NBY - Earnings call transcript Q3 2017 | NovaBay Pharmaceuticals, Inc.

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Operator

Welcome to the NovaBay Q3 2017 Conference Call. At this time all participants are in a listen-only mode.

Following management's prepared remark we'll hold a Q&A session. [Operator Instructions].

As a reminder, this call is being recorded today November 14, 2017. to conference like Jody to now Cain. would turn over the Ms I ahead. please Ma’am, go

Jody Cain

Jody is participating call. for LHA. in This with today's Cain Thank you all

that me management to of These from remind President cause that to comments the results. Mark could McGovern, Joining meaning this federal Company's forward listeners Pharmaceuticals forward-looking call looking be during risks and within by the like laws. CEO and include results statements Jack Sieczkarek, different I’d CFO. made NovaBay from will securities uncertainties & actual involve materially are anticipated statements any

the a information For the please Securities of is that call content risks with review Commission. Exchange and conference Furthermore, the list uncertainties, description and and of filings sensitive NovaBay time Pharmaceuticals this those except contains or statements update law. required undertakes November date as XXXX. XX, the circumstances, Pharmaceutical any revise only accurate or no as of to events live broadcast obligation by reflect of to NovaBay

over Mark. to turn Now Mark to the I'd like call Sieczkarek.

Mark Sieczkarek

you we that Thank I’m market announce investors financing terms afternoon to new thanks to and favorable agreement pleased very To everyone that joining with to us. for into a for NovaBay. $XX.X began, an on for million and the were entered Jody good

focused gains. Now financing and NovaBay positions term these and investors on share potential are this in growth us long the of market Avenova for continued

completed will all meet we is exchange financing this when well, as Importantly guidelines.

represented of XX% sales Sales to increased pleased Avenova double sales than strategy Now both this prescription pharmacy grow our reporting to and quarter year over retail prior channel. digit we total to we are the continue year-over-year on and XX% channel execute more to another be of sales. quarter-to-quarter growth from as Avenova

half anticipated a the third pharmacy XXXX our price reached is XX% higher a of as our is year we above which net in the year. on first new guidance margin versus up sales sales this Avenova per reviewing Avenova range. a quarter retail record benefited Now XX%, sales from of for unit ago. of Avenova QX, total the Gross from In

experienced You that drove that year this from plans we rebates. may earlier recall a higher and HSA deductable co-pays higher drag

progressed, year deductibles the more were As satisfied.

unit our summer diminished retail MedVantx. reached pharmacy of startup by months record business the some high, quarter impact new a for with through positive pharmacy channel this total this group and Although seasonality somewhat prescriber and direct specialty our in the the during sales was IT issues loss channel the

to commercial Avenova the Now a I’m turn going our to to like review the results. moment, quarterly to about call more Jack over in activities with first McGovern I’d talk but Jack.

Jack McGovern

Mark. you, begin net third were unit pharmacy $X.X volume everyone. through with channel. Avenova retail quarter $X.X up XXXX. comments Good third Total to sales million, increase million higher on Thank afternoon the results. over our our quarter like of for to were of XX% third sales XX% quarter margin year-over-year the XXXX I’d a my record

prior retail million Mark mentioned, XX% in of sales. Avenova and As Avenova the total pharmacy comprised to increased have has $X.X the XX% over channel year sales

has legacy focus declined XXXX third the channel through from been channel. than on rather direct prior XX% our retail As calls, year the our the quarter sales this stated from on past for channel Sales period. to legacy prescriber pharmacy

