offer. All Biofrontera shareholders are independently responsible for examining the Offer Document and the Modified Offer Document and for taking the necessary related actions.

In accordance with the provisions of the Modified Offer Document, the Bidder offers to all Biofrontera Shareholders to purchase Biofrontera Shares they hold for the Increased Consideration in cash per Biofrontera Share in the amount of now

If more than 500,000 Biofrontera shares are tendered, proportional acceptance shall be applied.

No change has been implemented to the Acceptance Period, which shall continue to end on 19 July 2019, 24:00 hours (local time Frankfurt am Main).

According to the Offer Document, the Offer and the share purchase agreements concluded with the acceptance of the Offer are not subject to any conditions.

Biofrontera shareholders are entitled to withdraw from agreements concluded through accepting the Offer in the instance of a modification to the Offer in the meaning of Section 21 (1) WpÜG pursuant to Section 21 (4) WpÜG as well as in the case of a competing offer pursuant to Section 22 (3) WpÜG.

The Management and Supervisory boards should address in their opinion the type and level of consideration offered.

By contrast with takeover and mandatory offers, in the case of a public purchase offer such as is the case with this Offer, no statutory requirements exist in relation to the type or level of consideration. The regulations of Section 31 of the German Securities Acquisition and Takeover Act (WpÜG) are not applicable for the Offer. In this procedure, the Bidder is consequently under no legal obligation to offer to a consideration in accordance with statutory regulations, but can instead freely determine the type and level of the consideration it is offering.

The Offer and the Modified Offer Document provide for a cash payment. In the Management and Supervisory boards’ opinion, this type of consideration is not objectionable.

The cash payment amounts to EUR 8.00 per Biofrontera share according to the Modified Offer Document. In this respect, the question arises whether this amount is financially appropriate.

The Bidders regard the Increased Consideration of EUR 8.00 per Biofrontera Share to be appropriate in accordance with the descriptions in the Modified Offer Document, as the consideration thereby

(i) exceeds the average stock exchange price of EUR 6.36 as determined by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht / BaFin) by EUR 1.64 or approximately 25.79 % in the period of three months prior to the publication of the decision of the Bidders to submit this Offer on 29 May 2019,

(ii) exceeds the current market price at the time of publication of the decision to increase the consideration on 1 July 2019,

(iii) exceeds the prices paid by the Bidders and persons acting in concert with the Bidders for Biofrontera Shares during the last six months prior to the publication of the decision of the Bidders to make this Purchase Offer on 29 May 2019 and subsequently.

Biofrontera AG has obtained an independent assessment of the financial adequacy of the consideration in accordance with IDW S 8 as part of the preparation of this Second Opinion.

IVC Independent Valuation & Consulting Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Girardetstrasse 2, 45131 Essen (“IVC”) was engaged by Biofrontera to produce a written opinion concerning the financial appropriateness of the consideration offered, in other words, the Increased Consideration, from the perspective of Biofrontera shareholders (apart from the Bidder and its affiliated companies).

IVC receives a standard market payment (fee plus reimbursement of expenses) from the Biofrontera AG for its work. Biofrontera AG and IVC have also entered into a standard professional agreement relating to the scope of liability assumed by IVC. The compensation of IVC does not depend on the Offer’s success. It should be noted that in the past, at present and prospectively also in the future, IVC has maintained, maintains, and potentially will maintain relations with Biofrontera AG and with the Biofrontera Group, for which IVC has received compensation or will receive compensation in the future.

The opinion of IVC is produced based on the IDW standard as prepared by the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer in Deutschland, hereinafter also referred to as “IDW”): “Principles for the Preparation of Fairness Opinions (IDW S 8).”

Given the standpoints developed in theory and practice, IDW S 8 presents the principles according to which financial auditors establish opinions relating to the financial appropriateness of transaction prices as part of corporate initiatives (so-called Fairness Opinions). Accordingly, the task of IVC is to assess in compliance with the methods presented in IDW S 8 whether the Increased Consideration on offer, in other words, the Offer Price, is financially appropriate in the meaning of IDW S 8. Reviewing or subjecting to an auditor’s review by IVC information presented by Biofrontera AG or third parties does not form a subject of activity pursuant to IDW S 8.

The Opinion Letter prepared by IVC is attached to this opinion as Annex 7.3.2.

Based on the activities conducted by IVC in compliance with IDW S 8, IVC has reached the view and communicated to Biofrontera AG in a letter dated 12 July 2019 (“Fairness Opinion”) that the consideration offered by the Bidder is not financially appropriate in the meaning of IDW S 8.

