What changed in this filing

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Item 1. Financial Statements

2023-05-05 compared with 2022-11-08 · 220 added, 293 removed, 340 unchanged (60% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

2023 December 31,

7 unchanged sentences

Restricted cash 1,930,253 1,930,753

Security deposit 39,091 96,034

Property and equipment, net 1,159,657 242,757

Right-of-use asset, net 14,669,362 14,922,669

Property and equipment, net 1,053,063 1,147,963

Other assets 212,510 261,191

4 unchanged sentences

Accrued expenses 4,085,369 4,504,669

Current portion, lease liability 804,139 533,946

Total current liabilities 6,720,998 6,991,525

Long-term liabilities:

1 unchanged sentence

Total liabilities 22,419,322 22,993,250

Stockholders' equity:

Preferred stock, $ 0.001 par value;

10,000,000 shares authorized;

Series A convertible preferred stock, 10,000 shares designated, 1,250 shares issued and outstanding at September 30, 2022 and December 31, 2021

Series A convertible preferred stock, 10,000 shares designated, 1,250 shares issued and outstanding at March 31, 2023 and December 31, 2022

Common stock, $ 0.001 par value;

125,000,000 shares authorized;

70,466,885 and 70,364,912 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

70,491,510 and 70,466,885 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

70,492 70,467

Additional paid-in-capital 359,754,310 357,770,825

Accumulated other comprehensive loss ( 82,792 ) —

Accumulated other comprehensive income (loss) 5,630 ( 42,187 )

Accumulated deficit ( 238,882,751 ) ( 225,526,542 )

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For The Three Months Ended

September 30, 2022 For The Three Months Ended

September 30, 2021 For The Nine Months Ended September 30, 2022 For The Nine Months Ended September 30, 2021

March 31, 2023 For The Three Months Ended

March 31, 2022

License and other revenue $ 66,160 $ 1,445,366

License revenue - related party — — — 196,000,000

Total revenue 66,160 1,445,366

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Total operating expenses 14,958,465 17,712,472

(Loss) income from operations ( 12,803,856 ) ( 11,681,734 ) ( 43,375,249 ) 150,562,757

Loss from operations ( 14,892,305 ) ( 16,267,106 )

Other income (expense), net 1,536,095 209,050

(Loss) income before provision for income taxes ( 11,967,771 ) ( 11,679,077 ) ( 42,664,240 ) 150,513,164

(Benefit) provision for income taxes — ( 294,829 ) — 1,678,532

Net (loss) income $ ( 11,967,771 ) $ ( 11,384,248 ) $ ( 42,664,240 ) $ 148,834,632

Net (loss) income per share, basic $ ( 0.17 ) $ ( 0.17 ) $ ( 0.61 ) $ 2.15

Net (loss) income per share, diluted $ ( 0.17 ) $ ( 0.17 ) $ ( 0.61 ) $ 2.14

Loss before provision for income taxes ( 13,356,209 ) ( 16,058,056 )

Provision for income taxes — 50,000

Net loss $ ( 13,356,209 ) $ ( 16,108,056 )

Net loss per share, basic $ ( 0.19 ) $ ( 0.23 )

Net loss per share, diluted $ ( 0.19 ) $ ( 0.23 )

Weighted-average common shares outstanding, basic 70,490,704 70,345,828

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OVID THERAPEUTICS INC.

Condensed Consolidated Statements of Comprehensive (Loss) Income

Condensed Consolidated Statements of Comprehensive Loss

For The Three Months Ended

September 30, 2022 For The Three Months Ended

September 30, 2021 For The Nine Months Ended September 30, 2022 For The Nine Months Ended September 30, 2021

Net (loss) income $ ( 11,967,771 ) $ ( 11,384,248 ) $ ( 42,664,240 ) $ 148,834,632

Other comprehensive loss:

Unrealized gain (loss) on marketable securities 7,335 — ( 82,792 ) —

Comprehensive (loss) income $ ( 11,960,436 ) $ ( 11,384,248 ) $ ( 42,747,032 ) $ 148,834,632

March 31, 2023 For The Three Months Ended

March 31, 2022

Net loss $ ( 13,356,209 ) $ ( 16,108,056 )

Other comprehensive income:

Unrealized gain on marketable securities 47,817 —

Comprehensive loss $ ( 13,308,392 ) $ ( 16,108,056 )

See accompanying notes to these unaudited condensed consolidated financial statements

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Balance, December 31, 2022 1,250 $ 1 70,466,885 $ 70,467 $ 357,770,825 $ ( 42,187 ) $ ( 225,526,542 ) $ 132,272,564

Stock-based compensation expense — — — — 1,324,812 — — 1,324,812

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 52,333 14 33,065 — — 33,079

Net loss — — — — — — ( 16,108,056 ) ( 16,108,056 )

Balance, March 31, 2022 1,250 1 70,417,245 70,373 352,391,466 — ( 187,465,569 ) 164,996,271

Stock-based compensation expense — — — — 1,720,217 — — 1,720,217

Issuance of common stock from exercise of stock options — — 2,143 41 109,507 — — 109,548

Other comprehensive loss — — — — — ( 90,127 ) — ( 90,127 )

Net loss — — — — — — ( 14,588,414 ) ( 14,588,414 )

Balance, June 30, 2022 1,250 1 70,419,388 70,414 354,221,191 ( 90,127 ) ( 202,053,983 ) 152,147,496

Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 24,625 25 66,968 — — 66,993

Stock-based compensation expense — — — — 1,916,518 — — 1,916,518

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 47,497 53 81,576 — — 81,629

Other comprehensive income — — — — — 47,817 — 47,817

Net loss — — — — — — ( 13,356,209 ) ( 13,356,209 )

Balance, September 30, 2022 1,250 $ 1 70,466,885 $ 70,467 $ 356,084,810 $ ( 82,792 ) $ ( 214,021,753 ) $ 142,050,733

Balance, March 31, 2023 1,250 $ 1 70,491,510 $ 70,492 $ 359,754,310 $ 5,630 $ ( 238,882,751 ) $ 120,947,682

Preferred Stock Common Stock Additional

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Balance, December 31, 2021 1,250 $ 1 70,364,912 $ 70,359 $ 351,033,589 $ — $ ( 171,357,513 ) $ 179,746,436

Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 52,333 14 33,065 — — 33,079

Stock-based compensation expense — — — — 1,324,812 — — 1,324,812

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 44,656 45 150,930 — — 150,975

Conversion of series A convertible preferred stock to common stock ( 2,000 ) ( 2 ) 2,000,000 2,000 ( 1,998 ) — — —

Net income — — — — — — ( 16,108,056 ) ( 16,108,056 )

Balance, March 31, 2022 1,250 $ 1 70,417,245 $ 70,373 $ 352,391,466 $ — $ ( 187,465,569 ) $ 164,996,271

Stock-based compensation expense — — — — 1,257,344 — — 1,257,344

Issuance of common stock from exercise of stock options — — 46,121 46 130,610 — — 130,656

Net loss — — — — — — ( 15,788,427 ) ( 15,788,427 )

Balance, June 30, 2021 1,250 1 67,833,947 67,834 340,614,895 — ( 133,973,217 ) 206,709,513

Stock-based compensation expense — — — — 1,161,911 — — 1,161,911

Issuance of common stock from exercise of stock options and employee stock purchase plan — — 182,794 183 534,402 — — 534,585

Net loss — — — — — — ( 11,384,248 ) ( 11,384,248 )

Balance, September 30, 2021 1,250 $ 1 68,016,741 $ 68,017 $ 342,311,208 $ — $ ( 145,357,465 ) $ 197,021,761

See accompanying notes to these unaudited condensed consolidated financial statements

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Condensed Consolidated Statements of Cash Flows

Nine Months Ended September 30,

2022 Nine Months Ended September 30,

For The Three Months Ended

March 31, 2023 For The Three Months Ended

March 31, 2022

Cash flows from operating activities:

Net (loss) income $ ( 42,664,240 ) $ 148,834,632

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Net loss $ ( 13,356,209 ) $ ( 16,108,056 )

Adjustments to reconcile net loss to cash used in operating activities:

Non-cash consideration received in licensing agreement transaction — ( 945,366 )

Unrealized loss on equity investment 125,721 —

Unrealized gain on equity investment ( 359,905 ) ( 207,068 )

Interest income and accretion of discount on marketable securities ( 729,119 ) —

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Security deposit 12,491 ( 4,305 )

Related party receivable — 141,763

Long-term prepaid expenses — 477,171

Accounts payable ( 121,420 ) ( 4,870,271 )

Accrued expenses ( 419,302 ) 299,300

Deferred revenue — ( 12,382,779 )

Related party payable — ( 2,432,192 )

Net cash (used in) provided by operating activities ( 46,051,395 ) 130,610,177

Net cash used in operating activities ( 12,112,260 ) ( 20,086,419 )

Cash flows from investing activities:

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Sales/maturities of marketable securities 40,000,000 —

Purchase of long-term equity investments ( 2,500,000 ) ( 1,631,992 )

Issuance of short-term note receivable — ( 1,000,000 )

Purchase of property and equipment ( 1,104,440 ) ( 22,050 )

Purchases of property and equipment ( 13,560 ) ( 45,935 )

Software development and other costs — ( 30,230 )

Net cash used in investing activities ( 83,713,708 ) ( 1,659,442 )

Net cash provided by (used in) investing activities 30,228,849 ( 1,076,165 )

Cash flows from financing activities:

ATM and other offering costs — ( 21,314 )

Proceeds from employee stock purchase plan 168,577 204,678

Proceeds from exercise of options 55,680 611,538

Proceeds from exercise of options and purchases from employee stock purchase plan 66,993 33,079

Net cash provided by financing activities 66,993 33,079

Net (decrease) increase in cash and cash equivalents ( 129,540,846 ) 129,745,637

Net increase (decrease) in cash, cash equivalents and restricted cash 18,183,582 ( 21,129,505 )

Cash, cash equivalents and restricted cash, at beginning of period 46,798,599 189,728,285

1 unchanged sentence

Non-cash investing and financing activities:

Right-of-use asset obtained in exchange for lease liability $ 15,791,769 $ —

Conversion of short-term note receivable to long-term equity investment $ 1,000,000 $ —

Right-of-use asset in exchange for lease liability $ — $ 15,779,773

See accompanying notes to these unaudited condensed consolidated financial statements

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Ovid Therapeutics Inc.

(the “Company”) was incorporated under the laws of the state of Delaware on April 1, 2014 and maintains its principal office in New York, New York.

The Company commenced operations on April 1, 2014 (date of inception).

The Company is a biopharmaceutical company focused exclusively on developing impactful medicines for patients and families living with rare neurological disorders.

Since its inception, the Company has devoted substantially all of its efforts to business development, research and development, recruiting management and technical staff, and raising capital.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fund operations.

Historically, the Company’s major sources of cash have been composed of proceeds from various public and private offerings of its capital stock, revenue from collaboration agreements, option exercises and interest income.

As of September 30, 2022, the Company had approximately $ 137.9 million in cash, cash equivalents and marketable securities.

Since inception, the Company has generated $ 222.5 million in revenue, primarily from the Company’s royalty, license and termination agreement (the “Takeda License and Termination Agreement”) with Takeda Pharmaceutical Company Limited (“Takeda”).

(the “Company”) was incorporated under the laws of the state of Delaware and commenced operations on April 1, 2014 and maintains its principal executive office in New York, New York.

The Company is a biopharmaceutical company committed to developing medicines that transform the lives of people with epilepsies and seizure-related disorders.

Since its inception, the Company has devoted substantially all of its efforts to business development, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of convertible preferred stock, common stock and other equity instruments.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and the ability to secure additional capital to fund operations.

The Company’s major sources of cash have been licensing revenue, proceeds from various public and private offerings of its capital stock, option exercises and interest income.

As of March 31, 2023, the Company had approximately $ 117.7 million in cash, cash equivalents and marketable securities.

Since inception, the Company has generated $ 222.6 million in revenue, primarily from the Company’s royalty, license and termination agreement (“RLT Agreement”) with Takeda Pharmaceutical Company Limited (“Takeda”).

Historically, the Company has incurred recurring losses, has experienced negative operating cash flows and requires significant cash resources to execute its business plans.

