Ovid Therapeutics Inc. (OVID) Earnings Call Transcript & Summary

Good morning, everyone. I'm Brian Abrahams, senior biotech analyst here at RBC Capital Markets, and welcome again to day 2 of our healthcare conference. Our next presenting company is Ovid Therapeutics, represented by their CEO and Chairman of the Board, Jeremy Levin. Jeremy thanks again for joining us.

Brian, thanks a lot. Pleasure being here with you. Nice to see you at least on video. It'd be fun to see you face to face.

Sure, would, hopefully soon.

So a lot going on at Ovid these days. You recently closed your amended deal with Takeda. Can you maybe talk a little bit more about that and particularly on soticlestat. Curious your latest thoughts on the time lines for trial initiation, the designs and potential readouts there. And what gives you on your partner confidence and the ultimate success of that in LGS and Dravet?

Well, yes, first of all, thank you. It was a very strategic transaction we did with Takeda. We retained a very significant interest in this Phase III trial. Now let's just give you some time lines on that. Takeda has announced publicly that it intends to launch this in 2024. So the bottom line is we're, right now, in a Phase III in LGS and Dravet, which, if successful, will lead to a launch. Now there's a lot of economics underlying that, and I'm happy to go into that. But just to put this in your head, we've got $196 million upfront. We have another nearly $600 million coming into us in the event that it is successful and the sales take off. And we have up to 20% economics on global sales of that entity. So it's an important asset within the company. And as a -- but we have 0 expense related to it, 0. So as you will note, expenses in Ovid have dropped dramatically as we focus the monies on our early stages. Now with regard to the trial, the trial is very important, and we have a -- we have great confidence that the -- that soticlestat will succeed again in Phase III. Obviously, biology will tell. But the reality is that the significant results from the global Phase II double-blind, randomized, placebo-controlled trial of soticlestat gives us that confidence. The Phase III study design and patient population is nearly identical to that of Phase II, and most sites and regions that participated in Phase II will be -- will also participate in Phase III. The epilepsy study consortium will again be involved in -- to reduce site and regional variability in seizure classification and counting at the primary end point, which is reduction in seizures, obviously. And hopefully, we'll replicate the very low placebo rates and large size effects we saw. Recall, in the Phase II study, the Dravet's population treated with soticlestat achieved a placebo-adjusted median reduction of 46% in convulsive seizures with a p-value of 0.0007, which puts soticlestat on a par with Fintepla and better than Epidiolex. In the LGS Phase III study to augment the seizure variability will be reduced by additional seizure classification breakdown, so it's easier to identify, reliably count, and basically identify the most impactful seizures will count towards the primary end point. And as far as we can see now that the sensitivity and subanalysis of the Phase II data reassured us and gives us a lot of confidence in soticlestat's efficacy will be replicated. I think the other aspect to think about this, and it's important, is that with soticlestat's safety and ease of use, its lack of drug-drug interaction across pediatric and adult studies, it's got a very high probability of a solid safety profile there. And if it's successful, and I say "if" because that's -- we're entering Phase III, could be a very formidable anti-seizure medication on the market. So in summary, important asset moving ahead. Takeda is now completely in charge. All costs accrued to Takeda, and we -- they have stated publicly that it's -- that, that Phase III will initiate on time in H1 in order to meet a second half of this year in order to meet that time line of a launch in 2024.

Great. Can you comment on any optionality for the drug beyond those 2 indications, Lennox-Gastaut and Dravet? Are there other areas that Takeda may -- and you may be looking to explore based on some of the earlier work that you've done?

Well, I don't want to preempt anything that Takeda decides to do because they are in charge of the development program. That said, with the kind of safety profile that we've seen to date, over time, this has the potential, at least in our opinion, Ovid's opinion, if that safety profile hold of being a very broad-based option as a medicine in seizures in general. So I think you may -- as we look at the way that Takeda is handling this, we're very pleased by it. It's a very solid way of doing this. We will build on what we did in Phase II and Phase III. And then from there, if it pans out as we hope it will do and this -- we have reason to believe it will do, then we have the option over time for this to be a very major player in epilepsy in general.

