Novan, Inc.
Q1 2022 Earnings Call Transcript

Published: 16 May 2022

[Operator:]

Hello and welcome to the Novan, Incorporated Quarterly Update Conference Call and Webcast. As a brief reminder, all participants are currently in a listen-only mode. [Operator Instructions] Following the presentation, there will be a question-and-answer session. Note that this webcast is being recorded at the company's request and a replay will be made available on the company's website following the end of the event. At this time, I'd like to remind our listeners that remarks made during this webcast may state management's intentions, beliefs, expectations, or future projections. These are forward-looking statements and involve risks and uncertainties. Forward-looking statements on this call are made pursuant to the Safe Harbor Provisions of the Federal Securities Laws and are based on Novan's current expectations and actual results could differ materially. As a result, you should not place under reliance on any forward-looking statements. Some of the factors that could cause actual results to differ materially from these contemplated by such forward-looking statements are discussed in the periodic reports Novan files with the Securities and Exchange Commission. These documents are available in the Investors section of the Company's website and on the Securities and Exchange Commission's website. We encourage you to review these documents carefully. Additionally, certain information contained in this webcast relates to or is based on studies, publications, surveys and other data obtained from third-party sources and the company's own estimates and research. While the company believes these third-party sources to be reliable, it is not independently verified such information. Joining us on the call today from the Novan leadership team are Paula Brown Stafford, Chairman, President and Chief Executive Officer; John A. Donofrio, Chief Operating Officer of Novan President of EPI Health; and John M. Gay, Chief Financial Officer. I would now like to turn the call over to Paula Brown Stafford, Chairman, President and Chief Executive Officer. Please proceed.

[Paula Brown Stafford:]

Thank you, Howard. Good morning everyone and thank you for joining our corporate update, including Novan's financial results for the first quarter of 2022. On March 11, we announced exciting news for Novan. We had closed on the acquisition of EPI Health, and therefore, we emerged as a fully integrated medical dermatology company. This is truly a foundational leap forward for Novan. We now have marketed products and a proprietary R&D platform technology to fuel future organic growth for Novan. A great example of the value we have added is Rhofade, a topical cream prescribed to treat ongoing facial redness associated with rosacea in adults. EPI Health acquired Rhofade in 2019 and relaunched just in time for the pandemic to hit. As dermatologists offices began to reopen in late 2021 and early 2022, we've seen a nice increase in scripts written for Rhofade. The quotes here are from two patients who are seeing their medical needs met, something that we're striving to do at Novan. It's the tangible value of Novan's products for the patients we serve. We are now more steadfast in our belief that Novan remains a compelling investment opportunity. Our highlights can be summarized, and easily remembered on one hand, we're going to count down five, product candidates in our development pipeline, all nitric oxide-based formulations; four, products promoted by our commercial team; three, near-term value creators, through two priority products and one lead product candidate; two, business units, we have an R&D engine and a commercial platform. And finally, one, NDA submission targeted before the end of 2022. We've created a medical dermatology company that has the capabilities to discover research and develop innovative therapies and bring medications to patients with diseases of the skin. Our NITRICIL technology has generated multiple nitric oxide-based formulations to address multiple medical conditions with unmet needs. We've recently completed the outfitting and launch of our small-scale manufacturing facility in Durham, North Carolina, for our drug substance. We're able to tout an experienced dermatology commercial platform from supply to engagement, to sales effectiveness. We've established healthcare relationships, as well as product launch experience. We are now positioned to detail SB206 or KINSOLUS if approved. Integration, let me talk a little bit about that. We're 65 days post-closing of the EPI acquisition. 20 days for accounting purposes, which John will speak to shortly. The transition has been smooth and generally on schedule and as planned. We've aligned our teams focusing on one culture, one set of IT systems and processes and leveraging our synergies. I'm truly pleased with our progress to date. The seamless integration enables us to focus on the execution of our growth strategy for Novan. We will now take a few minutes for John Donofrio to review Novan's commercial platform, including our promoted products. As you heard, John is Novan's COO and President of EPI Health, a Novan company. JOHN, over to you.