The Company has an accumulated deficit of $ 214.0 million as of September 30, 2022, working capital of $ 133.8 million and had cash used in operating activities of $ 46.1 million for the nine months ended September 30, 2022.

The Company recorded net losses of $ 12.0 million and $ 42.7 million during the three and nine months ended September 30, 2022, respectively, and expects to incur losses in subsequent periods for at least the next several years and is highly dependent on its ability to find additional sources of funding through either equity offerings, debt financings, collaborations, strategic alliances, licensing agreements or a combination of any such transactions.

Management believes that the Company’s existing cash, cash equivalents and marketable securities as of September 30, 2022 will be sufficient to fund its current operating plans through at least the next 12 months from the date of filing of the Company’s Quarterly Report on Form 10-Q.

The Company has an accumulated deficit of $ 238.9 million as of March 31, 2023, working capital of $ 112.8 million and had cash used in operating activities of $ 12.1 million for the three months ended March 31, 2023.

The Company recorded a net loss of $ 13.4 million during the three months ended March 31, 2023, and expects to incur losses in subsequent periods for at least the next several years.

The Company is highly dependent on its ability to find additional sources of funding through either equity offerings, debt financings, collaborations, strategic alliances, licensing agreements or a combination of any such transactions.

Management believes that the Company’s existing cash, cash equivalents and marketable securities as of March 31, 2023 will be sufficient to fund its current operating plans through at least the next 12 months from the date of filing of the Company’s Quarterly Report on Form 10-Q.

Adequate additional funding may not be available to the Company on acceptable terms or at all.

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The Company may be required to delay, reduce the scope of or eliminate research and development programs, or obtain funds through arrangements with collaborators or others that may require the Company to relinquish rights to certain drug candidates that the Company might otherwise seek to develop or commercialize independently.

The Company has implemented business continuity plans designed to address and mitigate the impact of the COVID-19 pandemic on its business.

The extent to which the ongoing COVID-19 pandemic impacts the Company's business, its clinical development and regulatory efforts, its corporate development objectives and the value of and market for the Company's common stock, will depend on future developments that are highly uncertain and cannot be predicted with confidence at this time, such as the ultimate duration of the pandemic, the extent of sustained or new travel restrictions, social distancing and business closure requirements in the United States, Europe and other countries, and the effectiveness of actions taken globally to contain and treat the disease, including vaccination efforts.

The global economic slowdown, the overall disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic could have a material adverse effect on the Company's business, financial condition, results of operations and growth prospects.

In addition, the Company is subject to other challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

obtaining regulatory approval of the Company's product candidates;

The Company is subject to other challenges and risks specific to its business and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the pharmaceutical industry with development and commercial operations, including, without limitation, risks and uncertainties associated with:

delays or problems in the supply of the Company's product candidates, loss of single source suppliers or failure to comply with manufacturing regulations;

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pharmaceutical product development and the inherent uncertainty of clinical success;

and the challenges of protecting and enhancing our intellectual property rights;

the challenges of protecting and enhancing intellectual property rights;

complying with applicable regulatory requirements;

In addition, to the extent the ongoing COVID-19 pandemic adversely affects the Company's business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties discussed above.

and obtaining regulatory approval of any of the Company's product candidates.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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(A) Unaudited Interim Condensed Consolidated Financial Statements

The interim condensed consolidated balance sheet at September 30, 2022, the condensed consolidated statements of operations, comprehensive (loss) income, cash flows, and stockholders’ equity for the three and nine months ended September 30, 2022 and 2021 are unaudited.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance

The interim condensed consolidated balance sheet at March 31, 2023 and the condensed consolidated statements of operations, comprehensive loss, cash flows, and stockholders’ equity for the three months ended March 31, 2023 and 2022 are unaudited.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) and following the requirements of the SEC for interim reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP are condensed or omitted.

As permitted under those rules, certain footnotes or other financial information that are normally required

by GAAP are condensed or omitted.

These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments that are necessary for a fair statement of its financial information.

The results of operations for the three and nine month periods ended September 30, 2022 and 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any other future annual or interim period.

The results of operations for the three month periods ended March 31, 2023 and 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other future annual or interim period.

The balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date.

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treasury instruments which are considered available-for-sale securities.

The Company classifies its marketable securities with maturities of less than one year from the balance sheet date as current assets on its consolidated balance sheets.

The Company classifies its marketable securities with maturities of less than one year from the balance sheet date as current assets on its condensed consolidated balance sheets.

The Company classifies its marketable securities with original maturities of less than three months as cash equivalents on its consolidated balance sheets.

Unrealized gains and losses on these securities that are determined to be temporary are reported as a separate component of accumulated other comprehensive loss in stockholder's equity.

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If the investment is impaired, the Company writes it down to its estimated fair value.

As of September 30, 2022 and December 31, 2021, the equity investment had a carrying value of $ 5.1 million and $ 1.6 million, respectively.

As of March 31, 2023 and December 31, 2022, the equity investment in Gensaic had a carrying value of $ 5.1 million.

Long-term equity investments also consist of an equity investment in the common shares of Marinus Pharmaceuticals, Inc.

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The equity shares are marked-to-market at each reporting date with changes in the fair value being reflected in the carrying value of the investment on the Company's consolidated balance sheets and other income (expense) on the Company's consolidated statements of operations.

As of September 30, 2022, the equity investment in Marinus had a carrying value of approximately $ 0.9 million.

(G) Note Receivable

On March 17, 2022, the Company issued a convertible promissory note with a principal amount of $ 1.0 million to Gensaic.

The note included features that permitted the Company to acquire additional equity or to settle the note in cash.

In August 2022, the Company signed an agreement with Gensaic which resulted in the conversion of the note into additional equity which was recorded as a long-term equity investment in the condensed consolidated balance sheet.

The Company received interest on the convertible promissory note at the rate of 1.5 % per annum through the date of conversion.

(H) Fair Value of Financial Instruments

As of March 31, 2023 and December 31, 2022, the equity investment in Marinus had a carrying value of approximately $ 0.9 million and $ 0.5 million, respectively.

(G) Fair Value of Financial Instruments

Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect market assumptions.

The hierarchy gives the highest priority to unadjusted quoted prices in

active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The hierarchy gives the highest

priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

The three levels of the fair value hierarchy are as follows:

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The Company’s Level 1 assets consisted of investments in a U.S.

treasury money market fund and equity securities totaling approximately $ 46.5 million as of September 30, 2022.

The Company's Level 1 assets consisted of money market funds and short-term investments of $ 187.6 million as of December 31, 2021.

treasury money market fund and equity securities totaling $ 61.6 million as of March 31, 2023.

The Company's Level 1 assets totaled $ 42.5 million as of December 31, 2022.

• Level 2—Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly (e.g., quoted prices of similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active).

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The Company's Level 2 assets consisted of U.S.

treasury bills totaling approximately $ 89.6 million as of September 30, 2022.

The Company had no Level 2 assets or liabilities as of December 31, 2021.

treasury bills, totaling $ 54.7 million as of March 31, 2023 and $ 84.1 million as of December 31, 2022.

• Level 3—Unobservable inputs for the asset or liability.

Financial instruments are considered Level 3 when their fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable.

There were no Level 3 assets or liabilities as of September 30, 2022 or December 31, 2021.

There were no Level 3 assets or liabilities as of March 31, 2023 or December 31, 2022.

The carrying amounts reported in the balance sheets for cash and cash equivalents, other current assets, accounts payable and accrued expenses approximate their fair value based on the short-term maturity of these instruments.

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The Company determines the portion of the lease liability that is current as the difference between the calculated lease liability at the end of the current period and the lease liability that is projected 12 months from the current period.

The Company determined that there was no current lease liability for the period ended September 30, 2022, which is due primarily to the free rental period for the Company's Hudson Commons lease.

(J) Revenue Recognition

Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

(I) Property and Equipment

Property and equipment are stated at cost and depreciated over their estimated useful lives of three years using the straight-line method.

Repair and maintenance costs are expensed.

The Company reviews the recoverability of all long-lived assets, including the related useful life, whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset might not be recoverable.

(J) Research and Development Expenses

The Company expenses the cost of research and development as incurred.

Research and development expenses are comprised of costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and preclinical materials as well as contracted services, license fees, and other external costs.

Research and development expenses also include the cost of licensing agreements acquired from third-parties.

Nonrefundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received in accordance with ASC 730, Research and Development .

(K) Stock-based Compensation

The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, which establishes accounting for stock-based awards granted to employees for services and requires companies to expense the estimated fair value of these awards over the requisite service period.

The Company estimates the fair value of all awards granted using the Black-Scholes valuation model.

Key inputs and assumptions include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, stock price and exercise price.

Many of the assumptions require significant judgment and any changes could have an impact in the determination of stock-based compensation expense.

The Company elected an accounting policy to record forfeitures as they occur.

recognizes employee stock-based compensation expense based on the fair value of the award on the date of the grant.

The compensation expense is recognized over the vesting period under the straight-line method.

The Company accounts for option awards granted to nonemployee consultants and directors in accordance with ASC 718.

The fair value of the option issued or committed to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received.

The fair value is measured at the value of the Company’s common stock award at the earlier of the date that the commitment for performance by the counterparty has been reached or the counterparty’s performance is complete.

(L) Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires deferred tax assets and liabilities to be recognized for the estimated future tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as well as for net operating loss carryforwards and research and development credits.

Valuation allowances are provided if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The impact of a change in the tax laws is recorded in the period in which the law is enacted.

(M) Net Loss per Share

Net loss per common share is determined by dividing net loss attributable to common stockholders by the basic and diluted weighted-average common shares outstanding during the period.

The Company applies the two-class method to allocate earnings between common stock and participating securities.

When applicable, net income per diluted share attributable to common stockholders adjusts the basic earnings per share attributable to common stockholders and the weighted-average number of shares of common stock outstanding for the potential dilutive impact of stock options using the treasury-stock method and the potential impact of preferred stock using the if-converted method.

(N) Revenue Recognition

Under ASC 606, Revenue from Contracts with Customers, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services.

In applying ASC 606, the Company performs the following five steps:

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The Company defers recognition of upfront license fees if the performance obligations are not satisfied.

(K) Net (Loss) Income Per Share

Net (loss) income, basic per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of shares of common stock outstanding.

The Company applies the two-class method to allocate earnings between common stock and participating securities.

Net income, diluted per share attributable to common stockholders adjusts the basic earnings per share attributable to common stockholders and the weighted-average number of shares of common stock outstanding for the potential dilutive impact of stock options using the treasury-stock method and preferred stock using the if-converted method.

Net loss, diluted per share is equivalent to the basic net loss per share due to the exclusion of outstanding stock options and convertible preferred stock because the inclusion of these securities would result in an anti-dilutive effect on per share amounts.

(L) Recent Accounting Pronouncements

(O) Recent Accounting Pronouncements

The Company has reviewed recently issued accounting standards and plans to adopt those that are applicable.

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NOTE 3 – CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

The following tables summarize the fair value of cash, cash equivalents and marketable securities as well as gross unrealized holding gains and losses as of September 30, 2022 and December 31, 2021:

September 30, 2022

cost Gross unrealized

holding gains Gross unrealized

holding losses Fair

The following tables summarize the fair value of cash, cash equivalents and marketable securities as well as gross unrealized holding gains and losses as of March 31, 2023 and December 31, 2022:

March 31, 2023

Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value

Cash $ 2,346,359 $ — $ — $ 2,346,359

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December 31, 2022

cost Gross unrealized

holding gains Gross unrealized

holding losses Fair

Amortized cost Gross unrealized holding gains Gross unrealized holding losses Fair value

Cash $ 2,853,042 $ — $ — $ 2,853,042

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Total cash, cash equivalents and marketable securities $ 129,043,598 $ — $ ( 42,187 ) $ 129,001,411

The Company did not hold any securities that were in an unrealized loss position for more than 12 months as of September 30, 2022 and December 31, 2021.

The Company did not hold any securities that were in an unrealized loss position for more than 12 months as of March 31, 2023 and December 31, 2022.

There were no material realized gains or losses on available-for-sale securities during the three months ended March 31, 2023 and 2022.

NOTE 4 – PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Property and equipment is summarized as follows:

September 30,

2023 December 31,

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Total property and equipment, net $ 1,053,063 $ 1,147,963

Depreciation expense was $ 102,071 and $ 16,497 for the three months ended September 30, 2022 and 2021, respectively.

