EMERYVILLE, Calif.--(BUSINESS WIRE)--NovaBay® Pharmaceuticals, Inc. (NYSE MKT: NBY), a pharmaceutical company focused on commercializing its prescription Avenova® lid and lash hygiene product for the domestic eye care market, reports financial results for the three months ended March 31, 2017 and provides a business update.
“Avenova product sales for the quarter increased 165% over the prior year on record unit volume from our higher-margin prescription ophthalmology channel as we continued the effective implementation of our sales strategy,” said Mark M. Sieczkarek, NovaBay’s President and CEO. “Once again we achieved momentum among a range of key metrics, most notably with increases in the number of prescribing physicians and the average number of prescriptions per prescriber. We are therefore reaffirming our financial guidance for 2017.
“We are committed to growing Avenova sales this year and beyond as we capitalize on the large market for blepharitis that we believe is poorly served by competing products and remedies,” he added. “Our strategy includes expanding our salesforce and investing in clinical studies to support physician adoption, while simultaneously managing expenses. We expect our current financial resources to be sufficient to fund operations and our growth strategy throughout 2017.”
Key First Quarter Avenova Metrics
- Avenova sales of $3.6 million increased 165% year-over-year;
- Gross margin on Avenova sales reached 88%;
- Prescription sales into the pharmacy channel were $2.8 million, up 402% year-over-year;
- New prescribers were more than 1,000; and
- Total number of medical professionals who have prescribed Avenova exceeded 9,700, up 33% year-over-year and up 12% from the fourth quarter of 2016.
First Quarter 2017 Financial Results
Net sales for the first quarter of 2017 increased 115% to $3.7 million from $1.7 million for the first quarter of 2016, due to higher Avenova product sales. Product revenue, which includes Avenova and NeutroPhase®, increased 123% to $3.7 million for the first quarter of 2017 from $1.7 million for the prior-year period. Total gross profit margin improved to 84% for the first quarter of 2017 from 64% for the first quarter of 2016 with the increase due to higher sales of Avenova. The gross profit margin on Avenova sales for the first quarter of 2017 was 88%.
Operating loss for the first quarter of 2017 improved 19% to $3.8 million from $4.7 million for the first quarter of 2016. R&D expenses of $0.1 million for the first quarter of 2017 declined from $0.9 million for the first quarter of 2016, primarily due to the Company’s focus on Avenova commercialization. Sales and marketing expenses for the first quarter of 2017 were $3.7 million compared with $3.1 million for the prior-year period, with the increase primarily due to the transition to an in-house sales team and an increase in the number of sales representatives. G&A expenses for the first quarter of 2017 of $3.1 million compare with $1.7 million for the prior-year period, with the increase primarily resulting from higher stock-based compensation expense.
The net loss for the first quarter of 2017 was $4.0 million, or $0.26 per share on a basic basis, compared with a net loss for the first quarter of 2016 of $5.1 million, or $1.24 per share on a basic basis.
NovaBay reported cash and cash equivalents of $7.4 million as of March 31, 2017, compared with $9.5 million as of December 31, 2016.
The Company used $2.0 million in cash to fund operations during the first quarter of 2017, a significant improvement from $4.9 million used during the first quarter of 2016. The decrease in cash usage was primarily due to higher sales of Avenova.
2017 Financial Outlook
NovaBay is affirming its financial guidance for 2017. The Company’s expectations are as follows:
- Total sales of $19 million, up 60% over 2016;
- Gross profit margin on Avenova sales in the high 80s;
- Net loss of $6.2 million, excluding the effect of non-cash gain (loss) on change in fair value of warrant liability; and
- Cash burn of $3 million.
Conference Call
NovaBay management will host an investment community conference call today 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 800-608-8202 from within the U.S. or 702-495-1913 from outside the U.S., with the conference identification number 14535369.
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 June 11, 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 14535369.
About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics®
NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focusing on commercializing and developing its non-antibiotic anti-infective products to address the unmet therapeutic needs of the global, topical anti-infective market with its two distinct product categories: the NEUTROX® family of products and the AGANOCIDE® compounds. The Neutrox family of products includes AVENOVA® for the eye care market, NEUTROPHASE® for wound care market, and CELLERX® for the aesthetic dermatology market. The Aganocide compounds, still under development, have target applications in the dermatology and urology markets.
