NovaBay Pharmaceuticals Reports on Status of Phase 2 Proof of Concept Clinical Trial of NovaBay’s NVC-422 for Viral Conjunctivitis

By October 18, 2010

(GLOBE NEWSWIRE) — NovaBay® Pharmaceuticals, Inc. (NYSE Amex:NBY) announced today that its development partner, Alcon Research, Ltd., has concluded its “proof of concept” clinical trial of NovaBay’s patented lead Aganocide® compound, NVC-422 for the treatment of viral conjunctivitis; a highly contagious eye infection for which there are currently no marketed products. Adenoviral infections are the most common form of viral conjunctivitis. Alcon and NovaBay will be analyzing the microbiological and clinical efficacy of the drug vs. placebo in all 81 adenovirus positive patients enrolled in the trial and plan to report on these analyses in early 2011. The decision to conclude the study as currently designed was based on an interim analysis of the first 50 adenovirus positive patients and a lower than expected rate of recruitment of adenovirus positive patients in the U.S. This analysis showed, that for patients presenting less than 3 days after the onset of symptoms, microbiological efficacy of NVC-422 vs. an inactive placebo was 8% better on day 3 (p=0.70), 12% on day 5 (p=0.43), no difference on day 7 (p=0.99), 10% on day 9 (p=0.54), 23% on day 11 (p=0.11) and 27% on day 18 (p=0.06). No safety concerns were identified. Upon database lock, Alcon and NovaBay will conduct a comprehensive analysis of all microbiological data and clinical signs and symptoms.

NovaBay chairman and CEO, Ron Najafi, Ph.D., commented, “We will complete a comprehensive analysis on all 81 patients finishing the study and believe that the larger patient sample size will provide a statistical framework from which we can determine the next steps in the clinical development of our Aganocides.”

Initiated in July 2009 this Phase 2 multi-center, randomized, placebo-controlled clinical trial was designed to evaluate the safety and efficacy of NovaBay’s lead Aganocide, NVC-422 ophthalmic solution for the treatment of adenoviral conjunctivitis. Alcon and NovaBay plan to analyze the full data set from the study to comprehensively understand the nature and degree of the activity observed with NVC-422. They also plan to review the optimal design of viral conjunctivitis studies in general and, more specifically, the design of studies to evaluate the potential of other compounds with the unique mechanism of action and broad-spectrum activity of NVC-422. The complete evaluation of all clinical and microbiological variables monitored during this comprehensive study will guide the next steps in the development of Aganocide compounds for the treatment of conjunctivitis. The Phase 2 viral conjunctivitis study followed a Phase 1 trial in which safety and tolerability were successfully demonstrated in 120 healthy volunteers with no reported serious adverse events.
About Conjunctivitis
Conjunctivitis, which can result from either viral or bacterial infection, is an inflammation of the thin, clear tissue that covers the white part of the eye and forms the inside lining of the eyelid. This condition is commonly referred to as “pink eye”. The viral form is principally caused by adenoviruses, but also can be caused by other viruses, such as enterovirus. There is no specific treatment for the highly contagious adenoviral conjunctivitis, which can take up to three weeks or longer to clear on its own. Bacterial conjunctivitis is caused by a variety of bacteria and is largely treated with topically applied antibiotic eye drops. Regular innovation to develop newer antibiotics is required because over time antibiotics may encounter increasing bacterial resistance.

About Aganocide® Compounds
The Aganocide® compounds are novel, proprietary, synthetic N-chlorinated antimicrobial molecules specifically developed by NovaBay® to mimic the body’s natural defense against infection. The Aganocide compounds maintain the biological activities while improving the stability of naturally occurring N-chlorinated antimicrobial molecules. These highly differentiated compounds may deliver the same or better efficacy than currently used antibiotics without contributing to the growing rise of antibiotic-resistant bacterial strains. In preclinical testing, the Aganocide compounds have been shown to be highly effective against bacteria, viruses and fungi. They also have been demonstrated to be effective against bacteria in biofilms, which render most antibiotics ineffective. Aganocides have a broad therapeutic index while providing a high degree of potency, good tolerability as well as dosing versatility and flexibility.

About NovaBay
NovaBay® Pharmaceuticals is a mid-stage biopharmaceutical company focused on developing its proprietary and patented Aganocide® compounds, which are novel, synthetic anti-infective product candidates that are bioequivalent to the active antimicrobial molecules generated within white blood cells 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 licensing and research collaboration agreement with Alcon, Inc. for use of its Aganocide compounds to treat eye, ear and sinus infections as well as in contact lens care solutions. NovaBay has also entered into an agreement with Galderma S.A. to develop and commercialize Aganocides in acne, impetigo and other dermatological indications. NovaBay and Aganocide are trademarks of NovaBay Pharmaceuticals, Inc. For more information on NovaBay, visit: www.novabaypharma.com

Forward-Looking Statements
The information and statements in this press release, including, but not limited to statements regarding NovaBay’s expectation that Alcon and NovaBay® will announce the results of the clinical trial in early 2011, the potential that the full data will differ from the interim data, the potential efficacy of Aganocide® compounds and any potential plans for future clinical development of NVC-422 are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward- looking statements reflect the views of the management of NovaBay as of the date of this press release and are based on assumptions and subject to significant risks and uncertainties (many of which are outside of NovaBay’s control), including: Alcon may not continue its development of NVC-422, results obtained in preclinical studies often are not predictive of results that will be obtained in clinical studies, and as a result NVC-422 may not prove to be effective in treating viral conjunctivitis or other diseases that are being studied; the announcement of the results of the viral conjunctivitis clinical study may be delayed due to factors outside of NovaBay’s control; and the FDA or other regulatory agencies may delay clinical trials, or require additional studies or procedures, which could delay or prevent the development of Aganocide compounds. These and other risks relating to the development of Aganocide compounds are detailed in NovaBay’s filings with the Securities and Exchange Commission, including in the section entitled “Risk Factors” in NovaBay’s Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission on August 12, 2010. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Except to the extent required under the federal securities laws and the rules and regulations promulgated by the Securities and Exchange Commission, NovaBay undertakes no obligation to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.

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