(Yicai Global) March 2 -- Chinese meat maker Jinzi Ham Co. has cancelled plans to become the largest shareholder in a struggling New York-listed pharmaceutical firm, saying it failed to get regulatory approval in time.

Jinzi unit Zhong Yu Capital Management Co. couldn't get the green light before Jan. 30, a precondition for the proposed deal to buy into Delaware-based NovaBay Pharmaceuticals Inc., and has had to cancel the share purchase agreement, it said in a statement.

NovaBay shares closed at USD3.34 yesterday, lower than the USD3.96 and USD4.46 Zhongyu agreed to pay in November in a USD27-million deal that would see the buyer take on a 37-percent stake from two major shareholders. Jinzi planned to turn the American firm into a global investment arm for innovative drug development, it said in a statement at the time.

NovaBay specializes in anti-infective development and owns the patent for Avenova, a product used to remove bacteria and debris from eyelids and lashes. It also created wound cleanser NeutroPhase and is working on another non-antibiotic antibacterial drug, the statement said.

Its largest shareholder is Pioneer Pharma Hong Kong Co., a unit under China Pioneer Pharma Holdings Co. The Hong Kong subsidiary holds an almost 34-percent stake in NovaBay.