Q2 2021 Novan Inc Earnings Call
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Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
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Hello, and welcome to the no fan Inc. Second quarter 'twenty 'twenty, one financial results webcast.
As a brief reminder, all participants are currently in a listen only mode.
If anyone requires operator assistance during the Fendt. Please press star zero on your telephone keypad.
Following the presentation, there will be a question and answer session with the companies covering analyst.
Note that this webcast is being recorded at the company's request and a replay will be made available on the company's webcast. Following the end of the event.
At this time I'd like to remind our listeners that remarks made during this webcast may state managements intentions beliefs expectations or future projections.
These are forward looking statements and involve risks and uncertainties forward looking statements on this call are made pursuant to the safe Harbor provisions of the.
Federal Securities laws and are based on nobody has a current expectation and actual results could differ materially.
As a result, you should not place undue reliance on any forward looking statements.
Some of the factors that could cause actual results to differ materially from these contemplated by such forward looking statements are discussed in the periodic reports <unk> files with the Securities and Exchange Commission.
These documents are available in the investors section of the company's website and on Securities and exchange Commission's website.
Encourage you to review these documents carefully.
I would now like to turn the call over to MS. Paula Brown, Stafford, Chairman, President and Chief Executive Officer of no Van Please proceed.
Thank you Misty and good morning, everyone. Thank you for joining our first.
Quarterly business update.
Yeah.
The first half of 2021 has been.
Transformational for November are remain delighted.
With what we are have been able to report.
It is the first time in the company's history, where we have clinical data that provide a pathway towards an NDA submission for one of our product candidates.
At the beginning of the year, we said we would deliver results from our three priority programs in the second quarter of 2021.
And we did just that and.
And it just so happened that it was in the same work week in June.
Not necessarily planned, but that's how it happened we were delighted to report positive results from our S. B two O six lead product candidate for molluscum.
Our S. B 019 product candidate as a potential anti viral therapy for Covid 19.
And our Nvme 4100, and C E targeting companion animal health.
I'll say the results from our B simple trial have in essence validated our nitrosyl platform technology.
Showing both clinically and statistically meaningful results that can impact patients lives.
While we are laser focused on getting the S. B two O six through the regulatory submission and approval process for molluscum.
We're also excited about the future of our proprietary platform technology as you know nitrosyl and the potential that we have to advance other product candidates and other indications.
Yeah.
So also in June we raised additional capital as you know through a public offering and therefore strengthen our balance sheet.
Yeah.
So now as a quick reminder, molluscum contagiosum.
Is a contagious virus that is shared primarily among children ages two to 14.
The prevalence exceeds 3 million and the annual incidents exceeds 1 million lives.
Yeah.
Today, there is no F D a approved treatment for in home use and.
And the only course of action today is via an in office procedure.
Or off label use of prescription therapies that have no proven efficacy against molluscum.
Our S. P. Two O six product candidate is for in home use self or caregiver administered.
So let's talk about our pivotal phase III trial.
But we.
We named be simple for.
We actually completed the trial in July just a few weeks ago.
And as you know in June we reported top line efficacy and safety results from the.
12 week treatment period.
The trial randomized 891 patients to one of two treatment groups S. B, two O six or vehicle with a one to one randomization.
Cross 55 investigator sites in the U S.
The primary endpoint is complete clearance and complete clearance as defined.
I'd like to say is clearing all lesions visible at baseline and any lesions that are rough did post baseline at or before week 12.
I'm pleased to reiterate that SB two O six demonstrated clinical evidence of efficacy by achieving.
Statistical significance when compared to vehicle at week 12.
As I mentioned.
The last week 24 visit occurred in July for our last patient in the trial and we will now report out or week 24 safety results before the end of September.
Yeah.
Yeah.
Then we will be laser focused on our NDA preparation with an intent to submit no later than the third quarter of 'twenty 'twenty two.
Okay.
So now I'll, just a recap those results, but I am.
So so delighted with them, which is why we use the color green [laughter] costs, we're ready to go now as I shared in June.
Our topline results from be simple for specifically across the primary endpoint and these three secondary endpoint SB two O six demonstrated that statistical significance and we believe clinically meaningful treatment difference.
For each of these end points.
So for complete clearance at week 12, we saw a nearly 13 percentage point difference with a P value of less than 0.0001.
That's showing the 32, 4% of the patients on our product.
Had complete clearance app.
Week 12.
The second the next one endpoint.
Pinpoint for the proportion of patients achieving complete clearance as I, just mentioned or clearing all but one.
