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A solid day of trading for NovaBay Pharmaceuticals (NYSEMKT:NBY) on Tuesday placed the share price back at the $1.20 mark, barely two weeks after the stock was hitting intra-day lows of 90 cents. A modest mid-week runup that began last week fueled the move to the $120 mark, a significant move in terms of percentages.

Volume of more than double the daily average drove the most recent leg of the runup, an encouraging sign that investors may still be taking notice of the fact that the potential of NovaBay's technology may not be accurately portrayed by the current share price and market cap.

Given the market penetration that could be achieved should NovaBay's Aganocide compounds continue to prove effective in late stage trials, NBY shares could quickly appreciate if volume and investor interest continues to grow. Already the $1.20 mark has provided a nice trade for those who took the opportunity to add shares during the dip to the 90 cents.

The share price also has a chance to move on some pending milestone events that - if positive - could provide a quick catalyst to fuel another run.

Results from Part B of a phase II study for urinary catheter blockage and encrustation (UCBE) and associated urinary tract infections are expected later this year, following the announcement of positive Part A results earlier in the year, and top line data from a Phase II adenoviral conjunctivitis trial are due to be released in early 2013.

Assuming positive results all the way around, and based on past successes, it's wholly possible that NovaBay could have three ongoing Phase III trials at some point next year. Should that be the case, then a much higher share price would be justified.

It is also expected that the company will launch NeutroPhase, the company's first FDA-cleared product, for the treatment of chronic wounds over the near term, providing another potential catalyst and revenue stream that could be a key consideration in funding the continuation of the rest of the pipeline. NeutroPhase is already partnered in China and the company expects to announce a U.S. partnership before the commercial launch.

In terms of partnerships, NovaBay has already landed Galderma SA to assist in the development of the dermatology portion of the pipeline.

On average, volume has picked up fairly significantly over the past month, more notably so at and below the one dollar mark.

As mentioned last week, the recent rebound could be just a taste of what's to come if the technology proves to be the answer to antibiotic resistance.

Another variable to consider is NovaBauy's buyout potential. As recently demonstrated by GlaxoSmithKline's (NYSE:GSK) buyout offer of Human Genome Sciences (HGSI) - in addition to offers made to Amylin Pharmaceuticals (AMLN) and Illumina Inc. (NASDAQ:ILMN) by Bristol-Myers Squibb Company (NYSE:BMY) and Roche Holding AG (OTCQX:RHHBY), respectively - the current trend has larger pharmaceutical companies taking advantage of market conditions to boost their pipelines with technologies and products that may fill a gap created by the expiration of patents on a plethora of drugs, including some of the biggest money-makers of our generation.

Pfizer Inc. (NYSE:PFE) is another fine example of that trend, having just boosted its cash reserves with the intent of looking for acquisition and/or merger opportunities.

There are many angles, whether speculative or not, from which to examine the potential of NovaBay Pharmaceuticals, and any volume spike can be an indication that investors are taking notice.

Disclosure: Long NBY.

Source: NovaBay Pharmaceuticals: A Potential Bargain With Catalysts Pending