Item 1.01. Entry into a Material Agreement.
On June 17, 2021, Novan, Inc., a Delaware corporation (the "Company"), entered
into an underwriting agreement (the "Underwriting Agreement") with Cantor
Fitzgerald & Co. (the "Underwriter"), pursuant to which the Company agreed to
issue and sell an aggregate of 3,636,364 shares of the Company's common stock,
par value $0.0001 per share (the "Common Stock"), to the Underwriter at a price
to the public of $11.00 per share, less underwriting discounts and commissions
(the "Offering"). Pursuant to the terms of the Underwriting Agreement, the
Company granted the Underwriter a 30-day option to purchase up to an additional
545,454 shares of Common Stock at the public offering price, less underwriting
discounts and commissions (the "Option Shares"). The Offering closed on June 21,
2021.
The net proceeds to the Company from the Offering, excluding any exercise by the
Underwriter of its 30-day option to purchase any of the Option Shares, are
approximately $37.6 million before deducting estimated offering expenses payable
by the Company. The Company intends to use the proceeds from the Offering,
together with existing cash, to fund research and development program
activities, including (i) preparing for and seeking regulatory approval of its
product candidate SB206 as a treatment for molluscum contagiosum, (ii) planning
for potential commercialization of SB206 and (iii) continuing research and
development activities primarily related to its product candidate SB204 as a
treatment for acne vulgaris, as well as for general corporate purposes,
including general and administrative expenses, capital expenditures and working
capital.
The Offering was made pursuant to the Company's effective shelf registration
statement on Form S-3 (No. 333-236583), filed with the Securities and Exchange
Commission ("SEC") and declared effective by the SEC on April 10, 2020,
including a prospectus contained therein dated as of April 10, 2020, as
supplemented by a prospectus supplement, dated June 17, 2021.
The Underwriting Agreement contains customary representations, warranties and
covenants of the Company and also provides for customary indemnification
obligations of the Company and the Underwriter, including for liabilities under
the Securities Act of 1933, as amended. The representations, warranties, and
covenants contained in the Underwriting Agreement were made only for purposes of
such agreement and as of specific dates and were solely for the benefit of the
parties to such agreement. The foregoing summary of the Underwriting Agreement
is qualified in its entirety by reference to the Underwriting Agreement, a copy
of which is attached hereto as Exhibit 1.1 and incorporated herein by reference.
Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P., counsel to the
Company, delivered an opinion as to legality of the issuance and sale of the
Common Stock in the Offering, a copy of which is attached hereto as Exhibit 5.1
and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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