Current Thoughts July 2015


The Phase II Trial That Will Change Trevena Forever

  • The as yet unheard insider argument as to why TRV130 detractors have it all wrong about nausea and vomiting rates in the soon to report Phase-2b abdominoplasty trial is compelling.
  • This real world titration setting with patient controlled analgesia will redefine the drug, validate g-protein biased ligand technology and set Trevena's stock on a steep upward trajectory.
  • The pseudo-scientific base their claims on a slippery slope of only 31-patients in the first, exploratory bunionectomy setting proving once again why they make the worst sector investors.
  • Over-stimulation of the self-protective intruder alert centers of the brain caused this anomaly in the first place. But that won't happen again through the avoidance of excessive and unnecessary dosing.

I am long Trevena (TRVN)

I have an open mind allowing the criticisms of others to shape my opinions on the equities I hold. Perhaps, a bit too much. Trevena (TRVN) has been no exception. But what I've uncovered recently by way of an unsolicited email from Jonathan Violin of Trevena Investor Relations, ostensibly to compliment me on my last article, has provided me with an ah-ha moment of exquisite realization that has left me more optimistic than ever before.

As crazy as it might seem, all presumptions about Trevena's acute pain therapeutic TRV130 have been predicated upon the adverse event profile of only 31 patients in the exploratory Phase-2a bunionectomy setting. Words to describe such erroneous extrapolations would be ludicrous and absurd, made even more so by extending those arguments to undermine confidence in Trevena's entire g-protein biased ligand technology. The reason why we have a progressive clinical phase trial system in place is to avoid drawing such conclusions from inadequate sample sizes.

That said, the argument against TRV130 can be summed up like this. Yes, the analgesic benefit of the 3 mg dose is unquestionably better than that of morphine at 4 mg, and reduction of the risk of respiratory depression (the only meaningful side-effect) is impressive, but the increased risk of nausea and vomiting are a trade-off the FDA will not ultimately approve of. In my last article, I sent you to this web page where that argument was enunciated best. I furthermore added that because this now underway Phase-2b abdominoplasty trial was in an area of the body most susceptible to pain aggravated by vomiting, that the analgesic benefit of TRV130 could, therefore, be reduced. But that's because I too easily bought into this fallacious argument in the first place.

What was revealed to me by Jonathan Violin, I'm about to reveal to you. And when you see what we've overlooked, you too will ignore the noise of the over-stated and chronically insecure. Furthermore, I'll graphically illustrate why Jonathan is absolutely right. But before I do, I want to address why patients experience nausea and vomiting while under the influence of opioid pain relief.

A Well Functioning Brain Will Protect The Body From Harm

I've read many scholarly articles on this subject, but a simple one written by, David E Weissman states the following.

Commonly ascribed by patients as an "allergy", opioid-induced nausea/vomiting is not an allergic reaction. In fact, rather than indicating a pathologic reaction, nausea indicates normal functioning of the brain! Opioid-induced nausea occurs through two mechanisms:

At the base of the 4th ventricle lies the chemoreceptor trigger zone (CTZ), a "sampling port", to detect substances that don't belong in the blood. Adjacent to the CTZ lies the medullary vomiting center [VC], which controls the complex muscular sequence of vomiting. When the CTZ detects a noxious chemical in the blood, a signal is sent to the VC and voila! vomiting ensues. Of note, this is the same reason why patients vomit after receiving chemotherapy. Although this mechanism works well for orally ingested chemicals, it was evolutionarily never designed for intravenous morphine!

A second cause of opioid nausea/vomiting is due to stimulation of the vestibular apparatus-patients note a spinning sensation with their nausea.

Beyond this, it should be noted that there is no predictable pattern which suggests that a patient's physiology predisposes them to these symptoms or a particular procedure is more likely to induce them. Nausea and vomiting can cause for cessation of, or limits to, analgesia and remedies include anti-emetics and/or switching to alternative pain killers. Nausea and vomiting occur in nearly a third of all post-surgical settings where today's gold standard of morphine is applied.

Why Is Respiratory Depression More Important?

