Thank you, Jessie. Good morning and welcome all to Novan's quarterly update.

To start and reiterate, Novan is a world leader in nitric oxide-based science. And we're bringing a technology platform to the clinic to support delivering safe and efficacious therapies, looking to be the world leader.

The Company has really never been in a stronger position. It's been a transformational year for us.

And it's a testament to our team and to our commitment. We have made significant progress across our 3 lead programs.

In June, f or SB206, our lead product candidate, we reported positive efficacy data for our pivotal Phase 3 study. And in September, we reported our final favorable safety data as expected.

Now we're advancing towards an NDA submission. And we're targeting quarter 3 of 2022, less than a year away.

And we're planning for success. With SB204, for acne vulgaris, the most common form of acne, we are advancing towards a pivotal Phase 3 study in 2023.

And with SB019 for SARS-CoV-2, we announced yesterday, additional positive pre -clinical data and our intent to advance towards an IND in the second quarter of 2022, and the initiation of a Phase 1 trial in humans. In short, we are targeting three NDA submissions over the next 3 years.

Each represents a significant market opportunity in the U.S. and beyond.

Since June, we've had the chance to report out and recap our positive top-line results from the Phase III study. So while some of you are aware of the robust nature of our data and study results.

We think it's important to now touch on it again, as we believe it's indicative of the potential of our entire platform and other pipeline assets. And I will share some updates regarding our pre -commercial activities that are now underway.

As I mentioned, in June, we reported top-line efficacy and safety results at Week 12 for our pivotal Phase 3 study with SB206. The primary efficacy endpoint was complete clearance at Week 12 of all treatable lesions.

And that main lesions that were reported at baseline and any that erupted during the trial. You can see here that we saw a 12.7%-point difference at Week 12.

And even a 3.6%-point difference as early as the Week 4 visit with statistical significance at Week 4, 8, and 12. And we believe this is also a clinically meaningful treatment difference at Week 12 and perhaps before.

We also achieved statistical significance for all 4 of our secondary endpoints when comparing our SB206 gel to vehicle, the placebo. Based on previous guidance from the FDA, we believe that we have met all criteria necessary to use B - SIMPLE4 as our pivotal Phase 3 study in our new drug application planned for 2022.

Based on the strength of these results, we're focusing most really nearly all of Novan's resources on the NDA submission on all that supports a submission for Novan. Last quarter, we finalized the be simple for safety readout.

Results were consistent with earlier studies and demonstrated a favorable safety profile. We also initiated pre -commercial activities.

We're now focused over the next 3 quarters on our manufacturing PAI readiness, NDA enabling stability, testing, and free NDA meeting preparation and conduct all before submitting our NDA in the third quarter of next year as we're targeting. With that said, Novan is planning for success, which includes planning for commercialization of SB206.

And last week, we announced our conditionally accepted brand name for SB206. Part of that planning includes reviewing the market potential and planning accordingly.

The remains a need for an at-home solution for molluscum, a highly contagious skin infection, mostly in children. The addressable market in the U.S.

alone is approximately 6 million cases. Today, molluscum is either not treated or it's treated with an in-office procedure.

There is currently no therapeutic alternative to Novan's SB206 product candidate for in-home use. So therefore, we expect there will be good reimbursement due to the lack of competitors and favorable efficacy and our favorable and efficacy and safety profile.

In September, we initiated our commercial planning activities. This started with the selection of Syneos Health as our end-to-end commercial solution provider.

And last week, we rehired Brian Johnson as our Chief Commercial Officer. Brian brings tremendous commercial experience from a number of companies including UCB and Galderma.

In fact, while he was at Galderma, he served the role of Chief Digital Officer. So I think is very important in today's world, especially.

And he helped launch 7 dermatological products. Also last week, we announced that the FDA provided a response, as I mentioned, and conditionally accepted KINSOLUS as the brand name for SB206.

As it's customary, we will request final acceptance of the brand name upon submission of the NDA. Great.

We're excited with the potential for KINSOLUS I really like this name. As we believe our product can be a kind solution for patients suffering from molluscum.

Finally work is underway with Syneos Health and our internal team of experts, Brian and others, to strategically position SB206 in the market ahead of a potential launch. I'd now like to spend a couple of minutes on an area of high interest with additional and encouraging pre -clinical results that we shared publicly yesterday.

