Novan (NOVN) Acquires EPI Health

Novan, Inc. (“the Company” or “Novan”) (Nasdaq: NOVN), today announced its acquisition of EPI Health, LLC (“EPI Health”), a specialty pharmaceutical company focused on the U.S. dermatology market. Novan will host a conference call and webcast, today, March 11, 2022, at 8:30 a.m. ET (details below).

“As we prepare for the planned NDA submission of our lead product candidate, SB206 (berdazimer gel 10.3%), it was imperative that we evaluate a broad spectrum of options for potential commercialization. This acquisition creates a robust commercial infrastructure for Novan, and I believe sets the stage for the future success of the Company. As of today, we have launched Novan as a fully-integrated specialty dermatology company with a solid pipeline of development candidates complemented by a commercial foundation to further position Novan to realize the value of each,” commented Paula Brown Stafford, Chairman and Chief Executive Officer of Novan. “I am thoroughly excited about the synergies this transaction offers as it has the potential to propel Novan into a leading global dermatology company. I am pleased to welcome EPI Health to the Novan family.”

EPI Health is a growing specialty dermatology company that has launched and markets innovative prescription therapies to dermatologists to improve the quality of life of patients. EPI Health’s significant product portfolio addresses patient needs across psoriasis, rosacea, dermatosis and acne. Additionally, EPI Health has a seasoned sales force with a proven commercial platform and foundational relationships across the dermatology community.

Following the acquisition, Novan will employ approximately 100 staff, including sales personnel currently covering 42 sales territories in the U.S.

“The combined entity has the opportunity to be a force multiplier for both companies, creating a pharmaceutical engine that has the capabilities to discover, research, develop innovative therapies and bring medications to patients with dermatological needs,” added John Donofrio, President of EPI Health and now Executive Vice President and Chief Operating Officer of Novan.

Under the terms of the transaction, Novan has acquired EPI Health for an upfront purchase price of $27.5 million, consisting of $11.0 million in cash and $16.5 million in a seller’s note with a 24-month term. Based on financial performance of EPI’s products and the occurrence of other events, Novan will pay up to an additional $23.5 million in potential future milestone payments, certain of which may be paid in cash or in shares of Novan common stock at Novan’s discretion.

Advisors

H.C. Wainwright & Co. acted as exclusive financial advisor to Novan in connection with the transaction. Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. served as Novan’s legal counsel, Blank Rome LLP served as EPI Health’s legal counsel and Baker & McKenzie LLP served as legal counsel to H.C. Wainwright & Co. in connection with the transaction.

For further information regarding all terms and conditions contained in the definitive merger agreement, please see Novan’s current report on Form 8-K filed in connection with the transaction.

Conference Call and Webcast

Novan management will host a conference call and webcast presentation for investors, analysts, and other interested parties to discuss the acquisition today, March 11, 2022, at 8:30 AM ET.

Interested participants and investors may access the conference call by dialing (844) 707-0661 (domestic) or (703) 318-2240 (international) and referencing conference ID:4166574. The live webcast will be accessible on the Events page of the Investors section of the Novan website, novan.com, and will be archived for 90 days.

About EPI Health

Headquartered in Charleston, South Carolina, EPI Health is an established dermatology specialty company that has launched and markets innovative prescription therapies to dermatologists to improve patients’ quality of life. It is one of the fastest growing companies in the US dermatology community. EPI Health has an established sales force and commercial team with existing, deep market relationships across the dermatology community.

The current portfolio includes prescription medicines for patients with acne, rosacea, dermatosis, and psoriasis. EPI Health was a wholly owned subsidiary of Evening Post Group, LLC.

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