Because it can kill you. When a person over-doses on an opioid pain reliever, this is how they perish - breathing slows to a stand still and the distribution of oxygen necessary for the correct functioning of all bodily organs is severely diminished. Although that rarely occurs in the aftermath of surgical procedures today, that's primarily because physician's deliberately under-dose their patients to begin with. Note this hospital memoranda on the administration of morphine by intravenous injection. It starts with only a 1 mg - 2-mg bolus. This leads to 60% of patients claiming that their pain is under-medicated in post-operative settings.

TRV130 Is A Powerful Analgesic Designed To Limit The Effects Of Respiratory Depression

In the first Phase-2a bunionectomy trial, the 3 mg dose TRV130 proved to be 2.4x more powerful than the 4 mg dose of morphine at reducing patient pain in the first 30 minutes following their return to consciousness. The nature of this pain reduction was consistent over 48 hours of clinical observation. Also noted was a reduction in the symptoms associated with respiratory depression (albeit not statistically significant).

I'm going to include two documents from the November 18, 2014Form S-1/A for your consideration. The first, can be found on page 89 and the second on page 88. I'll be annotating this latter figure and referencing both as we progress for clarity.

Adverse Events

Pain Intensity 48 Hours

Insider Hypothesis: If Nausea & Vomiting Rates Were Attributable To The 3 Mg Dose Of TRV130 It Was Likely Because Patients Were Over Treated With The Drug - Especially On The 2nd Day

A quick look at Figure 6 above will demonstrate why this hypothesis is likely to be validated in this 2nd Phase-2b study in abdominoplasty patients. Look at the placebo pain score on day 2 and note that the very same 3 mg dose of TRV130 was given every 3 hours even while patients slept. So, while pain barely crested the barrier between mild and moderate, patients were being blasted with a pain killer that dropped patient pain scores by 85.7%, from 7 points to 1 point in the first 30 minutes. I've annotated this chart which employs a fluctuating timeline to denote precisely when doses of TRV130 were administered.

TRV130 3-Hour Dosing

Now take a look at the same annotations made for morphine.

Morphine 4-Hour Dosing

We can clearly see that patients were given excessive amounts of TRV130 on the second day of treatment. Those chemoreceptor trigger zones and medullary vomiting centers of the brain referred to by Dr. Weissman must have been ringing off the hook.

This Second Phase-2b Trial Utilizes A Patient Controlled Analgesia Format With A Loading Dose Of Only 1.5 mg of TRV130

The loading dose (also known as the knock-out dose) for Morphine remains unchanged at 4 mg but TRV130 will be administered at only 1.5 mg when the patient first awakens in discomfort - more than enough to allow for comparatively greater effect. All participants will then be allowed to self-administer either drug for additional pain relief throughout the 24-hour trial period at 1 mg every 6-minutes as needed. If a physician determines that this amount is inadequate to the task at hand, either dose can be increased by 50% after the 1st hour of administration.

If we look again at the graphic above, we can clearly see that the 1 mg dose of TRV130 was at least as effective as morphine in the bunionectomy trial. More importantly, we can see that only 34% of patients became nauseous and only 10.5% vomited while on that dose. Consequently, it's highly unlikely that the rates of nausea and vomiting will be any higher than morphine in this clinical setting.

My Personal Experience

You'll note that I've added some sleeping times to my annotations of Trevena's illustrations. I've done this because this is the reality of post-surgical recovery environments. Patients self-apply the amount of pain relief they need and then allow the body to heal itself by sleeping.

10-years ago, I fell off the roof of a house I was rebuilding and broke my left arm so severely that the bone completely disintegrated. On the way to two different hospitals, I received morphine treatments which helped a great deal in managing my pain that was both physical and mental - there's anguish in realizing your life is suddenly changing.

When I woke up the next day in my hospital bed, I was no doubt given a loading dose of morphine, and then, I was instructed by my nurse to give myself as much additional pain relief as I wanted by pressing the clicker in my right hand. Fortunately, I was not made aware of the 6-minute lockout period. I can remember clicking a lot and then passing out for about 2-3 hours before awakening again. Throughout the day, I then stayed awake watching TV and the poor, unfortunate soul in the bed beside me who also fell off a roof onto his driveway breaking all four of his extremities (yes it looks exactly like it does in the old cartoons - heavily wrapped legs and arms all hoisted into the air).