[John Donofrio:]

Thank you, Paula and good morning, everybody. Paula mentioned, we are now a fully integrated medical dermatology company with a strong leadership team, proven execution with both an R&D engine, and now a commercial platform. I'm going to spend some time this morning to discuss three key areas. First, our commercial capabilities. Second, I'd like to provide background on our promoted product portfolio and therapeutic areas that serve our patients and close with an update on our Q1 prescription performance. Paula mentioned the rationale and benefit of acquiring EPI Health, along with our product portfolio was our commercial platform. We have an established commercial presence across the medical dermatology community with the ability to reach over 7,000 healthcare practitioners. When you think of our commercial platform, we start with supply chain management of our third-party suppliers, along with an optimized demand management process. We have built our distribution capabilities to both wholesalers and direct network pharmacies. We enhanced our managed care capabilities with the payers and patient affordability programs to ensure patients have affordable access to all our medications. Our sales organization consists of four regions in 42 territories and has more than doubled over the past three years. We've also upgraded our sales training and our field sales support organizations. Our team is either launched or relaunched four products in the last four years. And we believe that experience will provide a solid foundation for our potential future launches. We have a brand marketing team focused on the product and disease state messaging and education throughout our portfolio. And lastly, we built strong professional relations engagement with our healthcare practitioners and key opinion leaders across the country. When we look at our commercial capabilities, what differentiates us is our dedicated employees and our focus on execution data and performance. We have complimented our commercial capabilities with strong financial management, analytics and a reporting platform that focuses on clear alignment of our financial and operational data and metrics. When we step back, we look at this as one platform that is aligned on a common set of objectives. We are also in the process of integrating the legacy Novan commercial organization into our platform to make it even stronger as we prepare our company for potential future launches. Our commercial platform is focused on field readiness, high engagement with our customers, employees, along with a strong performance management across our organization to ensure we deliver value to our shareholders and the patients that we serve. There are multiple channels in dermatology space, medical prescription, device, statics, procedures, OTC. Here at Novan, we are solely focused on providing a portfolio of prescription dermatology products across multiple disease states and not just one product and not just one disease state. Over the past four years, we specifically focus our efforts on unmet needs in four key disease states in medical dermatology. We compete and provide our patients innovative solutions in psoriasis, rosacea, acne, and atopic dermatitis. We have a demonstrated commitment to the medical dermatology community, not only with our current promoted products, but with our strong development pipeline. When thinking about our pipeline, our commercial platform is built to expand disease states within medical dermatology and call on other specialties like pediatrics. I would like to now provide an overview of a diverse product -- promoted product portfolio. In psoriasis, we launched Wynzora cream last summer for the treatment of plaque psoriasis. This is a combination of calcipotriene and betamethasone dipropionate and works on both flares and maintenance of the disease. Wynzora delivers on three key attributes to the patient, efficacy, safety and adherence in a novel cream formulation using an innovative pad technology. For rosacea, Rhofade is a topical prescription medication indicated for the treatment of persistent facial erythema, PFE, or specifically redness. The majority of rosacea products addressed the inflammation of rosacea, and there was an unmet need in addressing the redness, and Rhofade has become a market leader in the PFE category. For acne, MinoLira is a oral antibiotic treatment with the active ingredient of minocycline. MinoLira provides our patients when innovative technology approach to ensure consistent delivery of the active ingredient, limiting variability and potential side effects to our patients. Lastly, CLODERM. CLODERM is a known steroid with a 40-year trusted history with healthcare practitioners for patients with dermatoses. As mentioned, our products are promoted over 7,000 healthcare practitioners across the country by our existing Salesforce of 42 territories. So, now let's talk performance. We shared with you the fundamentals of our commercial platform; the disease states, we serve our patients and our diverse product portfolio. Now let's discuss how our team performed in the first quarter of 2022. I am pleased to report significant growth in three of our four promoted products. Beginning with CLODERM. Prescriptions were slightly down over the last year and flat over previous quarter, in line with expectations of adding a fourth product within our sales team call cycle when we launched Wynzora. Speaking of Wynzora, Wynzora, which was launched in mid-2021 has shown consistent growth month-over-month and quarter-over-quarter since launch. For Rhofade, we're excited to have closed the quarter with the strongest quarter in the history of the brand with over 37,000 prescriptions, nearly 50% above last prior year and 14% over its previous all time high quarter. Team did a fantastic job. Speaking of fantastic job, MinoLira also had growth -- had strong growth quarter with almost 50% above Q1, 2021 and 14% over previous quarter. In summary, we're extremely pleased with this performance and a quarter that historically is lower or flat to Q4 due to end of year seasonality and feel this demonstrates our commercial platform's ability to execute and deliver going forward. Paula, I'll now hand it back over to you and John and thank you very much.

