Novan, Inc. (“the Company” or “Novan”) (Nasdaq: NOVN), today
announced its financial and operating results for the year ended
December 31, 2020 and provided a corporate update.
“With our accomplishments achieved over the course of 2020 and
our near-term milestones ahead of us this year, we believe we are
well-positioned for an exciting 2021. As enrollment has been
completed in our pivotal Phase 3 study for molluscum, B-SIMPLE4, we
are quickly approaching the expected readout of our top-line
efficacy data, targeted before the end of the second quarter and
are working to advance this important product candidate toward
potential approval,” commented Paula Brown Stafford, President and
Chief Executive Officer of Novan. “As we continue to grow and build
momentum advancing our priority development pipeline and the
NITRICIL platform technology, we are focused on preparing for
success and equipping the Company with the necessary resources and
capital.”
Recent Highlights
- Completed enrollment for B-SIMPLE4 pivotal Phase 3 trial for
SB206 as a treatment for molluscum with top-line efficacy results
targeted before the end of the second quarter of 2021;
- Secured new location to serve as corporate headquarters and to
support various cGMP activities, including research and development
and small-scale manufacturing capabilities for drug substance and
drug product; and
- Announced Master Services Agreement with Catalent, Inc. to
support chemistry, manufacturing and control activities and
development of an intranasal formulation of berdazimer sodium for
the Company’s COVID-19 program, SB019.
Priority Development Pipeline Update
SB206 – A Topical Antiviral Treatment for Viral Skin
Infections (Molluscum Contagiosum)
The Company announced the completion of patient enrollment for
B-SIMPLE4 on February 1, 2021. B-SIMPLE4 is a multi-center,
double-blind, randomized, vehicle-controlled study to evaluate the
efficacy and safety of SB206 12% once-daily in approximately 850
total patients (1:1 active:vehicle randomization), ages 6 months
and above, with molluscum. The Company exceeded its enrollment
target of 850 patients (1:1 randomization) in the study, across 55
clinical sites, due to the number of patients in screening at the
time of achieving the trial’s stated goal. Patients will be treated
for 12 weeks with a safety follow-up visit at Week 24. The primary
endpoint for the study is the proportion of patients achieving
complete clearance of all treatable molluscum lesions at Week 12
(Intent-to-Treat or “ITT” population, where the analysis assumes
that patients with missing data at Week 12 are assessed as
treatment failures).
Upcoming Targeted Milestones:
- Top-line efficacy results targeted before the end of the second
quarter of 2021, if the trial is not further impacted by the
COVID-19 pandemic.
For more information about the B-SIMPLE4 trial, please visit
clinicaltrials.gov and reference identifier: NCT04535531.
SB019 – Infectious Disease, Coronaviridae
(COVID-19)
In the fourth quarter of 2020, Novan announced positive in vitro
results showing the potential efficacy of our NITRICIL™ platform
technology, berdazimer sodium (NVN10000), as an anti-viral against
SARS-CoV-2, the virus that causes COVID-19. The Company initiated
in vitro assessments targeting the reduction of viral burden in
differentiated normal human bronchial epithelial cells. The studies
were conducted at the Institute for Antiviral Research at Utah
State University, and these results demonstrate the first instance
of an anti-viral effect from a nitric oxide-based medicine in a 3-D
tissue model that has similar structure to the human airway
epithelium. The results from the in vitro assessment of
concentrations as low as 0.75 mg/mL demonstrated that berdazimer
sodium reduced 90% of virus after repeat dosing, once daily.
Based on the scientific literature and data available to-date
related to berdazimer sodium and Novan’s product candidate SB206,
Novan believes that nitric oxide may inhibit viral replication by
disrupting protein function critical for viral replication and
infection through generation of reactive intermediates.
Upcoming Targeted Milestones:
- Advancing this program through preliminary preclinical studies,
which Novan targets to have results in the second quarter of
2021;
- Pending the results of the preclinical studies, anticipates
filing a potential IND application with the U.S. Food and Drug
Administration in 2021; and
- Targeting initiating human clinical trials in the second half
of 2021, subject to obtaining additional financing or strategic
partnering.
NVN4100 – Companion Animal Health
Novan has initiated exploratory work to evaluate the Company’s
new chemical entity, NVN4100, as a potential product candidate for
antimicrobial indications in companion animal health. The Company
has progressed internal efforts for initial formulation development
to assess viability and has engaged animal health experts to assess
technical feasibility and market potential.
Upcoming Targeted Milestones:
- Engaging with a potential collaborator or strategic partner to
advance development in this area upon positive proof-of-concept
work.
Financial Update
Summary of Full Year 2020 Financial Results
- As of December 31, 2020, Novan had a
total cash and cash equivalents balance of $35.9 million and
positive working capital of $35.3 million.
- As of December 31, 2020, the Company
had an accumulated deficit of $249.3 million and there is
substantial doubt about its ability to continue as a going concern.
