Novan (NOVN), which has been on a roller coaster ride since its IPO in September 2016, is surging 36% today on some positive clinical trial news. Before getting into today' news, a little background on Novan would help as most people are not familiar. Novan is a late-stage pharmaceutical company focused on redefining the standard of care in dermatology through the development of therapies using the company's nitric oxide-releasing platform.
Nitric oxide plays a vital role in the natural immune system response against microbial pathogens and is a critical regulator of inflammation. Novan's ability to harness nitric oxide has enabled the company to create an attractive platform. Novan is quickly advancing programs in five dermatological conditions.
The two key components of Novan's nitric oxide platform are its proprietary Nitricil technology, which drives the creation of new chemical entities, or NCEs, and its topical formulation science, both of which Novan uses to modulate, or "tune," its product candidates for specific indications. Novan is using its platform to transform a useful, naturally occurring molecule into a therapeutic pipeline for a host of skin diseases.
Its lead product candidate is SB204, a topical gel that treats acne vulgaris, the most common skin disease in the US. Novan recently reported top-line results from two Phase 3 trials of SB204. SB204 demonstrated statistical significance compared to vehicle on all three co-primary endpoints in one of the trials, but demonstrated statistical significance on only one of three co-primary endpoints in the other trial. Based on these results, Novan intends to pursue a pre-submission meeting with the FDA to discuss the entirety of the SB204 development program in 3Q17. Novan says its meeting with the FDA could lead to a new drug application, or NDA, submission targeted in 1Q18, assuming its long-term safety study goes well.
Other product candidates include SB206, SB208 and SB414. SB206 is a topical antiviral gel in Phase 2 development for the treatment of viral skin infections such as external genital and perianal warts caused by HPV. Novan expects to discuss the entirety of the SB206 development program with the FDA in 2Q17 and, assuming a successful end-of-Phase 2 meeting with the FDA, plans to initiate its late-stage program with Phase 3 pivotal clinical trials of SB206 by the end of 2017. SB208 is a topical antifungal product candidate for the treatment of fungal infections of the skin and nails. SB414 is a topical cream in preclinical development for the treatment of inflammatory skin diseases such as psoriasis and atopic dermatitis.
Turning to today's news, Novan announced positive topline results from its Phase 2 trial with SB208, a topical, silicone based-gel under development for the treatment of infections caused by dermatophytes such as Trichophyton rubrum, or T. rubrum. Novan's SB208 Gel, at both the 4% and 16% concentrations, demonstrated a statistically significant effect in a clinical trial in patients with tinea pedis, or athlete's foot.
The press release quotes Dr. Leon Kircik, a board-certified dermatologist, who says that fungal infections of the skin and nails are persistent, in part because there are no currently-approved therapies that treat both with a single topical product. These clinical trial results suggest that Novan's SB208 may provide an effective topical alternative to simultaneously treat the nail plate, the interdigital space and the surrounding cutaneous tissue, thereby potentially improving initial efficacy while decreasing relapse or reinfection.
Based on this data, Novan will evaluate late stage development opportunities in superficial cutaneous fungal infections, such as a Phase 2 trial in patients with onychomycosis, to be initiated as early as 2H17. Onychomycosis is a chronic fungal infection of the nails, and Novan estimates that it affects more than 40 mln people in the US, especially older adults.
In sum, Novan has been on quite a roller coaster since its IPO in September 2016. It was a small but upsized offering at 4.1 mln shares (up from 3.75 mln). It priced at $11, then opened at $14.40 as there was a good deal of interest in the stock. By early December 2016, it was trading north of $30 per share. However, the stock sold off by 74% on January 27, falling below $5, after the company announced mixed top-line results from its two Phase 3 trials for SB204. As such, this was some welcome good news for Novan. It's still trading below its IPO price, but investors were happy for some good news.