Novan, Inc.

Good morning and welcome to the Novant, Inc. quarterly update conference call and webcast. As a brief reminder, all participants are currently in the listen-only mode. If anyone requires operator assistance during the event, please press star zero on your telephone keypads. Following the presentation, there will be a question and answer session. Note that this webcast is being recorded at the company's request and a replay will be made available on the company's website following the end of the event. At this time, I'd like to remind our listeners that remarks made during this webcast may state management's 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 NoVAN's current expectations and actual results could differ materially. As a result, you should not place under reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from this contemplated by such forward-looking statements are discussed in the periodic reports NoVAN files with the Securities and Exchange Commission. These documents are available in the Investors section of the company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Joining us on today's call from the Novant leadership team are Paula Brown Stafford, Chairman, President, and Chief Executive Officer, and John M. Gay, Chief Financial Officer. I would now like to turn a call over to Paula Brown Stafford, Chairman, President, and Chief Executive Officer. Ma'am, please proceed.

Thank you, Jesse. Good morning and welcome all to NOVAN's quarterly update. To start and reiterate, NOVAN is a world leader in nitric oxide-based science. And we're bringing a technology platform to the clinic to support delivering safe and efficacious therapies, looking to be the world leader. The company has really never been in a stronger position. It's been a transformational year for us, and it's a testament to our team and to our commitment. We have made significant progress across our three lead programs. In June, for SB206, our lead product candidate, we reported positive efficacy data for our pivotal phase three study. And in September, we reported our final favorable safety data as expected. Now we're advancing towards an NDA submission, and we're targeting quarter three of 2022, less than a year away, and we are planning for success. With SB204 for acne vulgaris, the most common form of acne, we are advancing towards a pivotal phase three study in 2023. And with SB019 for SARS-CoV-2, we announced yesterday additional positive preclinical data and our intent to advance towards an IND in the second quarter of 2022, and the initiation of a phase one trial in humans. In short, we are targeting three NDA submissions over the next three years. Each represents a significant market opportunity in the U.S. and beyond. Since June, we've had the chance to report out and recap our positive top-line results from the Phase 3 study. So while some of you are aware of the robust nature of our data and study results, we think it's important to now touch on it again as we believe it's indicative of the potential of our entire platform and other pipeline assets. And I'll share some updates regarding our pre-commercial activities that are now underway. As I mentioned, in June, we reported top-line efficacy and safety results at Week 12 for our pivotal Phase III study with SB206. The primary efficacy endpoint was complete clearance at Week 12 of all treatable lesions and that means lesions that were reported at baseline and any that erupted during the trial. You can see here that we saw a 12.7 percentage point difference at week 12, and even a 3.6 percentage point difference as early as the week 4 visit. With statistical significance at weeks 4, 8, and 12, And we believe this is also a clinically meaningful treatment difference at week 12 and perhaps before. We also achieved statistical significance for all four of our secondary endpoints when comparing our SB206 gel to vehicle, the placebo. Based on previous guidance from the FDA, we believe that we have met all criteria necessary to use B-simple-4 as our pivotal phase three study in our new drug application planned for 2022. Based on the strength of these results, we're focusing most, really nearly all, of NOVAN's resources on the NDA submission and all that supports a submission for NOVAN. Last quarter, we finalized the B-4 Safety Readout. Results were consistent with earlier studies and demonstrated a favorable safety profile. We also initiated pre-commercial activities. We're now focused over the next three quarters on our manufacturing PAI readiness, NDA enabling stability testing, and pre-NDA meeting preparation and conduct, all before submitting our NDA in the third quarter of next year as we're targeting. With that said, NOVAN is planning for success, which includes planning for commercialization of SB206, And last week, we announced our conditionally accepted brand name for SB206. Part of that planning includes reviewing the market potential and planning accordingly. There remains a need for an at-home solution for molluscum, a highly contagious skin infection mostly in children. The addressable market in the U.S. alone is approximately 6 million