News Column

NovaBay Pharmaceuticals Reports First Quarter 2014 Financial Results and a Clinical/Business Update

May 1, 2014

Near-Term Clinical Catalysts:

  • Viral Conjunctivitis Trial Results to be Reported mid-2014
  • Start of Second Phase 2 in UCBE trial
  • Initiation of a Pilot Study in Impetigo

    Q1 Commercial Highlights:

  • Commercial Launch of NeutroPhase by PBE in the United States
  • Introduction of Advanced i-Lid CleanserTM at the American Society of Cataract and Refractive Surgery in Boston
  • Introduction of CellRxTM at the American Society for Aesthetic Plastic Surgery
  • Financing Helped Increase Cash Reserves to $15.2 Million


    EMERYVILLE, Calif.--(BUSINESS WIRE)-- NovaBay Pharmaceuticals, Inc. (NYSE MKT:NBY), clinical-stage biopharmaceutical company developing non-antibiotic, topical antimicrobial products, today reported first quarter 2014 financial results and provided an update on clinical progress.

    “In April, as an expansion of our hypochlorous acid family of products, we introduced a new eye care product, Advanced i-LidTM Cleanser, which aids a vexing problem for ophthalmologists and optometrists. We have also secured marketing and distribution partnerships for our NeutroPhase® Skin and Wound Cleanser in the United States, China, Southeast Asia, and South Korea and are expecting to announce additional geographical agreements in the future,” commented Ron Najafi, Ph.D., Chairman and CEO of NovaBay Pharmaceuticals. “I am also pleased to report that we have now enrolled over 500 patients in our global Phase 2b conjunctivitis study and expect to announce results in mid-2014. We remain committed to building shareholder value by strengthening our portfolio of drugs and medical devices that go ‘beyond antibiotics’. We believe our technology will help slow the advance of antibiotic resistance by potentially retiring resistance-producing topical antibiotics from the market,” concluded Dr. Najafi.

    First Quarter 2014 Results

    Net loss for the quarter ended March 31, 2014 was $3.6 million, compared to a net loss of $4.0 million for the same period last year. Cash, cash equivalents, and short-term investments increased to $15.2 million on March 31, 2014, compared with $13.1 million on December 31, 2013, an increase of approximately $2.1 million. The increase in cash balance was primarily attributable to a $6.7 million financing, or approximately $6.0 million in net cash proceeds after expenses, as well as approximately $0.5 million the company raised during the quarter ending March 31, 2014 through its ATM agreement.

    NovaBay’s license and collaboration revenue for the quarter ended March 31, 2014 was $0.3 million, compared to $1.0 million for the same period last year. The decrease in license, collaboration and distribution revenue was related to the full amortization of the upfront payments from Galderma in 2013 and the end of the FTE funding period of the same contract. NovaBay did not recognize any other significant revenues for the three months ended March 31, 2014.

    Research and development expenses for the three months ended March 31, 2014, were $2.5 million, compared to $2.9 million for the same period last year. The changes over the period relate to the decrease in clinical activities as NovaBay nears completion of its viral and bacterial conjunctivitis trials. In addition, the company completed its urology (UCBE) trial in the second half of 2013.

    General and administrative expenses for the three months ended March 31, 2014 were $1.7 million, compared to $1.6 million for the same period last year. This increase is primarily due to expanded business development activities related to NeutroPhase launch activities as well as planned commercialization in NovaBay’s dermatology and ophthalmology business units.

    Business and Clinical Updates

  • April: The company announced that Dr. John R. Crew, Medical Director of the Advanced Wound Care Center at Seton Medical Center in Daly City, California, presented a poster at the Spring Symposium on Advanced Wound Care. Dr. Crew described how he successfully used NovaBay’s NeutroPhase as an adjunct therapy to irrigate the wounds of four patients with life-threatening necrotizing fasciitis (also known as flesh-eating infections), in conjunction with an irrigation technique involving Negative Pressure Wound Therapy (NPWT). All of the patients healed completely and none lost limbs.
  • April: The Company announced that it introduced a new eye care product, Advanced i-LidTM Cleanser. The product was introduced at the American Society of Cataract and Refractive Surgery in Boston, MA. NovaBay’s Advanced i-Lid Cleanser, already cleared by the FDA through its 510(k) process, can help patients with irritation of the eyelids by cleaning their lids and lashes and removing debris and microorganisms that often lead to vision problems.
  • March: NovaBay announced that it has priced an underwritten public offering of an aggregate of 5,600,000 shares of its Common Stock, and 18-month warrants to purchase up to an aggregate of 1,400,000 shares of Common Stock at a combined price to the public of $1.20 for aggregate gross proceeds of $6,720,000. The warrants were exercisable immediately upon issuance, have an 18-month term, and an exercise price of $1.56 per share.