Great. And then following the Takeda deal, you now have, I think, over $230 million in cash on hand. And as you mentioned, a relatively low cash burn with Takeda picking up the costs of soticlestat, and you're focused now on the earlier-stage programs. So can you speak to how you might plan to use your balance sheet to grow up? What are the characteristics of external assets that you're looking for or internal assets that you might pull forward? What are you seeing from an opportunity standpoint in neuroscience that excites you right now?

Well, a couple of things are important. First of all, neuroscience is absolutely burgeoning, and you can see this any which way you want. The number of companies that are emerging in this area. If you, basically speak to the fact that if you've got the right team, you've got the right experience and the track record with adequate capital, doesn't matter private or public, you're going to be able to access incredible innovation, the right patient groups. And if you execute, you're going to have something really great and we plan to. So our use of capital is going to be really in 3 groups of use of capital. Number one is, obviously, we have a really interesting pipeline, which we can talk about at this time. One is 329 which is GABA aminotransferase inhibitor that is seizures associated with tuberous sclerosis. The second is 882, that's a short hairpin RNA therapy, which is an Angelman syndrome and the 815, which is in a very interesting area called KIF1A, which you and investors will hear a lot more, and then a list of genetic targets that we've assembled in -- which we are involved in and which are not disclosed. Now we anticipate 3 INDs per year -- 3 INDs over the next 3 years, starting in the first half of 2022. So one investment bucket goes there. The second investment bucket really is looking very carefully now, knowing where the neurosciences are going, is to target specifically the leading-edge technologies that are required to really build the fundamental CNS company of the future. Now these include, for example, bringing in what I call CNS therapeutic-enabling technologies and involve 2 key areas. One is the blood brain barrier. How do you challenge that? How do you get across that? And the second are key delivery systems. We know that we need to, in these delivery systems, if you are going to deal with genetic disorders or genetically related disorders, the delivery systems have to minimize immunogenicity, enable precision targeting and address the really [ multifarious ] manufacturing issues that have come along. Now we've had 6 years to think about this. And one of the key elements of investing our capital was to bring in the intellectual horsepower to do that, Brian. And amongst which was to ask Bob Langer to Chair our SAB so that we had a good asset test, not just of what we were looking at, but somebody who could extend our capabilities beyond what we had seen in the past and give us a reality check. So that's one group. That's the technologies. And we are advanced in doing that. The second, is looking at the clinical assets that might better fit with a team like ours where we know what we're doing, we really understand the patient groups, and we'd like to get hold of something that is differentiated and perhaps later stage in ours because the goal is to use this capital very thoughtfully. And there, what we're looking at is in rare neurological, neurometabolic and ophthalmological disorders. We really are looking at these very carefully. The goal is to find actionable assets that are near IND or later. We are looking at best-in-class or first-in-class therapies. And the bottom line is it's very disciplined approach. Done this before, Brian. It's not like we're a [indiscernible] here. It complements the current pipeline and that's really important, and it leverages our capability. So we have a set of criteria. We're actioning them. We're going to do this, but it's -- the bottom line is it's very, very disciplined. And given the team I have and its experience, I'm very confident that we can execute on that. So 3 pieces: one is carefully think through to how we invest in our current pipeline and make sure that that's successful with 3 INDs over the next 3 years; number two, build that technology base and complement our scientific strength in that in a way which is very special; and thirdly, look carefully but thoughtfully on assets that are complementary.

Got it. Would love for you to expand a little bit more on Bob Langer's recent appointment as Chair of the Scientific Advisory Board. I would love to learn more about how he fits within Ovid. And in addition to what you mentioned on external -- evaluation of external assets, just what role he'll be playing to help expand thought leadership across the team?

