going beyond antibiotics - novabay...

Going Beyond Antibiotics®

Developing and Commercializing

Anti‐Infective Products that Fight Infections without Giving Rise to Resistance

December, 2016

NYSE MKT: NBYwww.novabay.com

This presentation contains forward‐looking statements, within the meaning of applicable U.S. securities laws,

which statements can, in some cases, be identified with terms such as “project,” “believe,” “may,” “plan,”

“will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “target,” “potential” and other similar

expressions. These forward‐looking statements reflect NovaBay’s current expectation and assumptions, such

as expected market potential and market acceptance of our products and are subject to a number of risks

and uncertainties that could cause actual results to differ materially from those anticipated. These risks and

uncertainties include, but are not limited to, changing market conditions, the successful and timely

completion of clinical studies, the establishment of corporate alliances, the impact of competitive products

and pricing, new product development, uncertainties related to the regulatory approval process and other

risks detailed in the Company's filings with the SEC, which filings can be found at www.sec.gov. Given these

risks and uncertainties, you are cautioned not to place undue reliance on such forward‐looking statements.

The Company undertakes no obligation to publicly update or revise any forward‐looking statements either as

a result of new information, future events or otherwise, except as required by applicable U.S. securities laws.

Forward‐Looking Statements

2

Mark Sieczkarek‐Background

35 years in the Life Sciences‐ Large and Small Companies Pharmaceutical, Consumer, Diagnostics and Medical Devices Finance Sales & Marketing Manufacturing Mergers and Acquisitions General Management

Bristol‐Myers‐Senior Vice‐President Sanofi‐COO of US Diagnostics Unit Kos‐VP CFO

Sold to Abbott for $6.2B Bausch & Lomb‐President of the America’s & Europe Conceptus‐ CEO and President

Sold to Bayer for $1.1B Solta – Chairman, CEO and President

Sold to Valeant for $250M NovaBay‐ Chairman, CEO

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Neutrophil

Red Blood Cells

Pathogen

Neutrophils – Our first line of defense against infectionsProduce broad spectrum antimicrobials that do not give rise to resistance

The Foundation of NovaBay TechnologyDevelop Anti‐Microbial Molecules that Mimic Those Produced by Neutrophils

NovaBay’s Breakthrough: Auriclosene®

• Retains chlorine “warhead”• Two year stability • Phase 2b UCBE clinical positive• Ready for Pivotal Trials

White Blood Cell

Natural molecule: Hypochlorous Acid (HOCl)

Fast Acting, broad spectrum anti‐microbial, difficult to mfg

NovaBay’s Breakthrough:

Neutrox® • Proprietary formulation, pure HOCl• Two year stability• FDA Cleared / Commercial Stage

Natural Molecule: N‐Chlorotaurine (NCT)

Longer Acting, Effective; BUT Unstable

Two Distinct Anti-Infective Product Groups

WW: $600MWW: $700M

Aganocides®Lead: Auriclosene®(Advanced Clinical)

Neutrox®

Based Products (FDA Cleared – Commercial)

Urology UCBE

(Urinary Catheter Blockage and Encrustation)

41 Million U.S. Patients• Blepharitis• Dry Eye• Surgeries

6 Million U.S. Chronic Wounds• Ulcers, bed sores• Necrotizing Fasciitis• Ebola

300,000 Chronically catheterized in U.S.100,000 Chronic blockage• Paraplegics, quadriplegics• High morbidity, mortality• No warning signs of blockage• Two Phase 2b trials successful• Ready for pivotal Ph 3 registration trials

Going Beyond Antibiotics®Harnessing the Anti‐Infective Power

of White Blood Cell Chemistry

Developing and Commercializing

Anti‐Infective Products that Fight Infections without Giving Rise to Resistance


September 19, 2016

NovaBay Pharmaceuticals

Commercializing

Avenova® Lid and Lash Hygiene

in the U.S. Eye Care Market

September 19, 2016


Strategic Focus on Eye Care 2 Initiatives Targeting Commercial Growth and Cash Flow Breakeven

9

1. Continue revenue Growth from sales of Avenova®

‒ Large, poorly served U.S. market with 41 million potential patients

‒ Commercial strategy producing significant quarterly sales growth

‒ Leveraging substantial increase in Avenova insurance reimbursement

‒ Primary focus on rapidly growing prescription business

‒ Direct medical reps deployed in major markets across the U.S.

