NovaBay Pharmaceuticals Reports First Quarter 2019 Financial Results
May 9, 2019Conference 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
months ended March 31, 2019 and provides a business update.
“As we discussed when reporting fourth quarter 2018 financial results,
net sales for the first quarter of 2019 were impacted by significant
industry-wide changes in the reimbursement of branded pharmaceutical
products,” said Justin Hall, interim President and CEO. “Our objective
remains to make Avenova affordable to patients through rebates and
coupons. However, the annual reset in healthcare plan deductibles, the
continuing trend toward individual high-deductible healthcare plans
along with the decision by certain nationwide insurers to end
reimbursement coverage for Avenova are affecting unit sales and
gross-to-net pricing more than in past years.
“We are adapting to this new reimbursement environment with various
strategies to ensure that Avenova is affordable and accessible to all
patients while providing NovaBay with appropriate economics,” he said.
“We have expanded our partner pharmacy program that serves patients in
all 50 states, ensuring product availability at the best pricing. This
program has the added benefit of contracted pricing for Avenova,
therefore improving our gross-to-net pricing. We are also opening
opportunities for more eye care specialists to access our in-office
sales channel in which they resell Avenova at affordable prices directly
to their patients. We plan in the coming months to further broaden
access to Avenova through an entirely new direct-to-patient sales
channel.
“In March we implemented the strategic shift in our commercial
operations and, as such, expenses for the first quarter reflect our
prior strategy,” he added. “We expect to begin realizing cost savings
from this reduction in force in the second quarter, and to significantly
reduce operating expenses over the remainder of 2019.”
First Quarter Financial Results
Net sales for the first quarter of 2019 were $1.5 million compared with
$2.9 million for the first quarter of 2018, with the decrease due to
lower unit sales and lower gross-to-net pricing of Avenova. Gross margin
on net product revenue was 77% for the first quarter of 2019 compared
with 91% for the prior-year period, with the decrease due to lower
product revenue.
Sales and marketing expenses for the first quarter of 2019 were $3.5
million compared with $3.4 million for the first quarter of 2018.
General and administrative expenses for the first quarters of 2019 and
2018 were unchanged at $1.6 million. Research and development expenses
for the first quarter of 2019 were $85,000 compared with $46,000 for
2018.
Operating loss for the first quarter of 2019 was $4.1 million compared
with an operating loss of $2.4 million for the first quarter of 2018.
Non-cash loss on the change of fair value of warrant liability for the
first quarter of 2019 was $0.1 million compared with a non-cash gain of
$0.2 million for the first quarter of 2018.
Non-cash loss on the embedded derivative associated with the convertible
note for the first quarter of 2019 was $0.6 million. The Company did not
record a comparable loss or gain for the first quarter of 2018. The
Company is working with its auditors and outside consultants regarding
the valuation of the convertible note, which may cause a variation in
the financials reported in the Company’s Form 10-Q.
The net loss for the first quarter of 2019 was $4.8 million, or $0.28
per share, compared with a net loss for the first quarter of 2018 of
$2.2 million, or $0.13 per share.
NovaBay reported cash and cash equivalents of $2.9 million as of March
31, 2019, compared with $3.2 million as of December 31, 2018.
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 800-608-8202 from within the U.S. or
702-495-1913 from outside the U.S., with the conference identification
number 8495204.
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 ends through 8:59 p.m. Eastern time May
17, 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
8495204.
Receipt of Audit Opinion with Going Concern Qualification
As disclosed in its Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, which was filed with the Securities and Exchange
Commission on March 29, 2019 and amended on April 12, 2019, the
Company’s audited financial statements contained a going concern
explanatory paragraph in the audit opinion from its independent
registered public accounting firm. This announcement does not represent
any change or amendment to the Company’s financial statements or to its
Annual Report on Form 10-K for the fiscal year ended December 31, 2018,
as amended.
About Avenova®
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.
Forward-Looking Statements
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 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.