Depreciation expense was $ 187,541 and $ 52,974 for the nine months ended September 30, 2022 and 2021, respectively.

Intangible assets, net of accumulated amortization was $ 275,448 and $ 164,092 as of September 30, 2022 and December 31, 2021, respectively, and are included in other assets.

Amortization expense was $ 53,348 and $ 35,681 for the three months ended September 30, 2022 and 2021, respectively.

Amortization expense was $ 139,984 and $ 127,154 for the nine months ended September 30, 2022 and 2021, respectively.

Depreciation expense was $ 108,460 and $ 30,839 for the three months ended March 31, 2023 and 2022, respectively.

Intangible assets, net of accumulated amortization, were $ 185,910 and $ 222,100 as of March 31, 2023 and December 31, 2022, respectively, and are included in other assets.

Amortization expense was $ 36,190 and $ 32,000 for the three months ended March 31, 2023 and 2022, respectively .

NOTE 5 – LEASES

During September 2021, the Company entered into a 10-year lease agreement for its corporate headquarters with a term commencing March 10, 2022, for approximately 19,143 square feet of office space at Hudson Commons in New York, NY.

During September 2021, the Company entered into a 10-year lease agreement for its corporate headquarters with a term commencing March 10, 2022, for approximately 19,000 square feet of office space at Hudson Commons in New York, New York.

The lease provides for monthly rental payments over the lease term.

The base rent under the lease is currently $ 2.3 million per year.

Rent payments commence 10 months following the commencement date of the lease, or January 10, 2023, and continue for 10 years following the rent commencement date.

Rent also includes two months of free rent in the 6th and 7th months following the rent commencement date.

The base rent under the lease is

currently $ 2.3 million per year.

Rent payments commenced 10 months following the commencement date of the lease, or January 10, 2023, and continue for 10 years following the rent commencement date.

The Company issued a letter of credit in the amount of $ 1.9 million in association with the execution of the lease agreement;

the letter of credit is characterized as restricted cash on the balance sheet.

The Hudson Commons lease has a remaining lease term of 10 years and includes a single renewal option for an additional 5 years.

the letter of credit is characterized as restricted cash on the Company's condensed consolidated balance sheets.

The Hudson Commons lease has a remaining lease term of approximately 10 years and includes a single renewal option for an additional five years .

The Company did not include the renewal option in the lease term when calculating the lease liability as the Company is not reasonably certain that it will exercise the renewal option.

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ROU asset and lease liabilities related to the Company's operating lease are as follows:

September 30,

Right-of-use asset $ 14,669,362

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Long-term lease liability $ 15,698,324

The components of operating lease cost for the nine months ended September 30, 2022 were as follows:

September 30,

The components of operating lease cost for the three months ended March 31, 2023 were as follows:

Operating lease cost $ 541,808

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Accrued expenses consist of the following:

September 30,

2023 December 31,

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Professional fees accrual 675,234 682,664

Accrued taxes 284,536 —

Other 170,861 192,956

Total $ 4,085,369 $ 4,504,669

NOTE 7 – STOCKHOLDERS’ EQUITY AND PREFERRED STOCK

The Company’s capital structure consists of common stock and convertible preferred stock ("Preferred Stock").

Pursuant to the Company’s amended and restated certificate of incorporation, as amended, the Company is authorized to issue up to 125,000,000 shares

of common stock and 10,000,000 shares of Preferred Stock.

NOTE 7 – STOCKHOLDERS’ EQUITY

The Company’s capital structure consists of common stock and convertible preferred stock.

Pursuant to the Company’s amended and restated certificate of incorporation, as amended, the Company is authorized to issue up to 125,000,000 shares of common stock and 10,000,000 shares of preferred stock.

The Company has designated 1,250 of the 10,000,000 authorized shares of preferred stock as non-voting Series A Convertible Preferred Stock (“Series A Preferred Stock”).

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The holders of common stock are entitled to liquidation proceeds after all liquidation preferences for the preferred stock are satisfied.

In November 2020, the Company entered into a sales agreement (the “2020 ATM agreement”) with Cowen and Company, LLC (“Cowen”), under which the Company may offer and sell in “at the market offerings,” from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $ 75.0 million through Cowen acting as sales agent.

As of September 30, 2022, the Company has not sold any shares of its common stock under the 2020 ATM agreement.

There were 1,250 shares of Series A Preferred Stock outstanding as of September 30, 2022 and December 31, 2021.

There were 1,250 shares of Series A Preferred Stock outstanding as of March 31, 2023 and December 31, 2022.

Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock at any time at the holder’s option.

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In the event of a liquidation, dissolution, or winding up of the Company, holders of Series A Preferred Stock will receive a payment equal to $ 0.001 per share of Series A Preferred Stock before any proceeds are distributed to the holders of common stock.

In March 2021, certain of the Company’s stockholders elected to convert an aggregate of 2,000 shares of Series A Preferred Stock owned by such holders into an aggregate of 2,000,000 shares of the Company’s common stock.

Holders of Series A preferred stock are entitled to receive dividends at a rate equal to (on an as-if-converted-to-common stock basis), and in the same form and manner as, dividends (other than dividends in the form of the issuance of common stock) actually paid on shares of common stock.

As of March 31, 2023, the Company has not sold any shares of its common stock under the 2020 ATM agreement.

Through March 31, 2023, the Company has not declared any dividends.

No dividends on the common stock shall be declared and paid unless dividends on the preferred stock have been declared and paid.

Through September 30, 2022, the Company has not declared any dividends.

NOTE 8 – STOCK-BASED COMPENSATION

The Company's Board of Directors adopted and the Company's stockholders approved the 2017 Equity Incentive Plan (“2017 Plan”), which became effective immediately on May 4, 2017.

The initial reserve of shares of common stock under the 2017 Plan was 3,052,059 shares.

The Company's Board of Directors adopted, and the Company's stockholders approved, the 2017 Equity Incentive Plan (“2017 Plan”), which became effective on May 4, 2017.

The initial reserve of shares of common stock issuable under the 2017 Plan was 3,052,059 shares.

The 2017 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance-based stock awards, and other forms of stock-based awards.

Additionally, the 2017 Plan provides for the grant of performance cash awards.