The point is, that when my pain was relieved, I was inclined to nap. Therefore, I believe that patients receiving TRV130 will use far less of the drug this time around than they did before. To illustrate how much less, I've prepared my own predictive plot of pain and side-effects for your consideration. The number inside a 1 mg box of either drug indicates how many times that treatment will be self-administered in 1-hour's time.

Projected Rates of Efficacy and Side Effects in Phase 2b Abdominoplasty Trial


To Conclude

Because we're still in the exploratory stage of drug development, Trevena has the luxury of employing this non-standard titration format in this particular Phase-2b setting. By doing so, we'll learn a lot about the drug. Ironically, almost all I.V. use of morphine in post-surgical applications employs patient controlled analgesia. In pivotal clinical settings, however, this isn't possible as it doesn't provide the clarity needed to evaluate treatments on a comparative basis.

I'm comfortable with my predictions of nausea and vomiting rates in this Phase-2b trial set to report in a few months time.  If I've erred in any parameter aspect, it likely is in the assumption that patients receiving morphine won't experience better pain relief thereby reporting lower pain scores.  We'll see.

What the results here will clarify, however, is whether or not the side-effect profile is dose related. Should that be the case, the issue then will shift to how to mitigate the problem in a registration format.  It is possible that CEO Maxine Gowen could argue for a protocol that employs a reduced, fixed-dose application of TRV130 administered on a more frequent basis - think 1.5 mg every 2-hours.

Always be well...


The Facts about Eyelid Cleansers - Contrasting OCuSOFT and NovaBay

The following document has been provided by OCuSOFT for your consideration.  It serves as their reasoned response to my recent investment thesis on NovaBay dated, April 20th 2015.  It includes  what I believe to be important rebuttals to some of the assertions made by NovaBay management and key opinion leaders.  As you well know, our due diligence with respect to the equities we invest in is ongoing and ever incomplete.  A fuller picture is provided here.

The Facts about Eyelid Cleansers—Contrasting OCuSOFT and NovaBay


A lot has been written of late regarding eyelid hygiene and eyelid treatment options.  The majority of this attention has been directed to OCuSOFT Inc., the market leader and a new entry, NovaBay Pharmaceuticals.  NovaBay has introduced a 0.01% Hypochlorous acid Rx formulation in contrast to OCuSOFT’s family of OTC cleansers including OCuSOFT’s own Hypochlorous acid in a 0.02% concentration.  With so much hype going on, it’s important to get the facts straight.


OCuSOFT Inc. is a privately-held eye and skin care company with an established reputation for innovation in eyelid hygiene.  Recognized as the market leader and #1 recommended by eye doctors, OCuSOFT® Lid Scrub® Eyelid Cleansers are intended for daily use and are available in pre-moistened pads or foam pump dispensers for easy application.  Their mild, non-irritating formulations are 16X milder than baby shampoo (which was the standard of care until OCuSOFT).  OCuSOFT® Lid Scrub® Original Formula is a surfactant based cleanser intended to be used on the outer eyelid and lid margins and works by removing excessive oil, debris, and desquamated skin from the eyelids.  OCuSOFT® Lid Scrub®  PLUS offers proven antibacterial properties—killing in as little as 60 seconds!  It is important to note, however, that the time kill rate for bacteria is actually less important to patient treatment than convenience and compliance.  Oral antibiotics for example are taken for 5-10 days so whether its seconds or hours, is of little importance to the clinician.  What is important is whether they are 1) Effective; 2) Economical; 3) Convenient.

Effectiveness, cost and convenience are the barometers by which patient satisfaction is measured.  The reality is healthcare costs have risen to a level where patients often have to prioritize pharma treatments.  This article seeks to clarify misstatements made in the recent press along with critical omissions.  Consider then the relationship between surfactant cleansers and Hypochlorous Acid (HOCL) products.

As mentioned, NovaBay Pharmaceuticals is now offering an eyelid cleanser, Avenova™, which utilizes HOCL in a 0.01% concentration.  OCuSOFT is now offering HypoChlor™ in a 0.02% concentration of HOCL.  Avenova™ is marketed as “pure” and proceeds to differentiate its HOCL from other HOCL (there are many) products—including OCuSOFT.  The problem is the Food and Drug Administration (FDA) makes no such distinction.

