NovaBay Pharmaceuticals Reports First Quarter Financial Results and Clinical and Business Update

By May 2, 2013

NovaBay Pharmaceuticals, Inc. (NYSE MKT:NBY), a clinical-stage biotechnology company focused on the large global, topical anti-infective market, today reported first quarter financial results and provided a clinical update for the remainder of 2013.

Dr. Ron Najafi, Chairman and CEO of NovaBay Pharmaceuticals, commented: “All three of our Aganocide programs – in urology, dermatology, and ophthalmology – are now in Phase 2 clinical trials, and we are expecting results from each of these trials in 2013. We continue to strengthen our portfolio of drugs and medical devices that fulfill our mission of going ‘beyond antibiotics.’ By providing a treatment alternative to the several currently available, resistance-producing topical antibiotics, we believe our technology has the potential to slow down the steady advance of antibiotic resistance.”

First Quarter 2013 Results
Cash, cash equivalents, and short-term investments totaled $13.2 million on March 31, 2013, compared with $16.9 million on December 31, 2012, a decrease of approximately $3.7 million. The decrease in cash was primarily attributable to an increase in NovaBay’s research and development expenses related to continued expansion of enrollment in its multiple clinical trials, with results expected before the end of 2013, as well as general and administrative expenses.

NovaBay’s license and collaboration revenue for the first quarter 2013 was $0.9 million, compared to $1.3 million for the three months ended March 31, 2012. This decrease was related to lower reimbursable costs for the support of the impetigo trial as the trial progresses. NovaBay did not recognize any other significant revenues for the three months ended March 31, 2013.

Research and development expenses for the three months ended March 31, 2013, were $2.9 million, compared to $2.3 million for the same period in 2012. The increase is related to the clinical trial activities and patient enrollment as NovaBay continues to conduct its BAYNovationTM ophthalmology trial for viral conjunctivitis and its urology trial for UCBE and scales up its production of auriclosene in anticipation of the Phase 3 impetigo trial to be conducted by Galderma. Galderma is expected to reimburse NovaBay for a portion of the production expenses in the future.

General and administrative expenses for the three months ended March 31, 2013, remained relatively flat at $1.5 million compared to the three months ended March 31, 2012. NovaBay expects general and administrative expenses to continue to remain relatively flat for the remainder of 2013 as compared to 2012.

Net loss for the first quarter 2013 was $4.0 million, compared to $2.5 million for the same period last year, due to the clinical trial activities.

Recent Highlights
• April: NovaBay enrolled the first patients in Brazil into its global Phase 2b ophthalmology clinical trial, BAYnovation. The trial is investigating Auriclosene (NVC-422) Ophthalmic Solution as a treatment for adenoviral conjunctivitis, a highly contagious form of “pink eye” for which there is no approved treatment anywhere in the world.
• March: Keith R. Bley, Ph.D. joined NovaBay as Senior Vice President of Product Development. Dr. Bley has more than 20 years of experience in the pharmaceutical industry, and management positions with increasing responsibility in research and product development.

About NovaBay Pharmaceuticals, Inc.
Going Beyond Antibiotics
NovaBay Pharmaceuticals is a biotechnology company focused on addressing the large unmet therapeutic needs of the global, topical anti-infective market with its two distinct categories of compounds, Aganocides® and NeutroPhase® Skin and Wound Cleanser. The Company’s four core business units – DermaBay, UroBay, EyeBay and MediBay – are developing treatments that tackle infections in the dermatology, urology, ophthalmology, and wound care areas.

Aganocide® Compounds
NovaBay’s first-in-class Aganocide compounds, led by auriclosene, are patented, topical antimicrobials with a broad spectrum of activity against bacteria, viruses and fungi. Mimicking the mechanism of action that human white blood cells use against infections, Aganocides are not subject to bacterial or fungal resistance, which has been demonstrated in in vitro and in vivo studies. Having demonstrated clinical efficacy in Phase 2 proof-of-concept clinical studies, auriclosene is well suited to treat and prevent a wide range of local, non-systemic infections. NovaBay’s clinical development activities are focused on the following three disease areas:

Dermatology: Partnered with Galderma, a leading dermatology company, to develop a formulation of auriclosene for the treatment of highly contagious skin infection, impetigo, which occurs most commonly in children. Enrollment into a global Phase 2b clinical study has begun and clinical data results are expected in the second half 2013.
Ophthalmology: NovaBay is developing an eye drop formulation of auriclosene for treating adenoviral conjunctivitis, a highly contagious viral eye infection for which there is no approved treatment. Enrollment into a global Phase 2b clinical study has begun, and clinical data results are expected in the second half of 2013.

Urology: NovaBay’s urinary catheter irrigation solution containing auriclosene is currently in a Phase 2 study, with the goal of reducing the incidence of urinary catheter blockage and encrustation (UCBE). The Company reported positive data from an earlier part of an ongoing Phase 2 study and is evaluating the effect of an alternate more potent formulation of auriclosene. Results are expected mid-year.

Distinct from NovaBay’s Aganocides drug platform, NeutroPhase has been cleared by the U.S. Food and Drug Administration as a 510(k) medical device and is indicated as a skin and wound cleanser. NeutroPhase, which targets the 6 million-patient U.S. market of chronic non-healing wounds, such as pressure, venous stasis and diabetic ulcers, is the only pure hypochlorous acid solution available today. For additional information, visit:

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 expected timing of enrollment and commencement of clinical trials, expected timing of announcement of results of clinical studies, and expected future financial results. The words “continued,” “expected” and “will be” are intended to identify these 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, risks and uncertainties relating to difficulties or delays in development, clinical trial, 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. Other risks relating to NovaBay and 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 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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(a development stage company)

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NovaBay Pharmaceuticals Contacts
Thomas J. Paulson  
Chief Financial Officer
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Ana Kapor
Director, Investor Relations and Corporate Communications
NovaBay Pharmaceuticals, Inc.
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