Novan Reports Full Year 2021 Financial Results and Provides Corporate Update

Rhea-AI Summary

Novan reported its financial results for the year ended December 31, 2021, showing a net loss of $29.7 million, slightly up from $29.3 million in 2020. The company aims to submit a New Drug Application (NDA) for its lead product, SB206 (berdazimer gel 10.3%), by Q4 2022. Significant milestones include advancements in its clinical pipeline for SB204 (acne) and SB019 (COVID-19), with pivotal studies planned. Despite a decrease in license revenue to $2.8 million, cash reserves stood at $47.1 million as of year-end. The company is expanding its team to bolster commercialization efforts.

Positive

• Targeting NDA submission for SB206 by Q4 2022.
• Positive Phase 3 results for SB206, with significant efficacy (p-value <0.0001).
• Cash balance of $47.1 million as of December 31, 2021.
• Experienced team appointments to enhance commercialization efforts.

Negative

• Net loss increased to $29.7 million in 2021 compared to $29.3 million in 2020.
• License and collaboration revenue decreased from $4.2 million in 2020 to $2.8 million in 2021.

– First New Drug Application (NDA) submission targeted in Q4 2022 for lead program SB206 (berdazimer gel 10.3%) for molluscum contagiosum –

– Ongoing advancement of priority development pipeline assets SB019, for the treatment of SARS-CoV-2, toward a Phase 1 study in 2022, and SB204, for the treatment of acne vulgaris, toward a registrational Phase 3 study in 2023 –

– Company to host update conference call and webcast today at 8:30 a.m. ET –

DURHAM, N.C., Feb. 22, 2022 (GLOBE NEWSWIRE) -- Novan, Inc. (“the Company” or “Novan”) (Nasdaq: NOVN), today announced its financial and operating results for the year ended December 31, 2021 and provided a corporate update. The Company will host a conference call and webcast, today, February 22, 2022, at 8:30 a.m. ET (details below).

“Over the course of 2021, we made significant progress across multiple fronts. With positive data in hand and the expertise we have amassed within our team, we are executing on our preparations toward a potential NDA submission. We are gearing up our commercialization efforts in anticipation of a Food and Drug Administration (“FDA”) approval for our lead product candidate, SB206 (berdazimer gel 10.3%), and driving our strategic objectives forward. We believe 2022 is poised to be an exciting year and we are dedicated to optimizing the value of Novan and our NITRICIL™ platform technology for all stakeholders,” commented Paula Brown Stafford, President and Chief Executive Officer of Novan.

Recent Highlights

• Presented data from the Company’s completed Phase 2 and Phase 3 clinical studies of berdazimer gel 10.3% for molluscum contagiosum at the 2022 Winter Clinical Dermatology Conference.
• Announced favorable preclinical safety and toxicity data for treatment of COVID-19 with SB019.
• Bolstered team to drive commercialization efforts with appointments of:
  • Brian M. Johnson, who has considerable commercialization expertise with over 30 years of leadership spanning dermatology marketing, sales, sales management, digital marketing and managed care, as Chief Commercial Officer.
  • Melvin Whitehead, who has over 20 years of manufacturing experience within pharma and CDMOs, as Senior Vice President of Manufacturing & Operations.
  • Sheetal Sahel, who has over 20 years of experience in dermatology marketing, marketing management, and sales, as Vice President of Marketing and Commercial Operations.
  • Martina M. Cartwright, PhD, RDN, who has over 20 years of experience in US medical affairs management and preparation for drug and device launches, as Vice President of Medical Affairs.
• Received conditional acceptance from the U.S. Food and Drug Administration (FDA) for use of KINSOLUS™ as the brand name for berdazimer gel 10.3%, if approved.

Development Pipeline Update

SB206 (berdazimer gel 10.3%) – A Novel Topical Gel for Treatment of Molluscum Contagiosum

In June 2021, Novan reported statistically significant positive topline results for the primary efficacy endpoint (p-value <0.0001) of complete clearance of all treatable lesions in its B-SIMPLE4 pivotal Phase 3 clinical study of berdazimer gel 10.3% for the treatment of molluscum. Additionally, and consistent with results from the Company’s prior Phase 2 and Phase 3 studies, berdazimer gel 10.3% demonstrated a favorable safety profile in the B-SIMPLE4 study and met Company expectations. No treatment-related serious adverse events were reported.

