NovaBay® Pharmaceuticals, Inc. (NYSE MKT: NBY), a biopharmaceutical Company focusing on commercializing its prescription Avenova® Lid and Lash Cleanser for the domestic eye care market, reports financial results for the three and 12 months ended December 31, 2015, and provides a business update.
Fourth Quarter 2015 versus Third Quarter 2015 Avenova Highlights
• 41% increase in sales to a record $1.6 million
• 29% increase in the number of optometrists and ophthalmologists purchasing for their practices, to nearly 2,600
• 49% increase in distributor volume to nearly 21,000 units
• 29% increase in retail pharmacy orders to more than 3,500 units
“We are reporting another strong quarter with Avenova sales up sharply from the preceding quarter and substantial gains in all key areas that support a successful launch. We closed out a highly productive year with significant Avenova sales growth in each successive quarter and $4 million in sales for the product’s first full year of commercialization,” said Mark M. Sieczkarek, NovaBay’s Chairman and Interim President and CEO. “In the coming quarters, we expect to benefit from reduced research and development, clinical and other expenses as a result of a restructuring we implemented last November. We have reduced our anticipated 2016 expenses by more than $6 million from 2015 levels and believe we are on track to reach our goal of positive cash flow from operations in 2016.
“We also continue to benefit from more patients refilling their prescriptions,” he added. “This is important as patient and physician testimonials indicate that the best results for managing chronic blepharitis and dry eye come from continual, regular use. With the goal of building a strong reorder rate and an estimated addressable market of approximately 41 million Americans, we have ample opportunity for growth.
“At the end of 2015, managed care plans were reimbursing about 67% of all prescriptions written for Avenova, double the rate of about 38% in Q1 of 2015,” said Mr. Sieczkarek. “Increasing reimbursement coverage is a key strategic initiative as we build our prescription business. Importantly, it also supports our ability to align product pricing accordingly, which we believe provides us with substantial revenue upside.”
Avenova Quarter-over-Quarter Sales Growth in 2015
• 41% increase fourth quarter from third quarter
• 39% increase third quarter from second quarter
• 73% increase second quarter from first quarter
• 112% increase first quarter from the fourth quarter of 2014
Fourth Quarter 2015 Financial Results
NovaBay reported total net sales of $1.6 million for the fourth quarter of 2015, up $1.1 million from $491,000 for the fourth quarter of 2014. The increase was due to growing sales of Avenova, which was commercially launched in August 2014, partially offset by a decrease in collaboration revenue. Product revenue (including sales of Avenova and NeutroPhase®) for the fourth quarter of 2015 reached $1.6 million, up from $385,000 for the fourth quarter of 2014. Other revenue for the fourth quarter of 2015 was $48,000, compared with $106,000 for the prior-year period. Gross profit as a percentage of total net sales was 64% for the fourth quarter of 2015, up from 40% for the prior-year period.
The net loss for the fourth quarter of 2015 was $4.2 million, or $1.26 per share, compared with a net loss for the fourth quarter of 2014 of $4.5 million, or $2.17 per share. The per-share net loss reflects the effect of a 1-for-25 reverse stock split effected in December 2015. The lower net loss in the fourth quarter of 2015 was a result of increased product revenue and reduced spending on research and development, offset by higher spending on sales and marketing and the impact of a higher non-cash gain in fair value of warrants. Research and development expenses were $1.2 million and sales, general and administrative expenses were $6.0 million for the fourth quarter of 2015, compared with $2.4 million and $2.7 million, respectively, for the prior-year period. Non-cash gain in the fair value of warrants was $2.0 million for the fourth quarter of 2015, compared with $451,000 for the fourth quarter of 2014.
Full Year 2015 Financial Results
Total net sales for 2015 increased by $3.3 million to $4.4 million from $1.1 million for 2014. Product revenue for 2015 reached $4.1 million, compared with $684,000 for 2014. Other revenue for 2015 was $235,000, compared with $370,000 for the prior year. Gross profit as a percentage of total net sales increased to 71% from 54% for 2014.
The net loss for 2015 was $19.0 million, or $6.82 per share, compared with a net loss for 2014 of $15.2 million, or $7.65 per share. The higher net loss for 2015 reflected increased spending on sales and marketing activities for Avenova, partially offset by lower spending on research and development. Research and development expenses were $6.0 million and sales, general and administrative expenses were $18.1 million for 2015, compared with $9.5 million and $7.9 million, respectively, for 2014. NovaBay reported a non-cash gain in fair value of warrants of $2.1 million for 2015 versus $1.7 million for 2014.
Cash, cash equivalents and short-term investments were $2.4 million as of December 31, 2015, compared with $5.4 million as of December 31, 2014. The Company used approximately $4.5 million in cash to fund operations during the fourth quarter of 2015. In January 2016, NovaBay secured a $1.4 million loan and in February 2016, the Company completed a private placement raising proceeds of $2.83 million. Although the Company recently completed these financings, it will require additional capital to fund its operations in 2016. To achieve this, NovaBay intends to continue its historical financing strategy to raise additional capital to fund its operations and meet ongoing obligations, with the goal of positive cash flow from operations by December 2016. However, NovaBay can provide no assurance that it will be able to raise capital or that if it is able to raise capital, it will be on terms favorable to NovaBay and its shareholders.
NovaBay management will host an investment community conference call today, March 3, 2016, 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 866-239-5859 from within the U.S. or 702-495-1913 from outside the U.S. with the conference identification number 59218506.
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 March 9, 2016, 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 59218506.
About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics
NovaBay Pharmaceuticals is a biopharmaceutical Company focusing on the commercialization of prescription Avenova® Lid and Lash Cleanser for the eye care market. Avenova is formulated with Neutrox™, which is cleared by the U.S. Food and Drug Administration (FDA) as a 510(k) medical device. Neutrox is NovaBay’s pure hypochlorous acid. Laboratory tests show that hypochlorous acid has potent antimicrobial activity in solution yet is non-toxic to mammalian cells and it also neutralizes bacterial toxins. Avenova is marketed to optometrists and ophthalmologists throughout the U.S. by NovaBay’s direct medical salesforce. It is accessible from more than 90% of retail pharmacies in the U.S. through agreements with McKesson Corporation, Cardinal Health and AmerisourceBergen.
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 anticipated market acceptance of our products, future sales of our products, the ability to raise capital, and the Company’s expected future financial results. Forward-looking statements can be identified with words like (and variations of): “estimate,” “believe,” and “intend”. 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 the Company’s ability to obtain additional financing as necessary. 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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At the Company
Thomas J. Paulson
Chief Financial Officer