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.