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Wednesday, June 12, 2024

Novan files for Ch. 11 bankruptcy, agrees to sell assets

Durham-based Novan, which has been developing treatments for skin diseases, has filed for Chapter 11 bankruptcy court protection and has agreed to sell most of its assets for $15 million.

The buyer of the assets is Ligand Pharmaceuticals, which is based in San Diego. Novan also struck a deal with Ligand for a $3 million loan. Ligan is also providing debtor-in-possession financing of $15 million to Novan that will be repaid when the deal for its assets closes.

The transactions will require U.S. Bankruptcy Court approval.

Novan, a spinout from UNC Chapel Hill, said in a Securities and Exchange Commission filing that it plans to continue working with the U.S. Food and Drug Administration for approval of a gel to treat molluscum contagiosum, an infection caused by a poxvirus.

Last month, Novan had warned investors that its market capitalization had fallen below NASDAQ listing requirements and that it was pursuing financing and strategic options. It had until Dec. 27 to regain compliance.

As of March 31, 2023, Novan had a total cash and cash equivalents balance of $12.5 million. The company reported a net loss of $14.1 million in the first three months of the year.

In March, Novan entered into a securities purchase agreement with an institutional investor and closed a $6 million direct offering.

As recently as February 2021, Novan’s stock closed at $25.50. It was at 21 cents, down 40 cents, in Monday morning trading. The company’s initial public offering was in 2016.

Machelle Sanders, who is the N.C. Secretary of Commerce, sits on Novan’s baord.

 

 

 

Chris Roush
Chris Roush
Chris Roush is executive editor of Business North Carolina. He can be reached at croush@businessnc.com.

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