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 12 months ended December 31, 2019 and provides a business
update.
“We exited 2019 with fourth quarter Avenova unit sales at their
highest level of the year, with momentum being driven by consumer
sales on Amazon.com,” said Justin Hall, President and CEO of
NovaBay Pharmaceuticals. “Revenue and unit sales from this channel
increased each successive month since our online launch in June. By
the fourth quarter, 35% of Avenova revenue and 48% of Avenova units
were from Amazon.com, up from 21% and 36%, respectively, from the
third quarter. While we are pleased with the results from this
channel, units through Amazon.com are sold at lower gross-to-net
pricing than those sold through the prescription channel, resulting
in a year-over-year revenue decline for fourth quarter. Given
industrywide issues with prescription reimbursement that have
impacted Avenova, and the greater accessibility and improved
patient experience from online sales, we view the consumer channel
as the greatest opportunity for future Avenova growth.
“Our strategy this year is to enhance shareholder value by
cost-effectively expanding our Avenova customer base, while
leveraging our online and buy-and-sell channels with complementary
product offerings and line extensions,” said Mr. Hall. “As online
consumer sales become an increasing percentage of total sales of
our Avenova business, we are introducing new consumer branding,
with reinvigorated quality-of-life messaging and appealing
packaging aimed at attracting new consumers, as now seen on
Avenova.com. This refreshed branding, which highlights the ease in
which Avenova can fit into people’s daily routines, is designed to
appeal to a broader universe of consumers.”
Fourth Quarter Financial Results
Net sales for the fourth quarter of 2019 were $1.7 million
compared with $3.6 million for the fourth quarter of 2018. The
decrease in net sales was primarily the result of a decrease in the
net selling price of Avenova products, along with a decrease in the
number of Avenova units sold, largely due to a decrease in
insurance coverage of the product by national payors. In response
to this pricing pressure, NovaBay launched Avenova Direct, which
although contributing to stabilizing Avenova unit sales in 2019,
has a lower net selling price. Gross margin on net product revenue
was 65% for the fourth quarter of 2019 compared with 88% for the
prior-year period, with the decrease due to lower gross-to-net
pricing.
Operating expenses for the fourth quarter of 2019 were $3.3
million, a 30% decrease from $4.8 million in the fourth quarter of
2018, reflecting the strategic shift in the U.S. commercial
organization undertaken in March 2019, which included a major
salesforce reduction. Sales and marketing expenses for the fourth
quarter of 2019 were $2.2 million, a 32% decrease from $3.2 million
for the fourth quarter of 2018, with the decrease due to reduced
headcount, partly offset by an increase in direct marketing
expenses focused on increasing sales of Avenova. General and
administrative (G&A) expenses for the fourth quarter of 2019
were $1.2 million, a 22% decrease from $1.5 million for the fourth
quarter of 2018. The decrease was due to reduced headcount, offset
by severance payments and consulting fees. Research and development
(R&D) expenses for the fourth quarter of 2019 were $18,000
compared with $0.1 million for the fourth quarter of 2018.
Non-cash loss on the change of fair value of warrant liability
for the fourth quarter of 2019 was $0.2 million compared with a
non-cash gain of $0.3 million for the fourth quarter of 2018.
Non-cash gain on the embedded derivative associated with the
Convertible Note for the fourth quarter of 2019 was $1,000. The
convertible note was issued in March 2019 and the Company did not
record a comparable loss or gain for the fourth quarter of
2018.
Other expense for the fourth quarter of 2019 was $0.3 million
compared with other income of $6,000 for the fourth quarter of
2018. The other expense in 2019 was due to interest due on the
Promissory Note issued in February 2019 and the amortization of
discount and issuance cost related to the Convertible Note issued
in March 2019.
The Company recorded a beneficial conversion feature of $0.8
million in the fourth quarter of 2019 related to the conversion of
2.7 million shares of perpetual Series A Preferred Stock into 2.7
million shares of common stock. The transaction was recorded as a
discount to preferred stock and an increase to additional paid-in
capital. The Company recorded no comparable transaction in the
fourth quarter of 2018.
The net loss attributed to common stockholders for the fourth
quarter of 2019 was $3.5 million, or $0.13 per share, compared with
a net loss for the fourth quarter of 2018 of $1.3 million, or $0.07
per share.
Full Year Financial Results
Net sales for 2019 were $6.6 million compared with $12.5 million
for 2018. The decrease in net sales was primarily the result of a
decrease in the net selling price of Avenova products, along with a
decrease in the number of Avenova units sold, largely due to a
decrease in insurance coverage of the product by national payors.
In response to this pricing pressure, NovaBay launched Avenova
Direct, which although contributing to stabilizing Avenova unit
sales in 2019, has a lower net selling price. Gross margin on net
product revenue was 74% for 2019 compared with 88% for 2018, with
the decrease due to lower gross-to-net pricing.
Operating expense for 2019 was $14.3 million, a 24% decrease
from $18.9 million in 2018. Sales and marketing expenses for 2019
were $8.8 million, a 31% decrease from $12.8 million for 2018, with
the decrease due to reduced sales representative headcount, partly
offset by an increase in direct marketing expenses. G&A
expenses for 2019 were $5.3 million, an 9% decrease from $5.8
million for 2018, with the decrease due to reduced headcount,
offset by severance payments and consulting fees. R&D expenses
for 2019 were $184,000 compared with $259,000 for 2018, with the
decrease primarily due to the strategic shift of capital resources
from R&D to the commercialization of Avenova.
