NEW YORK, Nov. 24, 2017 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Novan, Inc. (“Novan” or the “Company”) (NASDAQ:NOVN) and certain of its officers. The class action, filed in United States District Court, for the Middle District of North Carolina, and docketed under 17-cv-01066, is on behalf of a class consisting of investors who purchased or otherwise acquired Novan’s stock: (1) pursuant and/or traceable to Novan’s false and misleading Registration Statement and Prospectus, issued in connection with the Company’s initial public offering on or about September 26, 2016 (the “IPO” or the “Offering”); and/or (2) on the open market between September 26, 2016 and August 1, 2017, both dates inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”).
If you are a shareholder who purchased Novan securities between September 26, 2016, and August 1, 2017, both dates inclusive, you have until January 2, 2018, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and amount of shares purchased.
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Novan is a clinical-stage drug development company that focuses on the development and commercialization of nitric oxide-based therapies in dermatology.
Leading up to and during the Class Period, Defendants represented that Novan had commenced two identically designed Phase 3 clinical trials of SB204, a once-daily, topical gel for the treatment of acne vulgaris. SB204 was the Company’s lead product candidate, and information regarding its development and commercialization was important to investors.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business and outlook, specifically regarding SB204. Specifically, (i) Defendants repeatedly stated that Novan had commenced and performed two identically designed Phase 3 clinical trials of SB204; (ii) Defendants falsely stated that the two Phase 3 clinical trials were identical and omitted specific facts as to why the two critical trials were, in fact, not identical; and (iii) as a result for the foregoing, the Company’s outlook and expected financial performance were not accurately represented to the market at all relevant times.
During the Class Period, the price of Novan stock climbed significantly above the IPO price of $11.00 per share, reaching as high as $29.09 on December 7, 2016.
Before the market opened on January 27, 2017, Novan announced the top-line results of its two “identical” Phase 3 clinical trials of SB204. Although the drug reached all of its goals in one of the trials, dubbed NI-AC302, it failed to beat a placebo in the other separate Phase 3 study, called NI-AC301.
On news of these discordant results in what were described to be two identical studies, the price of Novan stock fell sharply. After closing at $18.70 on January 26, 2017, the stock opened at $4.50 per share on January 27, 2017, fell to a low of $3.52, and ultimately closed at $4.86, a decline of 74%, on abnormally high trading volume of more than eight million shares.
Subsequent disclosures regarding SB204 demonstrated that the two Phase 3 clinical trials of SB204 were not “identical.”
Following these disclosures, several executives left the Company. On March 22, 2017, Novan announced that its Chief Financial Officer (“CFO”), Defendant Richard Peterson, was leaving and would be replaced, “effective immediately,” by interim CFO William L. Hodges. On May 5, 2017, Novan disclosed that the Company’s Chief Medical Officer, M. Joyce Rico, had resigned. Then, on June 5, 2017, Novan announced that it was replacing its Chief Executive Officer (“CEO”) and co-founder, Defendant Nathan Stasko, with G. Kelly Martin, a member of the Company’s Board of Directors, who would become interim CEO. Novan also announced that it was laying off 20% of its workforce and that despite previously assuring investors that it was committed to SB204, Novan was executing a plan to turn its focus to earlier-stage compounds.
Following the Company’s June 5, 2017 disclosures, the price of Novan stock fell 5% to close at $4.64 that day. The stock extended its losses on June 6, 2017, falling 4% to close at $4.45.
Additional disclosures on August 2, 2017 informed the market that Novan would be retreating further from SB204, stating that Novan’s “[p]rimary clinical focus over the next 24 months” would be “antiviral clinical work in EGW and Molluscum” and that the “[a]cne indication and path forward [would] be largely driven by regulatory clarity.” On this news, the price of Novan stock declined from $5.48 on August 1, 2017, to $4.54 on August 2, 2017, a drop of more than 17%.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby