NOVAN, INC. (NOVN) SPO
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|Company Name||NOVAN, INC.|
|Company Address||4105 HOPSON ROAD
MORRISVILLE, NC 27560
|CEO||G. Kelly Martin|
|Employees (as of 12/31/2016)||62|
|State of Inc||DE|
|Fiscal Year End||12/31|
|Shares Over Alloted||0|
|Shareholder Shares Offered||--|
|Lockup Period (days)||180|
|Quiet Period Expiration||2/19/2018|
We estimate that the net proceeds from this offering will be approximately $35.2 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and excluding the proceeds, if any, from the subsequent exercise of the warrants offered and issued pursuant to this offering. We currently expect to use the net proceeds from this offering, together with existing cash, as follows: • approximately $27 million to fund research and development program activities primarily in the fields of virology and immunology, including the advancement of our clinical-stage SB206 topical antiviral and SB414 topical anti-inflammatory programs and the expansion of our antiviral program for treatment of neoplasias caused by high-risk HPV infections, as well as for existing and future product candidates in other fields; and • the balance for general corporate purposes, including general and administrative expenses, capital expenditures and working capital. Our expected use of net proceeds from this offering represents our intentions based upon our current plans and business conditions. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the progress of our development, the status of and results from our clinical trials of our product candidates, our success in entering into strategic partnerships for the development and commercialization of our product candidates, and any unforeseen cash needs. We may find it necessary or advisable to use the net proceeds from this offering for other purposes, and our management will have broad discretion in the application of the net proceeds. Pending the uses described above, we plan to invest the net proceeds from this offering in short-and intermediate-term, interest-bearing obligations, investment-grade instruments, demand deposits, certificates of deposit or direct or guaranteed obligations of the U.S. government.
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. We consider our primary potential competition to be existing providers and drug developers of therapeutics to treat acne vulgaris, genital warts, onychomycosis, psoriasis and atopic dermatitis. Any product candidates that we successfully develop and commercialize will compete with these existing therapies as well as new therapies that may become available in the future. Our success will be based in part on our ability to identify, develop and manage a portfolio of product candidates that are safer and more effective than competing products. Acne Vulgaris If approved by the FDA for the treatment of acne vulgaris, we anticipate that SB204 would compete with branded and generic oral and topical antimicrobials, oral and topical retinoids, oral contraceptives, other prescription skin cleansers and over-the-counter treatments. We may compete with branded therapeutics, including Epiduo and Epiduo Forte, marketed by Galderma Laboratories, L.P.; Aczone, marketed by Allergan plc; and Onexton, marketed by Valeant Pharmaceuticals International, Inc. There are also product candidates under development that could potentially be used to treat acne vulgaris and compete with SB204. For example, we are aware of olumacostat glasaretil (formerly DRM01), a topical acetyl-CoA carboxylase inhibitor product candidate being developed by Dermira Inc.; FMX01, a minocycline foam product candidate being developed by Foamix Pharmaceuticals Ltd.; Winlevi, a novel-topical antiandrogen candidate, and CB-06-01, an antibiotic candidate, both being developed by Cassiopea SpA; sarecycline, a tetracycline derivative being developed by Allergan for the treatment of acne vulgaris; XEN801, a topical small-molecule inhibitor of stearoyl Co-A desaturase (SCD1) candidate being developed by Xenon Pharmaceuticals Inc.; BPX01, a topical hydrophilic antibiotic (minocycline) candidate being developed by BioPharmX, Inc.; and ANT-1207, a topical botulinum toxin type A candidate being developed by Allergan (Anterios Inc.). Genital Warts With respect to SB206 for the treatment of HPV-induced skin lesions, we would primarily face potential competition from Aldara and Zyclara, both marketed by Valeant; Condylox, marketed by Actavis plc; and Veregen, marketed by Fougera Pharmaceuticals, Inc.; as well as their generic equivalents. There are also product candidates under development that could potentially be used to treat HPV-associated genital warts and potentially compete with SB206. CB-06-02, a tellurium-based compound is being developed by Cassiopea. BTA074 is a direct-acting antiviral for the treatment of HPV 6 and 11 infections that is being developed by Biota Pharmaceuticals, Inc. Additional reformulations of generically available imiquimod are also under development. Onychomycosis With respect to SB208 for the treatment of onychomycosis, we would face potential competition from Lamisil, an oral therapeutic marketed by Novartis Pharmaceuticals Corporation; Jublia, a topical therapeutic marketed by Valeant; and Kerydin, a topical therapeutic marketed by Pfizer Inc. (Anacor Pharmaceuticals, Inc.); as well as generically available oral antifungals. There are also product candidates under development that could potentially be used to treat onychomycosis and compete with SB208. For example, we are aware of various terbinafine reformulations in clinical development, including HTU-520 being developed by Hisamitsu Pharmaceutical Co., Inc.; P-3058 being developed by Polichem SA; and MOB015 being