Positive Data on New Class of Anti-infectives Announced by NovaBay Pharmaceuticals at ARVO 2010

New studies confirm stability and antiviral activity of NovaBay’s Aganocide®  compounds.

Ft. Lauderdale, FL, May 6, 2010—New preclinical data demonstrating the antiviral activity and stability of NovaBay Pharmaceuticals’ (AMEX:NBY) Aganocide compounds were presented during three poster sessions at the Association for Research in Vision and Ophthalmology (ARVO) annual meeting in Ft. Lauderdale, Florida.

NovaBay’s Aganocide compounds are first-in-class anti-infectives being developed for the treatment and prevention of antibiotic-resistant infections. These broad-spectrum antimicrobials are in Phase 2 clinical development for the treatment of conjunctivitis or “Pink Eye,” impetigo and catheter-associated urinary tract infections (CAUTI).

The lead Aganocide compound, NVC-422/AL-46383A, is a stable compound based on the chemical structures of N-chlorotaurine (NCT) and N,N-dichlorotaurine, which are naturally occurring antimicrobial agents produced by white blood cells to fight invasive pathogens.

Data from the following abstracts were featured:

– An abstract presented today, titled, “Topical N,N-dichloro-2,2-dimethyltaurine(AL-46383A) Inhibits Adenovirus Replication in the Ocular Ad5/NZW Rabbit Replication Model,” revealed that AL-46383A demonstrated significant anti-adenoviral activity in the Ad5/NZW rabbit ocular model. There was no significant toxicity, as with the currently available treatment cidofovir. AL-46383A is under investigation in a masked placebo-controlled clinical trial as a topical therapy for viral conjunctivitis.

Authors of the study are David Stroman, Ph.D., of Alcon Laboratories; and Eric G. Romanowski, Kathleen A. Yates and Dr. Y. Jerold Gordon of the Charles T. Campbell Lab at the University of Pittsburgh et al.

– An abstract presented Monday, May, 3, titled, “In vitro Microbicidal Activity in Tears of N,N-dichloro-2,2-dimethyltaurine (NVC-422,AL-46383A), a Novel Topical Ophthalmic Agent,” showed that NVC-422 demonstrated stability in 10 percent synthetic tears after a two-hour incubation. A concentration of 0.3 percent NVC-422 in acetate pH4 in the presence of synthetic tears killed both Gram-positive and Gram-negative bacteria. Antiviral activity of NVC-422 was also retained in 10 percent synthetic tears. A concentration of 0.1 percent NVC-422 reduced all titers to the limit of detection.

Authors of the abstract are: Dr. Kathryn Najafi, founder and medical director of the Eye Institute of Marin and a NovaBay advisor; Dr. Stephen Wilmarth, NovaBay advisor and a founding member of Medical Vision Technology; and David Stroman, Ph.D, and Masood Chowhan, Ph.D., of Alcon Laboratories, et al.

– An abstract presented Monday, May 3, titled, “In vitro Evaluation of N,N-dichloro-2,2-dimethyltaurine(AL-46383A) as an Antiviral Agent Against Adenovirus and HSV-1,” showed that AL-46383A directly inactivated all ocular isolates of adenovirus and HSV-1 at all concentrations tested. All AL-46383A concentrations demonstrated at least a 1-Log10 reduction in the mean titers of all viral isolates.

Authors of the abstract are: Dr. Y. Jerold Gordon, Kathleen Yates, and Eric G. Romanowski of the Charles T. Campbell Lab at the University of Pittsburgh; and David Stroman, Ph.D. of Alcon Laboratories, et al.

“These studies demonstrate the potential for this very important new class of antimicrobial compounds to treat a broad range of infections without causing resistance,” said NovaBay CEO Ron Najafi, Ph.D. “We are excited about our work with partner Alcon, Inc. (NYSE:ACL), the world’s leading eye care company, to commercialize a promising dual treatment for both viral and bacterial conjunctivitis. We also expect to release Phase 2 clinical data later this year on the development of our Aganocide compounds for impetigo, a common, highly contagious skin infection among children, and Catheter-Associated Urinary Tract Infection.”

Abstracts of the presentations may be accessed at www.arvo.org.

About Aganocide Compounds
The Aganocide compounds are novel, proprietary, synthetic N-chlorinated antimicrobial molecules specifically developed by NovaBay to mimic the
body’s natural defense against infection. The Aganocide compounds maintain biological activities while demonstrating improved stability over the naturally occurring N-chlorinated antimicrobial molecules. These highly differentiated, first-in-class, small-molecule, patented new chemical entities may deliver the same or better efficacy than currently used antibiotics without contributing to the growing rise of antibiotic-resistant bacterial strains. In preclinical testing, the Aganocide compounds have been shown to be highly effective against bacteria, including multi-drug resistant strains (such as MRSA),viruses and fungi. They also have been demonstrated to be effective against bacteria in biofilm, which render most antibiotics ineffective. The Aganocide compounds have a broad therapeutic index while providing a high degree of potency and tolerability as well as dosing versatility and flexibility.

About NovaBay Pharmaceuticals, Inc.
NovaBay Pharmaceuticals is a clinical stage biotechnology company focused on developing its proprietary and patented Aganocide compounds, which are novel, synthetic anti-infective product candidates with equivalent activity to the active antimicrobial molecules generated within white blood cells. NovaBay’s Aganocide compounds are being developed to treat and prevent a wide range of infections without causing bacterial resistance. NovaBay has internal development programs aimed at addressing hospital and respiratory infections. The company has a license and research collaboration agreement with Alcon, Inc. for use of its Aganocide compounds to treat eye, ear and sinus infections as well as for contact lens care. NovaBay has also entered into an agreement with Galderma S.A. to develop and commercialize Aganocide compounds in acne, impetigo and other dermatological indications. For more information on NovaBay, visit: www.novabaypharma.com.

Cautionary Information Regarding Forward-Looking Statements
The statements in this press release of NovaBay’s expectations regarding NovaBay’s Aganocide compounds’ potential to treat a broad range of infections without causing resistance are forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, among others, the risk that results obtained in preclinical studies may not be obtained in humans, and the risk that the Aganocide compounds may not deliver the same or better efficacy than currently used antibiotics without contributing to the growing rise of bacterial resistance. Other risks relating to NovaBay and its Aganocide compounds, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in NovaBay’s Annual Report on Form 10-K for the period ended December 31, 2009, under the caption “Risk Factors” in Item 1A of Part I of that report, filed with the Securities and Exchange Commission on March 29, 2010. 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.