Novan Inc (NASDAQ: NOVN) shares are trading lower after Ligand Pharmaceuticals Incorporated (NASDAQ: LGND) announced that it has offered to acquire the company's assets.

The deal value includes $15 million in cash and provides up to $15 million in DIP financing to Novan, including a $3 million bridge loan already funded. 

Novan announced earlier today that it has filed for Chapter 11 reorganization and its entry into a stalking horse acquisition offer with Ligand. 

The transaction is designed to preserve and maximize the value of Novan's commercial business and berdazimer gel development assets. 

Berdazimer gel is in development for molluscum contagiosum infection, which has a filed new drug application with the FDA with an assigned PDUFA goal date of January 5, 2024. 

In Q2 2023, the company received its mid-cycle review communication from the FDA and the manufacturing facility's pre-approval inspection and establishment inspection report.

Ligand acquired milestone and royalty rights to berdazimer gel in 2019. 

Suppose Ligand's bid is successful in the anticipated bankruptcy sale and auction process. In that case, Ligand will acquire the Novan assets and, consistent with Ligand's business model, will seek to out-license or sell the existing development programs and commercial business assets of Novan.

Novan has engaged Raymond James & Associates to advise on its strategic options, including the process of selling its assets in connection with the Chapter 11 Case. 

As previously disclosed, the company has pursued financing, strategic alternatives, and conserving cash. 

Price Action: NOVN shares are down 68.1% at $0.20 on the last check Monday.

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This article Why Are Novan Shares Nosediving Today? originally appeared on Benzinga.com

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