Well, the dream here for us overall, and that's why Bob and myself are doing this is to make a fundamental neuroscientist company. In order to do that, you need many elements. Now we have deep clinical, deep understanding of the patient groups. And we've, over 6 years, we've been able to study intimately the delivery systems, the types of programs that people have put in place and some that has been successful, others that haven't. So we've got a huge amount of experience in understanding that. So what we needed to complement was to have somebody who would bring the scientific view from the outside, not living in management. Management can sometimes believe what they want to believe. You have to have somebody who can sit on a Scientific Board to ask the hard questions. Number one, is this scientifically valid? Number two, how will it advance the platform? And number three, to bring the kind of connections and credibility of assessment that we need internally. And of course, one of the things that's remarkable is to bring imagination, real excitement to what we're doing in the sense of, hey, this is -- this will change science. Can you do it? This will change the way we look at the science of neurosciences. So I think it's time to do that. We wouldn't have gone to seek Bob's advice or Bob's involvement until now. But now we feel it's at the same time. It's kind of like the pivot time that existed early on when suddenly people work up to the fact that you had -- immuno-oncology was about to burst. And that was -- you have to admit, Brian, that at that time, 2009, absolutely nobody thought it was going to burst but a few people did, and it was the science that drove it. And so Bob Langer in this instance is somebody who truly understands it. Imagine what you might do and challenge us to do so.

That's great. Would love to talk a little bit about the internal pipeline as well. You mentioned some of the assets. Maybe starting with 329. It's a molecule that's been in your pipeline for a while. It's probably received less attention from investors with all the focus on 101 and 935. But maybe you could talk to us about the mechanism there of GABA-T in activation and how maybe similar different to GABA modulation approaches that others are pursuing? And what kind of properties you've aimed for with this drug?

Yes. So this is -- this molecule came out of a collaboration with Richard Silverman, Northwestern. And Richard Silverman is, of course, the inventor of Lyrica, and one of the greatest scientists in -- chemical scientists there is. He's really thoughtful, very, very focused on delivering drugs that do something different. The mechanism of GABA-T in activation for 329, we've really been looking at it carefully because what we were interested in is how 329 worked by increasing the concentration and essentially an antiseizure drug, as an antiseizure drug, it -- increasing the concentration of inhibitory neurotransmitter, Gamma aminobutyric acid, GABA. So what it does is it essentially inhibits the GABA aminotransferase enzyme that breaks down GABA. Now there are a number of different drugs in the past, which are a lot more dirty than this, which are very dirty, actually, that work in roughly the same way. An example is vigabatrin. So we know that if you inhibit this enzyme and you increase the amount of GABA, you can definitely have an effect, a significant and very powerful effect on seizures. It's about -- in this instance, this is -- Sabril, obviously had its drawbacks. But if we knew about the target, and it led us to the clue that you wanted something that was incredibly specific for this target. And this particular molecule is about 1,000x more potent than vigabatrin and about 10x more potent than any other known inhibitor of this type. So this is a really interesting one. And what we can tell out of this is that by -- because of its potency and because of its specificity, it can be used at a much lower dose than similar or similar types of drug with better efficacy. Now we've had the chance to demonstrate this. For example, in animal models, where this perhaps one of the better ones of these is an infantile spasm model. And there, the sort of standard of treatment there is ACTH. And you can see that if you inject this into -- if you use what's called an NMDA model, this model will demonstrate very clearly that OV329 at the very low doses, has nearly identical effect as the standard of care injectable, it's an injectable, which is ACTH. And this is really a real step-up in the ability to provide a therapeutic in this area. So if this proceeds, and it's -- it has a number of things to do. It's in a preclinical test, it's in pre-IND studies right now. We -- the important thing for us will be to focus this. It's going to be primarily tuberous sclerosis and an infantile spasm. So it's a tremendous opportunity. By the way, just so you know, vigabatrin has what we believe are off-target effects, which leads to retinal effects. And even in tuberous sclerosis, this type of a mechanism has a -- it's the only one that really seems to have a very profound impact. In tuberous sclerosis, vigabatrin is used by up to 90% of patients despite its side effects. We want to have -- we don't want any of those, and we don't think we have them.

Interesting. Any other indications you might consider with this mechanism, tremor, for instance, that are broader? Or is the focus going to be primarily on epileptic conditions?