So that's to say these patients.
We'd have one or zero lesions at week 12, and here you saw a 43.5% of the patients on our product had completely clear or only one lesion and that was a 19 percentage point difference with a P value also a 0.0001.
The third measuring the proportion of patients achieving greater than 90% complete arent very.
<unk> clearance at week 12, very similar 43% voice versus almost 24%. So again, a 19 percentage point difference with again the P value of 0.0001.
And then finally, we measured complete clearance at week eight seen how early we had cleared and you can see that there was total clearance for 20% of the patients on our lead product candidate here. So we also there had an eight.
Percentage point treatment difference, which is also a P value of <unk> <unk> one.
So all of these are statistically highly statistically significant and we believe the robustness of the data across all of these endpoints demonstrate the clinical evidence of efficacy.
So following these tremendous results. Our next steps are to finalize the analysis of safety. Following the week 24 visit where we only collected safety data. So theres no more efficacy data that was collected.
This is to be complete before the end of the third quarter or before the end of September and and then we will compile and finalize the final study report.
In the fourth quarter.
Per our meeting with the FDA in April of 2020, we will prepare the NDA for SB two O six in molluscum with the be simple for trial as the pivotal phase III study and the previously conducted be simple two trial as the confirmatory trial.
We're targeting that NDA submission no later than the third quarter of next year 2022.
In parallel we will continue to evaluate our commercialization options, including a no van led solution or with a partner or partners.
Now moving onto our S. P O one nine product candidate.
And its potential use to inhibit viral replication of Sars Covid two.
That's impacting all of us thanks.
Thanks to the Delta variant.
We have conducted a number of in vitro and in vivo assessments of SP <unk> and in June. We also reported our latest positive results so specifically that.
We observed dose dependent statistically significant reduction in that was another a P value of less than 0.0 or one.
And the amount of virus in the lungs of the Syrian hamsters that were treated with <unk> nine.
We're currently conducting an intranasal IND, enabling safety study and the potential final formulation, which we believe is the last step now before submitting a pre IND request to the agency the FDA seeking.
Seeking regulatory guidance and support to potentially move forward with a phase one study.
Okay.
Now with regard to our N V and 4100 and C E.
We are targeting skin conditions in dogs.
We conducted in vitro and in vivo investigations of envy in 4100 during the past 12 months and also in June we reported results of the in vitro assessments, which suggest efficacy against a wide variety of antibiotic resistant and non resistant strains and.
In support Bactericidal mode of action.
Yeah.
And the in vivo assessments, which have informed us regarding a model that will allow for refinement or formulations or execution of further screening activities.
Were currently speaking with a number of interested third parties regarding potential next steps.
Now our pipeline got goes beyond these.
Sorry, I think I skip to slide in my own mind here, So no Vance strategy moving forward.
In terms of now where do we go from here. We have the three positive result, we have robust S. B two of six clinical evidence. We now have options, we have optionality for a path forward.
We're completing a thorough strategic review across our platform and evaluating with input from our board and external experts.
That best path.
Which we intend to share in the third quarter.
Sharing our commercialization strategy and our pipeline prioritization.
<unk>.
Of the remaining products in our portfolio.
We will identify the best path to maximize shareholder value and we're going through that process now and I'm excited to share that with you before the end of the quarter.
So as I mentioned, we have other options and those other options here are go beyond those three assets that I've just spoken off.
The assets Act for acne SB, two or four.
S B.
Two O seven for women's health or agw external genital warts or SB 414 for atopic dermatitis. They are what I would call. The most advanced opportunities outside of the previous three.
And we believe that.
And this ongoing in depth review.
For our prioritization, we need to look at all three of those as well as others for how best to use the funds available so I'm going to turn it to John Gay, our Chief Financial Officer to highlight our financial results for the second quarter, John Thank you Paula good morning.
Everyone and thank you for joining our first quarterly update call I'll touch on a few marks with regards to our financial position and our current plans forward.
For the six months ended June 21, we had net cash provided by financing activities of $44.2 million, including the public offering that we did in June of $37.6 million.
We ended the quarter with a cash balance of $65.8 million and positive working capital of $57.2 million.
At the end of the quarter, we believe that our existing cash balance plus payments that we expect to receive in connection with our current licensing agreements.
Provide us liquidity to fund our current operating needs into the first quarter of 2023. This includes through the NDA submission for <unk> and beyond as Paul noted.
Included in this cash forecast our anticipated costs related to the be simple for trial on its completion.
