Novan Stock Drop After Novan Announces Clinical Trials for Acne Treatment Yielded Different Results

Novan, Inc. (NASDAQ:NOVN)

On January 27, 2017, Novan announced that its two “replicate” Phase 3 clinical trials for its topical acne treatment had yielded different results. Novan revealed that one trial showed statistical significance for all three co-primary endpoints and the other trial showed statistical significance for only one co-primary endpoint.

Novan Stock Drop

On this news, shares of Novan’s stock dropped from a close of $18.70 per share on January 26, 2017 to a close of $4.86 per share on January 27, 2017, a 74% decline.

“Novan Reports Topline Results from SB204 Phase 3 Pivotal Trials”

On January 27, 2017, Novan’s press release stated that Novan

. . . announced top-line results from the Company’s two, replicate Phase 3 pivotal clinical trials for SB204 in the treatment of acne vulgaris. In the intent-to-treat analysis, Novan’s topical nitric oxide-releasing product candidate SB204 demonstrated statistical significance (p<0.05) compared to vehicle on all three co-primary endpoints in NI-AC302, but demonstrated statistical significance on only one of three co-primary endpoints in NI-AC301. The three co-primary endpoints included the absolute changes in inflammatory and non-inflammatory lesion counts and proportion of patients achieving success on the Investigator Global Assessment, or IGA, at week 12. Success was defined as an improvement of at least two grades in the IGA score from baseline and an IGA score of 0 or 1, or “clear” or “almost clear.” [Emphasis added]

In these two Phase 3 multi-center, randomized, double-blinded, vehicle-controlled, parallel group pivotal clinical trials, NI-AC301 and NI-AC302, a total of 2,639 patients ages 9 and older with moderate to severe acne were enrolled across a total of 110 sites in the United States, randomized in a 1:1 ratio to SB204 Gel 4% topically once-daily or vehicle gel topically once-daily and treated for 12 weeks. No new safety signals were observed and both treatments were generally safe and well tolerated, with less than 2% of patients discontinuing due to treatment-emergent adverse events in each trial. Summary statistics are based on the use of a multiple imputation methodology for missing data.

Novan’s press release also stated:

“While we are pleased with the results of the NI-AC302 trial that met the regulatory requirement for statistically significant efficacy of SB204, we are disappointed with the discordant results of NI-AC301. Our team has not yet received the full data set and we intend to provide an update on the SB204 program after our complete analysis,” said Nathan Stasko, PhD, President and CEO of Novan. “Despite these discordant results, we believe in the potential of nitric oxide’s multiple, well-documented mechanisms of action and the data we have recently generated for our SB206 anti-viral and SB414 anti-inflammatory product candidates. We continue to look forward to near term clinical results from our SB208 anti-fungal program in the second quarter of 2017 and advancing our pipeline of innovative therapies for patients suffering from skin diseases.” [Emphasis added]

[Novan] believes that its cash on hand is sufficient to fund operations at least through the end of 2017, of which the allocation of capital will be dependent upon further assessment of the SB204 Phase 3 trial results and data from other platform programs.

Novan, Inc. – Investors – January 27, 2017 Press Release

Novan Stock Drop & Novan Class Action Complaint Filed

A class action lawsuit has been filed on behalf of investors that purchased Novan, Inc. (NASDAQ:NOVN) securities between September 26, 2016 and August 1, 2017, 2017, inclusive (the “Class Period”) and/or pursuant to its September 26, 2016 Initial Public Offering.

The class action complaint alleges that, throughout the Class Period, Defendants made materially false and/or misleading statements and/or failed to disclose that: (1) Novan had initiated and conducted two identical Phase 3 clinical trials for its lead product candidate SB204; (2) the two SB204 Phase 3 clinical trials were, in fact, not identical; and (3), consequently, Novan’s financial statements were materially false and misleading at all relevant times.

Novan Shareholders

If you purchased or otherwise acquired Novan securities between September 26, 2016 and August 1, 2017 and/or pursuant to Novan’s September 26, 2016 Initial Public Offering and wish to speak privately with a securities attorney, please complete the form on the right or contact John Kehoe, Esq., (215) 792-6676, Ext.  801, [email protected] or send an e-mail to [email protected].

Kehoe Law Firm, P.C.