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NovaBay Pharmaceuticals Announces Strategic Marketing Agreement for NeutroPhase in China

NovaBay to Receive Up to $1.3M in Upfront and Milestone Payments

Seeks Strategic Partners for Additional Global Territories

EMERYVILLE, Calif., Jan. 9, 2012 (GLOBE NEWSWIRE) -- NovaBay(R) Pharmaceuticals, Inc. (NYSE AMEX:NBY), a clinical-stage biotechnology company developing its first-in-class, anti-infective Aganocide(R) compounds for the local non-systemic treatment and prevention of antibiotic-resistant infections, today announced it has entered into a commercial partnership agreement with Pioneer Pharma Co., Ltd., a Shanghai-based company that markets high-end pharmaceutical products into China, for the commercialization of NeutroPhase in this territory. Under the terms of the agreement, NovaBay will receive an upfront payment of over $300,000, with the potential for additional payments totaling approximately $1 million that may be triggered by certain regulatory milestones pre commercial launch.

NeutroPhase is a U.S. Food and Drug Administration (FDA)-cleared wound cleanser developed by NovaBay to promote healing and improve clinical outcomes for patients with chronic non-healing wounds, including Stage I-IV pressure ulcers, stasis ulcers, leg ulcers, diabetic foot ulcers, post surgical wounds, first and second degree burns, abrasions and minor irritations of the skin.

"We are pleased to announce our partnership with Pioneer Pharma, whose sales network covers every province of Mainland China, including over 7,500 hospitals and 40,000 pharmacies," said Dr. Ron Najafi, Chairman and Chief Executive Officer of NovaBay. "We are also proud to be counted among Pioneer's strategic partners, which include several leading global pharmaceutical companies, including Alcon and Takeda."

"We are excited to partner with NovaBay for the sales and marketing of NeutroPhase in China," stated President of Pioneer, Mr. XinZhou "Paul" Li. "We believe NeutroPhase represents a significant advancement in the care of chronic non-healing wounds that translates into a large market opportunity here in China. Our 1,000+ member sales force is looking forward to launching the product."

Under the exclusive agreement, NovaBay will be responsible for preparation and submission of a Marketing Approval Application (MAA) for NeutroPhase, which will be reviewed by China's State Food and Drug Administration (SFDA). The MAA in China will be based on the data in the U.S. FDA 510(k) of NeutroPhase and NovaBay does not expect the SFDA will require further clinical testing for approval. NovaBay will export NeutroPhase finished product to Pioneer for sale in Mainland China following its expected approval. NovaBay has retained rights to commercialize or partner NeutroPhase in select Chinese markets not covered by the agreement, including Hong Kong, Macau, and Taiwan.

Dr. Najafi continued, "NeutroPhase is our first FDA-cleared commercial product and announcing our first strategic marketing partnership for NeutroPhase represents a significant milestone for the Company. As we continue to seek additional partners for NeutroPhase in global markets, we remain on track for potential commercialization of NeutroPhase in the United States in the first quarter of 2012."

About NeutroPhase(R)

NeutroPhase is an FDA-cleared wound cleanser that consists of a solution of pure hypochlorous acid (HOCl), which is an anti-bacterial compound produced naturally by white blood cells to combat infection in the body. With its proprietary solution, NovaBay is targeting the six-million-patient US market of chronic non-healing wounds, such as pressure, venous stasis and diabetic ulcers. NeutroPhase is the only pure and stable HOCl solution in the world, demonstrating a superior therapeutic index as compared to other wound cleansers. In numerous laboratory and clinical studies, NeutroPhase was proven to disrupt bacterial biofilm and kill common wound pathogens (both Gram-positive and Gram-negative), while leaving healthy living human cells unharmed. Furthermore, the characteristics and mechanisms of action of NeutroPhase also make it highly unlikely that resistant strains of bacteria could develop over time. In a 54 patient double blind clinical study conducted at San Francisco Wound Care Center of Seton Medical Center, NeutroPhase was shown to be superior when compared with wet to moist saline dressing (standard of care) in patients with diabetic ulcers, venous ulcers and bedsores. Learn more about NeutroPhase at: www.neutrophase.com.

About Pioneer Pharma Co., Ltd.

Shanghai-based Pioneer Pharma was founded in Hainan, China in 1996 and imports and markets high-end pharmaceutical products into China. Pioneer currently markets 27 different pharmaceutical products across a wide range of therapeutic categories on behalf of its strategic partners. The company has over 34 representative offices across China and covers over 7,500 hospitals and 40,000 drugstores. For more information, please visit www.pioneer-pharma.com.

About NovaBay Pharmaceuticals, Inc.

NovaBay Pharmaceuticals is a clinical-stage biotechnology company focused on developing its proprietary and patented Aganocide compounds. These are novel, synthetic anti-infectives with activity against bacteria, fungi and viruses, and are being developed to treat and prevent a wide range of local, non-systemic infections with a low likelihood of developing bacterial resistance.

NovaBay is focusing its technology on four distinct therapeutic areas: dermatology, ophthalmology, urology and hospital infections. In dermatology, the focus is on developing NVC-422 Gel formulation for the highly contagious skin infection, impetigo. NovaBay has the advantage of being partnered with Galderma, the leading dermatology company in the world. In ophthalmology, the goal is to develop an eye drop for conjunctivitis. In urology, NovaBay aims to reduce the incidence of urinary catheter blockage and encrustation (UCBE) and the associated urinary tract infections with an irrigation solution containing NVC-422. In hospital infection, NovaBay is targeting the six-million-patient market of chronic non-healing wounds, such as pressure, venous stasis and diabetic ulcers with its proprietary anti-infective solution, NeutroPhase(R) which has received two 510(k) clearances from the Food and Drug Administration. For additional information, visit: www.novabaypharma.com.

Cautionary Information Regarding Forward-Looking Statements

This release contains forward-looking statements, which are based upon management's current expectations, assumptions, estimates, projections and beliefs. The statements in this press release including, but not limited to, statements regarding NovaBay's expectations on the value of NeutroPhase in the healing of chronic non-healing wounds; the potential commercialization of NeutroPhase in the United States in the first quarter of 2012 and potential outcome on NovaBay's efforts to seek potential partners for NeutroPhase globally, as well as other statements that relate to future events or results are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward- looking statements reflect the views of the management of NovaBay as of the date of this press release and are based on assumptions and subject to significant risks and uncertainties (many of which are outside of NovaBay's control), including: the risk that NovaBay's Aganocide compounds and NeutroPhase may not prove to be effective in treating wounds; the risk that NovaBay may experience unexpected results in further studies which may limit, delay or prevent NovaBay from manufacturing NeutroPhase; unexpected adverse side effects or inadequate therapeutic efficacy of NeutroPhase may inhibit it from becoming a treatment for chronic wound and the risk of unexpected delays in the regulatory process which may delay the manufacturing and commercialization of NeutroPhase, as well as other risks relating to NovaBay and its Aganocide compounds detailed in NovaBay's Quarterly Report on Form 10-Q, under the caption "Risk Factors" in Item 1A of Part II of that report, which was filed with the Securities and Exchange Commission on November 7, 2011. 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.