NovaBay Pharmaceuticals (NBY) - LifeTech Capital

www.LifeTechCapital.com December 7, 2010
34 to 68 sec (range each). Fibrinogen decreased from 258 to 283 mg/dl (range of controls) to < 40 mg/dl in samples
containing chloramines. The effects were significant compared to controls without oxidative power (p < 0.01 for all). No
direct thrombin inhibition was observed by NVC-422, NVC-612 or DMT at concentrations tested (0.4, 4 and 40mM).
Conclusions: These results indicate a specific anticoagulant effect of NCT, NVC-612 and NVC-422 on the blood
coagulation system consistent with previous literature reports on chloramines. This added effect is beneficial for
evaluating NCT, NVC-612 and NVC-422 as potential CVC catheter lock solutions.
Financial Model Assumptions
Royalty Revenue: Our sales model reflects a traditional biotechnology company with all product candidates eventually
being partnered for marketing and distribution. Investors should note that we have not yet added Alcon’s contact lens
solution and sinusitis programs nor NovaBay’s onychomycosis program as the development pathways and timelines are
not yet clear enough for us to model. However these indications would represent potential upside to our model. Our
current assumptions are as follows:
Indication Launch Peak Sales (3 Years) Partner Royalty
Impetigo Q4’12 $80M Galderma 10%-30%
Urinary Catheters Q4’12 $200M ($500M if prophylactic) --- 20% Assumed
Conjunctivitis Q4’12 $500M ($1B if antiviral also) Alcon 7%
Otitis Externa / Media Q3’13 $500M Alcon 7%
Acne Q1’13 $200M Galderma 10%-30%
Source:LifeTech Capital Estimates
NovaBay FDA-Approved Products
NeutroPhase (NVC-101) – FDA Approved September 2007
NeutroPhase is a solution containing HOCI (hypochlorous acid) which is rapid-acting but short-lived making it ideal for
multiple applications, especially in surface wound care. In April 2007, NovaBay filed a 510(k) application to the FDA for
wound management as a wound cleanser and debriding agent and subsequently received FDA approval in September
2007. NeutroPhase was licensed to Kinetic Concepts (NYSE:KCI) in June 2007 for the exclusive worldwide rights to
develop, manufacture and commercialize for use in wound care in humans. NovaBay received from KCI a non-refundable
technology access fee of $200,000. There are also milestone payments up to $1.25 million and royalty payments based on
net revenues. We have not included NeutroPhase in our financial model as we lack visibility on the status within KCI.
Partnerships
Alcon (NYSE:ACL)
In August 2006, NovaBay entered into a collaboration and license agreement with Alcon Manufacturing, Ltd. to license to
Alcon the exclusive rights to develop, manufacture and commercialize products incorporating the Aganocide compounds
for application in connection with the eye, ear and sinus and for use in contact lens solution. Under the terms of the
agreement, Alcon agreed to pay an up-front, non-refundable, non-creditable technology access fee of $10.0 million upon
the effective date of the agreement. This up-front fee was recorded as deferred revenue and is being amortized into
revenue on a straight-line basis over the four-year funding term of the agreement, through August 2010. Additionally,
NovaBay will receive semi-annual payments to support on-going research and development activities over the four year
funding term of the agreement. The research and development support payments include amounts to fund a specified
number of personnel engaged in collaboration activities and to reimburse for qualified equipment, materials and contract
study costs. NovaBay’s obligation to perform research and development activities under the agreement expires at the end
of the four year funding term. As product candidates are developed and proceed through clinical trials and approval,
NovaBay will receive milestone payments. If the products are commercialized, NovaBay will also receive royalties on
any sales of products containing the Aganocide compound. Alcon has the right to terminate the agreement in its entirety
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