Milestone Payment from Alcon and Initial Payments from New Galderma Collaboration Resulted in Positive Cash-Flow for the Quarter
EMERYVILLE, Calif., May 18 /PRNewswire-FirstCall/ -- NovaBay Pharmaceuticals, Inc. (NYSE Amex: NBY), a mid-stage biopharmaceutical company developing first-in-class anti-infective products for the treatment and prevention of a wide range of infections without causing resistance, reported today its financial results and operational highlights for the first quarter of 2009 ended March 31, 2009.
License and collaboration revenue for the first quarter of 2009 increased 75% to $2.6 million from $1.5 million for the first quarter of 2008. This revenue consisted almost exclusively of amounts earned under license and collaboration agreements with Alcon, Inc. (NYSE: ACL), a leader in the discovery, development, and commercialization of pharmaceutical products, in particular for the treatment of eye and ear infections and for contact lens care, commencing in August of 2006, and most recently, Galderma S.A, the leading dermatology company in the world. Payments from Alcon were related to on-going research and development support and a milestone payment triggered by the clearance of an Investigational New Drug (IND) application by the U.S. Food and Drug Administration (FDA). During this quarter, a license agreement and collaboration was entered into with Galderma S.A., a leader in the discovery, development, and commercialization of pharmaceutical products and medical devices for the prevention and treatment of skin diseases, for the development of the Aganocide(R) compounds for certain dermatological indications. Under the terms of the agreement, NovaBay received an initial payment and also the first of committed monthly payments in support of development of compounds for acne and eventually for impetigo.
The net loss for the first quarter of 2009 was $(0.3) million, or $(0.01) per share, compared to a net loss of $(2.7) million, or $(0.13) per share, reported for the first quarter of 2008. As of March 31, 2009, the company's cash, cash equivalents and short-term investments totaled $12.9 million, up from $12.1 million at December 31, 2008. The increase was largely due to receipt of milestone payments from Alcon and upfront payments from Galderma, as well as reduced spending on overhead and delayed research and development costs.
"We believe the first quarter of 2009 was one of continued accomplishment for NovaBay as we achieved business development and clinical progress in advancing our first-in-class Aganocide(R) compounds that are designed to mimic the human body's natural defense against infection without developing resistance," said Dr. Ron Najafi, chairman and chief executive officer of NovaBay. "Our collaboration with Galderma for the Aganocides in major dermatological conditions further validates the potential for our novel, potent anti-infectives. At the same time, our pipeline continued to advance during the quarter, and we recently announced an agreement with Professors Nagl and Gottardi of Medical University of Innsbruck - Austria, pioneers in the clinical evaluation of the endogenous, unstable molecule upon which NovaBay's proprietary Aganocides are based, to broaden our intellectual property portfolio and expand the clinical opportunities for the Aganocides."
First Quarter 2009 and Recent Key Achievements
NovaBay's alliance with Alcon, Inc. in the ophthalmic, otic and sinusitis fields continues to advance. Alcon initiated a Phase I clinical trial of NVC-422 (N,N-dichloro-2,2-dimethyltaurine), NovaBay's lead Aganocide compound, after receiving clearance of an IND application from the FDA in January. The IND clearance triggered a milestone payment of $1 million from Alcon to NovaBay.
In March 2009, NovaBay announced a global agreement with Galderma, S.A. to develop and commercialize Aganocide compounds for all major dermatological conditions, excluding onychomycosis (nail fungus). Under the terms of the agreement, NovaBay expects to receive up to $50 million from Galderma upon achievement of certain development and regulatory milestones related to the acne and impetigo indications and escalating double digit royalties on future net sales of products. Galderma will be responsible for the development costs of the acne and other indications, except in Japan, and for the ongoing development program for impetigo, upon the achievement of a specified milestone.
NovaBay also announced in March new data presented at the American Academy of Dermatology 67th Annual Meeting that showed NVC-422 achieved significant anti-mycological efficacy in-vivo in treating subcutaneous dermatophyte infections based on an established pre-clinical model. Importantly, these data combined with the past preclinical work that showed NVC-422 kills P. acne in the follicle which strongly suggests that NVC-422 may be a potent and well-tolerated treatment for acne and numerous other serious skin infections.
In April 2009, NovaBay announced an exclusive agreement with Professors Markus Nagl M.D. and Waldemar Gottardi, Ph.D. of the Medical University of Innsbruck, Austria that broadens NovaBay's intellectual property portfolio and could expand clinical opportunities and accelerate clinical timelines for the Aganocide compounds. Under the terms of the agreement, NovaBay has an exclusive license to a broad portfolio of patent applications, as well as exclusive pre-clinical and clinical research data on N-chlorotaurine (NCT), a natural antimicrobial produced by the body's white blood cells which is the biological basis for NovaBay's Aganocides, in multiple disease indications. In addition, NovaBay also owns the rights to successful human proof of concept trials of NCT in otitis externa (ear infection) and viral conjunctivitis (pink eye) that is expected to provide guidance for NovaBay's and its partners' future clinical programs.
First Quarter 2009 Financial Results
License and collaboration revenue for the first quarter of 2009 increased 75% to $2.6 million from $1.5 million for the first quarter of 2008. License and collaboration revenue consists of the amortization of the upfront technology access fees previously paid, and reimbursements for the funding of research and development activities, and payments for milestones from Alcon and Galderma.
The net loss for the first quarter of 2009 was $(0.3) million, or $(0.01) per share, compared to a net loss of $(2.7) million, or $(0.13) per share, reported for the first quarter of 2008.
Research and development expenses for the quarter ended March 31, 2009 totaled $1.4 million, compared to $2.6 million for the quarter ended March 31, 2008. The decrease was due to budget reductions at year end 2008 resulting in decreased headcount, and delayed research, development, and clinical expenses. However, the company expects to incur increasing research, development and clinical expenses in the remainder of 2009 as programs to develop product candidates move forward, both independently and in collaboration with Alcon and now Galderma.
General and administrative expenses for the quarter ended March 31, 2009 were $1.6 million, compared to $1.7 million in the comparable 2008 period. Employee costs related to general and administrative expenses decreased as a result of staff reductions at year end 2008. Professional services costs increased primarily as a result of increased Sarbanes-Oxley implementation and year end audit costs.
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