NovaBay Pharmaceuticals Reports Third Quarter 2020 Financial Results

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Nov. 12, 2020 21:05 UTC

 

  • Revenue increased 34% versus prior year
  • Avenova® unit sales set quarterly record
  • Exited Q3 with $13.4 million in cash and equivalents
  • Regained compliance with NYSE American continued-listing standards
  • Launches CelleRx® Clinical Reset™ into beauty market

Conference call begins at 4:30 p.m. Eastern time today

 

EMERYVILLE, Calif.--(BUSINESS WIRE)-- NovaBay Pharmaceuticals Inc (NYSE American: NBY) reports financial results for the three and nine months ended September 30, 2020 and provides a business update.

“This is an exceptionally exciting time at NovaBay as Avenova unit sales set a new quarterly record and we prepare for the consumer launch of CelleRx Clinical Reset into the beauty market,” said Justin Hall, President and CEO of NovaBay Pharmaceuticals. “Product revenue for the quarter increased 34% to $2.2 million from the prior year, with Avenova revenue reaching its highest level since we introduced the direct-to-consumer channel. Online sales of Avenova Direct continued as the fastest-growing channel driven by our successful digital marketing programs featuring lifestyle messaging and increased customer outreach. Sales from our buy-and-sell channel also surged in recent months with the reopening of doctors’ offices across the country.

“Our groundbreaking product CelleRx Clinical Reset creates a new category in skin care,” he added. “Previously we marketed CelleRx to only medical professionals without targeting the consumer market. With a completely new marketing approach for CelleRx Clinical Reset, we intend to leverage our pharmaceutical pedigree in the beauty industry. Clinical Reset disrupts the layer of bacteria that settles and grows on the face, yet is a gentle way to get skin back to a healthy baseline to heal itself and to better absorb skincare products. Clinical Reset’s unveiling will include robust social media and print advertising campaigns targeted directly to the consumer market. Initial sales will be through our newly designed website, cellerx.com.

“We exited the quarter with our strongest cash position since the commercial launch of Avenova in 2015 and have sufficient funds to support current operations through full year 2021, including our enhanced online advertising programs for Avenova and the consumer launch of CelleRx Clinical Reset. We raised $6.4 million in the third quarter from the renegotiation of warrants, which also enabled us to regain compliance with NYSE American continued-listing requirements,” Mr. Hall added. “I’m proud of our many recent accomplishments as they position NovaBay for a bright future.

“We continue actively working with the U.S. Food and Drug Administration (FDA) on a number of items. Our application for Emergency Use Authorization (EUA) to sell the fluorecare® rapid COVID-19 antibody test is still under review and we have successfully remediated the recent Warning Letter regarding our COVID-19 Avenova marketing. Lastly, we continue to work with the Environmental Protection Agency (EPA) on the inclusion of Avenova on its list of approved disinfectants that kill the COVID-19 virus on hard surfaces,” concluded Mr. Hall.

Third Quarter Financial Results

Net product revenue for the third quarter of 2020 was $2.2 million, a 34% increase from $1.6 million for the third quarter of 2019. Avenova revenue for the third quarter of 2020 was $1.8 million, a 14% increase from $1.6 million for the third quarter of 2019. The increase reflects a higher number of Avenova Direct and buy-and-sell units sold, partially offset by a decrease in the number of units sold through our retail and partner pharmacy channels. The increase in revenue due to unit sales was partially offset by the lower average net selling price associated with Avenova Direct units. Net product revenue for the third quarter of 2020 also includes $0.2 million from the sales of a PhaseOne, a private-label prescription skin and wound care product, with no comparable revenue in the prior-year period.

Gross margin on net product revenue remained unchanged at 75% for the third quarters of 2020 and 2019.

Operating expenses for the third quarter of 2020 were $3.7 million, compared with $2.9 million for the third quarter of 2019. Sales and marketing expenses for the third quarter of 2020 were $1.7 million, compared with $1.5 million for the third quarter of 2019, reflecting an increase in Avenova digital advertising and costs associated with the consumer launch of CelleRx Clinical Reset, partially offset by lower headcount-related costs and lower travel and related expenses due to the impact of COVID-19. General and administrative (G&A) expenses for the third quarter of 2020 were $1.9 million, compared with $1.3 million for the third quarter of 2019, with the increase due to higher legal fees and the cost of the McGovern arbitration. Research and development (R&D) expenses for the third quarter of 2020 were $125,000, compared with $49,000 for the third quarter of 2019.

