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 and 12 months ended December 31, 2018 and provides a business update.
“We are steadfast in our belief that Avenova is the best topical product available to treat chronic bacterial infections that affect about 85% of those suffering from dry eye. We are affirming our commitment to providing broad access to this important product among eye care professionals and patients under a model that makes economic sense for NovaBay,” said Justin Hall, Interim President and CEO. “In keeping with this focus we recently contracted with new partner pharmacies that serve patients in all 50 states. Our engagement with partner pharmacies ensures quality patient experiences and offers us the benefit of a negotiated price per prescription.
“We recently completed the restructuring of our sales organization and now have sales representatives deployed in territories that are profitable or on the verge of profitability. In light of our smaller sales organization, we are revising our outlook for 2019 net sales to be in the range of $6 million to $8 million, with a significant narrowing in operating expenses over 2018 through various cost-management initiatives,” he added. “We believe this shift in focus to long-term profitable growth is in the interest of our shareholders and will facilitate future access to capital.”
Fourth Quarter Financial Results
Net sales for the fourth quarter of 2018 were $3.6 million compared with $6.3 million for the fourth quarter of 2017, with the decrease primarily due to lower insurance reimbursement resulting in a lower average selling price of Avenova, along with a $1.3 million reduction in non-Avenova sales. Gross margin on net product revenue was 88% for the fourth quarter of 2018 compared with 85% for the prior-year period, with the improvement due to product mix.
Sales and marketing expenses for the fourth quarter of 2018 were $3.2 million compared with $3.3 million for the fourth quarter of 2017. General and administrative expenses for the fourth quarters of 2018 and 2017 were unchanged at $1.5 million. Research and development expenses for the fourth quarters of 2018 and 2017 were $0.1 million.
The operating loss for the fourth quarter of 2018 was $1.6 million compared with operating income of $0.4 million for the fourth quarter of 2017.
Non-cash gain on the change of fair value of warrant liability for the fourth quarter of 2018 was $0.3 million compared with a non-cash gain of $0.4 million for the fourth quarter of 2017.
The net loss for the fourth quarter of 2018 was $1.3 million, or $0.07 per share, compared with net income for the fourth quarter of 2017 of $0.8 million, or $0.02 per diluted share.
Full Year Financial Results
Net sales for 2018 were $12.5 million compared with $18.2 million for 2017. Gross margin on net product revenue was 88% for 2018, up from 85% for 2017.
The operating loss for 2018 was $7.9 million compared with an operating loss of $7.3 million for 2017. Sales and marketing expenses for 2018 decreased 7% to $12.8 million, general and administrative expenses decreased 33% to $5.8 million, and research and development expenses decreased 37% to $0.3 million, all compared with 2017.
Non-cash gain on the change of fair market of warrant liability for 2018 was $1.3 million compared with a non-cash loss of $0.1 million for 2017.
The net loss for 2018 was $6.5 million, or $0.39 per share, compared with a net loss for 2017 of $7.4 million, or $0.48 per share.
NovaBay reported cash and cash equivalents of $3.2 million as of both December 31, 2018 and December 31, 2017.
In March 2019 the company received proceeds from a $2.0 million convertible promissory note.
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 6686573.
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 April 4, 2019 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 6686573.
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. 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 returning to double digit revenue growth, the size of the potential market for our products, improving sales rep productivity and product distribution, obtaining adequate insurance reimbursement, 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-Q/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||$||3,183||$||3,199|
Accounts receivable, net of allowance for doubtful accounts ($10 and $13 at December 31, 2018 and December 31, 2017, respectively)
Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments of $104 and $140 at December 31, 2018 and December 31, 2017, respectively)
|Prepaid expenses and other current assets||1,760||1,663|
|Total current assets||8,608||8,995|
|Property and equipment, net||201||471|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Total current liabilities||3,847||4,979|
|Deferred revenues - non-current||-||534|
|Preferred stock: 5,000 shares authorized; none outstanding at December 31, 2018 and December 31, 2017||—||—|
|Common stock, $0.01 par value; 50,000 and 240,000 shares authorized at December 31, 2018 and December 31, 2017, respectively; 17,089 and 15,385 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively||171||154|
|Additional paid-in capital||119,764||113,514|
|Total stockholders' equity||4,954||2,594|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||9,361||$||10,079|
|NOVABAY PHARMACEUTICALS, INC.|
|CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)|
|(in thousands except per share data)|
Three Months Ended
|Product revenue, net||$||3,604||$ 6,259||$||12,474||$||18,127|
|Total sales, net||3,625||6,316||12,508||18,230|
|Product cost of goods sold||441||977||1,503||2,784|
|Research and development||107||146||259||410|
|Sales and marketing||3,186||3,299||12,789||13,711|
|General and administrative||1,502||1,502||5,828||8,636|
|Total operating expenses||4,795||4,947||18,876||22,757|
|Operating income (loss)||(1,611||)||392||(7,871||)||(7,311||)|
|Non cash gain (loss) on changes in fair value of warrant liability||340||400||1,311||(101||)|
|Other income, net||6||3||19||12|
|Income (loss) before provision for income taxes||(1,265||)||795||(6,541||)||(7,400||)|
|Provision for income tax||(3||)||(2||)||(4||)||(3||)|
|Net income (loss) and comprehensive income (loss)||$||(1,268||)||$||793||$||(6,545||)||$||(7,403||)|
|Net income (loss) per share attributable to common stockholders, basic||$||(0.07||)||$||0.05||$||(0.39||)||$||(0.48||)|
|Net income (loss) per share attributable to common stockholders, diluted||$||(0.07||)||$||0.02||(0.46||)||(0.48||)|
|Weighted-average shares of common stock outstanding used in computing net loss per share of common stock|