Initial results are in for two late-stage clinical trials testing Novan’s experimental acne drug, and it’s a mixed bag. The topical gel hit all of its goals in one Phase 3 trial but fell short in a second, separate study.
While Morrisville, NC-based Novan (NASDAQ: NOVN) tries to figure out why the two studies on its lead drug yielded different results, investors are already passing judgment, sending Novan’s stock down more than 75 percent to $4.57 as of Friday morning.
Novan’s drug, SB204, is a topical gel that releases nitric oxide to treat acne. The company is studying the drug in two late-stage clinical trials that enrolled patients age 9 and older with moderate to severe acne. A total of 2,639 patients at 110 study sites in the United States were randomized to receive once daily applications of either Novan’s drug or a placebo gel.
In both double-blind Phase 3 trials, the main goals were measuring changes in: the number of inflammatory lesions, the number of non-inflammatory lesions, and the score of patients on a scale used to assess acne severity.
Patients treated with the Novan drug in one clinical trial showed statistically significant results in all three measures. But the drug’s performance was murkier in the second trial. The Novan drug reduced both non-inflammatory lesions and inflammatory lesions in patients in this second study. But the reduction in inflammatory lesions was not enough to reach statistical significance. And on the scale assessing acne severity, the percentage of patients with successful scores was slightly higher in the placebo arm compared to the treatment arm.
Novan raised $45 million when it went public in September. The company, founded in 2008, was spun out of the University of North Carolina at Chapel Hill. Novan’s research focused on nitric oxide, a compound that has several therapeutic applications but is a challenge to administer because it is normally a gas.
The only FDA-approved nitric oxide use is in the treatment of newborns who have high blood pressure in the arteries of their lungs. In this application, the treatment is administered as a gas. Novan developed a way to store nitric oxide in solid form and to control its release, offering the potential for what the company calls “nitric acid on demand” applications. The company chose acne as its lead therapeutic target.
In a prepared statement, Novan CEO Nathan Stasko said that the company has not yet received all of the data from the two Phase 3 trials and will provide an update after a complete analysis. He said that the company believes it has enough cash to carry the company through the end of the year. At the end of the third quarter, Novan had $55.6 million in cash, according to securities filings.
Besides the acne drug, Novan’s pipeline includes drug candidates for genital warts and onychomychosis, a fungal infection of the toenails and fingernails, in mid-stage clinical trials, as well as early-stage candidates in psoriasis and eczema.