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

Companies mentioned in this article: NovaBay Pharmaceuticals, Inc.

EMERYVILLE, Calif. -- (BUSINESS WIRE) -- NovaBay Pharmaceuticals, Inc. (NYSE MKT:NBY), a biopharmaceutical company focusing on the development and commercialization of its non-antibiotic anti-infectives, today reported second quarter 2014 financial results and provided a clinical and commercialization update.

“In July, we announced a major marketing and commercialization campaign for the company’s new product, i-LidTMCleanser. The effort is led by Glenn Moro, our new Vice President of Sales and Marketing, who has a long and successful track record of launching products in this ophthalmology and optometry space,” commented Ron Najafi, Ph.D., Chairman and CEO of NovaBay Pharmaceuticals.

“i-Lid Cleanser is the first prescription, non-detergent, non-irritating, non-antibiotic lid and lash hygiene product. Current lid and lash hygiene products are detergent-based, can cause contact dermatitis, and simply do not offer the same advantages of i-Lid Cleanser. The marketing campaign will target U.S. eye care professionals treating the estimated 36 million patients suffering from blepharitis and other chronic eye conditions.”

“We also recently reported that enrollment in our BAYnovation clinical trial for viral conjunctivitis has been completed and we are in the process of accumulating the data from U.S. and international sites. We anticipate reporting top-line results mid-August,” concluded Dr. Najafi.

Second Quarter 2014 Results

Net loss for the quarter ended June 30, 2014 was $2.9 million, compared to a net loss of $4.0 million for the same period last year. The lower expenses are due to the winding down of our BAYnovation clinical trial. Cash, cash equivalents, and short-term investments decreased by approximately $1.5 million to $11.6 million on June 30, 2014, compared with $13.1 million on December 31, 2013. The decrease in cash balance was primarily attributable to our spending in multiple clinical trials, partially offset by $6.0 million in net cash proceeds from a March 2014 financing as well as approximately $0.5 million the company raised through its ATM agreement during the quarter ending March 31, 2014.

NovaBay’s license, collaboration, distribution, and product revenue for the quarter ended June 30, 2014 was $0.1 million, compared to $0.8 million for the same period last year. The decrease in license, collaboration, distribution and product 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 June 30, 2014.

Research and development expenses for the three months ended June 30, 2014 were $2.2 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 (UROvation) trial in the second half of 2013.

General and administrative expenses for the three months ended June 30, 2014 were $1.7 million, compared to $2.0 million for the same period last year. This decrease is primarily due to warrant modification expense of $0.2 million for a warrant issued under our equity purchase agreement with Pioneer Pharma Co. Ltd., recorded in the three months ended June 30, 2013, and lower travel and entertainment expenses in 2014.

Q2 and Recent Business and Clinical Updates

  • July: Announced the initiation of a major marketing campaign and commercialization effort for the company’s new product, i-LidTMCleanser.
  • June: Announced that Christine Sindt OD, Clinical Associate Professor of Ophthalmology and Visual Sciences at University of Iowa’s Carver College of Medicine, discussed our i-Lid Cleanser at the annual Optometry’s Meeting of the American Optometric Association in Philadelphia, PA.
  • May: Announced the completion of patient enrollment in our global Phase 2b viral conjunctivitis trial, BAYnovation. The trial is investigating our Auriclosene (NVC-422) Ophthalmic Solution as a treatment for adenoviral conjunctivitis, a highly contagious, potentially sight-impairing form of “pink eye.” Top line results are expected to be announced mid-August 2014.
  • May: Announced that Todd A. Linsenmeyer, M.D., Director of Urology, Kessler Institute for Rehabilitation, presented the results of our Auriclosene Irrigation Solution (AIS) in our phase 2 clinical trial (UROvation) at the annual meeting of the American Urological Association.
  • April: Announced the introduction of a new eye care product, i-Lid™ Cleanser at the American Society of Cataract and Refractive Surgery held in Boston, MA.

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, anticipated market acceptance of our new products, and expected future financial results. The words “will” “estimated” “anticipate” and “expect” 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.
CONSOLIDATED BALANCE SHEETS
 
  June 30,   December 31,
2014 2013

(in thousands, except per share data)

(unaudited) (Note 2)
ASSETS
Current assets:
Cash and cash equivalents $ 7,757 $ 10,500
Short-term investments 3,808 2,553
Accounts receivable 440 784
Inventory 218 231
Prepaid expenses and other current assets   656     723  
Total current assets 12,879 14,791
Property and equipment, net 488 718
Other assets   146     141  
TOTAL ASSETS $ 13,513   $ 15,650  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Accounts payable $ 520 $ 1,674
Accrued liabilities 1,301 1,616
Deferred revenue   196     337  
Total current liabilities 2,017 3,627
Deferred revenues - non-current 1,601 1,534
Deferred rent 155 136
Warrant liability   520     1,837  
Total liabilities   4,293     7,134  
 
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000 shares authorized; none outstanding at June 30, 2014 and December 31, 2013
Common stock, $0.01 par value; 120,000 shares authorized at June 30, 2014 and 65,000 shares authorized at December 31, 2013; 50,779 and 44,624 issued and outstanding at June 30, 2014 and December 31, 2013, respectively 508 446
 
Additional paid-in capital 71,586 64,438
Accumulated other comprehensive loss (13 ) (15 )
Accumulated deficit during development stage   (62,861 )   (56,353 )
Total stockholders' equity   9,220     8,516  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,513   $ 15,650  
 
 
NOVABAY PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
 

 

   

Cumulative Period

Three Months Ended

  Six Months Ended  

from July 1, 2002

June 30, June 30,

(inception) to

(in thousands, except per share data)

2014   2013 2014   2013

June 30, 2014

Sales:
Product revenue $ 21 $ 17 $ 209 $ 80 $ 446
Cost of goods sold   18     16     148     38     318  
Gross profit 3 1 61 42 128
 
Other revenue:
License, collaboration and distribution revenue 38 790 76 1,704 60,575
Other revenues   64     41     126     84     439  
Total other revenue 102 831 202 1,788 61,014
 
Operating expenses:
Research and development 2,238 2,937 4,766 5,911 77,373
General and administrative   1,653     2,045     3,361     3,556     49,328  
Total operating expenses   3,891     4,982     8,127     9,467     126,701  
Operating loss (3,786 ) (4,150 ) (7,864 ) (7,637 ) (65,559 )
 
Non-cash gain (loss) on changes in fair value of warrants 797 104 1,317 (416 ) 1,469
Other income (expense), net   57     5     50     5     1,316  
 
Loss before provision for income taxes (2,932 ) (4,041 ) (6,497 ) (8,048 ) (62,774 )
Provision for income taxes   (10 )   (7 )   (10 )   (9 )   (87 )
Net loss (2,942 ) (4,048 ) (6,507 ) (8,057 ) (62,861 )
 

Change in unrealized gains (losses) on available-for-sale securities

      (8 )   2     (6 )   (13 )
Comprehensive loss $ (2,942 ) $ (4,056 ) $ (6,505 ) $ (8,063 ) $ (62,874 )
 
Net loss per share:
Basic and diluted $ (0.06 ) $ (0.11 ) $ (0.14 ) $ (0.22 )
Shares used in per share calculations:
Basic and diluted 50,767 37,266 48,067 37,013
 

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