Warts and All: Novan Files Chapter 11, Sells Assets

The progression toward PDUFA goal date of January 5, 2024, for berdazimer gel, 10.3% (SB206) continues, with Pre-Approval Inspection (PAI) complete and favorable mid-cycle review communication from FDA.

Novan is selling all of its assets, including Berdazimer Gel, 10.3% (SB206), and has filed for Chapter 11 Protection.

 The Company entered into a stalking horse asset purchase agreement (APA) with Ligand Pharmaceuticals, Inc. prior to filing voluntary petitions for relief under chapter 11 of title 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. 

The Company continues to operate its business as a “debtor-in-possession” (“DIP”) under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company also entered into a secured DIP credit facility with signed an agreement to sell substantially all of Novan’s assets under Section 363 of the U.S. Bankruptcy Code, along with a commitment from Ligand to fund $15 million in debtor-in-possession financing.

The progression toward the Prescription Drug User Fee Act (PDUFA) goal date of January 5, 2024, for berdazimer gel, 10.3% (SB206) continues, with Pre-Approval Inspection (PAI) complete and favorable mid-cycle review communication from FDA. This agreement provides a path forward for a product, if approved, to treat molluscum contagiosum, an unmet medical need.

The APA governs the sale of substantially all the assets of the Company for $15 million to be paid in cash at closing. The cash payable at closing will be reduced dollar-for-dollar by the outstanding balance of the DIP credit facility which will be repaid at closing. The transaction will be subject to approval by the Bankruptcy Court and compliance with agreed upon and Bankruptcy Court-approved bidding procedures allowing for the submission of higher or otherwise better offers, and other agreed-upon conditions.

In addition, on July 14, 2023, the Company entered into a bridge loan with Ligand for the principal amount of $3.0 million. This pre-petition loan provided needed working capital to the Company for general corporate purposes and is secured by the assets of the Company. The pre-petition bridge loan will be rolled into the DIP credit facility after Bankruptcy Court approval of the DIP credit facility.