NovaBay Pharmaceuticals Reports Positive Data from Exploratory Phase 2 Trial

By April 15, 2010

NovaBay Pharmaceuticals, Inc., a clinical stage biotechnology company developing first-in-class anti-infectives for the treatment and prevention of antibiotic-resistant infections, today reported positive results of an open-label Phase 2a trial of NVC-422 in chronically catheterized patients with significant bacteriuria, or bacteria in the urine. The study showed that NVC-422 was well tolerated and reduced or eliminated certain pathogens in the urine.

Certain Gram-negative pathogens present in bacteriuria can cause urinary catheter blockage, a common occurrence among patients who are permanently catheterized. Urinary catheter blockage can often lead to catheter-associated urinary tract infections (CAUTI). Permanently catheterized patients include those suffering from conditions such as spinal cord injury, neurogenic bladder, spina bifida and multiple sclerosis.

“We are encouraged by the results of this study, both in terms of treatment tolerability and the activity against multiple uropathogens in patients with high levels of bacteriuria,” said Dr. Behzad Khosrovi, senior vice president of product development. “We now look forward to initiating additional studies evaluating the use of advanced formulations of NVC-422 in preventing or reducing urinary catheter blockage and encrustation in permanently catheterized spinal cord injury patients.”

Study Design and Results

Enrollment criteria included a condition requiring chronic transurethral catheterization for at least one month prior to enrollment, documented high levels of bacteriuria, and no treatment with antimicrobial agents during the preceding week. Following baseline urine cultures, 25 to 100mL of a sterile solution of NVC-422, depending on bladder capacity, was instilled through the catheter into the bladder. The drainage tube was clamped for 1 hour and then allowed to drain. Urine specimens were collected before and following each instillation and daily during post-treatment follow-up.

In the first part of the study, five patients were treated with a single administration of 0.1% NVC-422. The treatment was well tolerated and some transient antimicrobial activity was observed. In Part 2a of the study, five patients were treated with 0.1% NVC-422 daily for seven days; in Part 2b, five patients were treated with a higher NVC-422 concentration of 0.2% daily for seven days. No significant adverse events related to NVC-422 were observed.

Despite the presence of high urinary concentrations (greater than 100,000 colony-forming units per mL) of multiple uropathogens at baseline, a number of these were eradicated by the end of the treatment. These effects were more pronounced in subjects treated with the higher concentration of NVC-422.

NovaBay’s lead Aganocide® compound, NVC-422, has broad-spectrum anti-microbial activity against bacteria tested, including uropathogens, bacteria resistant to antibiotics, and bacteria encased in biofilm. The use of NVC-422 solutions to control bacteria that inevitably and rapidly develop in urinary catheters and in the bladder represents a significant opportunity for NovaBay. These bacteria are increasingly resistant to antibiotics.

“The encouraging findings of this exploratory study lay the foundation for future investigation of the potential role of this class of non-antibiotic antimicrobials in controlling the consequences of catheter-associated bacteriuria,” said Dr. Rabih O. Darouiche, the principal investigator of the study and a professor and director of the Center for Prostheses Infection at Baylor College of Medicine.

CAUTI is the most common type of hospital-acquired infection, accounting for approximately 30 percent of such infections and for most of the 900,000 patients with bacteriuria in U.S. hospitals annually.

NovaBay plans to initiate a multi-center Phase 2 trial of NVC-422 in the third quarter for the treatment of urinary catheter blockage and encrustation.

Conference Call Scheduled
On Monday, April 19, at 2 p.m. EDT, members of NovaBay’s management team will host a conference call to discuss results of the trial and to provide a pipeline update of its development programs. To join the audio conference and participate in the Q&A session, please call 1-800-434-1335 (outside the U.S., dial 1-404-920-6442), and provide the operator with code 353316.
Live audio of the conference call will be broadcast simultaneously over the internet. Please pre-register for the call at:http://tinyurl.com/novapharmreg. Once the registration process is complete, you will receive a confirmation e-mail with instructions on how to join the conference.A replay of the webcast will be available shortly after the call and may be accessed via NovaBay’s website:www.novabaypharma.com
.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 NovaBay’s 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 NovaBay’s Aganocide compounds in acne, impetigo and other dermatological indications. For more information visitwww.novabaypharma.com

Cautionary Information Regarding Forward-Looking Statements

This release contains forward-looking statements, which are based upon management’s current expectations, assumptions, estimates, projections and beliefs. Statements regarding NovaBay’s expectations for conducting additional clinical trials of NVC-422 for the treatment of urinary catheter blockage and encrustation, and that the use of NVC-422 solutions to control bacteria that inevitably and rapidly develop in urinary catheters and in the bladder represents a significant opportunity for NovaBay, as well as other statements that relate to future events or results, are forward-looking statements. 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: the risk that NovaBay may experience unexpected results in further studies which may limit, delay or prevent NovaBay from conducting further clinical trials; unexpected adverse side effects or inadequate therapeutic efficacy of NVC-422 may inhibit NVC-422 from becoming a treatment for these types of infections; and the risk of unexpected delays in the regulatory process which may delay the commencement or completion of clinical trials. 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 Annual Report on Form 10-K for the period ended December 31, 2009, under the caption “Risk Factors” in Item 1A of Part I of that report, filed with the Securities and Exchange Commission on March 29, 2010. 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.

Contact

Investors:
NovaBay Pharmaceuticals Contacts
Thomas J. Paulson  
Chief Financial Officer
510-899-8809
Contact Thomas Paulson

Media:
NovaBay Pharmaceuticals, Inc.
Susan Thomas, 510-899-8841
Director of Corporate Communications
sthomas@novabaypharma.com

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