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NovaBay Pharmaceuticals Reports 2019 Third Quarter Financial Results

16:05 EST 7 Nov 2019 | Businesswire

Conference call begins at 4:30 p.m. Eastern time today

NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY), a biopharmaceutical company focusing on commercializing Avenova® for the domestic eye care market, reports financial results for the three and nine months ended September 30, 2019 and provides a business update.

“Overall demand for Avenova was strong during the quarter with unit sales remaining steady with the prior year despite the significantly reduced size of our salesforce. We are pleased with the sales momentum through our new direct-to-consumer channel on Amazon.com, and we remain on track to reach our 2019 revenue guidance of $6 million to $8 million,” said Justin Hall, President and CEO of NovaBay Pharmaceuticals.

“Our recently improved capital position is allowing us to focus on broadening our product portfolio with several Avenova product line extensions, while also seeking other opportunities to further leverage our domestic commercial organization by increasing product offerings through partnerships, licensing and co-promotion activities,” he added. “Later this month, in order to further leverage our sales force and to generate some additional revenue, we will begin a 90-day trial selling the NuLids System®, an innovative device for the treatment of dry eye, in six top-producing U.S. geographic territories. We also just announced a soft direct-to-consumer launch in the U.S. of our skin and wound cleanser CelleRx® through our new website, www.CelleRx.com. We plan to increase marketing in early 2020 to promote this product, which is proven to gently clean and ease discomfort following aesthetic dermatology and cosmetic surgery procedures.

“In addition to these strategic moves, our increased capital position allows us to more fully focus on building our business through new marketing and branding initiatives. One such initiative is the engagement of an experienced online branding firm to implement strategies to increase unit sales of Avenova on Amazon by broadening our current customer base,” Hall concluded.

Third Quarter Financial Results

Net sales for the third quarter of 2019 were $1.6 million compared with $3.1 million for the third quarter of 2018. The decrease was primarily due to the loss of insurance reimbursement and the resulting lower Avenova gross-to-net pricing. Gross margin on net product revenue was 75% for the third quarter of 2019 compared with 89% for the prior-year period, with the decrease due to lower product revenue mentioned above.

Operating expenses for the third quarter of 2019 were $2.9 million, down 37% from $4.6 million in the third quarter of 2018 reflecting the strategic shift in the U.S. commercial organization undertaken in March 2019. Sales and marketing expenses for the third quarter of 2019 were $1.5 million, a 52% decrease from $3.2 million for the third quarter of 2018. General and administrative expenses for the third quarters of 2019 and 2018 were unchanged at $1.3 million for both periods. Research and development expenses for the third quarter of 2019 were $49,000 compared with $45,000 for the third quarter of 2018.

Operating loss for the third quarter of 2019 was $1.7 million compared with $1.8 million for the third quarter of 2018.

Non-cash gain on the change of fair value of warrant liability for the third quarter of 2019 was $1.5 million compared with a non-cash gain of $0.3 million for the third quarter of 2018.

Non-cash gain on the embedded derivative associated with the convertible note for the third quarter of 2019 was $0.7 million. The Company did not record a comparable loss or gain for the third quarter of 2018.

Other expense for the third quarter of 2019 was $0.7 million compared with other income of $4,000 for the third quarter of 2018. The other expense in 2019 was due to interest due on the Promissory Note issued in February 2019, the amortization of discount and issuance cost related to the Convertible Note issued in March 2019, and the issuance cost related to issuance of common stock, Series A Preferred Stock and warrants in August 2019.

Net loss for the third quarter of 2019 was $0.3 million, or $0.01 per share, compared with a net loss for the third quarter of 2018 of $1.5 million, or $0.09 per share.

Nine Month Financial Results

Net sales for the nine months ended September 30, 2019 were $4.9 million compared with $8.9 million for the nine months ended September 30, 2018. Gross margin on net product revenue was 77% for the first nine months of 2019 compared with 88% for the first nine months of 2018.

Operating expenses for the nine months ended September 30, 2019 were $10.9 million, a 23% decrease from the prior-year period and included sales and marketing expenses of $6.6 million, general and administrative expenses of $4.1 million and research and development expenses of $0.2 million.

Operating loss for the nine months ended September 30, 2019 was $7.2 million compared with $6.3 million for the first nine months of 2018.

Non-cash gain on the change of fair value of warrant liability for the first nine months of 2019 was $0.9 million compared with a non-cash gain of $1.0 million for the first nine months of 2018.

Non-cash gain on the embedded derivative associated with the Convertible Note for the first nine months of 2019 was $0.4 million. The Company did not record a comparable loss or gain for the first nine months of 2018.

Other expense for the first nine months of 2019 was $1.2 million compared with other income of $13,000 for the same period of 2018. The other expense was due to interest due on the Promissory Note issued in February 2019, the amortization of discount and issuance cost related to the Convertible Note issued in March 2019, and the issuance cost related to issuance of common stock, Series A Preferred Stock and warrants in August 2019.

Net loss for the nine months ended September 30, 2019 was $7.0 million, or $0.36 per share, compared with a net loss for the nine months ended September 30, 2018 of $5.3 million, or $0.31 per share.