XXXX. non-cash up than who Gross in up per of quarter up XX% the and share. for value year-over-year of is expenses of of to third margin slightly $X.X third number total of $XXX,XXX. XXXX $XXX,XXX record and the from quarter number item, period, XXXX. $X.X for the brings eye versus and period. of the more than the the We prior expenses per sales on both at was sales XX%, prior warrant the loss loss were marketing quarter G&A third $X.X loss XXXX The expense total the margins This expenses reached reported prescribers. million $X.X million the loss of and slightly quarter During for XX% liability line Avenova of million, quarter new profit X% quarter million was a from the quarters sampling R&D third reps, the Gross XXXX from The or the year for quarter for reviewing $X.XX quarter for have of compares over increases we to $X.X period. $X.X sales million. $X.XX This period. the quarter unchanged In $X.X with which operating $X.X loss XX% by prescribed profit XX,XXX, the on were in fair third XXXX compares for more year for prior for up a quarter more up the share. XXXX specialist sales This XXXX for XXX the added XXXX. for for next second Avenova over of with care the third million, third or million of XXXX in mainly of a the QX, Avenova million was third the XXXX programs. increased due to the the non-cash of net prior of marketing XX%

the for sales is XXXX. or expenses marketing $XXX,XXX of The expenses G&A prior first of Net and compared of profit The loss $X.X nine change ended non-cash the ended the nine $X.X of sales fair from million, loss for XXXX, of the XXXX and of $XX.X as in and the of were period. nine on per XX, the September R&D net XX% net months million nine liability of to million from compares XXXX, with for the profit months of months XXXX first XXXX months months months for to first was XX, which $XX.X million of XXXX per for sales total September XXXX. results. $XXX,XXX. is $X.X Non-cash of nine warrant $X.X XX% months on margin for year the compared now million was XXXX million the XXXX for loss first loss of of improvement margins the XXXX. September operating $X.X loss nine loss ended nine the was nine months or Gross nine with XX% of ended the net for prior up improved Operating share guidance on value Avenova first of XX% Turning share. year $X for sales which first a the months September over million, for above our with XX% first the XX% million, the $XX.X our XX, for up year-to-date XX, expenses for operating months nine the $X.XX included year expenses a for $X.XX nine the period. was million the the Gross

$X.X in prior of flow, the months Avenova first million and a cash which used from primarily year sales $XX.X improvement collections. to nine to resulted period. receivable the increased we fund XX% represents for XXXX, from used This the higher improvement operations Turning million accounts

equivalents sheet, of $X.X As as we we look December with XX, at million million compared September our XX, of as had of cash and XXXX. $X.X XXXX, balance cash

cash the quarter are into entered in of not a And As we is That financing close XXXX. earlier, in numbers. of that have $XX.X lastly, yet course financing first we mentioned as total outlook those and will agreement $XX.X This guidance and million We our XXXX to expect million. be our now our sales $XX.X compares follows: million guidance of them financial are million. $XX with for revising between adjusting included prior

over XXXX to guidance XX% represents XX% increase sales. Avenova higher with of an new Our by driven growth

unit the of net Mark discussed, As third the for first we per with from benefited the compared quarter sales higher year. half

expect higher end the through per XXXX. continue We to unit sales of

offset higher first unit be half rebates we sufficient sales expected the to However, higher of the the incurred not the per year. to are in

continue XXXX turn managing firming XX% and are profit gross to our range. plan sales while be the And high We expenses reducing Avenova I’ll support investing back guidance Avenova to to initiatives Mark. brand. We with call in over to burn for margin in that, and sales for the carefully marking cash in

Mark Sieczkarek

the been then We insurance the which and retail in sales call changed Avenova channel concentrate two eye since care directly Gaining This sold us to point for strategy focus on highly Avenova such shift for now has take as channel. of the proud to reimbursement, to the patient, higher adoption paradigm dry which I’m the strategy It’s of our can across of advantage challenge. eye representatives. prescriber care we specialists more this eye significant the a allows our NovaBay will margin We direct been per them commercial make the attacking pharmacy is under on a report symptoms. and both and of provide and pharmacy reluctant converting our We to U.S. however, Jack. model; restructured we With Avenova market pricing simply cause we blepharitis gross Well, a anticipated commercialization. model support productive attention prescriber direct margin finding are launch for in margin. are are higher many revenue capturing sales on higher a underlying now prescribers. not thanks growth that than on the Avenova and retail initially the and success established to unit we to the year our to base focused the that of expanded of XX,XXX move. an have to specialist

