NovaBay® Pharmaceuticals, Inc. (NYSE American: NBY) announces
that Chief Executive Officer Justin Hall has issued the following
Letter to Stockholders:
To My Fellow Stockholders:
The purpose of this letter is to share some of my personal
thoughts about NovaBay and explain my vision for the future as we
join forces with DERMAdoctor. First, I’d like to say I’m proud of
the direction we have taken with Avenova over the past
two-and-a-half years, since I became CEO. In June 2019, we obtained
an over-the-counter designation from the FDA and launched our
direct-to-consumer campaign. While we have had considerable success
with our OTC Avenova product, to achieve the growth NovaBay needs
to significantly enhance stockholder value, we must take some bold
and aggressive steps. With the addition of DERMAdoctor’s products
and our newly expanded product-development capabilities, we are on
an entirely new growth trajectory.
First, this transaction makes a lot of financial sense.
DERMAdoctor is immediately accretive to our bottom line and is
expected to double NovaBay’s total revenues. One of the major
drivers behind the acquisition was to accelerate our path to
profitability. With our current product margins, NovaBay should be
able to reach profitability with annual revenues of approximately
$20 million. This should come as soon as the fourth quarter of
2022. Importantly, I believe our current cash on hand is sufficient
to fund operations through profitability. I don’t anticipate
raising any additional funds to cover operating expenses.
Furthermore, we are in full compliance with all NYSE American
listing requirements and there are no plans for a reverse split
anytime soon. As a reminder, the NYSE American does not have a
one-dollar price requirement like the NASDAQ. I would like to
convey my confidence to our stockholders…our listing is rock
solid.
Beyond just the technical and financial aspects, I would like
everyone to understand that DERMAdoctor is a great fit with NovaBay
for many fundamental reasons. First, this acquisition greatly
expands our product portfolio with DERMAdoctor’s 30+ products,
thereby eliminating the risk associated with being a one-product
company in a single market. Also, we significantly increase our
presence in the high-growth, lucrative skincare market.
Researchinmarkets.com estimates that the global market for cosmetic
skincare products will reach $185 billion by 2027. Although we
fully recognize that this market is highly competitive, it also
rewards innovation. We believe that DERMAdoctor’s scientifically
formulated products with proven effectiveness developed by a
board-certified dermatologist will resonate strongly with
consumers.
Second, we will apply NovaBay’s expertise in marketing OTC
products to DERMAdoctor's skincare products. We launched our OTC
product two-and-a-half years ago, and through focused and concerted
efforts, more than two-thirds of Avenova units are now being sold
through online channels and unit sales are increasing each quarter.
We bring expertise in developing robust social media and print
advertising campaigns along with a strong marketing presence across
all digital channels, allowing consumers to engage with our brands
through social media and influencer campaigns. Our sophisticated
digital programs include real-time monitoring of metrics to
evaluate effectiveness in reaching target demographics.
Importantly, we can make quick adjustments to improve effectiveness
and optimize our spend. We're excited to apply these strategies to
advance and enhance the DERMAdoctor business and customer base.
Third, utilizing DERMAdoctor's established relationships, we
have the opportunity to expand sales of Avenova into international
markets. DERMAdoctor products are sold through a large and growing
network of international distributors and retailers in North
America, South America, Europe and Asia. The DERMAdoctor team has
cultivated these relationships over many years, and we see
significant overseas growth opportunities both for DERMAdoctor and
NovaBay products.
The fourth benefit of the acquisition relates to warehouse and
front-office synergies. DERMAdoctor can now share its warehouse
operations including storage, picking, packing, shipping and
logistics with NovaBay. We anticipate some cost savings from
shifting third-party providers to the existing DERMAdoctor
warehouse team.
A fifth and the most important benefit is bringing the two
talented and successful entrepreneurs Drs. Jeff and Audrey Kunin,
who cofounded DERMAdoctor, onto our NovaBay team. DERMAdoctor will
operate as a wholly owned subsidiary of NovaBay, with Jeff and
Audrey continuing to lead the operations. Audrey has also taken on
a broader role at NovaBay as our Chief Product Officer. She is a
known trailblazer in the skincare industry and developed many of
the formulations found in DERMAdoctor products. We are excited to
gain Audrey and her team's capabilities in developing new
scientifically proven products to expand our presence in both the
skincare and eyecare markets. This highly experienced group has a
track record of creating innovative, award-winning products and new
product categories with clinically effective formulations that
consumers have come to embrace and trust.