Non-cash gain on the change of fair value of warrant liability
for 2019 was $0.7 million compared with a non-cash gain of $1.3
million for 2018.
Non-cash gain on the embedded derivative associated with the
Convertible Note for 2019 was $0.4 million. The Convertible note
was issued in March 2019 and the Company did not record a
comparable loss or gain for 2018.
Other expense for 2019 was $1.4 million compared with other
income of $19,000 for 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 warrants in August 2019.
The Company recorded a beneficial conversion feature of $0.8
million in 2019 related to the conversion of 2.7 million shares of
perpetual Series A Preferred Stock into 2.7 million shares of
common stock. The transaction was recorded as a discount to
preferred stock and an increase to additional paid-in capital. The
Company recorded no comparable transaction in 2018.
The net loss attributed to common stockholders for 2019 was
$10.5 million, or $0.48 per share, compared with a net loss for
2018 of $6.5 million, or $0.39 per share.
NovaBay reported cash and cash equivalents of $6.9 million as of
December 31, 2019 compared with $3.2 million as of December 31,
2018. In 2019, 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 through private placements of common
stock in June, $4.2 million through a registered direct offering of
common stock in August and $2.7 million through a private placement
of convertible preferred stock in August.
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 5299253.
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 April 13, 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
5299253.
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 product offerings, our estimated future revenue, and
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)
December 31, December 31,
2019
2018
ASSETS Current assets: Cash and cash equivalents
$
6,937
$
3,183
Accounts receivable, net of allowance for doubtful accounts ($51
and $10 at December 31, 2019 and December 31, 2018, respectively)
1,066
3,385
Inventory, net of allowance for excess and obsolete inventory and
lower of cost or estimated net realizable value adjustments ($247
and $104 at December 31, 2019 and December 31, 2018, respectively)
492
280
Prepaid expenses and other current assets
886
1,760
Total current assets
9,381
8,608
Operating lease right-of-use assets
1,252
— Property and equipment, net
110
201
Other assets
477
552
TOTAL ASSETS
$
11,220
$
9,361
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities:
Current liabilities: Accounts payable
$
331
$
551
Accrued liabilities
1,778
3,255
Deferred revenue —
41
Operating lease liabilities
930
— Notes payable, related party
1,202
— Convertible note
1,409
— Embedded derivative liability
3
— Warrant Liability
34
— Total current liabilities
5,687
3,847
Operating lease liabilities-non-current
505
— Deferred rent —
184
Warrant liability
4,055
178
Other liabilities —
198
Total liabilities
10,247
4,407
Stockholders' equity : Preferred stock: 5,000 shares
authorized; none outstanding at December 31, 2019 and December 31,
2018 — — Common stock, $0.01 par value; 50,000 shares
authorized; 27,938 and 17,089 shares issued and outstanding at
December 31, 2019 and December 31, 2018, respectively
279
171
Additional paid-in capital
125,718
119,764
Accumulated deficit
(125,024)
(114,981)
Total stockholders' equity
973
4,954
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
11,220
$
9,361
NOVABAY PHARMACEUTICALS,
INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in thousands except per share
data)
Three Months Ended December 31, Year Ended December
31,
2019
2018
2019
2018
Sales: Product revenue, net
$
1,702
$
3,604
$
6,556
$
12,474
Other revenue, net
2
21
43
34
Total sales, net
1,704
3,625
6,599
12,508
Product cost of goods sold
593
441
1,738
1,503
Gross profit
1,111
3,184
4,861
11,005
Research and development
18
107
184
259
Sales and marketing
2,157
3,186
8,767
12,789
General and administrative
1,174
1,502
5,310
5,828
Total operating expenses
3,349
4,795
14,261
18,876
Operating loss
(2,238)
(1,611)
(9,400)
(7,871)
Non-cash gain (loss) on changes in fair value of warrant
liability
(187)
340
749
1,311
Non-cash gain on changes in fair value of embedded derivative
liability
1
-
424
-
Other (expense) income, net
(259)
6
(1,425)
19
Loss before provision for income taxes
(2,683)
(1,265)
(9,652)
(6,541)
Provision for income taxes
(3)
(3)
(6)
(4)
Net loss and comprehensive loss
$
(2,686)
$
(1,268)
$
(9,658)
$
(6,545)
Less: Preferred deemed dividend
800
-
800
-
Less: Retained earnings reduction related to warrant down round
feature triggered
-
-
29
-
Net loss attributable to common stockholders
$
(3,486)
$
(1,268)
$
(10,487)
$
(6,545)
Net loss per share attributable to common stockholders,
basic
$
(0.13)
$
(0.07)
$
(0.48)
$
(0.39)
Net loss per share attributable to common stockholders, diluted
$
(0.13)
$
(0.07)
$
(0.48)
$
(0.46)
Weighted-average shares of common stock outstanding used in
computing net loss per share of common stock Basic
27,630
17,089
21,641
16,921
Diluted
27,630
17,089
21,641
17,058
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200326005633/en/
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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