DEFA14A: NovaBay Pharmaceuticals Board Deems Refresh Acquisitions' Offer Superior to PRN Asset Purchase Agreement

NovaBay Pharmaceuticals has determined that an unsolicited offer from Refresh Acquisitions BidCo LLC to acquire its Avenova brand and related assets is a superior proposal to its existing asset purchase agreement with PRN Physician Recommended Nutriceuticals, LLC.

Summary

• NovaBay Pharmaceuticals announced that its Board of Directors has determined an unsolicited offer from Refresh Acquisitions BidCo LLC to purchase the Avenova Assets is a Superior Proposal compared to the existing agreement with PRN Physician Recommended Nutriceuticals, LLC.
• The Refresh offer includes a base purchase price of $11.5 million, subject to a downside net working capital adjustment, compared to $9.5 million in the PRN agreement.
• Refresh will also provide a secured term loan of $2.0 million to NovaBay with a 10.0% annual interest rate, which is expected to be repaid upon closing and deducted from the purchase price.
• NovaBay has notified PRN of its intention to terminate the PRN APA unless PRN submits a revised proposal by November 4, 2024, that the Board deems superior to the Refresh offer.
• The PRN APA remains in full force and effect while PRN has the opportunity to provide a counteroffer.
• A special meeting of stockholders is scheduled to consider the PRN Transaction and a potential voluntary liquidation and dissolution of the Company.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company is exploring a potentially better offer, there's uncertainty surrounding the termination of the existing agreement and the consideration of a potential liquidation.

Positives

• The Refresh offer presents a higher potential purchase price of $11.5 million compared to PRN's $9.5 million.
• The $2.0 million secured term loan from Refresh provides immediate financial support to NovaBay.
• NovaBay's CEO believes Refresh will place Avenova in 'highly capable commercial hands'.
• The potential transaction with Refresh aligns with NovaBay's passion for commercializing products that improve patients' lives, as Refresh is an affiliate of RVL Pharmaceuticals, which commercializes Upneeq.

Negatives

• The $11.5 million purchase price from Refresh is subject to a downside net working capital adjustment.
• The $2.0 million secured loan from Refresh carries a 10.0% annual interest rate.
• The potential termination of the PRN agreement introduces uncertainty.
• The company is considering a potential voluntary liquidation and dissolution.

Risks

• The Refresh offer is non-binding and subject to change.
• The PRN agreement may be terminated, impacting the certainty of the asset sale.
• The downside net working capital adjustment could reduce the final purchase price from Refresh.
• The company faces risks related to the PRN Transaction, the Refresh Unsolicited Offer, and the Dissolution.
• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Future Outlook

The company is evaluating the Refresh Unsolicited Offer and awaiting a potential revised proposal from PRN, while also considering a potential voluntary liquidation and dissolution.

Management Comments

• Justin Hall, NovaBay CEO, stated that the Refresh offer represents greater value for stockholders and places Avenova in highly capable commercial hands.
• Justin Hall, NovaBay CEO, stated that RVL Pharmaceuticals and NovaBay are aligned in their shared passion for commercializing products that improve patients' lives.

Industry Context

The potential acquisition of NovaBay's Avenova brand by Refresh Acquisitions, an affiliate of RVL Pharmaceuticals, suggests a strategic move to complement RVL's existing ophthalmic solution, Upneeq, indicating a trend towards comprehensive eye care solutions.

Comparison to Industry Standards

• RVL Pharmaceuticals' Upneeq is the first and only FDA-approved prescription eye drop for adults with low-lying eyelids, setting a benchmark in the non-surgical treatment of acquired blepharoptosis.
• The acquisition of Avenova by an affiliate of RVL Pharmaceuticals would create a company with a broader portfolio of eye care products, similar to Allergan's diverse range of ophthalmic solutions.
• The $11.5 million purchase price for Avenova is relatively small compared to larger pharmaceutical acquisitions, but it reflects the value of the brand and its potential synergies with RVL's existing products.

Stakeholder Impact

• Shareholders may benefit from the higher potential purchase price offered by Refresh.
• Employees face uncertainty regarding the future of the company and their jobs.
• Customers may experience changes in the availability and distribution of Avenova products.
• Suppliers may be affected by changes in the company's operations and potential liquidation.
• Creditors face potential risks related to the company's financial stability and potential liquidation.

Next Steps

• PRN has until November 4, 2024, to submit a revised proposal.
• The Board will evaluate any revised proposal from PRN.
• Stockholders will vote on the PRN Transaction and a potential voluntary liquidation and dissolution of the Company.

Key Dates

Keywords

NovaBay Pharmaceuticals, Avenova, Refresh Acquisitions, PRN Physician Recommended Nutriceuticals, Asset Purchase Agreement, Superior Proposal, Acquisition, Secured Loan, Dissolution, Proxy Statement