[Paula Brown Stafford:]

All right. Super. Thanks, John. I think your next question may be, well, what are you doing to keep this going or make it even better? Well, our commercial organization will be focused on seven key growth drivers to expand our promoted products, continue to expansion of our Salesforce size and structure. Starting with a national sales leader starting this week, and planned expansion of our 42 territories in the second half of this year, both the companies Novan and EPI Health had established good coverage at industry conferences and meetings. But now as a combined company, we plan to expand that presence at the national, regional and even local levels. We'll continue the momentum of our promoted products with a heightened level of focus with our key opinion leaders in our current disease states, as well as, our potential future disease states, along with the continued Salesforce execution and promotional marketing programs that continue to drive growth across the portfolio. And lastly, we have an excellent opportunity to add potential value to our shareholders by perhaps licensing Rhofade outside the U.S. So, it's been an exciting time for our commercial organization, with the announcement of our combined R&D and commercial company, strong integration of our culture and our strong quarter one prescription growth across the portfolio. So, from a commercial perspective, we have our key areas of focus, and we're extremely excited as we look to our future. I'll now spend some time on our development pipeline, our R&D engine. It provides a near-term opportunity to leverage our platform technology to fuel our pipeline and ultimately provide new commercial opportunities. Each product candidate has its own compelling addressable market globally and domestically, with Novan pending solutions, meeting different current medical needs for diseases of the skin and others. So, just quickly for those new to the new the Novan story, our NITRICIL technology enables us to create NCEs that store large amounts of nitric oxide gas in a stable solid form. The advantage of our technology includes tenability, stability, high storage capacity and targeted delivery. We believe that our ability to deploy nitric oxide in a solid form on demand and in localized formulations, allow us the potential to improve patient outcomes in a variety of diseases. You can see here, we've treated nearly 4,000 patients with the active ingredient berdazimer sodium. We've seen a compelling safety profile in the clinic, across the platform thus far, and we have a solid patent protection with formulation and indication specific IP out to 2035. Our lead product candidate is SB206, which is berdazimer gel 10.3%. It's a potential topical prescription treatment for molluscum contagiosum. In 2021, we reported what I've referred to as robustly positive efficacy results from our pivotal Phase 3 study. Molluscum is a highly contagious condition prevalent primarily in children age one to 14, for which there's no FDA approved prescription treatment. Dermatologists and pediatricians remain concerned with the tolerability of the currently sought office based procedures. Our pivotal Phase 3 study known as B-SIMPLE4 demonstrated clinical and statistical evidence of efficacy, with our primary and secondary endpoints. So, you may ask what's next. Well, we are now preparing our NDA submission. As normal course of business, we've had our pre-NDA meetings with the agency in March and then received written minutes from the agency in April. This confirms what we need to complete before submitting our NDA package. And part of that is completing customary stability testing of our -- of GMP batches of our drug substance and drug product. Importantly, we remain on track to meet our targeted submission date before the end of the year. We've been planning towards the potential launch of SB206, or KINSOLUS, if approved. For some time now, we identified a path, the best and most compelling path that delivering value and that was to acquire an established business, EPI Health. That commercial platform will promote SB206 if approved. And in the meantime, we have key activities ongoing to prepare for a potential launch. These include our commercial scale manufacturing capability, which is up and running; a pricing and reimbursement strategy, which is in progress; outreach to KOLs through our medical team, which is ongoing; and Salesforce preparedness, which is really to come. So, at Novan, as you know, we've said it many times before, we plan for success and a product launch is no different. Novan also has a full technology platform poised to fuel potential future growth for the company. In addition to our lead product candidate, we have two other priority product candidates