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Avenova Purchasing Information
For
NovaBay Avenova purchasing information:
Please call 800-890-0329 or
email [email protected].
www.Avenova.com
| NOVABAY PHARMACEUTICALS, INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (in thousands, except par value amounts) | |||||||||||
| March 31, | December 31, | ||||||||||
| 2019 | 2018 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,932 | $ | 3,183 | |||||||
|
Accounts receivable, net of allowance for doubtful accounts ($24 and $10 at March 31, 2019 and December 31, 2018, respectively) |
2,430 | 3,385 | |||||||||
|
Inventory, net of allowance for excess and obsolete inventory and lower of cost or estimated net realizable value adjustments ($110 and $104 at March 31, 2019 and December 31, 2018, respectively) |
302 | 280 | |||||||||
| Prepaid expenses and other current assets | 1,451 | 1,760 | |||||||||
| Total current assets | 7,115 | 8,608 | |||||||||
| Operating lease right-of-use assets | 1,870 | – | |||||||||
| Property and equipment, net | 193 | 201 | |||||||||
| Other assets | 542 | 552 | |||||||||
| TOTAL ASSETS | $ | 9,720 | $ | 9,361 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Liabilities: | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 462 | $ | 551 | |||||||
| Accrued liabilities | 2,860 | 3,255 | |||||||||
| Deferred revenue | – | 41 | |||||||||
| Operating lease liabilities | 1,073 | – | |||||||||
| Notes payable, related party | 1,019 | – | |||||||||
| Total current liabilities | 5,414 | 3,847 | |||||||||
| Operating lease liabilities-non-current | 1,143 | – | |||||||||
| Deferred rent | – | 184 | |||||||||
| Warrant liability | 179 | 178 | |||||||||
| Convertible note | 33 | – | |||||||||
|
Embedded derivative liability associated with the convertible note |
2,410 | – | |||||||||
| Other liabilities | 201 | 198 | |||||||||
| Total liabilities | 9,380 | 4,407 | |||||||||
|
Stockholders’ equity: |
|||||||||||
|
Preferred stock: 5,000 shares authorized; none outstanding at March 31, 2019 and December 31, 2018 |
— | — | |||||||||
|
Common stock, $0.01 par value; 50,000 shares authorized; 17,095 and 17,089 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
171 | 171 | |||||||||
| Additional paid-in capital | 120,300 | 119,764 | |||||||||
| Accumulated deficit | (120,131 | ) | (114,981 | ) | |||||||
| Total stockholders’ equity | 340 | 4,954 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 9,720 | $ | 9,361 | |||||||
| NOVABAY PHARMACEUTICALS, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||||||||||
| (Unaudited) | ||||||||||||
| (in thousands except per share data) | ||||||||||||
| Three Months Ended March 31, | ||||||||||||
| 2019 | 2018 | |||||||||||
| Sales: | ||||||||||||
| Product revenue, net | $ | 1,450 | $ | 2,934 | ||||||||
| Other revenue | 41 | 13 | ||||||||||
| Total sales, net | 1,491 | 2,947 | ||||||||||
| Product cost of goods sold | 341 | 251 | ||||||||||
| Gross profit | 1,150 | 2,696 | ||||||||||
| Research and development | 85 | 46 | ||||||||||
| Sales and marketing | 3,531 | 3,396 | ||||||||||
| General and administrative | 1,605 | 1,622 | ||||||||||
| Total operating expenses | 5,221 | 5,064 | ||||||||||
| Operating loss | (4,071 | ) | (2,368 | ) | ||||||||
| Non cash (loss) gain on changes in fair value of warrant liability | (57 | ) | 214 | |||||||||
| Non cash loss on embedded derivative associated | ||||||||||||
| with the convertible note | (592 | ) | – | |||||||||
| Other (expense) income, net | (73 | ) | 4 | |||||||||
| Loss before provision for income taxes | (4,793 | ) | (2,150 | ) | ||||||||
| Provision for income tax | (1 | ) | – | |||||||||
| Net loss and comprehensive loss | $ | (4,794 | ) | $ | (2,150 | ) | ||||||
| Net loss per share attributable to common stockholders, basic | $ | (0.28 | ) | $ | (0.13 | ) | ||||||
| Net loss per share attributable to common stockholders, diluted | $ | (0.28 | ) | $ | (0.14 | ) | ||||||
|
Weighted-average shares of common stock outstanding used in computing net loss per share of common stock |
||||||||||||
| Basic | 17,093 | 16,406 | ||||||||||
| Diluted | 17,093 | 16,670 | ||||||||||
Contacts
NovaBay Contact
Justin Hall
Interim
President and Chief Executive Officer
510-899-8800
[email protected]
Investor Contact
LHA Investor
Relations
Jody Cain
310-691-7100
[email protected]