Avenova (formerly i-Lid™ Cleanser)

A NEW DIMENSION IN LID AND LASH HYGIENE

Ron Najafi, Ph.D.

Chairman & CEO

NovaBay Pharmaceuticals, Inc. email: Rnajafi@NovaBay.com

(New York Stock Exchange: NBY)

The San Francisco Bay Area

Home to NovaBay Pharmaceuticals (A view from our facilities)

NovaBay Pharmaceuticals Employees: 28, founded in 2000 by Ron Najafi, Ph.D. (chemist)

NovaBay Dedicated Sales Force: 39, all across the US

Location: Emeryville, CA

Capital Structure: Public Company, listed on NYSE: NBY

Focus: Non-Antibiotic Antimicrobials

Marketed products (Neutrox platform)

– Avenova: (formerly i-Lid™ Cleanser ) . Lid & Lash Hygiene, Blepharitis,

MGD and Dry Eye.

– NeutroPhase: Diabetic Ulcer, Venous and Pressure Ulcers, including NF)

– CelleRx: Burn associated with Post Laser Resurfacing

Pre-Market Products (Aganocide platform)

– Bladder Irrigation Solution for patients with Spinal Cord Injury and recurrent

blockage and encrustation

– Skin Infection (Impetigo and Acne)

Global Partnerships: PBE (in the US), IHT (USA), Galderma (France), Virbac

(France), Pioneer Pharma (China and Southeast Asia), Shin Poong (Korea), Biopharm

(North African and Middle East)

“The Most Under-

recognized

The Most

Underappreciated

The Most Undertreated

disease

in Ophthalmic Care”

Anatomy of Eye and Lid and

Meibomian Gland

Blepharitis: Infection and

Inflammation of EyeLid

Blepharitis Causes:

Meibomian Gland Dysfunction (MGD).

Gland Oil Keep

the water from

evaporating &

preventing Dry

Eye.

Expressing the Meibomian Gland

Shows Dysfunction present

Tooth Paste

like

consistency is

bad

Doctor is

pressing

against lower

eye lid

Blepharitis / Meibomian Gland Dysfunction/

Associated Dry Eye / Pre-Operative Lid

Hygiene

Chronic lid & lash hygiene

- 24 million blepharitis patients

- 6.5 million MGD dry eye patients

- 3 million cataract patients

- 1.5 million refractive surgery patients

Avenova (formerly i-Lid™ Cleanser) for Conditions of the Lids and Lashes

Proprietary Technology

– Neutrox : NovaBay Proprietary Pure 0.01% Pure hypochlorous

solution in saline

– No bleach impurities, which is present in Dakin and Dakin-like

solutions

– No resistance expected based on novel mechanism of action

Significant Market / Poorly Served

– Eyelid hygiene therapy, part of the treatment for blepharitis

– Currently marketed products have little to no benefit

– 4% of 18 – 22 year olds

– 71% of 65+ year olds

Why Control of Lid Flora Matters?

Blepharitis

MGD with secondary staph

overpopulation

Pre-op surgical prophylaxis

– Refractive

– Cataract

– Retinal

Contact lens wear

Does not generate

Resistance

Mechanical Debridement

Anti-Toxin Anti-biofilm

Activity

Bacterial Removal ✓

✓ ✓

✓

✓

Blepharitis

MGD

Multifactorial

Chronic

Disease

Affects

Quality of life

Does not generate

Resistance

Mechanical Debridement

Anti-Toxin Anti-biofilm

Activity

Bacterial Removal ✓

✓ ✓

✓

✓

Omega 3

Fatty Acid

Omega 3 Fatty Acid,

Rich in EPA & DHA

Eicosapentaenoic Acid (EPA), 20 carbons and 5 double bonds.

Docosahexaenoic Acid (DHA), 22 carbons and 6 double bonds.

Why Neutrox™ ?

PURE Hypochlorous Acid [ HOCl ]

Cl

O

H

Neutrox™ (NovaBay’s Proprietary Pure Hypochlorous Acid)

Excellent

activity

against a

broad range

of pathogens

Fast acting

onset of

activity

Effective

against

pathogens

commonly

found on the

lids & lashes

20

Avenova™ demonstrated excellent activity in solution

compared with the market leading lid and lash cleanser*

Organism S. aureus MRSA S. epidermidis S. haemolyticus P. acnes

NovaBay

Avenova®

< 1 minute < 1 minute

< 1 minute

< 1 minute

< 1 minute

OcuSoft® Lid

Scrub Foam

> 30 minute > 30 minute > 30 minute > 30 minute > 30 minute

Avenova has higher Therapeutic

Index than Betadine

• Fast acting onset of microbial activity

• Extremely low toxicity levels

• 1,000 times less toxicity than Betadine®

21

Agent Tested Hypochlorous Acid

.01%

Betadine® Surgical

Scrub (Povidone-

iodine, 7.5%)

Nontoxic

Dilution

1:10 1:10,000

Time to 4 log10

kill

<1 minute >24 hours

Tested Against S. aureus ATCC 33591

*Antimicrobial Activity Comparison of Pure HypoChlorous Acid (0.01) with other Wound and Skin Cleansers at Non-Toxic

Concentrations, Russell Hoon, Suriani Abdul Rani, Ramin Najafi, Lu Wang, Dmitri Debabov; SAWC Spring 2013 and WHD

2013

Research on Biofilms

22

• Hypothesis is that bacterial biofilm plays a significant role in delaying wound healing

(Mertz – Wounds – May 2003)

A scanning electron micrograph of a porcine wound surface with Staphylococcus aureus biofilm (6000X)

