NovaBay first-quarter net loss increases to $1.6 million

May 12 2010

NovaBay Pharmaceuticals, Inc. (NYSE Amex:NBY), a clinical stage biotechnology company developing first-in-class, anti-infective compounds for the treatment and prevention of antibiotic-resistant infections, today reported financial results for the first quarter of 2010.

As of March 31, 2010, the company's cash, cash equivalents and short-term investments totaled $13.7 million, compared with $11.3 million at the end of 2009. The increase in cash was due to the receipt of $3.75 million in milestone payments from Galderma S.A. for the completion of both a formulation feasibility study and of an exploratory clinical study in adult acne. This revenue was reported in the fourth quarter of 2009 and received in the first quarter of 2010.

NovaBay's license and collaboration revenue for the three months ended March 31, 2010 was $2.1 million, compared with $2.6 million for the same period a year ago. The company earns license and collaboration revenue from two significant corporate partnerships. Under a collaboration agreement with Alcon, Inc., the two companies are developing NovaBay's Aganocide^® compounds for the treatment of eye, ear and sinus infections, as well as for the care of contact lenses. NovaBay and partner Galderma are developing NovaBay's Aganocide compounds for the treatment of impetigo - a common skin infection - acne and other major dermatologic conditions.

During the first quarter, NovaBay increased its investment in research and development, as it accelerated its proprietary and partnered development programs. NovaBay's research and development expenses rose by 64 percent to $2.2 million in the first quarter, compared with $1.4 million in the same period a year ago.

NovaBay reported a first quarter net loss of $1.6 million, or 7 cents per share, compared with a net loss of $318,000, or 1 cent per share in the first quarter of 2009. The larger net loss was primarily due to increases in research and development expenses, particularly as NovaBay advanced its program in catheter-associated urinary tract infection(CAUTI). During the first quarter, NovaBay reported encouraging results from a Phase 2a trial in the area of CAUTI, setting the stage for the company's next study in urinary catheter blockage and encrustation. CAUTI is the most common hospital-acquired infection today, comprising approximately 40 percent of the more than 1 million infections in hospitals and long-term care institutions nationwide. These infections can lead to serious complications, and are sometimes fatal.

"As a result of increased investments in research and development, NovaBay now has three programs that are rapidly advancing through Phase 2 clinical trials," said Chairman and CEO Ron Najafi, Ph.D. "In addition to the progress we are making in the areas of conjunctivitis and CAUTI, NovaBay is nearing completion of a Phase 2 trial for the treatment of impetigo, a common and highly contagious skin infection that afflicts approximately 1 million people in the U.S. annually - mostly infants and children."

Recent Highlights

• Reported positive results from an open label exploratory Phase 2a trial of the company's lead Aganocide compound, NVC-422, for the treatment of bacteriuria, or bacteria in the urine, in chronically catheterized patients. The study showed that NVC-422 was well tolerated and that it reduced or eliminated certain pathogens in the urine.
• Received $3.75 million in milestone payments from Galderma, including $2 million triggered by the completion of formulation feasibility studies of NovaBay'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 in the care of contact lenses.

SOURCE NovaBay Pharmaceuticals, Inc.