Hypochlorous Acid OTC vs. Rx Claims—Understanding the Difference

The FDA requires that Hypochlorous acid is registered as a medical device which may be marketed by the filing company as either a prescription (Rx) or OTC product.  The basis of Rx vs. OTC relies on the claims that can be made of the product as contrasted with ingredient concentration.  More specific claims can be made if the product is marketed as an Rx (“… for use under the supervision of healthcare professionals…; for moistening absorbent wound dressings and cleaning minor cuts, minor burns…” etc.) however, more general claims are made if the product is OTC (“…immediate care of minor cuts, minor scrapes and minor burns.”)  Generally speaking, the Rx vs. OTC has nothing to do with percentage of principle ingredient.  For example, OCuSOFT® HypoChlorSolution and OCuSOFT® HypoChlor Gel both contain 0.02% Hypochlorous acid and are OTC.  Other company’s brands are available at lower strengths than OCuSOFT® HypoChlor yet one may be Rx and yet another OTC.

Consider the statement made from an earlier post when referencing OCuSOFT’s Hypochlor™: The problem with this is three-fold. First, a product that contains .02% hypochlorous acid is comparable in name only. The impurities found in such formulations (Avenova™ is a special NeutroPhase™ spinoff of 100% pure hypochlorous acid) are often irritating to the eye. So while this makes for a nice headline it doesn't make for a better product. Yes, it too attacks microbial invaders but to what extent and how fast is left to our imagination. Most importantly, OCuSOFT's Hypochlor™ can't be labeled, and is not, prescription grade.”    The statement referring to other HOCL products as “often irritating to the eye” is factually incorrect as HypoChlor™ was tested for use directly in the eye and received a “0” perfect non-irritating score.  It should be noted that all these HOCL products are intended for use ON the eyelid…not in the eye, however, in the case of inadvertent spillage into the eye(s), it is comforting to know Hypochlorous acids are non-irritating to the eye.

OCuSOFT® Lid Scrub® Original & PLUS Formulas Needed to Remove Oil and Debris

OCuSOFT® Lid Scrub® Original and OCuSOFT® Lid Scrub® PLUS are effective and intended for continuous daily eyelid hygiene use.  The root cause of anterior blepharitis is the overproduction of oils.  Mild surfactants in OCuSOFT® Lid Scrub® eyelid cleansers act to dissolve and remove oil, debris and desquamated skin.  Hypochlorous acid formulas do not contain these surfactants and thus are largely ineffective in debriding the oil, scales and debris often associated with eyelid irritations.  Accordingly, in the most severe cases where Hypochlorous acid might be most beneficial, it is suggested to use Combination Therapy including both a surfactant cleanser and Hypochlorous acid to achieve optimum results.  In the article, “Alternative Products Available to Combat Ocular Surface Disease” that ran in the November 2014 issue of Primary Care Optometry News,  Katherine Mastrota, O.D., a consultant for NovaBay herself, recommends pairing a hypochlorous acid product with a “doctor recommended surfactant product.

OCuSOFT® Lid Scrub® Original Formula is principally a surfactant formulation and acts to remove oil, debris and desquamated skin in various eyelid conditions. OCuSOFT® Lid Scrub® PLUS contains a patented moisturizer and preservative blend that effectively eradicates seven different strains of bacteria commonly found on the eyelids without the need of prescription cleansers.

Regarding the effectiveness of OCuSOFT® Lid Scrub® PLUS, Marguerite McDonald, M.D. of Ophthalmic Consultants of Long Island and Clinical Professor of Ophthalmology, NYU School of Medicine, New York, US, goes on to say, “In a time-kill study, the anti-bacterial effectiveness of OCuSOFT® Lid Scrub® PLUS was independently tested against a variety of pathogens. In particular, S. epidermidis, a leading cause of post-operative endophthalmitis was tested.  These studies demonstrated a 5.5 log reduction confirming its significant effectiveness.”

It is interesting to note that debridement claims made by hypochlorous acid products are due to the spray projectile packaging of all hypochlorous acid products rather than strength of the concentration.  Significantly, none of the hypochlorous acid formulations on the market contain any surfactants to remove oil from the eyelids.  Most expert ophthalmologists and optometrists agree that the surfactant components of existing eyelid cleansers are necessary to remove excessive oil, debris and desquamated skin from the eyelids.  Since OCuSOFT® Lid Scrub® PLUS contains anti-bacterial properties, in cases of bacterial blepharitis treatment, this ONE product will effectively treat most patients.