    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 two distinct product categories: Aganocide® compounds, led by auriclosene, and its Hypochlorous Acid Family of Products, led by NeutroPhase. The Hypochlorous Acid Family of products includes NeutroPhase for wound care, as well as two new recently introduced products: Advanced i-Lid Cleanser for the eye care market and CelleRx for the dermatology market.

    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. Auriclosene is a new chemical entity invented by NovaBay and has a broad spectrum of activity against bacteria, viruses and fungi.

    The Hypochlorous Acid Family of products includes NeutroPhase for wound care, as well as two new recently introduced products: i-Lid Cleanser for the eye care market and CelleRx for the dermatology market. All three products are cleared for use by the FDA 510(k) regulatory process. NeutroPhase® is a 510(k)-cleared wound cleanser and is intended for use under the supervision of healthcare professionals for cleansing and removal of foreign material, including: microorganisms and debris from wounds; cleaning minor cuts, minor burns, superficial abrasions, and minor irritations of the skin; as well as moistening absorbent wound dressings. It is also intended for moistening and debriding acute and chronic dermal lesions, such as: Stage I-IV pressure ulcers, stasis ulcers, leg ulcers, diabetic foot ulcers, post surgical wounds, first and second degree burns, as well as grafted and donor sites.

    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

    March 31,December 31,
    20142013

    (in thousands, except per share data)

    (unaudited)

     

    ASSETS
    Current assets:
    Cash and cash equivalents $ 10,316 $ 10,500
    Short-term investments 4,858 2,553
    Accounts receivable 260 784
    Inventory 155 231
    Prepaid expenses and other current assets   794     723  
    Total current assets 16,383 14,791
    Property and equipment, net 658 718
    Other assets   144     141  
    TOTAL ASSETS $ 17,185   $ 15,650  
     
    LIABILITIES AND STOCKHOLDERS' EQUITY
    Liabilities:
    Current liabilities:
    Accounts payable $ 487 $ 1,674
    Accrued liabilities 1,595 1,616
    Deferred revenue   200     337  
    Total current liabilities 2,282 3,627
    Deferred revenues - non-current 1,605 1,534
    Deferred rent 145 136
    Warrant liability   1,317     1,837  
    Total liabilities   5,349     7,134  
     
    Stockholders' equity:

    Preferred stock, $0.01 par value; 5,000 shares authorized; none

    outstanding at March 31, 2014 and December 31, 2013

    Common stock, $0.01 par value; 65,000 shares authorized at March 31, 2014

    and December 31, 2013; 50,705 and 44,624 issued and outstanding at March 31, 2014

    and December 31, 2013, respectively

    507 446
     
    Additional paid-in capital 71,260 64,438
    Accumulated other comprehensive loss (13 ) (15 )
    Accumulated deficit during development stage   (59,918 )   (56,353 )
    Total stockholders' equity   11,836     8,516  
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,185   $ 15,650  
     

    NOVABAY PHARMACEUTICALS, INC.

    (a development stage company)

    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

    (unaudited)Stay informed on NovaBay's progress:

       

     

    Three Months Ended

    March 31,

    Cumulative Period

    from July 1, 2002

    (inception) to

    March 31, 2014

    (in thousands, except per share data)

      2014       2013    
    Sales:
    Sales revenue $ 188 $ 63 $ 425
    Cost of goods sold   130     22     300  
    Gross profit 58 41 125
     
    Other revenue:
    License, collaboration and distribution revenue 38 914 60,537
    Other revenues   62     43     375  
    Total other revenue 100 957 60,912
     
    Operating expenses:
    Research and development 2,528 2,925 75,135
    General and administrative   1,708     1,560     47,675  
    Total operating expenses   4,236     4,485     122,810  
    Operating loss (4,078 ) (3,487 ) (61,773 )
     
    Non-cash gain (loss) on changes in fair value of warrants 520 (520 ) 672
    Other income (expense), net   (7 )       1,260  
     
    Income (loss) before provision for income taxes (3,565 ) (4,007 ) (59,841 )
    Provision for income taxes       (2 )   (77 )
    Net income (loss) (3,565 ) (4,009 ) (59,918 )
     
    Change in unrealized gains (losses) on

    available-for-sale securities

      2     2     (13 )
    Comprehensive income (loss) $ (3,563 ) $ (4,007 ) $ (59,931 )
     
    Net loss per share:
    Basic and diluted $ (0.08 ) $ (0.11 )
    Shares used in per share calculations:
    Basic and diluted 45,338 36,756
     


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    NovaBay Pharmaceuticals Contacts

    Thomas J. Paulson, 510-899-8809

    Chief Financial Officer

    Contact Tom

    or

    Ana Kapor, 510-899-8889

    Director, Investor Relations and Corporate Communications

    Contact Ana

    Source: NovaBay Pharmaceuticals, Inc.


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