Novan, Inc. (“the Company” or “Novan”) (Nasdaq: NOVN), today announced that following an evaluation of its commercial and developmental stage assets, it has decided to sharpen its focus and resources on berdazimer gel, 10.3% (SB206) and announced that it continues to explore strategic alternatives, with a focus on its commercial product portfolio and a sale or out-license of one or more of its commercial products.
Novan conducted a deliberate and thorough review of its commercial and development portfolio of assets to determine a path to optimally deploy capital and maximize shareholder value. Following this review, the Company, has initiated a process to explore a sale or out-license of its commercial assets, including RHOFADE, MINOLIRA, and CLODERM. The Company will immediately reduce certain of its operating expenses currently supporting its commercial operations.
“We continue to face serious challenges achieving profitability with our commercial assets in the current economic environment, while also endeavoring to extend our cash runway through the PDUFA goal date of January 5, 2024, for berdazimer gel, 10.3%,” said Paula Brown Stafford, President and CEO. “We have been evaluating our portfolio of assets for some time to determine the optimal path for a product, if approved, to treat molluscum contagiosum, an unmet medical need. After careful consideration, we have made the strategic decision to implement a reduction in force of our commercial team and continue to explore a sale or out-license of our commercial assets. We will use our resources, plus the proceeds from any dilutive or non-dilutive financing or any strategic transaction, to work in earnest to capture the potential value of berdazimer gel, 10.3% by supporting the ongoing NDA review process.”
The restructuring of the Company’s commercial business, impacting 39 employees, results in a reduction in force of approximately 50% of employees of the Company, primarily among its field sales representatives. The Company estimates that it will incur approximately $0.9 million in charges related to the reduction in force over a period of twelve months. The Company took this step to concentrate its resources on pursuing the regulatory approval for the Company’s berdazimer gel, 10.3% product candidate.
The Company believes that its existing cash and cash equivalents as of March 31, 2023, plus expected receipts associated with product sales from its commercial product portfolio, will provide it with liquidity to fund its planned operating needs into late June of 2023, subject to the factors described in the Company’s Form 10-Q for the quarter ended March 31, 2023. Any potential new business development transactions or financing activities would target extending the Company’s runway into the fourth quarter of 2023 and desirably beyond.
As the Company explores strategic alternatives related to its commercial portfolio, it will continue to sell and distribute its commercial products, and incur certain related expenses associated with RHOFADE, WYNZORA, MINOLIRA and CLODERM in the United States.
