With markets in a freefall over COVID-19, the smart play is on small cap biotechs. We have played a number of winners and continue to hunt for the next triple-digit runner. Last week, Bellerophon Therapeutics Inc (NASDAQ:BLPH) jumped 430% on Friday. The next stock we see that might have triple-digit potential is Novan Inc (NASDAQ:NOVN).
Novan, Inc., 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.
NASDAQ:NOVN Technical Picture
On Friday, NASDAQ:NOVN broke through the downtrend line. This is a signal that the stock wants to go higher and that dips are likely to be bought. Immediate resistance is the $1 level. A move above $1 and we can see $2 rather quickly and will present strong resistance.
NASDAQ:BLPH exploded higher last week after the FDA granted emergency expanded access allowing its proprietary inhaled nitric oxide (iNO) delivery system, INOpulse®, to immediately be used for the treatment of COVID-19. Fabian Tenenbaum, Chief Executive Officer of Bellerophon, said:
“Based on currently available data and its significant role in the immune response, we believe INOpulse has the potential to be a safe and effective treatment for COVID-19. INOpulse technology utilizes targeted pulsatile delivery of inhaled nitric oxide, providing important antiviral potential, as well as improved arterial oxygenation. Importantly, INOpulse is designed to treat patients in the outpatient setting, which may be critical in helping combat the further spread of the virus and significantly alleviate the mounting impact on hospitals and intensive care units. We look forward to supporting patients and physicians in order to help address the current COVID-19 global health pandemic.”
This is a huge development for NASDAQ:BLPH as any treatment developed has multi-billion dollar potential. This is why the stock jumped over 400% and why it will continue climbing as dips are bought and shorts scramble to cover.
Last month, NASDAQ:NOVN raised $5.95 million after selling 18,333,334 shares of common stock, at a combined effective public offering price of $0.30 per share of common stock (or pre-funded warrant) and accompanying common warrant. The common warrants have an exercise price of $0.30 per share, are exercisable immediately and expire five years from the date of issuance.
NASDAQ:NOVN offers a compelling risk/reward setup at current levels. The offering was just done at $.30 a share and represents solid support from which dips can be bought. Furthermore, NASDAQ:NOVN now has plenty of cash and just a $23 million market cap. We are just one press release away from NASDAQ:NOVN exploding higher. Buckle your seat belts and get ready. Good luck to all!
If you are looking for more coronavirus ideas, check out our new article Coronavirus: Secondary Stocks to Watch!
Disclosure: We have NO position in NASDAQ:NOVN or NASDAQ:BLPH and have NOT been compensated for this article.