The Company You Keep Speaks Volumes: Novabay And Trius

Often, small biotechs develop their drugs in a singular effort, trying desperately to meet established clinical milestones, living in the Phase 1 and 2 valley of death space – where no larger pharmaceutical or substantial investor will take interest or assist in funding their effort – until they prove a level of efficacy and safety. Keeping the bills paid and operations running, along with securing patents, is the major challenge at that stage. In other words, it is outright survival that is at stake as each financial quarter arrives.

Thinking about funding clinical trials going forward, commercialization and marketing deals are on the radar, but a distant leap from day to day operational matters. It takes smart management, keen deal making, and efficient cash management to survive. Those who demonstrate the skill of deal-making, without giving up too much of marketing rights, do well. Those who partner in a shrewd manner and net clinical development funding do even better. If you think about it, the company one keeps along the way is somewhat of an indicator of how a company is doing at present, and an indicator of what the future may bring.

The great potential of a drug or remedy that may make it a significant seller and revenue driver for years to come is one thing. But the partners and interested parties early on and along the way suggests a depth that a long term stakeholder should pay attention to.

Novabay Pharmaceuticals (AMEX: (NBY)) latched on to resolving what is now a growing problem of methicillin-resistant Staphylococcus aureus (MRSA). The go-to remedies of the past years are not as effective as they once were, due to growing drug resistance. Novabay’s NVC-422 anti-infective drug is the backbone of their effort. In a highly effective and smart move, Novabay negotiated an agreement with Galderma S.A to develop and then market the product, should it make it through the regulatory approval stages.

Galderma plans to treat impetigo, a highly contagious skin infection with NVC-422. A recent indicator of the partnership was that Galderma paid a $2.6 million clinical milestone payment to Novabay. Galderma pays for the ongoing clinical development, therefore Novabay is not out of pocket without current revenue. Down the road, royalty payments will come streaming in. While the royalty percentage amount is not declared, a double digit percentage is thought probable.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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