SCHEDULE: R01 Fund LP Boosts NovaBay Stake to 45%, Gains Board Seat

R01 Fund LP and its affiliates, forming a group with Framework Ventures, increased their beneficial ownership in NovaBay Pharmaceuticals to 45% and secured the right to appoint a director.

Summary

• R01 Fund LP, R01 Capital LLC, R01 Capital Manager LLC, and Michael Kazley, along with Framework Ventures IV L.P. and its affiliates, have formed a group.
• The group beneficially owns 56,806,080 shares of NovaBay Pharmaceuticals, Inc. Common Stock.
• This represents 45.0% of the 126,173,650 shares outstanding as of January 16, 2026.
• The group purchased pre-funded warrants exercisable for Common Stock at $0.17 per underlying share.
• These warrants are not exercisable until six months after issuance and vest on a tiered basis (20% at 6 months, 30% at 9 months, 50% at 12 months), subject to stockholder approval.
• An Investors' Rights Agreement grants the group demand and piggyback registration rights, and the right to nominate one director to NovaBay's Board.

Sentiment

Score: 7

Explanation: The filing indicates a significant strategic investment and increased shareholder influence, which is generally positive for a company seeking capital and strategic direction. However, the delayed exercisability and contingency of stockholder approval for warrants introduce some uncertainty.

Positives

• R01 Fund LP and its group have significantly increased their stake, demonstrating strong conviction in NovaBay Pharmaceuticals.
• The group has secured the right to nominate one director to the Board, indicating increased influence and potential for strategic alignment.
• The purchase of pre-funded warrants at $0.17 per underlying share suggests a specific valuation point for the investment.

Negatives

• The pre-funded warrants are not immediately exercisable, with a six-month waiting period and tiered vesting over 12 months.
• The full exercisability of the warrants is subject to stockholder approval, introducing a potential contingency.

Risks

• The exercisability of the pre-funded warrants is contingent on stockholder approval, which could impact the full realization of the investment.
• The shares underlying the warrants are not currently deemed beneficially owned, meaning the full impact of the investment on ownership percentage is delayed.

Future Outlook

The filing indicates a long-term investment strategy by R01 and Framework, evidenced by the tiered vesting of warrants over 12 months and the securing of board nomination rights, suggesting an intent to influence future company direction. The full impact of the warrant exercise is contingent on future stockholder approval.

Industry Context

This transaction represents a significant equity investment and potential for increased shareholder activism or strategic influence in NovaBay Pharmaceuticals. Such large stakes and board representation rights often precede strategic shifts or increased oversight, common in smaller cap biotech or pharmaceutical companies seeking capital and strategic guidance.

Comparison to Industry Standards

• A 45% beneficial ownership stake is substantial and typically indicates a strategic investor or a party seeking significant control or influence, often seen in private equity or activist investor scenarios.
• The acquisition of pre-funded warrants with a delayed exercise and tiered vesting is a common mechanism for investors to manage capital deployment and regulatory thresholds, while also providing the company with immediate capital.
• Securing a board nomination right with a 45% stake is standard practice, ensuring the investor's interests are represented at the highest level of corporate governance.

Management Changes

Corporate Governance

Related Party Transactions

• Purchase of pre-funded warrants by R01 Fund LP and Framework Ventures IV L.P. from NovaBay Pharmaceuticals, Inc.
• Entry into an Investors' Rights Agreement between NovaBay Pharmaceuticals, Inc. and R01 Fund LP (and other purchasers).

Stakeholder Impact

• Shareholders: Existing shareholders will see a significant new investor group with a 45% stake and board representation, potentially leading to strategic shifts. The dilution from warrant exercise will occur over time.
• Management: Management will likely work more closely with the R01 group, especially with a new director on the board, potentially influencing strategic decisions.
• Creditors: No direct impact mentioned, but a capital raise generally strengthens the company's financial position.

Next Steps

• Stockholder approval for the full exercisability of the 2026 Pre-Funded Warrants.
• Exercise of the 2026 Pre-Funded Warrants, starting six months after issuance and continuing on a tiered schedule.
• Nomination and appointment of one director to NovaBay's Board by the R01 group.

Key Dates

Recommendation

The significant investment by R01 Fund LP and Framework Ventures, coupled with board representation rights, suggests a strategic long-term interest and potential for positive future developments. However, the delayed exercisability of warrants and the contingency of stockholder approval introduce near-term uncertainties. A 'hold' recommendation reflects the potential for future upside balanced by these immediate factors, advising investors to await further clarity on the strategic direction and warrant exercise.

Keywords

NovaBay Pharmaceuticals, R01 Fund LP, Framework Ventures, Schedule 13D, Beneficial Ownership, Pre-Funded Warrants, Investors' Rights Agreement, Board Nomination, Equity Investment, Shareholder Activism