NovaBay Pharma Offers 2013 Business Update

NovaBay®Pharmaceuticals, Inc. (NYSE: NBY), a biotechnology company focused onaddressing the large unmet therapeutic needs of the global anti-infectivemarket with first-in-class compounds such as its proprietary Aganocides®,today provided a business update highlighting recent accomplishments andoutlook for 2013.Dr. Ron Najafi, Chairman and Chief Executive Officer, said, "2012 was anexciting year for NovaBay. As a result of the hard work from our talentedemployees and partners, all three of our Aganocide programs, in ophthalmology,dermatology, and urology, are currently in Phase 2 clinical trials. Data isexpected from all of these trials in 2013.""We plan to use our recent $7 million financing to accelerate and expand theseclinical trials," Dr. Najafi continued. "For example, we anticipate that thesefunds will allow us to speed enrollment of patients with additional sites inour global Phase 2b study for adenoviral conjunctivitis. Additionally, weintend to use proceeds from this financing to conduct a Phase 2 study ofNVC-422 in bacterial conjunctivitis. We believe that having one product totreat both bacterial and viral conjunctivitis will place NovaBay in a leadingposition in the market. NVC-422 has the potential to be the conjunctivitisprescription, without need for a test to determine if a patient has thebacterial or the viral form of the disease."Dr. Najafi continued, "Our dermatology partner, Galderma, remains highlycommitted to our NVC-422 treatment for impetigo. Galderma's dedication todevelop this exciting and differentiated product candidate, with a very lowpotential of developing bacterial resistance, for the global 13 millionprescription impetigo market is unwavering."Dr. Najafi concluded, "In another confirmation of our products' potential,Pioneer Pharma expanded our January strategic marketing agreement aroundNeutroPhase® to include Southeast Asia as well as China. The agreementexpansion included a $2.5 million investment in NovaBay, with the potential ofanother $3 million in 2013. We were pleased to complete the first commercialshipment of NeutroPhase to Southeast Asia in December. NovaBay remainsdedicated to our mission of addressing the large unmet therapeutic needs ofthe global anti-infective market, and we are very pleased to see suchcommitment from our partners as well."BUSINESS OVERVIEW:OphthalmologyNovaBay's development focus in ophthalmology is to use the confirmedanti-viral and antibacterial properties of its proprietary NVC-422 compound todevelop the only single product capable of serving the $2 billion globalbacterial and viral conjunctivitis markets.The U.S. portion of the currently ongoing 450 patient global Phase 2b studyfor NVC-422 in adenoviral conjunctivitis launched in May, and recruitment isrunning ahead of schedule. Indian enrollment is expected to begin this month,with Brazilian enrollment expected in January of 2013. The recent financingwill enable NovaBay to accelerate this global Phase 2b study through theexpansion of the number of clinical sites. The Company expects to reportglobal trial results in the second half of 2013.The recent financing also provides NovaBay with the resources to conduct aPhase 2 study of NVC-422 as a treatment for bacterial conjunctivitis,facilitating NovaBay's ultimate goal of one product capable of treating bothviral and bacterial conjunctivitis.DermatologyNovaBay's development focus in dermatology is to support the ongoing Phase 2bglobal clinical trial for impetigo, a highly contagious skin infection thatmainly affects children. The study is being conducted by NovaBay's partnerGalderma S.A., a world-leading pharmaceutical company for the treatment ofdermatological conditions.In June 2012, NovaBay announced a successful End-of-Phase 2a meeting with theU.S. Food and Drug Administration (FDA), who provided valuable protocolguidance for the design of the Phase 2b study that started in September. Alsoin September, Galderma paid NovaBay $2.6 million in a previously agreed uponmilestone payment, in addition to ongoing research and development funding. Aspreviously stated, Galderma expects to report Phase 2b clinical data for theimpetigo study in mid 2013.UrologyNovaBay's development focus in urology is to use the confirmed antimicrobialproperties of NVC-422 to develop a urinary catheter irrigation solution forthe poorly served 330,000 chronically catheterized patients who suffer fromurinary catheter blockage and encrustation (UCBE). Current standard of carefor these patients involves flushing their catheters three times daily.Results have demonstrated that NVC-422 Irrigation Solution reduces the need toflush catheters to only two to three times weekly, significantly improvingpatient quality of life.The ongoing Phase 2 Proof of Concept clinical trial for the use of NVC-422 inthe treatment of UCBE continues at a steady pace, with data expected in thefirst half of 2013.Chronic Non-Healing WoundsNovaBay's focus in wound care is to commercialize its unique pure hypochlorousacid product, NeutroPhase®, for the treatment of chronic non-healing andsurgical wounds, by forming clinical partnerships in select markets around theworld. In January, NovaBay announced a strategic agreement with Pioneer Pharmato market NeutroPhase in China, and in September the two companies expandedthe agreement to include Southeast Asia. The expansion included a $2.5 millioninvestment in NovaBay, with the potential of an additional $3 million in 2013.NovaBay completed its first commercial shipment of NeutroPhase to SoutheastAsia in December.In April, NovaBay reported patient studies supporting the use of NeutroPhasein the management of chronic wounds at the Spring Symposium on Advanced WoundCare. In August, NovaBay received additional FDA 510(k) clearance for the useof NeutroPhase in the management of graft and donor-site surgical procedures.In September, NeutroPhase was utilized as a vital component of a successfulnew therapeutic technique for the management of necrotizing fasciitis, betterknown as "flesh-eating bacteria." Additionally, NeutroPhase manufacturing wasvalidated in the fourth quarter.NovaBay expects to continue to enter into additional NeutroPhase marketingalliances around the world in 2013.