NovaBay Announces Positive Phase I Study Results with Its Lead Aganocide Compound

    Product Shown to be Safe as First Step Towards Its Potential Use in
Controlling MRSA in Hospitals

    Novel, Topically Applied, Non-Antibiotic, Anti-Infective Compound to
Commence a Phase IIa Study in Humans by January 2008

    EMERYVILLE, CALIF., November 26 /CNW/ - NovaBay Pharmaceuticals, Inc.
(AMEX & TSX: NBY,, a biopharmaceutical company
developing products for the treatment or prevention of a wide range of
bacterial and viral infections, reports results from a Phase I trial studying
the lead Aganocide compound, NVC-422, a novel non-antibiotic anti-infective
that has shown potent in vitro activity against major pathogens, including
methicillin-resistant Staphylococcus aureus (MRSA).

    Nasal colonization of Staphylococcus aureus, including MRSA, is an
important risk factor that predisposes the carrier to infections during
invasive hospital procedures. The results of the Phase I trials show that when
topically applied to the anterior nares (the lower nasal passages), NVC-422
appears safe and well tolerated with undetectable systemic exposure. Based on
these results, NovaBay has commenced a second Phase I trial to test the safety
of NVC-422 at a higher dose and expects to have results from this second study
by early 2008. In parallel with the second Phase I study, NovaBay expects to
commence a Phase IIa study by January 2008 in healthy volunteers that are
carriers of Staphylococcus aureus in their nasal passages.

    "AgaNase (NVC-422 for nasal applications) has the potential to be an
important treatment option for physicians in the ongoing fight against
drug-resistant infections, including MRSA, a growing public health concern in
the hospital," said Dr. Ron Najafi, NovaBay's Chairman and Chief Executive
Officer. "With this excellent preliminary safety data, we intend to move
forward into additional trials to study the safety and efficacy of NVC-422 in
volunteers and patients at risk of infection."

    In this double-blind placebo controlled Phase I trial of AgaNase, safety
and tolerability were tested following repeated applications of AgaNase, using
various concentrations (0.1% and 0.3%) and regimens, applied by spray or swab
to the anterior nares. A total of ninety-six subjects were enrolled and
completed the study. Any adverse events were local, mild, and transient and
did not appear to increase at higher doses. No serious adverse events were
observed in any study subject. There was no detectable systemic absorption of
NVC-422 or its major metabolite.

    About Surgical Site Infection

    When a Surgical Site Infection (SSI) occurs, it can be a major problem,
resulting, in the best cases, in a longer stay in hospital and, in the worst
cases, in death. Staphylococcal infections have been reported as a major cause
of SSI over many years. Several recent studies have shown that in many parts
of the world, including the United States, there has been a rapid increase in
the proportion of SSIs that are being caused by MRSA. An SSI caused by MRSA
has a significantly higher mortality rate and more extensive hospitalization
stays than SSIs caused by methicillin-susceptible Staphylococcus aureus. In
some hospitals, mupirocin, a topical antibiotic, has been used to reduce
Staphylococcus colonization in the nose, but the proportion of Staphylococcus
aureus that is now being found to be resistant to mupirocin is increasing,
including MRSA that has also become resistant to mupirocin.

    About AgaNase (NVC-422 for pre-surgery nasal decolonization of MRSA)

    NVC-422 is a novel topical non-antibiotic anti-infective compound that
destroys pathogens extremely rapidly. In vitro, NVC-422 is highly active
against gram-positive and gram-negative bacteria, yeast and viruses, including
drug-resistant strains such as MRSA, mupirocin-resistant and
vancomycin-resistant Staphylococcus aureus. AgaNase is being developed to
reduce the risk of SSIs and to reduce the risk of MRSA infections in hospital
environments. AgaNase is not an antibiotic and unlikely to contribute to
antibiotic resistance.

    About NovaBay

    NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focused on
developing innovative product candidates for 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, based upon small molecules
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 MRSA.
NovaBay has entered into a licensing and research collaboration agreement with
an affiliate of Alcon, Inc. for use of the Aganocide compounds in eye, ear and
sinus infections and in contact lens solutions and also a license agreement
with an affiliate of Kinetic Concepts, Inc. for the use of NovaBay's
NeutroPhase product in woundcare applications.

    NovaBay(TM), AgaNase(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.

    For more information visit the Company's website at

    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.

For further information:

For further information: Investor Relations: The Investor Relations
Group Adam Holdsworth / Rachel Colgate / Erica Ruderman 212-825-3210 or Media
Relations: Janet Vasquez / Susan Morgenbesser 212-825-3210

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