Novan soothes investors with positive antifungal trial

A nitric oxide-based drug shows its promise in an athlete's foot study.

Investors who bought into Novan Therapeutics' cut-price public listing last year have seen the company's share price halve since then—but look set to recoup some of those losses after the company reported a positive phase 2 trial.

Dermatology-focused biotech Novan raised $45 million in its IPO last September in a difficult climate, well below its target of $60 million, to help push its nitric oxide-based R&D pipeline, but a phase 3 miss for lead drug SB204 for moderate-to-severe acne torpedoed the stock in January.

Now, another one of those assets—a topical silicone-based gel called SB208—has come good in a mid-stage trial testing its ability to fight fungal infections of the skin and nails such as athlete's foot.

Novan priced its IPO at $11 last September, and ahead of today's announcement the shares were trading at less than half that amount ($5.20). News of the positive trial had pushed the shares up more than 50% premarket today, not fully recouping the declines but no doubt making investors a lot happier about the stock.

Fungal infections of the skin and nails, also known as onychomycosis, affect around 40 million people in the U.S., with 90% of cases caused by dermatophytes such as Trichophyton rubrum. In Novan's trial, SB208 proved to be significantly more effective than a dummy gel at clearing up athlete's foot infections after a two-week treatment period.

A 4% dose of SB208 got rid of 80% of infections, with a higher 16% formulation clearing 74%, according to mycological culture testing. Both doses performed significantly better than the control, which had a cure rate of 45%. Against a more stringent assessment involving a skin scraping to check for the presence of fungus, Novan's drug had cured around half of the infections, compared to 16% for the control.

Novan CEO Nathan Stasko, Ph.D., said the result was an important proof-of-concept for its nitric oxide platform against fungal pathogens, which adds to earlier evidence that its drugs work against bacteria and viruses.

"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," said Stasko.

Onychomycoses can be treated with topical antifungals, but because the organisms that cause them are so widespread, infections often recur and additional courses of treatment are needed.