[John Gay:]

Thank you, Paula and good morning. Due to the timing of the acquisition of EPI Health on March 11, we only had 20 days of commercial activity reflected in our three-month ended 3/31 financials. However, based on the trends of script activity for the complete first quarter, which John touched on earlier, we are bullish on the future of our promoted product portfolio. Before I touch on some of the key data points for this quarter, I would like to let our participants know that while we are excited for the path set before us, we are still in the process of fully integrating our new company, our personnel and our operations. As such, we are not yet in a position to provide guidance as it relates to 2022 revenues or EBITDA. However, as John noted, we certainly see opportunities for growth in our promoted product portfolio. For the first quarter ended March 31, 2022, our Commercial Operations segment reported total revenue of $1.2 million. Again, this represents only 20 days of consolidated activity for this business segment which represents the legacy EPI Health business. Our Commercial Operations segment included net product revenues from sales of our commercial portfolio of $0.7 million, driven primarily by Rhofade, which was $0.8 million for the 20 days ended March 31. Net revenues from the sale of MinoLira and CLODERM totaled $0.1 million for the 20 days ended March 31. In addition to these positive trends for our products, we did have a reduction in revenue of approximately $0.2 million for certain adjustments, including those products not currently promoted and also related to certain accruals that were assumed as of the acquisition date. In addition, our Commercial Operations segment also generated $0.5 million of license and collaboration revenues, primarily related to our agreement with MC2 Therapeutics for Wynzora, totaling $0.4 million. This amount includes not only the commercialization fee we receive as part of that arrangement, but also the reimbursement of certain covered expenses. Our Research and Development Operations segment, which is comprised of the legacy Novan business, reported total revenue of $0.7 million for the three months ended March 31, 2022. For the three months ended March 31, 2021, our R&D Operations segment generated $0.8 million of revenue. Our license and collaboration agreement with Sato Pharmaceuticals comprised the majority of this revenue. In addition, during the first quarter of 2022, we received a time-based milestone payment of $4.3 million related to this agreement. Now turning to our operating expenses. Our Research and Development Operations segment incurred R&D expenses of $4.8 million for the three months ended March 31, 2022 compared to $6.4 million for the three months ended March 31, 2021. The decrease is primarily related to the SB206 program based on the timing of the B-SIMPLE4 trial. S&A expenses were $10 million for the three months ended March 31, 2022 compared to $2.7 million for the three months ended March 31, 2021. This increase of approximately $7.3 million was primarily due to $4 million of non-recurring transaction-related expenditures in current in connection with the EPI Health acquisition, $1.6 million of expenses incurred to support the conduct of EPI Health's commercial sales operations during the quarter, $0.8 million increase in support costs related to the SB206 prelaunch strategy and commercial preparation, and finally, a $0.9 million increase in other G&A costs. Total net loss on a consolidated basis was $13.4 million for the first quarter of 2022 as compared to $9 million for 2021. As of March 31, 2022, we had a total cash balance of $35.5 million. We believe that our existing cash balance plus expected receipts associated with product sales from our commercial portfolio will provide us with adequate liquidity to fund our planned operating needs into the early fourth quarter of 2022. I will refer you to our Form 10-Q filed this morning for additional detail regarding management's projections and planned operating, development and commercial activities for the remainder of the year. With that, I will turn it back to Paula.

