NovaBay Pharmaceuticals, Galderma expand their multi-year collaboration agreement

NovaBay Pharmaceuticals, Inc. (NYSE Amex:NBY), a clinical stage biotechnology company developing first-in-class, anti-infective compounds for the treatment and prevention of antibiotic-resistant infections, and Galderma, a global leading pharmaceutical company dedicated exclusively to the field of dermatology, announce the expansion of their multi-year collaboration agreement. Based on positive data assessing the activity of NovaBay's Aganocide^® compounds against impetigo, Galderma has agreed to exercise its option for this indication.

Dr. Ron Najafi, Chairman and CEO of NovaBay, commented, "We are very pleased with Galderma's decision to exercise their option. Galderma is the world's largest dermatology company with impressive clinical and commercial capabilities. This provides further evidence of Galderma's commitment to commercializing NovaBay's Aganocides for dermatological indications and we look forward to advancing these programs through clinical trials to commercialization."

Humberto C. Antunes, CEO of Galderma, commented, "This enhancement of our collaboration demonstrates our belief that NovaBay's first-in-class Aganocides have the potential to provide a significant advancement in the treatment of skin infections, a condition that affects millions of patients worldwide, without adding to the growing problem of antibiotic resistance. Galderma is looking forward to advancing the Aganocide programs for multiple indications."

Under the terms of the new agreement, which was initially signed in March 2009 for the research and development of impetigo and acne, Galderma has agreed to exercise its option to advance the clinical development program and will pay a $3.25 million continuation fee together with additional R&D funding in 2010 and 2011. NovaBay has the potential to receive up to $62 million in milestones from Galderma, and escalating double-digit royalties on net sales of products once commercialized.

Galderma will be financially responsible for all the development and clinical costs, and will reimburse NovaBay for the costs incurred in support of the collaboration. NovaBay retains the right to co-market products resulting from the agreement in Japan. In addition, NovaBay has retained rights in certain Asian markets outside of Japan, and has exclusive rights to promote the products developed under the agreement in hospital and other healthcare institutions in North America.

Impetigo Clinical Update (Partnered with Galderma)

Affecting over 1.4 million patients in the U.S., impetigo is a highly contagious superficial bacterial infection of the skin that affects mostly children.  Most cases are caused by Staphylococcus aureus, Streptococcus pyogenes, or a mixture of both organisms.  Methicillin-resistant S. aureus (MRSA) is being observed with increasing frequency in this population.  Impetigo is currently being treated with antibiotic ointments, to which bacteria has developed resistance.

Recently, NovaBay announced top-line results from its randomized, sequential group, double-blind study designed to evaluate the efficacy and safety of three different strengths of NVC-422 topical gel in the treatment of impetigo.  A total of 129 children in the age range 2-12 presenting with impetigo were randomized for treatment with NVC-422 topical gel three times daily for 7 days.  Efficacy evaluations, compared to baseline, were conducted at the end of treatment and one week later.  Clinical and bacteriological response rates for the three concentrations of drug applied ranged from 84% to 95% at end of treatment and at follow-up.  These response rates were substantially higher than the response rate anticipated for placebo (30-50%).  Notably, response rates for MRSA infections were 100% (10/10) across all treatment groups. The clinical and bacteriological response rates across the treatment groups suggested a dose response, although differences were not statistically significant.  Infrequent adverse events were mild to moderate in severity and were predominantly local.

Acne Clinical Update (Partnered with Galderma)

Acne is the most common skin disease that affects people of all races and age groups, but it is most common in teenagers and young adults. An estimated 80 percent of all people between the ages of 11 and 30 suffer from outbreaks of acne at some point, and some people in their 40s and 50s are also affected. There is a clear need for more effective antimicrobial treatments than the currently available antibiotics.

Following a successful Phase 1 trial, NovaBay and Galderma are engaged in Phase 2 clinical research and will be evaluating various novel Aganocide formulations for treating acne.

Onychomycosis Update (Un-Partnered, In-House NovaBay Program)

Onychomycosis is the most common serious nail condition.  Topical treatment of the infection is limited by the inability of currently available drugs to penetrate the human nail.  According to Podiatry Today, over 35 million people in the United States have onychomycosis.  Estimates indicate that up to 50% of those affected by the disease do not receive treatment. Systemic treatments represent well over 80% of the market today, but have potential severe liver toxicity issues, and have shown to have relapse rates of 40% or higher.

At the recent Infectious Diseases Society of America meeting, NovaBay presented data from a new study conducted using a novel in vitro infected human nail model to evaluate and confirm the ability of novel NVC-422 gel formulations and nanoemulsion lacquers to penetrate and kill fungi grown on the subungal side of the infected nail.  The study was conducted by Mahmoud Ghannoum, PhD, at Case Western Reserve University's Center for Medical Mycology in Cleveland, OH.

These most recent data showed that NVC-422 was able to penetrate the nail and effectively eradicate T. mentagrophytes and T. rubrum, the fungi responsible for the majority of infections.

NovaBay has used other validated in vitro models and presented the results during the 47th IDSA Annual Meeting in 2009 ("In Vitro Evaluation of Stable Derivatives of the Chlorotaurines on Infected Human Nail Model as Potent Antifungal Agents for the Treatment of Onychomycosis"). Research for the study was conducted by MedPharm Ltd.

A Phase 1/2 clinical trial is being planned for early 2011.