NovaBay Pharmaceuticals Reports Second Quarter 2018 Financial Results
Conference call begins today at 4:30 p.m. Eastern time
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 six months ended June 30, 2018 and provides a business update.
Net product revenue for the second quarter of 2018 was $2.8 million, compared with $4.1 million for the second quarter of 2017, with the decrease due to delays in hiring new sales representatives and increasing managed care coverage for Avenova.
“We see ample market opportunity with Avenova and we’re addressing areas of improvement that make us optimistic about returning to double-digit net sales growth in 2019,” said Mark M. Sieczkarek, NovaBay’s Chairman, President and CEO. “Among these, we’ve expanded our salesforce for the higher seasonality quarters, recently adding seven sales representatives with significant direct experience promoting ophthalmic products. We are deploying our entire salesforce more efficiently by targeting sales calls on high Avenova prescribers in areas of higher reimbursement with the aim to increase unit volume and net product revenue per unit. We also are making inroads with our program to obtain new or improved reimbursement for Avenova with meetings scheduled with a select group of top managed care organizations before the end of this year.
“Our outlook is for net sales to increase sequentially in each successive quarter through the remainder of 2018,” he added. “We will begin benefitting at the beginning of 2019 as our newer sales representatives become increasingly productive and we execute on our managed care strategy.”
Second Quarter Financial Results
Net sales for the second quarter of 2018 were $2.8 million, compared with $4.1 million for the second quarter of 2017. Gross margin on net product revenue was 83% for the second quarter of 2018, compared with 83% for the prior-year period.
Sales and marketing expenses for the second quarter of 2018 were $3.0 million, compared with $3.4 million for the second quarter of 2017, with the decrease due primarily to a reduction in the number of sales representatives and lower marketing expenses. G&A expenses for the second quarter of 2018 were $1.4 million, compared with $1.7 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 second quarter of 2018 were $61,000, compared with $70,000 for the second quarter of 2017.
The operating loss for the second quarter of 2018 was $2.1 million, compared with an operating loss of $1.8 million for the second quarter of 2017.
Non-cash gain on the change of fair value of warrant liability for the second quarter of 2018 was $0.5 million, compared with a non-cash gain of $15,000 for the second quarter of 2017.
The net loss for the second quarter of 2018 was $1.6 million, or $0.09 per share, compared with a net loss for the second quarter of 2017 of $1.7 million, or $0.11 per share.
Six Month Financial Results
Net sales for the six months ended June 30, 2018 were $5.7 million, compared with $7.8 million for the six months ended June 30, 2017. Gross margin on net product revenue was 87% for the first half of 2018, compared with 84% for the first half of 2017.
The operating loss for the first six months of 2018 was $4.5 million, a 20% decrease from an operating loss of $5.5 million for the comparable period in 2017. For the six months ended June 30, 2018, sales and marketing expenses decreased 10% to $6.4 million, G&A expenses decreased 38% to $3.0 million, and R&D expenses decreased 19% to $0.1 million, all compared with the six months ended June 30, 2017.
Non-cash gain on the change of fair market of warrant liability for the first six months of 2018 was $0.7 million, compared with a non-cash loss of $0.2 million for the first six months of 2017.
The net loss for the six months ended June 30, 2018 was $3.7 million, or $0.22 per share, compared with a net loss for the six months ended June 30, 2017 of $5.7 million, or $0.38 per share.
NovaBay reported cash and cash equivalents of $6.8 million as of June 30, 2018, compared with $3.2 million as of December 31, 2017. In February 2018, the company raised net proceeds of $5.6 million through a private placement of common stock.
The Company used $2.0 million in cash to fund operations in the first six months of 2018, an improvement from $3.6 million used to fund operations in the first six months 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 1078758.
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 August 13 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 1078758.
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): “outlook,” and “optimistic.” 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-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||$||6,833||$||3,199|
|Accounts receivable, net of allowance for doubtful accounts ($11 and $13 at June 30, 2018 and December 31, 2017, respectively)||2,024||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 June 30, 2018 and December 31, 2017, respectively)||317||504|
|Prepaid expenses and other current assets||1,598||1,663|
|Total current assets||10,772||8,995|
|Property and equipment, net||351||471|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Total current liabilities||3,056||4,979|
|Deferred revenues - non-current||-||534|
|Stockholders' equity :|
|Preferred stock: 5,000 shares authorized; none outstanding at June 30, 2018 and December 31, 2017||—||—|
|Common stock, $0.01 par value; 50,000 and 240,000, shares authorized at June 30, 2018 and December 31, 2017, respectively; 17,089 and 15,385 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively||171||154|
|Additional paid-in capital||119,433||113,514|
|Total stockholders' equity||7,429||2,594|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||11,705||$||10,079|
NOVABAY PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands except per share data)
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|Product revenue, net||$||2,794||$||4,094||$||5,728||$||7,788|
|Total sales, net||2,794||4,122||5,741||7,823|
|Product cost of goods sold||479||698||730||1,286|
|Research and development||61||70||107||132|
|Sales and marketing||2,977||3,376||6,373||7,116|
|General and administrative||1,360||1,735||2,982||4,823|
|Total operating expenses||4,398||5,181||9,462||12,071|
|Non cash gain (loss) on changes in fair value of warrant liability||490||15||704||(220||)|
|Other income, net||5||4||9||6|
|Loss before provision for income taxes||(1,588||)||(1,738||)||(3,738||)||(5,748||)|
|Provision for income tax||(1||)||-||(1||)||(1||)|
|Net loss and comprehensive loss||$||(1,589||)||$||(1,738||)||$||(3,739||)||$||(5,749||)|
|Net loss per share attributable to common stockholders, basic||$||(0.09||)||$||(0.11||)||$||(0.22||)||$||(0.38||)|
|Net loss per share attributable to common stockholders, diluted||$||(0.12||)||$||(0.11||)||(0.26||)||(0.38||)|
|Weighted-average shares of common stock outstanding used in computing net loss per share of common stock|
Source: NovaBay Pharmaceuticals, Inc.