2. Achieve cash‐flow breakeven in 4Q’16

‒ Restructuring and cost reductions

‒ Innovative sales and marketing programs to enhance margins

‒ $11.8 million private placement and potential exercise of warrants to provide necessary capital

Does not generate Resistance

Mechanical Debridement

Anti‐ToxinAnti‐biofilm Activity

Bacterial Removal✓

✓ ✓

✓

✓

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41 Million Potential Patients in U.S.

Blepharitis 24M

Dry Eye6M

Surgery ‐ Catarac3M

Surgery ‐ Lasik1M

Retinal injections3M

Contact lens intolerance

4M

Signs and symptoms‒ Itchy, sore, red eyelids; eyelids stick together;

burning, gritty sensation High incidence

‒ 37% of patients seen by ophthalmologists ‒ 47% of patients seen by optometrists

Most common cause is staphylococcus bacteria Complications include dry eye syndrome,

conjunctivitis, meibomian cysts, sties, cornea damage

Standard of care is warm compresses, lid wipes, antibiotics

What is Blepharitis?Blepharon, Greek “eyelid” + itis – inflammatory disease

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Case Study – Compelling Results with

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Only two Ingredients = 1. Pure Hypochlorous Acid + 2. Saline

OCuSoft SteriLidOasis

Lid and Lash LIDCLENZ VisiCleanse Eye Scrub

Water , PEG‐80 Sorbitan Laurate , Sodium Tricedeth Sulfate , PEG‐150 Distearate , Disodium Lauroamphodiacetate, Cocamidopropyl Hydroxysultaine , Sodium Laureth‐13 Carboxylate , Sodium Chloride , Quaternium‐15

Water , PEG 80 , Sorbitan Laurate , Sodium Trideceth Sulfate , Cocamidopropyl Betaine , Sodium, Lauroamphoacetate , PEG 150 Distearate , Sodium Laureth 13 Carboxylate , Linalool Oil , Hepes Acetate , Sodium Perborate Monohydrate , Panthenol , Allantoin (Comfrey Root) , Sodium Chloride , Tea Tree (Melaleuca Alternifolia) Oil , Tris EDTA , Boric Acid , Cocamidopropyl PG Dimonium Chloride , Etridronic Acid , Citric Acid for pH adjustment , Sodium Hydroxide for pH adjustment

Water, Poloxamer, Polyethylene, Glycol,Borate,Hyaluronan,Methylparaben, Carbopol 940

non‐foaming pH balanced formulation of non‐ionic surfactant in purified water

Water, Cocamidopropyl Betaine, PEG‐80 Sorbitan, Laurate, Sodium Trideceth Sulfate, PEG‐150 Distearate, Aloe, Barbadensis Leaf Extract, Chamomilla Recutita (Matricaria) Flower, Extract, Cucumis Sativus (Cucumber) Fruit Extract, Althaea Officinalis, Root Extract, Avena Sativa (Oat) Kernel Extract, Tetrasodium EDTA, Citric Acid, PolyaminopropylBiguanide

Water USP (Purified), PEG 200 Hydrogenated Glyceryl Palmate, Disodium Laureth Sulfosuccinate, Cocoamidopropylamine Oxide, PEG 80 Glyceryl Cocoate, Benzyl Alcohol, Edetate Disodium

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Growing Commercial Presence

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Addressing Major U.S. Markets