[Paula Brown Stafford:]

Great. Thanks John. And I'm just back on that, that 56% growth in promoted products of -- prescriptions from the first quarter of 2021, it's quite the growth, as John Donofrio mentioned earlier as well. So, we are pleased with Novan's foundational leap forward in quarter one. If the strength of scripts in the first quarter is any indication, we have a commercial organization poised for growth. We continue to advance our efforts toward an NDA submission in 2022, having received FDA feedback and marching forward with our to-do list. We are planning for success and preparing ourselves for potential product launch of KINSOLUS, if approved. We continue to pursue, evaluate and consider collaborations that could expand our existing commercial products. And we continue to explore our proprietary development pipeline for future growth opportunities. So, in closing, even with the challenges that we all see in the stock markets, the interest rate environment and the geopolitical landscape, we at Novan remain energetic, focused and excited for the future based on our integration activities this quarter, and the evolution of our company with the addition of EPI Health. So, thank you. And operator, I'd like to turn the call back to you to facilitate our Q&A session.

[Operator:]

[Operator Instructions] Our first question or comment comes from the line of Jennifer Kim from Cantor Fitzgerald. Your line is open.

[Jennifer Kim:]

Thanks for taking my questions. I have two to start off. Maybe -- I know that you're not providing guidance yet, but do you believe that the EPI Health business is positioned to grow year-over-year on a full year basis? I think in the 2021 operating revenues is around $17.6 million. And in the first quarter, there's only 20 operating days. But on a full year basis, do you believe we can grow off that? And then my second question is, I think previously, you said that you expect to increase the number of U.S. territories covered from 42 to 50 this year. I'm wondering, is that still the plan? And what is the general timing on that through the course of the year? Thanks.

[Paula Brown Stafford:]

Thank you, Jennifer. Appreciate your questions. I'm going to ask John Gay to take the first one on the growth, and then I'll ask John Donofrio to provide you the update on our plan regarding the reps.

[John Gay:]

Thanks Paul, and good morning, Jennifer. Thanks for your question. With respect to the first part of that, do we expect year-over-year growth? Yes. Based upon what John Donofrio was able to articulate earlier in the prepared remarks, I will say this though and kind of to the point of my comments, on a full year basis, which is the metrics that we'll use to compare. Keep in mind that we only have consolidated results, March 11 going forward. So, just keep that in mind. But on a totality basis as it relates to the operations of the legacy EPI Health, yes, we see year-over-year growth.

[Paula Brown Stafford:]

Thanks. And John Donofrio?

[John Donofrio:]

Yes. In regards to Salesforce expansion, yes, we are still planning on expanding from 42 territories to 50. We plan that to start that in Q3 of 2022. And when you think about it just quickly, we'll be going from four to seven regions. And so, we'll be reorganizing the regions and then it will take time to bring in the managers and then the respective representatives accordingly. So, we expect to be complete in early Q4 as it usually is about a two to three-month process.

[Jennifer Kim:]

Okay. Great. That's helpful. And maybe one more question here. I think, I saw that your cash runway extended a bit into the fourth quarter. And I'm wondering what were the main drivers of being able to extend that.

[John Gay:]

Yeah. Sure, Jennifer. With respect to that, obviously, with the acquisition of strong performance of Rhofade in Q1 with respect to the level of sales that increase kind of our cash collection as it relates to that activity. So, that's certainly part of the equation as it relates to extending the runway into Q4.

[Jennifer Kim:]

Okay. Great. Thanks everyone.

[John Gay:]

Thank you.

[Paula Brown Stafford:]

Thanks Jennifer. Operator, next?

[Operator:]

Thank you. Our next question or comment comes from the line of Kemp Dolliver from Brookline Capital. Your line is open.

[Kemp Dolliver:]

Great. Thanks and good morning. Just quickly, the accounts receivable on the books are roughly $20 million, which is a pretty large number for a business of this size. It does appear from the Q that there's some offsetting payables. But John, could you just walk through how that number is going to show up on the income statement going forward?

[John Gay:]

Certainly, Kemp. Good morning.

[Kemp Dolliver:]

I mean on the balance sheet, sorry.

