Product revenue increased 122% to $4.0 million
driven by sales of KN95 masks; operating loss narrowed 21%
Conference call begins at 4:30 p.m. Eastern
time today
NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports
financial results for the three and six months ended June 30, 2020
and provides a business update.
“We are reporting strong financial results for the second
quarter with product revenue increasing 122% and operating loss
narrowing 21% over the prior-year period, while also improving our
cash position,” said Justin Hall, President and CEO of NovaBay
Pharmaceuticals. “Despite difficult economic conditions in the
second quarter that ravaged the economy and worsened the financial
condition of many companies, we were able to substantially improve
our financial results. Our strategic move last year to sell
Avenova® directly to consumers online proved key to maintaining
unit growth during a quarter when most of the doctors who typically
prescribe Avenova were largely sidelined. Furthermore, we increased
revenue by offering KN95 masks, with brisk sales during the early
months of the COVID-19 pandemic.
“Given the resurgence in COVID-19 cases, consumers and
physicians are responding favorably to the recently announced
independent laboratory testing confirming Avenova kills SARS-CoV-2.
While many disinfectants can kill the virus, only Avenova,
manufactured in the USA, is completely non-toxic and gentle enough
for use on the sensitive skin around the eyes, nose, and mouth, the
parts of the body known to be susceptible to COVID-19
transmission,” he added. “In addition to Avenova, we are pleased to
continue serving our communities during the pandemic by broadening
our selection of personal protection equipment with a variety of
face masks, gloves and other PPE. These products are available only
in bulk quantities through Avenova.com.
“We are confident NovaBay will retain NYSE continued-listing
compliance following our successful ATM financing and recent
renegotiation and exercise of warrants,” he added. “With the
additional capital raised, we also expect our financial resources
to be sufficient to fund current operations through 2021. We have
strengthened our balance sheet, brought on new product offerings
and expanded our target market. The second quarter was an
inflection point for our business that will serve as a springboard
for accelerating future growth.”
Second Quarter Financial Results
Net product revenue for the second quarter of 2020 was $4.0
million, a 122% increase from $1.8 million for the second quarter
of 2019. The increase is due to $2.8 million in net product revenue
from the sale of KN95 masks, with no comparable revenue in the
second quarter of 2019. Avenova revenue for the second quarter of
2020 was $1.1 million, compared with $1.6 million for the second
quarter of 2019. The decrease reflects an increase in Avenova units
sold, offset by a lower net selling price largely due to a decrease
in insurance coverage by national payors, as well as a lower net
selling price associated with Avenova Direct, which was launched in
June 2019.
Gross margin on net product revenue was 49% for the second
quarter of 2020, compared with 77% for the prior-year period, due
to the addition of the KN95 masks which are sold for a lower
margin.
Operating expenses for the second quarter of 2020 were $3.0
million, compared with $2.8 million for the second quarter of 2019.
Sales and marketing expenses for the second quarter of 2020 were
$1.4 million, a 7% decline from $1.5 million for the second quarter
of 2019, reflecting lower headcount, partially offset by an
increase in digital advertising and other marketing expenses.
General and administrative (G&A) expenses for the second
quarter of 2020 were $1.5 million, compared with $1.2 million for
the second quarter of 2019, with the increase due to higher
regulatory and legal fees. Research and development (R&D)
expenses for the second quarter of 2020 were $115,000, compared
with $32,000 for the second quarter of 2019, mostly due to product
testing and FDA applications.
Operating loss for the second quarter of 2020 was $1.1 million,
a 21% improvement from the operating loss of $1.4 million for the
second quarter of 2019.
Non-cash loss on the change of fair value of warrant liability
for the second quarter of 2020 was $3.8 million, compared with a
non-cash loss of $487,000 for the second quarter of 2019.
Loss from adjustments to the fair value of derivative liability
for the second quarter of 2019 was $246,000. The Company did not
record a comparable loss or gain for the second quarter of
2020.
Net other income for the second quarter of 2020 of $362,000 was
primarily related to qualified expenses incurred under the Paycheck
Production Program. This compares with other expense of $387,000
for the second quarter of 2019, which was due to interest expenses
related to a convertible note issued March 2019.
The net loss for the second quarter of 2020 was $4.5 million, or
$0.15 per share, compared with a net loss for the second quarter of
2019 of $2.5 million, or $0.14 per share.
Six Month Financial Results
Net product revenue for the six months ended June 30, 2020 was
$5.9 million, a 79% increase from $3.3 million for the six months
ended June 30, 2019. Gross margin on net product revenue was 55%
for the first half of 2020, compared with 77% for the first half of
2019.
For the six months ended June 30, 2020, sales and marketing
expenses decreased 41% to $3.0 million, while G&A expenses and
R&D expenses were relatively unchanged, all compared with the
six months ended June 30, 2019.
Operating loss for the first six months of 2020 was $2.6
million, a 53% improvement from the operating loss of $5.5 million
for the first six months of 2019.
Non-cash loss on the change of fair value of warrant liability
for the first six months of 2020 was $3.6 million, compared with a
non-cash loss of $544,000 for the first six months of 2019.
Gain from adjustments to the fair value of derivative liability
for the six months ended June 30, 2020 was $2,000, compared with a
loss of $246,000 for the six months ended June 30, 2019.