The Company's employees, officers, directors and consultants and advisors are eligible to receive awards under the 2017 Plan.

The Company's employees, officers, directors, consultants and advisors are eligible to receive awards under the 2017 Plan.

Following the adoption of the 2017 Plan, no further awards will be granted under the Company’s prior plan.

Pursuant to the terms of the 2017 Plan, on each January 1st, the plan limit shall be increased by the lesser of (x) 5 % of the number of shares of common stock outstanding as of the immediately preceding December 31 and (y) such lesser number as the Board of Directors may determine in its discretion.

On January 1, 2022 and January 1, 2021, respectively, an additional 1,000,000 and 3,287,158 shares were reserved for issuance under the 2017 Plan.

As of September 30, 2022, there were 3,135,048 shares of the Company’s common stock reserved and available for issuance under the 2017 Plan.

The Company's Board of Directors adopted, and the Company's stockholders approved the 2017 Employee Stock Purchase Plan (the “2017 ESPP”), which became effective immediately prior to the execution of the underwriting agreement related to the Company’s initial public offering on May 4, 2017.

On January 1, 2023 and January 1, 2022 an additional 3,523,344 and 1,000,000 shares, respectively, were reserved for issuance under the 2017 Plan.

As of March 31, 2023, there were 4,243,849 shares of the Company’s common stock reserved and available for issuance under the 2017 Plan.

The Company's Board of Directors adopted, and the Company's stockholders approved, the 2017 Employee Stock Purchase Plan (“2017 ESPP”), which became effective on May 4, 2017.

The initial reserve of shares of common stock issuable under the 2017 ESPP was 279,069 shares.

The 2017 ESPP allows employees to purchase common stock of the Company at a 15 % discount to the market price on designated semi-annual purchase dates.

During the three months ended September 30, 2022 and 2021, 37,872 and 26,234 shares were purchased under the 2017 ESPP, and the Company recorded expense of $ 20,687 and $ 3,000 , respectively.

During the nine months ended September 30, 2022 and 2021, 76,455 and 60,490 shares, respectively, were purchased under the 2017 ESPP and the Company recorded expense of $ 61,882 and $ 58,968 , respectively.

The initial reserve of shares of common stock that may be issued under the 2017 ESPP was 279,069 shares.

The number of shares of common stock reserved for issuance under the 2017 ESPP will automatically increase on January 1 of each year, beginning on January 1, 2018 and continuing through and including January 1, 2027, by the lesser of (i) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 550,000 shares or (iii) such lesser number of shares determined by our Board.

During the three months ended March 31, 2023 and 2022, 29,830 and 38,583 shares, respectively, were purchased under the 2017 ESPP, and the Company recorded expense of $ 15,154 and $ 21,019 , respectively.

The number of shares of common stock reserved for issuance under the 2017 ESPP automatically increases on January 1 of each year, beginning on January 1, 2018 and continuing through and including January 1, 2027, by the lesser of (i) 1 % of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, (ii) 550,000 shares or (iii) such lesser number of shares determined by the Board.

The Board acted prior to each of January 1, 2023 and January 1, 2022 to provide that there be no increase in the number of shares reserved for issuance under the 2017 ESPP on either such date.

As of September 30, 2022, there were 416,607 shares of the Company’s common stock reserved and available for issuance under the 2017 ESPP.

As of March 31, 2023, there were 386,777 shares of the Company’s common stock reserved and available for issuance under the 2017 ESPP.

The Company’s Board of Directors adopted and the Company’s stockholder’s approved the 2014 Equity Incentive Plan (“2014 Plan”), which authorized the Company to grant shares of common stock in the form of incentive stock options,

non-statutory stock options, stock appreciation rights, restricted stock and restricted stock units.

The 2014 Plan was terminated as to future awards in May 2017, although it continues to govern the terms of options that remain outstanding under the 2014 Plan.

No additional stock awards will be granted under the 2014 Plan, and all outstanding stock awards granted under the 2014 Plan that are repurchased, forfeited, expire or are cancelled will become available for grant under the 2017 Plan in accordance with its terms.

As of March 31, 2023, options to purchase 1,663,597 shares of common stock were outstanding under the 2014 Plan.

Unless specified otherwise in an individual option agreement, stock options granted under the prior plan and the 2017 Plan generally have a ten-year term and a four-year graded vesting period.

The vesting requirement is generally conditioned upon the

grantee’s continued service with the Company during the vesting period.

Once vested, all awards are exercisable from the date of grant until they expire.

The vesting requirement is generally conditioned upon the grantee’s continued service with the Company during the vesting period.

Once vested, all options granted are exercisable from the date of grant until they expire.

The option grants are non-transferable.

Vested options generally remain exercisable for 90 days subsequent to the termination of the option holder’s service with the Company.

In the event of option holder’s death or disability while employed by or providing service to the Company, the exercisable period extends to 12 months.

In the event of the option holder’s death or disability while employed by or providing service to the Company, the exercisable period extends to 12 months.

Performance-based option awards generally have similar terms, with vesting commencing on the date the performance condition is achieved and expire in accordance with the specific terms of the agreement.

At September 30, 2022, there were 150,000 performance-based options outstanding and unvested that include options to be granted upon the achievement of certain research and development milestones.

The fair value of options granted during the three and nine months ended September 30, 2022 and 2021 was estimated using the Black-Scholes option valuation model.

At March 31, 2023, there were 100,000 performance-based options outstanding and unvested that include options to be granted upon the achievement of certain research and development milestones.

The fair value of options granted during the three months ended March 31, 2023 and 2022 was estimated using the Black-Scholes option valuation model.

The inputs for the Black-Scholes option valuation model require significant assumptions that are detailed in the table below.

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The expected life was based on the simplified method in accordance with the SEC Staff Accounting Bulletin No.

The expected volatility was estimated based on historical volatility information of peer companies that are publicly available.

Beginning in January 1, 2023, the expected volatility was estimated based on historical volatility information of the Company since the Company's initial public offering.

All assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for options granted to employees.

In the event the Company terminates any of its consulting agreements, the unvested options underlying the agreements would also be canceled.

The Company did no t grant any stock options to nonemployee consultants for services rendered during the three months ended September 30, 2022 and 2021.

