Johnson Fistel, LLP Files Class Action Suit against Novan, Inc.; Lead Plaintiff Deadline is January 2, 2018
SAN DIEGO—(PRNewswire)—November 5, 2017
Johnson Fistel, LLP announced a class action has commenced in the Middle District of North Carolina on behalf of all purchasers of Novan, Inc. (NASDAQ: NOVN) (“Novan” or “Company”) common stock during the period between September 26, 2016 and January 26, 2017 (the “Class Period”), including those who purchased Novan stock pursuant and/or traceable to the Registration Statement and Prospectus issued in connection with the Company’s initial public offering on or about September 26, 2016 (“IPO”).
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.
Plaintiff seeks to recover damages on behalf of all purchasers of Novan stock during the Class Period, including those who purchased Novan stock in connection with the Company’s IPO (the “Class”).
If you wish to serve as a lead plaintiff, you must move the Court no later than January 2, 2018. If you wish to discuss this action, have any questions concerning this notice, or your rights or interests, please contact Jim Baker (firstname.lastname@example.org) at 619-814-4471. If you email, please include your phone number.
If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.johnsonfistel.com. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice or may choose to do nothing and remain an absent class member.
About Johnson Fistel, LLP:
Johnson Fistel, LLP is a nationally recognized shareholder rights law firm with offices in California, New York and Georgia. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits. For more information about the firm and its attorneys, please visit http://www.johnsonfistel.com. Attorney advertising. Past results do not guarantee future outcomes.