Novan enters into agreement to sell substantially all of its assets, including Berdazimer Gel, 10.3% and files for Chapter 11 protection

The Company continues to operate its business as a “debtor-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Company also entered into a secured DIP credit facility with Ligand in the principal amount of $15.0 million. The APA governs the sale of substantially all the assets of the Company for $15 million to be paid in cash at closing. The cash payable at closing will be reduced dollar-for-dollar by the outstanding balance of the DIP credit facility which will be repaid at closing. The transaction will be subject to approval by the Bankruptcy Court and compliance with agreed upon and Bankruptcy Court-approved bidding procedures allowing for the submission of higher or otherwise better offers, and other agreed-upon conditions. In addition, on July 14, 2023, the Company entered into a bridge loan with Ligand for the principal amount of $3.0 million. This pre-petition loan provided needed working capital to the Company for general corporate purposes and is secured by the assets of the Company. The pre-petition bridge loan will be rolled into the DIP credit facility after Bankruptcy Court approval of the DIP credit facility. As the Chapter 11 Case progresses, the Company plans to continue to work with the FDA to progress towards potential approval of berdazimer gel, 10.3% (SB206), with a PDUFA goal date of January 5th, 2024. In the second quarter of 2023, the Company received its mid-cycle review communication from the FDA, in addition to the manufacturing facility’s pre-approval inspection and establishment inspection report.