The Company believes that its existing cash and cash equivalents
balance, plus expected contractual payments to be received in
connection with existing licensing agreements, will provide it with
adequate liquidity to fund its planned operating needs into the
first quarter of 2022, based on management’s projections and
planned development and operating activities described in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2020.
- Novan incurred net losses of $29.3
million and $30.4 million in the years ended December 31, 2020 and
2019, respectively.
- License and collaboration revenue of
$4.2 million and $4.5 million for the years ended December 31, 2020
and 2019, respectively, was associated with the Company’s
performance during the period and the related amortization of
non-refundable upfront and expected milestone payments under one of
the Company’s license agreements.
- Research and development expenses were
$19.8 million for the year ended December 31, 2020, compared to
$25.2 million for the year ended December 31, 2019. The net
decrease of $5.4 million was primarily related to (i) a net $0.7
million increase in the SB206 program, (ii) a $4.3 million decrease
in other research and development expenses, and (iii) a $1.6
million decrease in the SB414 program. The $4.3 million decrease in
other research and development expenses was primarily driven by (i)
a $1.3 million net decrease in research and development personnel
costs, (ii) a $1.6 million decrease in costs associated with
Novan’s manufacturing technology transfer projects to third-party
manufacturers, (iii) a $0.7 million decrease in depreciation
expense and (iv) a $1.0 million decrease in manufacturing materials
and support costs at the Company’s previous primary facility,
partially offset by $0.3 million of discrete costs incurred during
the second and third quarters of 2020 related to decommissioning
manufacturing capabilities at the Company’s previous primary
facility.
- General and administrative expenses
were $11.3 million for the year ended December 31, 2020, compared
to $10.4 million during the year ended December 31, 2019. The
increase was primarily due to $1.7 million of aggregate non-cash
expense related to the issuance of commitment shares as
consideration for entering into common stock purchase arrangements
with Aspire Capital Fund, LLC, partially offset by a $0.5 million
decrease in general and administrative personnel and related costs
and a $0.3 million decrease in other general and administrative
expenses.
- For the year ended December 31, 2020,
the Company recognized $2.3 million of non-cash impairment charges
related to the July 2020 termination of its previous primary
facility lease and a $1.8 million loss on the disposition of
related assets, of which $0.8 million was a non-cash charge.
About Novan
Novan, Inc. is a clinical development-stage biotechnology
company focused on leveraging its proprietary nitric oxide
(NO)-based technology platform, NITRICIL™ to generate
macromolecular New Chemical Entities (NCEs) to treat multiple
indications in dermatology, men’s and women’s health, infectious
diseases and gastroenterology conditions with significant unmet
needs. The Company’s lead product candidate, SB206, a topical
antiviral gel, for the treatment of molluscum contagiosum, is
currently being evaluated in the B-SIMPLE4 pivotal Phase 3 clinical
study. The Company believes that SB206 as a topical, at-home,
caregiver-applied therapy with a rapid treatment benefit, if
approved, would address an important patient-care need for the
treatment of molluscum.
About Molluscum
Molluscum contagiosum is a common, contagious skin infection
caused by the molluscipoxvirus, affecting approximately six million
people in the U.S. annually, with the greatest incidence in
children aged one to 14 years. Infected children typically present
with 10 to 30 painless, yet unsightly lesions, and, in severe
cases, they can have around 100 lesions. Due to the largely
pediatric nature of the disease, parents are the caregivers for
these children, in most cases, and tend to seek treatment. There
are no U.S. Food and Drug Administration approved therapies for
molluscum, and, upon seeking treatment, caregivers are faced with
potentially painful in-office, dermatologist-administered physical
procedures or cantharidin, or recommended off-label prescriptions
and over-the-counter products. More than half of the patients
diagnosed with molluscum are untreated and over 30% of those
treated receive an off-label prescription with no molluscum
indication or proven clinical efficacy. The average time to
resolution is 13 months, however, some children experience lesions
that may not resolve in 24 months. Further dissemination of this
highly-contagious disease is common, and transmission to other
children living in the household is reported to be 41%. There is a
significant unmet need in the molluscum treatment landscape.
