SEC Comment Letter for NovaBay Pharmaceuticals, Inc. (NBY) (CIK 0001389545) (SDEV) — Feb 4, 2011
NovaBay Pharmaceuticals, Inc. (NBY) (CIK 0001389545)
Date: Feb. 4, 2011 · CIK: 0001389545 · Accession: 0000000000-11-007556
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-33678
Letter
February 4, 2011 Ramin Najafi Chief Executive Officer and President NovaBay Pharmaceuticals, Inc. 5980 Horton Street, Suite 550 Emeryville, CA 94608
Re: NovaBay Pharmaceuticals, Inc. Form 10-K for the Fiscal Year Ended December 31, 2009 Filed March 30, 2010 File No. 001-33678
Dear Mr. Najafi:
We have reviewed your January 7, 2011 re sponse to our December 14, 2010 letter and have the following comments.
Please respond to this letter within te n business days by providing the requested information or by advising us when you will provide the requested response. If you do not believe a comment applies to your facts and circ umstances, please tell us why in your response. Please furnish us a letter on EDGAR under the fo rm type label CORRESP that keys your responses to our comments. After reviewing the information you provide in response to these comments, we may have additional comments.
Our Target Indications and Product Candidates, page 4
1. We note your response to prior comment one that confidential trea tment requests have been granted with respect to your agreements with Alcon and Galderma. However, with respect to royalty rates, we are not looking for disclosure of the exact royalty rates, but we are looking for disclosure of a range of r oyalty rates within a te n percent range. That range of royalty rates is material informati on that needs to be disclosed and is not the subject of a confidential treatment request. With respect to milestone payments, we are not looking for disclosure of individual milestone paym ents, but we are looking for disclosure of aggregate milestones. We note that section 8.4 of your Collaboration and License Agreement with Galderma, which disc usses milestones payable, states, “the maximum amount payable by Galderma to NovaBay pursuant to this Section 8.4 for Acne Products is $30,000,000 and for Impeti go Products is $12,750,000,” and that these aggregate amounts were not redacted from the agreement. Please provide draft disclosure to be incl uded in your 2010 Form 10-K descri bing the range of royalty rates for your agreements with Alcon and Galder ma and aggregate milestones payable under the Galderma agreement.
Ramin Najafi NovaBay Pharmaceuticals, Inc. February 4, 2011 Page 2
Item 7. Management’s Discussion and Analysis
Results of Operations Comparison of Years Ended December 31, 2009, 2008 and 2007 Research and Development, page 33
2. Refer to your response to prior comment three, and addr ess the following: Disclose that you have not hi storically maintained research and development costs by program, and disclose why you have not maintained such costs by program; Disclose that you are begi nning to set up such tracki ng on your research and development programs to allow for tracking within each program on a go forward basis; and Disclose the date at which you will begi n tracking and disclosing research and development costs by program. Notes to Consolidated Financial Statements
Note 9. Stockholders’ Equity Stock Warrants Investor Warrants, page 58
3. Refer to your response to prior comment four . Regarding your analysis of ASC 815-40- 25-11, you state that the contract does not specify that NovaBay must deliver registered shares. In general, warrants issued in a public unit offering are required to settle in registered shares, and net cash settlement of the contract is assumed unless otherwise specified in the contract. It appears that section 14 of the warrant agreement does not absolve the Company from its obligation to ne t cash settle in all instances given that section 14 excludes section 1(c). Pleas e provide us your accounting analysis demonstrating why section 1(c) does not require net cash settlement and therefore recording the warrants as a liability and marki ng them to fair value at each balance sheet date through charges or credits to the statement of operations.
You may contact Staci Shannon, Staff Account ant, at (202) 551-3374 or Joel Parker, Branch Chief, at (202) 551-3651 if you have a ny questions regarding the processing of your response, as well as any questions regarding co mments on the financial statements and related matters. You may contact Johnny Gharib, Sta ff Attorney, at (202) 551-3170, or Sebastian Gomez Abero, Staff Attorney, at (202) 551-3578 with questions on comment one. In this regard, do not hesitate to contact me at (202) 551-3679.