Operating loss for the third quarter of 2020 was $2.1 million, compared with the operating loss of $1.7 million for the third quarter of 2019.

Non-cash loss on the change of fair value of warrant liability for the third quarter of 2020 was $1.6 million, compared with a non-cash gain of $1.5 million for the third quarter of 2019.

Non-cash gain from adjustments to the fair value of an embedded derivative liability for the third quarter of 2020 was $1,000, compared with $0.7 million for the third quarter of 2019.

Other income, net, for the third quarter of 2020 of $0.4 million is primarily related to qualified expenses incurred under the Paycheck Production Program. This compares with other expense, net, of $0.7 million for the third quarter of 2019, which was due primarily to interest expense recognized on a convertible note that was settled prior to the end of the third quarter of 2020.

The net loss for the third quarter of 2020 was $3.2 million, or $0.08 per share, compared with a net loss for the third quarter of 2019 of $282,000, or $0.01 per share.

Nine Month Financial Results

Net product revenue for the nine months ended September 30, 2020 was $8.0 million, a 66% increase from $4.9 million for the nine months ended September 30, 2019. Gross margin on net product revenue was 61% for the first nine months of 2020, compared with 77% for the first nine months of 2019.

For the nine months ended September 30, 2020, sales and marketing expenses decreased 29% to $4.7 million, G&A expenses of $4.6 million increased 12% and R&D expenses of $0.2 million were relatively unchanged, compared with the nine months ended September 30, 2019.

Operating loss for the first nine months of 2020 was $4.7 million, a 35% improvement from the operating loss of $7.2 million for the first nine months of 2019.

Non-cash loss on the change of fair value of warrant liability for the first nine months of 2020 was $5.2 million, compared with a non-cash gain of $0.9 million for the first nine months of 2019.

Non-cash gain from adjustments to the fair value of an embedded derivative liability for the nine months ended September 30, 2020 was $3,000, compared with $0.4 million for the nine months ended September 30, 2019.

Other income, net, for the first nine months of 2020 was $0.6 million, compared with other expense, net, for the first nine months of 2019 of $1.2 million.

The net loss for the nine months ended September 30, 2020 was $9.3 million, or $0.28 per share, compared with a net loss for the nine months ended September 30, 2019 of $7.0 million, or $0.36 per share.

NovaBay reported cash and cash equivalents of $13.4 million as of September 30, 2020, compared with $6.9 million as of December 31, 2019. The Company raised net proceeds of $5.2 million from the sale of common stock through an ATM agreement during the quarter ended June 30, 2020 and $6.4 million from the renegotiation of warrants during the quarter ended September 30, 2020.

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 866-677-7731 from within the U.S. or 480-405-6745 from outside the U.S., and requesting the NovaBay Pharmaceuticals call.

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 the call ends through 11:59 p.m. Eastern time November 26, 2020 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 8439986.

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, CELLERX® for the aesthetic dermatology market and NEUTROPHASE® for the wound care market. The Aganocide compounds, still under development, have target applications in the dermatology and urology markets.

Forward-Looking Statements

Except for historical information herein, matters set forth in this press release are forward-looking within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements about the commercial progress and future financial performance of NovaBay Pharmaceuticals, Inc. 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 current product offerings, potential future product offerings, possible regulatory clearance of any of our products or future products, and any future revenue that may result from selling these products, as well as generally the Company’s expected future financial results. These forward-looking statements are identified by the use of words such as “launch,” “leverage,” “position,” and “continue,” among others. 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 the size of the potential market for our products, the possibility that the available market for the Company’s products will not be as large as expected, the Company’s products will not be able to penetrate one or more targeted markets, revenues will not be sufficient to meet the Company’s cash needs, the effect on sales and potential reputational damage resulting from decisions or actions taken by regulators, including Warning Letters issued by the FDA, and any other potential regulatory problems that may arise. 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.

