UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________

Commission File Number: 001-38085

Ovid Therapeutics Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-5270895
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1460 Broadway, Suite 15044 New York, New York	10036
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (646) 661-7661

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	OVID	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of November 5, 2020, the registrant had 63,435,222 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	5
	Condensed Consolidated Statements of Comprehensive Loss	6
	Condensed Consolidated Statements of Stockholders’ Equity	7
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 5.	Other Information	62
Item 6.	Exhibits	63
Signatures		64

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this report, regarding, among other things:

• statements regarding the impact of the COVID-19 pandemic and its effects on our operations, access to capital, research and development and clinical trials and potential disruption in the operations and business of third-party manufacturers, contract research organizations, or CROs, other service providers, and collaborators with whom we conduct business;

• the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs;

• our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

• our ability to identify additional novel compounds with significant commercial potential to acquire or in-license;

• our ability to successfully acquire or in-license additional drug candidates on reasonable terms;

• our ability to obtain regulatory approval of our current and future drug candidates;

• our expectations regarding the potential market size and the rate and degree of market acceptance of such drug candidates;

• our ability to fund our working capital requirements;

• the implementation of our business model and strategic plans for our business and drug candidates;

• developments or disputes concerning our intellectual property or other proprietary rights;

• our ability to maintain and establish collaborations or obtain additional funding;

• our expectations regarding government and third-party payor coverage and reimbursement;

• our ability to compete in the markets we serve;

• the impact of government laws and regulations;

• developments relating to our competitors and our industry; and

• the factors that may impact our financial results.

You should not rely upon forward-looking statements as predictions of future events.  Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we are under no duty to update or revise any of the forward-looking statements, whether because of new information, future events or otherwise, after the date of this report. A summary of selected risks associated with our business are set forth below.

Summary of Selected Risks Associated with Our Business

Our business is subject to numerous risks and uncertainties, including those discussed at length in the section titled “Risk Factors.” These risks include, among others, the following:

• We have incurred significant operating losses since inception and expect to continue to incur substantial operating losses for the foreseeable future.

• We have never generated any revenue from drug sales. Our operating history may make it difficult to evaluate the success of our business to date and to assess our future viability.

• We will require additional capital to finance our operations, which may not be available on acceptable terms, if at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate certain of our drug development efforts or other operations.

• Our future success is dependent on the successful clinical development, regulatory approval and commercialization of our current and future drug candidates. If we, or our licensees, are not able to obtain required regulatory approvals, we will not be able to commercialize our drug candidates, and our ability to generate revenue will be adversely affected.

• Because the results of preclinical studies or earlier clinical trials are not necessarily predictive of future results, our drug candidates may not have favorable results in planned or future preclinical studies or clinical trials, or may not receive regulatory approval.

• Interim topline and preliminary results from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures, which could result in material changes in the final data.

ii

• We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

• Angelman syndrome has no treatments approved by the U.S. Food and Drug Administration, and the primary clinical endpoint, CGI-I-AS, has not previously been used as a sole primary endpoint in a pivotal clinical trial.

• If we are not successful in discovering, developing and commercializing additional drug candidates, our ability to expand our business and achieve our strategic objectives would be impaired.

• Our drug candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial potential or result in significant negative consequences following any potential marketing approval.

• Even if our current or future drug candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.

• If we are unable to establish sales and marketing capabilities, or enter into agreements with third parties to market and sell our current or any future drug candidates, we may be unable to generate any revenue from drug sales.

• We are heavily dependent on our relationship with Takeda Pharmaceutical Company Limited (“Takeda”) for the development and commercialization of OV935. Any disruption in our relationship with Takeda could lead to delays in, or the termination of, the development of OV935, which would materially harm our business.

• We are dependent on our relationship with Angelini Pharma Rare Diseases AG (“Angelini”) for the development and commercialization of OV101 in the European Economic Area as well as Switzerland, the United Kingdom, Russia and Turkey. Any disruption in our relationship with Angelini could lead to delays in the development and achievement of regulatory approval in these countries, which would materially harm our business.

• We may be required to make significant payments in connection with our licenses of OV101 from H. Lundbeck A/S and OV935 from Takeda.

• Our relationships with customers, physicians, and third-party payors may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.

• Coverage and adequate reimbursement may not be available for our current or any future drug candidates, which could make it difficult for us to sell profitably, if approved.

• If we are unable to obtain and maintain patent protection for our current or any future drug candidates, or if the scope of the patent protection obtained is not sufficiently broad, we may not be able to compete effectively in our markets.

• We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could be expensive, time consuming and unsuccessful.

• We do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of our current and any future drug candidates.

• We intend to rely on third parties to conduct, supervise and monitor our preclinical studies and clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business.

• COVID-19 could adversely impact our business, including our clinical trials and access to capital.