covered. have fact, In XX% to-date only

up ground a a organization through sales specialists pharmacies. developing as Now our start base in eye retail from would almost prescriptions care the writing result, be filled that of

growth patients by chronic blepharitis specialists finding and XX million are a I market this and the conditions developing we as many significant such regular and base. do origination patients Early the undergoing which announced XX we million are eye have An have estimated organization represent Avenova. cover eye sales Eye well the our retinal suffer ophthalmic a specialists issues, market from modest that portion and of cataract as total. hurdle, are have with this managed another eye in to seen daily prescriber newer our lens scratched we surgeries, geographically year of care contact want barely substantial LASIK, expansion procedures and While dry for care growth only we the sales also of Americans. using result. best presented U.S. tolerance a room reiterate these Avenova as use as a Americans as for we two conditions, for successfully is

high to unit. in now collecting progress establishing been base we on market Data prescriber strengthen to opportunities improving are team, guides net and organization. sales a we directing zero-in our our need a assembling focus and sales where about our our to performing Given we us have our per

instance, reimbursement clear as Now a much have understanding we a picture. of our for now

this a in and marketing of into sales integrating We our targeting the and precisely by prescribers our regions. resources, higher reimbursement more number information are growth strategy select

in now address obtain reimbursement on new by are planning the we Additionally, to calling based coverage. market private data on care the granular stage or level this managed additional on and a to healthcare

intent the to than on rather increasing primarily current our We base penetration from physician that also on further base. focus building

show by and at insurance, specialist covered care for optimizing analysis higher rates understands is and of number their reimbursement. an strategy they This tend at the their of the patients that of product. are cost units targeting Our Avenova when embrace aimed the effectively prescriber patients eye benefit to per

continue created promotion consumer the products. by and We benefit eye to dry from of awareness advertising heavy

sales. focused We bacteria that At cause other on use underlying NovaBay Avenova firmly to which Avenova Avenova the the we on remain dry of are message these be also eye, growing products. sharpening with reduce makes complementary our ability can

We are to both resources. continue analyzing several We collected reducing expenses managing our the plan and optimize years over and burn. data sales marketing now, past cash to

our strategy support and our activities strengthened operating this balance sheet have market. in large growth We to our

to opportunities non-core focus additional in bring to franchise. monetize pursue our to continue also we on capital assets Avenova while We core

create Our goal to shareholders. our value is for

employees we So but chronic we up balance look burn; is nearly the also dry from done have for we’ve continued have employees made great come. to of two cap patients behalf a the have On overview growth beginning stores cash operator; our this and of ready now not the millions happen, for to the your our who growth suffered our our and we away due fold. the sales to only future strategy; only This of one, organic of who by of force issues with the forward number summary, reset questions. business you the quality eye. blepharitis market finical increased and over and overhang; we life years I shareholders, last have XX many sheet; and we in for plans, sharing success minimized propelling to With thank the and take cleaned that years of we’ve are our attention bright the we growth Avenova for have

Operator

[Operator Instructions].

Mark Sieczkarek

will waiting Healthcare January mention are for during J.P. meetings XX the that question, be to Conference. I’d through like Annual While from we holding the the in first X Francisco San we Morgan

be schedule some meetings from your street the conference I’m will you and time a us. for hotel and are first Our Operator, question. call please ready give interested, the across if LHA with

Operator

line Laidlaw. go question. first question Please the ahead Frank Our is Brisbois from with your with of

Frank Brisbois

question. thanks [inaudible]. Hey for It’s guys, Frank the

Just first question here.

can in just So little you that the an is is issue update of terms with how Symphony translation us there going? MedVantx, give here on; a data or for

