Novan, Inc. (“the Company” or “Novan”) (Nasdaq: NOVN), today
announced its financial results for the quarter ended September 30,
2020 and provided a corporate update.
“The last few months have been marked by many
significant achievements for the Company and the advancement of our
priority development pipeline. We initiated our pivotal Phase 3
study, B-SIMPLE4, and even during the current global pandemic, I am
pleased to report that enrollment has remained on track and is
targeted to complete in the first quarter of 2021. We also recently
reported positive in vitro results demonstrating antiviral effect
of our NITRICIL platform against coronavirus (SARS-CoV-2) and the
next step would be to advance this program into preclinical
IND-enabling studies. Additionally, we have taken deliberate
actions to strengthen our balance sheet and believe we have
sufficient capital to fund operations through the fourth quarter of
2021,” commented Paula Brown Stafford, President and Chief
Executive Officer of Novan.
Recent Highlights
- Initiated enrollment and dosed first patients in B-SIMPLE4
pivotal Phase 3 study of SB206, a topical antiviral gel, for
treatment of molluscum;
- Demonstrated in vitro antiviral effect of proprietary NITRICIL™
technology against SARS-CoV-2 in human airway infection in a
3D-model;
- Commenced exploratory work to evaluate NITRICIL™ for
antimicrobial indications in companion animal health;
- Continued ongoing review of existing programs and opportunities
to expand priority development pipeline;
- Announced the appointment of John M. Gay to serve as the
Company’s Chief Financial Officer and the appointment of James L.
Bierman to the Company’s Board of Directors;
- Announced an expanded role of Paula Brown Stafford, President
and Chief Executive Officer of Novan, to also include Chairman of
Novan’s Board of Directors; and
- Since January 1, 2020, secured approximately $50 million in
capital from multiple sources including the use of common stock
purchase agreements with Aspire Capital Fund, LLC, a March 2020
public offering (and the exercise of related common stock
warrants), and a March 2020 registered direct offering.
“While over the past few months we have raised
capital to progress our lead asset for molluscum and provide an
expected cash runway past our targeted topline results for our
B-SIMPLE4 trial, maintaining our listing on Nasdaq remains a
critical priority for the Company. We continue to pursue a course
of action intended to allow us to work toward regaining compliance
in a manner that we believe is in the best interests of the Company
and its stockholders,” commented John M. Gay, Chief Financial
Officer. “Recognizing the importance of this process to our
stockholders, we expect to provide an update on this matter in the
near-term.”
Priority Development Pipeline
Update
SB206 – a Topical Antiviral Treatment for
Viral Skin Infections (Molluscum Contagiosum) The Company
commenced patient enrollment and dosing for B-SIMPLE4 in September
2020. B-SIMPLE4 is a multi-center, double-blind, randomized,
vehicle-controlled study expected to enroll approximately 850
patients (1:1 randomization), across 50 clinical sites, who will be
treated for 12 weeks with a follow-up visit at Week 24. To-date,
the Company has completed more than 30% of the total expected
patient enrollment for the study.
Upcoming
Targeted Milestones:
- Completion of enrollment targeted in Q1 2021; and
- Topline efficacy results targeted in Q2 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.
Infectious Disease, Coronaviridae
(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 antiviral 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.
Upcoming
Targeted Milestones:
- Initiate Chemistry, Manufacturing, and Controls (CMC) work with
a global leader in providing integrated services, superior delivery
technologies and manufacturing solutions to develop an intranasal
formulation of berdazimer sodium.
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. Additionally, the Company
has engaged animal health experts to assess technical feasibility
and market potential.
Upcoming
Targeted Milestones:
- Currently intend to seek a potential strategic partner or
collaborator following initial proof-of-concept work.
Financial Update
Summary of Financial Results for Third
Quarter 2020
- Novan reported a net loss of $8.4 million for the three months
ended September 30, 2020, compared to a $9.5 million net loss for
the same period in 2019.
- As of September 30, 2020, Novan had a total cash and cash
equivalents balance of $43.1 million and positive working capital
of $36.7 million.
- The Company believes that its existing cash and cash
equivalents balance as of September 30, 2020, and expected
contractual payments to be received in connection with existing
licensing agreements, will provide it with adequate liquidity to
fund its operating needs through the fourth quarter of 2021, based
on management’s projections and planned priority development
activities described in the Company’s quarterly report on Form 10-Q
for the three month period ended September 30, 2020.
Summary of Financial Results for
Year-to-Date September 2020
- Novan reported a net loss of $22.7 million for the nine months
ended September 30, 2020, compared to a $24.4 million net loss for
the same period in 2019.
- License and collaboration revenue was $3.2 million for the nine
months ended September 30, 2020, compared to $3.3 million for the
same period in 2019, associated with the Company’s performance
during the period and the related amortization of the
non-refundable upfront and expected milestone payments under one of
the Company’s license agreements.