Costs associated with preparing for and seeking regulatory approval of <unk>.
Our continued build out of our new headquarters and manufacturing capability.
Certain drug manufacturing capability transfer activities or tech transfer.
So our third party Cmos developed.
The development activities and certain priority therapeutic areas, such as <unk> and SB, two afore and initial efforts to support potential commercialization and SB 206.
I'll refer you to our 10-Q filing and our press release regarding the specifics of our operating results for the quarter, including our R&D spend primarily in SB 206, and other support costs.
That I will turn it back to follow.
Alright, Thanks John.
So in summary.
<unk> to 'twenty 'twenty, one was a turning point for no van <unk>.
And based on the positive phase III trial results that I just shared with you we have an opportunity to submit our first ever NDA no later than the third quarter of 2022.
And as John shared we have a strong balance sheet to support these efforts.
We're now preparing to shift towards commercialization and accelerate the further development of our nitrosyl platform.
This concludes conclude I guess my presentation, my formal presentation and I'll now turn it back to Misty to facilitate our Q&A portion of the call Misty.
At this time, if you would like to ask a question press star one on your telephone keypad again that is star and the number one we will pause just for a moment to compile the Q&A roster.
Okay.
Okay.
Your first question is from the line of Jonathan Aschoff with Walter capital partner.
Thank you Hi, Paul and John Congrats on the progress last quarter.
I was curious what kind of products are you looking to buy and is that a thought for the future or currently inactive process.
Yeah.
Thanks, Jonathan good to hear from you.
I would say that we are open to.
We're open to that discussion.
We have had conversations but we you know and as you know if.
If anything we're more formal we would be sharing that but theres always that option.
We have been a nitric oxide based medicine company.
To date, but you know with the cash that we have on hand and in terms of the strategic process. It's always something that we should and will consider but right now as I said, we're laser focused at the moment on SP to a six.
And all of that until an NDA submission for that.
Yeah.
Okay I was going to ask you about the hierarchy of development for your pipeline, but it sounded like you just said that that is going to be forthcoming right.
We are working on that now we you know we have so much so many options in a sense. When you look at how many different products in different indications, but we've been in the clinic and it's a matter of matching our funds with the with the right strategy and the best shareholder return that we can bring forward.
So that's what we are evaluating while again staying laser focused on SP to a fix with those great results, which really validates the <unk>.
Platform for Us and then fuel that potential growth going forward.
Thank you Paul Congrats again.
Alright, Thank you Jonathan.
Your next question is from John back in Washington with Zacks.
Good morning, Paul and John.
Let me start out with a question on.
Just some of the factors that will impact the timing of the NDA submission.
The variables out there that youre looking at that.
Maybe pull that forward from the <unk> 22 target.
Or perhaps you know keep it with that with that target.
Thanks, John I appreciate it and good to hear from you.
There are a number of components really to the to the NDA I'm trying to do everything I can to bring it forward, but there are things between us and submitting and really we have to close out as I mentioned the base simple for trial and.
And complete a clinical study report, we then need stability data for our drug substance and that will come from our manufacturing facility here at <unk>.
We need our drug product stability, which will come from our CMO and we continue to work on that and then there's just the actual compilation of the NDA and those are the.
The big components, but it's mainly around getting the stability data for our drug substance and our drug product.
<unk> and <unk>.
In a timeframe that allows us to submit that to the agency.
Okay.
Great.
You mentioned on the call and we've talked about this before about your numerous opportunities to commercialize internally externally and co development. How has your thinking been refined I guess over the last few months since you.
You touched on this.
In terms of <unk>.
Process and maybe how to do it.
Yes.
Great question, and it's something that we are working on daily. So we are building that plan a preliminary plan in this and determining and obviously, we have estimated cost for commercializing it ourselves and this is going in it.
Into our strategic planning process.
<unk>.
As we speak so we have those estimates I feel good about the plan that we have in front of us and we will share more on the come.
Six to six or so six or seven weeks.
Oh, great looking forward to that.
Last one for me is just on the animal health program, but are there any commercial livestock commercial veterinarian opportunities here or is this mostly.
Targeting companion animals, I think Thats I think Thats, what you had mentioned before companion animals, but is there a broader application here.
Yeah, No. That's also a good question.
Cuz, we looked at their companion animal models, and then what they call production animals.
And you know, we we obviously could could look into both but the regulatory path is a little bit different for those two.
So we have been more focused on having conversations.
Initially around the companion health, but it is potentially something with again, the proving out of the nitric nitrosyl technology that it could potentially go into production animals in the future, but the regulatory path a little bit different for companion.