We are advancing towards submission of an IND for SB019 or for the treatment of SARS-CoV-2. Over the past 18 months, we've all been impacted by COVID-19.

And during this time at Novan, we continue to expand the utility of our Nitricil platform. We took the opportunity to evaluate the potential of our technology as an intranasal treatment option for COVID-19.

After positive pre -clinical efficacy results observed in deterring transmission of the disease in vivo, we evaluated also in vivo the safety and toxicity of berdazimer sodium when intranasally administered via the SB019 formulation. We've demonstrated this 14-day repeat dosing GLP study, the SB019 was well tolerated at the highest dose tested, which was 14 milligrams per day.

The intranasal administration of berdazimer sodium marks a notable extension to our previously assessed routes of administration. To date, all clinical administration has been via gel or cream with our berdazimer sodium API.

We've now unlocked, unlocked. Just to say it again, unlocked real opportunity with a new possible route of administration for berdazimer sodium.

What Novan wants to focus on is an inter-nasal formulation that works against respiratory infectious diseases. So as Novan continues to progress this product, we strive to be prepared for COVID-19, or possibly other infectious diseases.

Thus far, we continue to provide encouraging and positive pre -clinical data and continue to advance forward with a program with real differentiation and real opportunity. This is obviously a broader indication than our two lead assets, which are both dermatological products.

Suggesting though that our platform and API can apply in more ways than dermatological needs only. Enough of that.

Let's transition to a discussion on our financial position at the end of the third quarter. John, will you cover our finances and broader opportunities for potential value creation?

Certainly. Thank you, Paula.

And good morning and thank you all for joining our update call today. This morning, we bought our 10-Q for September in addition to our corporate update press release [Indiscernible] to those reports for additional detail, I will touch briefly on a few key points regarding our current positioning.

As of the end of the quarter, we ended with $60 million in cash and cash equivalents. We expect that this balance plus expected contractual payments to be received provide us with sufficient capital to get us past our targeted Q3, 2022 NDA submission for SB206.

Our current expected runway gets us into Q4 2022 with our capital being focused on the continued progression of our platform. As Paula noted, primarily on the regulatory and supporting efforts to submit an NDA for SB206 and initial efforts to support commercialization for that asset.

We believe getting a product candidate submitted to the FDA to be a transformative event for the Company. This is indeed an exciting time.

In addition to the molluscum acne, and COVID programs, Paula discussed. We also have other opportunities with additional product candidates currently in our pipeline that represent potential value in the future, both in the U.S.

and potentially an ex-U.S. geographies.

This includes our SP4 and fork candidate for a atopic dermatitis. SB207 for general awards and NVN4100 for companion animal health.

While these assets are currently planned for progression internally, we do continue to look for potential avenues to move these assets forward, including with potential partners or other strategic arrangements. With that, I will turn it back to Paula.

Thanks, John. Some frequently asked, why Novan and why now.

Well, 2021 was truly transformational for Novan. We're a different Company today than we were just a year ago.

We've proven our platform technology across 3 programs. We're planning to submit 3 NDA s in 3 years.

We have robust Phase III clinical Data for SB206. Confidence to advance to SB204 and acne.

And important pre -clinical data related to SB019. All of us and me tremendous confidence to proceed as we've shared today.

Novan has ambitious goals, yet reasonable goals. There's significant opportunity with our 3 lead programs alone.

And John shared our expansion opportunity that exists with the additional pipeline indications. And we believe there's significant potential upside across the entire platform.

I'm proud of our team and their tremendous achievements in 2021 and their commitment to meeting our goals in 2022. As I conclude our prepared comments today, and where I started.

Fundamentally, the Company has never been stronger. We've got a lot left to do for the remainder of 2021.

A nd we're excited for all ahead of us in 2022. We appreciate your support and interest in Novan.

And I will now ask our operator, Jessie, to facilitate questions.

Thank you. Good morning and congrats on the progress, guys.

I was wondering I had a first question for John. With your guidance at $60 mill last through 2022 or almost through that, could you please tell us roughly how much of that flows through the Income statement for modeling purposes and therefore, how much is capex?

Certainly, Jonathan. Good morning and thanks for your question.