Hypochlorous Acid for Severe Eyelid Treatment

The role of hypochlorous acid in eye care is not for continuous everyday eyelid cleansing, but instead used as an adjunct to OCuSOFT Lid Scrub cleansers in severe cases only.  Only in such severe cases might Hypochlorous acid (OCuSOFT® HypoChlor™) be beneficial.  In such cases, OCuSOFT suggests the use Combination Therapy including both a surfactant cleanser and Hypochlorous acid to achieve optimum results.  (It should be noted that such combination therapy is not necessary for the vast majority of patients.) OCuSOFT® HypoChlor™ Gel is ideal in these cases since it can be applied and left on overnight in order to expedite healing.

Price Tag and Degradation Rate

In order to receive a 510-K Medical Device clearance from the FDA, the product must demonstrate bioequivalence with the predicate devices.  All hypochlorous acid products that have received 510-K clearance and have identical bacterial kill rates using the USP51 test and identical principle compositions.  Again, from an earlier post:  ”…you wouldn't be getting the efficacy of pure hypochlorous acid with its 14 years of product development, absence of sodium hypochlorite found in Chlorox bleach, and 3-year shelf life.” This is incorrect.  All hypochlorous acid products are manufactured similarly.  Chlorine in water splits into two forms, Hypochlorous Acid (HOCl) and Hypochlorite Ion (OCl-).  At the high pH the chlorine provided by bleach contains a maximum of Hypochlorite Ion. The chlorine produced by electrolyses or chemical reaction contains a maximum concentration of Hypochlorous Acid (HOCl).

How much of each is present in a chlorine solution is totally dependent upon the pH of the solution. As pH rises, less Hypochlorous Acid and more Hypochlorite Ion is in the solution. As the pH rises, less germ killing power is available.  The ideal pH of a disinfecting chlorine solution is a pH of 6-7 which is where most HOCl products range.

The shelf-life of NovaBay’s Avenova™ is 3 years, however, once the product is opened, its equilibrium shifts, chlorine gas is released and it degrades into saline after 30 days.  Therefore, one bottle of Avenova only lasts one month.  Compare this to OCuSOFT® HypoChlor™ that has an 18 month shelf-life and stability either opened or unopened.  Since we believe that OCuSOFT® HypoChlor™ should only be used as an adjunct to eyelid cleansers and for severe cases only, OCuSOFT® HypoChlor™’s 2oz. bottle could last a patient for 3-6 months.  Once the eyelid irritation is under control within the first 2 weeks of treatment with OCuSOFT® Lid Scrub® Plus and HypoChlor™, then the patient can switch to a low cost maintenance regimen of OCuSOFT® Lid Scrub® Original.

A minimum order of Avenova™ on-line through NovaBay’s website is 3 bottles at $30 each in 1.33 oz.  Annual treatment with Avenova™ would cost at least $360.  Compare this with the recommended therapy of OCuSOFT® HypoChlor™ ($21.95), OCuSOFT® Lid Scrub® PLUS® ($20) for the first two weeks of treatment, then OCuSOFT® Lid Scrub® Original monthly thereafter ($20 for a 90 day supply 7.25 oz. bottle) equals $121.00 per year.  This is a savings to the patient of 66% using the OCuSOFT preferred therapy.

In Summary

Doctors have long treated blepharitis and lid disease by recommending mild cleansers with surfactants (baby shampoo initially, then commercial lid cleansers such as OCuSOFT® Lid Scrub®) and prescribing antibiotics when necessary.  Although most antibiotic prescriptions will kill the primary bacterial flora found on the eyelid,  a surfactant cleanser  was, and still is, recommended first to debride the eyelid and remove excessive oil that harbor bacteria.


Synergy Begins a Relentless Climb May 18, 2015


Synergy May 18th 2015

As many of you are well aware, I've successfully predicted two 50% plus ascents in Synergy's share price over the past 2 years.  I'm now predicting that beginning May 18th, Synergy's share price will climb a similar amount and possibly higher over the coming 5 months.  Please note that I'm long Synergy Pharmaceuticals (SGYP).

Always be well...


