Enters into a $10.3 million financing on
favorable terms
Pharmacy channel sales increase 67% over
prior year, represent 90% of total Avenova sales
Revises 2017 financial guidance
Conference call begins today at 4:30 p.m.
Eastern time
NovaBay® Pharmaceuticals, Inc. (NYSE American: 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 ninth months ended
September 30, 2017 and provides a business update.
“First off, we are significantly better positioned to support
continued Avenova growth having entered into a $10.3 million
financing with accredited investors under favorable pricing terms
and no warrant coverage,” said Mark M. Sieczkarek, NovaBay’s
President and CEO. “This agreement, which was struck with investors
who have NovaBay’s long-term interest in mind, removes the
financing overhang and NYSE compliance issues, and is expected to
close in the first quarter of 2018.
“We enjoyed continued success with our focus on increasing
Avenova sales through the high-margin retail pharmacy channel
during the third quarter, with prescription sales increasing 67%
over the prior year and representing more than 90% of total Avenova
sales. Gross margin on Avenova sales reached a record 92% for the
quarter, exceeding our 2017 guidance,” he said.
“As anticipated, we benefitted from a higher net price per unit
in the third quarter as more insurance deductibles were satisfied.
However, the improvement did not fully offset the
higher-than-anticipated impact of rebates in the first half of
2017,” added Sieczkarek. “As a result, we are revising our 2017 net
sales guidance to be between $17.5 million and $18.5 million,
representing a 47% to 55% increase over 2016.
“Two years ago, we focused NovaBay on commercializing Avenova –
a new paradigm in treating the underlying cause rather than the
symptoms of blepharitis and dry eye. Since then we established a
base of more than 11,300 medical professionals who have prescribed
Avenova and collected data showing reimbursement trends. We are
using this information to more precisely target high prescribers
with the goal of increasing the number of prescriptions written per
prescriber,” he added. “This strategy is aimed at optimizing sales
by effectively allocating our resources.”
$10.3 Million Financing
On November 13, 2017, the Company entered into a share purchase
agreement for the sale of an aggregate of 2,400,000 shares of the
Company’s common stock, to a single accredited investor for an
aggregate purchase price of $10,320,000. The Private Placement is
expected to close in January 2018.
Key Third Quarter Metrics
- Sales of $4.1 million increased 19%
year-over-year;
- Prescription sales into the pharmacy
channel were $3.5 million, up 67% year-over-year;
- Prescription sales represented 90% of
total Avenova sales;
- Gross margin on Avenova sales was
92%;
- New prescribers were more than 730;
and
- Total number of medical professionals
who have prescribed Avenova exceeded 11,300, up 47% year-over-year
and up 7% from the second quarter of 2017.
Third Quarter 2017 Financial Results
Net sales for the third quarter of 2017 increased 19% to $4.1
million from $3.4 million for the third quarter of 2016. Gross
margin on net sales improved to 87% for the third quarter of 2017
from 84% for the third quarter of 2016. Gross margin on Avenova
sales was 92% for the third quarter of 2017 compared with 88% for
the prior-year period.
Sales and marketing expenses for the third quarter of 2017 were
$3.3 million compared with $2.7 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 third quarters of 2017 and 2016
were unchanged at $2.3 million. R&D expenses for the third
quarter of 2017 were $132,000 compared with $4,000 for the third
quarter of 2016, with the increase primarily due to a gain
recognized from the sales of laboratory equipment in the third
quarter of 2016. Operating loss for the third quarter of 2017 was
$2.2 million, up slightly from $2.1 million for the third quarter
of 2016.
Non-cash loss on the change of fair value of warrant liability
for the third quarter of 2017 was $281,000 compared with a non-cash
loss of $1.7 million for the third quarter of 2016.
The net loss for the third quarter of 2017 was $2.4 million, or
$0.16 per share, compared with a net loss for the third quarter of
2016 of $3.7 million, or $0.34 per share.
Nine-Month 2017 Financial Results
Net sales for the nine months ended September 30, 2017 were
$11.9 million, up 52% from $7.8 million for the nine months ended
September 30, 2016. Gross margin on net sales improved to 85% for
the nine-month period of 2017 from 79% for the nine-month period in
2016. Gross margin on Avenova sales improved to 90% for the first
nine months of 2017 from 85% for the first nine months of 2016.
Sales and marketing expenses for the nine months ended September
30, 2017 were $10.4 million and G&A expenses were $7.1 million,
a 20% and 36% increase, respectively, compared with the nine months
ended September 30, 2016. R&D expenses for the first nine
months of 2017 were $264,000, a 78% decrease from the first nine
months of 2016. Operating loss for the first nine months of 2017
was $7.7 million, a 14% improvement from $9.0 million for the
comparable period in 2016.
Non-cash loss on the change of fair value of warrant liability
for the first nine months of 2017 was $501,000 compared with a
non-cash loss of $2.5 million for the first nine months of
2016.
