The recent biotech IPO surge continues. Ovid Therapeutics raised $75 million in an IPO late Thursday, becoming the fifth life sciences company to hit the Nasdaq in the past two weeks.
Ovid (NASDAQ: OVID), a New York company developing drugs for rare brain diseases, sold 5 million shares at $15 apiece. Those numbers come in at the low end of the projected $15 to $17 per share range set by Ovid, which is run by ex-Teva Pharmaceutical and Bristol-Myers Squibb executive Jeremy Levin. The company will begin trading on the Nasdaq on Friday under the ticker symbol “OVID.”
Ovid follows four other biotechs—Verona Pharma (NASDAQ: VRNA), Zymeworks (NYSE: ZYME), UroGen Pharma (NASDAQ: URGN), and BioHaven Pharmaceuticals (NYSE: BHVN)—to hold IPOs since April 26. In a positive sign for the life sciences sector, each of those companies sold shares at prices at or above their expectations, and all four, at least so far, are trading at or above their offering prices. Tocagen (NASDAQ: TOCA), which went public in early April, trades 73 percent above its IPO price.
Insider buying was part of the reason biotech was one of the most active sectors for IPOs in 2016, and the trend has continued this year. Existing backers offered to buy $20 million in Ovid shares at the IPO price (the company declined to comment as to whether they actually did). Similarly, insiders offered to purchase shares of BioHaven ($70 million), UroGen ($20 million), Verona ($23 million), Zymeworks ($42 million), before each of their IPOs.
Ovid, meanwhile, has gone from inception to publicly traded company in about three years. The company was formed in April 2014 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 a plan to pluck assets from pharma and academia’s shelves, and develop them for rare neurological disorders. The first was a license to gaboxadol, a drug once tested by Merck and Lundbeck as a sleeping pill that is now being developed as a treatment for the rare genetic disease Angelman syndrome. 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.
Pushing dormant pharma programs forward under new ownership isn’t a new idea, but it has started to take on a variety of different forms. New Enterprise Associates formed orphan drug accelerator Cydan Development in 2013 so a team of experts could scour the globe for promising projects in rare diseases, sift through them, find some winners, and form companies around them. One startup to come from that work, Vtesse, was sold to Sucampo Pharmaceuticals last month.
The idea behind Waltham, MA-based Tesaro (NASDAQ: TSRO) when it formed in 2010 was to buy up cancer drug candidates and rely on an expert team to develop them. Boston Pharmaceuticals was formed in 2015 with a similar concept. Vivek Ramaswamy has built three companies—Axovant Sciences, Myovant Sciences, and Dermavant Sciences—off a plan to similarly find deep discounts on pharma’s shelves and develop them quickly with loads of new cash.
Ovid will try to turn a similar trick with rare brain diseases. With the IPO cash, Ovid will run a Phase 2 study in adults with Angelman, with data expected in 2018, and an early-stage trial in kids with either Angelman or Fragile X syndrome, with data to come later this year. 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 of OV935 in patients with rare diseases causing chronic epilepsies—Dravet syndrome, Lennox-Gaustaut syndrome, and Tuberous Sclerosis Complex—this year as well.