• We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

• We may be subject to numerous and varying privacy and security laws, and our failure to comply could result in penalties and reputational damage.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

OVID THERAPEUTICS INC.

Condensed Consolidated Balance Sheets

	September 30,			December 31,
	2020			2019
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	86,866,275		$	41,897,144
Short-term investments		-			34,841,969
Related party receivable		648,995			1,131,146
Prepaid expenses and other current assets		2,831,564			1,942,933
Total current assets		90,346,834			79,813,192
Long-term prepaid expenses		599,046			359,539
Security deposit		154,376			135,390
Property and equipment, net		137,799			68,363
Other assets		360,961			467,247
Total assets	$	91,599,016		$	80,843,731
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	3,161,801		$	3,256,098
Accrued expenses		11,420,475			7,266,706
Deferred revenue, current		3,150,454			-
Related party payable		226,536			10,804
Total current liabilities		17,959,266			10,533,608
Deferred revenue, net of current portion		9,935,512			-
Related party payable - noncurrent		61,200			286,562
Total liabilities		27,955,978			10,820,170
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized; Series A convertible preferred stock, 10,000 shares designated, 5,506 and 7,762 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively	$	6		$	8
Common stock, $0.001 par value; 125,000,000 shares authorized; 63,435,222 and 54,710,322 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		63,435			54,711
Additional paid-in-capital		335,742,193			283,122,894
Accumulated other comprehensive gain		-			2,469
Accumulated deficit		(272,162,596	)		(213,156,521	)
Total stockholders' equity		63,643,038			70,023,561
Total liabilities and stockholders' equity	$	91,599,016		$	80,843,731

See accompanying notes to these unaudited condensed consolidated financial statements

4

OVID THERAPEUTICS INC.

Condensed Consolidated Statements of Operations

(unaudited)

	For the Three Months Ended September 30,			For the Three Months Ended September 30,			For the Nine Months Ended September 30,			For the Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue:
License revenue	$	6,914,034		$	—		$	6,914,034		$	—
Operating expenses:
Research and development	$	15,875,295		$	11,597,633		$	46,533,610		$	30,052,432
General and administrative		7,442,401			5,168,103			20,220,160			14,089,106
Total operating expenses		23,317,696			16,765,736			66,753,770			44,141,538
Loss from operations		(16,403,662	)		(16,765,736	)		(59,839,736	)		(44,141,538	)
Other (expense) income, net		(21,127	)		131,164			833,661			649,504
Net loss	$	(16,424,789	)	$	(16,634,572	)	$	(59,006,075	)	$	(43,492,034	)
Net loss attributable to common stockholders	$	(16,424,789	)	$	(16,634,572	)	$	(59,006,075	)	$	(43,492,034	)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.28	)	$	(0.43	)	$	(1.04	)	$	(1.21	)
Weighted-average common shares outstanding basic and diluted		59,406,215			38,504,825			56,586,640			35,872,441

See accompanying notes to these unaudited condensed consolidated financial statements

5

OVID THERAPEUTICS INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

	For the Three Months Ended September 30,			For the Three Months Ended September 30,			For the Nine Months Ended September 30,			For the Nine Months Ended September 30,
	2020			2019			2020			2019
Net loss	$	(16,424,789	)	$	(16,634,572	)	$	(59,006,075	)	$	(43,492,034	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities		-			-			(2,469	)		1,829
Comprehensive loss	$	(16,424,789	)	$	(16,634,572	)	$	(59,008,544	)	$	(43,490,205	)

See accompanying notes to these unaudited condensed consolidated financial statements

