Pharmaceutical company Novan Inc. has laid off 20 percent of its workforce and reassigned its chief executive officer to a new role, as the company looks to turn around its slumping finances and broaden the uses for its technology.
Nathan Stasko – who took the company public last year with a $51.9 million initial public offering – was removed from the role of chief executive officer and made chief scientific officer, the company said on Monday.
The announcement comes as the company faces shrinking cash reserves. The company said in a release that it believes it has enough cash to fund operations through the end of 2017, but that it would need additional funding to get its pipeline of drugs approved the U.S. Food and Drug Administration.
Novan, which is developing several dermatology treatments using nitric oxide, has seen its share price plummet since it went public in 2016. The company, which moved its headquarters to Morrisville from Durham shortly after going public, saw its stock price fall nearly 78 percent in January after one of its acne drugs posted mixed results in clinical trials.
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Its share price has never recovered.
The company plans to meet with the FDA in the third quarter of 2017 to seek clarity on the acne drug’s path forward in the regulatory process, but it is also tasking its former CEO to find more medical uses for nitric oxide.
The 20-percent workforce reduction is meant to preserve cash while the company navigates the approval process and seeks more uses for its nitric oxide technology. The firm had around 60 employees as of April.
“This action will accomplish three things: reduce near term operating costs and preserve cash on our balance sheet, enable refined focus around key projects, and align necessary skills to near term tasks and activities,” the company said in a release.
Kelly Martin, currently a non-executive director at the company, will assume the role of CEO on an interime basis, the company said. Bob Ingram, the current chairman of the Novan’s board of directors, will now serve as the non-employee executive chairman of the board.
In May, Novan’s chief medical officer also resigned.