NovaBay Pharma (NBY) Announces Strategic Realignment; May Spin Some non-Core Assets

NovaBay Pharma (AMEX: NBY) announces a refinement of business focus on products for the eye care market featuring three primary components designed to deliver commercial and business success:

1. Revenue Growth – NovaBay is expanding its sales and marketing team for Avenova™ daily-use prescription eye care product with more than 50 U.S. direct medical sales representatives expected to be in place in 2015.
2. Innovation – NovaBay will continue to develop innovative products for the eye care market and plans to add new products currently in development in the next 12 to 18 months.
3. Strategic Alternatives – While NovaBay remains committed to the partnerships it currently has in wound care with China’s Pioneer Pharma, Korea’s Shin-Poong Pharma and the Middle East’s Biopharm Group to market NeutroPhase; in animal care with Virbac; and in dermatology with Galderma, NovaBay intends to seek additional sources of revenue and reduce expenses by licensing or selling select assets in urology, dermatology, wound care and plastic surgery.

“Following a comprehensive review of our assets, competitive positions, markets and market dynamics we have determined that focusing on eye care affords NovaBay the best opportunity for near-term revenue growth and, ultimately, profitability and positive operating cash flow,” said Ron Najafi, Ph.D., Chairman and CEO of NovaBay. “In addition, we are committed to monetizing other assets. Expenses to support programs outside of eye care have been significantly reduced, unless these programs are funded through collaborations or partnerships.”

Revenue Growth

The eye care market that NovaBay is currently reaching through its direct medical sales representatives is very large. An estimated 30 million Americans suffer from eyelid conditions such as blepharitis, meibomian gland dysfunction (MGD) or dry eye syndrome, collectively representing an estimated $500 million annual market in the U.S. alone. NovaBay recently announced the rebranding of what was previously known as i-Lid Cleanser to Avenova, in order to more clearly differentiate this prescription product from over-the-counter (OTC) detergent-based lid wipes. NovaBay’s FDA-cleared* prescription product, Avenova, offers clear advantages as a part of the regimen for managing these disorders compared with alternative regimens that include antibiotics, steroids and detergent-based OTC cleansers.

Starting in September 2014, with 10 direct medical sales representatives led by eye care industry marketing leader Glenn Moro, NovaBay has proven the market potential for Avenova. “Based on the metrics and current performance, we will be expanding the sales force to 35 representatives by February and to approximately 50 representatives by July. These sales representatives will be calling on ophthalmologists and optometrists across the United States. NovaBay’s distribution agreements with McKesson Corporation and Vision Source have made this game-changing product available in 90 percent of the nation’s 67,000 pharmacies and in optometrists’ and ophthalmologists’ offices all across the country,” Glenn Moro commented.

With the active support of the key opinion leaders who have joined NovaBay’s Ophthalmic and Optometry Advisory Boards, NovaBay expects to continue its active educational and marketing programs throughout 2015. The company plans to have a very active presence at major eye care conferences in the coming months, including the American Academy of Ophthalmology, the American Optometric Association, the American Society of Cataract and Refractive Surgery Conferences and the South Eastern Congress of Optometry, as well as numerous Vision Expo meetings held around the U.S.

At meetings, in professional publications and in surveys, nationally prominent ophthalmologists and optometrists like Christine W. Sindt, O.D., Clinical Associate Professor of Ophthalmology and Visual Sciences at the University of Iowa’s Carver College of Medicine, and Art Epstein, O.D., Director of Clinical Research at Phoenix Eye Care, are reporting on the improvements in eye care from the use of Avenova. Patients also say that Avenova has brought long-sought relief after years of suffering.

Innovation

NovaBay will continue to innovate in eye care by creating or acquiring new products to be sold by its expanding field force of Medical representatives.

The company is developing new formulations of its Neutrox™ and Aganocide® product categories that will strengthen its position as an eye care innovator. NovaBay intends to create strong proprietary and clinical positions with novel formulations of Neutrox for the management of blepharitis and dry eye disease. An Aganocide-based topical product may complement the action of Neutrox-based solutions. The company also is developing a ground-breaking product that could revolutionize the care of contact lenses. NovaBay expects to introduce this product in the coming months.

NovaBay is actively evaluating a number of existing products to be synergistic with and complement Avenova. All products under consideration are intended to leverage the company’s proprietary field force of Medical Representatives and bolster productivity.

Strategic Alternatives for Other Assets

NovaBay intends to consider strategic alternatives for its assets and technology for programs not related to eye care. The company plans to retain and support its partnerships to market NeutroPhase with China Pioneer Pharma, Shin-Poong Pharma and the Biopharm Group. The potential markets are significant, with an estimated 24 million people suffering from diabetic ulcers and other chronic wounds in China alone, and millions more in Middle Eastern countries.

NovaBay also sees significant value in the proven ability of its Auriclosene (NVC-422) product to reduce the encrustation and blockage of in-dwelling urinary catheters. The company is now working with investment bankers to monetize that value by identifying the right partner. It is also working to sell or out-license its efforts in dermatology and other areas.

“We are excited about our new business strategy, which leverages our heritage while focusing operations on our largest market segment,” added Dr. Najafi. “While we look to the future with great optimism, we also are grateful for the hard work and dedication over the years by employees who are affected by a streamlining of our organization and extend best wishes to them in their future professional endeavors.”

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