Novan, Inc. (NASDAQ:NOVN) Q4 2022 Earnings Call Transcript

John Gay: Yes, thanks Jeff. I’ll take the first question as it relates to cash needs and S&M prep. If you look back at kind of the historical activity that we had during 2022, we were utilizing about $8 million to $10 million of cash on a quarterly basis. Going forward end of Q1, that should probably look similar. Really as it relates to from here forward for the rest of the year, it’s going to be dependent upon, to Paula’s comment just a moment ago, the amount of activity that we do to prepare the market, if you will, so that number could vary, but I think it’s fair to say that if we look at that activity, I think the prior year numbers, call it $8 million to $10 million on a quarterly basis, we can probably bring that down a couple of million on a quarterly utilization just based on some of the cost conservation measures that we’re doing, and also paired with the amount of activity we’re able to do as it relates to preparing the field.

So again, that can be variable, again it is dependent upon our access to capital. Then as it relates to Sato, ex-U.S.–?

Paula Brown Stafford: Yes, so ex-U.S., we have active discussions going on in many countries in Asia Pacific, Europe, Canada, others, so there is interest–I was going to qualify that, but there is interest in Rhofade because it is a very good product and a number of companies and countries are interested in that. We continue to progress those discussions and, as always, as we can or when we can, we’ll share the details of those discussions and those potential agreements. Thanks for asking.

Jeff Jones: Okay. Just a quick follow-up on Sato, I believe they had a limited time to exercise rights in certain additional territories. How much time is left on that, or has that expired?

Paula Brown Stafford: It has not expired, and we’ve got a couple months to go before that expires. We are aware and we’ll proceed elsewhere if for some reason that doesn’t move forward, so there is interest in addition to Sato.

Jeff Jones: Great, thanks guys.

Operator: Thank you. The next question comes from Jennifer Kim with Cantor Fitzgerald.

Jennifer Kim: Hey, good morning. Thanks for taking my questions. I have two here. Maybe on the first, following up on a prior comment, the digital investments that you’re currently planning, what degree of additional investment would go into that, and is there a way to think about your potential reach through digital investment or analog to other similar approaches to launches? Then my second question is I know you’re not in a position to provide guidance just yet, but is there anything you can say on, I guess, expectations on the cadence of growth over time and maybe when you believe you’ll be in a position to provide guidance? Thanks.

Paula Brown Stafford: Thank you Jennifer. I’ll take the first, John Gay will take the second. I think in terms of the digital investments and the investment for the potential launch of berdamizer gel is–you know, for us is measuring over time and balancing over time the funds available and the win, etc. I think one thing to say is that it’s not just sales and marketing but it’s also manufacturing, so it’s to be able to launch in 2024 and hopefully in the first half of 2024, we need to manufacture product, so I’ll put that spend ahead of some of even the sales and marketing to make sure that we have the product available, and then put that spend into 2024 if we don’t have it to spend in 2023. It’s a matter of how much you put in is how much you get out, and so we will continue to evaluate and balance our funds with the investment in our potential launch.