Net other income for the first six months of 2020 was $176,000,
compared with net other expense for the first six months of 2019 of
$447,000.
The net loss for the six months ended June 30, 2020 was $6.1
million, or $0.21 per share, compared with a net loss for the six
months ended June 30, 2019 of $6.7 million, or $0.38 per share.
NovaBay reported cash and cash equivalents of $8.8 million as of
June 30, 2020 compared with $6.9 million as of December 31, 2019.
During the three months ended June 30, 2020, the Company raised net
proceeds of $5.2 million from the sale of common stock through an
ATM agreement. In July 2020 the Company raised net proceeds of $6.4
million through the renegotiation of warrants. This renegotiation
is also expected to contribute to our initiative to successfully
regain compliance with the NYSE continued-listing requirements.
Conference Call
NovaBay management will host an investment community conference
call today August 6, 2020, 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
7662239.
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 the call ends through 11:59 p.m. Eastern time August 27, 2020
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
7662239.
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, CELLERX® for the aesthetic
dermatology market and NEUTROPHASE® for the wound care market. The
Aganocide compounds, still under development, have target
applications in the dermatology and urology markets.
Forward-Looking Statements
Except for historical information herein, matters set forth in
this press release are forward-looking within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including statements about the commercial
progress and future financial performance of NovaBay
Pharmaceuticals, Inc. 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 current product offerings, potential future product
offerings, possible regulatory clearance of any of our products or
future products, and any future revenue that may result from
selling these products, as well as generally the Company’s expected
future financial results. These forward-looking statements are
identified by the use of words such as “future growth,” “reduce,”
and “expand,” among others. 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, the possibility that the available market for the
Company’s products will not be as large as expected, the Company’s
products will not be able to penetrate one or more targeted
markets, revenues will not be sufficient to meet the Company’s cash
needs, 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)
June 30,
December 31,
2020
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
8,775
$
6,937
Accounts receivable, net of allowance for
doubtful accounts ($0 and $51 at June 30, 2020 and December 31,
2019, respectively)
1,391
1,066
Inventory, net of allowance for excess and
obsolete inventory and lower of cost or estimated net realizable
value adjustments ($206 and $247 at June 30, 2020 and December 31,
2019, respectively)
626
492
Prepaid expenses and other current
assets
1,116
886
Total current assets
11,908
9,381
Operating lease right-of-use assets
803
1,252
Property and equipment, net
84
110
Other assets
477
477
TOTAL ASSETS
$
13,272
$
11,220
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Current liabilities:
Accounts payable
$
1,291
$
331
Accrued liabilities
1,282
1,778
Deferred revenue
115
—
Operating lease liabilities
619
930
Notes payable, related party
104
1,202
Deferred income
432
—
Convertible note
418
1,409
Embedded derivative liability
1
3
Warrant liability
39
34
Total current liabilities
4,301
5,687
Operating lease
liabilities-non-current
303
505
Warrant liability
7,685
4,055
Total liabilities
12,289
10,247
Stockholders' equity:
Preferred stock: 5,000 shares authorized;
none issued and outstanding at June 30, 2020 and December 31,
2019
—
—
Common stock, $0.01 par value; 75,000
shares and 50,000 shares authorized at June 30, 2020 and December
31, 2019, respectively; 34,648 and 27,938 shares issued and
outstanding at June 30, 2020 and December 31, 2019,
respectively
346
279
Additional paid-in capital
131,725
125,718
Accumulated deficit
(131,088
)
(125,024
)
Total stockholders' equity
983
973
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
13,272
$
11,220
NOVABAY PHARMACEUTICALS,
INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS) (Unaudited) (in thousands except per
share data)
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
Sales:
Product revenue, net
$
3,979
$
1,789
$
5,871
$
3,239
Other revenue, net
5
—
5
41
Total sales, net
3,984
1,789
5,876
3,280
Product cost of goods sold
2,040
403
2,621
744
Gross profit
1,944
1,386
3,255
2,536
Research and development
115
32
124
117
Sales and marketing
1,423
1,535
2,983
5,066
General and administrative
1,477
1,198
2,754
2,803
Total operating expenses
3,015
2,765
5,861
7,986
Operating loss
(1,071
)
(1,379
)
(2,606
)
(5,450
)
Non-cash loss on changes in fair value of
warrant liability
(3,772
)
(487
)
(3,635
)
(544
)
Non-cash (loss) gain on changes in fair
value of embedded derivative liability
-
(246
)
2
(246
)
Other income (expense), net
362
(387
)
176
(447
)
Loss before provision for income taxes
(4,481
)
(2,499
)
(6,063
)
(6,687
)
Provision for income taxes
(1
)
(2
)
(1
)
(3
)
Net loss and comprehensive loss
$
(4,482
)
$
(2,501
)
$
(6,064
)
$
(6,690
)
Net loss per share attributable to common
stockholders (basic and diluted)
$
(0.15
)
$
(0.14
)
$
(0.21
)
$
(0.38
)
Weighted-average shares of common stock
outstanding used in computing net loss per share of common stock
(basic and diluted)
30,384
18,613
29,012
17,857
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200806005028/en/
NovaBay Contact Justin Hall
Chief Executive Officer and General Counsel 510-899-8800
jhall@novabay.com
Investor Contact LHA
Investor Relations Jody Cain 310-691-7100 jcain@lhai.com
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