The Company granted no stock options to nonemployee consultants for services rendered during the nine months ended September 30, 2022, and 170,000 during the nine months ended September 30, 2021.

There were 130,834 and 186,563 unvested nonemployee options outstanding as of September 30, 2022 and 2021, respectively.

Total expense recognized related to nonemployee stock options for the three months ended September 30, 2022 and 2021, was $ 106,806 and $ 247,000 , respectively.

Total expense recognized related to nonemployee stock options for the nine months ended September 30, 2022 and 2021 was $ 461,913 and $ 337,000 , respectively.

Total unrecognized compensation expenses related to the nonemployee stock options was $ 0.7 million as of September 30, 2022.

The Company did not recognize any expense for nonemployee performance-based option awards during the three months or nine months ended September 30, 2022 or 2021.

The Company granted 266,800 and 556,345 stock options to employees during the three months ended September 30, 2022 and 2021, respectively.

The Company granted 4,555,641 and 1,392,345 stock options to employees during the nine months ended September 30, 2022 and 2021 respectively.

There were 7,010,800 and 4,660,093 unvested employee options outstanding as of September 30, 2022, and 2021, respectively.

Total expense recognized related to the employee stock options for the three months ended September 30, 2022 and 2021 was $ 1.6 million and $ 0.9 million, respectively.

Total expense recognized related to the employee stock options for the nine months ended September 30, 2022 and 2021 was $ 4.3 million and $ 3.3 million, respectively.

Total unrecognized compensation expense related to employee stock options was $ 13.0 million as of September 30, 2022.

During the three and nine months ended September 30, 2022, the Company recognized $ 94,000 for employee performance-based option awards.

No expense for employee performance-based options was recognized in the same period in 2021.

The Company’s stock-based compensation expense was recognized in operating expense as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The Company did no t grant any stock options to nonemployee consultants for services rendered during the three months ended March 31, 2023 and 2022.

There were 125,303 and 175,938 unvested nonemployee options outstanding as of March 31, 2023 and 2022, respectively.

Total expense recognized related to nonemployee stock options for the three months ended March 31, 2023 and 2022, was $ 108,585 and $ 195,000 , respectively.

Total unrecognized compensation expenses related to the nonemployee stock options was $ 518,392 as of March 31, 2023.

The Company did not recognize any expense for nonemployee performance-based option awards during the three months ended March 31, 2023 or 2022.

The Company granted 2,660,500 and 2,426,750 stock options to employees during the three months ended March 31, 2023 and 2022, respectively.

There were 7,372,384 and 5,954,029 unvested employee options outstanding as of March 31, 2023, and 2022, respectively.

Total expense recognized related to the employee stock options for the three months ended March 31, 2023 and 2022 was $ 1.8 million and $ 1.1 million, respectively.

Total unrecognized compensation expense related to employee stock options was $ 14.2 million as of March 31, 2023.

No expense for employee performance-based options was recognized during the three months ended in March 31, 2023 and 2022.

The Company’s stock-based compensation expense was recognized in operating expenses as follows:

Three Months Ended March 31,

Research and development $ 510,261 $ 395,492

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Total $ 1,916,518 $ 1,324,812

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Stock options $ 1,901,364 $ 1,303,793

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Total $ 1,916,518 $ 1,324,812

The fair value of employee options granted during the three and nine months ended September 30, 2022 and 2021 was estimated by utilizing the following assumptions:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Average Weighted

Volatility 86.90 % 86.35 % 87.17 % 83.57 %

Expected term in years 6.08 6.01 6.07 6.03

Dividend rate 0.00 % 0.00 % 0.00 % 0.00 %

Risk-free interest rate 2.90 % 0.94 % 2.20 % 0.81 %

Fair value of option on grant date $ 1.61 $ 2.71 $ 2.13 $ 1.43

The fair value of nonemployee options granted during the three and nine months ended September 30, 2022 and 2021 was estimated by utilizing the following assumptions:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Average Weighted

The fair value of employee options granted during the three months ended March 31, 2023 and 2022 was estimated utilizing the following assumptions:

Three Months Ended March 31,

Volatility 84.61 % 87.17 %

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Forfeited or expired ( 193,936 ) 3.38

Options outstanding September 30, 2022 13,013,259 $ 4.13 7.63 $ 56,953

Vested and exercisable at September 30, 2022 5,873,500 $ 5.30 6.10 $ 56,192

At September 30, 2022 there was approximately $ 13.0 million of unamortized share–based compensation expense related to employee and nonemployee grants, which is expected to be recognized over a remaining average vesting period of 2.39 years.

Options outstanding March 31, 2023 15,418,177 $ 3.86 7.57 $ 1,028,677

Vested and exercisable at March 31, 2023 7,920,490 $ 4.75 6.23 $ 694,303

At March 31, 2023 there was approximately $ 14.7 million of unrecognized stock–based compensation expense related to employee and nonemployee grants, which is expected to be recognized over a remaining average vesting period of 2.57 years.

NOTE 9 – INCOME TAXES

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Each quarter the Company updates its estimate of the annual effective tax rate and records cumulative adjustments as necessary.

As of September 30, 2022, the Company was in a pre-tax loss position, and is anticipated to remain so throughout the year.

For the three and nine months ended September 30, 2022, the Company did no t record a tax provision.

As of March 31, 2023, the Company was in a pre-tax loss position, and is anticipated to remain so throughout the year.

For the three months ended March 31, 2023, the Company did no t record any tax benefit or expense.

In assessing the realizability of deferred tax assets, management evaluates whether it is more likely than not that some portion or all of the deferred tax assets will be realized.

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This evidence includes, but is not limited to, prior earnings history, scheduled reversal of taxable temporary differences, tax planning strategies and projected future taxable income.

Significant weight is given to positive and negative evidence

that is objectively verifiable.

Based on these factors, including cumulative losses in recent years, the Company continues to maintain a full valuation allowance against its net deferred tax assets as of September 30, 2022.

Significant weight is given to positive and negative evidence that is objectively verifiable.

Based on these factors,

including cumulative losses in recent years, the Company continues to maintain a full valuation allowance against its net deferred tax assets as of March 31, 2023.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

License Agreements

Lundbeck A/S License Agreement

On March 26, 2015, the Company entered into an exclusive agreement with H.

