NovaBay Pharmaceuticals Receives Allowance of Patent Covering NeutroPhase® Product

By February 12, 2008

NovaBay Pharmaceuticals, Inc. (AMEX & TSX: NBY, http://novabaypharma.com), a biopharmaceutical company developing products for the treatment or prevention of a wide range of multi-drug resistant bacterial and viral infections, including MRSA, has added an important piece to its patent portfolio with the allowance of a US Patent covering the use of NeutroPhase™ in wound care applications, under conditions that the company believes are optimal for efficacy and stability. In September 2007, NovaBay received 510(K) approval from the US Food and Drug Administration to market NeutroPhase, also known as NVC-101.

Commenting on the allowance of this patent, Jack O’Reilly, NovaBay’s Senior Vice President of Corporate and Business Development, said, “We have a very strong emphasis on expanding our portfolio of patents and patent applications. Our intellectual property continues to develop because of our scientists’ deepening understanding of NeutroPhase and our Aganocide® anti-microbial compounds. The strength of our patent portfolio is critical to the continued development of our business strategy of partnering with world-class companies.”

NeutroPhase is a dilute solution of hypochlorous acid, which is rapid-acting in saline with broad-spectrum antimicrobial properties. It was developed as a stable form of the molecule that is naturally produced by the body as white blood cells defend against bacteria. In vitro, the product is rapidly effective against common wound pathogens at concentrations significantly lower than those toxic to human cells. The product kills a broad range of bacteria in seconds. The company believes that the characteristics and mechanisms of action of NeutroPhase make it highly unlikely that resistant strains of bacteria could develop over time.

In June 2007, NovaBay entered into an exclusive worldwide license with Kinetic Concepts, Inc. (NYSE:KCI), a global medical technology company, with leadership positions in advanced wound care and therapeutic surfaces, through one of its affiliates, for the use of its proprietary NeutroPhase topical solution technology in the field of wound healing.

About NovaBay Pharmaceuticals, Inc.

NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focused on developing innovative product candidates for the treatment or prevention of a wide range of infections in hospital and non-hospital environments. NovaBay has discovered and is developing a class of non-antibiotic anti-infective compounds, which it has named Aganocides, based upon small molecules generated by white blood cells that defend the body against invading pathogens. NovaBay believes that the Aganocide® compounds could form a platform on which to create a variety of products to address different needs in the prevention and treatment of bacterial, fungal and viral infections, including methicillin-resistant Staphylococcus aureus (MRSA). NovaBay has entered into a licensing and research collaboration agreement with an affiliate of Alcon, Inc. for use of the Aganocide® compounds in eye, ear and sinus infections and in contact lens solutions. In addition to its Aganocide® compounds, NovaBay is developing NVC-101, which it refers to as NeutroPhase, and has entered into a license agreement with an affiliate of Kinetic Concepts, Inc. for the use of NeutroPhase in wound care applications.

NovaBay recently received clearance from the US Food and Drug Administration of its Investigational Drug Application (IND) for NVC-422, the company’s lead Aganocide® compound, so that human clinical trials of NVC-422 in the prevention of catheter associated urinary tract infections (CAUTI) can begin. NVC-422 is a novel topical non-antibiotic anti-infective compound that has been shown to destroy pathogens extremely rapidly in vitro. NVC-422 is highly active against gram-positive and gram-negative bacteria, fungi and viruses in vitro, including drug-resistant strains such as MRSA (USA100 and USA300 strains), mupirocin-resistant and vancomycin-resistant Staphylococcus aureus and vancomycin-resistant Enterococcus (VRE). NVC-422 has been shown to be effective in vitro against the causative agents of urinary tract infections, including multidrug-resistant Escherichia coli and Pseudomonas aeruginosa. In addition to its potential use to prevent CAUTI, NVC-422 is in clinical development at NovaBay under the trademark AgaNase, to reduce the risk of surgical site infections and to reduce the risk of MRSA infections in hospital environments. Formulations of NVC-422 are in advanced pre-clinical development at Alcon, Inc. for use against ophthalmic and ear infections. NVC-422 is not an antibiotic and the company believes it is unlikely to contribute to antibiotic resistance.

NovaBay™, AgaNase™, Aganocide® and NeutroPhase™ are trademarks of NovaBay Pharmaceuticals, Inc. All other trademarks and trade names are the property of their respective owners.

For more information visit the company’s website at:www.novabaypharma.com

Forward-Looking Statements

This release contains forward-looking statements, which are based upon management’s current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements regarding the development and potential benefits of, and the market opportunities for, NovaBay’s product candidates. Forward-looking 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 discovery, development, testing, regulatory approval, production and marketing of the company’s product candidates, unexpected adverse side effects or inadequate therapeutic efficacy of the product candidates, the uncertainty of patent protection for the company’s intellectual property or trade secrets, the company’s ability to obtain additional financing as necessary and unanticipated research and development and other costs. 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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