The Company is working with Syneos Health, a fully integrated biopharmaceutical solutions organization, to interface with the Company’s internal commercial operations team to implement prelaunch strategy and U.S. commercial preparation, in addition to sales and marketing support, of berdazimer gel 10.3%, if approved by the FDA.

The Company has preparations underway for its planned pre-NDA meeting with the FDA in order to confirm the final details and necessary requirements for its NDA submission for berdazimer gel 10.3%. In addition to finalizing a process for manufacturing the product in commercial quantities in accordance with cGMP requirements, appropriate stability studies must be conducted. The Company expects to have its NDA-enabling stability studies completed in Q3 2022, with the NDA submission now scheduled for no later than Q4 2022.

Upcoming Targeted Milestones:

• Pre-NDA meeting with the FDA targeted for Q2 2022.
• Completion of NDA-enabling stability testing targeted for Q3 2022.
• Potential submission of an NDA targeted for no later than Q4 2022.
  

There are currently no FDA-approved prescription drug treatments for molluscum. The Company believes that berdazimer gel 10.3%, if approved, would offer those infected with molluscum a potential new prescription therapeutic approach that could allow patients and/or caregivers to directly apply treatment gel to molluscum lesions.

For more information about the B-SIMPLE4 study, please visit clinicaltrials.gov and reference identifier: NCT04535531.

SB204 – A Novel Topical Gel for the Treatment of Acne Vulgaris

Novan is developing SB204 as a topical monotherapy for the treatment of acne, a multi-factorial disease with multiple aspects of disease pathology (immunomodulatory and anti-bacterial). SB204 utilizes the same active pharmaceutical ingredient used in the Company’s lead product candidate, SB206 (berdazimer gel 10.3%), and is formulated specifically to address acne via an immunomodulatory (anti-inflammatory) and anti-bacterial mechanism.

In two previous Phase 3 studies, AC301 and AC302, SB204 demonstrated consistent and promising results across two of three co-primary endpoints. In addition, AC302 was a successful pivotal trial with respect to all three co-primary endpoints, including non-inflammatory lesions, inflammatory lesions, and Investigator’s Global Assessment (“IGA”). Based on the recent positive pivotal Phase 3 results in the SB206 (berdazimer gel 10.3%) molluscum development program, the Company believes it can optimize the trial design of a new pivotal Phase 3 study for SB204 that has the potential to serve as a second pivotal study to support an NDA submission.

Upcoming Targeted Milestones:

• Prepare for pivotal Phase 3 study during 2022.
• Conduct planned pivotal Phase 3 trial targeted for 2023, subject to obtaining additional financing or strategic partnering.
• Potential submission of an NDA targeted for 2024.
  

SB019 – An Intranasal Formulation for the Treatment of Infectious Disease, COVID-19

In June 2021, Novan announced positive preclinical results demonstrating anti-viral effect of the Company's NITRICIL™ platform technology, berdazimer sodium, against SARS-CoV-2, the virus that causes COVID-19.

The Company has completed additional studies assessing the preclinical toxicology of SB019 including recently reported favorable preclinical safety results with berdazimer sodium in a 14-day Good Laboratory Practices (“GLP”) repeat dose intranasal toxicity study. There were no treatment-related adverse events up to the highest dose tested of 14 mg/day berdazimer sodium and the SB019 formulation was concluded to be well-tolerated under the conditions of this GLP study. The Company also completed dose-range finding studies in SARS-CoV-2 infected golden Syrian hamsters. A significant reduction in the amount of virus in lung or nasal tissue of animals directly inoculated and infected with SARS-CoV-2 was observed and found to be dependent on both the concentration and dosing regimen (e.g., once daily vs. twice daily) of intranasally administered berdazimer sodium.

Based on the strong preclinical and clinical data demonstrating anti-viral effect of berdazimer sodium against multiple viruses, the recently reported promising preclinical safety data, as well as a public health need to reduce breakthrough infections and transmission, the Company plans to advance its SB019 product candidate.