Based on the points of view presented above, including the Fairness Opinion, the Management and Supervisory boards assess the consideration offered by the Bidder as

As the Bidder has not stated any intentions in the Modified Offer Document that diverge from those set out in the Offer Document, reference is made in full to the First Opinion in this respect.

It remains the case that the Bidder and persons acting together with it have not granted or held out the prospect of unjustified monetary payments or other unjustified benefits in kind to the members of the Management and Supervisory boards of Biofrontera AG in connection with the Offer.

The members of the Management and Supervisory boards hereby declare that they have acted solely in the interests of Biofrontera AG when issuing this Second Opinion.

The Management Board approved this Second Opinion unanimously and without abstention.

The Supervisory Board approved this Second Opinion unanimously and without abstention.

The Chairman of the Management Board (CEO), Prof. Dr. Hermann Lübbert, holds a total of 744,678 Biofrontera shares.

Management Board member, Mr. Thomas Schaffer, holds a total of 56,265 Biofrontera shares and 1,500 Biofrontera ADSs.

Management Board member, Mr. Christoph Dünwald, holds a total of 125,000 Biofrontera shares.

The Management Board members do not intend to accept the Offer. Instead, they intend to except the Maruho Offer for all Biofrontera shares they hold (see Note 6.5 of the First Opinion).

Mr. Baumann intends to accept the Maruho Offer for all Biofrontera shares he holds (see Note 6.5 of the First Opinion). The other members of the Supervisory Board do not hold any Biofrontera shares.

The Management and Supervisory boards continue to recommend that Biofrontera shareholders do not accept the Offer.

Opinion of IVC relating to the financial appropriateness of the consideration

2.1	Legal bases of this Opinion	4
2.2	First Opinion of the Management and Supervisory boards	4
2.3	Subject of the Second Opinion	5
2.4	Opinion of the employees of Biofrontera AG	5
2.5	Actual bases of this Second Opinion	5
2.6	Publication of this Second Opinion and any additional opinions relating to potential modifications to the Offer	7
2.7	Biofrontera shareholders’ own responsibility to examine the Offer	7

3	Summary of the main statements of the First and Second opinions	8
4	Preliminary unaudited sales revenue for the first half of 2019	10
5	Changes to the Supervisory Board of Biofrontera AG / Annual General Meeting of Biofrontera AG on 10 July 2019	10
6	Information about the modification of the Offer	11

7.3.1	Explanation by the Bidder concerning the determination and appropriateness of the consideration in the Modified Offer Document	13
7.3.2	Opinion of IVC relating to the financial appropriateness of the consideration pursuant to IDW S 8 / Fairness Opinion	14
7.3.3	Assessment of the Increased Consideration by the Management and Supervisory boards	16

	9.1	No guarantee or prospect of benefits	16
	9.2	Conflicts of interest / Voting behavior of the Management and Supervisory boards in approving this Second Opinion / Voting abstentions	16

	-	reference to the Fairness Opinion serves solely the purpose of rendering transparent the information basis on which the Management and Supervisory boards issue their Opinion,

	-	the Fairness Opinion was issued solely on behalf of Biofrontera AG and to support the Management and Supervisory boards in the performance of their tasks and duties,

	-	IVC has neither reviewed nor subjected to an auditor’s review the information and documents underlying the Fairness Opinion,

	-	the appropriateness was determined according to IDW S 8 and assessed based mainly on the information and documents provided by Biofrontera AG,

	-	no recommendation to accept or reject the public offer is connected with the Fairness Opinion,

	-	the activity of IVC does not comprise an assessment of the completeness and correctness of the opinion pursuant to Section 27 of the German Securities Acquisition and Takeover Act (WpÜG),

	-	IVC’s reporting is neither addressed to third parties nor intended for the protection of third parties. Third parties cannot derive any rights in relation to IVC from the reporting. The agreement of IVC to attach the opinion letter to the statement of the Management and Supervisory boards does not lead to an expansion of the circle of addressees of IVC’s reporting or to the inclusion of third parties in the scope of protection of the Fairness Opinion.

6.1	Relevance of the Modified Offer Document	11
6.2	Increased Consideration offered by the Bidder	11
6.3	Acceptance period	12
6.4	No offer conditions	12
6.5	Rights of withdrawal	12

7.1	No statutory regulations concerning the type and level of consideration	12
7.2	Type of consideration	13
7.3	Amount of Increased Consideration	13

8	Concerning the Bidder’s intentions and prospective consequences of a successful offer for the Biofrontera Group	16
9	Interests of the Management and Supervisory boards of Biofrontera AG	16

11	Summarizing opinion of the Management and Supervisory boards	17
Annex 7.3.2 (Fairness Opinion)		18