RM LAW, P.C. announces that a class action lawsuit has been filed on behalf of all persons or entities that purchased or otherwise acquired Novan, Inc. (NASDAQ: NOVN) (“Novan” or the “Company”) securities between September 26, 2016 and January 26, 2017, inclusive (the “Class Period”) and/or pursuant to its September 26, 2016 initial public offering (“IPO”).
Novan shareholders may, no later than January 2, 2018, move the Court for appointment as a lead plaintiff of the Class. If you purchased shares of Novan and would like to learn more about these claims or if you wish to discuss these matters and have any questions concerning this announcement or your rights, contact Richard A. Maniskas, Esquire toll-free at (844) 291-9299 or to sign up online, click here.
The complaint charges Novan, certain of its officers and directors, and the underwriters of its IPO with violations of the Securities Act of 1933. It also charges Novan and its former CEO and CFO with violations of the Securities Exchange Act of 1934. Novan is a clinical-stage drug development company that focuses on the development and commercialization of nitric oxide-based therapies in dermatology. At all relevant times, Novan’s lead product candidate was SB204, a once-daily topical gel for the treatment of acne vulgaris.
The complaint alleges that in the IPO Registration Statement and Prospectus, and throughout the Class Period, defendants made materially false and misleading statements regarding Novan’s business and outlook, specifically regarding SB204. For example, defendants repeatedly stated that Novan had commenced and performed two identically designed Phase 3 clinical trials for SB204. Defendants’ statements 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. As a result of these false statements, the Company’s outlook and expected financial performance were not accurately represented to the market at all relevant times. As a result of defendants’ false statements 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 per share on December 7, 2016.
Before the market opened on January 27, 2017, Novan announced the top-line results of its two Phase 3 clinical trials of SB204. Although the drug hit all of its goals in one of the trials, it failed to beat a placebo in the other trial. On this news, the price of Novan stock dropped from a close of $18.70 per share on January 26, 2017, to a close of $4.86 per share on January 27, 2017, a decline of 74%.
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. Then, on June 5, 2017, Novan announced that it was replacing its CEO and co-founder and that it was laying off 20% of its workforce. As a result, the price of Novan stock fell on June 6, 2017. Additional disclosures on August 2, 2017 revealed that Novan was retreating further from SB204, signaling a shift in Novan’s primary focus and causing the stock to drop more than 17% to close at $4.54 that day.
If you are a member of the class, you may, no later than January 2, 2018, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as “lead plaintiff.” Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain RM LAW, P.C. or other counsel of your choice, to serve as your counsel in this action.