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Avenova Purchasing Information
For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com.
www.Avenova.com

Financial tables to follow

NOVABAY PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amounts)

         

 

 

September 30,

 

December 31,

 

 

2020

 

2019

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

13,413

 

 

$

6,937

 

Accounts receivable, net of allowance for doubtful accounts ($0 and $51 at September 30, 2020 and December 31, 2019, respectively)

 

 

1,119

 

 

 

1,066

 

Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($194 and $247 at September 30, 2020 and December 31, 2019, respectively)

 

 

785

 

 

 

492

 

Prepaid expenses and other current assets

 

 

695

 

 

 

886

 

Total current assets

 

 

16,012

 

 

 

9,381

 

Operating lease right-of-use assets

 

 

518

 

 

 

1,252

 

Property and equipment, net

 

 

76

 

 

 

110

 

Other assets

 

 

476

 

 

 

477

 

TOTAL ASSETS

 

$

17,082

 

 

$

11,220

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

796

 

 

$

331

 

Accrued liabilities

 

 

1,655

 

 

 

1,778

 

Operating lease liabilities

 

 

400

 

 

 

930

 

Note payable, related party

 

 

104

 

 

 

1,202

 

Convertible note

 

 

 

 

 

1,409

 

Other current liabilities

 

 

48

 

 

 

37

 

Total current liabilities

 

 

3,003

 

 

 

5,687

 

Operating lease liabilities-non-current

 

 

197

 

 

 

505

 

Warrant liability

 

 

 

 

 

4,055

 

Total liabilities

 

 

3,200

 

 

 

10,247

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock: 5,000 shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.01 par value; 75,000 shares and 50,000 shares authorized at September 30, 2020 and December 31, 2019, respectively; 41,760 and 27,938 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

417

 

 

 

279

 

Additional paid-in capital

 

 

147,774

 

 

 

125,718

 

Accumulated deficit

 

 

(134,309

)

 

 

(125,024

)

Total stockholders' equity

 

 

13,882

 

 

 

973

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

17,082

 

 

$

11,220

 

NOVABAY PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands except per share data)

         

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2020

 

2019

 

2020

 

2019

Sales:

 

 

 

 

 

 

 

 

Product revenue, net

 

$

2,167

 

 

$

1,615

 

 

$

8,038

 

 

$

4,854

 

Other revenue, net

 

 

3

 

 

 

 

 

 

8

 

 

 

41

 

Total sales, net

 

 

2,170

 

 

 

1,615

 

 

 

8,046

 

 

 

4,895

 

 

 

 

 

 

 

 

 

 

Product cost of goods sold

 

 

536

 

 

 

401

 

 

 

3,157

 

 

 

1,145

 

Gross profit

 

 

1,634

 

 

 

1,214

 

 

 

4,889

 

 

 

3,750

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

125

 

 

 

49

 

 

 

249

 

 

 

166

 

Sales and marketing

 

 

1,692

 

 

 

1,544

 

 

 

4,675

 

 

 

6,610

 

General and administrative

 

 

1,879

 

 

 

1,333

 

 

 

4,633

 

 

 

4,136

 

Total operating expenses

 

 

3,696

 

 

 

2,926

 

 

 

9,557

 

 

 

10,912

 

Operating loss

 

 

(2,062

)

 

 

(1,712

)

 

 

(4,668

)

 

 

(7,162

)

 

 

 

 

 

 

 

 

 

Non-cash (loss) gain on changes in fair value of warrant liability

 

 

(1,589

)

 

 

1,480

 

 

 

(5,224

)

 

 

936

 

Non-cash gain on changes in fair value of embedded derivative liability

 

 

1

 

 

 

669

 

 

 

3

 

 

 

423

 

Other income (expense), net

 

 

429

 

 

 

(719

)

 

 

605

 

 

 

(1,166

)

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(3,221

)

 

 

(282

)

 

 

(9,284

)

 

 

(6,969

)

Provision for income taxes

 

 

 

 

 

 

 

 

(1

)

 

 

(3

)

Net loss and comprehensive loss

 

$

(3,221

)

 

$

(282

)

 

$

(9,285

)

 

$

(6,972

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share attributable to common stockholders (basic)

 

$

(0.08

)

 

$

(0.01

)

 

$

(0.28

)

 

$

(0.36

)

Net loss per share attributable to common stockholders (diluted)

 

$

(0.08

)

 

$

(0.02

)

 

$

(0.28

)

 

$

(0.36

)

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (basic)

 

 

40,037

 

 

 

23,096

 

 

 

32,614

 

 

 

19,623

 

Weighted-average shares of common stock outstanding used in computing net loss per share of common stock (diluted)

 

 

40,067

 

 

 

23,213

 

 

 

32,642

 

 

 

19,623

 

 

Contacts

NovaBay Contact
Justin Hall
Chief Executive Officer and General Counsel
510-899-8800
jhall@novabay.com

Investor Contact
LHA Investor Relations
Jody Cain
310-691-7100
jcain@lhai.com

 
 

Source: NovaBay Pharmaceuticals, Inc.

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