- Revenue increased 34% versus prior year
- Avenova® unit sales set quarterly record
- Exited Q3 with $13.4 million in cash and equivalents
- Regained compliance with NYSE American continued-listing
standards
- Launches CelleRx® Clinical Reset™ into beauty market
Conference call begins at 4:30 p.m. Eastern
time today
NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) reports
financial results for the three and nine months ended September 30,
2020 and provides a business update.
“This is an exceptionally exciting time at NovaBay as Avenova
unit sales set a new quarterly record and we prepare for the
consumer launch of CelleRx Clinical Reset into the beauty market,”
said Justin Hall, President and CEO of NovaBay Pharmaceuticals.
“Product revenue for the quarter increased 34% to $2.2 million from
the prior year, with Avenova revenue reaching its highest level
since we introduced the direct-to-consumer channel. Online sales of
Avenova Direct continued as the fastest-growing channel driven by
our successful digital marketing programs featuring lifestyle
messaging and increased customer outreach. Sales from our
buy-and-sell channel also surged in recent months with the
reopening of doctors’ offices across the country.
“Our groundbreaking product CelleRx Clinical Reset creates a new
category in skin care,” he added. “Previously we marketed CelleRx
to only medical professionals without targeting the consumer
market. With a completely new marketing approach for CelleRx
Clinical Reset, we intend to leverage our pharmaceutical pedigree
in the beauty industry. Clinical Reset disrupts the layer of
bacteria that settles and grows on the face, yet is a gentle way to
get skin back to a healthy baseline to heal itself and to better
absorb skincare products. Clinical Reset’s unveiling will include
robust social media and print advertising campaigns targeted
directly to the consumer market. Initial sales will be through our
newly designed website, cellerx.com.
“We exited the quarter with our strongest cash position since
the commercial launch of Avenova in 2015 and have sufficient funds
to support current operations through full year 2021, including our
enhanced online advertising programs for Avenova and the consumer
launch of CelleRx Clinical Reset. We raised $6.4 million in the
third quarter from the renegotiation of warrants, which also
enabled us to regain compliance with NYSE American
continued-listing requirements,” Mr. Hall added. “I’m proud of our
many recent accomplishments as they position NovaBay for a bright
future.
“We continue actively working with the U.S. Food and Drug
Administration (FDA) on a number of items. Our application for
Emergency Use Authorization (EUA) to sell the fluorecare® rapid
COVID-19 antibody test is still under review and we have
successfully remediated the recent Warning Letter regarding our
COVID-19 Avenova marketing. Lastly, we continue to work with the
Environmental Protection Agency (EPA) on the inclusion of Avenova
on its list of approved disinfectants that kill the COVID-19 virus
on hard surfaces,” concluded Mr. Hall.
Third Quarter Financial Results
Net product revenue for the third quarter of 2020 was $2.2
million, a 34% increase from $1.6 million for the third quarter of
2019. Avenova revenue for the third quarter of 2020 was $1.8
million, a 14% increase from $1.6 million for the third quarter of
2019. The increase reflects a higher number of Avenova Direct and
buy-and-sell units sold, partially offset by a decrease in the
number of units sold through our retail and partner pharmacy
channels. The increase in revenue due to unit sales was partially
offset by the lower average net selling price associated with
Avenova Direct units. Net product revenue for the third quarter of
2020 also includes $0.2 million from the sales of a PhaseOne, a
private-label prescription skin and wound care product, with no
comparable revenue in the prior-year period.
Gross margin on net product revenue remained unchanged at 75%
for the third quarters of 2020 and 2019.
Operating expenses for the third quarter of 2020 were $3.7
million, compared with $2.9 million for the third quarter of 2019.
Sales and marketing expenses for the third quarter of 2020 were
$1.7 million, compared with $1.5 million for the third quarter of
2019, reflecting an increase in Avenova digital advertising and
costs associated with the consumer launch of CelleRx Clinical
Reset, partially offset by lower headcount-related costs and lower
travel and related expenses due to the impact of COVID-19. General
and administrative (G&A) expenses for the third quarter of 2020
were $1.9 million, compared with $1.3 million for the third quarter
of 2019, with the increase due to higher legal fees and the cost of
the McGovern arbitration. Research and development (R&D)
expenses for the third quarter of 2020 were $125,000, compared with
$49,000 for the third quarter of 2019.
Operating loss for the third quarter of 2020 was $2.1 million,
compared with the operating loss of $1.7 million for the third
quarter of 2019.
Non-cash loss on the change of fair value of warrant liability
for the third quarter of 2020 was $1.6 million, compared with a
non-cash gain of $1.5 million for the third quarter of 2019.
Non-cash gain from adjustments to the fair value of an embedded
derivative liability for the third quarter of 2020 was $1,000,
compared with $0.7 million for the third quarter of 2019.
Other income, net, for the third quarter of 2020 of $0.4 million
is primarily related to qualified expenses incurred under the
Paycheck Production Program. This compares with other expense, net,
of $0.7 million for the third quarter of 2019, which was due
primarily to interest expense recognized on a convertible note that
was settled prior to the end of the third quarter of 2020.
The net loss for the third quarter of 2020 was $3.2 million, or
$0.08 per share, compared with a net loss for the third quarter of
2019 of $282,000, or $0.01 per share.
Nine Month Financial Results
Net product revenue for the nine months ended September 30, 2020
was $8.0 million, a 66% increase from $4.9 million for the nine
months ended September 30, 2019. Gross margin on net product
revenue was 61% for the first nine months of 2020, compared with
77% for the first nine months of 2019.
