- Net product revenue from Avenova®-branded eyecare products grew
7% year-over-year, reflecting an increased contribution from the
physician dispensed channel
- Sales and marketing expenses declined 7% versus the prior year
through continued optimized digital marketing programs
- Operating loss for the first nine months of 2023 narrowed by
16% from the prior year
- Marketing activities are underway to promote differentiated,
high-quality Avenova Allograft to a broad target audience of U.S.
eyecare specialists
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,
2023 and provides a business update.
“We are successfully expanding relationships with eyecare
specialists with product sales from our physician dispensed channel
growing 36% over the prior year and increasing in each consecutive
quarter so far in 2023. Our multiple sales channels for Avenova
have a tremendous impact on one another, with our physician
dispensed channel creating a halo effect over our over-the-counter
products. When patients first learn about Avenova from their
doctor, there is an inherent trust in the brand that we can
leverage in our direct-to-consumer sales channel,” said Justin
Hall, NovaBay CEO. “We continued to benefit from our expertise in
digital marketing, resulting in a 7% decrease in sales and
marketing spend for the quarter and a 13% decline year-to-date.
Operating loss narrowed by 16% for the first nine months of 2023 as
we managed our expenses.
“We are capitalizing on opportunities to leverage and build the
physician dispensed channel by promoting our new Avenova Allograft
through an extensive marketing campaign targeting U.S.
ophthalmologists and optometrists. As with our other best-in-class
eyecare products, Avenova Allograft has distinct advantages that
include being the only ophthalmic allograft manufactured using a
patented six-step BioREtain® process that preserves the natural
integrity of the placental tissue,” he added. “We anticipate a
strong finish to 2023 for our DERMAdoctor® brand with marketing
programs focused on 11/11, China’s biggest online shopping event,
as well as various programs and promotions for the upcoming holiday
season.”
Third Quarter Financial Results
Total sales, net for the third quarter of 2023 was $3.3 million,
compared with $3.8 million for the prior-year period, with the
decrease primarily due to lower DERMAdoctor skincare product sales.
Net product revenue for the third quarter of 2023 included $2.4
million of Avenova-branded eyecare product sales, $0.8 million of
DERMAdoctor skincare product sales and $0.1 million of PhaseOne®
wound care product sales.
Gross margin on net product revenue for the third quarter of
2023 was 56%, compared with 62% for the third quarter of 2022, with
the decrease primarily due to product and channel mix.
Total operating expenses for the third quarter of 2023 were $3.0
million, compared with $2.8 million for the third quarter of 2022.
Sales and marketing expenses were $1.7 million, a 7% decrease from
$1.8 million for the prior year, reflecting lower digital
advertising costs and lower expenses for outside professional
services. General and administrative (G&A) expenses were $1.2
million, compared with $1.0 million for the prior year, due to the
reversal of previously recorded performance-based compensation
expenses in the prior fiscal year. Research & development
(R&D) expenses were reduced to $11 thousand, versus $41
thousand for the prior year. Total operating loss for the three
months ended September 30, 2023 was $1.1 million, compared with
$457 thousand for the three months ended September 30, 2022, with
the increase due primarily to note repayments, lower margins and
higher G&A expenses, partially offset by lower sales and
marketing expenses.
Other expense, net for the third quarter of 2023 was $641
thousand, compared with other expense, net of $171 thousand for the
third quarter of 2022, with the increase primarily due to the
amortization of discount and issuance costs related to convertible
notes issued in May 2023 with no comparable expense for the third
quarter of 2022.
The third quarter of 2022 included a non-cash gain on changes in
fair value of warrant liability of $2.4 million, a non-cash loss on
the modification of common stock warrants of $1.9 million, and a
non-cash increase to accumulated deficit due to adjustment to
Series B preferred stock conversion price of $5.7 million, with
each related to the warrant reprice transaction completed in
September 2022. There were no comparable items in the 2023
period.
Net loss attributable to common stockholders for the third
quarter of 2023 was $1.8 million, or $0.37 per share. This compares
with a net loss attributable to common stockholders for the third
quarter of 2022 of $5.8 million, or $3.61 per share.
Nine Month Financial Results
Total sales, net for the nine months ended September 30, 2023
was $11.0 million, an increase of 2% from $10.8 million for the
nine months ended September 30, 2022.
Gross margin on net product revenue remained relatively
unchanged for the first nine months of 2023 at 55%, compared with
56% for the first nine months of 2022.