Seeking Alpha Healthcare Contributor Rankings April 20, 2015

Can anyone explain this to me?  The explanation I've received from my editors is that the rankings of contributors on Seeking Alpha are made based upon the total number of page views in the last 90 days.  Is that anyway to to arrive at a ranking system that anyone would interpret as based upon some form of quality such as percentage of successful picks; average investment return; number of Pro articles; follower to article ratio, etc; etc; etc?  Clearly not!

SA Graphical Rankings



An Interview With NovaBay CEO Ron Najafi

Question: Noting that I really like the change, how did i-Lid Cleanser become Avenova?

I’d like to answer that question by beginning with some background about this unique product.  They say “necessity is the Mother of Invention” and it was the desperate need for an effective treatment regimen for the chronic condition of blepharitis that was the genesis behind Avenova.  I-Lid Cleanser, now Avenova, was created by Dr. Kathryn Najafi-Tagol who is an ophthalmologist, cataract surgeon and glaucoma specialist, and NovaBay’s VP of Medical Affairs.  Katy also happens to be my sister and has been involved with the development of our entire Neutrox family of products that includes Avenova, NeutroPhase and CelleRx.

The idea for i-Lid Cleanser (now Avenova) came out of Katy’s frustration with trying to help her patients with blepharitis.  Antibiotic, steroid, lid compresses and detergent based lid wipes simply did not work. Blepharitis is a chronic condition and is often caused by over colonization of staphylococcus bacteria on the patient’s eyelids and lashes.


Antibiotics help, except you cannot use them continually.  Steroids help, but once again prolonged use is prohibited as steroids increase eye pressure, which can be dangerous, especially in glaucoma patients.  Detergent-based lid wipes make sense to eliminate the attendant encrustation, collarets, and seemingly dirty looking eyelids and lashes that are caused by this condition.  However, they offered no antimicrobial activity and may irritate the skin around the eye.  Furthermore, continual use of these wipes results in contact dermatitis and may not be helpful if one is suffering from dry eye.

Katy was looking for a product with rapid antimicrobial, anti-toxin, anti-lipase activity that can be used indefinitely. She found that a modified formulation of NeutroPhase, our skin and wound cleanser product, accommodated the sensitivity of eyelids.  This is the formula for success that we now call Avenova.

We had initially branded the product as i-Lid Cleanser.  However, this name sounded like just another detergent-base lid wipe, which we are not and wanted to distinguish our product.

Katy began prescribing the Avenova formulation for blepharitis patients with remarkable success.  Even patients who have been using this product for more than two years now have not had any need to use antibiotics, steroids or any detergent-base lid wipes.

Let me tell you a bit about dry eye.  In the seminal American Academy of Ophthalmology paper, “2007 Report of the International Dry Eye Workshop,” also known as the “DEWS report”, eye doctors from around the world agreed that most dry eye is caused by meibomian gland deficiencies.

Eye 1

In fact, most dry eye patients experience meibomian glands deficiency. Located in the eyelids, these glands produce the fine “olive oil-like” lubricant that cover the cornea and provides for a layer of protection over the water layer on the eye to prevent dryness.  That’s why detergent-base lid wipes are not the solution. They rob the eyes of precious, much-needed oil that provides a protective layer on the cornea. Avenova does not contain any of these “problem causing detergents”.

Eye 2

Question: How is it that NovaBay was able to receive a device exemption from the FDA in order to commercialize Avenova when it's not a device?

Avenova falls under the NeutroPhase FDA regulatory clearance. As a skin and wound cleanser, NeutroPhase qualified, and was cleared, by the FDA as a 510(k) medical device.  Similarly, Avenova, as a lid cleanser, is also covered under the same FDA clearance.  The package insert indicates the potent and fast in-solution antimicrobial activity.

And will that exemption provide sufficient protection should there be reports of any unexpected problems with the product?

NovaBay’s Quality Assurance and Manufacturing departments are tasked with maintaining highest quality product during production and post-marketing.  The product has been in use for two years and we have a fantastic safety record.  In the rare instances in which we have received any sort of complaint, we use this information to improve quality and safety. Any serious adverse event are required to be included as Medical Device Reporting and shared with the FDA.  To date, we do not know of any serious adverse events and no serious adverse events have been filed with Medical Device Reporting with the FDA.

