NovaBay announces third quarter 2007 financial results



    EMERYVILLE, CA, Nov. 15 /CNW/ - NovaBay Pharmaceuticals, Inc. (AMEX &
TSX: NBY), a biopharmaceutical company focused on developing non-antibiotic
anti-infective products targeting the treatment or prevention of a wide range
of bacterial and viral infections, today reported results for the third
quarter ended September 30, 2007.
    Net loss for the quarter ended September 30, 2007 was $1.6 million, or
$0.24 per share, as compared to a net loss of $1.5 million, or $0.24 per
share, for the third quarter of 2006. For the nine months ended September 30,
2007, NovaBay reported a net loss of $4.0 million, or $0.62 per share, as
compared to a net loss of $4.2 million, or $0.76 per share, for the nine
months ended September 30, 2006.
    As of September 30, 2007, NovaBay had $6.9 million in cash, cash
equivalents and investments. At September 30, 2007, there were outstanding
6,632,170 shares of common stock and 19,227,195 shares of preferred stock
(which were convertible into 9,613,554 shares of common stock).

    Recent Developments and Corporate Highlights:

    
        On October 31, 2007, NovaBay completed its initial public offering of
        5,000,000 shares of common stock at a price to the public of
        $4.00 per share, and received net proceeds of approximately
        $17.2 million after deducting underwriting discounts and commissions
        of $1.4 million and other offering costs of approximately
        $1.4 million. The underwriters have an option to purchase an
        additional 750,000 shares of common stock until 30 days after the
        closing of the IPO. Upon the closing of the IPO, all shares of
        convertible preferred stock outstanding automatically converted into
        9,613,554 shares of common stock. As of the closing of the initial
        public offering, the Company had 21,254,474 shares of common stock
        outstanding and $24.2 million in cash, cash equivalents and
        investments.

        At the end of September 2007, NovaBay received clearance from the
        U.S. Food and Drug Administration (FDA) for its NeutroPhase woundcare
        product. NeutroPhase is NovaBay's proprietary solution of
        hypochlorous acid, a molecule that is naturally produced by the
        body's immune system to protect against pathogens. NeutroPhase has
        been cleared by the FDA as a prescription product for moistening
        absorbent wound dressings, irrigating and cleaning minor cuts, minor
        burns, superficial abrasions and minor irritations of the skin, and
        moistening, debriding and irrigating acute and chronic dermal
        lesions, such as stage I-IV pressure ulcers, stasis ulcers, leg
        ulcers, diabetic foot ulcers, post-surgical wounds, first and second
        degree burns, and abrasions and minor irritations of the skin.
        NeutroPhase has been licensed to an affiliate of Kinetic Concepts,
        Inc. for development and commercialization purposes within the field
        of wound healing.

        At the end of September 2007, NovaBay completed the treatment phase
        of the Phase I safety trial for NVC-422, NovaBay's lead compound in a
        class of antimicrobial compounds that it calls the Aganocide
        compounds, for the decolonization of the nasal passages prior to
        surgery. A total of 96 subjects were enrolled in the trial. NVC-422
        is being developed for use prior to surgery to kill pathogens in the
        nasal passages, including Methicillin-Resistant Staphylococcus aureus
        (MRSA). The presence of MRSA in the nasal passages has been
        associated with a significant increase in the risk of surgical
        infection and our development program is aimed at reducing this risk.

        During the third quarter of 2007, NovaBay initiated toxicology
        studies for NVC-422 for the prevention of catheter associated urinary
        tract infections, a significant source of hospital-associated
        infections. An Investigational New Drug application for this
        indication is expected to be filed with the FDA before the end of
        2007.

        During the third quarter of 2007, NovaBay continued its work to
        develop its Aganocide compounds with its partner, an affiliate of
        Alcon, Inc., for use in the treatment of infections in the eye, ear
        and sinus and in contact lens solutions.
    

    About NovaBay

    NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focused on
developing innovative product candidates targeting the treatment or prevention
of a wide range of infections in hospital and non-hospital environments.
NovaBay has discovered and is developing a class of non-antibiotic
anti-infective compounds, which it has named Aganocide compounds, which are
based upon small molecules that are generated by white blood cells that defend
the body against invading pathogens. NovaBay believes that Aganocide compounds
could form a platform on which to create a variety of products to address
differing needs in the treatment and prevention of bacterial and viral
infections, including Methicillin-Resistant Staphylococcus aureus (MRSA).
NovaBay has entered into a licensing and research collaboration agreement with
an affiliate of Alcon, Inc. for use of the Aganocide compounds in the eye, ear
and sinus and in contact lens solutions and a license agreement with an
affiliate of Kinetic Concepts, Inc. for the use of NovaBay's NeutroPhase
product in woundcare applications.

