Stock Update (NASDAQ:NOVN): Here’s Why Novan Inc Shares Collapsed 77%

Friday turned out to be a nightmare for Novan Inc (NASDAQ:NOVN) investors, after the company announced that its Phase 3 pivotal clinical trial (NI-AC301) demonstrated statistical significance on only one of three co-primary endpoints in the treatment of acne vulgaris. In reaction, Novan shares collapsed 77% to $4.23.

“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.”

The Company 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.

Earlier this month, JMP analyst Donald Ellis wrote, “Phase 3 clinical trial designs include careful analysis and conclusions based on conversations with the FDA, clinical investigators and consultants. The IGE endpoint is highly qualitative and almost never achieves statistical significance in Phase 2 studies, nor are results for all treatment arms generally disclosed. Phase 2 statistical significance reductions in acne lesions is an objective measure and directly correlated with improved Phase 3 statistical significance reductions in both lesion count and IGE.”

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Donald Ellis has a yearly average return of 7.0% and a 50% success rate. Ellis is ranked #1675 out of 4378 analysts.

Novan, Inc. is a late-stage pharmaceutical company, which focuses on redefining the standard of care in dermatology through the development and commercialization of innovative therapies using the it’s nitric oxide platform. It has two key components of nitric oxide platform: Proprietary Nitricil Technology and Topical Formulation Science. The Proprietary Nitricil Technology drives the creation of new chemical entities. The Topical Formulation Science use to modulate or tune product candidates for specific indications. The company was founded by Mark Schoenfisch and Nathan Stasko in 2006 and is headquartered in Durham, NC.

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