NovaBay reported cash and cash equivalents of $9.0 million as of September 30, 2019 compared with $3.2 million as of December 31, 2018. The Company raised $1.0 million through a related-party loan in February, $2.0 million through a convertible loan in March, $2.4 million in June through private placements of common stock, $4.2 million in August through a registered direct offering of common stock and $2.7 million in August through a private placement of convertible preferred stock.

Conference Call

NovaBay management will host an investment community conference call today beginning at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss the Company’s financial and operational results and to answer questions. Shareholders and other interested parties may participate in the conference call by dialing 800-608-8202 from within the U.S. or 702-495-1913 from outside the U.S., with the conference identification number 5868436.

A live webcast of the call will be available at http://novabay.com/investors/events and will be archived for 90 days. A replay of the call will be available beginning two hours after call ends through 11:59 p.m. Eastern time November 25, 2019 by dialing 855-859-2056 from within the U.S. or 404-537-3406 from outside the U.S. and entering the conference identification number 5868436.

About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics®

NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focusing on commercializing and developing its non-antibiotic anti-infective products to address the unmet therapeutic needs of the global, topical anti-infective market with its two distinct product categories: the NEUTROX® family of products and the AGANOCIDE® compounds. The Neutrox family of products includes AVENOVA® for the eye care market, NEUTROPHASE® for wound care market, and CELLERX® for the aesthetic dermatology market. The Aganocide compounds, still under development, have target applications in the dermatology and urology markets.

Forward-Looking Statements

This release contains forward-looking statements that are based upon management’s current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements regarding our business strategies and product offerings, our estimated future revenue, and generally the Company’s expected future financial results. These 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 the size of the potential market for our products, improving sales rep productivity and product distribution, obtaining adequate insurance reimbursement, and any potential regulatory problems. Other risks relating to NovaBay’s business, 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-Q/K 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.

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Avenova Purchasing Information

For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com.
www.Avenova.com

NOVABAY PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

September 30,

 

 

 

December 31,

 

 

 

 

2019

 

 

 

2018

(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents

$

9,020

$

3,183

Accounts receivable, net of allowance for doubtful accounts ($24 and $10 at September 30, 2019 and December 31, 2018, respectively)

1,505

3,385

Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($135 and $104 at September 30, 2019 and December 31, 2018, respectively)

838

280

Prepaid expenses and other current assets

1,135

1,760

Total current assets

12,498

8,608

Operating lease right-of-use assets

1,435

Property and equipment, net

128

201

Other assets

542

552

TOTAL ASSETS

$

14,603

$

9,361

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current liabilities:
Accounts payable

$

503

$

551

Accrued liabilities

1,642

3,255

Deferred revenue

41

Operating lease liabilities

1,058

Notes payable, related party

1,155

Convertible note

1,890

Embedded derivative liability

4

Total current liabilities

6,252

3,847

Operating lease liabilities-non-current

627

Deferred rent

184

Warrant liability

3,902

178

Other liabilities

315

198

Total liabilities

11,096

4,407

 
Series A non-voting convertible preferred stock, $0.01 par value; 2,700 shares authorized; 2,700 and 0 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

584

Stockholders' equity :
Common stock, $0.01 par value; 50,000 shares authorized; 25,202 and 17,089 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

252

171

Additional paid-in capital

125,009

119,764

Accumulated deficit

(122,338)

(114,981)

Total stockholders' equity

2,923

4,954

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

14,603

$

9,361

NOVABAY PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share data)

 
Three Months Ended September 30, Nine Months Ended September 30,

2019

2018

2019

2018

Sales:
Product revenue, net

$

1,615

$

3,142

$

4,854

$

8,870

Other revenue

-

-

41

13

Total sales, net

1,615

3,142

4,895

8,883

 
Product cost of goods sold

401

332

1,145

1,062

Gross profit

1,214

2,810

3,750

7,821

 
Research and development

49

45

166

152

Sales and marketing

1,544

3,230

6,610

9,603

General and administrative

1,333

1,344

4,136

4,326

Total operating expenses

2,926

4,619

10,912

14,081

Operating loss

(1,712)

(1,809)

(7,162)

(6,260)

 
Non-cash gain on changes in fair value of warrant liability

1,480

267

936

971

Non-cash gain on changes in fair value of embedded derivative liability

669

-

423

-

Other (expense) income, net

(719)

4

(1,166)

13

 
Loss before provision for income taxes

(282)

(1,538)

(6,969)

(5,276)

Provision for income tax

-

-

(3)

(1)

Net loss and comprehensive loss

$

(282)

$

(1,538)

$

(6,972)

$

(5,277)

 
Net loss per share attributable to common stockholders, basic

$

(0.01)

$

(0.09)

$

(0.36)

$

(0.31)

Net loss per share attributable to common stockholders, diluted

$

(0.02)

$

(0.11)

$

(0.36)

$

(0.37)

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock
Basic

23,096

17,089

19,623

16,864

Diluted

23,213

17,148

19,623

17,056

 

 

NovaBay Contact
Justin Hall
President and Chief Executive Officer
510-899-8800
jhall@novabay.com

Investor Contact
LHA Investor Relations
Jody Cain
310-691-7100
jcain@lhai.com

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