Ex-Teva Pharmaceutical and Bristol-Myers Squibb executive Jeremy Levin is once again on the verge of running a publicly traded company—this time, a small startup biotech. Startup Ovid Therapeutics, which Levin formed in New York a few years ago to develop treatments for rare brain diseases, has just filed paperwork outlining an IPO.
The move isn’t a surprise for Ovid, which over the past few years has amassed the type of large syndicate of investors that can support an IPO. But the offering will be a bet on Ovid’s ability to find drug candidates gathering dust elsewhere and develop them for rare neurological diseases. The first of those bets, a drug called OV101, was originally known as gaboxadol and was once tested by Merck and Lundbeck as a sleeping pill. Ovid is testing it for two rare brain diseases: Angelman Syndrome, a genetic disease with no effective treatments that causes a host of neurological, cognitive, and motor problems; and Fragile X Syndrome, an uncommon form of autism. Data from the first trials of OV101 should come over the next year or so.
Ovid, which is based in Manhattan but is opening up a lab in Cambridge, MA, was formed by Levin and Matthew During, a former molecular virology professor at Ohio State University and a neuroscience specialist. It has executed two deals since its inception as part of its plan to pluck assets from pharma and academia’s shelves. The first was a license to gaboxadol, which is being developed both as a pill (OV101) and intravenously (OV102). The second was to split rights to experimental TAK-935 (now OV935) with Takeda and develop it for a group of rare epilepsies and perhaps other neurological diseases.
Ovid never outlined the terms of these deals publicly, just that both Lundbeck and Takeda got equity stakes in Ovid and were entitled to future payments if these drugs progress (Takeda and Ovid are splitting TAK-935’s future profits, if they ever materialize, while Lundbeck would just get milestone payments). The IPO prospectus, however, gives some additional details.
According to the filing, Lundbeck got 1,052,977 Ovid shares in the licensing deal and stands to receive $181 million in milestone payments. Takeda became Ovid’s largest institutional equity holder thanks to the OV935 deal, which gave the Japanese firm 3,831,293 Ovid shares. Takeda could get more stock if OV935 gets to Phase 3 trials—the exact amount depends on a specific calculation, though Takeda can’t own more than 19.99 percent of the company—and could receive another $35 million in cash or stock if it hits certain regulatory and sales targets.
Angelman is estimated to affect one out of every 12,000 to 20,000 births, according to the National Organization for Rare Disorders. Symptoms vary patient to patient, but they include epileptic seizures and attention, walking, and speaking problems. There are no approved drugs for Angelman, just treatments to manage symptoms—like anti-epilepsy drugs to treat seizures—and behavioral and physical therapy to help patients deal with other issues. Ovid believes low levels of an inhibitory neurotransmitter, GABA, is responsible for many of the symptoms Angelman (and Fragile X) patients suffer from. OV101 is meant to boost GABA levels to impact a variety of these symptoms.
OV101 has begun a Phase 2 study in adults with Angelman, with data expected in 2018, and an early-stage trail in kids with either Angelman or Fragile X, with data to come later this year. Ovid is exploring the potential paths forward for OV102, which would be for use in hospitals.
OV935 blocks an enzyme primarily expressed in the brain, cholesterol 24-hydroxylase, thought to play a role in neurological diseases such as epilepsy. Takeda has tested the drug in four different Phase 1 trials so far. Ovid will begin a Phase 1b/2a trial in patients with rare diseases causing chronic epilepsies—Dravet syndrome, Lennox-Gaustaut syndrome, and Tuberous Sclerosis Complex—this year.
Ovid raised about $76 million total from a group that included Fidelity Management and Research Co., Cowen Private Investments, Sanofi-Genzyme BioVentures (the VC arm of Sanofi), Redmile Group, Cormorant Asset Management and others. Yet the IPO prospectus shows that Levin (26.8 percent stake) and During (24.7 percent stake) remain, by far, the company’s largest stockholders. Shinra Capital (5.0 percent) and Takeda (9.1 percent) are the only entities with a more than 5 percent stake. Ovid had about $51.9 million in cash at the end of 2016 after burning through $22.4 million over the course of the year.
Levin (pictured), meanwhile, was the head dealmaker at Novartis between 2002 and 2007 and over the next five years the senior VP of strategy and alliances at Bristol-Myers Squibb. At Bristol, he was one of the orchestrators of an initiative dubbed the “string of pearls” plan, in which the drugmaker aligned itself with a number of biotechs via licensing deals and small- to mid-size buyouts. Levin was named CEO of Israeli generics giant Teva in early 2012, but resigned less than two years later, in October 2013, amidst reports of a board squabble.