The net loss for the nine months ended September 30, 2017 was
$8.2 million, or $0.54 per share, compared with a net loss for the
nine months ended September 30, 2016 of $11.5 million, or $1.54 per
share.
NovaBay had cash and cash equivalents of $6.1 million as of
September 30, 2017, compared with $9.5 million as of December 31,
2016. In November 2017, the Company entered into a private
placement agreement expected to raise gross proceeds of $10.3
million in the first quarter of 2018.
The Company used $3.3 million in cash to fund operations during
the nine months ended September 30, 2017, a significant improvement
from $11.4 million used during the nine months ended September 30,
2016. The decrease in cash usage was primarily due to higher sales
of Avenova, increased accounts receivable collections, lower
prepaid expenses resulting from bringing the sales team in-house
during the first quarter of 2017, and increased payment of payables
during the nine months ended September 30, 2016 resulting from
increased financing activities.
2017 Financial Outlook
- NovaBay is revising guidance for 2017
net sales to be between $17.5 million and $18.5 million, a 47% to
55% increase over 2016. This compares with previous guidance for
2017 net sales to be $19 million.
- The Company is affirming its guidance
for 2017 gross profit margin on Avenova sales to be in the high 80%
range.
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 3187119.
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 December 14, 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
3187119.
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 equity financing,
estimated annual revenue, expected operating losses, gross margin,
the future sales of our products, and generally the Company’s
expected future financial results. Forward-looking statements can
be identified with words like (and variations of): “guidance,” 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.
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NOVABAY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands) September 30,
December 31, 2017 2016
ASSETS Current assets: Cash and cash equivalents $
6,076 $ 9,512 Accounts receivable, net of allowance for
doubtful accounts ($28 and $10 at September 30, 2017 and December
31, 2016, respectively) 2,230 2,120 Inventory, net of
allowance for excess and obsolete inventory and lower of cost or
estimate net realizable value adjustments of $139 and $196 at
September 30, 2017 and December 31, 2016, respectively 599 873
Prepaid expenses and other current assets 1,033
1,966 Total current assets 9,938 14,471 Property and
equipment, net 492 371 Other assets 626 539
TOTAL ASSETS $ 11,056 $ 15,381
LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Current
liabilities: Accounts payable $ 356 $ 455 Accrued liabilities 2,419
2,007 Deferred revenue 2,487 1,861
Total current liabilities 5,262 4,323 Deferred revenues -
non-current 1,569 1,986 Deferred rent 286 327 Warrant liability
1,889 1,446 Other liabilities 218 198
Total liabilities 9,224 8,280
Stockholders' equity : Preferred stock: 5,000 shares authorized;
none outstanding at September 30, 2017 and December 31, 2016 — —
Common stock, $0.01 par value; 240,000,
shares authorized 15,361 and 15,269 shares issued and outstanding
at September 30, 2017 and December 31, 2016, respectively
154 153 Additional paid-in capital 113,545 110,619 Accumulated
deficit (111,867 ) (103,671 ) Total stockholders'
equity 1,832 7,101 TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 11,056 $ 15,381
NOVABAY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share
data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2017 2016 2017
2016 Sales: Product revenue, net $ 4,080 $
3,262 $ 11,868 $ 7,571 Other revenue,net 11 176 46
249 Total net sales 4,091 3,438 11,914 7,820
Product cost of goods sold 521 566 1,807 1,656
Gross profit 3,570 2,872 10,107 6,164
Research and development 132 4 264 1,215 Sales and
marketing 3,296 2,663 10,412 8,660 General and administrative 2,311
2,266 7,134 5,241 Total operating
expenses 5,739 4,933 17,810 15,116
Operating Loss (2,169 ) (2,061 ) (7,703 ) (8,952 ) Non-cash
loss on changes in fair value of warrant liability (281 ) (1,671 )
(501 ) (2,480 ) Other income (expense), net 3 (4 ) 9
(69 ) Loss before provision for income taxes (2,447 ) (3,736
) (8,195 ) (11,501 ) Provision for income tax - - (1
) (2 ) Net loss and comprehensive loss $ (2,447 ) $ (3,736 ) $
(8,196 ) $ (11,503 ) Net loss per share attributable to
common stockholders (basic and diluted) $ (0.16 ) $ (0.34 ) $ (0.54
) $ (1.54 ) Weighted-average shares of common stock
outstanding used in computing net loss per share of common stock
15,324 10,913 15,306 7,481
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version on businesswire.com: http://www.businesswire.com/news/home/20171114006594/en/
NovaBay ContactsFor NovaBay
Avenova purchasing information:Please call us toll free:
1-800-890-0329 or email
sales@avenova.comwww.Avenova.comorFrom the
CompanyNovaBay Pharmaceuticals, Inc.Jack McGovernChief
Financial Officer510-899-8800jmcgovern@novabay.comorInvestor ContactLHA Investor RelationsJody
Cain310-691-7100Jcain@lhai.com
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