Business Wire | Aug 12, 2021 04:05PM EDT

NovaBay Pharmaceuticals Reports Second Quarter 2021 Financial Results

Aug. 12, 2021

EMERYVILLE, Calif.--(BUSINESS WIRE)--Aug. 12, 2021--NovaBay(r) Pharmaceuticals, Inc. (NYSE American: NBY) reports financial results for the three and six months ended June 30, 2021 and provides a business update.

"Unit sales reached a new quarterly record as more people than ever before are using and benefitting from Avenova," said Justin Hall, President and CEO of NovaBay Pharmaceuticals. "We also are reporting record revenue from the over-the-counter channel that increased sequentially from the first quarter of this year and more than doubled from the prior-year quarter. We anticipate continued growth through the direct-to-consumer channel driven by the recent launch of our new digital advertising campaigns. Additionally, customers are finding it easier than ever to purchase Avenova with our product now on the shelves of more than 5,000 CVS stores across the U.S.

"Avenova has growth potential among the 30 million Americans who suffer from the symptoms of dry eye and we are exploiting this opportunity with increasingly sophisticated direct-to-consumer marketing," he added. "We also see significant opportunity for our prescription product. We have new resources focused on the prescription channel through our recently announced partnership with ImprimisRx, which is promoting Avenova to their nationwide customer base of thousands of eyecare specialists. This is a cost-effective means to expand our reach with a partner that has proven success with other prescription ophthalmic products.

"I would like to underscore the strength of our balance sheet and our ability to execute on our growth initiatives with financial resources we believe are sufficient to fund current operations beyond 2022," Mr. Hall said. "A key growth priority is expanding our product portfolio. To this end, we are negotiating with several opportunities to acquire or license products that allow us to leverage our competencies in the ophthalmic and skincare markets."

Second Quarter Financial Results

Net product revenue for the second quarter of 2021 was $2.1 million, compared with $4.0 million for the second quarter of 2020, which included $2.8 million in sales of KN95 masks. There were no sales of KN95 masks in the 2021 quarter. Avenova revenue for the second quarter of 2021 was $1.9 million, up 65% from $1.1 million for the second quarter of 2020. The increase reflects a higher number of OTC units sold, partially offset by a decrease in the number of net units sold through pharmacy channels as our customers continue the general trend toward online purchasing.

Gross margin on total net sales for the second quarter of 2021 was 71%, compared with 49% for the second quarter of 2020. The improvement reflects higher Avenova revenue in the 2021 quarter and the fact that we are no longer selling low-margin KN95 masks.

Operating expenses for the second quarter of 2021 were $3.4 million, compared with $3.0 million for the second quarter of 2020. Sales and marketing expenses for the second quarter of 2021 were $1.8 million, compared with $1.4 million for the second quarter of 2020, with the increase due to higher digital advertising costs partially offset by lower sales personnel headcount. General and administrative (G&A) expenses for the second quarter of 2021 were generally unchanged at $1.6 million, compared with $1.5 million for the second quarter of 2020. Research and development (R&D) expenses for the second quarter of 2021 declined to $21,000 from $115,000 for the prior-year period.

Non-cash loss on the change of fair value of warrant liability for the second quarter of 2020 was $3.8 million. The warrants underlying this result were eliminated, and we recorded no comparable expense for the second quarter of 2021.

Net loss for the second quarter of 2021 was $1.9 million, or $0.04 per share, an improvement from the loss for the second quarter of 2020 of $4.5 million, or $0.15 per share.

Six Month Financial Results

Net product revenue for the six months ended June 30, 2021 was $3.9 million, compared with $5.9 million for the six months ended June 30, 2020.

Gross margin on net product revenue for the first half of 2021 was 73%, compared with 55% for the first half of 2020.

For the six months ended June 30, 2021, sales and marketing expenses increased by 16%, G&A expenses were relatively unchanged and R&D expenses decreased modestly, all compared with the six months ended June 30, 2020.

Non-cash loss on the change of fair value of warrant liability for the first six months of 2020 was $3.6 million. There was no comparable result for the first six months of 2021.

The net loss for the six months ended June 30, 2021 was $3.4 million, or $0.08 per share, compared with a net loss for the six months ended June 30, 2020 of $6.1 million, or $0.21 per share.

NovaBay reported cash and cash equivalents of $10.3 million as of June 30, 2021, compared with $12.0 million as of December 31, 2020. During the six months ended June 30, 2021, the Company raised net proceeds of $1.8 million from the sale of common stock through an ATM agreement.