Total operating expenses for the first nine months of 2023 were
$10.3 million, a decrease of 7% compared with $11.0 million for the
first nine months of 2022. For the nine months ended September 30,
2023, sales and marketing expenses decreased by 13% and G&A
expenses increased by 2%, both compared with the prior-year period.
R&D expenses for the first nine months of 2023 were $64
thousand, versus $108 thousand for the prior-year period. Total
operating loss for the first nine months of 2023 declined by 16%
from the first nine months of 2022.
Other expense, net for the first nine months of 2023 was $1.3
million, versus other expense, net of $0.2 million for the first
nine months of 2022, with the increase primarily due to the
amortization of discount and issuance costs related to the
convertible notes issued in May 2023 with no comparable expense for
the nine months ended September 30, 2022.
The nine months ended September 30, 2023 included a non-cash
gain on the change in fair value of warrant liability of $0.2
million, a non-cash loss on modification of common stock warrants
of $0.3 million, a non-cash increase to accumulated deficit due to
adjustment to the Series B preferred stock of $1.8 million, and a
non-cash increase to accumulated deficit due to adjustment to the
Series C preferred stock of $0.2 million. The nine months ended
September 30, 2022 included a non-cash gain on changes in fair
value of warrant liability of $4.5 million, a non-cash gain on
change in fair value of contingent liability of $0.2 million, a
non-cash loss on modification of common stock warrants of $1.9
million, and a non-cash increase to accumulated deficit due to
adjustment to Series B preferred stock conversion price of $5.7
million.
Net loss attributable to common stockholders for the first nine
months of 2023 was $7.5 million, or $2.27 per share. This compares
with a net loss for the first nine months of 2022 of $8.1 million,
or $5.32 per share.
NovaBay had cash and cash equivalents of $3.5 million as of
September 30, 2023, compared with $5.4 million as of December 31,
2022. In May 2023, the Company completed a private placement of
convertible debentures and warrants for aggregate gross proceeds of
$3.0 million.
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 answer questions. Participants can pre-register for the
conference call here. Callers who pre-register will be given a
conference passcode and unique PIN to gain immediate access to the
call and bypass the live operator. Participants may pre-register at
any time, including up to and after the call start time.
Stockholders and other interested parties may also participate
in the conference call by dialing 833-816-1121 from within the U.S.
or 412-317-1862 from outside the U.S., and requesting the NovaBay
Pharmaceuticals call.
A live webcast of the call will be available here and will be
archived for 90 days. A replay of the call will be available
beginning two hours after the call ends through November 30, 2023
by dialing 877-344-7529 from within the U.S., 855-669-9658 from
Canada or 412-317-0088 from outside the U.S. and Canada, and
entering the conference identification number 7329052.
About NovaBay Pharmaceuticals, Inc.:
NovaBay Pharmaceuticals, Inc. develops and sells scientifically
created and clinically proven eyecare, skincare and wound care
products. NovaBay’s leading product, Avenova® Antimicrobial Lid
& Lash Solution, is proven in laboratory testing to have broad
antimicrobial properties as it removes foreign material including
microorganisms and debris from the skin around the eye, including
the eyelid. Avenova Antimicrobial Lid & Lash Solution is
available direct to consumer primarily through online distribution
channels such as Amazon, and is also available by prescription and
dispensed by eyecare professionals for blepharitis and dry-eye
disease. DERMAdoctor® offers more than 30 dermatologist-developed
skincare products through the DERMAdoctor website, well-known
traditional and digital beauty retailers, and international
distributors. NovaBay also manufactures and sells effective, yet
gentle and non-irritating wound care products. The PhaseOne® brand
is distributed through commercial partners in the U.S. for
professional use only, and the NeutroPhase® brand is distributed in
China by Pioneer Pharma (Hong Kong) Company Ltd.
Forward-Looking Statements
This release contains information about management's view of the
Company's future expectations, plans and prospects that constitute
forward-looking statements within the meaning of the “safe harbor”
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements can be identified by the fact that they
do not relate strictly to historic or current facts. Such
forward-looking statements 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, commercial progress, current and
potential future product offerings, the continuing contribution of
DERMAdoctor, expanded access to our products through new and
existing sales channels, and any future revenue, and the timing of
such revenue, that may result from selling these products, as well
as generally the Company’s expected future financial results. These
statements involve 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 these forward-looking
statements. Factors that might cause or contribute to such
differences include, but are not limited to, risks and
uncertainties relating to the continued contribution of
DERMAdoctor’s business to the Company’s business (and further
related impairments to goodwill and intangible assets), the size of
the potential market for our products, the Company’s products not
being able to penetrate one or more targeted markets and the
Company’s ability to continue as a going concern and revenues (or
the execution on capital raise opportunities) not being sufficient
to meet the Company’s cash needs. 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/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.