Market Coverage 43 Direct Medical Reps In Key Metro Areas

Western (11):LA‐North, LA‐SouthSan Francisco, San Jose, Sacramento, San Diego, Seattle, Phoenix, Denver, Dallas, Austin

Northeast (11):Albany, Brooklyn,Manhattan, Nassau County, White Plains, Cherry Hill, Boston, Hartford, Patterson, Wash, DC, Philadelphia

Southeast (11):Miami, Jacksonville, Ft. Myers, West Palm, Raleigh‐Durham, Charlotte, Memphis, Atlanta, Baton Rouge, Houston, Nashville

Midwestern (10):Chicago‐No, Chicago‐So, Detroit, St. Louis, Buffalo, St. Paul, Kansas City, KS, Cleveland, Cincinnati, Pittsburg

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Covering Major Markets

40 122321 465 553

1,664

2,085

425

684

797

1,115 813

914

1,003

465

806

1,118

1,580

1,366

2,578

3,088

Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Direct Buy & Bill Sales

Prescriptions Sales

Net Sales ($000)

33%

70% 67%

30%

20

History of Net Operating Losses(in thousands)

21

(2,843)

(3,487)

(4,150)

(2,982)

(4,867)

(4,078)(3,786)

(4,113)

(4,901)

(4,661)(4,859)

(5,348)

(6,146)

(4,624)

(2,206)

(2,013)

(1,697)

(6,500)

(6,000)

(5,500)

(5,000)

(4,500)

(4,000)

(3,500)

(3,000)

(2,500)

(2,000)

(1,500)

(1,000)

(500)

‐

500

Dec‐12

Jan‐13

Feb‐13

Mar‐13

Apr‐13

May‐13

Jun‐13

Jul‐1

3Au

g‐13

Sep‐13

Oct‐13

Nov

‐13

Dec‐13

Jan‐14

Feb‐14

Mar‐14

Apr‐14

May‐14

Jun‐14

Jul‐1

4Au

g‐14

Sep‐14

Oct‐14

Nov

‐14

Dec‐14

Jan‐15

Feb‐15

Mar‐15

Apr‐15

May‐15

Jun‐15

Jul‐1

5Au

g‐15

Sep‐15

Oct‐15

Nov

‐15

Dec‐15

Jan‐16

Feb‐16

Mar‐16

Apr‐16

May‐16

Jun‐16

Jul‐1

6Au

g‐16

Sep‐16

Oct‐16

Nov

‐16

Dec‐16

2013 201620152014

BreakevenNet Operating Loss ($000)

Adj Q3 for one‐time exps:‐ Move related‐ Warrant repricing

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Avenova Phased Commercial Strategy

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Avenova Phased Commercial Strategy Phase 1 – Initial Launch

‒ 2015 launch targeted two sales channels at introductory pricing1. Sales Reps detailing directly to MD’s and OD’s

‐ Primary emphasis ‐ Most efficient approach to seed the market2. Prescription sales

‐ Once doctors comfortable with product, Rx sales take over Phase 2 – Focus on Rx Growth / Multi‐pronged Marketing Strategy

‒ Ophthalmology channel has highest growth potential‒ New pricing model recognizes full value/benefits of Avenova‒ Strategy supported by insurance coverage approaching 90%‒ Direct sales to doctors will continue, but de‐emphasized

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Key Opinion Leader Endorsements

KOL from Across U.S. SupportOphthalmic Advisory Board

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Dr. Eric DonnenfeldPast president of Ocular Microbiology and Immunology Group and serves on the Board of Directors of American Society of Cataract and Refractive Surgery. Dr. Donnenfeld has published over 175 journal articles, and >20 book chapters and books.

Dr. Richard L. LindstromFounder and attending surgeon of Minnesota Eye Consultants and Adjunct Professor Emeritus at the University of Minnesota Department of Ophthalmology.

Dr. Russell N. Van Gelder, M.D., PhD.Current President of The American Academy of Ophthalmology; University of Washington Professor and Chair of the Department of Ophthalmology.

