NovaBay Pharma Offers 2013 Business Update

NovaBay® Pharmaceuticals, Inc.

, a biotechnology company focused on addressing the large unmet therapeutic needs of the global anti-infective market with first-in-class compounds such as its proprietary Aganocides®, today provided a business update highlighting recent accomplishments and outlook for 2013. Dr. Ron Najafi, Chairman and Chief Executive Officer, said, "2012 was an exciting year for NovaBay. As a result of the hard work from our talented employees and partners, all three of our Aganocide programs, in ophthalmology, dermatology, and urology, are currently in Phase 2 clinical trials. Data is expected from all of these trials in 2013." "We plan to use our recent $7 million financing to accelerate and expand these clinical trials," Dr. Najafi continued. "For example, we anticipate that these funds will allow us to speed enrollment of patients with additional sites in our global Phase 2b study for adenoviral conjunctivitis. Additionally, we intend to use proceeds from this financing to conduct a Phase 2 study of NVC-422 in bacterial conjunctivitis. We believe that having one product to treat both bacterial and viral conjunctivitis will place NovaBay in a leading position in the market. NVC-422 has the potential to be the conjunctivitis prescription, without need for a test to determine if a patient has the bacterial or the viral form of the disease." Dr. Najafi continued, "Our dermatology partner, Galderma, remains highly committed to our NVC-422 treatment for impetigo. Galderma's dedication to develop this exciting and differentiated product candidate, with a very low potential of developing bacterial resistance, for the global 13 million prescription impetigo market is unwavering." Dr. Najafi concluded, "In another confirmation of our products' potential, Pioneer Pharma expanded our January strategic marketing agreement around NeutroPhase® to include Southeast Asia as well as China. The agreement expansion included a $2.5 million investment in NovaBay, with the potential of another $3 million in 2013. We were pleased to complete the first commercial shipment of NeutroPhase to Southeast Asia in December. NovaBay remains dedicated to our mission of addressing the large unmet therapeutic needs of the global anti-infective market, and we are very pleased to see such commitment from our partners as well." BUSINESS OVERVIEW: Ophthalmology NovaBay's development focus in ophthalmology is to use the confirmed anti-viral and antibacterial properties of its proprietary NVC-422 compound to develop the only single product capable of serving the $2 billion global bacterial and viral conjunctivitis markets. The U.S. portion of the currently ongoing 450 patient global Phase 2b study for NVC-422 in adenoviral conjunctivitis launched in May, and recruitment is running ahead of schedule. Indian enrollment is expected to begin this month, with Brazilian enrollment expected in January of 2013. The recent financing will enable NovaBay to accelerate this global Phase 2b study through the expansion of the number of clinical sites. The Company expects to report global trial results in the second half of 2013. The recent financing also provides NovaBay with the resources to conduct a Phase 2 study of NVC-422 as a treatment for bacterial conjunctivitis, facilitating NovaBay's ultimate goal of one product capable of treating both viral and bacterial conjunctivitis. Dermatology NovaBay's development focus in dermatology is to support the ongoing Phase 2b global clinical trial for impetigo, a highly contagious skin infection that mainly affects children. The study is being conducted by NovaBay's partner Galderma S.A., a world-leading pharmaceutical company for the treatment of dermatological conditions. In June 2012, NovaBay announced a successful End-of-Phase 2a meeting with the U.S. Food and Drug Administration (FDA), who provided valuable protocol guidance for the design of the Phase 2b study that started in September. Also in September, Galderma paid NovaBay $2.6 million in a previously agreed upon milestone payment, in addition to ongoing research and development funding. As previously stated, Galderma expects to report Phase 2b clinical data for the impetigo study in mid 2013. Urology NovaBay's development focus in urology is to use the confirmed antimicrobial properties of NVC-422 to develop a urinary catheter irrigation solution for the poorly served 330,000 chronically catheterized patients who suffer from urinary catheter blockage and encrustation (UCBE). Current standard of care for these patients involves flushing their catheters three times daily. Results have demonstrated that NVC-422 Irrigation Solution reduces the need to flush catheters to only two to three times weekly, significantly improving patient quality of life. The ongoing Phase 2 Proof of Concept clinical trial for the use of NVC-422 in the treatment of UCBE continues at a steady pace, with data expected in the first half of 2013. Chronic Non-Healing Wounds NovaBay's focus in wound care is to commercialize its unique pure hypochlorous acid product, NeutroPhase®, for the treatment of chronic non-healing and surgical wounds, by forming clinical partnerships in select markets around the world. In January, NovaBay announced a strategic agreement with Pioneer Pharma to market NeutroPhase in China, and in September the two companies expanded the agreement to include Southeast Asia. The expansion included a $2.5 million investment in NovaBay, with the potential of an additional $3 million in 2013. NovaBay completed its first commercial shipment of NeutroPhase to Southeast Asia in December. In April, NovaBay reported patient studies supporting the use of NeutroPhase in the management of chronic wounds at the Spring Symposium on Advanced Wound Care. In August, NovaBay received additional FDA 510(k) clearance for the use of NeutroPhase in the management of graft and donor-site surgical procedures. In September, NeutroPhase was utilized as a vital component of a successful new therapeutic technique for the management of necrotizing fasciitis, better known as "flesh-eating bacteria." Additionally, NeutroPhase manufacturing was validated in the fourth quarter. NovaBay expects to continue to enter into additional NeutroPhase marketing alliances around the world in 2013.