Company Overview

Ovid Therapeutics is a biopharmaceutical company dedicated to improving the lives of people affected by rare epilepsies and brain conditions. With a deep understanding of the underlying biology driving neurological disorders, Ovid has established a pipeline of novel drug candidates that hold the promise of addressing significant unmet medical needs.

Founded in 2014, Ovid has undergone a remarkable transformation, evolving from a startup with a singular focus to a multi-faceted biopharmaceutical powerhouse. The company’s journey has been marked by strategic acquisitions, targeted partnerships, and an unwavering commitment to cutting-edge research and development. Since its inception, Ovid has devoted substantially all of its efforts to business development, research and development, recruiting management and technical staff, and raising capital. The company has financed its operations through various means, including the issuance of convertible preferred stock, common stock, other equity instruments, the sale and/or licensing of certain assets, and the licensing of certain intellectual property.

Strategic Partnerships and Challenges

In 2017, Ovid entered into a significant license and collaboration agreement with Takeda Pharmaceutical Company Limited to develop and commercialize soticlestat, a cholesterol 24-hydroxylase inhibitor, for the treatment of developmental and epileptic encephalopathies. This partnership was further expanded in 2021 when Ovid granted Takeda exclusive worldwide rights to soticlestat. However, the company has faced challenges along the way. In 2019, adverse events were observed in certain clinical trials for its former drug candidate, OV101, leading to a setback in that program.

A more recent setback occurred in June 2024 when Takeda announced that its Phase 3 trials of soticlestat failed to meet their primary endpoints in Dravet and Lennox-Gastaut syndromes. It remains uncertain whether Takeda will continue the development of soticlestat. This development impacts Ovid’s potential to receive royalties and milestone payments from the soticlestat program.

Drug Pipeline

At the heart of Ovid’s success lies its robust portfolio of drug candidates, each tackling a different aspect of neurological disorders. The company’s lead program, OV329, is a next-generation GABA-aminotransferase (GABA-AT) inhibitor that has demonstrated the potential to reduce neuronal hyperexcitability with less sedation and ocular changes compared to the older drug, vigabatrin. In a recent preclinical study published in eNeuro, OV329 was shown to have a higher potency for the GABA-AT target and induce phasic and tonic inhibition, suggesting a differentiated efficacy and safety profile.

In December 2022, Ovid initiated a Phase 1 SADMAD study of OV329 in healthy volunteers. The company is currently executing the multiple ascending dose portion of the Phase 1 study and plans to explore adding additional cohorts to increase dosing opportunities for future Phase 2 programs, which may delay topline data until 2025.

Ovid’s pipeline also includes a library of direct activators of the potassium chloride co-transporter 2 (KCC2), a key regulator of neuronal excitability. The first candidate from this program, OV350, is expected to enter a Phase 1 clinical trial in the first quarter of 2025, marking an exciting milestone for the company. Ovid intends to submit a regulatory application for this Phase 1 trial before the end of 2024. In preclinical and animal disease models, OV350 has demonstrated anti-psychotic and anticonvulsant effects.

Ovid’s strategic partnership with Graviton Bioscience Corporation has further bolstered its pipeline, with the in-licensing of OV888GV101, a rho-associated coiled-coil containing protein kinase 2 (ROCK2) inhibitor. This program was initially being evaluated for the treatment of cerebral cavernous malformations, a rare neurological condition with high unmet medical need. In May 2023, Ovid in-licensed OV888GV101 and a library of ROCK2 inhibitors from Graviton. Positive topline data from a Phase 1 multiple-ascending dose study of OV888GV101 were announced in July 2024. While the companies had intended to initiate a Phase 2 proof-of-concept study in cerebral cavernous malformations (CCM) in the second half of 2024, they have decided to pause the CCM program to evaluate clinical design learnings from competitor trials. Ovid continues to pursue additional formulations of OV888GV101 for undisclosed cerebral vascular conditions.

Recent Developments

Despite the recent setback with Takeda’s soticlestat, which failed to meet its primary endpoints in late-stage trials, Ovid has remained resilient and focused on advancing its proprietary pipeline. In June 2024, the company announced a workforce reduction to prioritize its core programs and extend its cash runway, a move that demonstrates its commitment to prudent resource allocation and strategic execution.

Financials

As of September 30, 2024, Ovid reported a strong financial position, with $62.7 million in cash and marketable securities. This capital, combined with the company’s ability to generate revenue through strategic partnerships and collaborations, positions Ovid to potentially achieve five clinical and regulatory milestones by late H1 2026.

For the most recent fiscal year, Ovid reported revenue of $391,690, a net loss of $52,338,959, operating cash flow of -$45,780,925, and free cash flow of -$45,918,380. In the most recent quarter, the company recorded revenue of $173,000, a net loss of $14,006,000, operating cash flow of -$15,007,000, and free cash flow of -$15,003,000. The quarterly revenue increased by 58.72% year-over-year, primarily due to higher royalty payments received under the company’s licensing agreements. However, net income, operating cash flow, and free cash flow all declined compared to the prior year quarter, mainly due to increased research and development expenses as the company advanced its drug candidates.

Research and development expenses were $7.9 million and $30.8 million for the three and nine months ended September 30, 2024, reflecting the acceleration of preclinical and clinical activities for Ovid’s pipeline programs. General and administrative expenses decreased to $5.5 million and $20.8 million for the three and nine month periods, primarily due to the organizational restructuring executed in the second quarter of 2024.

Liquidity

Ovid maintains a strong liquidity position with a debt-to-equity ratio of 0. As of September 30, 2024, the company had $62.7 million in cash, cash equivalents, and marketable securities. The company has access to a $75 million at-the-market (ATM) equity offering program, providing additional financial flexibility. Ovid’s current ratio and quick ratio both stand at 5.66, indicating a strong ability to meet short-term obligations.

The company believes its existing cash, cash equivalents and marketable securities as of September 30, 2024 will fund its current operating plans through at least the next 12 months. Ovid continues to explore additional financing options, including through its $250 million shelf registration statement and at-the-market equity offering program, to support the development of its pipeline.

The challenges facing Ovid are not unlike those faced by many biopharmaceutical companies operating in the complex and highly competitive field of neuroscience. However, the company’s unwavering focus on mechanistic-driven research, its diversified pipeline, and its experienced leadership team have positioned it to navigate these obstacles and emerge as a key player in the treatment of rare brain disorders.

Innovation and Expansion

Ovid’s commitment to innovation is further underscored by its recent expansion of its Scientific Advisory Board, which now includes renowned neurologists, neuroscientists, and epileptologists. This expansion will undoubtedly strengthen the company’s ability to translate its scientific insights into clinically meaningful therapies.

Resilience and Adaptability

In the face of global economic uncertainty and heightened geopolitical tensions, Ovid has demonstrated its resilience, adaptability, and forward-thinking approach. The company’s ability to streamline operations, prioritize its pipeline, and maintain a strong financial position during these challenging times is a testament to its strategic foresight and operational excellence.

Conclusion

As Ovid continues to advance its pipeline and navigate the ever-evolving landscape of neurological drug development, investors and patients alike will be closely watching the company’s progress. With a steadfast commitment to scientific rigor, a diversified portfolio of promising drug candidates, and a seasoned management team, Ovid Therapeutics is well-positioned to make a meaningful impact in the lives of those affected by rare brain conditions.

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