Novan’s anti-acne drug has some effect, but is not worth investing in


Novan ($NOVN) is a company focused on using nitric oxide to treat skin conditions. Nitric oxide is a curious molecule with a ton of different effects in the body. It’s an incredibly potent vasodilator and has some use in the immune system (among many, many other things nitric oxide does in the body). It’s this immune system function that researchers became particularly interested in a few years ago. Eventually, scientists discovered that immune cells were using nitric oxide to kill disease-causing microbes. Novan is hoping that they can capitalize on the anti-microbial properties of nitric oxide. Their first attempt, a gel called SB204, is in Phase 3 trials for acne.

The Phase 3 data for SB204 should be released sometime in Q1 of 2017. Based on the research I’ve done, I think that SB204 will miss one of the primary endpoints in the Phase 3 trial. Moreover, even if SB204 makes all of the endpoints, I’m not confident that SB204 warrants approval by the FDA.

SB204 is mildly effective

First, I’ll talk about the good. The nitric oxide treatment had a very clear effect on the raw number of lesions (you and I would call them “pimples”). The 4% concentration (which is the concentration that will be used in the Phase 3 trial for SB204) significantly decreased both “inflammatory” and “non-inflammatory” pimples.

This chart shows that SB204 is effective at decreasing the number of pimples.
4% concentration of SB204 significantly decreased the number of lesions (pimples)

The treatment is safe enough. Some of the subjects suffered from the side-effects which are commonly associated with topical treatments — dryness of skin and things — but nobody had serious safety issues.

However, there’s some bad news as well. In the Phase 2 study, the researchers had each subject scored on a scale of 0 to 4, where 0 was “clear skin” and 4 was “severe” acne. The subjects were scored at the beginning of the study and 12 weeks later, when the study had concluded. Only 1 subject (out of 41) who was treated with SB204 had their score drop at least 2 points to “almost clear” or “clear”.

This is critical because the severity scoring is one of the three primary outcome measures for the SB204 Phase 3 trial. The Phase 3 trial is the same length and uses the same concentration (4%) of the drug, so I see no reason how that outcome measure could be successful.

My other issue is with the treatment itself. The researchers aren’t completely positive how SB204 works, but it’s probably by killing the bacteria on the face that are causing the acne. If this is the case:

  1. the treatment is a temporary fix
  2. there are no real advantages to SB204 over the myriad of other acne treatments on the market

The study didn’t check on the patients after the treatment stopped, so we can’t tell for certain whether the drug is a temporary fix.

Not worth the investment

Ultimately, this drug from Novan ($NOVN) just isn’t worth investing in. Novan has some other drugs in the pipeline, and maybe I’ll get a chance to update this post with due diligence on one of those. NOVN should be releasing Phase 3 data sometime this quarter, but I don’t have my fingers crossed for anything too exciting.

Prediction: Phase 3 Failure

SB204’s Phase 3 trial is testing an outcome which fell flat during Phase 2. In addition, the case for the treatment itself is not compelling.

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