Mark Sieczkarek

Symphony is data. I I Frank, point let at the And that I’ll into MedVantx It the but Symphony. not of the you rollup. know in not the data talking, do think which will term that time, is group does contain rest captured, short the when are is the MedVantx way public the Yeah be it separate know data, data, rolled-up the in see this you

that have that handy? to So I’m you went MedVantx. many just about units talk going have Jack data through ask we’ll separately. how maybe idea give an to you of to Jack

Jack McGovern

probably Frank, in MedVantx channel we you’ve put the XX,XXX through the seen. approximately Yeah, in data Symphony addition roughly through units to quarter third that

Frank Brisbois

think Okay, do And rebate that that one-time of it bit was expected. higher impact, that little that? than great, is going what then should forward on in or that’s very happening terms or something kind be a useful. a thing guys Is of the

Mark Sieczkarek

people deductibles to issue Frank, to HSAs, that and as the I are have what year rolls the on less way again our up their their this of half saw program, people think a have in referring as is first half going third been the quarter, and the is think net in prescription. more eat-up the – co-pays, are through of the basis goes you and second in basically are half, I the we the macro is which to switching No, couponing the buying first down pricing year. our we In up

just of the expansion job a know to and therefore that people fourth move third you half and of that there co-pays eaten and as up continue link expansion of how deductibles out of we’d covered and the anticipate HSAs have see that as to those much part more for for us that to the see in forecast that type of So always behavior to of trying growth deductibles is are last better co-pays do are forward. we continued is and during to of quarter and going the you the Again, a we year up. missing go going the good the year second because you saw out we forward. But year the

Frank Brisbois

fourth Okay, be the you holiday should quarter? but season, here then something expected lastly its great, that is of months, obviously going quarter terms obviously there and then is that something this just seasonality seasonality, that months, would in just third quarter is expect summer summer into

Mark Sieczkarek

if you a goes No, has reimbursement. you it, know take to prior historical, our your quarter and been quarter the our fourth about at back question look it our best fourth

people at to specifically track and in very and so their You third have We demand spike Avenova to us. a a and for only if our they it not and co-pay we’ve deductibles up, know are data point it that cost graphed for know again then don’t their seasonality. getting we large or seen it’s quarter mimicked looked people and good our pay quarter industry eaten you third

look Like take said, holidays, they I and are seasonality your about a products usually at good unique data know prescription not in question we fourth for but seeing industry in seasonality, the the through. for great You us a so going to quarter are quarter. a the what point it’s again it’s despite

Frank Brisbois

Right, very from helpful. okay, Thank That’s me. you. it

Operator

your is ahead of with Our with from go H.C. next question. question Tannahill line Please the Wainwright. James

James Tannahill

on company’s the for and to for taking new Chen. first four the is I have you referring Hi guys the placement on long direction guys, question. credit any that new you overall going phone one, term influence and to My I’m thank the strategy, I’m have questions. my investor Yi announced. today

Mark Sieczkarek

look, I opening our see of our play what to in up they are nice they stock exactly onboard, very are to because in do, willing this said can’t as them going have are think see they is are in as time. well, predict coming that focused my term remarks, them happy they in terms Yeah. future. we invest company I ophthalmology Well and long to for perspective a long I Again, I so an and a but from and

we going other to again sure as that products in basis I’m opportunities to on be potentially them see complement that with marry talking bag forward. Avenova, So Avenova we’ll our

with So They great and track I China of company. billions is traded we their record. attitude longer are In dollars. record. market pleased term a their really in their track cap They the have believe publicly are a

So that partners. shareholders aboard, certainly we’re they’ve pleased come and as

James Tannahill

you. Do forward? buy-and-build doctor’s diminish Thank revenues the Great. going channels from you to expect

Mark Sieczkarek

Yeah, question. well that’s great a

think that you percentage as opening this was quarter pharmacy our as in my and of remarks, said saw I again channel. in retail business XX% I

again made channel. certainly to call move our the to that you in is to the the, switch retail strategy was it business know it we that I’ll the wrong continuing appears that somewhat pharmacy convert and direction, So also but

the So that. leave continue that we’ll somewhat, see on that at it I track to and we current diminish that least on guess at we’re

James Tannahill

spend need keep sales XX% Alright, and to and in growing a roughly thank you. How much at marketing more rate company does Avenova’s on revenue a beyond? to XXXX

Mark Sieczkarek

look said to going for the on that instance identifying sales reimbursed and in I what includes this in I’ll we’re point is, time those we’re our that force. adding major remarks where we’re our put know focused to areas a sales back and emphasis on are the that effort, to You at very go and

So we that speak. of we’re in data as assessing the process

that force always we expansion, our started the probably as said going get order sales in clinical So the to and are what? importance of again we’ve in beyond, paperwork, our that XXXX investments and be

Jack McGovern

And managed care.

Mark Sieczkarek

care. Oh yes! And Jack. Thanks managed

James Tannahill

And to acid sales? the expect the erode Alright, over of any thank do products you. hypochlorous Avenova’s counter finally, you

Mark Sieczkarek

the products the between I and that’s you do including know preservatives which byproduct longer you big Well eye can and in products look, with term we’re medically have and I difference a products clear of It’s between that lies pure and very you hypochlorous hypochlorous say, and additives even know can acid, over really where patent there, the so our can contain bleach, a other is hypochlorous manufacturing other acid the though certainly and is different we’re use process think those use their there’s you always and in Avenova term. us fact ingredients, difference use their that know the long they their bleach the term. that for not you the very

reason bar will product they’ll of plenty eye care into you to and to to shelf, your eye we to as our care your we’re for non-prescription are always and continue get on. So eye have a obviously that retail and products higher walk and that’s there at know again, the look and products market as well what the pharmacy are for be prescription to you there going dry

James Tannahill

hop my you going am much in questions. taking back I for Thank queue. the Great. to so

Mark Sieczkarek

Alright, thanks James.

Operator

Scott Roth with line [Operator Capital. go question. ahead of next is Please from the question Henry with Our your Instructions]

David Solomon

inflection Avenova? is in see my you point for thanks curious I’m This Henry. you. Solomon Hi, prescription for Scott when for your an Thank data expect question. to taking David

Mark Sieczkarek

with knew answer to a happy Well, If share that’s the it I’d you. be great I question.

of some think you of again my to goes remarks. back kind know I it

the most terms the probably care. mentioned know You know changing XX to therapy on part been in are current I and in previous of has you we’re for paradigm years. calls that training eye doctors XX for

writing to that shampoo to typically and a eye wash know so baby you moderate data if per your have now many, really we for as and others therapy, know saving the high have doing the sometimes for we with many, you’re change hot cases many look know very know of people who know you per are but You use issues, it’s we’re we’ll answer marketing of month that write we other you again, and some where eye And I going severe one anything going know when questioned That say mild, Avenova eyes night you blepharitis message who physicians, have their month. and most know prescriptions the for inflection. your paradigm. who know are doctors month for have further in remains that’s internally, that you compresses. product utilization by XX to at are in is physicians you question, at their from blepharitis our Avenova, see these present think you what with I I you tune that continue one we and they When is writing sever currently to our initial to think are after Avenova, to do dry

what know in and meetings when We and New mode and use get it at all hot and you severe shampoo for our the question again first compresses, that using is asked the point too point being they of a outdated, that you answer ultimately that with they You is you at last is in for KOLs current their patients. AAO just this the answer people basis. on day-to-day operation line exact that and week had of we it that answered understand Orleans normal cases that know baby know, over more Avenova and gave I those really time

us that three or paradigm in take years. know happen don’t across. to a Again you to get know that shifts bit message get and you So it’s going two

solid be our period sales higher able going a that what out time, and and know can of guarantee we think show of investment in but line. certainly of is say over to you good continued happen in years to years they force we and I know seeing growth Avenova you reimbursement product continued the know move you You higher that we’re the rates investment with

David Solomon

helpful, very That’s thank you.

