Dragon's breath rounds create a cone of fire (2d6 fire; Reflex DC 15; half). All creatures in the area need to save. Cover will provide a +2 Reflex save. Creatures do provide cover, but it is called soft cover. Soft cover provides the same +4 AC bonus as cover, but does not provide a Reflex bonus. So if an enemy is directly in the front of blast (cone, which is likely a burst effect), then people behind him have 'soft' cover, which will not protect them from the blast or keep them from making a save nor will it give them a bonus.
They save for half damage, and the only way they would take no damage is with evasion or greater evasion. If they have improved cover (basically 9/10th or 90% cover, almost total cover, like an arrow slit) they would get a +4 Reflex bonus and count as having improved evasion, so half damage or none.
A GM might make a soft cover exception to cover for a creature that absolutely would fill its square and space, like a gelatinous cube. Similarly, if someone absolutely just pressed the barrel of the gun flush to a creature's chest, and fired, a GM could rule that it takes the brunt of it and doesn't form a normal cone effect (whether reduced or blocked). but that's a situational call and depends on the situation.