developed by Moberg Pharma AB; as well as VT-1161, an oral antifungal under development by Viamet Pharmaceuticals, Inc. Psoriasis and Atopic Dermatitis With respect to SB414 for the topical treatment of mild to moderate psoriasis, we would face potential competition from companies that market corticosteroids, vitamin D analogues, combinations thereof and calcineurin inhibitors. There are also topical product candidates under development that could potentially be used to treat psoriasis and compete with SB414, including CED 90100, WBI1001, INCB018424, LAS 41004 and PH10. Other product candidates under development that could potentially be used to treat psoriasis and compete with SB414 include Eucrisa, a topical phosphodiesterase 4 (PDE4) inhibitor being developed by Pfizer (Anacor); VTP-43742, a systemic RORyt inhibitor candidate being developed by Allergan (Vitae Pharmaceuticals, Inc.); brodalumab injection, 210 mg, a monoclonal antibody that binds to IL-17, and IDP-119, a topical steroid and retinoid combination, both candidates being developed by Valeant; CT327 and CT103, topical TrkA kinase inhibitor candidates being developed by Sienna Biopharmaceuticals, Inc. (Creabilis SA); multiple foam candidates being developed by Foamix; and multiple topical kinase inhibitors being developed by multiple companies. With respect to SB414 for the treatment of atopic dermatitis, we would face potential competition from companies that market branded and generic corticosteroids; the topical calcineurin inhibitors, Elidel, which is being marketed by Valeant, and Protopic, which is expected to be marketed by Leo Pharma; and the topical PDE4 inhibitor, Eucrisa, which is expected to be marketed by Pfizer (Anacor). Product candidates under development that could potentially be used to treat atopic dermatitis and compete with SB414 include dupilumab, which is being developed by Regeneron Pharmaceuticals, Inc; VTP-38543, which is being developed by Allergan (Vitae Pharmaceuticals); tralokinumab, which is being developed by Medimmune; GSK2894512, which is being developed by GlaxoSmithKline; ZPL-389, which is being developed by Ziarco; and CT340 and CT101, which are being developed by Sienna (Creabilis).
We are a clinical-stage biotechnology company focused on leveraging nitric oxide’s natural antiviral and immunomodulatory mechanisms of action to treat dermatological and oncovirus-mediated diseases. Nitric oxide plays a vital role in the natural immune system response against microbial pathogens
and is a critical regulator of inflammation. Our ability to harness nitric oxide and its multiple mechanisms of action has enabled us to create a platform with the potential to generate differentiated first-in-class product candidates. The two key components of our nitric oxide platform are our proprietary Nitricil technology, which drives the creation of new chemical entities, or NCEs, and our topical formulation science, both of which we use to tune our product candidates for specific indications. We believe that our ability to conveniently deploy nitric oxide in a solid form, on demand and in localized formulations allows us the potential to significantly improve patient outcomes in a variety of diseases. We are advancing strategic development programs in the fields of virology and immunology with product candidates SB206, SB414 and NVN3100. We also have clinical-stage drug candidates with anti-acne (SB204) and antifungal (SB208) applications, which we intend to advance through partnerships, collaborations or other strategic relationships we are currently exploring. • SB206 is a first-in-class, topical antiviral gel that we are developing for the treatment of viral skin infections, with a current focus on the treatment of genital and perianal warts caused by human papillomavirus, or HPV, molluscum contagiosum, a contagious skin infection caused by the molluscipoxvirus, and HPV-associated sexually transmitted infections, or STIs. • SB414 is a topical cream-based product candidate that we are developing for the treatment of inflammatory skin diseases, with a current focus on the treatment of psoriasis and atopic dermatitis (eczema). • NVN3100 is a NCE being developed for the treatment of high risk neoplasias, including cervical and anal neoplasias caused by HPV-16 and HPV-18. • SB204 is a potential once-daily, topical monotherapy for treatment of acne vulgaris, a multifactorial disease. Multiple aspects of the disease pathology, anti-inflammatory and antibacterial, may be treatable with SB204. • SB208 is a potential topical broad-spectrum antifungal gel for the treatment of fungal infections of the skin and nails, including tinea pedis (athlete’s foot) and onychomycosis (fungal nail infections). We entered into a license agreement with Sato Pharmaceutical Co., Ltd. during the first quarter of 2017 for the exclusive right to develop, use and sell SB204 in certain topical dosage forms in Japan for the treatment of acne vulgaris. We have agreed in principle, through a non-binding term sheet executed in November 2017, to a business structure that would enable further development and advancement of the SB204 program with third-party financing and third-party execution of an additional Phase 3 pivotal trial. --- We were incorporated under the laws of the State of Delaware in 2006. Our principal executive office is located at 4105 Hopson Road, Morrisville, NC 27560, and our telephone number is 919-485-8080. Our corporate website is www.novan.com.
|Company Counsel||Smith, Anderson, Blount, Dorsett, Mitchell and Jernigan, L.L.P|
|Lead Underwriter||Piper Jaffray & Co.|
|Transfer Agent||American Stock Transfer & Trust Company, LLC|
|Underwriter Counsel||Cooley LLP|
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