The clinical study of SB206, an antiviral gel, is designed to treat this common and contagious skin infection.
It affects six million people in the U.S. annually, with the greatest incidence in children aged 1 to 14 years.
Novan shares at last check jumped 60% to $14.54.
The results from the B-Simple4 study are a milestone, Chief Executive Paula Brown Stafford said in a statement.
"The strong safety and statistically significant efficacy results give us confidence as we move forward in preparing" a new-drug-application to the Food and Drug Administration to potentially bring SB206 to market, Stafford continued.
B-Simple4 is a multi-center, double-blind, study that randomized 891 patients across 55 clinical sites.
Not quite a third (32%) of the patients in the study saw total clearance of the disease at week 12, while 43% saw total clearance or one remaining lesion at that point.
The data "demonstrate SB206 can be a powerful treatment option to shorten the duration of this contagious disease with visible skin lesions that worry parents and caregivers," Tomoko Maeda-Chubachi, senior vice president, at Novan, said.
No FDA-approved therapies currently treat molluscum contagiosum. Novan sees the drug as a topical, at-home, self or caregiver-applied therapy with a rapid treatment benefit.