Animals Greg.
Great Great. Thanks, Paul I appreciate the responses.
Good questions. Thank you.
And your final question comes from the line of Jennifer Kim with Cantor Fitzgerald.
Hey, Thanks, so much for taking my questions and congrats guys on some wonderful progress it seems like a very exciting time for the company I have a couple of questions maybe.
Maybe first just logistically, what's the format going to be for when you share your commercialization strategy and pipeline. This quarter is that going to vehicle. Our presentation is gonna be investor day, or how should we expect that to come out and then second.
With all of the efficacy and safety data that's available at hand have you gone to physicians with that latest data and how have they reacted and then my last question focus on who's Euro six.
We're fast approaching the potential approval of the competing product an in office procedure in molluscum, if that gets approved and launched do you think the launch dynamics there could be a good indicator for SB two jurisdictions opportunity or in general how should we think about the similarities and differences between where they are targeting versus you.
Okay. Thanks, Jennifer let me see if I can hit all of those [laughter]. The first in terms of an update regarding our strategy.
Working on that now and it will at a minimum be a press release, but we will.
That is a little bit yet to be determined, but we will we will definitely be back in touch on and share that.
As we finalize that.
Strategy. So a good question, but I presume, we will likely have a call and go into more detail.
In terms of the physicians and we.
The trial didn't end until the end of July and so we didn't want to get out there and start having any conversations until the trial.
Officially completed so we're now in that process and our Chief Medical Officer Tomoko made at <unk>. She will be a continuing to have discussions I can I can tell you that the physicians who participated in the trial.
Even we know from patients and caregivers.
We saw.
Really great support for our product and both the efficacy and safety. So we will be moving forward and that's part of the really the commercialization strategy that we have which is to get out there and share what information we can.
The the studies to date and the data that we have.
Regarding our competitor that has a <unk> date in September of.
Of course wish them well and.
I hope that.
They do get to the market it certainly creates more awareness around molluscum.
I'm always amazed.
Amazed that people that I talk to certainly my age and even a little bit younger who say Oh, you know I know.
Ever knew that what I had or what my sibling had or what my friend had was molluscum.
And Theres just a you know.
Oh and awareness and the fact that yes. It does resolve on average 13 months, but we we had patients that were well over.
Two years, who came into our study and so we know that.
With the the.
The launch of Verica potentially their launch.
Would bring awareness awareness.
That there is an opportunity and we would like to piggyback on that awareness basically and you know get our message out there and we.
We do believe that.
It could be an indicator for us and measuring them better measuring the market size and the market landscape et cetera.
As you know their product as an in office use and it requires multiple visits.
Our product isn't in home.
Self administered or caregiver administered meaning apparent for their child and in our previous slides, we shared the average age and be simple for was six and a half years.
So these are young patients that generally need a caregiver to apply it but this is a once a day application.
For up to 12 weeks, but maybe less.
Okay, Great. That's Super helpful. And then I had one more question unrelated to two jurisdiction with the validation of your platform technology. I'm. Just wondering are you more excited about the current early pipeline that you have or is the excitement really more about the optionality towards new opportunity.
<unk>.
Oh.
It's really both.
I am excited because two O six was so successful.
And the visa before trial and really.
Consistent with what we've seen and even better than what we saw and be simple one and two but then the fact that we're able to because we know where.
Being able to treat a virus with molluscum and inhibit viral replication and then when we see something so similar with SB one nine.
And then we know in women's health that external genital warts has has very few solutions. There you know you have an opportunity because that's also a virus. So it's in the dermatology area, but.
Yes.
On the book in the <unk> nine in between but being a virus not necessarily dermatological not at all but anyway. We've got that you know those three.
Components that come together, but then when we look at our acne.
Acne and Theres still have been I guess Theres now one approved product in the last 20 years and the opportunity for us to have a safe product that.
Patients, who don't want to go on an antibiotic we have that option. So we continue to be excited about you know some of our if you will older data, but its just validated by the newer data.
Okay great.
That's it for me, thanks, guys and congrats again.
Alright, Thanks, Jennifer.
I will now turn the call back over to Paula for closing remarks.
Okay. Thank you Mr. Han Thank you, Jonathan John and Jennifer for your questions. We look forward to.
Our continued opportunities to update you and we look forward to hopefully talking to you again with them.
Within the quarter.
So thank you for all attending.
Have a great day.
Ladies and gentlemen. This concludes today's conference call you may now disconnect presenters. Please hold.
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