[John Gay:]

On the balance sheet, yeah, certainly. So, as it relates to the acquisition, what came over from the acquisition date was roughly $20 million of receivable. And obviously, we've collected down that to get to the 3/31 balance. So, a couple of key drivers that we saw from a cash perspective was the collection of those AR balances, again, driven by the Rhofade activity during the first quarter. And also, again, I touched on the Sato payment. So that was kind of the flux, if you will, from a balance sheet perspective of AR. I think your question to what's it going to like going forward? I mean, obviously, it's going to be highly dependent upon the level of sales. But keep in mind that those accounts receivables are directly related to the gross amounts that the company gets in as part of the gross to net adjustments -- the amounts that we get versus what there's an offsetting liability that we'll have to pay against in the future.

[Kemp Dolliver:]

Okay. That makes a lot of sense. Second question relates to the Wynzora revenue. Is what you're booking essentially strictly for in-period revenue on an ongoing basis?

[John Gay:]

Yes. So for that, the revenue is two pieces, commercialization fee that we get as part of that, but also the reimbursement of certain expenses. So, with our distribution agreement and commercialization agreement with MC2, they cover certain expenses. So, the revenue is comprised of two pieces, the fee and also the recoupment of those expenses that are funded.

[Kemp Dolliver:]

Okay. And then finally, with regard to the Salesforce reorganization coming ahead and again, you're not giving guidance. But when I hear Salesforce through organization, I think that there are usually short-term bumps associated with those. Is that something we should take into consideration when we look at the second half of the year?

[Paula Brown Stafford:]

John Donofrio, do you want to address that? Because I would say --.

[John Donofrio:]

Yeah.

[Paula Brown Stafford:]

I'll let John comment.

[John Donofrio:]

Yeah. I'll be glad to. Thanks and great question. We look at it more as an expansion than a reorganization. So, I think your point is spot on in historical reorganizations when you change a lot of stuff. This has kind of been in the plans for over a year. Territories have already been targeted of where we'll go. And so -- and the fact that we're doing it over a three-month kind of period, we feel strong that our implementation and our strict targeting will keep the momentum going forward as we continue to move forward. So, I do not see it to be a hindrance, but more of an opportunity going forward.

[Kemp Dolliver:]

Great. Thanks John Don.

[Paula Brown Stafford:]

All right. Thanks Kemp. Operator?

[Operator:]

Thank you. Our next question or comment comes from the line of John Vandermosten from Zacks. Your line is open.

[John Vandermosten:]

Good morning. Just one for me on the cash flow statement. It looked like you had -- well, you had positive cash from operations, but net loss was $13 million. So, can you explain just the difference there and if that will reverse in the second quarter.

[John Gay:]

Sure. Thanks John. Good morning. Yeah. So, keep in mind, the cash flow statement is a little bit complex this quarter, because of the acquired balances and the way that it flows through our consolidated Q1 cash flow statement. But yeah, you're correct. As it relates to the activity for the acquisition balances and what we had for the 20-day stub period, as we've been calling it, we did -- provided cash about $0.8 million. Again, that will be subject to continued activity on the P&L and we can expect for that to change based upon our net loss and the amount of sales that we are able to execute upon.

[John Vandermosten:]

Okay. Thanks John. And can you update us on the number of employees you have right now after the acquisition?

[John Gay:]

Yeah. So, after the acquisition is roughly 100. So that includes all of the EPI Health folks and the legacy Novan. But on a consolidated basis, it's roughly 100.

[John Vandermosten:]

Great. Thank you, guys.

[Operator:]

Thank you. Our next question or comment comes from the line of Jonathan Aschoff with Roth Capital Partners. Your line is open.

[Jonathan Aschoff:]

Thanks and good morning. I was wondering, can you guys help us understand your best competitive edge against, I guess, similarly sized dermatological companies, even if you just kind of restrict that answer to Wynzora and Rhofade?

[Paula Brown Stafford:]

Yeah. I think -- thank you, Jonathan. I think John Donofrio could probably answer that best.

[John Donofrio:]

Yeah. Good morning, Jon. How are you?

[Jonathan Aschoff:]

I am fine.

