MORRISVILLE, N.C., Oct. 30, 2020 (GLOBE NEWSWIRE) -- Novan, Inc. (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.