NovaBay Works to Remedy Sales Slump

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EMERYVILLE, Calif.—NovaBay Pharmaceuticals (NYSE American: NBY), reported net sales for the first quarter ending March 31, 2019 of $1.5 million compared with $2.9 million for the first quarter of 2018. The company attributed the decrease due to lower unit sales and lower gross-to-net pricing of Avenova, its prescription eyelid cleaner. Gross margin on net product revenue was 77 percent for the first quarter of 2019 compared with 91 percent for the prior-year period, with the decrease due to lower product revenue.

“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 health care plan deductibles, the continuing trend toward individual high-deductible health care 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.”

NovaBay’s 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. The net loss for the first quarter of 2019 was $4.8 million compared with a net loss for the first quarter of 2018 of $2.2 million.

To decrease its losses, Hall said NovaBay will reduce operating expenses. He noted that the company has expanded its nationwide partner pharmacy program, a move designed to improve its gross-to-net pricing. It is also expanding its in-office sales channel in which they resell Avenova at affordable prices directly to their patient, and plans to open a direct-to-patient sales channel in the coming months.