- Research and development expenses were $13.5 million for the
nine months ended September 30, 2020, compared to $19.6 million for
the same period in 2019. The decrease was primarily attributable to
(i) net decreased costs of $1.7 million related to Novan’s relative
timing of the B-SIMPLE4 trial’s enrollment initiation, which
occurred in late third quarter of 2020, compared to enrollment
initiations for the previous Phase 3 trials (B-SIMPLE1 and
B-SIMPLE2), which occurred in late second quarter of 2019; and (ii)
a decrease of $3.4 million in other research and development
expenses, primarily related to a $2.1 million net decrease in
research and development personnel costs, and a $0.9 million
decrease in costs primarily associated with manufacturing
technology transfer projects to third-party manufacturers.
- General and administrative expenses were $8.8 million for the
nine months ended September 30, 2020, compared to $8.6 million for
the same period in 2019. The increase was primarily due to $1.7
million of non-cash expense related to the issuance of commitment
shares as consideration for entering into common stock purchase
arrangements with Aspire Capital, partially offset by a $1.4
million decrease in general and administrative personnel and
related costs.
- For the nine months ended September 30, 2020, the Company
recognized $2.4 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.
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,” “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, the Company’s
expected cash runway, the Company’s plans to regain compliance with
the Nasdaq listing standards 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, risks and uncertainties in the Company’s
ongoing or future product development activities and preclinical
studies, which may not prove successful in demonstrating proof-of
concept, or may show adverse toxicological findings, and even if
successful may not necessarily predict that subsequent clinical
trials will show the requisite safety and efficacy of the Company’s
product candidates; the Company’s ability to enter 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, reliance on third parties,
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
FDA 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 FDA or comparable regulatory
authorities; any operational or other disruptions as a result of
the COVID-19 pandemic, including any delays or disruptions to the
enrollment in and conduct of the B-SIMPLE4 Phase 3 trial; and other
risks and uncertainties described in the Company’s annual report
filed with the SEC on Form 10-K for the twelve months ended
December 31, 2019, as amended, and in the Company’s subsequent
filings with the SEC, including the Company’s quarterly report on
Form 10-Q for the three months ended September 30, 2020. These
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)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
License and collaboration revenue |
$ |
1,100 |
|
|
$ |
1,100 |
|
|
$ |
3,224 |
|
|
$ |
3,301 |
|
Government
research contracts and grants revenue |
217 |
|
|
216 |
|
|
627 |
|
|
216 |
|
Total revenue |
1,317 |
|
|
1,316 |
|
|
3,851 |
|
|
3,517 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Research and development |
4,836 |
|
|
8,598 |
|
|
13,513 |
|
|
19,614 |
|
General and administrative |
3,108 |
|
|
2,290 |
|
|
8,847 |
|
|
8,595 |
|
Impairment loss on long-lived assets |
— |
|
|
— |
|
|
2,421 |
|
|
— |
|
Loss on facility asset group disposition |
1,772 |
|
|
— |
|
|
1,772 |
|
|
— |
|
Total operating expenses |
9,716 |
|
|
10,888 |
|
|
26,553 |
|
|
28,209 |
|
Operating
loss |
(8,399 |
) |
|
(9,572 |
) |
|
(22,702 |
) |
|
(24,692 |
) |
Other
(expense) income, net: |
|
|
|
|
|
|
|
Interest income |
2 |
|
|
53 |
|
|
47 |
|
|
149 |
|
Interest expense |
— |
|
|
— |
|
|
— |
|
|
(1 |
) |
Other (expense) income |
(8 |
) |
|
23 |
|
|
(3 |
) |
|
115 |
|
Total other
(expense) income, net |
(6 |
) |
|
76 |
|
|
44 |
|
|
263 |
|
Net loss and
comprehensive loss |
$ |
(8,405 |
) |
|
$ |
(9,496 |
) |
|
$ |
(22,658 |
) |
|
$ |
(24,429 |
) |
Net loss per
share, basic and diluted |
$ |
(0.06 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.94 |
) |
Weighted-average common shares outstanding, basic and diluted |
133,689,645 |
|
|
26,189,454 |
|
|
83,961,052 |
|
|
26,108,870 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NOVAN, INC. Selected
Condensed Consolidated Balance Sheet Data
(unaudited) (in thousands)
|
September 30, 2020 |
|
December 31, 2019 |
Cash and cash equivalents |
$ |
43,072 |
|
|
$ |
13,711 |
|
Total
current assets |
44,755 |
|
|
15,724 |
|
Total
assets |
46,570 |
|
|
29,097 |
|
Total
current liabilities |
8,049 |
|
|
12,899 |
|
Total
liabilities |
39,117 |
|
|
51,380 |
|
Total
stockholders’ equity (deficit) |
7,453 |
|
|
(22,283 |
) |
Total
liabilities and stockholders’ equity (deficit) |
$ |
46,570 |
|
|
$ |
29,097 |
|
|
|
|
|
|
|
|
|
INVESTOR AND MEDIA CONTACT:
Jenene Thomas JTC Team, LLC 833-475-8247NOVN@jtcir.com
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