Forward-Looking Statements
Any statements contained in this press release that do not
describe historical facts may constitute forward-looking statements
as that term is defined in the Private Securities Litigation Reform
Act of 1995. These statements may be identified by words such as
“believe,” “expect,” “target,” “anticipate,” “may,” “plan,”
“potential,” “will,” and similar expressions, and are based on the
Company’s current beliefs and expectations. These forward-looking
statements include, but are not limited to, statements related to
the potential therapeutic value of the Company’s NITRICIL™ platform
technology, the Company’s pharmaceutical development of nitric
oxide-releasing product candidates, the Company’s intention to
advance development of certain product candidates, including the
timing and progress of our Phase 3 program to evaluate SB206 for
the treatment of molluscum, the timing of anticipated topline
results, the Company’s expected cash runway and the Company’s
intention to partner with third parties. Forward-looking statements
are subject to a number of risks and uncertainties that could cause
actual results to differ materially from the Company’s
expectations, including, but not limited to, any operational or
other disruptions as a result of the COVID-19 pandemic, including
any delays or disruptions to the conduct of the B-SIMPLE4 study;
the Company’s ability to enter into arrangements with third parties
to support its development efforts on terms that are acceptable to
the Company or at all; risks and uncertainties in the clinical
development process, including, among others, length, expense,
ability to enroll patients, potential for delays or other impacts,
whether as a result of the COVID-19 pandemic or other factors, and
that results of earlier research and preclinical or clinical trials
may not be predictive of results, conclusions or interpretations of
later research activities or additional trials; risks related to
the regulatory approval process, which is lengthy, time-consuming
and inherently unpredictable, including the risk that the Company’s
product candidates may not be approved or that additional studies
may be required for approval or other delays may occur and that the
Company may not obtain funding sufficient to complete the
regulatory or development process; the Company’s ability to obtain
additional funding or enter into strategic or other business
relationships necessary or useful for the further development of
the Company’s product candidates; the risk that disruptions at the
U.S. Food and Drug Administration or other agencies could cause
such agencies to cancel or postpone meetings or otherwise impact
the ability of such agencies to provide regulatory guidance or
feedback or timely review and process the Company’s regulatory
submissions, all of which could have a material adverse effect on
the Company’s business; risks related to the manufacture of raw
materials, including the Company’s active pharmaceutical ingredient
and drug product components utilized in clinical trial materials,
including failure to transfer technology and processes to third
parties effectively or failure of those third parties to obtain
approval of and maintain compliance with the U.S. Food and Drug
Administration or comparable regulatory authorities; the Company’s
reliance on arrangements with third parties to support its
operations and development efforts and the risk that such parties
will not successfully carry out their contractual duties or meet
expected deadlines; and other risks and uncertainties described in
the Company’s annual report filed with the Securities and Exchange
Commission on Form 10-K for the twelve months ended December 31,
2020, and in the Company’s subsequent filings with the Securities
and Exchange Commission. Such forward-looking statements speak only
as of the date of this press release, and Novan disclaims any
intent or obligation to update these forward-looking statements to
reflect events or circumstances after the date of such statements,
except as may be required by law.
NOVAN, INC.Condensed
Consolidated Statements of Operations and Comprehensive
Loss(unaudited)(in thousands,
except share and per share amounts)
|
Year Ended December 31, |
|
2020 |
|
2019 |
|
|
|
|
License and collaboration revenue |
$ |
4,208 |
|
|
$ |
4,477 |
|
Government research contracts and
grants revenue |
712 |
|
|
419 |
|
Total revenue |
4,920 |
|
|
4,896 |
|
Operating expenses: |
|
|
|
Research and development |
19,814 |
|
|
25,172 |
|
General and administrative |
11,271 |
|
|
10,412 |
|
Impairment loss on long-lived assets |
2,277 |
|
|
— |
|
Loss on facility asset group disposition |
1,772 |
|
|
— |
|
Total operating expenses |
35,134 |
|
|
35,584 |
|
Operating loss |
(30,214 |
) |
|
(30,688 |
) |
Other (expense) income, net: |
|
|
|
Interest income |
51 |
|
|
177 |
|
Interest expense |
— |
|
|
(2 |
) |
Other income, net |
870 |
|
|
136 |
|
Total other income (expense),
net |
921 |
|
|
311 |
|
Net loss and comprehensive
loss |
$ |
(29,293 |
) |
|
$ |
(30,377 |
) |
Net loss per share, basic and
diluted |
$ |
(0.30 |
) |
|
$ |
(1.16 |
) |
Weighted-average common shares
outstanding, basic and diluted |
98,808,114 |
|
|
26,254,119 |
|
|
|
|
|
|
|
NOVAN, INC.Selected
Condensed Consolidated Balance Sheet
Data(unaudited)(in
thousands)
|
Year Ended December 31, |
|
2020 |
|
2019 |
Cash and cash equivalents |
$ |
35,879 |
|
|
$ |
13,711 |
|
Total current assets |
44,007 |
|
|
15,724 |
|
Total assets |
46,829 |
|
|
29,097 |
|
Total current liabilities |
8,700 |
|
|
12,899 |
|
Total liabilities |
43,852 |
|
|
51,380 |
|
Total stockholders’ equity
(deficit) |
2,977 |
|
|
(22,283 |
) |
Total liabilities and
stockholders’ equity (deficit) |
$ |
46,829 |
|
|
$ |
29,097 |
|
|
|
|
|
|
|
|
|
INVESTOR AND MEDIA CONTACT:
Jenene Thomas JTC Team, LLC833-475-8247NOVN@jtcir.com
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