    NovaBay(TM) , Aganocide(TM) and NeutroPhase(TM) are trademarks of NovaBay
    Pharmaceuticals, Inc. All other trademarks and trade names are the
    property of their respective owners.

    Forward Looking Statements

    This release contains forward-looking statements, which are based upon
management's current expectations, assumptions, estimates, projections and
beliefs. These statements include, but are not limited to, statements
regarding the development and potential benefits of, and the market
opportunities for, NovaBay's product candidates. Forward-looking 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
discovery, development, testing, regulatory approval, production and marketing
of the company's product candidates, unexpected adverse side effects or
inadequate therapeutic efficacy of the product candidates, the uncertainty of
patent protection for the company's intellectual property or trade secrets,
the company's ability to obtain additional financing as necessary and
unanticipated research and development and other costs. 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.
                        (a development stage company)
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (in thousands, except per share data)
                                 (unaudited)

                           Three Months Ended           Nine Months Ended
                              September 30,               September 30,
                              2006          2007          2006          2007
                       ------------- ------------- --------------------------
    REVENUE
      License and
       collaboration
       revenue         $       208   $     1,444   $       208   $     4,392
                      ------------- ------------- ------------- -------------
      Total revenue            208         1,444           208         4,392

    EXPENSES
    Operating Expenses:
      Research and
       development           1,122         2,051         2,441         5,580
      General and
       administrative          634         1,021         2,065         3,125
                      ------------- ------------- ------------- -------------
      Total operating
       expenses              1,756         3,072         4,506         8,705
    Other income, net           58            72            97           307
                      ------------- ------------- ------------- -------------
    Net loss           $    (1,490)  $    (1,556)  $    (4,201)  $    (4,006)
                      ------------- ------------- ------------- -------------
                      ------------- ------------- ------------- -------------

    Basic and diluted
     net loss per
     share             $     (0.24)  $     (0.24)  $     (0.76)  $     (0.62)

    Shares used to
     compute basic and
     diluted net loss
     per share               6,234         6,564         5,524         6,494



                        NOVABAY PHARMACEUTICALS, INC.
                        (a development stage company)
                           CONDENSED BALANCE SHEETS
                               (in thousands)

                                                   December 31, September 30,
                                                          2006          2007
                                                  ------------- -------------
                                                                  (unaudited)
    ASSETS
      Current assets:
        Cash, cash equivalents and investments     $    11,086   $     6,881
        Prepaid expenses and other current assets          226           364
                                                  ------------- -------------
        Total current assets                            11,312         7,245
      Property and equipment, net                          554           912
                                                  ------------- -------------
      TOTAL ASSETS                                 $    11,866   $     8,157
                                                  ------------- -------------
                                                  ------------- -------------

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Liabilities:
      Current liabilities:
        Accounts payable and accrued liabilities   $       886   $     1,878
        Deferred revenue                                 2,500         3,377
        Other current liabilities                            -           170
                                                  ------------- -------------
        Total current liabilities                        3,386         5,425
      Deferred revenue - non-current                     6,667         4,951
      Other non-current liabilities                          -           373
                                                  ------------- -------------
      Total liabilities                                 10,053        10,749
                                                  ------------- -------------

    Stockholders' Equity (Deficit):
      Convertible preferred stock                          192           192
      Common stock                                          63            66
      Additional paid-in capital                        14,620        14,207
      Accumulated other comprehensive income                12            23
      Accumulated deficit during development stage     (13,074)      (17,080)
                                                  ------------- -------------
      Total stockholders' equity (deficit)               1,813        (2,592)
                                                  ------------- -------------
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $    11,866   $     8,157
                                                  ------------- -------------
                                                  ------------- -------------
    





For further information:

For further information: Investor Relations: Theresa Granados, Manager,
Investor Relations, (510) 899-8870, tgranados@novabaypharma.com

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NOVABAY PHARMACEUTICALS, INC.

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