Novan Expands Nitric Oxide Dermatology Business Partnership with Sato in Japan

Novan announced that the Company has expanded its partnership with Sato Pharmaceutical, a Japanese company with a prescription pharmaceutical business specializing in dermatology, to include Novan’s topical nitric oxide-releasing product candidate SB206 for the treatment of viral skin infections including warts and molluscum contagiosum.

The initial licensing agreement executed in January of 2017 focused on the development and commercialization of SB204 for the treatment of acne vulgaris in Japan. This amended license agreement provides Sato with the exclusive rights to also develop and commercialize Novan’s SB206 and related dosage forms for the treatment of viral skin infections in Japan. Under the terms of the amendment, Novan will receive an upfront payment from Sato of 1.25 billion JPY (approximately $11.0 million) to be paid in installments over the next 12 months. As part of the revised agreement, the parties adjusted potential future development and regulatory milestone payments, added additional sales-based milestone payments and adopted a tiered royalty structure on net sales of SB204 and SB206 in Japan.

“We are pleased to announce this expanded partnership with Sato to now include SB206,” said Nathan Stasko, Ph.D., President and Chief Scientific Officer of Novan. “Japan is the second largest dermatology market in the world where skin diseases such as acne, molluscum and warts have substantial prevalences. Continued interest from a closely aligned and strong partner like Sato further reinforces the science behind our nitric oxide platform and its translation into a broad array of dermatological disorders.” Dr. Stasko concluded his commentary by stating, “The potential opportunities across a multitude of global markets for our technology are significant. Expanding our activity within Japan is an important and tangible step in advancing that vision.”

Paula Brown Stafford, Chief Development Officer of Novan, added, “In addition to the expansion of our partnership to include viral skin infections, Novan continues to support Sato’s clinical activities with SB204 for acne in Japan. We are pleased to announce that based on Sato’s progress, Novan is due to receive an SB204 milestone payment in the fourth quarter of 2018 and our team is committed to advancing acne care globally as a meaningful and important indication within dermatology.”

While Novan and Sato will work closely together on the progression of these assets, Sato is responsible for funding the development and commercial costs for the programs that are specific to Japan. Novan retains the rights to manufacture the active pharmaceutical ingredient of SB204 and SB206, which Novan will supply to Sato for commercial purposes.

Novan’s antiviral development program with SB206 includes a completed Phase 2 trial in patients with external genital warts and an ongoing Phase 2 trial in patients with molluscum contagiosum. As previously communicated, the 108-patient trial conducted in patients with external genital and perianal warts, demonstrated that topical application of SB206 12% once-daily demonstrated statistically significant complete clearance of genital warts compared to vehicle after 12 weeks of treatment. Additionally, the ascending dose Phase 2 trial in 256 patients with molluscum contagiosum enrolled ahead of schedule and favorable tolerability with SB206 has allowed escalation to the highest dose of 12% twice-daily. Top line results for Cohorts 1 through 3 of this study are targeted no later than mid-November.