NovaBay Pharmaceuticals: Key Deal Marks A Year Of Swift Progression

| About: NovaBay Pharmaceuticals, (NBY)

NovaBay Pharmaceuticals (NYSEMKT:NBY) spent the better part of late 2011 gaining increased attention for its proprietary technology that might offer a groundbreaking solution to the dilemma of antibiotic resistance. Resistance to common antibiotics has become a huge concern in the medical industry and has very significant monetary implications on the exploding costs associated with health care. Owning a solution that could solve these problems - since NBY's "Aganocide" technology mimics the body's own defense systems against infection by essentially acting as white blood cells, thereby eliminating the risk of a patient developing resistance - Novabay stands to benefit greatly, should the technology make it to market in the various indications for which it is being tested.

Investors have been taking notice, as volume and price are up for NBY, and there could be more to come as planned developments for 2012 start to unfold.

Included in this year's plan is a commercial launch for NeutroPhase, NBY's first FDA-cleared product that is being targeted for the treatment of chronic wounds. A successful launch for NeutroPhase could alleviate many of the monetary concerns normally associated with a small company bringing new drugs, treatments and products to market. For investors of NBY, news relating to the undertaking of this commercial launch will be a key story to watch over the coming months, as having an FDA-cleared product on the market is a huge step of validation for any small company.

Just yesterday NovaBay announced its first strategic partnership for NeutroPhase, with Shaghai-based Pioneer Pharma Co., Ltd., coming on board to market the product in China. From the agreement, NovaBay will receive an up-front payment of $300,000, with the potential for additional payments totaling roughly $1 million to be realized if certain regulatory milestones are met before the official commercial launch.

Dr. Ron Najafi Chairman and Chief Executive Officer of NovaBay,

We are pleased to announce our partnership with Pioneer Pharma, whose sales network covers every province of Mainland China, including over 7,500 hospitals and 40,000 pharmacies. We are also proud to be counted among Pioneer's strategic partners, which include several leading global pharmaceutical companies, including Alcon and Takeda.

Dr. Najafi also added that a US launch of NeutroPhase in the United States is still on track to potentially take place during the first quarter of this year.

Also set to unfold this year are multiple clinical trials that are either underway or planned to commence for NVC-422, the company's lead Aganocide compound that is being investigated to enter numerous very distinct and potentially very lucrative thearapeutic areas.

In dermatology the company has already landed Galderma SA as a partner. This is no insignificant partnership, as Galderma stands as arguably the largest player in the field of dermatology world wide and provides NovaBay with financial backing and security that is rare for a 'Phase II' developmental company. The deal, which revolves around NBY's technology as applied to the highly contagious skin infection, Impetigo, could potentially be worth over sixty million dollars to NovaBay in milestone payments - in addition to double digit royalties, should the product make it to market.

A Phase IIb trial is expected to begin within weeks for this condition and, assuming positive results, a Phase III is being planned for late 2012.

Galderma has agreed to pick up the tab for these trials, which frees up resources for NovaBay to concentrate on the remainder of its pipeline, such as NVC-422 for the treatment of adenoviral conjunctivits - better known to the average Joe as "pink eye."

Although an earlier clinical trial conducted with then-partner Alcon in this condition missed its primary endpoint and sent investors running for the doors, a further look at the data from the same trial did show that efficacy was demonstrated against the Epidemic Keratoconjunctivitis (EKC) infection, possibly the most contagious form of the infection, which often threatens a victim's vision. Based on that data, NovaBay is armed to move forward with a larger-scale confirmatory trial set to begin in early 2012.

On the urology front, the company met another milestone by meeting the goal of establishing a proof-of-concept for NVC-422 in the condition of urinary catheter blockage and encrustation (UCBE) with spinal cord injury (SCI) patients. This was established in 'Part A' of the ongoing Phase II trial, while Part B is still ongoing with results expected within in the first half of this year.

Already having the makings of a successful developing company, with a high-profile partner and a product ready for market, 2012 could shape up as a year of swift progression for NovaBay. By 2013 the company could have three Phase III trials ongoing and an approved product on the market in the United States - and other countries around the globe - as demonstrated by the deal in China.

Should the late stage trials prove successful, then the sky could be the limit for this company's potentially game changing technology.

Disclosure: Long NBY.