IPOs, People

Jeremy Levin spotlights a trendy new way to build a pipeline with his $86M IPO for Ovid

Jeremy Levin is a trend-setter.  A decade ago he helped fashion the whole legendary “String of Pearls” model for Bristol-Myers as strategy chief. He was probably a little ahead of his time — though perfectly in sync with the industry — in looking to restructure Teva as pharma was applying the ax liberally to bloated, unproductive organizations when he took over in 2012. And after he got bounced by the Teva board just 18 months later, he jumped into neurosciences and formed Ovid Therapeutics as a wave of upstarts looked to use new technologies and scientific insights to revive a struggling field.

So what does his $86 million IPO filing for Ovid presage, as he joins a growing — though still relatively modest — queue for public offerings?

First among the lessons: Pharma companies are often ready to do deals with their assets. And it’s a quick way to create a serious pipeline without spending a lot of cash up front. Biohaven rolled out their IPO a few days ago with a related strategy, grabbing a pair of discards for their work. David Hung just took over as CEO of Axovant, which helped make it trendy when Vivek Ramaswamy was starting biotech companies. And those are just a few examples.

In this case the two chief assets are OV101, now in early-stage testing for Angelman Syndrome and Fragile X, and OV935, in Phase I for epileptic encephalopathies. Two other preclinical programs are still largely under wraps.

OV101 came from Lundbeck in the spring of 2015. It’s involved in tonic inhibition, a pathway that regulates brain network activity, where a disruption can trigger a variety of neurological disorders. Ovid says this drug is evidently the first of its kind. And the S-1 now tells us that Levin agreed to pay up to $181 million in milestones, a chunk of stock — 1,052,977 shares — and royalties. The lead Phase II trial is expected to read out next year, setting the stage for a prospective pivotal if it makes the cut.

OV935 comes from Takeda, which has preclinical mouse data to link it to a reduction of inflammation-induced seizures. In healthy volunteers, researchers also reported confusion and acute psychosis in two cases — though both cases were resolved.

We also learned a few new details on that collaboration, which tied the two companies as 50/50 partners. Levin finished that deal in January and the pharma company agreed to get paid largely in shares, with chunks starting at 8% or a $50 million value — whichever is less — and up to 19.99% of the company. After that, there’s a trigger for cash payments and another $35 million in cash or stock.

The Takeda/Ovid program is designed to be co-managed, with the partners splitting up regional marketing responsibilities on the first indication — Ovid gets the US — and then partnering on any additional indications.

“Intellectually, we contribute,” Levin told me last January. “People, capital, we contribute. And Takeda does the same.”

For a startup, Ovid has not been squandering a lot of cash. It’s burned through $36 million and had $52 million in the bank at the end of last year. Levin’s base salary is $515,000 this year, which puts him in the same ballpark as David Hung, who signed on at Axovant this week at $550,000. Levin’s total compensation last year was $1.5 million.

More importantly, Levin owns 26.8% of the company, making him the largest shareholder — an unusual feature for any biotech CEO going public.

CSO and co-founder Matthew During, meanwhile, came in very close to Levin with 24.7%. Shira Capital owns 5% and Takeda is now in for 9%.

We will now get to test Levin’s sense of timing on the IPO market for biotechs. The gangbusters phase is well behind us now. But there remains a steady though much reduced flow of companies filing IPOs. If he’s right, look for more biotechs to follow Levin’s lead.

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Research Scientist - Immunology
Recursion Pharmaceuticals Salt Lake City, UT
Director of Operations
Atlas Venture Cambridge, MA

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