Ligand Pharmaceuticals Incorporated (NasdaqGM:LGND) entered into a stalking horse asset purchase agreement to acquire Substantially All of the Assets of Novan, Inc. for $15 million on July 17, 2023. Novan entered into a ?stalking horse? asset purchase agreement with Ligand Pharmaceuticals to sell substantially all of the assets of the Company and its subsidiaries, including EPI Health (the ?Purchased Assets?) for an upfront payment of $15 million. 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 Purchase Agreement provides that the Company will pay a break-up fee to Ligand equal to $450,000 upon termination of the transaction in certain circumstances, including the entry into or consummation of an alternative transaction for the Purchased Assets with a party other than Ligand. Ligand Pharmaceuticals provide up to $15 million in DIP financing to Novan inclusive of a $3 million bridge loan already funded.

The transaction is part of a sale process under Section 363 of the Bankruptcy Code that 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. The transaction is expected to close in the third quarter of 2023. Gerald F. Roach; Christopher B. Capel; James R. Jolley of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. and Derek Abbot of Morris, Nichols, Arsht & Tunnell LLP acted as legal advisors for Novan. Craig Wolfe of Morgan, Lewis & Bockius LLP acted as legal advisor for Ligand Pharmaceuticals. Birch Lake is acting as financial advisor for Ligand Pharmaceuticals. Novan engaged Raymond James & Associates, Inc. and SIERRACONSTELLATION PARTNERS LLC. as financial advisor.

Ligand Pharmaceuticals Incorporated (NasdaqGM:LGND) completed the acquisition of Substantially All of the Assets of Novan, Inc. on September 27, 2023.