Just regarding prescriptions. is by captured by the a a Symphony, at data captured growing quick to the data not Symphony similar that’s regarding follow-up; rate it that’s

Mark Sieczkarek

at evidence point actually one quarter is time. have it’s this point of again say – at this it I’d in faster, only growing growing but we

David Solomon

That’s very very you helpful. Thank much.

Operator

And we have the do question a follow-up Frank. from line of

Frank Brisbois

yeah for was I you in little the a mentioned ramp so bit sales. Hi, thanks just follow-up. guys wondering, up a of

You there what’s guys a of number reps thought more the is you’re that being granular, adding there? on know and you

Mark Sieczkarek

Yeah, go in to terms of that said. Frank, you I back what know I’ll

assessing that good good know we have between if for sales size instance in to data we force We’re coverage, have we’re this where the have think city, fits if time data mentioned good one calls in it ultimately the and do don’t is XXX rep than the the I on and and is where people. that I reimbursement a I thought you ultimate that have move that reimbursement, forward. going but previous can’t, point there more and we I should we’ll At somewhere in don’t because XXX a number, have U.S. us

number So are areas people the know aim whole on dependent going the need very that in cover reimbursement but we be it’s where to to to U.S., putting ultimately than gaining rather not first reimbursed. that’s the you for we

Frank Brisbois

month. ones is once thing are then great. it prescribing just literally the only that physicians don’t the know severe that for a from only cases, Is using it know push you the in that Okay, or… they And just awareness an back this are

Mark Sieczkarek

have of all cases to awareness of hygiene don’t good and It now necessarily to dry given is it say talked we a in you that’s sudden I anecdotal sales people that certainly and treat our many what that cases that’s answer physicians office we their in who is an mild there know thing. eye they of physicians good us talking even present. and a mean and know you eye for stories

about So always it’s laugh shift it of I I you habit. change know a paradigm shifts. and call paradigm again

grab realize now cell each. this, out everybody Frank years young know them of when but them of to it came you three about first about and course too to Your you XX know owns took phones on

So it’s with same cars. thing it’s electric one of the issues where those

know consumer put in though and You demand, ultimately you off that move the think things right advanced Avenova technology same direction preference, in start and between I you slow is even boat. could

Frank Brisbois

complementary just usage, And docs it dry for growing data; Did down as great. you to kind the there how need look? does see lastly way? Okay, dry on that or many of people or guys a break eye do clinical is that how use well is eye

Mark Sieczkarek

specifically Well it always necessarily competitive are at look highest about competitive Xiidra from cause don’t ones care. use and is for standpoint a we talked eye symptom we’ve as and eye who look about to actually docs ourselves our which I in Restasis, dry dry unison and therapy. the always talk with prescribing or you know

in Again are or on terms deal too. not it cause either being if company unison, me we’re in of So on working working a for they doesn’t that’s that the complementary bother again and consumer. a bad certainly symptom the

Frank Brisbois

only using growing that it or that or is guys of you or… kind are down mean, your just breaking is that prescribers I are but that very it way Okay, highest

Mark Sieczkarek

breaking high are prescribers. our a down yes, we and characteristic that is of Yeah, it

Frank Brisbois

great. Okay, it for That’s me. Thanks.

Mark Sieczkarek

Alright.

Operator

questions this call you we to the And Sir, have like remarks. further no would closing over to for back any at time. I hand

Mark Sieczkarek

us to drive day that Avenova with being and move and want to certainly do for to things the here you joining guess its able forward An NovaBay, financing and you exciting today. do Yeah, again we well the growth. I once at know thank

excited fourth results. the So quarter updating during to we that discuss look about and our we’re and financial you our forward out to-date next opportunity certainly progress call that I laid just to

So have a good day. Thank you.

Operator

thank does for Ladies conclude participation and that your and your disconnect ask gentlemen, you conference please you today. lines. your We that for

NovaBay Pharmaceuticals (NBY) 14 Nov 172017 Q3 Earnings call transcript