For the nine months ended September 30, 2020, sales and
marketing expenses decreased 29% to $4.7 million, G&A expenses
of $4.6 million increased 12% and R&D expenses of $0.2 million
were relatively unchanged, compared with the nine months ended
September 30, 2019.
Operating loss for the first nine months of 2020 was $4.7
million, a 35% improvement from the operating loss of $7.2 million
for the first nine months of 2019.
Non-cash loss on the change of fair value of warrant liability
for the first nine months of 2020 was $5.2 million, compared with a
non-cash gain of $0.9 million for the first nine months of
2019.
Non-cash gain from adjustments to the fair value of an embedded
derivative liability for the nine months ended September 30, 2020
was $3,000, compared with $0.4 million for the nine months ended
September 30, 2019.
Other income, net, for the first nine months of 2020 was $0.6
million, compared with other expense, net, for the first nine
months of 2019 of $1.2 million.
The net loss for the nine months ended September 30, 2020 was
$9.3 million, or $0.28 per share, compared with a net loss for the
nine months ended September 30, 2019 of $7.0 million, or $0.36 per
share.
NovaBay reported cash and cash equivalents of $13.4 million as
of September 30, 2020, compared with $6.9 million as of December
31, 2019. The Company raised net proceeds of $5.2 million from the
sale of common stock through an ATM agreement during the quarter
ended June 30, 2020 and $6.4 million from the renegotiation of
warrants during the quarter ended September 30, 2020.
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 866-677-7731 from
within the U.S. or 480-405-6745 from outside the U.S., and
requesting the NovaBay Pharmaceuticals call.
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 November 26,
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 8439986.
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 “launch,” “leverage,”
“position,” and “continue,” 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, the effect on sales and potential reputational damage
resulting from decisions or actions taken by regulators, including
Warning Letters issued by the FDA, and any other potential
regulatory problems that may arise. 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.
Socialize and Stay informed on
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Website
Avenova Purchasing
Information For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com.
www.Avenova.com
Financial tables to follow
NOVABAY PHARMACEUTICALS,
INC.
CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value amounts)
September 30,
December 31,
2020
2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
13,413
$
6,937
Accounts receivable, net of allowance for
doubtful accounts ($0 and $51 at September 30, 2020 and December
31, 2019, respectively)
1,119
1,066
Inventory, net of allowance for excess and
obsolete inventory and lower of cost or estimated net realizable
value adjustments ($194 and $247 at September 30, 2020 and December
31, 2019, respectively)
785
492
Prepaid expenses and other current
assets
695
886
Total current assets
16,012
9,381
Operating lease right-of-use assets
518
1,252
Property and equipment, net
76
110
Other assets
476
477
TOTAL ASSETS
$
17,082
$
11,220
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Current liabilities:
Accounts payable
$
796
$
331
Accrued liabilities
1,655
1,778
Operating lease liabilities
400
930
Note payable, related party
104
1,202
Convertible note
—
1,409
Other current liabilities
48
37
Total current liabilities
3,003
5,687
Operating lease
liabilities-non-current
197
505
Warrant liability
—
4,055
Total liabilities
3,200
10,247
Stockholders' equity:
Preferred stock: 5,000 shares authorized;
none issued and outstanding at September 30, 2020 and December 31,
2019
—
—
Common stock, $0.01 par value; 75,000
shares and 50,000 shares authorized at September 30, 2020 and
December 31, 2019, respectively; 41,760 and 27,938 shares issued
and outstanding at September 30, 2020 and December 31, 2019,
respectively
417
279
Additional paid-in capital
147,774
125,718
Accumulated deficit
(134,309
)
(125,024
)
Total stockholders' equity
13,882
973
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
$
17,082
$
11,220
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,
2020
2019
2020
2019
Sales:
Product revenue, net
$
2,167
$
1,615
$
8,038
$
4,854
Other revenue, net
3
—
8
41
Total sales, net
2,170
1,615
8,046
4,895
Product cost of goods sold
536
401
3,157
1,145
Gross profit
1,634
1,214
4,889
3,750
Research and development
125
49
249
166
Sales and marketing
1,692
1,544
4,675
6,610
General and administrative
1,879
1,333
4,633
4,136
Total operating expenses
3,696
2,926
9,557
10,912
Operating loss
(2,062
)
(1,712
)
(4,668
)
(7,162
)
Non-cash (loss) gain on changes in fair
value of warrant liability
(1,589
)
1,480
(5,224
)
936
Non-cash gain on changes in fair value of
embedded derivative liability
1
669
3
423
Other income (expense), net
429
(719
)
605
(1,166
)
Loss before provision for income taxes
(3,221
)
(282
)
(9,284
)
(6,969
)
Provision for income taxes
—
—
(1
)
(3
)
Net loss and comprehensive loss
$
(3,221
)
$
(282
)
$
(9,285
)
$
(6,972
)
Net loss per share attributable to common
stockholders (basic)
$
(0.08
)
$
(0.01
)
$
(0.28
)
$
(0.36
)
Net loss per share attributable to common
stockholders (diluted)
$
(0.08
)
$
(0.02
)
$
(0.28
)
$
(0.36
)
Weighted-average shares of common stock
outstanding used in computing net loss per share of common stock
(basic)
40,037
23,096
32,614
19,623
Weighted-average shares of common stock
outstanding used in computing net loss per share of common stock
(diluted)
40,067
23,213
32,642
19,623
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201112005993/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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