With the acquisition of DERMAdoctor, NovaBay now has
product-development capabilities including idea generation,
formulation, packaging, clinical testing and marketing. DERMAdoctor
has an extensive pipeline of problem-solving products in various
stages of development that address a variety of skin conditions. We
expect at least four new SKUs to be commercially available in the
first half of 2022. These products will target common skin concerns
such as aging, keratosis pilaris and eczema under the Kakadu C, KP
Duty and Calm Cool + Corrected brands. Similarly for 2023, we will
expand existing product lines and create new ones. We are bringing
the same strategy to the eyecare market and have identified dry
eye, blepharitis, MGD, inflammation, bacteria and contact lens
intolerance as concerns to address in 2022 and 2023 under the
Avenova brand.
In summary, we are excited by the acquisition of DERMAdoctor,
which creates immediate and ongoing stockholder value.
As a final topic, we will hold a Special Meeting of Stockholders
on December 17, 2021, to vote on several proposals, which are
described in the proxy materials that you may have already
received, by email. Hard copy materials are also being sent by
mail. The first two proposals pertain to our recent $15 million
financing, in support of the DERMAdoctor acquisition. The passage
of all proposals is crucial to allowing us to move forward as a
combined company.
Both your Board of Directors and I consider the approval of both
proposals to be in the best interests of ALL stockholders. We urge
you to cast your vote by proxy as soon as possible, in advance of
the meeting date. Your vote is very important to us, no matter how
many or few shares in NovaBay Pharmaceuticals you own.
Please vote your shares, using any one of the methods included
in those materials. If you have any questions about voting, please
call our proxy soliciting agent, The Proxy Advisory Group, LLC® at
212-616-2181.
Thank you for your investment in NovaBay. We are extremely
grateful for your proxy voting support.
Sincerely, Justin Hall, Esq. Chief Executive Officer and General
Counsel November 18, 2021
About NovaBay Pharmaceuticals, Inc.: Going Beyond
Antibiotics®
NovaBay Pharmaceuticals, Inc. is a pharmaceutical company that
develops and sells scientifically created and clinically proven
consumer products for the eyecare and skincare markets. Avenova® is
the most prescribed antimicrobial lid and lash spray and CelleRx®
is a breakthrough product in the beauty category. In November 2021,
NovaBay acquired DERMAdoctor, LLC, a company commercializing more
than 30 dermatologist-developed skincare products sold through
traditional domestic retailers, digital beauty channels and
international distributors.
NovaBay Pharmaceuticals Forward-Looking Statements
Except for historical information herein, matters set forth in
this press release may be forward looking within the meaning of the
“safe harbor” provisions of the Private Securities Litigation
Reform Act of 1995, including statements about the commercial
progress and future financial performance of NovaBay
Pharmaceuticals, Inc. This release contains forward-looking
statements that are based upon management’s current expectations,
assumptions, estimates, projections and beliefs. These statements
include, but are not limited to, statements regarding our business
strategies and current product offerings, potential future product
offerings including through strategic acquisitions such as the
acquisition of DERMAdoctor, LLC, expanded access to our products,
and any future revenue that may result from selling these products,
as well as generally the Company’s expected future financial
results. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or
achievements to be materially different and adverse from those
expressed in or implied by the forward-looking statements. Factors
that might cause or contribute to such differences include, but are
not limited to, risks and uncertainties relating to the size of the
potential market for our products, the integration of DERMAdoctor’s
business into the Company’s business, the possibility that the
available market for the Company’s products will not be as large as
expected, the Company’s products will not be able to penetrate one
or more targeted markets, and revenues will not be sufficient to
meet the Company’s cash needs. Other risks relating to NovaBay’s
business, including risks that could cause results to differ
materially from those projected in the forward-looking statements
in this press release, are detailed in NovaBay’s latest Form 10-Q/K
filings with the Securities and Exchange Commission, especially
under the heading “Risk Factors.” The forward-looking statements in
this release speak only as of this date, and NovaBay disclaims any
intent or obligation to revise or update publicly any
forward-looking statement except as required by law.
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Avenova Purchasing
Information For NovaBay Avenova purchasing information:
Please call 800-890-0329 or email sales@avenova.com.
Avenova.com
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version on businesswire.com: https://www.businesswire.com/news/home/20211118005340/en/
NovaBay Contact Justin Hall
Chief Executive Officer and General Counsel 510-899-8800
jhall@novabay.com
Investor Contact LHA
Investor Relations Jody Cain 310-691-7100 jcain@lhai.com
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