EMERYVILLE, Calif.--(BUSINESS WIRE)--NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY), a biopharmaceutical company focusing on commercializing prescription Avenova® for the domestic eye care market, reports financial results for the three months ended March 31, 2018 and provides a business update.
Unit volume through the retail pharmacy channel for the first quarter of 2018 increased 12% versus the prior-year period. Net sales for the first quarter of 2018 were $2.9 million, compared with $3.7 million for the first quarter of 2017, with the decrease due to a significant increase in rebates following health insurance deductible resets at the beginning of the year. Gross margin on net sales for the first quarter of 2018 was 91%, an increase from 84% for the prior-year period. Cash used in operations for the first quarter of 2018 was $0.5 million, a significant improvement from cash usage of $2.0 million in the prior-year period.
“In combination with the salesforce reduction at the end of 2017, we paused our planned salesforce expansion in a seasonally slow revenue quarter to focus on identifying the most profitable territories,” said Mark M. Sieczkarek, NovaBay’s Chairman, President and CEO. “Although we experienced growth in unit volume for the quarter versus the prior-year period, our net revenue declined due to the increased impact of rebates. Pharmaceutical manufacturers are reporting that the outsized impact of rebates negatively impacted sales across many products during the first quarter, including Avenova.
“We flattened our sales organization to streamline communications and improve training and strategic execution. We are currently recruiting sales representatives in under-served territories. We will continue to hire new representatives before the end of 2018 in parallel with the progress we make on increasing insurance coverage on Avenova sales by managed care organizations.
“As an update on our initiative to obtain new or improved reimbursement, introductions have been made with a target group of top managed care prospects that we expect will lead to meaningful discussions in the second half of 2018,” he added. “We believe we have a powerful rationale with Avenova as the only prescription product clinically proven to reduce bacteria on ocular surfaces, which is the underlying cause of bacterial dry eye that represents approximately 85% of the total dry eye market.”
First Quarter Financial Highlights
Sales and marketing expenses for the first quarter of 2018 were $3.4 million, compared with $3.7 million for the first quarter of 2017, with the decrease due primarily to a reduction in the number of sales representatives, partially offset by higher marketing expenses. G&A expenses for the first quarter of 2018 were $1.6 million, compared with $3.1 million for the prior-year period, with the decrease due primarily to lower stock-based compensation expense and lower professional services and consulting fees. R&D expenses for the first quarter of 2018 were $46,000, compared with $62,000 for the first quarter of 2017.
The operating loss for the first quarter of 2018 was $2.4 million, an improvement from an operating loss of $3.8 million for the first quarter of 2017.
Non-cash gain on the change of fair value of warrant liability for the first quarter of 2018 was $0.2 million, compared with a non-cash loss of $0.2 million for the first quarter of 2017.
The net loss for the first quarter of 2018 was $2.2 million, or $0.13 per share, compared with a net loss for the first quarter of 2017 of $4.0 million, or $0.26 per share.
NovaBay reported cash and cash equivalents of $8.3 million as of March 31, 2018, compared with $3.2 million as of December 31, 2017. In February 2018, the company raised a net $5.6 million through a private placement of common stock.
The Company used $0.5 million in cash to fund operations in the first quarter of 2018, an improvement from $2.0 million used to fund operations in the first quarter of 2017. The decrease was primarily due to a lower net loss and favorable changes in working capital.
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 9649919.
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 May 20 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 9649919.
Avenova is an eye care product formulated with our proprietary, stable and pure form of hypochlorous acid. It has proven in laboratory testing to have broad antimicrobial properties as a preservative in solution as it removes foreign material including microorganisms and debris from the skin on the eyelids and lashes without burning or stinging. 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.
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.
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 our business strategies and future focus, our estimated future revenue, 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, obtaining adequate insurance reimbursement for the Company’s products, 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 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.
NOVABAY PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value amounts)
|Cash and cash equivalents||$||8,336||$||3,199|
|Accounts receivable, net of allowance for doubtful accounts ($10 and $13 at March 31, 2018 and December 31, 2017, respectively)||2,225||3,629|
|Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments of $138 and $140 at March 31, 2018 and December 31, 2017, respectively)||479||504|
|Prepaid expenses and other current assets||1,751||1,663|
|Total current assets||12,791||8,995|
|Property and equipment, net||435||471|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Total current liabilities||3,218||4,979|
|Deferred revenues - non-current||-||534|
|Stockholders' equity :|
|Preferred stock: 5,000 shares authorized; none outstanding at March 31, 2018 and December 31, 2017||—||—|
|Common stock, $0.01 par value; 240,000, shares authorized 17,089 and 15,385 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively||171||154|
|Additional paid-in capital||119,285||113,514|
|Total stockholders' equity||8,871||2,594|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||13,823||$||10,079|
NOVABAY PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands except per share data)
Three Months Ended March 31,
|Product revenue, net||$||2,934||$||3,694|
|Total sales, net||2,947||3,701|
|Product cost of goods sold||251||588|
|Research and development||46||62|
|Sales and marketing||3,396||3,740|
|General and administrative||1,622||3,088|
|Total operating expenses||5,064||6,890|
|Non cash gain (loss) on changes in fair value of warrant liability||214||(235||)|
|Other income, net||4||2|
|Loss before provision for income taxes||(2,150||)||(4,010||)|
|Provision for income tax||-||(1||)|
|Net loss and comprehensive loss||$||(2,150||)||$||(4,011||)|
|Net loss per share attributable to common stockholders, basic||$||(0.13||)||$||(0.26||)|
|Net loss per share attributable to common stockholders, diluted||$||(0.14||)||$||(0.26||)|
|Weighted-average shares of common stock outstanding used in computing net loss per share of common stock|