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 866-777-2509 from within the U.S. or 412-317-5413 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 September 2, 2021 by dialing 877-344-7529 from within the U.S., 855-669-9658 from Canada or 412-317-0088 from outside the U.S., and entering the conference identification number 10157994.

About NovaBay Pharmaceuticals, Inc.: Going Beyond Antibiotics(r)

NovaBay Pharmaceuticals, Inc. is a biopharmaceutical company focusing on high-quality, differentiated, anti-infective consumer products: Avenova(r), the premier antimicrobial lid and lash spray, CelleRx(r) Clinical Reset(tm), a breakthrough product in the beauty category, and NeutroPhase(r) Skin and Wound Cleanser for wound healing. NovaBay's products are formulated with its patented, pure, stable, pharmaceutical-grade hypochlorous acid that replicates the antimicrobial chemicals used by white blood cells to fight infection. NovaBay's hypochlorous acid products do not cause stinging or irritation, are non-toxic and non-sensitizing, making them completely safe for regular use. Avenova is the only commercial hypochlorous acid lid and lash spray product clinically proven to reduce bacterial load on ocular skin surfaces, thus effectively addressing the underlying cause of bacterial dry eye.

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, potential opportunities for revenue accretion 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 including through strategic acquisitions or licensing opportunities, expanded access to our products, and any future revenue that may result from selling these products, as well as 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, 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, and revenues will not be sufficient to meet the Company's cash needs. 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 InformationFor NovaBay Avenova purchasing information: Please call 800-890-0329 or email sales@avenova.com. Avenova.com

CelleRx Clinical Reset Purchasing InformationFor NovaBay CelleRx Clinical Reset purchasing information Please call 877-CELLERX www.CelleRx.com

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except par value amounts)

June 30, December 31,

2021 2020

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents $ 10,294 $ 11,952

Accounts receivable, net of allowance fordoubtful accounts ($0 at June 30, 2021 and 1,232 1,106 December 31, 2020)

Inventory, net of allowance for excess andobsolete inventory ($185 and $236 at June 30, 682 608 2021 and December 31, 2020, respectively)

Prepaid expenses and other current assets 564 576

Total current assets 12,772 14,242

Operating lease right-of-use assets 262 436

Property and equipment, net 94 84

Other assets 475 476

TOTAL ASSETS $ 13,603 $ 15,238



LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:

Current liabilities:

Accounts payable $ 208 $ 302

Accrued liabilities 1,883 2,115

Operating lease liabilities 298 416

Total current liabilities 2,389 2,833

Operating lease liabilities-non-current 5 87

Total liabilities 2,394 2,920



Stockholders' equity:

Preferred stock: 5,000 shares authorized; noneissued and outstanding at June 30, 2021 and - - December 31, 2020

Common stock, $0.01 par value; 100,000 and 75,000shares authorized at June 30, 2021 and December31, 2020, respectively; 44,615 and 41,782 shares 447 418 issued and outstanding at June 30, 2021 andDecember 31, 2020, respectively

Additional paid-in capital 150,202 147,963

Accumulated deficit (139,440 ) (136,063 )

Total stockholders' equity 11,209 12,318

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,603 $ 15,238

NOVABAY PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands except per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Sales:

Product revenue, net

$

2,126

$

3,979

$

3,927

$

5,871

Other revenue, net

7

5

13

5

Total sales, net

2,133

3,984

3,940

5,876

Product cost of goods sold

614

2,040

1,069

2,621

Gross profit

1,519

1,944

2,871

3,255

Operating expenses:

Research and development

21

115

26

124

Sales and marketing

1,788

1,423

3,468

2,983

General and administrative

1,569

1,477

2,756

2,754

Total operating expenses

3,378

3,015

6,250

5,861

Operating loss

(1,859

)

(1,071

)

(3,379

)

(2,606

)

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

-

(3,772

)

-

(3,635

)

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

-

-

-

2

Other income, net

-

362

2

176

Loss before provision for income taxes

(1,859

)

(4,481

)

(3,377

)

(6,063

)

Provision for income taxes

-

(1

)

-

(1

)

Net loss and comprehensive loss

$

(1,859

)

$

(4,482

)

$

(3,377

)

$

(6,064

)

Net loss per share (basic and diluted)

$

(0.04

)

$

(0.15

)

$

(0.08

)

(0.21

)

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

42,561

30,384

42,174

$

29,012

View source version on businesswire.com: https://www.businesswire.com/news/home/20210812005105/en/

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

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