SecProbe.io

Mail Stop 6010           June 25, 2007   Ron Najafi, Ph.D. Chairman of the Board, Chief Executive Officer and President NovaBay Pharmaceuticals, Inc. 5980 Horton Street – Suite 550 Emeryville, California  94608
Re:   NovaBay Pharmaceuticals, Inc.
Amendment No. 3 to Form S-1 Registration Statement
 File No. 333-140714

Dear Mr. Najafi:
We have reviewed your filing and have the following comments.  Where
indicated, we think you should re vise your document in response to these comments.  If
you disagree, we will consider your explanation as to why our comment is inapplicable or
a revision is unnecessary.  Please be as deta iled as necessary in your explanation.  In
some of our comments, we may ask you to pr ovide us with supplemental information so
we may better understand your disclosure.  Af ter reviewing this information, we may or
may not raise additional comments.
 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our  comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations

 Critical Accounting Policies and Estimates

 Stock Based Compensation, page 39

1. Please refer to your response to prior comme nt 14 and your disclosure that you grant
options to purchase your common stock to em ployees and directors at prices equal to
or greater than the fair value of the stoc k on the dates the options are granted.  It
appears from your response that the en terprise value of your company was

Ron Najafi, Ph.D.
NovaBay Pharmaceuticals, Inc. June 25, 2007 Page 2

determined based discussions with invest ment banks in mid to late 2006 and an
independent third-party va luation as of December 31, 2006.  Please disclose, and
explain to us, in greater detail how you determined the fair value of the common
stock at each grant date.  Discuss the met hodology used to determine enterprise value
at each grant date and how the enterprise value was allocated to  the preferred and
common stock.  Explain management’s basis for the discount from preferred stock.
2. Disclose whether or not the va luation used to determine fa ir value at each grant date
was contemporaneous or retrospective.  If the valuation specialist was a related party,
please state that fact.  If the valuation at each grant date was not performed contemporaneously.  Please disclose th e following information relating to your
issuances of equity instruments:

• A discussion of significant  factors, assumptions, and methodologies used in
determining fair value
• A discussion of each significant factor contributing to the difference between the
fair value as of the date of each grant and the estimated IPO price.
• The valuation alternative selected and th e reason management chose not to obtain
a contemporaneous valuation by an  unrelated valuation specialist

* * * * *
   As appropriate, please amend your regist ration statement in response to these
comments.  You may wish to provide us w ith marked copies of the amendment to
expedite our review.  Please furnish a cove r letter with your amendment that keys your
responses to our comments and provides any requested supplemental information.
Detailed cover letters greatly facilitate our  review.  We may have additional comments
after reviewing your amendment and responses to our comments.

 We urge all persons who are responsible  for the accuracy and adequacy of the
disclosure in the filings reviewed by the sta ff to be certain that they have provided all
information investors require for an info rmed decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.
    Notwithstanding our comments, in the ev ent the company requests acceleration of
the effective date of the pending registration statement, it should furnish a letter, at the
time of such request , acknowledging that
 ‚ should the Commission or the staff, acti ng pursuant to delegated authority,
declare the filing effective, it does not foreclose the Commission from taking any
action with respect to the filing;

Ron Najafi, Ph.D.
NovaBay Pharmaceuticals, Inc. June 25, 2007 Page 3

‚ the action of the Commission or the staff,  acting pursuant to delegated authority,
in declaring the filing effective, does not relieve the company from its full
responsibility for the adequacy  and accuracy of the disclosure in the filing; and

‚ the company may not assert this action as  a defense in any proceeding initiated by
the Commission or any person under the fe deral securities laws of the United
States.
  In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to our comments on your filing.
We direct your attention to Rules 46 0 and 461 regarding requesting acceleration
of a registration statement.  Please provide this request at least two business days in
advance of the requested effective date and allow adequate time after the filing of any
amendment for further review before submitting a request for acceleration.
 You may contact Todd Sherman at 202- 551-3665 or Don Abbott at 202-551-3608
if you have questions regarding comments on the financial statements and related
matters.  Please contact Suzanne Hayes at 202-551-3675 or me at 202-551-3710 with any
other questions.

         S i n c e r e l y ,             J e f f r e y  P .  R i e d l e r          A s s i s t a n t  D i r e c t o r

Cc: Chris Barry, Esq.  Dorsey & Whitney LLP  U.S. Bank Centre  1420 Fifth Avenue – Suite 3400  Seattle, Washington  98101-4010