If you look at our most recent results in our 10-Q that we filed this morning, with the continued build out of our headquarter facility and small scale manufacturing capability, you are correct. We do have some significant capex.

You'll notice in our disclosures, we have roughly $4 million accrued for at the end of the quarter. However, as we continue to move forward, we will have additional costs, but I think that the majority has already been either capitalized or is on the Balance Sheet.

So I would expect maybe a few no more than a couple of more million to come through. But that is part of that expected cash runway in this through the end of the quarter, or end of Q4 of 2022.

Okay. Thank you.

Paula, despite the 019 progress, do the Merck and Pfizer COVID pills -- those positive results in calling you to rethink at all how you'll prioritize that program?

Yeah. It's a good question.

Thanks, Jonathan. And really, obviously we're not going to be the first treatment to the market.

As we have seen with other products elsewhere, that it's often good to be the second, third, or fourth treatment option. And we're going to take it 1 step at a time.

But right now, because we believe, as I mentioned, they are advancing this product forward, maybe it's not COVID-19 even in the end, but it's another infectious respiratory disease. So we will continue to advance it 1 step at a time.

But we're very confident and the data we're seeing that we should do that.

Okay, thank you. That was -- that's an interesting strategy, that makes sense.

How long are you actually doing the KINSOLUS stability testing for? And is it all real-time or is any of it like heat accelerated.

Well, it's both. There is accelerated and then there's the real-time and there's the drug substance that we have and the drug product.

And both have to be on stability for a certain number of months and all that is a discussion with the agency. And so that's in terms of our tech transfer and manufacturing and getting that on stability, and it's that testing that will happen in the first half of next year.

Thank you guys. Congrats again.

All right. Thank you, Jonathan.

Operator.

Hey, thanks for taking my questions and congrats on the quarter. I have a few questions here.

Maybe to start off with the molluscum landscape. And this might be for the whole team as well as Brian.

How do you think about the CRL received by your competitor in molluscum? And does that change the way you think about the market you could be entering upon approval?

Right now, it doesn't change anything for us. I really can't comment on anything with our competitor.

I don't know where that stands. We wish them success.

And as we've said before, whether they're in the market or not, we have a place in the market because we have an at-home solution. And they would bring more awareness to molluscum if they go ahead of us.

And we wish them well in that. But we think that there -- as we've always said, there's room for both in the market because there's is administered in office over several visits typically, and our product is at home, used by the patient or administered by the caregiver.

And for OpEx, I'm just wondering, do you have any color on how we should think about this costs going forward? I know I saw R&D went down partially from lower personnel costs and reduce costs related to the 401 [Indiscernible] programs.

So I'm just wondering how to think about that as well with the pivotal teaser for trial planned after 2022. Thanks.

Certainly [Indiscernible] OpEx perspective, the '23 that would be the expected timing of the incurrence of the cost for the trial, I would say anywhere roughly $20 to $30 million for the clinical work. With regards to our OpEx.

We will continue that pace. It's pretty consistent where we at presence, including as we continue to ramp up our costs associated with our Syneos work and commercialization work.

So yes, R&D will take down with regards to our clinical work on SB 204, but SG&A will take up a bit as we look forward to doing additional work with Syneos.

Okay. And my last question is more generally, the opportunity for SP201, given the known Phase 3 data, Could you maybe lay out the topical RF market and how you think about the positioning of that product in the market?

Are you talking about 204, you said 201? I just want to make sure.

[Indiscernible] 204 for acne.

Yes.

I was getting confuse in terms of those. So I think in terms of that, do you want to speak to that.

I've got Brian Johnson actually here with me in terms of acne and the market.

Sure. Happy to.

And good morning, everybody. The great thing about the agri market on the professional side is that it's a huge market.

There is a tremendous number of patients that are being seen in the medical profession. And there are a lot of prescriptions that are being written for the conditions.

What we typically see is that physicians will choose more than one modality. So they will put together our regimen and market research.

The joke is, if you've talked to 1 dermatologists, you talk to 1 dermatologists. And they have a regimen that they booked -- that they believe it.

But they kind of come back to the different activities that the different drugs have. So you have a group of retinoids [Indiscernible] antibiotics, anti - microbials, and then you'll have systemic antibiotics.

