OVID THERAPEUTICS INC. The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
this Quarterly Report on Form 10-Q and the audited financial information and the
notes thereto included in the Annual Report on Form 10-K for the year ended
Overview
We are a biopharmaceutical company focused on developing impactful medicines for patients and families living with rare neurological disorders. We believe these disorders represent an attractive area for drug development as the understanding of the underlying biology has grown meaningfully over the last few years and today represent a substantial opportunity medically and commercially. Based on the rapid increase in scientific understanding of the role of genetics and key biological pathways relevant to diseases of the brain, we aim to identify, discover and develop novel compounds for the treatment of rare neurological disorders. We have built a deep knowledge of such diseases, how to treat them and how to develop the clinically meaningful endpoints required for development of a compound in these disorders. As a result of this knowledge, we have developed a pipeline of first-in-class compounds and programs and have demonstrated our model by progressing multiple compounds through to late-stage development. We continue to execute on our strategy to build this pipeline by discovering in-licensing and collaborating with leading biopharmaceutical companies and academic institutions.
Our latest pipeline includes two late-stage programs and several earlier-stage programs.
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Since our inception in
During the nine months ended
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Although we recorded net income of
? continue the ongoing and planned preclinical and clinical development of our drug candidates; ? build a portfolio of drug candidates through the development, acquisition or in-license of drugs, drug candidates or technologies; ? pursue collaborations and other arrangements with other leading biopharmaceutical companies and academic institutions; ? initiate preclinical studies and clinical trials for any additional drug candidates that we may pursue in the future; ? seek marketing approvals for our current and future drug candidates that successfully complete clinical trials; ? establish a sales, marketing and distribution infrastructure to commercialize any drug candidate for which we may obtain marketing approval; ? develop, maintain, expand and protect our intellectual property portfolio; ? implement operational, financial and management systems; and ? attract, hire and retain additional administrative, clinical, regulatory, manufacturing, commercial and scientific personnel.
COVID-19 Update
We have implemented business continuity plans designed to address and mitigate the impact of the ongoing COVID-19 pandemic on our employees and our business. We continue to operate normally with all of our employees continuing to work productively at home and abiding by new or re-imposed travel restrictions issued by federal, state and local governments. Our current plans to return to the office remain fluid as the COVID-19 pandemic persists, federal, state and local guidelines, rules and regulations continue to evolve and vaccination efforts continue.
Financial Operations Overview
Revenue
Since inception, we recognized
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for our research activities, including our product discovery efforts and the development of our product candidates, which include, among other things:
? employee-related expenses, including salaries, benefits and stock-based compensation expense; ? fees paid to consultants for services directly related to our drug development and regulatory effort; ? expenses incurred under agreements with contract research organizations, as well as contract manufacturing organizations and consultants that conduct preclinical studies and clinical trials; ? costs associated with preclinical activities and development activities; ? costs associated with technology and intellectual property licenses; ? milestone payments and other costs under licensing agreements; and ? depreciation expense for assets used in research and development activities.
Costs incurred in connection with research and development activities are expensed as incurred. Costs for certain development activities, such as clinical trials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or other information provided to us by our vendors.
Research and development activities are and will continue to be central to our business model. We expect our research and development expenses to increase over the next several years as we advance our current and future drug candidates through preclinical studies and clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. It is difficult to determine with certainty the duration and costs of any preclinical study or clinical trial that we may conduct. The duration, costs and timing of clinical trial programs and development of our current and future drug candidates will depend on a variety of factors that include, but are not limited to, the following:
?
number of clinical trials required for approval and any requirement for
extension trials;
?
per patient trial costs;
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? number of patients who participate in the clinical trials; ? number of sites included in the clinical trials; ? countries in which the clinical trial is conducted; ? length of time required to enroll eligible patients; ? number of doses that patients receive; ? drop-out or discontinuation rates of patients; ? potential additional safety monitoring or other studies requested by regulatory agencies; ? duration of patient follow-up; and ? efficacy and safety profile of the drug candidate.
In addition, the probability of success for any of our current or future drug candidates will depend on numerous factors, including competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an assessment of each drug candidate's commercial potential.
General and Administrative Expenses
General and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and stock-based compensation expense, related to our executive, finance, business development and support functions. Other general and administrative expenses include costs associated with operating as a public company described below, travel expenses, conferences, professional fees for auditing, tax and legal services and facility-related costs.
