Novan crushed by phase 3 failures of antiviral gel

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Novan closed out September with $22.5 million in the bank. (Getty Images)

Novan’s antiviral SB206 has failed to beat placebo in two phase 3 trials in patients with molluscum contagiosum. The setback wiped 74% off Novan’s value and left its cash runway looking precariously short, but the biotech plans to start another trial in the belief it still has a path to approval.

SB206 is made up of a hydrogel and a gel containing berdazimer sodium. Co-administering the two components is intended to promote the release of nitric oxide, a small molecule with antimicrobial properties. Novan has built a pipeline around nitric oxide that is spearheaded by two phase 3 trials designed to assess the effect of SB206 on viral skin infection molluscum contagiosum.

The two trials enrolled about 700 participants in total and randomized them to apply SB206 or a topical placebo once a day. After 12 weeks, investigators assessed whether treatable molluscum contagiosum remained on the patients.

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SB206 was statistically no better than placebo at fully clearing molluscum contagiosum in either trial, resulting in both studies missing their primary endpoints. That headline failure sent Novan’s stock into a tailspin.

However, Novan had a more positive take on the data, noting that, with a p-value of 0.062, one of the trials approached statistical significance. Tweaking the primary endpoint population, either by taking a per protocol approach or by changing the handling of missing data, brought the p-value down to below the threshold for statistical significance. 

Coupled to a positive result against a secondary endpoint that looked at the clearance rate at week eight, Novan thinks the analyses are encouraging enough to warrant using the data in a filing for FDA approval. The second clinical study failed to generate good enough data for it to serve as the second confirmatory trial. Yet, Novan thinks the second study’s findings are “consistent with and supportive of” the more encouraging trial. 

That upbeat reading of the data set led Novan to outline plans to start another phase 3 trial in April. If that study generates positive results, Novan will use it as the second confirmatory trial and file for FDA approval in 2021. 

While that is what Novan wants to do, there are doubts about whether it will be able to execute the plan. The plan is dependent on feedback from the FDA and the willingness of investors to give Novan more money. Novan closed out September with $22.5 million in the bank, a sum that will only fund its operations into the first quarter of 2020. Investors diminished Novan’s ability to raise money after getting a look at the phase 3 data by sending its stock price down 74% in after-hours trading. 

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