NovaBay Pharmaceuticals Reports Third Quarter 2013 Financial Results and a Clinical/Business Update

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| Source: NovaBay Pharmaceuticals, Inc.

Phase 2b study of Auriclosene for Impetigo Completed by Partner Galderma

Reported Positive Results from Phase 2 Clinical Study of Auriclosene to Reduce Urinary Catheter Blockage and Encrustation (UCBE)

Results from Viral Conjunctivitis Trial to be Reported in the Next Six Months

EMERYVILLE, Calif., Nov. 14, 2013 (GLOBE NEWSWIRE) -- NovaBay Pharmaceuticals, Inc. (NYSE MKT:NBY), a clinical-stage biopharmaceutical company developing non-antibiotic antimicrobial products, today reported third quarter 2013 financial results and provided a clinical update.

"Last week, we announced that the recently completed Phase 2b clinical study of impetigo had been completed. While the study showed that auriclosene is safe and well tolerated, it did not meet its primary clinical endpoint. While the news is not what we expected, we are working closely with our partner Galderma to thoroughly analyze the results of the study and understand the differences from this study and the previous successful Phase 2a for impetigo. Both NovaBay and Galderma remain committed to determining the next steps in the development of auriclosene for impetigo and other opportunities in dermatology," said Ron Najafi, Ph.D., Chairman and CEO of NovaBay Pharmaceuticals.

"We recently reported positive results from our urinary catheter blockage and encrustation (UCBE) trial and are continuing to interact with the FDA to move the program forward. Additionally, we expect to provide clinical results from NovaBay's ophthalmology trial in the first half of 2014. For our NeutroPhase® skin and wound cleanser, we have secured marketing and distribution partnerships in the United States, China, Southeast Asia, and South Korea and are expecting to announce additional geographical agreements in the future. Our diversified portfolio of novel, non-antibiotic anti-microbials fulfills our mission of Going Beyond Antibiotics® by providing a safe and effective alternative to traditional antibiotics without developing resistance," concluded Dr. Najafi.

Third Quarter 2013 Results

Net loss for the quarter ended September 30, 2013 was $3.8 million, compared to a gain of $0.1 million for the same period last year, due to larger clinical trial activities. Cash, cash equivalents, and short-term investments totaled $10.8 million on September 30, 2013, compared with $16.9 million on December 31, 2012, a decrease of approximately $6.1 million. The decrease in cash was primarily attributable to an increase in enrollment in multiple clinical trials as well as an increase in general and administrative expenses. NovaBay received $1.8 million from warrant exercises in the quarter ended September 30, 2013.

NovaBay's license and collaboration revenue for the third quarter of 2013 was $1.0 million, compared to $3.6 million for the three months ended September 30, 2012. The decrease in license, collaboration and distribution revenue was related to a large reimbursement of $2.6 million received from Galderma in 2012 and a decrease in overall reimbursable costs from Galderma for support of the impetigo trial, which has been completed. NovaBay did not recognize any other significant revenues for the nine months ended September 30, 2013.

Research and development expenses for the three months ended September 30, 2013, were $2.5 million, relatively flat compared to the same period in 2012. This is due to increased ophthalmology clinical trial expenses offset by the completion of the urology trial during the three months ended September 30, 2013.

General and administrative expenses for the three months ended September 30, 2013 were $1.5 million, compared to $1.2 million for the three months ended September 30, 2012. This increase is primarily due to expanded business development activities across all Business Units.

Business and Clinical Updates

  • November: NovaBay announced that the auriclosene Phase 2b clinical study of impetigo has been completed. While the study showed that auriclosene is safe and well tolerated, it did not meet its primary clinical endpoint. NovaBay and its partner Galderma are examining the results from this study and expect to use the findings to guide the future course of the clinical development for auriclosene. NovaBay expects to provide an update in the near future.
     
  • October: NovaBay announced its support for the Centers for Disease Control (CDC) report which is calling for a new approach to tackle the growing crisis of antibiotic resistance. CDC has found that each year, more than 2 million people in the U.S. become infected with bacteria that are resistant to antibiotics. More than 23,000 of them die from those infections. NovaBay suggested a novel approach of creating next-generation, synthetic molecules that mimic the natural agents that our bodies use to fight infection and do not give rise to resistance.
     
  • September: NovaBay announced results from its Phase 2 clinical study for auriclosene to prevent urinary catheter blockage and encrustation of indwelling urinary catheters. Overall, the top-line results demonstrated that auriclosene irrigation solution was effective at reducing the degree of catheter encrustation and maintaining the catheter patency over the course of the study. Primary endpoints in the study were achieved showing statistically significant and clinically meaningful benefits for patients with long-term indwelling catheters. If commercialized, NovaBay's auriclosene-based irrigation solution has the potential to mitigate an important medical problem, cut healthcare costs, and improve the quality of life for tens of thousands of patients in the U.S. alone. A catheter irrigation solution that significantly reduces catheter blockage and encrustation could greatly reduce what NovaBay estimates to be $1.5 billion spent annually to help patients with indwelling urinary catheters deal with costs attributable to this debilitating condition. Such a product would also improve the quality of patients' lives by reducing the consequences of unexpected catheter blockages.

