NovaBay Pharmaceuticals reports net income of $2.7M for 2009 against year-ago loss

NovaBay Pharmaceuticals, Inc.Mar 30 2010

NovaBay Pharmaceuticals, Inc. (NYSE Amex:NBY), a clinical stage specialty pharmaceutical company developing first-in-class, anti-infective compounds for the treatment and prevention of antibiotic-resistant infections, today reported full-year and fourth quarter financial results for 2009. The company also highlighted recent progress of its proprietary and partnered development programs.

As of December 31, 2009, the company's cash, cash equivalents and short-term investments totaled $11.3 million, compared with $12.1 million at the end of 2008; representing a full-year net cash burn of approximately $800,000.

NovaBay's license and collaboration revenue for the year ended December 31, 2009 grew significantly to $15.7 million compared with $6.7 million a year ago. License and collaboration revenue for the fourth quarter ended December 31, 2009 increased to $7.5 million from $2.2 million in the fourth quarter of 2008, due primarily to $3.75 million in milestone payments from Galderma S.A. for the successful completion of formulation feasibility studies and an exploratory acne study. The overall increase in annual license and collaboration revenue was due to additional milestone payments and financial support from NovaBay's partners Galderma and Alcon, Inc.

Net income for 2009 was $2.7 million, compared with a net loss in 2008 of $8.1 million. NovaBay reported net income of $3.4 million or $0.14 cents per diluted share for the fourth quarter, compared with a net loss of $1.54 million or $0.07 a share in the same quarter a year ago.

Total research and development expenses decreased 24 percent to $7.3 million in 2009 from $9.6 million in 2008. For the fourth quarter, NovaBay reported research and development expenses of $2.5 million, compared with $2.9 million in the same quarter a year ago. The overall decrease was primarily due to lower clinical trial costs and cost-cutting measures. NovaBay expects increased research and development expenses in 2010, as the company advances its development programs in dermatology, catheter-associated urinary tract infection (CAUTI) andonychomycosis, or nail fungus.

"In 2009, NovaBay continued to exercise strong fiscal management, while making marked progress in our clinical and preclinical programs. We are pleased with the early positive results in our partnered programs, which resulted in $3.75 million in milestone payments from Galderma and a commitment from Alcon for increased support of $2 million annually to enhance our programs in eye, ear and sinus infections, as well as contact lens solutions," said Dr. Ron Najafi, chairman and chief executive officer of NovaBay. "We believe 2010 will be a transformational year, as we expect to advance our proprietary programs in onychomycosis and catheter-associated urinary tract infection, and move our partnered programs in impetigo, a skin infection, and conjunctivitis, or pink eye, beyond proof-of-concept."

2009 and Recent Highlights

• Received $3.75 million in milestone payments from Galderma, including $2 million triggered by the completion of formulation feasibility studies of the company's Aganocide^® compounds for topical use, and $1.75 million for the successful completion of an exploratory study in acne.
• Received a commitment from Alcon for an increase in on-going financial support of more than $2 million annually, beginning in December 2009. The additional funds are expected to enhance NovaBay's pre-clinical and clinical development programs in eye, ear and sinus infections as well as contact lens solution.
• Initiated a Phase 2a proof-of-concept trial in impetigo with partner Galderma in September 2009
• Partner Alcon launched a Phase 2 trial of NVC-422 for the treatment of viral conjunctivitis, or pink eye, in July 2009
• Secured Galderma, a global leader in dermatology, as a new development partner in March 2009. Under terms of the deal, Galderma funds the development and commercialization of NovaBay's Aganocide compounds for the treatment of dermatological conditions including acne and impetigo. NovaBay may receive from Galderma up to $50 million upon achievement of certain development and regulatory milestones related to acne and impetigo, and escalating double-digit royalties on future net sales of products. NovaBay retains co-marketing rights in Japan, all rights in other Asian markets, and rights to promote products developed to hospitals and health care institutions in the U.S.
• Presented data at the 47th Annual Meeting of the Infectious Diseases Society of America (IDSA) showing that NovaBay's Aganocide compounds demonstrated efficacy and penetration in an established pre-clinical infected nail model of onychomycosis, or nail fungus
• Presented positive data from two pre-clinical studies of NVC-422 at the 49th Annual Interscience Conference on Antimicrobial Agents and Chemotherapy conference, revealing that NVC-422 had potent activity in killing bacteria that have developed resistance to antiseptics and antibiotics
• Entered into an exclusive agreement with Professors Markus Nagl M.D. and Waldemar Gottardi, Ph.D. of the Medical University of Innsbruck, Austria. The agreement aims to advance the development of NovaBay's Aganocide compounds by integrating extensive and on-going clinical work at the University with NovaBay's development program.