News Article

Durham-based Novan Inc. sells all assets, files for bankruptcy
Date: Jul 18, 2023
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Featured firm in this article: Novan Inc of Morrisville, NC

Novan Inc., Durham-based medical dermatology company, announced early Monday that it had entered into an agreement to sell all of its assets and was filing for Chapter 11 bankruptcy.

Since its founding in 2006, Novan has had as its main focus to research, develop, and commercialize innovative products for skin diseases such as acne, rosacea, plaque psoriasis, among others.

According to the press release, Novan, alongside its wholly owned subsidiary EPI Health, is entering into a stalking horse asset purchasing agreement with San Diego-based company Ligand Pharmaceuticals for $15 million, with an additional $15 as a loan in order to keep the company afloat until the deal is officially approved by the Bankruptcy Court. A stalking horse agreement in this case means accepting an initial bid on the assets of a bankrupt company.

Just two months ago, Novan had reported a loss of $14.1 million in its first quarter and during June, it announced that it was cutting 50% (equaling to 39 employees) according to WRAL TechWire.

Novan had previously disclosed that it was pursuing financial and strategic alternatives to conserve cash.

"The board of directors of the Company made the decision to commence the Chapter 11 Case, with Ligand as a stalking horse bidder, after careful review of such alternatives, after considering factors such as the Company's challenging financial circumstances and the challenging market climate for similarly situated companies and upon consultation with the Company's professional advisors," Novan stated in the press release announcing their sale.

Previously, in a May 31st press release, Novan had stated that it believed that "its existing cash and cash equivalents as of March 31, 2023, plus expected receipts associated with product sales from its commercial product portfolio," would provide enough liquidity to fund all of its planned operating needs into late June of 2023.

Among Novan's most notable medical products in development is berdazimer gel 10.3% which helps with the treatment of molluscum contagiosum, included in the selling agreement. In the press release announcing the sale, Novan stated that it "plans to continue to work with the FDA to progress towards potential approval of berdazimer gel, 10.3%," with the goal date being January 15th.

Nova submitted its new drug application to the FDA in January of this year. That submission was based on favorable data shown by trial that showed that Berdazimer gel showcased statistically significant improvement in the primary endpoint of complete clearance of all treatable molluscum contagiosum at week 12.