For Rare Neural Diseases, Is Ovid Therapeutics The Right Team At The Right Time?

The Cowen Group has initiated coverage on Ovid Therapeutics Inc (NASDAQ: OVID) with an Outperform rating and $14.48 price target.

It's Time To Tackle Orphan Neurological Disorders

Until now, the biopharmaceutical industry has mostly ignored orphan neurological disorders due to the difficulty of understanding the complex biology and completing clinical trials, research analyst Eric Schmidt said in a note.

“Ovid's team of experienced executives has embraced the mission of transforming these patients' lives with novel medicines. The company's scientific understandings have been deployed via a BusDev-based strategy to generate a pipeline of candidates focused on neurodevelopmental disorders and epileptic encephalopathies.”

Ovid’s 2 Largest Candidates

1. OV101 is “a postsynaptic GABA receptor agonist [that is] directed at restoring tonic inhibition (proper signal to noise activity) in the neurons of patients with Angelman Syndrome and Fragile X Syndrome, two genetic disorders with no treatment options,” Schmidt said.
2. The drug has proven to be safe and biologically active in prior studies and is currently ongoing a Phase II proof-of-concept trial, according to the Cowen note. OV101 could have $1 billion or more in potential value from this therapy, Schmidt said.
3. OV935 is a candidate that could provide a modality for epileptic encephalopathies. Ovid’s 50 percent partner, Takeda, is convinced of Ovid's "scientific insights and capabilities" and since allowed “Ovid to redirect and spearhead development of OV935 into rare, severe epilepsies.” OV935 has proven to be safe and Ovid plans to initiate a Phase 2 trial in 2017, Schmidt said.

Overall, Schmidt believes his valuation still leaves upside for Ovid, and that the stock could currently be 70 percent undervalued. Ovid Therapeutics was trading down 5.52 percent at $13.68 at time of publication.

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