Second quarter net sales increase 55% and
Avenova sales through high-margin pharmacy channel increase 80%
over prior year
Affirms 2017 revenue guidance
Conference call begins today at 4:30 p.m.
Eastern time
NovaBay® Pharmaceuticals, Inc. (NYSE MKT: NBY), a
biopharmaceutical company focusing on commercializing prescription
Avenova® for lid and lash hygiene in the domestic eye care market,
reports financial results for the three and six months ended June
30, 2017 and provides a business update.
“We had record Avenova unit volume through the pharmacy channel
during the second quarter, along with an 80% increase in revenue
through this channel over the prior year. Our planned shift of
sales to the higher-margin pharmacy channel from our legacy
in-office direct sales channel continued into the second quarter,
and resulted in Avenova sales growth of 48% year-over-year.
Importantly, total revenue increased 79% for the first half of 2017
as we continue to be confident in reaching our revenue guidance for
the year,” said Mark M. Sieczkarek, NovaBay’s President and CEO.
“Our focus on the ophthalmology channel continues to pay off with
gross margin on Avenova sales reaching 89%, in line with our
expectations for the year. We carefully managed and reduced our
cash burn while investing in sales and marketing initiatives to
support continued growth, and we continue to believe that our
current financial resources will be sufficient to fund operations
and our growth strategy throughout 2017.
“As part of our ongoing strategy to make Avenova accessible to
an ever-growing number of patients, I am pleased to announce that
during the second quarter we teamed up with MedVantx and the
world’s largest retailer. Our new partnership provides patients
with the option of home delivery of Avenova in all 50 states or
pick up at one of thousands of in-store pharmacies across the
U.S.
“We expanded our sales organization early this year and we
expect our sales to continue to increase as our newer sales
representatives gain tenure and become more productive,” he added.
“We are affirming revenue guidance for 2017 including our outlook
for total sales of $19 million, which represents a 60% increase
over 2016.”
Key Second Quarter Metrics
- Sales of $4.1 million increased 55%
year-over-year;
- Gross margin on Avenova sales reached
89%;
- Prescription sales into the pharmacy
channel were $3.0 million, up 80% year-over-year;
- New prescribers were nearly 900;
and
- Total number of medical professionals
who have prescribed Avenova exceeded 10,600, up 21% year-over-year
and up 9% from the first quarter of 2017.
Second Quarter 2017 Financial Results
Net sales for the second quarter of 2017 increased 55% to $4.1
million from $2.7 million for the second quarter of 2016. Total
gross profit margin improved to 83% for the second quarter of 2017
from 82% for the second quarter of 2016. The gross profit margin on
Avenova sales for the second quarter of 2017 improved to 89% from
85% for the prior-year period.
Operating loss for the second quarter of 2017 improved 22% to
$1.8 million from $2.2 million for the second quarter of 2016.
Sales and marketing expenses for the second quarter of 2017 were
$3.4 million compared with $2.9 million for the prior-year period,
with the increase primarily due to an increase in the number of
sales representatives and increased sampling and marketing
programs. G&A expenses for the second quarter of 2017 were $1.7
million compared with $1.3 million for the prior-year period, with
the increase primarily resulting from higher stock-based
compensation expense and increased expenses to support the employee
salesforce, partially offset by lower lease expenses. R&D
expenses declined to $70,000 for the second quarter of 2017 from
$0.3 million for the second quarter of 2016, primarily due to the
Company’s focus on Avenova commercialization.
Non-cash gain on the change of fair value of warrant liability
for the second quarter of 2017 was $15,000 compared with a non-cash
loss of $424,000 for the second quarter of 2016.
The net loss for the second quarter of 2017 was $1.7 million, or
$0.11 per share on a basic basis, compared with a net loss for the
second quarter of 2016 of $2.7 million, or $0.36 per share on a
basic basis.
Six-Month 2017 Financial Results
Net sales for the six months ended June 30, 2017 were $7.8
million, up 79% from $4.4 million for the six months ended June 30,
2016. Total gross profit margin was 84% for the first half of 2017,
compared with 75% for the first half of 2016. Gross profit margin
on Avenova sales was 89% the first half of 2017, compared with 82%
for the first half of 2016.
Operating loss for the first six months of 2017 was $5.5
million, a 20% improvement from $6.9 million for the comparable
period in 2016. Sales and marketing expenses for the six months
ended June 30, 2017 increased 19% to $7.1 million and G&A
expenses increased 62% to $4.8 million, both compared with the six
months ended June 30, 2016. R&D expenses for the first six
months of 2017 decreased 89% to $0.1 million compared with the
first six months of 2016.
Non-cash loss on the change of fair value of warrant liability
for the first six months of 2017 was $220,000 compared with a
non-cash loss of $809,000 for the first six months of 2016.
The net loss for the six months ended June 30, 2017 was $5.7
million, or $0.38 per share on a basic basis, compared with a net
loss for the six months ended June 30, 2016 of $7.8 million, or
$1.35 per share on a basic basis.
NovaBay reported cash and cash equivalents of $5.7 million as of
June 30, 2017, compared with $9.5 million as of December 31,
2016.
The Company used $1.6 million in cash to fund operations during
the second quarter of 2017, a significant improvement from $2.7
million used during the second quarter of 2016. The decrease in
cash usage was primarily due to higher sales of Avenova.
