Novan Inc (NOVN) Shares Jump on Encouraging Phase 2 Results for SB208


It’s a very rewarding trading day for investors in Novan Inc (NASDAQ:NOVN) with shares up over 50% in pre-market trading. The reason? The drug maker announced positive topline results from the Company’s Phase 2 clinical trial with SB208, a topical, silicone based-gel under development for the treatment of infections caused by dermatophytes such as Trichophyton rubrum, or T. rubrum.

Novan is developing SB208 as a broad-spectrum antifungal gel for the treatment of superficial cutaneous fungal infections of the skin and nails, including tinea pedis and onychomycosis. Novan’s SB208 Gel, at both the 4% and 16% concentrations, demonstrated a statistically significant effect (p<0.05) compared to vehicle in a clinical trial in patients with tinea pedis, or athlete’s foot. Clinical activity against dermatophytes was measured by incidence of a negative fungal culture after two weeks of treatment.

“The results from this Phase 2 trial with SB208 confirm the fungicidal activity of nitric oxide observed in our preclinical studies,” said Nathan Stasko, Ph.D., President and Chief Executive Officer of Novan. “We have now seen clinical evidence of antibacterial, antiviral and antifungal activity with product candidates from our nitric oxide platform. Our ability to deploy antimicrobial doses of nitric oxide in this trial gives us confidence to move forward in the development of a potential treatment for hard-to-treat infections like onychomycosis.”

In this double-blind, randomized, vehicle-controlled, dose-ranging clinical trial, the tolerability, safety and antifungal activity of SB208 was evaluated in 222 patients with clinical signs and symptoms of tinea pedis. Patients were randomized evenly to one of three active or vehicle treatment arms, applying either SB208 Gel (2%, 4% or 16%) or vehicle once-daily for two weeks, followed by a four-week post-treatment observation period. Efficacy assessments were made on a modified intent-to-treat population (mITT) comprised of patients who had a positive baseline culture for dermatophytes such as T. rubrum. The primary endpoint in this study was the proportion of patients in each treatment group achieving negative fungal culture at day 14.

In the primary efficacy analysis of patients with evaluable culture results, 80.6% (p=0.002) of patients treated with SB208 4% and 74.2% (p=0.016) of patients treated with SB208 16% achieved negative fungal culture at day 14 versus 45.5% of patients treated with vehicle. Similar results were observed in the per-protocol analysis, with both SB208 4% and 16% demonstrating statistical superiority to vehicle treated subjects (p<0.05).

Mycological cure, defined as both a negative fungal culture and a negative skin scraping for the presence of fungus, was assessed at day 14 and after a four week follow up period at day 42 as two of the secondary endpoints. The percentage of patients achieving mycological cure at the day 14 visit was 50.0% (p=0.009) of the patients treated with SB208 4% and 53.1% (p=0.010) of patients treated with SB208 16% versus 23.5% of patients treated with vehicle. Mycological cure was maintained at day 42 in both dose groups; 58.8% of patients treated with SB208 16% demonstrated a mycological cure compared to vehicle (p<0.05).

“Fungal infections of the skin and nails are persistent, in part because there are no currently-approved therapies that treat both with a single topical product,” said Dr. Leon Kircik, board-certified dermatologist, associate clinical professor of dermatology at Indiana University Medical Center in Indianapolis and Icahn School of Medicine at Mount Sinai Medical Center in New York and medical director of DermResearch, PLLC and Physicians Skin Care, PLLC. “These clinical trial results in patients with tinea pedis, paired with the previously released preclinical rapid nail penetration data, suggest that Novan’s SB208 may provide an effective topical alternative to simultaneously treat the nail plate, the interdigital space and the surrounding cutaneous tissue, thereby potentially improving initial efficacy while decreasing relapse or reinfection.”

Based on the data generated in this SB208 Phase 2 dose-ranging trial, Novan will evaluate late stage development opportunities in superficial cutaneous fungal infections, such as a Phase 2 trial in patients with onychomycosis, to be initiated as early as the second half of 2017.

On the ratings front, Wedbush analyst David Nierengarten downgraded NOVN to Hold, with a price target of $6.00, in a report issued on January 30. The current price target implies an upside of 15% from current levels. According to TipRanks.com, Nierengarten has a yearly average return of 28.1%, a 51% success rate, and is ranked #109 out of 4560 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. 

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