Dr. Francis MahDirector of Cornea and External Disease and Co‐Director of Refractive Surgery, Scripps Clinic Medical Group, La Jolla, CA.

Dr. Terry KimProfessor of Ophthalmology at Duke University School of Medicine, and Associate Director of the Corneal and External Disease Service and Refractive Surgery Service at the Duke University Eye Center.

Dr. Edward J. HollandDirector of Cornea Services at the Cincinnati Eye Institute and Professor of Ophthalmology at the University of Cincinnati.

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KOLs from Across U.S. Support Optometry Advisory Board

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Dr. Arthur EpsteinDirector of Dry Eye – Ocular Surface Disease Center and Director of Clinical Research at Phoenix Eye Care; heads practice’s Dry‐Eye – Ocular Surface Disease Center and serves as Director of Clinical Research. Internationally recognized expert in complex contact lens management and medical complications of contact lenses, dry eye and anterior segment disease.

Dr. Christine SindtFounded Scleral Lens Education Society is nationally recognized expert on specialty contact lenses for children, practice specializes in treatment of anterior segment disease.

Dr. Katherine M. MastrotaCenter Director of Omni Eye Surgery in New York City; Contributing Editor to Contact Lens Spectrum and Optometric Physician and authored numerous articles. Named Secretary to the Ocular Surface Society of Optometry. Serves on Board of Directors of Optometric Society of the City of New York.

Dr. Brian Rosenblatt Owner of Rosenblatt Family Eye Care Associates, a group practice in Raritan, NJ focusing on Contact Lenses, Glaucoma, Anterior Segment Disease, and Ocular Manifestations of Systemic Diseases. Member of the AOA, NJSOP, and is currently a candidate for fellowship of the American Academy of Optometry.

Dr. Bill TownsendServed 11 years as consultant at VA Medical Center in Amarillo, TX. Currently an adjunct professor at University of Houston, College of Optometry. Special emphasis on ocular surface disease and dry eye. Fellow of American Academy of Optometry and President of Ocular Surface Society of Optometry.

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Advertising

27

Placements in Top Trade Journals

Collateral Marketing Materials

Interactive Website

28

Find a Physician

Find a Pharmacy

29

Media Coverage Growing

30


Article: “Avenova With Neutrox Is ‘Breakthrough’ in Fight Against Contact Lens Intolerance”

31


Article: “New Therapy Introduced for Chronic Dry Eye”

32

Media Coverage GrowingArticle: “Dry Eye: A Growing Problem in an Aging Population”

33


Article: “New Treatments for Contact Lens Intolerance On The Rise”

34

Media Coverage GrowingArticle: “Did You Know Your Eye Makeup Could Be Making You Sick?”

35

Media Coverage GrowingArticle: “Spotlight on Demodex: Eliminating the Mite‐y Menace”

36


Financial Overview

Million

Market Cap (12/2/16) $60

Cash (9/30/16) $9.4

Debt $0

Shares Outstanding (Preliminary 9/30/16) 15

Shareholders Equity (9/30/16) $6.8

Strategic Focus on Eye Care 2 Initiatives Targeting Commercial Growth and Cash Flow Breakeven

38

1. Continue revenue Growth from sales of Avenova®

‒ Large, poorly served U.S. market with 41 million potential patients

‒ Commercial strategy producing significant quarterly sales growth

‒ Leveraging substantial increase in Avenova insurance reimbursement

‒ Primary focus on rapidly growing prescription business

‒ Direct medical reps deployed in major markets across the U.S.

2. Achieve cash‐flow breakeven in 4Q’16

‒ Restructuring and cost reductions

‒ Innovative sales and marketing programs to enhance margins

‒ $11.8M private placement and exercise of warrants to provide necessary capital

NovaBay Pharmaceuticals

Commercializing

Avenova® Lid and Lash Hygiene

in the U.S. Eye Care Market


December, 2016

going beyond antibiotics - novabay...

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