Socialize and Stay Informed on
NovaBay’s Progress Like us on Facebook Follow us on
Twitter Connect with NovaBay on LinkedIn Visit NovaBay’s
Website
Avenova Purchasing
Information For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com Avenova.com
DERMAdoctor Purchasing
Information For DERMAdoctor purchasing information:
Please call 877-337-6237 or email service@dermadoctor.com
DERMAdoctor.com
Financial tables follow
NOVABAY PHARMACEUTICALS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except par
value amounts)
September 30,
December 31,
2023
2022
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
3,472
$
5,362
Accounts receivable, net of allowance for
credit losses ($3 and $19 at September 30, 2023 and December 31,
2022, respectively)
916
1,973
Inventory, net of allowance for excess and
obsolete inventory and lower of cost or estimated net realizable
value adjustments ($556 and $499 at September 30, 2023 and December
31, 2022, respectively)
3,493
3,437
Prepaid expenses and other current
assets
333
560
Total current assets
8,214
11,332
Operating lease right-of-use assets
1,526
1,831
Property and equipment, net
97
119
Goodwill
348
348
Other intangible assets, net
2,166
2,280
Other assets
501
489
TOTAL ASSETS
$
12,852
$
16,399
LIABILITIES AND STOCKHOLDERS’
EQUITY
Liabilities:
Current liabilities:
Accounts payable
$
947
$
1,080
Accrued liabilities
1,869
2,724
Convertible Notes, net
1,270
—
Operating lease liabilities
485
453
Total current liabilities
4,571
4,257
Operating lease
liabilities-non-current
1,244
1,588
Total liabilities
5,815
5,845
Commitments & contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000
shares authorized;
Series B Preferred Stock; 6 and 12 shares
issued and outstanding at September 30, 2023 and December 31, 2022,
respectively
302
570
Series C Preferred Stock; 1 and 2 shares
issued and outstanding at September 30, 2023 and December 31, 2022,
respectively
1,675
2,403
Common stock, $0.01 par value; 150,000
shares authorized, 6,529 and 2,035 shares issued and outstanding at
September 30, 2023 and December 31, 2022, respectively
65
20
Additional paid-in capital
170,675
165,713
Accumulated deficit
(165,680
)
(158,152
)
Total stockholders’ equity
7,037
10,554
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
12,852
$
16,399
NOVABAY PHARMACEUTICALS,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per
share data)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Sales:
Product revenue, net
$
3,255
$
3,816
$
10,971
$
10,743
Other revenue, net
10
10
28
18
Total sales, net
3,265
3,826
10,999
10,761
Product cost of goods sold
1,427
1,451
4,919
4,735
Gross profit
1,838
2,375
6,080
6,026
Operating expenses:
Research and development
11
41
64
108
Sales and marketing
1,715
1,835
5,086
5,860
General and administrative
1,228
956
5,135
5,049
Total operating expenses
2,954
2,832
10,285
11,017
Operating loss
(1,116
)
(457
)
(4,205
)
(4,991
)
Non-cash gain on changes in fair value of
warrant liability
—
2,414
216
4,470
Non-cash gain on changes in fair value of
combined derivative liability
—
—
40
—
Non-cash gain on changes in fair value of
contingent liability
—
—
—
219
Non-cash loss on modification of common
stock warrants
—
(1,922
)
(285
)
(1,922
)
Other expense, net
(641
)
(171
)
(1,298
)
(178
)
Net loss
(1,757
)
(136
)
(5,532
)
(2,402
)
Less: Increase to accumulated deficit due
to adjustment to Series B Preferred Stock conversion price
—
(5,657)
(1,802
)
(5,657)
Less: Increase to accumulated deficit due
to adjustment to Series C Preferred Stock conversion price
—
—
(194
)
—
Net loss attributable to common
stockholders
$
(1,757
)
$
(5,793
)
$
(7,528
)
$
(8,059
)
Net loss per share attributable to common
stockholders (basic and diluted)
$
(0.37
)
$
(3.61
)
$
(2.27
)
$
(5.32
)
Weighted-average shares of common stock
outstanding used in computing net loss per share of common stock
(basic and diluted)
4,692
1,604
3,311
1,514
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231109288051/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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