Upcoming Targeted Milestones:

• Pre-IND application activities are underway for an IND submission and, subject to regulatory guidance, target initiating a Phase 1 study in healthy volunteers in 2022.
• Phase 2/3 study(ies) targeted for 2023, subject to obtaining additional financing or strategic partnering.
• Potential submission of an NDA targeted for 2024.
  

Financial Update

Summary of Full Year 2021 Financial Results

• The Company reported a cash and cash equivalents balance of $47.1 million as of December 31, 2021.

• Novan reported a net loss of $29.7 million for the fiscal year ended December 31, 2021, compared to a $29.3 million net loss for the fiscal year ended December 31, 2020.

• License and collaboration revenue was $2.8 million and $4.2 million for the years ended December 31, 2021 and 2020, respectively. The decrease from the prior year related to changes in the Company's estimated performance period related to the non-refundable upfront and expected milestone payments under one of the Company’s license agreements, which was extended during the fourth quarter of 2020 and again in the third quarter of 2021.

• Research and development expenses were $20.4 million for the year ended December 31, 2021, compared to $19.8 million for the year ended December 31, 2020. The net increase of $0.6 million, was primarily related to (i) a net $1.4 million increase in the SB206 program, (ii) a $0.5 million decrease in other research and development expenses and (iii) a $0.3 million decrease in the SB414 (atopic dermatitis) program.
  
  In the SB206 program, the Company experienced (i) a $2.6 million decrease in gross clinical trial costs primarily due to the conduct and completion of the B-SIMPLE4 Phase 3 trial during the year ended December 31, 2021, compared to the relatively higher cost of B-SIMPLE4 Phase 3 trial start-up and conduct activities and B-SIMPLE1 and B-SIMPLE2 Phase 3 trial wind down activities during the comparative year ended December 31, 2020, (ii) a $1.9 million increase in regulatory consulting services, stability and other analytical testing services, and CMC consulting services and materials in support of the planned SB206 NDA submission, and (iii) a $2.1 million decrease in contra-research and development expense from the ratable amortization of the development funding and royalties agreement with Ligand Pharmaceuticals, Inc.

• General and administrative expenses were $12.3 million for the year ended December 31, 2021, compared to $11.3 million during the year ended December 31, 2020. The increase was primarily due to (i) a $0.9 million increase in insurance premium expenses associated with our directors’ and officers’ liability policies, (ii) a $0.3 million net increase in general and administrative personnel and related costs, and (iii) a $1.9 million increase in SB206 prelaunch strategy and commercial preparation costs; partially offset by (i) $1.7 million of aggregate non-cash expense recognized during 2020 related to the issuance of commitment shares in consideration for entering into the June 2020 and July 2020 Common Stock Purchase Agreements with Aspire Capital Fund, LLC and (ii) a $0.3 million decrease in rent and depreciation expense.

• Other income (expense), net was $0.2 million income for the year ended December 31, 2021, compared to $0.9 million income for the year ended December 31, 2020. This change was primarily due to a $1.6 million negative impact of foreign currency exchange rate fluctuations over the comparative periods for certain time-based milestones related to one of the Company’s license agreements, partially offset by a $1.0 million gain on debt extinguishment related to the forgiveness of the Company’s Paycheck Protection Program loan in June 2021.
  

Conference Call and Webcast

Novan management will host a conference call and webcast presentation for investors, analysts, and other interested parties today, Tuesday, February 22, 2022, at 8:30 AM ET.

Interested participants and investors may access the conference call by dialing (844) 707-0661 (domestic) or (703) 318-2240 (international) and referencing conference ID: 4368839. The live webcast will be accessible on the Events page of the Investors section of the Novan website, novan.com, and will be archived for 90 days.

About Novan

Novan, Inc. is a pre-commercial nitric oxide-based pharmaceutical company focused on dermatology and anti-infective therapies. We leverage our core synergies of science, capital, resources and patient needs to create value by bringing new nitric oxide-based medicines to market. Our vision is to create the world’s leader in nitric oxide-based science, technology, and clinical translation in support of delivering safe and efficacious therapies using our proprietary nitric oxide-based technology platform, NITRICIL™ to generate macromolecular New Chemical Entities (NCEs) to treat multiple indications.

