NovaBay Pharmaceutical’s NVC-422 Demonstrates up to 95% Efficacy in 129 Patient Impetigo Phase 2 Clinical Trial, Including 100% Efficacy in MRSA Infected Patients

By October 25, 2010

NovaBay Pharmaceuticals, Inc. (NYSE Amex: NBY), a clinical stage biotechnology company developing first-in-class, anti-infective compounds for the treatment and prevention of antibiotic-resistant infections, delivered two poster presentations on its compounds at the 48th Annual Meeting of the Infectious Diseases Society of America (IDSA) in Vancouver, Canada.

The presentations included new data from clinical and preclinical studies of NovaBay’s Aganocide® compounds, which have shown to be highly effective against bacteria, including some multi-drug resistant strains (such as MRSA), viruses and fungi in preclinical testing.

Ron Najafi, Chairman and CEO of NovaBay, said, “These presentations illustrated compelling clinical evidence of effectiveness in the treatment of impetigo and preclinical effectiveness for the treatment of nail fungus infection. The versatility and power of these compounds have been vividly demonstrated as a result.”

NovaBay’s pipeline of Aganocide compounds is being studied in numerous preclinical and clinical programs. Three clinical programs of the company’s lead Aganocide drug candidate are under way for the treatment of impetigo, a highly contagious skin infection; urinary catheter encrustation and blockage; and conjunctivitis, or pink eye.

The posters and their conclusions were as follows:

Impetigo “A Pilot Study to Evaluate the Safety and Efficacy of NVC-422 Topical Gel in Impetigo, Including MRSA”

Impetigo is a highly contagious superficial bacterial infection of the skin that affects mostly children. Most cases are caused by Staphylococcus aureus, Streptococcus pyogenes, or a mixture of both organisms. Methicillin-resistant S. aureus (MRSA) is being observed with increasing frequency in this population. Impetigo is currently being treated with antibiotic ointments, to which bacteria may develop resistance.

This randomized, sequential group, double-blind study was designed to evaluate the efficacy and safety of three different strengths of NVC-422 Topical Gel in the treatment of impetigo. A total of 129 children in the age range 2-12 presenting with impetigo were randomized for treatment with NVC-422 topical gel three times daily for 7 days. Efficacy evaluations, compared to baseline, were conducted at the end of treatment and one week later. Clinical and bacteriological response rates for the three concentrations of drug applied ranged from 84% to 95% at end of treatment and at follow up. These response rates were substantially higher than the response rate anticipated for placebo (30-50%). Notably, response rates for MRSA infections were 100% (10/10) across all treatment groups. The clinical and bacteriological response rates across the treatment groups suggested a dose response, although differences were not statistically significant. Infrequent adverse events were mild to moderate in severity and were predominantly local

This proof of concept study provided compelling evidence of the activity of NVC-422 topical gel in the treatment of impetigo.

Onychomycosis

“In Vitro Evaluation of the Antifungal Activity of NVC-422 (N,N-dichloro-2,2-dimethyltaurine) using a Novel Cadaver Nail Model”

Onychomycosis is the most commonly diagnosed nail disorder. Topical treatment of the infection is limited by the inability of currently available drugs to penetrate the human nail. NovaBay’s lead Aganocide compound, NVC-422 is a hydrophilic agent with potent antimicrobial activity making it a good candidate to be evaluated in a human clinical trial.

NovaBay has used other validated in vitro models and presented the results during the 47th IDSA annual meeting in 2009 (“In Vitro Evaluation of Stable Derivatives of the Chlorotaurines on Infected Human Nail Model as Potent Antifungal Agents for the Treatment”) conducted by MedPharm Ltd.

This new study was conducted using a novel in vitro infected human nail model to evaluate and confirm the ability of novel NVC-422 gel formulations and nanoemulsion lacquers to penetrate and kill fungi grown on the subungal side of the infected nail. The study was conducted at University Hospitals Case Medical Center, Center for Medical Mycology, Cleveland, OH, USA.

These most recent data showed that NVC-422 was able to penetrate the nail and effectively eradicate T. mentagrophytes and T. rubrum. The study also confirmed our earlier studies using a completely different approach. Further evaluation of NVC-422 is warranted.

About Aganocides
NovaBay’s Aganocide® compounds are novel, synthetic N-chlorinated antimicrobial molecules specifically designed and developed to mimic the body’s natural defense against infection. The Aganocide compounds maintain biological activities while demonstrating improved stability over the naturally occurring N-chlorinated antimicrobial molecules. In preclinical testing, NovaBay’s Aganocide compounds have been shown to be highly effective against bacteria, including some multi-drug resistant strains (such as MRSA), viruses and fungi. NovaBay’s Aganocide compounds have the potential to deliver the same or better efficacy than antibiotics, and to address the growing problem of antibiotic resistance by employing a novel mechanism of action.

About NovaBay Pharmaceuticals, Inc.
NovaBay Pharmaceuticals is a clinical stage biotechnology company focused on developing its proprietary and patented Aganocide compounds, which are novel, synthetic anti-infective product candidates with equivalent activity to the active antimicrobial molecules generated within white blood cells. NovaBay’s Aganocide compounds are being developed to treat and prevent a wide range of infections without causing bacterial resistance. NovaBay has internal development programs aimed at addressing hospital and respiratory infections. The company has a license and research collaboration agreement with Alcon, Inc. for use of its Aganocide compounds to treat eye, ear and sinus infections as well as for contact lens care. NovaBay has also entered into an agreement with Galderma S.A. to develop and commercialize Aganocide compounds in impetigo and other dermatological indications. For more information on NovaBay, visit: www.novabaypharma.com

Cautionary Information Regarding Forward-Looking Statements
The statements in this press release of NovaBay’s expectations and the potential regarding its Aganocide compounds are forward-looking statements. Actual results may differ materially due to a number of risks and uncertainties, including: results in preclinical and other studies may differ from results obtained in clinical trials; unexpected results may be obtained in further studies due to the inherent uncertainty in the development of NovaBay’s compounds; and the inherent uncertainty of obtaining regulatory approvals may prevent NovaBay from being able to bring its potential products to market. Other risks relating to NovaBay and its Aganocide compounds, 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 Quarterly Report on Form 10-Q for the period ended June 30, 2010, under the caption “Risk Factors” in Item 1A of Part II of that report, filed with the Securities and Exchange Commission on August 12, 2010. The forward-looking statements in this release speak only as of this date, and NovaBay Pharmaceuticals 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 Contacts
Thomas J. Paulson  
Chief Financial Officer
510-899-8809
Contact Thomas Paulson

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Adam Holdsworth
adam@investorrelationsgroup.com

Public Relations:
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