NovaBay Pharmaceuticals, Inc.

Good day and welcome to the Nova Bay Pharmaceuticals second quarter 2021 financial results conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, we will hold a Q&A session. To ask a question at that time, please press the star key followed by the number one on your touchtone phone. If anyone has difficulty hearing the conference, please press star, then zero for operator assistance. As a reminder, this conference is being recorded I would now like to turn the conference over to Jody Kane. Please go ahead.

This is Jody Kane with LHA. Thank you for participating in today's call. Joining me from Nova Bay are Justin Hall, Chief Executive Officer and General Counsel, and Andy Jones, the company's Chief Financial Officer. I would like to remind listeners that comments made during this call by management will include forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve risks and uncertainties that could cause actual results to be materially different from any anticipated results. In particular, there is significant uncertainty about the duration and potential impact of the COVID-19 pandemic. This means that results could change at any time, and the contemplated impact of COVID-19 on Nova Bay's operations is financial results and its outlook is the best estimate based on information available for today's discussion. For a list and description of risks and uncertainties, please review NOVA-based filings with the Securities and Exchange Commission at sec.gov. Furthermore, the content of this conference call contains information that is accurate only as of the date of the live broadcast, August 12, 2021. NOVA Bay undertakes no obligation to revise or update any statements to reflect events or circumstances, except as required by law. And now I'd like to turn the call over to Justin Hall. Justin?

Thank you, Jody. Good afternoon, everyone, and thank you for joining us. Highly gratifying to begin this call by reporting record high quarterly unit sales, as more people are using Avanova today than ever before. Our Q2 financial performance was driven by record Avanova unit sales and record revenue in the DTC channel for the fourth consecutive quarter. In fact, with the exception of one quarter last year during the height of the pandemic, we have consistently broken records in this channel since its inception in 2019. Amazon continues to be our largest source of online sales, complemented by growing sales through our own website. Our considerable DTC competency is reflected in our ever increasing sophistication in digital marketing. We now consistently launch fresh advertising campaigns across multiple electronic platforms with marketing techniques that include real-time monitoring of performance metrics. This tracking allows for quick adjustments to placements and messaging to leverage what's working best, accelerate sales, and maximize our return on ad spend. Our efforts to expand and improve our DTC channel are paying off, and we continue to see this channel as our highest growth potential for Avanova. DTC sales are coming from both first-time users and our loyal customer base. Expanding our customer base is key to creating a reliable revenue stream, as Avanova enjoys a very high rate of repeat business. We know we have strong brand loyalty because of the growing number of users who are utilizing the subscribe and save feature on Amazon.com and Avanova.com. We also know that our customer satisfaction is extremely high, as evidenced by Avanova's full five-star rating by 70% of the 8,000 customers who have reviewed our product on Amazon, with 84% of the ratings at four stars and above. Verified purchasers praise our product in written reviews with comments such as, I've suffered for years with dry eye, and this is the only thing that has ever worked. I've literally tried everything else on the market. These customer reviews are especially rewarding because they are honest and unsolicited, as required by Amazon. We can truly say that our product is making a positive impact in people's lives. Other contributions to the DTC channel have also come from Walmart.com and from CVS, where Avanova has been available both in stores and online since earlier this year. It's exciting to announce that CVS has recently expanded access to our product, with Avanova now on the shelves of more than half of CVS's 10,000 stores nationwide. We are also capitalizing on the strong Avanova brand by launching complementary eye care products in the DTC channel. So far this year, we've added the warm eye compress and the EyeCheck illuminated eye examination mirror. The EyeCheck is a portable, lightweight, handheld mirror featuring 10 times magnification and is specifically designed for at-home visual resolution and magnification of the eye and surrounding area. Among its uses, EyeCheck enables our customers to have an up-close look at the effectiveness of Avanova on their lids and lashes. These ancillary products are meant to support the use of Avanova by both new and returning customers. Our Avanova lubricating eye drops are still slated to launch at the beginning of Q4. While sales have continued to grow through our DTC channel, we continue to focus on our pharmacy channel with our RX-only product. We increased our focus on the prescription channel through our recently announced highly promising partnership, with the nation's largest ophthalmic pharmacy, Impromis Rx. Our new partner has had lots of success in commercializing high-quality prescription ophthalmic drugs to its established customer base of thousands of eye care specialists nationwide. Avanova is highly complementary to their newly launched cyclosporine eye drop, Clarity C. I firmly believe that patients who use both Clarity C and Avanova will experience better clinical outcomes if they use both products together. These two products have different mechanisms of action but are completely complementary. Although they were designed separately, it's almost as if the two products were created to be used together. In addition to their eye drops, their portfolio consists of hundreds of products used in ophthalmic surgical procedures. Avanova's antibacterial and antimicrobial properties make it ideal for pre and post LASIK surgery and cataract procedures. This opens a significant market opportunity for Avanova, as cataract surgery is the number one surgical procedure in the United States, with about 4 million procedures performed each year. ImpromiseRx is involved in approximately 20% of all cataract surgeries in the U.S., so the market potential is huge, and we're excited to have a partner with such broad reach. The Inframis Rx sales force is already promoting Avanova, and we expect to see a material impact from this new partnership in the fourth quarter. Avanova's high-quality formulation has made it the number one physician-recommended antimicrobial lid and lash spray and provides a foundation for continued growth. Novabay was the first to launch a hypochlorous acid product into the large dry eye market. We continue to stand by our assertion that Avanova is best in class due to our patented pharmaceutical grade formulation. We have tested every hypochlorous acid lid and lash product we can find on the market and no other formulation has been found to be as pure as Avanova. As we've said many times, Avanova is completely safe for regular use. It's the only lid and lash antimicrobial spray to be clinically proven to reduce the bacterial load on ocular skin surfaces thus addressing the underlying cause of bacterial dry eye rather than just the symptoms. Turning now to Celerex Clinical Reset. We very recently launched digital advertising campaigns for this product with creative messaging aimed at accelerating sales. These campaigns have the same high level of sophistication as our Avanova campaigns with real-time tracking. Clinical Reset is a truly exciting product that opens up a new category for pharmaceutical-grade skincare. Our product is a gentle, calming, and soothing facial spray that effectively removes barriers to cell turnover by disrupting the biofilm layer without stripping the skin. CellRx is the answer to the dangerous idea of needing to scrub, repetitively wash, and use harsh ingredients to have healthy, glowing skin. Increasingly, researchers are realizing that the balance of oil and lipids in the skin's biofilm is exceedingly important to keeping it healthy. Celerex addresses this balance. As a wholly new approach to skin care, adoption requires some education about its benefits. Our new digital media campaigns are focused on defining the role of Celerex in a daily skincare routine with messaging that features all natural, non-drying, deep cleansing benefits and lifestyle testimonials from actual users. Like Avanova, we find a high level of customer loyalty in this product. Cellarex also provides us with relationships and competencies in the large skincare market, much like Avanova does in the ophthalmic market. These competencies are important as we actively negotiate strategic opportunities to broaden our product portfolio with complementary products. This is a top priority for NovaBay as we look to build shareholder value by reaching profitability through growing revenue and a diversified product offering. We are positioned to capitalize on attractive opportunities by leveraging our sales channels, our marketing know-how, and our administrative expertise. Now I'll turn the call over to Andy to review our financial performance in more detail.