Let's Make a Deal: Levin's Ovid Raises $75m
This article was originally published in Scrip
Former Teva Pharmaceutical Industries president and CEO Jeremy Levin has gone back to his dealmaking roots as chairman and CEO of Ovid Therapeutics, which just closed a $75m Series B funding round to fund development and acquisition of treatments for rare neurological diseases.
Levin left Teva, where acquiring and developing new drugs was one of his top priorities for the generic medicines leader, in 2013 after 18 months on the job. Before that, he oversaw alliances and transactions as a member of the Bristol-Myers Squibb executive committee, and was head of global business development at Novartis. Now at Ovid, Levin still is focused on buying or licensing assets from pharma and biotech firms, but he has a narrow focus on orphan brain diseases.
Ovid acquired lead drug candidate OV101 (gaboxadol) – a small molecule, highly selective extrasynaptic GABA(A) receptor agonist (SEGA) – from Lundbeck in March and will use some of the Series B financing to initiate Phase II clinical trials in Angelman and Fragile X syndromes in 2016. Lundbeck took a minority share of Ovid and agreed to undisclosed milestone fees and royalties in exchange for handing over worldwide OV101 rights to Ovid.
The Lundbeck deal was announced in April on the same day that Ovid said Levin, who already was chairman of the company's board, would become the CEO as well.
Funding For R&D, Deals
Levin and his family provided about 60% of Ovid's seed funding, he told Scrip. The company used the money to define its strategy focused on therapies for rare brain diseases in which the underlying biology is clear.
"That dictated the [next round of] financing we went after. We have products in the portfolio that require rapid clinical development, which required investors who understood what it meant to build a biotech company – investors that wanted to be with us over the long term," Levin said. "It wasn't ideally suited to venture funding; we needed backing and interest from crossover and hedge funds whose interest extends for many years."
Those investors could help Ovid in the future should the company need a larger funding round – either private equity or an initial public offering – to pursue bigger deals or additional research programs.
Ovid hired former Citi Research managing director Yaron Werber, who headed up CitiBank's health care and biotech equity research teams, as the company's chief financial officer in June. Werber said he joined Ovid because of the company's executive team, its therapeutic area with a high need for innovation, and because of the quality of Ovid's investors.
"This is one of the better syndicates I've seen in my career," he said.
Fidelity Management and Research Company led the investment syndicate with participation from Cowen Private Investments, Sanofi-Genzyme BioVentures, Tekla Capital Management, Sphera Global Healthcare Fund, Jennison Associates, Redmile Group and Cormorant Asset Management. Other unnamed blue chip mutual funds and life sciences investors also backed Ovid's Series B round along with prior investors, including DoubleLine Equity Healthcare Fund.
In addition to mid-stage trials for OV101, the capital will help Ovid advance earlier-stage programs and acquire or license additional drug candidates. The company also is developing OV201 for Lewy body dementia, but the pediatric orphan indications for OV301 and OV401 are undisclosed.
Yet even as new programs are added to the research and development pipeline, Levin said Ovid will continue to rely on consultants for many services and will not grow much larger than its current 20-person team.
Acquisition Strategy
Ovid has nine different screens to evaluate the safety, efficacy and biological activity of neurological drug candidates that were in development in the US, but never launched in any indication.
"We match them into areas we care about – orphan indications in neurology with new pathways that are now known. We find the right purpose to advance them into development," Werber said. "We will be aggressive about acquisitions."
The company will be an active acquirer, but will have an open mind in regard to deal structures, which may include buying companies or assets, partnering with pharma, or in-licensing biotech assets.
"At large pharmaceutical companies, it's really more of a question of scale and prioritization, where they have whole divisions where they've decided to back away from neurology, except for key areas like Alzheimer's," Levin said.
Big pharma may not be interested in developing a shelved program in a rare disease, but that doesn't mean they're opposed to letting someone else give it a shot.
"In biotech, the approach there is more about whether we can help them leverage an asset in their company," Levin said. "Biotech companies often have compounds that they think might be interesting, but they're not on target with the disease areas they're interested in. It's much more of a question of how can we – eyeball-to-eyeball – really help each other make things happen."
Reasonable Negotiations
Despite the astronomical values that biotech companies have seen, both in dealmaking and in stock prices, he said most companies are pretty reasonable about negotiating deals for de-prioritized assets.
"In every negotiation, you must start with the premise that it will only work if there is a benefit to both. You assess early on if the negotiation will be fruitful. In other words, will it be worth the time to spend on the negotiation? Otherwise, the best thing you can do is stop the discussion immediately, because neither side can get to where they want to go," Levin said.
He pointed to former employer Bristol-Myers as a prime example of the dealmaking necessary for companies to thrive rather than lag behind. BMS now has a leading position in immuno-oncology with Opdivo (nivolumab) and Yervoy (ipilimumab), because the big pharma partnered with Medarex and then acquired the company in 2009 for $2.4bn.
Levin also noted the hepatitis C leadership position that Gilead Sciences gained following its $11bn acquisition of Pharmasset and the willingness of Regeneron Pharmaceuticals to speed up development of its assets by partnering with Sanofi-Aventis on multiple programs, most recently in immuno-oncology.
Ovid already is engaged in discussions to buy or in-license additional assets for its pipeline. The company expects to announce new programs relatively soon, all of which will be within its predefined rare brain disease focus.
"At Ovid, we're focused on patients with orphan diseases, but I suspect that we may see through a keyhole to these larger indications [like Alzheimer's disease or multiple sclerosis]," Levin said. "Should there be something that is larger that emerges, unless it is extremely tractable, we will look to larger pharma partners."