About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics®

NovaBay Pharmaceuticals is a clinical-stage biopharmaceutical company focused on addressing the unmet therapeutic needs of the global, topical anti-infective market with its Aganocide compounds, led by auriclosene. Auriclosene is a new chemical entity invented by NovaBay and has a broad spectrum of activity against bacteria, viruses and fungi. Aganocide compounds are based on the human body's natural immune system and the molecules involved in combating infections. Bacterial resistance to Aganocides is highly unlikely, as demonstrated in in vitro studies. Once pathogens penetrate the body's primary defense, the next line of defense is provided by the white blood cells. NovaBay has focused on understanding these molecules generated by the white blood cells and finding ways, by chemical modification, to allow them to be developed as therapeutic products with the potential to treat a wide range of local, non-systemic infections. NovaBay believes that if Aganocides® begin to supplement and thereby reduce the usage of classic topical antibiotics, they will help slow the rise of antibiotic resistance.

Forward-Looking Statements

This release contains forward-looking statements, which are based upon management's current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements regarding the expected timing of enrollment and commencement of clinical trials, expected timing of announcement of results of clinical studies, and expected future financial results. The words "remain" "expect" and "would" are intended to identify these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or achievements to be materially different and adverse from those expressed in or implied by the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, risks and uncertainties relating to difficulties or delays in development, clinical trial, regulatory approval, production and marketing of the company's product candidates, unexpected adverse side effects or inadequate therapeutic efficacy of the product candidates, the uncertainty of patent protection for the company's intellectual property or trade secrets, the company's ability to obtain additional financing as necessary and unanticipated research and development and other costs. Other risks relating to NovaBay and Aganocide compounds, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in NovaBay's latest Form 10-K and Form 10-Q filings with the Securities and Exchange Commission, especially under the heading "Risk Factors." The forward-looking statements in this release speak only as of this date, and NovaBay disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law.

     
     
     
NOVABAY PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED BALANCE SHEETS
   
     
  September 30, December 31,
  2013 2012
(in thousands, except per share data) (unaudited) (Note 2)
ASSETS    
Current assets:    
Cash and cash equivalents  $ 6,934  $ 12,735
Short-term investments  3,885  4,135
Accounts receivable  272  943
Inventory  63  23
Prepaid expenses and other current assets  330  445
Total current assets  11,484  18,281
Property and equipment, net  687  891
Other assets  74  63
TOTAL ASSETS  $ 12,245  $ 19,235
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Liabilities:    
Current liabilities:    
Accounts payable  $ 1,013  $ 455
Accrued liabilities  1,842  1,497
Deferred revenue  207  1,221
Total current liabilities  3,062  3,173
Deferred revenues - non-current  1,081  671
Deferred rent  116  60
Warrant liability  2,564  1,282
Total liabilities  6,823  5,186
     
Stockholders' equity:    
     
Preferred stock, $0.01 par value; 5,000 shares authorized; none outstanding at September 30, 2013 and December 31, 2012  —   — 
Common stock, $0.01 par value; 65,000 shares authorized at September 30, 2013 and December 31, 2012; 38,651 and 36,915 issued and outstanding at September 30, 2013 and December 31, 2012, respectively  387  369
     
Additional paid-in capital  57,264  54,004
Accumulated other comprehensive loss  (13)  (13)
Accumulated deficit during development stage  (52,216)  (40,311)
Total stockholders' equity  5,422  14,049
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 12,245  $ 19,235
 
 
 
NOVABAY PHARMACEUTICALS, INC.
(a development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
           
 
Three Months Ended
September 30,

Nine Months Ended
September 30,
Cumulative Period
from July 1, 2002
(inception) to
(in thousands, except per share data) 2013 2012 2013 2012 September 30, 2013
Sales:          
Sales revenue  $ (1)  $ —   $ 78  $ —   $ 78
Cost of goods sold  43  —   82  —   82
Gross profit  (44)  —   (4)  —   (4)
           
Other revenue:          
License, collaboration and distribution revenue  $ 1,035  $ 3,617  $ 2,739  $ 5,794  $ 60,193
Other revenues  65  25  150  40  268
Total other revenue  1,100  3,642  2,889  5,834  60,461
           
Operating expenses:          
Research and development  2,513  2,514  8,424  7,156  68,570
General and administrative  1,525  1,234  5,081  4,145  44,716
Total operating expenses  4,038  3,748  13,505  11,301  113,286
Operating loss  (2,982)  (106)  (10,620)  (5,467)  (52,829)
           
Non-cash gain (loss) on changes in fair value of warrants  (866)  209  (1,282)  802  (575)
Other income, net  3  (17)  8  5  1,274
           
Income (loss) before provision for income taxes  (3,845)  86  (11,894)  (4,660)  (52,130)
Provision for income taxes  (3)  (6)  (11)  (17)  (86)
Net income (loss)  (3,848)  80  (11,905)  (4,677)  (52,216)
           
Change in unrealized gains (losses) on available-for-sale securities  6  33  (13)  15  (26)
Comprehensive income (loss)  $ (3,842)  $ 113  $ (11,918)  $ (4,662)  $ (52,242)
           
Net loss per share:          
Basic  $ (0.10)  $ 0.00  $ (0.32)  $ (0.16)  
Diluted  $ (0.10)  $ 0.00  $ (0.32)  $ (0.16)  
Shares used in per share calculations:          
Basic  37,467  28,861  37,166  28,702  
Diluted  37,467  29,284  37,166  28,702  
           
           

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NovaBay Pharmaceuticals Contacts
Thomas J. Paulson
Chief Financial Officer
510-899-8809
Contact Tom
 
Ana Kapor
Director, Investor Relations and Corporate Communications
NovaBay Pharmaceuticals, Inc.
510-899-8889
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