NOVN stock
Biotech

Is A Buyout Coming In NOVN Stock?

Last month we told our readers and subscribers that NOVN stock was gearing up for a big move when the stock was trading at just $.40 a share. Fast forward a month later and many are sitting on gains of 0ver 200%. We said at the time:

we think now the low is in and that Novan stock is due for a triple-digit run. Major resistance is at the $1 level. A break above $1 and there’s nothing but blue skies for Novan stock. As we take a closer look, we are just one press release away from NASDAQ:NOVN exploding higher.

As you can see from the chart, the $1 level was indeed major resistance and NOVN stock blasted through that level on over 300 million shares. This move now opens the door for a run to $3 and close the gap.

NOVN Stock Daily Chart

About NOVN Stock

First up, here’s a little background info for those that aren’t familiar with NOVN stock.

Novan, a clinical development-stage biotechnology company, focuses on the development and commercialization of nitric oxide-based therapies to treat dermatological and oncovirus-mediated diseases. Its clinical-stage product candidates include SB206, a topical anti-viral gel, which is in Phase III pivotal trials for the treatment of patients with external genital warts, and Phase III clinical trial for the treatment of molluscum contagiosum; and SB204, a topical monotherapy that is in Phase III pivotal clinical trials for the treatment of acne vulgaris.

The company also develops SB414, a topical cream, which has completed Phase Ib trial for the treatment of inflammatory skin diseases, such as psoriasis and atopic dermatitis; and SB208, a topical anti-fungal gel that is in Phase II proof-of-concept trial for the treatment of athlete’s foot and fungal nail infections. In addition, it develops SB207, a product candidate for additional anti-viral programs.

The company has a license agreement with Sato Pharmaceutical Co., Ltd.; and a strategic alliance with Orion Corporation. Novan, Inc. was founded in 2006 and is headquartered in Morrisville, North Carolina.

Buyout Rumors

Many subscribers have reached out to us about a rumor that Ligand Pharmaceuticals is going to buyout Novan. A buyout from Ligand makes sense as the two companies already have a working relationship. Last year they signed a deal as follows:

  • Novan received $12 million of non-dilutive capital
  • Ligand received milestones and tiered royalty for North America SB206 molluscum indication

The problem is that trial data regarding SB206 failed to achieve statistically significant results for the primary endpoint of the trial – which was the clearance of molluscum at week 12 of treatment. Despite failing to achieve significant goals, the company touted the drugs “near statistical significance” and positive portions of both trials as evidence that the drug does have a measurable improvement in patients.

This news has put Ligand into a bind on what to do next. At $1.23 a share, NOVN stock has a market cap of just $95 million. Ligand, on the other hand, has a market cap of $2 billion. It makes sense for Ligand to just purchase Novan and bring the company in-house to do research and development.

NOVN Stock A COVID-19 Play

The reason a buyout of Novan makes sense is that the company is now a Covid-19 play. Have a look at how NOVN stock is tackling COVID-19 with nitric oxide.

According to George Washington University, nitric oxide treatment can be pivotal in the world’s fight against SARS-CoV-2, the coronavirus that causes COVID-19. Adam Friedman, MD, interim chair and professor in the Department of Dermatology at the GW School of Medicine and Health Sciences and co-senior author of the review, said:

“Nitric oxide plays key roles in maintaining normal vascular function and regulating inflammatory cascades that contribute to acute lung injury (ALI) and acute respiratory distress syndrome (ARDS). Interventions that are protective against ALI and ARDS can play a critical role for patients and health systems during the pandemic.”

And what company is at the center of treating COVID-19 with nitric oxide? Novan!

Don’t Give Up On SB206

Even if a buyout doesn’t materialize, there is still potential with SB206. Novan’s current cash position will be sufficient to fund costs associated with conducting an additional Phase 3 pivotal trial for SB206 as a treatment for molluscum, or B-SIMPLE4 (Berdazimer Sodium In Molluscum Patients with Lesions). Since June 1, 2020, the Company has secured approximately $16.9 million in capital from the use of common stock purchase agreements with Aspire Capital Fund, LLC, and the exercise of common stock warrants sold in its March 2020 public offering.

The Company is targeting enrolling the first patient for B-SIMPLE4 in September 2020 and, if the trial is initiated on this timetable and not further impacted by the COVID-19 pandemic, top-line efficacy results would be targeted for late in the second quarter of 2021.

Success is critical as currently there are no U.S. Food and Drug Administration-approved therapies for the treatment of molluscum. Treatment choices for patients, the majority of whom are below the age of 10, including in-office and often painful, physician-administered scraping, freezing, burning, and blistering treatments. The only other choices appear to be off-label prescriptions and over-the-counter products with no clinical data that support a molluscum indication and therefore have no proven clinical efficacy and an unknown safety profile. The Company believes that SB206 as a topical, at-home, caregiver-applied therapy with a rapid treatment benefit if approved, would satisfy an important patient-care need for the treatment of molluscum.

Bottom Line

We don’t recommend anyone to trade on rumors or innuendo. It’s pure speculation and we don’t believe investors should gamble. It’s best to focus on NOVN stock and what the company’s current situation is and its potential. SB206 is advancing and its proprietary Nitricil technology puts the company at the center of treating COVID-19 when it comes to nitric oxide. With plenty of cash and these catalysts, we don’t believe a buyout is necessary for investors to see big returns in NOVN stock. All it takes is one pr and NOVN stock is back trading at $3. All investors need is a little patience and to buckle up and enjoy the ride.

As always, good luck to all (except the shorts)!

We will be updating our subscribers as soon as we know more. For the latest updates on NASDAQ:NOVN, sign up today!

Disclosure: We have no position in NASDAQ:NOVN or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article.

Image by Gerd Altmann from Pixabay

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Is A Buyout Coming In NOVN Stock?
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