Following a successful Phase 1 trial, NovaBay and Galderma are engaged in Phase 2 clinical research and will be evaluating various novel Aganocide formulations for treating acne.

Onychomycosis Update (Un-Partnered, In-House NovaBay Program)

Onychomycosis is the most common serious nail condition.  Topical treatment of the infection is limited by the inability of currently available drugs to penetrate the human nail.  According to Podiatry Today, over 35 million people in the United States have onychomycosis.  Estimates indicate that up to 50% of those affected by the disease do not receive treatment. Systemic treatments represent well over 80% of the market today, but have potential severe liver toxicity issues, and have shown to have relapse rates of 40% or higher.

At the recent Infectious Diseases Society of America meeting, NovaBay presented data from a new study conducted using a novel in vitro infected human nail model to evaluate and confirm the ability of novel NVC-422 gel formulations and nanoemulsion lacquers to penetrate and kill fungi grown on the subungal side of the infected nail.  The study was conducted by Mahmoud Ghannoum, PhD, at Case Western Reserve University's Center for Medical Mycology in Cleveland, OH.

These most recent data showed that NVC-422 was able to penetrate the nail and effectively eradicate T. mentagrophytes and T. rubrum , the fungi responsible for the majority of infections .

NovaBay has used other validated in vitro models and presented the results during the 47th IDSA Annual Meeting in 2009 (" In Vitro Evaluation of Stable Derivatives of the Chlorotaurines on Infected Human Nail Model as Potent Antifungal Agents for the Treatment of Onychomycosis"). Research for the study was conducted by MedPharm Ltd.

A Phase 1/2 clinical trial is being planned for early 2011.

About Aganocides

NovaBay's Aganocide ® compounds are novel, synthetic N-chlorinated antimicrobial molecules specifically designed and developed to mimic the body's natural defense against infection. The Aganocide compounds maintain biological activities while demonstrating improved stability over the naturally occurring N-chlorinated antimicrobial molecules. In preclinical testing, NovaBay's Aganocide compounds have been shown to be highly effective against bacteria, including some multi-drug resistant strains (such as MRSA), viruses and fungi. NovaBay's Aganocide compounds have the potential to deliver the same or better efficacy than antibiotics, and to address the growing problem of antibiotic resistance by employing a novel mechanism of action.

About NovaBay Pharmaceuticals, Inc.

NovaBay Pharmaceuticals is a clinical stage biotechnology company focused on developing its proprietary and patented Aganocide compounds, which are novel, synthetic anti-infective product candidates with equivalent activity to the active antimicrobial molecules generated within white blood cells. NovaBay's Aganocide compounds are being developed to treat and prevent a wide range of infections without causing bacterial resistance. NovaBay has internal development programs aimed at addressing hospital infections, chronic non-healing wounds, urinary catheter blockage and encrustation (UCBE) and onychomycosis. The company has a license and research collaboration agreement with Alcon, Inc. for use of its Aganocide compounds to treat eye, ear and sinus infections as well as for contact lens care. NovaBay has also entered into an agreement with Galderma S.A. to develop and commercialize Aganocide compounds in acne, impetigo and other dermatological indications. For more information on NovaBay Pharmaceuticals, visit: .

About Galderma

Galderma's ambition is to be recognized as the most competent and successful innovation-based company focused exclusively on meeting the needs of dermatology patients and physicians. A fully-integrated specialty pharmaceutical company, Galderma was founded in 1981 and has over 3,000 employees actively collaborating with doctors, scientists, research institutes, universities, and patient advocacy groups who all share a commitment to improving the health of skin. With approximately 20% of sales invested each year to discover and develop new products and access innovative technologies, Galderma's laboratory in Sophia-Antipolis, France, is one of the largest R&D facilities in the world dedicated exclusively to dermatology. The company's extensive portfolio of products is available in 70 countries and treats a range of dermatological conditions including: acne, rosacea, onychomycosis, psoriasis & steroid-responsive dermatoses, pigmentary disorders, skin cancer and skin senescence.   Leading brands include Epiduo, Differin, Oracea, MetroGel, Cetaphil, Tetralysal, Loceryl, Clobex, Tri-Luma, Silkis, Vectical, Dysport and Azzalure. For more information on Galderma, visit: .

Cautionary Information Regarding Forward-Looking Statements

This release contains forward-looking statements, which are based upon NovaBay's current expectations, assumptions, estimates, projections and beliefs. The statements in this press release of NovaBay's expectations (i) on financial and other benefits to be received from the Galderma deal expansion; (ii) that the products for dermatological indications will advance through clinical trials and ultimately commercialization; (iii) that Aganocides have the potential to bring about significant progress in the treatment of skin diseases without adding to the growing problem of antibiotic resistance; (iv) that NovaBay plans to launch Phase 1/2 clinical trial in onychomycosis in early 2011; (v) that the benefits that Aganocide compounds may deliver the same or better efficacy than antibiotics; (vi) NovaBay's expectations regarding the potential of its NVC-422 compounds as well as other statements that relate to future events or results, are forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: the risk that results obtained in animal models may not be obtained in humans; the risk that milestones and net sales may not be achieved under the Galderma agreement; the risk of unexpected delays in the regulatory process may delay the commencement or completion of clinical trials; inherent risks and uncertainties relating to difficulties or delays in conducting clinical trials; and the inherent uncertainty of patent protection for the company's intellectual property or trade secrets. Other risks relating to NovaBay and its Aganocide compounds, including risks that could cause results to differ materially from those projected in the forward-looking statements in this press release, are detailed in NovaBay's Quarterly Report on Form 10-Q for the period ended September 30, 2010, under the caption "Risk Factors" in Item 1A of Part II of that report, filed with the Securities and Exchange Commission on November 12, 2010. The forward-looking statements in this release speak only as of this date, and NovaBay disclaims any intent or obligation to revise or update publicly any forward-looking statement except as required by law.
CONTACT:  NovaBay Pharmaceuticals, Inc.          Thomas J. Paulson, Chief Financial Officer          510-899-8800          The Investor Relations Group          Investor Relations:          Adam Holdsworth            212-825-3210            Public Relations:          Laura Colontrelle            212-825-3210