A March 9 research note indicated that Piper Jaffray & Co. launched coverage of Ovid Therapeutics Inc. (OVID:NASDAQ) with an Overweight rating and a $20 per share price target. The biotech's stock is currently trading at around $8.33 per share. "We see this as one of few high quality yet deep value buys in the neuro-innovation space right now," noted analyst Sarah Weber. "We see potential for Ovid to reach a $500 million ($500M) valuation in the next 12 months."
As such, she stated that now is the time to buy shares of Ovid to capture imminent value creation, expected in H2/18.
Ovid Therapeutics develops oral drugs for rare and serious central nervous system (CNS) disorders. Its lead candidates target GABA and glutamate, the primary excitatory and inhibitory transmitters, respectively, in the brain. "This should enable Ovid to address high value neurological symptom clusters across multiple indications," Weber wrote.
Data are expected this year for two of the biotech's most advanced programs, which are OV101 in Angelman syndrome and OV395 in developmental and epileptic encephalopathies (DEE). Proof-of-concept results in both indications are slated for release in H2/18.
Specifically, Phase 2b/2a data from the DEE study are anticipated in roughly Q3/18. Phase 2 data in the Angelman study are likely in about Q4/18. These results "should inform pipeline direction into 2019," Weber indicated. "As upside, we could see an additional (capital-efficient) in-licensing or partnership to expand the pipeline in the next ~12 months."
With enrollment in these initial studies nearly done, trial participants consist of "genetically defined, well-organized orphan populations of Angelman and DEE," which, Weber pointed out, should "support efficient clinical development and favorable commercial market dynamics (price, penetration)," such as shortened timelines.
Piper Jaffray's model on Ovid accounts for a peak revenue of $250M for OV101 in adult and pediatric Angelman syndrome, with first sales occurring in 2021. For OV395 in pediatric DEE, estimates are a revenue maximum of $330M and initial sales in 2022. "This end market size as well as a neurological comparative analysis suggest Ovid is significantly undervalued versus even its risk-adjusted fundamental value," Weber explained.
Weber described the management team as "topnotch" and "highly experienced." CEO Jeremy Levin is the former president/CEO of Teva. Matthew During, the founder and chief strategy officer, has several previous biotech launches on his resumé. Dr. Amit Rakhit, the chief medical officer, was a vice president at Biogen in the past. Dr. Yaron Werber, the chief financial officer, has 10-plus years of biotech equity research experience. This team, Weber added, will continue to deliver "differentiated, risk-mitigated clinical programs; flawless execution; and value-creating business development."
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Disclosures from Piper Jaffray, Ovid Therapeutics Inc., Company Note, March 9, 2018
— Sarah R. Weber, Research Analyst
— Charles C. Duncan, PhD, Sr. Research Analyst
The views expressed in this report accurately reflect my personal views about the subject company and the subject security. In addition, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report. Piper Jaffray research analysts receive compensation that is based, in part, on overall firm revenues, which include investment banking revenues.
Piper Jaffray usually provides bids and offers for the securities of Ovid Therapeutics Inc. and will, from time to time, buy and sell Ovid Therapeutics Inc. securities on a principal basis.