Investors go bargain shopping as Novan IPO prices low, climbs high


Nitric oxide dermatology player Novan nabbed a nice share price pop on its first day of trading; after the first few hours, it had gained about 55%, which may bode well for other biotech IPOs during this tough last leg of the U.S. presidential election cycle. But that bump only came on the back of a discount when it priced at the bottom of its proposed range.

Novan traded up to about $17 per share from the $11 in that early trading; it had proposed a range of $11 to $13. To help offset that shortfall on price, the North Carolina-based company opted for more dilution by selling 4.1 million shares, up from an anticipated 3.75 million.

All told, Novan raised $45 million in its IPO, although existing investors had committed to buy up to $25 million of that sum. The company’s largest shareholder is publicly traded Irish life sciences investment company Malin.

Malin kicked in $30 million of the $50 million mezzanine round that Novan closed in March 2015. It boasted a 30% bump on its investment at the IPO pricing. It also holds shares in Know Bio, which was spun out from Novan in December 2015, to house Novan’s nondermatological assets based on its nitric oxide platform.

Founded in 2006, Novan had already raised about $104 million in equity and debt ahead of the IPO.

Novan expects this IPO financing will be sufficient to get lead candidate SB204 through an NDA submission; it also hopes to advance two more candidates, SB206 and SN208, into Phase II testing.

SB204 is a topical gel to treat acne vulgaris. It’s in two ongoing Phase III trials with top-line data expected during the first quarter of next year. If the company gets the clinical results it’s looking for, Novan expects to submit an NDA by the end of 2017.

SB206 is a topical antiviral to treat external genital and perianal warts that’s in Phase II. It also has Phase II SB208 to treat onychomycosis, a fungal infection of the skin and nails. Finally, Novan has a preclinical candidate, SB414, which it is developing as an anti-inflammatory for skin conditions such as psoriasis and atopic dermatitis.