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 and the potential benefits of its product candidates, the Company’s pharmaceutical development of nitric oxide-releasing product candidates, such as SB206 (berdazimer gel 10.3%) for molluscum contagiosum, the potential timing of FDA submissions, the plans for launch and commercialization of SB206 (berdazimer gel 10.3%), if approved, the Company’s expected cash runway, the timing of anticipated results of the Company’s preclinical development programs, and the Company’s intention to enter into strategic relationships and transactions 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 related to the regulatory approval process, which is lengthy, time-consuming and inherently unpredictable, including the risk that the FDA will not agree with the Company’s approach to a potential NDA submission, that the Company’s product candidates may not be approved or that additional studies may be required for approval or other delays may occur, that the Company may not have sufficient quantities of drug substance and/or drug product to support regulatory submissions and that the Company may not obtain funding sufficient to complete the regulatory or development process; the Company’s limited experience in obtaining regulatory approvals and commercializing pharmaceutical products and its ability to recruit and retain qualified personnel and key talent; changes in the size and nature of the market for the Company’s product candidates, including potential competition, patient and payer perceptions and reimbursement determinations; 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, or that any of the Company’s product candidates, if approved, will continue to demonstrate requisite safety and efficacy following their commercial launch; any operational or other disruptions as a result of the COVID-19 pandemic; risks related to the manufacture of raw materials, including the Company’s active pharmaceutical ingredient and drug product components utilized in clinical trial materials, such as supply chain disruptions or delays, failure to transfer technology and processes to third parties effectively or failure of those third parties (or the Company in connection with the upfit of the Company’s facility) to obtain approval of and maintain compliance with the FDA or comparable regulatory authorities; the Company’s ability to obtain additional funding or enter into strategic or other business relationships or transactions necessary or useful for the further development or commercialization of the Company’s product candidates and the expansion of its business, on favorable terms or at all, or if such relationships or transactions are unsuccessful or the Company is unable to realize the potential economic benefits of such relationships or transactions; the Company’s reliance on arrangements with third parties to support its operations and its development, manufacturing and commercialization 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, 2021, 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,
		2021				2020
License and collaboration revenue	$	2,822			$	4,208
Government research contracts and grants revenue		136				712
Total revenue		2,958				4,920
Operating expenses:
Research and development		20,416				19,814
General and administrative		12,343				11,271
Impairment loss on long-lived assets		114				2,277
Loss on facility asset group disposition		—				1,772
Total operating expenses		32,873				35,134
Operating loss		(29,915	)			(30,214	)
Other (expense) income, net:
Interest income		13				51
Gain on debt extinguishment		956				—
Other (expense) income		(746	)			870
Total other (expense) income, net		223				921
Net loss and comprehensive loss	$	(29,692	)		$	(29,293	)
Net loss per share, basic and diluted	$	(1.74	)		$	(2.96	)
Weighted-average common shares outstanding, basic and diluted		17,065,932				9,880,812

NOVAN, INC.
Selected Condensed Consolidated Balance Sheet Data
(unaudited)
(in thousands)

	Year Ended December 31,
		2021			2020
Cash and cash equivalents	$	47,085		$	35,879
Total current assets		54,130			44,007
Total assets		68,960			46,829
Total current liabilities		11,150			8,700
Total liabilities		50,641			43,852
Total stockholders’ equity		18,319			2,977
Total liabilities and stockholders’ equity	$	68,960		$	46,829

INVESTOR AND MEDIA CONTACT:

Jenene Thomas
JTC Team, LLC
833-475-8247
NOVN@jtcir.com

FAQ

What are Novan's financial results for the year 2021?

Novan reported a net loss of $29.7 million for 2021, slightly up from a $29.3 million loss in 2020.

What is the status of Novan's NDA submission for SB206?

Novan is targeting a New Drug Application (NDA) submission for SB206 by Q4 2022.

What are Novan's upcoming milestones for SB204 and SB019?

Novan plans to conduct pivotal Phase 3 trials for SB204 in 2023 and to initiate Phase 1 studies for SB019 in 2022.

How much cash did Novan have at the end of 2021?

As of December 31, 2021, Novan reported a cash and cash equivalents balance of $47.1 million.

Why did Novan's license revenue decrease in 2021?

The decline in license revenue from $4.2 million in 2020 to $2.8 million in 2021 was due to changes in the estimated performance period under one of its license agreements.