Ovid Therapeutics Inc (NASDAQ: OVID) is screaming for the top in the market this morning after the company announced that Takeda Pharmaceutical Company has acquired the rights to soticlestat. Here’s what’s going on:
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- Ovid Therapeutics Announces Exclusive Agreement
- Management Commentary
- Risks to Consider Before Buying OVID Stock
- Final Thoughts
Ovid Therapeutics Announces Exclusive Agreement
In the press release, Ovid Therapeutics said that it has entered into an exclusive agreement with Takeda. Under the terms of the agreement, Takeda will secure global rights to develop and commercialize the investigational medicine soticlestat.
The treatment is being developed as a potential option for patients with epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome.
In the release, OVID said that the treatment was discovered at Takeda’s Shonan, Japan research center. It is a highly selective, first-in-class inhibitor of the enzyme cholesterol 24-hydroxylase.
As part of the new exclusive agreement, Takeda will assume the sole responsibility for further worldwide development and commercialization. Moreover, OVID will no longer have any financial obligation to Takeda under the original collaboration agreement, this includes any milestone payments or future development costs.
In exchange for the rights to the treatment, Takeda will make an upfront payment of $196 million to OVID at closing. Moreover, OVID will be eligible to receive up to an additional $660 million in milestone payments on top of tiered royalties beginning in the low double-digits and climbing as high as 20% on sales of soticlestat if the treatment is approved.
In a statement, Andy Plump, M.D., Ph.D., President of Research and Development at Takeda, had the following to offer:
I would like to thank Ovid for their thoughtful and productive collaboration. Together we generated positive Phase 2 ELEKTRA study data, and as a result, soticlestat is poised to enter two pivotal trials.
Our work together demonstrates the strength of Takeda’s partnership model and our commitment to delivering transformative medicines to patients with neurological diseases.
The above statement was followed up by Jeremy Levin, DPhil, MB, BChir, Chairman and CEO at OVID. Here’s what he had to offer:
This new agreement is a positive outcome for patients, for Ovid and for Takeda. Jointly, we have set the stage, optimized the program and enabled it to accelerate. Ovid may benefit significantly, but without the obligation to commit the substantial capital needed over the coming years as soticlestat completes pivotal trials and, if successful, enters the global market. Importantly, with the resources this agreement delivers, Ovid is strategically and financially positioned well into the future. We will advance and enrich our pipeline while continuing to build a leading company in rare diseases of the brain. We would like to thank Takeda, who has been a superb partner, and we look forward to further successes for this program in the future.
Finally, Sarah Sheikh, M.D., M.Sc., MRCP, Head of the Neuroscience Therapeutic Area Unit at Takeda sadi,
Soticlestat has emerged as an important late-stage molecule in our portfolio, which focuses predominantly on rare neurological and neuromuscular diseases with great unmet need.
We are working diligently and expediently to initiate and execute upon the Phase 3 studies in children and young adults with DS and LGS. Our goal is to one day bring new treatment options that provide greater seizure control, tolerability and function to DS and LGS patients around the world.
Risks to Consider Before Buying OVID Stock
If you’re going to invest in OVID stock, it’s important that you consider the risks first. After all, there’s no such thing as a risk-free investment. When it comes to Ovid Therapeutics, the most significant risks are as follows:
- Clinical. First and foremost, Ovid Therapeutics is a clinical-stage biotechnology company. As such, the company is at the mercy of clinical trial results and regulatory authority opinion. Should results or opinions come out negative in any of the company’s development programs, significant declines may be the result.
- Profitability. OVID is not yet a profitable company. While this agreement may change that fact, it has not yet. At the end of the day, if the money the company has in the bank isn’t enough to bring it to profitability, it may look to public markets to raise funds, resulting in the dilution of existing shareholder value.
- Volatility. OVID stock is known to experience high levels of volatility. This makes entrance and exit decisions difficult and could lead to significant losses.
While there are risks to consider, there are always risks to think about when it comes to investing. Nonetheless, OVID stock seems like an amazing opportunity at the moment. With Takeda taking control over the asset, the company will receive a large injection of funding and have the potential to receive more cash as the development of the treatment progresses. Moreover, with a compelling pipeline, there are likely plenty more catalysts ahead. All in all, OVID stock is one to watch closely.