Novan, a company researching ways to harness nitric oxide for drugmaking, has filed for an initial public offering to fund clinical work on treatments for an array of skin conditions.
Durham, NC-based Novan set a preliminary target of $60 million for the IPO, a figure that may change as the company works through how many shares it will sell and at what price. In its prospectus filed with securities regulators on Wednesday, Novan says proceeds from the stock offering would fund its lead drug, a topical gel for acne known as SB204, all the way through an application for FDA approval, and help push four other compounds in its pipeline forward, as well. The company has applied for a Nasdaq listing under the stock symbol “NOVN.”
The IPO filing comes eight months after Novan raised more than $30 million for late-stage clinical trials. SB204 is in two Phase 3 clinical trials for acne that should produce data in early 2017. If all goes well in those trials and Novan completes a planned long-term safety study, the company could apply for FDA approval by the end of next year. Data from mid stage trials of another drug, SB206, a gel being studied as a treatment for the warts caused by human papillomavirus (HPV), are expected later this year.
The dermatology market was $28 billion in 2014, Novan says, citing IMS Health data. But Novan says innovation in dermatology has been stagnant and some treatments for skin conditions, such as antibiotics, raise concerns about contributing to drug resistance. Novan believes its drugs can provide an alternative to such acne treatments.
Novan says it has figured out a way to administer nitric oxide, a volatile compound that is normally a gas, in a solid form. The compound has been researched in applications such as treating microbial diseases and managing inflammation. Right now, the only FDA-approved use of nitric oxide is the treatment of newborns who have pulmonary hypertension, or high blood pressure in the arteries to their lungs. Nitric oxide is administered from a gas tank in this setting, which makes it difficult to use as a treatment for other types of diseases.
By storing nitric oxide in a solid form, Novan says its “nitric oxide on demand” technology, called Nitricil, can be used to form new drugs that make delivery of the compound stable, targeted, and safe. Novan says it has a library of more than 200 Nitricil compositions, each with a unique way of releasing nitric oxide. The company says it focused on dermatology because its technology can work with the body’s own nitric oxide producing capabilities; each of the skin’s three layers release can produce and release nitric oxide at different rates.
“Our platform allows us the ability to tune the release profile of nitric oxide and trigger its wide range of beneficial effects when host systems fail or are overwhelmed by invading microorganisms,” the company says in its filing.
Nitricil was originally developed in the laboratory of Mark Schoenfisch, a chemistry professor at the University of North Carolina at Chapel Hill. Schoenfisch co-founded Novan in 2008 with Nathan Stasko, who was one of his graduate students. Stasko is now the president and CEO of the company, which has an exclusive license from UNC to develop and commercialize the nitric oxide technology.
Novan has spent more than $64 million on R&D since its inception, according to the filing, and has taken an unusual financing path for a biotech. Rather than rely on venture capitalists for funding, the company’s first outside investment came from Neal Hunter, the co-founder and former CEO of Durham LED technologies company Cree (NASDAQ: [[ticker:CREE]]). Novan’s work has since been funded primarily by
