NovaBay Pharmaceuticals, Inc.

Good afternoon and welcome to the Nova Bay Pharmaceuticals fourth quarter 2021 financial results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event 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'd like to remind listeners that comments made during this call by managements will include forward-looking statements within the meaning of the 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 uncertainty about the integration of DERMA doctor into NOFA-based operations and duration of potential impact of the ongoing COVID-19 pandemic. This means that results could change at any time in the contemplated impact of Nova Bay's recent acquisition and COVID-19 on Nova Bay's operations, its financial results, and its outlook is the best estimate based on information available for today's discussion. For a list and description of recent uncertainties, please review Nova Bay's 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, March 29, 2022. 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. I'm pleased to report that product sales for the fourth quarter increased by 40% over the prior year period on record high unit sales of Avanova spray. Q4 was a strong close to a highly productive year in which Avanova sales increased by 15% while the number of units sold increased by 31% as more people than ever used our antimicrobial lid and lash spray. Importantly, 74% of Avanova product revenue during 2021 came from our non-prescription channels, reflecting the success of our consumer marketing initiatives. The crowning achievement of 2021 was the acquisition of Dermadoctor, which was completed in November. In my view, this is the most significant event in our corporate history. By acquiring Dermadoctor, we effectively transitioned NovaBay from a single product company to one with a strong presence in the large and growing eye care and skin care markets. While diversifying our product portfolio in itself is of significant value, we also gained additional growth opportunities from this highly synergistic transaction. On our last quarterly call, I laid out a multi-pronged growth strategy for our combined companies. Among our strategic initiatives is introducing innovative, scientifically developed over-the-counter products under both the Avanova and Dermadoctor brands. We are already executing on this initiative, having launched two new products this year. In January, we expanded our Avanova product portfolio with the launch of our lubricating eye drops. These new eye drops were designed to help dry eye sufferers by providing immediate relief from irritated, gritty, scratchy, or blurry eyes. What differentiates our lubricating eye drops and makes them so highly effective is a mode of action that is entirely new to the eye care market. While these drops are effective as a standalone product, when they are combined with the Avanova Warm Eye Compress and Avanova Spray, they become our science for sore eyes three-step daily regimen for at-home dry eye management. Like other Avanova products, you can find our lubricating eye drops for sale on Amazon.com avanova.com, and dermadoctor.com. They are also offered for resale by eye care specialists through our physician-dispensed channel. Earlier this month, we launched a hyaluronic acid moisture recovery serum. This new product expands the Dermadoctor Calm, Cool, and Corrected family, which is specifically formulated to hydrate and repair eczema-prone skin. The HA serum was created by our new product officer, Dr. Audrey Kunin, who is a board-certified dermatologist and co-founder of Dermadoctor. Our serum is unique to the marketplace because it includes vitamin C, dragon fruit, and water-binding cactus botanicals to restore natural hydration to parched skin. Beyond just the new product pipeline, we have an opportunity for growth by expanding the marketing and distribution of our current products. The combined Avanova and Dermadoc teams bring extensive in-house expertise in developing robust social media and a strong marketing presence across all digital channels, allowing consumers to engage with the brand through social media and influencer campaigns. We are building on Audrey's established position as a key opinion leader in the skincare industry by identifying opportunities for her to provide an expert opinion on various skincare and beauty topics. Since the beginning of 2022, Audrey has been quoted in articles and appearing in online publications, including Glam.com, Cosmopolitan.com, CNN.com, and MarieClaire.com. You may have also seen Audrey in her recent QVC appearance as an on-air guest on a show called Cheers to Shopping with Leah and Sean, in which she featured our new eczema balm. Due to the popularity and success of her appearance, Audrey is expected to make additional QVC appearances, and we plan to announce those dates and times once they're set. Nova Bay has also been executing on our strategy to expand marketing activities outside of the United States. To that end, we engaged a leading Chinese marketing firm to drive consumer sales of Dermadoctor products in the vast Chinese market. As of March 1st, our new partner began managing Dermadoctor's flagship store on Tmall.com, which is the leading business to consumer online retailer in China. As you may know, Novavay has developed excellent relationships in China over the last several years. One thing that we've learned is that success in China is predicated on having a strong local business partner that understands the market and has the ability to create positive brand awareness. Social media platforms like TikTok are the best ways to attract new customers in China, and our new marketing partner, brings a greatly expanded network of bloggers and influencers, along with strong social media brand building capabilities. We are also looking to leverage Dermadoctor's relationships with their network of international distributors and retailers to further distribute NovaBay products throughout the world. As an update on another benefit from this acquisition, NovaBay and Dermadoctor are now sharing warehouse operations, including storage, picking and packing shipping, and logistics. All orders for Avanova branded products placed through our own website are now fulfilled by Dermadoctor, helping us save on Amazon fees. Now I'd like to turn the call over to Andy to review our financial performance from Q4 and the full year 2021.