Last week, Ovid Therapeutics disclosed layoff plans in an SEC filing following a Phase 3 flop for its Takeda-partnered epilepsy program. The news sent its stock price $OVID down 70%.
Ovid has been here before.
In 2022, the company laid off 20% of its staff after an Angelman syndrome drug failed a Phase 3 study, a result that most analysts saw coming. The drug, called OV101, had whiffed on a Phase 2 trial in 2018, causing another stock market rout.
But at the time, CEO Jeremy Levin insisted the then-mid-stage drug was a success and pushed it into that pivotal trial. When it ultimately failed the Phase 3, Ovid pivoted to epilepsy, including the Takeda-partnered drug soticlestat.
Now, the company is pivoting again, touting healthy volunteer data from a ROCK2 inhibitor, with plans to launch a Phase 2 trial later this year.
In an emailed statement, Levin said the cash they got from Takeda after selling soticlestat’s rights back in 2021 allowed Ovid to build its own pipeline and run its own studies. The company “never counted” on a windfall from the drug, Levin also told Endpoints News last month, though the Takeda deal promises up to $660 million in milestones.
“We are laser focused on advancing our own pipeline programs which contain novel mechanisms of action for seizures and rare brain disorders and doing so in a financially disciplined manner,” Levin said in the statement.
Takeda plans to discuss next steps with regulators on soticlestat, and some analysts believe there is a path forward given the lack of treatments for the type of epilepsy it is designed to treat. But some acknowledge the difficult position Ovid is in, with B Riley Securities’ Kalpit Patel writing that many investors “have written off” the company thanks to the recent readout.
Any path for soticlestat would be narrow, with a more modest commercial opportunity than originally planned, TD Cowen analysts noted last month. The likelihood of receiving any milestones is also lower, William Blair analyst Tim Lugo wrote, since Takeda probably won’t be as aggressive in trying to get it approved.
Ovid will also have to move forward with a reshuffled C-suite. Part of last week’s layoffs included COO Jason Tardio and general counsel/chief compliance officer Thomas Perone.
But the ROCK2 program, called OV888, shouldn’t be counted out immediately, Patel said, because the healthy volunteer data only resulted in mild side effects that resolved on their own. Researchers are testing it in cerebral cavernous malformations, and Ovid estimates a treatable population of about 400,000 in the “seven major markets.”
Whether OV888 reaches those patients remains to be seen. Data for the Phase 2 trial is expected in early 2026 — around the same time Ovid expects its cash to run out.