2017 Financial Outlook
NovaBay is affirming total sales and gross profit margin
guidance for 2017. The Company’s expectations are as follows:
- Total sales of $19 million, up 60% over
2016; and
- Gross profit margin on Avenova sales in
the high 80 percentiles.
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 56306358.
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 completion through 11:59 p.m. Eastern time September 9, 2017
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
56306358.
About Avenova®
Avenova is NovaBay Pharmaceuticals’ main commercial focus. Data
from a multicenter clinical study show that Avenova reduced
bacterial load, the underlying cause of blepharitis, on ocular skin
surface by more than 90%. Laboratory tests show that hypochlorous
acid has potent antimicrobial activity in solution yet is non-toxic
to mammalian cells and also neutralizes bacterial toxins. Avenova
is marketed to optometrists and ophthalmologists throughout the
U.S. by NovaBay’s direct salesforce. It is accessible from more
than 90% of retail pharmacies in the U.S. through agreements with
McKesson Corporation, Cardinal Health and AmerisourceBergen.
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 expected annual revenue,
expected operating losses, gross margin, the future sales of our
products, what we believe to be sufficient future financial
resources, and generally the Company’s expected future financial
results. Forward-looking statements can be identified with words
like (and variations of): “believe,” and “expect.” 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 difficulties or delays in
manufacturing, distributing, and selling the Company’s products,
unexpected adverse side effects or inadequate therapeutic efficacy
of our product, the uncertainty of patent protection for the
Company’s intellectual property, 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-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.
Stay informed on NovaBay’s
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NovaBay ContactsFor NovaBay
Avenova purchasing information, please
contact:800-890-0329www.Avenova.com
NOVABAY PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited) (In
thousands) June 30, December
31, 2017 2016 ASSETS Current assets: Cash
and cash equivalents $ 5,722 $ 9,512 Accounts receivable, net of
allowance for doubtful accounts ($48 and $10 at June 30, 2017 and
December 31, 2016, respectively) 3,601 2,120 Inventory, net of
allowance for excess and obsolete inventory and lower of cost or
estimate net realizable value adjustments of $149 and $196 at June
30, 2017 and December 31, 2016, respectively) 672 873 Prepaid
expenses and other current assets 972 1,966
Total current assets 10,967 14,471 Property and equipment,
net 462 371 Other assets 641 539 TOTAL
ASSETS $ 12,070 $ 15,381
LIABILITIES AND
STOCKHOLDERS' EQUITY Liabilities: Current liabilities: Accounts
payable $ 908 $ 455 Accrued liabilities 1,655 2,007 Deferred
revenue 2,172 1,861 Total current
liabilities 4,735 4,323 Deferred revenues - non-current 1,997 1,986
Deferred rent 300 327 Warrant liability 1,608 1,446 Other
liabilities 221 198 Total liabilities
8,861 8,280 Stockholders' equity
: Preferred stock: 5,000 shares authorized; none outstanding at
June 30, 2017 and December 31, 2016 — —
Common stock, $0.01 par value; 240,000,
shares authorized 15,309 and 15,269 shares issued and outstanding
at June 30, 2017 and December 31, 2016, respectively
153 153 Additional paid-in capital 112,477 110,619 Accumulated
deficit (109,421 ) (103,671 ) Total stockholders'
equity 3,209 7,101 TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 12,070 $ 15,381
NOVABAY PHARMACEUTICALS, INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited) (In thousands, except per share data)
Three Months Ended Six
Months Ended June 30, June 30, 2017 2016 2017
2016 Sales: Product revenue, net
$ 4,094 $ 2,654 $ 7,788 $ 4,309 Other revenue,net 28
9 35 73 Total sales, net
4,122 2,663 7,823 4,382 Product cost of goods sold
698 479 1,286 1,090
Gross profit 3,424 2,184
6,537 3,292 Research and development 70
278 132 1,211 Sales and marketing 3,376 2,853 7,116 5,997 General
and administrative 1,735 1,293
4,823 2,975 Total operating expenses
5,181 4,424 12,071 10,183
Operating Loss (1,757 ) (2,240 ) (5,534 ) (6,891 )
Non-cash gain (loss) on changes in fair value of warrant liability
15 (424 ) (220 ) (809 ) Other income (expense), net 4
(24 ) 6 (65 ) Loss before
provision for income taxes (1,738 ) (2,688 ) (5,748 ) (7,765 )
Provision for income tax - (2 ) (1 )
(2 ) Net loss and comprehensive loss
$
(1,738
)
$ (2,690 ) $ (5,749 ) $ (7,767 ) Net loss per share
attributable to common stockholders (basic and diluted) $ (0.11 ) $
(0.36 ) $ (0.38 ) $ (1.35 ) Weighted-average shares of
common stock outstanding used in computing net loss per share of
common stock 15,308 7,407 15,296 5,746
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version on businesswire.com: http://www.businesswire.com/news/home/20170810006043/en/
NovaBay ContactJack
McGovernChief Financial
Officer510-899-8800Jmcgovern@novabay.comorInvestor ContactLHA Investor RelationsJody
Cain310-691-7100Jcain@lhai.com
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