cases. Today, molluscum is either not treated or it's treated with an in-office procedure. There is currently no therapeutic alternative to Novan's SB206 product candidate for in-home use. So therefore, we expect there will be good reimbursement due to the lack of competitors and favorable efficacy and our favorable and efficacy and safety profile. In September, we initiated our commercial planning activities. This started with the selection of Cineos Health as our end-to-end commercial solution provider. And last week, we rehired Brian Johnson as our chief commercial officer. Brian brings tremendous commercial experience from a number of companies, including UCB and Galderma. In fact, while he was at Galderma, he served the role of chief digital officer, which I think is very important in today's world especially, and he helped launch seven dermatological products. Also last week, we announced that the FDA provided a response, as I mentioned, and conditionally accepted Consolis as the brand name for SB206. As is customary, we will request final acceptance of the brand name upon submission of the NDA. We're excited with the potential for Consolis, I really like this name, as we believe our product can be a kind solution for patients suffering from molluscum. Finally, work is underway with Cineos Health and our internal team of experts, Brian and others, to strategically position SB206 in the market ahead of a potential launch. I'd now like to spend a couple of minutes on an area of high interest. With additional and encouraging preclinical results that we shared publicly yesterday, we are advancing towards submission of an IND or SB019 for the treatment of SARS-CoV-2. Over the past 18 months, we've all been impacted by COVID-19. And during this time at Novan, we continued to expand the utility of our Nitrosil platform. We took the opportunity to evaluate the potential of our technology as an intranasal treatment option for COVID-19. After positive preclinical efficacy results observed in deterring transmission of the disease in vivo, we evaluated also in vivo the safety and toxicity of bradasmer sodium when intranasally administered via the SB019 formulation. We demonstrated in this 14-day repeat dosing GLP study that SB019 was well-tolerated at the highest dose tested, which was 14 milligrams per day. The intranasal administration of bradasm or sodium marks a notable extension to our previously assessed routes of administration. To date, all clinical administration has been via gel or cream with our Berdasmir sodium API. We've now unlocked, unlocked, just to say it again, unlocked real opportunity with a new possible route of administration for Berdasmir sodium. What Novan wants to focus on is an intranasal formulation that works against respiratory infectious diseases. So as Novan continues to progress this product, we strive to be prepared for COVID-19 or possibly other infectious diseases. Thus far, we continue to provide encouraging and positive preclinical data and continue to advance forward with a program with real differentiation and real opportunity. This is obviously a broader indication than our two lead assets, which are both dermatological products, suggesting, though, that our platform and API can apply in more ways than dermatological needs only. So enough of that. Let's transition to a discussion on our financial position at the end of the third quarter. John, will you cover our finances and broader opportunities for potential value creation?

Certainly. Thank you, Paula. Good morning, and thank you all for joining our update call today. This morning, we followed our 10Q for September, in addition to our corporate update press release. I'll point you to those reports for additional detail. However, I'll touch briefly on a few key points regarding our current positioning. As of the end of the quarter, we ended with $60 million in cash and cash equivalents. We expect that this balance, plus expected contractual payments to be received, provide us with the subvention capital to get us past our targeted Q3 2022 NDA submission for SB206. Our current expected runway gets assumed to Q4 2022, with our capital being focused on the continued progression of our platform, as Paula noted, primarily on the regulatory and supporting efforts to submit an NDA for SB206 and initial efforts to support commercialization for that asset. We believe getting a product candidate submitted to the FDA to be a transformative event for the company This is indeed an exciting time. In addition to the molluscum, acne, and COVID programs Paula discussed, we also have other opportunities with additional product candidates currently in our pipeline that represent potential value in the future, both in the U.S. and potentially in ex-U.S. geographies. This includes our SB4 and 4 candidate for atopic dermatitis, SB207 for genital warts, and NVN 4100 for companion animal health. While these assets are currently planned for progression internally, we do continue to look for potential avenues to move these assets forward, including with potential partners or other strategic arrangements. With that, I'll turn it back to Paula.