[John Donofrio:]

Great. Thank you very much. I think from a competition perspective, we look at, first of all, our -- we have a full product portfolio across four disease states. So, we look at it, we sell as an EPI Health company. And when you look at Rhofade specifically, we see basically the acceptance of the trading persistent facial erythema differentiates us significantly. We only have one competitor in that space and have over 90% of the market share in PFE for redness. And we have exciting new data that's come out on the medical front that shows using Rhofade once a day, every day, make a significant difference in the patient's treatment regimen. So, we're excited about that. We also feel comfortable in the launch of Wynzora. We've taken about 20% of the share of the combination topical market, with the goal of continuing to expand that market and taking share, and also addressing the larger steroid -- single steroid market and the ability to expand. Wynzora is a real advantage over potent steroids. So, we feel like in those two categories. And then, we'll use that just through the seven kind of capabilities that Paula went through. And when we think about our field execution and the expansion, we've demonstrated that now. We also feel like the data that we have and the information, the medical education and promotion of these products, including sampling will help us as we continue to grow and go forward. And then, as we mentioned, just our robust presence at conferences, medical education awareness and also just our professional relations and key opinion leadership -- relationships have only expanded over the last few years, and we figure as a combined company will be even better. So, all those areas combined, it's just not one. We feel like positioned us well against the competition going forward.

[Jonathan Aschoff:]

Thank you very much for that answer. Back on April 26 when you had a presentation, you're talking about companies interested in you for one reason or another. So, what is the balance of, interested sellers and interested buyers currently talking to you guys? Is everyone trying to sell you something? Does everyone want to buy the new Novan? What's kind of the balance there?

[Paula Brown Stafford:]

Thanks Jonathan for being on and for that question. I would say that -- to be frank, the most interest is a lot of people wanting us to buy things. Partner with them interested, like the platform and what we're doing. And so, there is some interest there. So, we'll continue, as I said, to evaluate opportunities, and with the focus on ourselves getting hopefully SB206 approved and making sure that's a priority for us. Thanks for that.

[Jonathan Aschoff:]

And just sort of a little follow-up to that. Are any of them who wish to sell you a product or wishing to sell you themselves and maybe that comes with some cash as well? Or is it really just buy this product?

[Paula Brown Stafford:]

Yeah. I really can't share any detail on that, Jonathan. And too early to even and to summarize any of that interest. So, I appreciate the question, but I don't think I can answer it.

[Jonathan Aschoff:]

Okay. And lastly, and maybe you mentioned this many times, can you remind us of what stops somebody with severe acne using an approved KINSOLUS given that both are 10.3% topical formulations.

[Paula Brown Stafford:]

Yeah. SB2 -- so they are the same API, which is for berdazimer sodium, but there's a different volume and there's a different proton donor source. So, it's a dual administration, and they are very different. And molluscum, SB206 is a spot treatment. So, it's just being applied to each lesion. But for acne, it would be a field treatment, so put on the whole face. So, they're two very different formulations and amounts of no being applied. So, they should not be used one for the other.

[Jonathan Aschoff:]

Yeah. That sounds prohibitive enough. Thank you, guys.

[Paula Brown Stafford:]

Yeah. Thank for that. Operator, I know we have -- I got a text, we have another analyst trying to get on to the call, so I don't know if there's another one waiting?

[Operator:]

I'm showing no additional questions in the queue at this time.

[Paula Brown Stafford:]

Okay. Okay. Well, we will speak to them offline then. And thank you all. Let me just summarize if there are no other questions, operator, right? There are no other?

[Operator:]

That's correct, ma'am.

[Paula Brown Stafford:]

All right. Let me just summarize. Quarter one, it's been a foundational leap forward for Novan and we thank our shareholders. The acquisition of EPI Health has propelled us into that fully integrated dermatology company. So, not only do we have our proprietary NITRICIL technology, which we know has the potential of generating NCEs. We have a first-class sales team and a supporting commercial infrastructure to propel us forward. So, with two key products in the bag with Rhofade and Wynzora, and a watchful eye toward a potential approval and launch of SB206, it is a very exciting time for Novan. So, it's a count down 5, 4, 3, 2, 1, and we're ready to go. So, thank you all for attending this morning, and have a great week.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.