Ovid’s drug pipeline has drugs in phase 3 clinical trials for Dravet syndrome and Lennox-Gastaut Syndrome with upcoming milestones expected in the sales, regulatory, and royalty areas. The pre-clinical portion of the company’s product mix includes drugs that target epilepsy, infantile spasms, Tuberous Sclerosis Complex, Angelman syndrome, and other neurological disorders. The company has strategic partnerships with drug manufacturers AstraZeneca, Lundbeck, and Takeda, and on the research side, Ovid is working with Columbia University, Northwestern University, and the University of Connecticut.
While microcap stocks, especially in the biotech sector often trade on prospects rather than financials, Ovid has a margin of safety that is rare in the space. The company has $2.96 per share in cash, which is interesting considering it is currently trading around $3.20 so investors are not paying much for the actual product pipeline. Ovid has no debt, so current price levels represent an opportunity to essentially pay for the cash on the balance sheet and get the future growth prospects for next to nothing.
The company is not widely followed by Wall Street analysts, with three firms providing coverage all with a Strong Buy rating and an average price target of $5.50. Ovid is currently profitable and has a price-to-earnings ratio (P/E) of 1.8, further indicating that there is some solid downside protection in the shares. The company first began to realize revenues in 2020 with $12.6 million in sales, and growth has been rapid since then at $214 million for the trailing twelve-month period. This suggests that Ovid is transitioning from a pre-revenue development company to one with a legitimate sales-producing product line. This transition period looks to be a window for investors to buy the current assets of the firm and receive the prospects as a sweetener.
Rapidly growing sales, a robust development pipeline, strategic research, and distribution partnerships, and a dirt-cheap valuation build a case that Ovid Therapeutics is poised to break out strong to the upside in the coming years. Biotech
Disclosure: No position. Spotlight Growth has no relationships with any of the companies mentioned in this article and did not receive payment in any form for its creation. This is an opinion article and is not meant to be financial advise. We are not broker-dealers or investment professionals. Please conduct your own due diligence. For more information on our disclosures, please visit: https://spotlightgrowth.com/disclosures/