Question: Having seen firsthand changes to the pricing of glasses at my most recent appointment benefiting my eye doctor, I see optometrists as being very enthusiastic about prescribing this product.  What percentage of each sale is given to them?

Optometrists who stock and sell Avenova receive a healthy margin of 30-40% on the sale of this product.  We view this as a “win-win” for patients who may benefit by using Avenova and optometrists who have a product that can help these patients and also support their business goals.

Question: There's obviously a cosmetic aspect to the benefit of using Avenova which would appeal to both men and women.  Are you emphasizing this?  And if so, how?

We are not emphasizing the cosmetic benefit of Avenova or Neutrox at this time as our focus is on Avenova’s ability to control the chronic condition of blepharitis and dry eye.  We also are excited that some ophthalmologists are also using Avenova as a pre and post-surgical cleanser.  We are aware of Neutrox’s potential in the cosmetic market, which is addressed by our CelleRx product.  But, for right now, NovaBay is focused on the eye care market.  We are very pleased by how the market is welcoming Avenova and how patients, even those who have suffered for years, are now benefiting from this unique product in as little as two weeks by simply wiping their eyelids with the product twice a day.  What is exciting is that we have the opportunity to focus on cosmetic applications with Neutrox if we choose at some future date.

Question: Over the last 180 years there have been many products containing Hypochlorous Acid, namely Dakin solution and many over the counter products.  What is truly unique about your version of hypochlorous acid?

Thank you for asking this question.  All non-NovaBay products containing hypochlorous acid are not 100% pure hypochlorous acid.  Some contain significant amount of sodium hypochlorite, which is the active ingredient in Clorox bleach.  NovaBay products contain pure hypochlorous acid.  We have the scientific know-how to make pure hypochlorous acid and more importantly bring it to the market in a formulation that features a three-year shelf life.  And our product is patent protected.  It took us 14 years to develop our product.  Most impure hypochlorous acids of 19th and 20th centuries have only a three-to-18 months shelf life.

Question: I noticed on your marketing maps the absence of my home town of Seattle, Washington.  How can you possibly account for this oversight and can I be your sole rep up here until you realize what a gold mine you've overlooked?  Please note that this employment request is made purely in jest.

Thanks for your interest.  We are very excited to inform you that as of early February we have a dedicated medical sales representative in the Seattle area.  Seattle is one of my favorite cities in the U.S. and we agree that there is plenty of opportunity for Avenova in this market.

In the map below, you will see our current sales territories.  Following our recent sales organization expansion, we have medical sales representatives in major markets across the country.

I also want to take this opportunity to remind you that our sales organization is led by Glenn Moro, who, based upon his 26 years of experience at Alcon, is highly experienced in launching ophthalmic products.


Question: And finally, I would be remiss in not asking you to give some value to those non-eye care assets that are now being negotiated for sale.  At the Q4 Conference Call, you mentioned a window of perhaps 6-months, are you prepared to itemize those and attach some general dollar amounts for us?

An important aspect of our strategy is to monetize certain non-core assets.  Our urology asset is in Phase 2 testing with patient enrollment underway.  We are actively discussing this asset with potential partners.  As for NeutroPhase and CelleRx, we have been licensing these assets and will continue to support our distributors.  It is very exciting that our partner Pioneer Pharma, which is a major pharmaceutical distributor in China, is currently introducing NeutroPhase into that market.

Question: Patent protection for Avenova:  How extensive is it?  And is NBY currently fending off generic competition?

We have several issued and pending patents on Neutrox, which is our pure hypochlorous acid technology.  All competing products contain significant sodium hypochlorite impurities, which I mentioned earlier is the active ingredient in Clorox beach.  Avenova is the only pure hypochlorous acid.  Purity and shelf life make all the difference.

Question: I recall NBY being listed on one of the two major exchanges.  Since you've been sub $1.00 for a while now, do you anticipate being relegated to the OTC and if so, when?

We are listed on the NYSE-MKT market under the symbol NBY.  Unlike Nasdaq, the NYSE-MKT does not have a "bright line" designated minimum trading price. Simply being sub-$1.00 does not cause de-listing.  We very much like being listed on the NYSE and intend take appropriate measures to ensure that we stay compliant with its listing standards.

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