And then most recently, you have a product like [Indiscernible], which is a different mode of action that it's getting contribute to some different activities for the acne patients. We believe that SB204 based on our understanding of how it works in acne and the impact that nitric oxide can have on the acne pathogenesis, that we all have a different mode of action than any of the other products that are out there.

We'll be antimicrobial. We'll also be anti-inflammatory.

That lens the opportunity to be used very early in the treatment regimen when combined with the safety profile that we saw in the previous 204 trials and then across all of our clinical programs thus far. I would expect there will be some patients that get it by itself, but I think the majority of patients like other products in the market will be receiving SB204 along with another or potentially other multiple products as well.

Thanks, Brian. Thank you, gentlemen.

Thanks and congrats, Brian.

Thank you.

Good morning, Paula, John, and welcome aboard Brian. Can you get an update on the new manufacturing facility build and how it's coming along?

Sure. We're looking at each other.

Yes, it is progressing as planned. It is here in our Durham headquarter facility.

And we are progressing and currently on track. Not to say that supply chain issues aren't always a challenge for us here as they are for each of you individually.

So we're managing through those, and right now there's nothing taking us off track, but we'll have that up and running in the early part of next year.

Okay. If I wasn't sure, what would capex be in 2022 just approximately?

I know you said there's going to be more in the fourth quarter, and I assume it will be all the capex will be complete in 2022. Is that right?

How much will that be?

It will be completed in 2022. There'll be some cash outlays, obviously through '21.

Good morning, John, by the way. There will be some capex throughout the year and then into the first part of next year, even after we finish the build-out.

It would look at the total magnitude, we can expect probably, and it's dependent with our lease agreement. We do have a TR allowance that helps offset -- deferring you the costs that we're incurring for the capex.

But from a cash outlay perspective through from basically here through the completion and call it of the cash flow in Q1 roughly another $5 million or so.

Okay. Great.

And then will it be completed on a modular basis. I guess you're almost -- you're probably less than six months away from getting it done, but will it be modularly completed or will it be just all done at once?

So John, we actually got modular. We've been in the building, the front half of the building as we describe it since May of this year.

As we continue to the back half of the building, which is the manufacturing suite, we expect that to be done by the end of the year.

So 2 different parts of it. Okay.

Great. Can you just remind us of the capabilities of other facility?

Certainly, so the small-scale has a small-scale capability for API manufacturing and limited drug product manufacturing. That's really thought about for future use for potential CTM for our continued development.

So really the purpose of the plant here is to continue our development from an R&D perspective, but also to support our supply chain with our CMO counter-parties that we're utilizing. The facility here will be used initially to support the API manufacturer for registration campaigns for SB206 and it'll be part of the greater supply chain for our potential commercial quantities.

Okay. Great, great.

Last question is just on SB204 to follow-on what some of the other analysts just asked. I think it's still expected to be a thousand patient trial.

What is your estimated costs on a per patient basis for that and should we just assume that it's going to be simpler to -- I'm sorry, similar to B - SIMPLE4?

The design is obviously different. yet we will -- we are taking our learnings from 206.

The design obviously different because of acne, but the execution would be very similar. Again, from what we've learned from our successful 206.

In terms of cost, we haven't given a per patient cost, but you can do the math. We've said that the trial is probably between $15 million and $20 million to run that trial.

Okay. Great.

Thank you, Paula.

Thank you, John. Operator, any other questions?

Great. Thank you and good morning.

And not to split hairs, given the prior discussion, but with regard to SB204 and SB019, how far do you assume you would advance each given your current guidance?

Certainly [Indiscernible], Kemp. So our current guidance and runway, if you will, encapsulates but only the regulatory [Indiscernible] for 206.

But as it relates to SB019, investigated through a Phase 1 trial in the first half of next year. So that Phase 1 work is included in that forecast.

With regards to SB2 04 for acne, that does not include the anticipated Phase 3 trial in 2023, but it does include activities related to preparing for that trial.

Okay.

Thanks, Kemp. Any other questions?

Thank you.

All right. Operator, any other?

Thank you, Jessie (ph). Well, thank you all very excited for what's ahead.

So we're looking forward to 2022 and we thank you for joining us today. Thank you.