Other Income (Expense), Net
Other income (expense) primarily consists of interest income earned on our cash
and cash equivalents maintained in money market funds and prior short-term
investments that were maintained in
Results of Operations
Comparison of the Three Months Ended
The following table summarizes the results of our operations for the periods
indicated:
Three Months Three Months
Ended Ended
September 30, September 30,
2021 2020 Change
(in thousands)
Revenue:
License and other revenue $ - $ 6,914 $ (6,914 )
License revenue - related party - - -
Total revenue - 6,914 (6,914 )
Operating expenses:
Research and development $ 4,917 $ 15,876 $ (10,959 )
General and administrative 6,764 7,442 (678 )
Total operating expenses 11,682 23,318 (11,636 )
(Loss) from operations (11,682 ) (16,404 ) 4,722
Other income (expense), net 3 (21 ) 24
(Loss) before provision (benefit) for income
taxes (11,679 ) (16,425 ) 4,746
(Benefit) for income taxes (295 ) - (295 )
Net loss $ (11,384 ) $ (16,425 ) $ 5,041
Revenue
No revenue was generated during the three months ended
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Research and Development Expenses
Three Months Three Months
Ended September Ended
30, September 30,
2021 2020 Change
(in thousands)
Preclinical and development expenses $ 1,416 $ 10,713 $ (9,297 )
Payroll and payroll-related expenses 2,810 4,097 (1,287 )
Other expenses 691 1,065 (374 )
Total research and development $ 4,917 $ 15,875 $ (10,958 ) During the three months ended
General and Administrative Expenses
Three Months Three Months
Ended September Ended September
30, 30,
2021 2020 Change
(in thousands)
Payroll and payroll-related expenses $ 3,222 $ 3,588 $ (366 )
Legal and professional fees 1,795 2,908 (1,113 )
General office expenses 1,747 946 801
Total general and administrative $ 6,764 $ 7,442 $ (678 ) General and administrative expenses were
(Benefit) Provision for income taxes
The provision for income taxes was a benefit of
Other (Expense) Income, net
We incurred nominal other expenses for the three months ended
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Comparison of the Nine Months Ended
The following table summarizes the results of our operations for the periods
indicated:
Nine Months Nine Months
Ended Ended
September 30, September 30,
2021 2020 Change
(in thousands)
Revenue:
License and other revenue $ 12,383 $ 6,914 $ 5,469
License revenue - related party 196,000 - 196,000
Total revenue 208,383 6,914 201,469
Operating Expenses:
Research and development 28,850 46,534 (17,684 )
General and administrative 28,970 20,220 8,750
Total operating expenses 57,820 66,754 (8,934 )
Income (loss) from operations 150,563 (59,840 ) 210,402
Other (expense) income, net (50 ) 834 (883 )
Income (loss) before provision for income taxes 150,513 (59,006 ) 209,519
Provision for income taxes 1,679 - 1,679
Net income (loss) $ 148,835 $ (59,006 ) $ 211,198
Revenue
Total revenue was
Research and Development Expenses
Nine Months Nine Months
Ended Ended
September 30, September 30,
2021 2020 Change
(in thousands)
Preclinical and development expense $ 15,557 $ 31,963 $ (16,406 )
Payroll and payroll-related expenses 10,557 11,683 (1,126 )
Other expenses 2,736 2,888 (152 )
Total research and development $ 28,850 $ 46,534 $ (17,684 ) Research and development expenses were
General and Administrative Expenses
Nine Months Nine Months
Ended Ended
September 30, September 30,
2021 2020 Change
(in thousands)
Payroll and payroll-related expenses $ 10,647 $ 9,305 $ 1,342
Legal and professional fees 14,611 8,009 6,602
General office expenses 3,712 2,906 806
Total general and administrative $ 28,970 $ 20,220 $ 8,750
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General and administrative expenses were
Provision for income taxes
The provision for income taxes was
Other Income (Expense), net
We incurred nominal other expense for the nine months ended
Liquidity and Capital Resources
Overview
As of
In
Similar to other development stage biotechnology companies, we have generated
limited revenue, which has been through the Angelini License Agreement. With the
exception of the three months ended
We believe that our existing cash and cash equivalents as of
We plan to finance our cash needs through either equity offerings, debt financings, collaborations, strategic alliances, or licensing agreements or a combination of any such transactions. To the extent that we raise additional capital through future equity offerings or debt financings, ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. There can be no assurance that such financings will be obtained on terms acceptable to us, if at all. The ongoing COVID-19 pandemic continues to evolve and has already resulted in a significant disruption of global financial markets. If the disruption persists and deepens, we could experience an inability to access additional capital, which could in the future negatively affect our operations. If we raise additional funds through collaborations, strategic alliances or licensing agreements with third parties for one or more of our current or future drug candidates, we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or to grant licenses on terms that may not be favorable to us. Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability to pursue our business strategy.
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Cash Flows
The following table summarizes our cash flows for the periods indicated:
Nine Months Nine Months
Ended Ended
September 30, September 30,
2021 2020
(in thousands)
Net cash provided by (used in):
Operating activities $ 130,610 $ (37,075 )
Investing activities (1,659 ) 34,739
Financing activities 795 47,305
Net increase (decrease) in cash and cash equivalents
Net Cash Provided by (Used in) Operating Activities
Net cash provided by operating activities was
Net cash used in investing activities was
Net Cash Provided by Financing Activities
Net cash provided by financing activities of
Contractual Obligations and Commitments
As of
During the period ended
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any
off-balance sheet arrangements, as defined in the rules and regulations of the
Emerging Growth Company Status and Smaller Reporting Company Status
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012, or the JOBS Act, and may remain an emerging growth company
until
?
reduced disclosure about our executive compensation arrangements;
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? no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and ? exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
We have taken advantage of reduced reporting requirements in this Quarterly
Report on Form 10-Q and may continue to do so until such time that we are no
longer an emerging growth company. We will remain an "emerging growth company"
until the earliest of (a) the last day of the fiscal year in which we have total
annual gross revenues of
In addition, we are also a smaller reporting company as defined in the Exchange
Act. We may continue to be a smaller reporting company even after we are no
longer an emerging growth company. We may take advantage of certain of the
scaled disclosures available to smaller reporting companies and will be able to
take advantage of these scaled disclosures for so long as (i) our voting and
non-voting common stock held by non-affiliates is less than
Critical Accounting Policies and Estimates
Our management's discussion and analysis of financial condition and results of
operations is based on our financial statements, which have been prepared in
accordance with accounting principles generally accepted in
During the nine months ended
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