Sincerely,
Jim B. Rosenberg
Senior Assistant Chief Accountant
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February 4, 2011 Ramin Najafi Chief Executive Officer and President NovaBay Pharmaceuticals, Inc. 5980 Horton Street, Suite 550 Emeryville, CA 94608 Re: NovaBay Pharmaceuticals, Inc. Form 10-K for the Fiscal Year Ended December 31, 2009 Filed March 30, 2010 File No. 001-33678 Dear Mr. Najafi: We have reviewed your January 7, 2011 re sponse to our December 14, 2010 letter and have the following comments. Please respond to this letter within te n business days by providing the requested information or by advising us when you will provide the requested response. If you do not believe a comment applies to your facts and circ umstances, please tell us why in your response. Please furnish us a letter on EDGAR under the fo rm type label CORRESP that keys your responses to our comments. After reviewing the information you provide in response to these comments, we may have additional comments. Our Target Indications and Product Candidates, page 4 1. We note your response to prior comment one that confidential trea tment requests have been granted with respect to your agreements with Alcon and Galderma. However, with respect to royalty rates, we are not looking for disclosure of the exact royalty rates, but we are looking for disclosure of a range of r oyalty rates within a te n percent range. That range of royalty rates is material informati on that needs to be disclosed and is not the subject of a confidential treatment request. With respect to milestone payments, we are not looking for disclosure of individual milestone paym ents, but we are looking for disclosure of aggregate milestones. We note that section 8.4 of your Collaboration and License Agreement with Galderma, which disc usses milestones payable, states, “the maximum amount payable by Galderma to NovaBay pursuant to this Section 8.4 for Acne Products is $30,000,000 and for Impeti go Products is $12,750,000,” and that these aggregate amounts were not redacted from the agreement. Please provide draft disclosure to be incl uded in your 2010 Form 10-K descri bing the range of royalty rates for your agreements with Alcon and Galder ma and aggregate milestones payable under the Galderma agreement. Ramin Najafi NovaBay Pharmaceuticals, Inc. February 4, 2011 Page 2 Item 7. Management’s Discussion and Analysis Results of Operations Comparison of Years Ended December 31, 2009, 2008 and 2007 Research and Development, page 33 2. Refer to your response to prior comment three, and addr ess the following: Disclose that you have not hi storically maintained research and development costs by program, and disclose why you have not maintained such costs by program; Disclose that you are begi nning to set up such tracki ng on your research and development programs to allow for tracking within each program on a go forward basis; and Disclose the date at which you will begi n tracking and disclosing research and development costs by program. Notes to Consolidated Financial Statements Note 9. Stockholders’ Equity Stock Warrants Investor Warrants, page 58 3. Refer to your response to prior comment four . Regarding your analysis of ASC 815-40- 25-11, you state that the contract does not specify that NovaBay must deliver registered shares. In general, warrants issued in a public unit offering are required to settle in registered shares, and net cash settlement of the contract is assumed unless otherwise specified in the contract. It appears that section 14 of the warrant agreement does not absolve the Company from its obligation to ne t cash settle in all instances given that section 14 excludes section 1(c). Pleas e provide us your accounting analysis demonstrating why section 1(c) does not require net cash settlement and therefore recording the warrants as a liability and marki ng them to fair value at each balance sheet date through charges or credits to the statement of operations. You may contact Staci Shannon, Staff Account ant, at (202) 551-3374 or Joel Parker, Branch Chief, at (202) 551-3651 if you have a ny questions regarding the processing of your response, as well as any questions regarding co mments on the financial statements and related matters. You may contact Johnny Gharib, Sta ff Attorney, at (202) 551-3170, or Sebastian Gomez Abero, Staff Attorney, at (202) 551-3578 with questions on comment one. In this regard, do not hesitate to contact me at (202) 551-3679. Sincerely, Jim B. Rosenberg Senior Assistant Chief Accountant