23

NovaBay Avenova® has Potent Anti-biofilm

Activity Compared to Saline

• In vitro Biofilm of P. fluorescens breaks up upon

introduction of Avenova®

SALINE (control) NovaBay Avenova

Hypochlorous Acid

Hypochlorous acid (HOCL) released from neutrophil cells

Part of body’s immune response

Kills microorganisms

Neutralizes toxins released from pathogens and inflammatory mediators – helps suppress the body’s

inflammatory response

24

neutrophil

cell

HOCL

Representation of bacteria-produced

toxins which attack human cells

26

Representation of human cell response

to bacteria-produced toxins

27

Representation of the Mechanism of

Action of Hypochlorous .01% in In-Vitro

Models

Kills bacteria

Blocks bacteria produced toxins

Blocks human cell produced pro-inflammatory mediators

Dx of DES and Blepharitis:c/o irritation, pain; used Maxitrol drops and

ointment for 2 wks + warm compress and eye scrub with Baby Shampoo. Was

shown how to clean his lids and lashes in the office with Saline.

Still returned 2 wks later with similar symptoms. Maxitrol was d/c’d and

Avenova given. After 2 wks RTC with improved symptoms and improved

clinically on Exam.

After Use of Baby Shampoo After use of Avenova

Typical Blepharitis Case

Vision:

– OD 20/30

– OS 20/20-

TAP: OD 21 OS 23

Exam:

– Blepharitis

– Debris on lashes

– Conjunctival

hyperemia

• From end of 2008 until end of 2012

• Patient was seen 25 times

• Between visits he would call and get Rx for Ab.

• Received courses of:

• Bacitracin, neomycin, polymyxin, tobradex,

maxitrol, zylet, oral doxy, used Ocusoft.

• Patient developed skin ulcer from Ocusoft use

• 10% of patients who use these over the counter

eye lid scrubs will develop contact dermatitis

• Eczema type reaction due to their detergent

based components

Patient Case History: Chronic Blepharitis

32

Avenova™

(formerly i-Lid Cleanser)

33

with

Neutrox

as preservative

Avenova™

(formerly i-Lid Cleanser)

Severe Ocular Surface Disease

with Demodex

After 3 wks of use of Avenova™

Patients with acute or early stage meibomian gland

disease have a frothy tear film, or bubbles, which is

evident here at the lid margin.

Staph aureus is a consistent Lipase producer

Breaking down natural lipids (triglycerides) from

Meibomian Gland

Bacteria Lipase activity is responsible for the

breakdown of lipid to fatty acids – [Invest. Ophthalmol. Vis. Sci.April 1986 vol. 27 no. 4 486-491]

Assuming Lipase causes saponification of lipid

and conversion to fatty acid and soap. Can

Avenova breakdown Lipase and prevent

saponification (soap making)

Lipase

Methyl Resorufin

Lipase Viability Assay

Lipase Substrate

Method used:

1) We treated Lipase with the test article

2) We looked for Lipase viability next

Avenova™(formerly i-Lid Cleanser)

inactivates Bacterial Lipase

Chronic use of antibiotic

will result in antibiotic

resistant strains

Product Comparison (Ingredients)

50

OCuSoft SteriLid Oasis

Lid

and

Lash

LIDCLE

NZ

VisiClean

se

Eye

Scrub

Ingredient

s

Hypochlorous

acid, saline

Water , PEG-

80 Sorbitan

Laurate ,

Sodium

Tricedeth

Sulfate ,

PEG-150

Distearate ,

Disodium

Lauroamphod

iacetate ,

Cocamidopro

pyl

Hydroxysultai

ne , Sodium

Laureth-13

Carboxylate ,

Sodium

Chloride ,

Quaternium-

15

Water , PEG 80

, Sorbitan

Laurate ,

Sodium

Trideceth

Sulfate ,

Cocamidopropyl

Betaine ,

Sodium

Lauroamphoace

tate , PEG 150

Distearate ,

Sodium Laureth

13 Carboxylate ,

Linalool Oil ,

Hepes Acetate ,

Sodium

Perborate

Monohydrate ,

Panthenol ,

Allantoin

(Comfrey Root)

, Sodium

Chloride , Tea

Tree (Melaleuca

Alternifolia) Oil ,

Tris EDTA ,

Water,

Poloxamer,

Polyethylen

e,Glycol,Bo

rate,Hyalur

onan,Methy

lparaben,

Carbopol

940

non-foaming

pH balanced

formulation of

non-ionic

surfactant in

purified water

Water,

Cocamidopropyl

Betaine, PEG-

80 Sorbitan,

Laurate,

Sodium

Trideceth

Sulfate, PEG-

150 Distearate,

Aloe,

Barbadensis

Leaf Extract,

Chamomilla

Recutita

(Matricaria)

Flower, Extract,

Cucumis

Sativus

(Cucumber)

Fruit Extract,

Althaea

Officinalis, Root

Extract, Avena

Sativa (Oat)

Kernel Extract,

Tetrasodium

EDTA, Citric

Water USP

(Purified),

PEG 200

Hydrogenated

Glyceryl

Palmate,

Disodium

Laureth

Sulfosuccinat

e,

Cocoamidopr

opylamine

Oxide, PEG

80 Glyceryl

Cocoate,

Benzyl

Alcohol,

Edetate

Disodium

To Open an account contact:

NovaBay by calling:

1-800-890-0329

Retail to patients: $30

If used according to instructions:

1st bottle will last 2 weeks

(2X per day application)

2nd bottle will last 1 month

(1X per day application)

Thank you!