Novan Lays Off 20% of Workforce, Switches Up C-Suite

Published: Jun 06, 2017

Novan Lays Off 20% of Workforce, Switches Up C-Suite June 6, 2017
By Alex Keown, Breaking News Staff

MORRISVILLE, N.C. – Shares of Novan Inc. tumbled more than 4 percent this morning after the company announced a shakeup on its leadership team and a culling of 20 percent of its workforce as the company seeks financing to continue development of its nitric-oxide-based dermatological therapies.

A spinout of the University of North Carolina, Novan said on Monday it needs additional capital to conduct Phase II trials in both psoriasis and atopic dermatitis using its nitric-oxide platform. The company said the 20 percent employment cuts will help provide the necessary capital and help streamline the business by forcing more efficient use of resources. The job cuts will leave the company with about 40 employees.

Novan said it believes its cash-on-hand is sufficient to fund operations through the end of 2017 and will continue to “adjust resources up or down as needed.” In December 2015, the company secured $30 million in a funding round. In March 2015, the company also secured $50 million in financing from several investors, including Malin Corporation PLC (MLC.IR).

The money was used to advance SB204, the company’s experimental treatment for acne vulgaris, through Phase III trials. In January, the company released mixed top-line results from that trial. The results showed the therapy achieved statistical significant results in its three primary endpoints, but only one of three in its secondary endpoints. The company said it was disappointed in the mixed results, but continues to “believe in the potential of nitric oxide’s multiple, well-documented mechanisms of action.” Novan will meet with the U.S. Food and Drug Administration later this year to determine a regulatory path forward.

In addition to its job cuts, the company said it plans to broaden the application of its nitric oxide therapies to high-impact immunological diseases in dermatology, including psoriasis and atopic dermatitis. Novan said it is working on an Investigational New Drug Application for mild-to-moderate psoriasis and is planning a Phase II trial in the third quarter of this year. A Phase II trial in atopic dermatitis is currently in the planning stage, the company said.

Novan is also looking to move forward with SB206, its Phase II therapy for genital warts caused by the human papillomavirus. An end of Phase II meeting with the FDA is planned for the end of the second quarter to provide clarity on a path forward.

Under the changes at Novan, Nathan Stasko, co-founder and chief executive officer of Novan, will now hold the position of president and chief scientific officer. The company said that change will allow Stasko to “help the company deepen its understanding of the possibilities of nitric oxide and its potential therapeutic application across patient needs.”

Kelly Martin, currently a non-executive director at Novan, will assume the role of CEO on an interim basis. In this role, Martin will work closely with Stasko and other Novan leaders on extending the company’s business presence in order to support the scientific developments.

Other leadership changes include Bob Ingram, chairman of the company’s board of directors becoming the “non-employee executive chairman of the board and Kent Geer will become lead independent director of the board.

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