About Avenova®
Avenova is the Company’s main commercial focus. Data from a multicenter clinical study show that Avenova reduced bacterial load, the underlying cause of blepharitis, on ocular skin surface by more than 90%. Laboratory tests show that hypochlorous acid has potent antimicrobial activity in solution yet is non-toxic to mammalian cells and also neutralizes bacterial toxins. Avenova is marketed to optometrists and ophthalmologists throughout the U.S. by NovaBay’s direct salesforce. It is accessible from more than 90% of retail pharmacies in the U.S. through agreements with McKesson Corporation, Cardinal Health and AmerisourceBergen.
Forward-Looking Statements
This release contains forward-looking statements that are based upon management's current expectations, assumptions, estimates, projections and beliefs. These statements include, but are not limited to, statements regarding the size of our potential market, the future sales of our products, what we believe to be sufficient future financial resources, our expected gross margin, and generally the Company’s expected future financial results. Forward-looking statements can be identified with words like (and variations of): “believe,” and “expect.” 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 any potential regulatory problems. 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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| NOVABAY PHARMACEUTICALS, INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (in thousands) | |||||||||||
| March 31, | December 31, | ||||||||||
| 2017 | 2016 | ||||||||||
| ASSETS | (Unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 7,399 | $ | 9,512 | |||||||
| Accounts receivable, net of allowance for doubtful accounts ($52 and $10 at March 31, 2017 and December 31, 2016, respectively) | 2,331 | 2,120 | |||||||||
| Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments of $273 and $196 at March 31, 2017 and December 31, 2016, respectively) | 765 | 873 | |||||||||
| Prepaid expenses and other current assets | 1,036 | 1,966 | |||||||||
| Total current assets | 11,531 | 14,471 | |||||||||
| Property and equipment, net | 421 | 371 | |||||||||
| Other assets | 730 |
539 |
|||||||||
| TOTAL ASSETS | 12,682 | 15,381 | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||||
| Liabilities: | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | 798 | 455 | |||||||||
| Accrued liabilities | 1,831 | 2,007 | |||||||||
| Deferred revenue | 1,673 | 1,861 | |||||||||
| Total current liabilities | 4,302 | 4,323 | |||||||||
| Deferred revenue - non-current | 1,807 | 1,986 | |||||||||
| Deferred rent | 314 | 327 | |||||||||
| Warrant liability | 1,681 | 1,446 | |||||||||
| Other liabilities | 222 | 198 | |||||||||
| Total liabilities | 8,326 | 8,280 | |||||||||
| Stockholders' equity (deficit): | |||||||||||
| Preferred stock: 5,000 shares authorized; none outstanding at March 31, 2017 and December 31, 2016 | — | — | |||||||||
|
Common stock, $0.01 par value; 240,000 shares authorized; 15,288 and 15,269 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively |
153 | 153 | |||||||||
| Additional paid-in capital | 111,885 | 110,619 | |||||||||
| Accumulated deficit | (107,682 | ) | (103,671 | ) | |||||||
| Total stockholders' equity (deficit) | 4,356 | 7,101 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 12,682 | $ | 15,381 | |||||||
| NOVABAY PHARMACEUTICALS, INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | |||||||||||
| (Unaudited) | |||||||||||
|
(in thousands, except per share data) |
|||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| (in thousands, except per share data) | 2017 | 2016 | |||||||||
| Sales: | |||||||||||
| Product revenue, net | $ | 3,694 | $ | 1,655 | |||||||
| Other revenue, net | 7 | 64 | |||||||||
| Total sales, net | 3,701 | 1,719 | |||||||||
| Product cost of goods sold | 588 | 611 | |||||||||
| Gross profit | 3,113 | 1,108 | |||||||||
| Research and development | 62 | 933 | |||||||||
| Sales and marketing | 3,740 | 3,144 | |||||||||
| General and administrative | 3,088 | 1,682 | |||||||||
| Total Operating Expenses | 6,890 | 5,759 | |||||||||
| Operating Loss | (3,777 | ) | (4,651 | ) | |||||||
| Non-cash loss on changes in fair value of warrant liability | (235 | ) | (385 | ) | |||||||
| Other income (expense), net | 2 | (41 | ) | ||||||||
| Loss before provision for income taxes | (4,010 | ) | (5,077 | ) | |||||||
| Provision for income tax | (1 | ) | — | ||||||||
| Net loss and comprehensive loss | $ | (4,011 | ) | $ | (5,077 | ) | |||||
| Net loss per share attributable to common stockholders (basic and diluted) | $ | (0.26 | ) | $ | (1.24 | ) | |||||
| Weighted-average shares of common stock outstanding used in computing net loss per share of common stock | 15,284 | 4,086 | |||||||||