Well, we're going to start with the epileptic ones. Tuberous sclerosis, we must -- the way we've operated before is proof that the drug actually has an effect in the most likely disorder. And tuberous sclerosis is one. As I point out that the second, of course, is infantile spasms. And there's a very clear unmet need. It's realistically, epilepsy and tuberous sclerosis are the most common neurological manifestation, at least 85% of patients have it. And despite several treatment options, we still have significant, significant, about half of the patients, continue to have resistance to epilepsy. So from our perspective, that's a good start. In infantile spasm, frankly, what we would -- the goal here is a much safer medicine and at least, if not, more effective than what is currently around, and that's what we're aiming for. So the risk/benefit profile of 329 is superior to anything that we've seen by far. And it's unlikely that we would do anything other than tackle those epilepsies. And there, ultimately, and I say ultimately, okay? You have to imagine a bit. It's the same as what we did with Takeda. Ultimately, in the ideal situation, it all goes well, and it -- 329 has the potential to be evaluated in use as effective in any seizure disorder. But we've got to -- this includes -- what I'm really talking about here, including garden variety focal onset seizures in adults, et cetera. We need to prove to the -- ourselves, the medical community, first of all, in the rare epilepsies. And then from there, we take it to the larger jump. But again, it's very similar to the strategy that we described in Takeda. Prove it in the narrow area, which we've demonstrated our ability to do. And then, again, see if it's got a larger use, which means, Brian, and this is super important, that the whole world of epilepsy is changing in front of our eyes. We've got the Phase III now in the 24-hydroxylase inhibitor. And now coming right behind it, a little bit further behind, but we hope we can accelerate that, here, you have a GABA aminotransferase inhibitor, which looks really good.

Great. And then with respect to some of the other interesting pipeline programs that you guys are working on, 882, which you mentioned earlier, the shRNA approach has a relatively unique mechanism. What advantages might that offer in targeting UBE3 versus other approaches? Is there a level of UBE restoration that you think will be sufficient to confer therapeutic benefit there? And can you maybe just quickly mention how 882 differs from, I think, your initial asset, which was 881 in that space?

Yes. You bet. Well, 881 is just -- it's a variant of [ this ]. So let's talk 882, it's a more optimized version. So what we know is that the short hairpin approach, the other genetic approaches to Angelman's, essentially are all based on, as we are, on a fundamental fact. Angelman syndrome is caused by a mutation in the maternal copy of the UBE3A gene and at the same time, the silencing of the paternal copy. Now that's unusual, rare to happen. But the silencing is mediated by a noncoding RNA sequence whose expression basically blocks the transmission of the paternal UBE3A gene, which if it was expressing, you might not have Angelman, okay? So that's really the problem. So how did they address it? In the ASO approach, basically, what they do is they inject a chemically modified entity with the hope that it will essentially target that noncoding RNA sequence and get rid of it and basically let the maternal gene expressed. The problem with that is that it causes, we know already, undesirable off-target effects, which could be -- we've seen that in many cases, other cases have been successful, but it does depend on the chemical modification. Number two, it requires redosing on approximately quarterly time scale. That's a lot for patients who need to go in and have an intrathecal injection. And the problem is, in addition to that, it may have undesirable off-target effects. Now the -- it's a good beginning. But the better way of going, and we've been studying this for some time, is what 882 does. This is a -- the short hairpin approach essentially inserts a cassette that allows you to replicate repeatedly a molecule that silences completely the paternal -- that -- or the noncoding RNA sequence. It basically silences it. And then it does something which is even more attractive, it unsilences the gene, the paternal gene. And it has minimal off-target effects, and it has the potential for very long-term lasting effects if done in the right way. We believe we can, therefore, mitigate many of the problems that ASOs present in this particular population. And we have a good demonstration of that. For example, we know that if you -- its effects on both getting rid of the suppressing RNA, it's -- we can see that and it reduces it -- it really does reduce its expression. It's quite striking in vitro and we'll -- over time, we'll be able to show much more of that hopefully in vivo as well. And then in addition to that, we see a significant, at least, a far -- greater than 2x increase in mRNA, UBE3A, mRNA expression from the paternal gene when compared to control. So we've got a lot of confidence in this approach. We think it's the better way to go in Angelman's. And of course, this is an area we really, really understand. The less time you can have [ equipment ] in hospital, the better.

Great. Well, unfortunately, we're out of time, but this was really great to catch up, Jeremy. Thank you so much for the insights. And thanks for your participation. Thanks, everyone, for joining.

Brian, thank you, and thanks, everybody, for listening. Really appreciate your being here.

Take care.

Take care. Bye now.