6

OVID THERAPEUTICS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

	Series A Convertible Preferred Stock						Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated
	Shares			Amount			Shares			Amount			Capital			Income			Deficit			Total
Balance, December 31, 2019		7,762		$	8			54,710,322		$	54,711		$	283,122,894		$	2,469		$	(213,156,521	)	$	70,023,561
ATM offering costs		-			-			-			-			2,053			-			-			2,053
Stock-based compensation expense		-			-			-			-			1,302,931			-			-			1,302,931
Issuance of common stock from employee stock purchase plan		-			-			43,743			43			83,067			-			-			83,110
Other comprehensive income		-			-			-			-			-			63,235			-			63,235
Net loss		-			-			-			-			-			-			(20,030,090	)		(20,030,090	)
Balance, March 31, 2020		7,762			8			54,754,065			54,754			284,510,945			65,704			(233,186,611	)		51,444,800
ATM offering costs		-			-			-			-			(61,260	)		-			-			(61,260	)
Conversion of series A convertible preferred stock to common stock		(2,256	)		(2	)		2,256,000			2,256			(2,254	)		-			-			-
Stock-based compensation expense		-			-			-			-			1,555,332			-			-			1,555,332
Issuance of common stock from exercise of stock options		-			-			72,035			72			160,870			-			-			160,942
Other comprehensive loss		-			-			-			-			-			(65,704	)		-			(65,704	)
Net loss		-			-			-			-			-			-			(22,551,196	)		(22,551,196	)
Balance, June 30, 2020		5,506			6			57,082,100			57,082			286,163,633			-			(255,737,807	)		30,482,914
Stock-based compensation expense		-			-			-			-			2,616,241			-			-			2,616,241
Proceeds from August 2020 Offering, net of underwriting costs and commissions		-			-			6,250,000			6,250			46,725,185			-			-			46,731,435
Issuance of common stock from employee stock purchase plan		-			-			61,721			62			120,294									120,356
Issuance of common stock from exercise of stock options		-			-			41,401			41			116,840			-			-			116,881
Net loss		-			-			-			-			-			-			(16,424,789	)		(16,424,789	)
Balance, September 30, 2020		5,506		$	6			63,435,222		$	63,435		$	335,742,193		$	-		$	(272,162,596	)	$	63,643,038
	Series A Convertible Preferred Stock						Common Stock						Additional Paid-In			Accumulated Other Comprehensive			Accumulated
	Shares			Amount			Shares			Amount			Capital			Income			Deficit			Total
Balance, December 31, 2018		-		$	-			24,654,114		$	24,654		$	191,477,598		$	(1,829	)	$	(152,695,278	)	$	38,805,145
Proceeds from February 2019 Offering, net of underwriting costs and commissions		2,500			3			13,993,778			13,994			30,508,031			-			-			30,522,028
Stock-based compensation expense		-			-			-			-			1,642,540			-			-			1,642,540
Issuance of common stock from employee stock purchase plan		-			-			45,126			45			73,059			-			-			73,104
Other comprehensive income		-			-			-			-			-			3,179			-			3,179
Net loss		-			-			-			-			-			-			(13,800,195	)		(13,800,195	)
Balance, March 31, 2019		2,500			3			38,693,018			38,693			223,701,228			1,350			(166,495,473	)		57,245,801
Underwriting costs related to February 2019 Offering		-			-			-			-			(1,193	)		-			-			(1,193	)
Stock-based compensation expense		-			-			-			-			1,251,908			-			-			1,251,908
Other comprehensive loss		-			-			-			-			-			(1,350	)		-			(1,350	)
Net loss		-			-			-			-			-			-			(13,057,267	)		(13,057,267	)
Balance, June 30, 2019		2,500			3			38,693,018			38,693			224,951,943			-			(179,552,740	)		45,437,899
Stock-based compensation expense		-			-			-			-			1,184,481			-			-			1,184,481
Issuance of common stock from employee stock purchase plan		-			-			35,416			36			58,755			-			-			58,791
Conversion of common stock to Series A convertible preferred stock		1,262			1			(1,262,000	)		(1,262	)		1,261			-			-			-
Net loss		-			-			-			-			-			-			(16,634,572	)		(16,634,572	)
Balance, September 30, 2019		3,762		$	4			37,466,434		$	37,467		$	226,196,440		$	-		$	(196,187,312	)	$	30,046,599

See accompanying notes to these unaudited condensed consolidated financial statements

7

OVID THERAPEUTICS INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

	Nine Months Ended September 30,			Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(59,006,075	)	$	(43,492,034	)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense		5,474,504			4,078,929
Depreciation and amortization expense		223,807			201,201
Change in accrued interest and accretion of discount on short-term investments		(199,408	)		12,863
Change in operating assets and liabilities:
Prepaid expenses and other current assets		(888,631	)		924,800
Security deposit		(18,986	)		8,605
Related party receivable		482,151			600,104
Long-term prepaid expenses		(239,507	)		1,790,941
Accounts payable		(202,120	)		1,455,155
Accrued expenses		4,223,397			(407,167	)
Deferred revenue		13,085,966			-
Related party payable		(9,630	)		624,335
Net cash used in operating activities		(37,074,532	)		(34,202,268	)
Cash flows from investing activities:
Purchases of short-term investments		(9,961,092	)		-
Proceeds from maturities of short-term investments		45,000,000			5,000,000
Purchase of property and equipment		(85,357	)		(25,911	)
Software development and other assets		(214,842	)		(6,265	)
Net cash provided by investing activities		34,738,709			4,967,824
Cash flows from financing activities:
Proceeds from August 2020 Offering, net of offering expenses		46,952,500			-
Proceeds from February 2019 Offering, net of offering expenses		-			30,520,835
ATM offering costs		(128,835	)		-
Proceeds from employee stock purchase plan		203,466			131,895
Proceeds from exercise of options		277,823			-
Net cash provided by financing activities		47,304,954			30,652,730
Net increase in cash and cash equivalents		44,969,131			1,418,286
Cash and cash equivalents, at beginning of period		41,897,144			36,489,618
Cash and cash equivalents, at end of period	$	86,866,275		$	37,907,904