Lundbeck A/S (“Lundbeck”) for a worldwide perpetual licensing right related to the research, development and commercialization of OV101 (gaboxadol).

On May 10, 2019, the parties amended the license agreement.

Pursuant to the Lundbeck license agreement, as of the first amendment, the Company agreed to make milestone payments totaling up to $ 189.0 million upon the achievement of certain developmental, regulatory and sales milestones.

The first payment of $ 1.0 million is due upon the successful completion of the first Phase 3 trial for a product in which OV101 is an active ingredient.

In addition, the agreement calls for the Company to pay royalties for an initial term based on a low double-digit percentage of sales and provides for the reduction of royalties in certain limited circumstances.

Thereafter, the Company closed its OV101 program in Angelman syndrome in early 2021.

On February 1, 2022, the Company entered into Amendment No.

3 to the Lundbeck agreement, or Amendment No.

3, to permit its performance under the Healx License and Option Agreement.

Under the terms of Amendment No.

3, if Healx exercises its option, the Company will owe Lundbeck a share of all milestone and royalty payments received from Healx if the Company chooses not to exercise the Ovid Opt-In Right.

If the Company chooses to exercise the Ovid Opt-In Right and to co-develop and co-commercialize the program with Healx, the Company will owe a share of the net profit share to Lundbeck (see further discussion below in Note 11, Healx License and Option Agreement).

Northwestern University License Agreement

In December 2016, the Company entered into a license agreement with Northwestern University, or Northwestern, pursuant to which Northwestern granted the Company an exclusive, worldwide license to patent rights of certain inventions, or the Northwestern Patent Rights, which relate to a specific compound and related methods of use for such compound, along with certain Know-How related to the practice of the inventions claimed in the Northwestern Patents.

In December 2016, the Company entered into a license agreement with Northwestern University, (“Northwestern”), pursuant to which Northwestern granted the Company an exclusive, worldwide license to patent rights of certain inventions (“Northwestern Patent Rights”) which relate to a specific compound and related methods of use for such compound, along with certain Know-How related to the practice of the inventions claimed in the Northwestern Patents.

The Company is developing OV329 under this agreement.

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AstraZeneca AB License Agreement

On December 30, 2021, the Company entered into an exclusive license agreement with AstraZeneca AB, for a library of early-stage small molecules targeting the KCC2 transporter, including lead candidate OV350.

On December 30, 2021, the Company entered into an exclusive license agreement with AstraZeneca AB (“AstraZeneca”), for a library of early-stage small molecules targeting the KCC2 transporter, including lead candidate OV350.

Upon execution of the agreement, the Company was obligated to pay an upfront cash payment of $ 5.0 million and issued shares of the Company's common stock in an amount that equaled $ 7.3 million based on the volume-weighted average price of shares of the Company's common stock for the 30 business days immediately preceding the execution date of the transaction.

Since the intangibles acquired in the AstraZeneca license agreement do not

have an alternative future use, all costs incurred were treated as research and development expense.

Since the intangibles acquired in the AstraZeneca license agreement do not have an alternative future use, all costs incurred were treated as research and development expense.

The Company recorded a total of $ 12.3 million as research and development expense related to this agreement during December 2021.

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Gensaic Collaboration and Option Agreement

In August 2022, the Company entered into a collaboration and option agreement (the "Collaboration Agreement") with Gensaic.

In August 2022, the Company entered into a collaboration and option agreement (“Collaboration Agreement”) with Gensaic.

The Collaboration Agreement involves the research and development of phage-derived particle (“PDP”) products on Gensaic's proprietary platform for certain central nervous system rare disorder targets.

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Once a product is identified by the Company that demonstrates sufficient efficacy, the Company may exercise its option with respect to the specific research program for that PDP product.

The Company shall reimburse Gensaic for Gensaic's research costs related to the specific research plan for PDP products identified, The research plan and budget shall be mutually agreed on by the parties and shall not exceed $ 3.0 million in any research year.

The Company shall reimburse Gensaic for Gensaic's research costs related to the specific research plan for PDP products identified, The research plan and budget shall be mutually agreed upon by the parties and shall not exceed $ 3.0 million in any research year.

The Company will record these reimbursement payments as research and development costs in the period the research costs are incurred.

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The Company may terminate this agreement by providing written notice to Gensaic 90 days in advance of the termination date.

As of September 30, 2022, none of these contingent payments were considered probable.

As of March 31, 2023, none of these contingent payments were considered probable.

Contingencies

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NOTE 11 – COLLABORATION AND LICENSE AGREEMENTS

Angelini Collaboration

On July 9, 2020, the Company entered into the Angelini License Agreement, pursuant to which the Company granted to Angelini exclusive rights to develop and commercialize OV101, a selective agonist of the GABAA receptor, for the treatment of Angelman syndrome in the European Economic Area as well as Switzerland, the United Kingdom, Russia and Turkey (the “European Territory”).

On March 29, 2021, the Company received a notice of termination of the Angelini License Agreement.

Subsequently, Angelini and the Company mutually agreed to waive the six month termination notice provisions and the Angelini License Agreement terminated effective March 31, 2021.

The Company has been released from its performance obligations and will not be entitled to any future milestone payments under the Angelini License Agreement.

The Company evaluated the Angelini License Agreement to determine whether it was a collaborative arrangement for purposes of ASC 808.

The Company concluded that because Angelini was not the ultimate decision maker or the legal owner of the license, Angelini was not considered an active participant and therefore the Angelini License Agreement was outside of the scope of ASC 808.

The Company concluded that Angelini was a customer with regard to the combined license and research and development activities and as such the Angelini License Agreement should be evaluated under ASC 606.

The Company identified the following material promises under the Angelini License Agreement:

(1) licensing of intellectual property with respect to OV101;

(2) completion of certain ongoing trials;

(3) transfer of a specified amount of compound and related

(4) potential for funding 35 % of the cost for Angelini future trials limited to $ 7.0 million;

and (5) completion of the manufacturing process technology transfer.

The Company determined that the $ 7.0 million represented a potential payment to a customer and was deferred.

The transfer of compound and related information was considered a contingent milestone payment that will be recognized upon acceptance by Angelini of the milestone.

The Company further determined that the license and the completion of ongoing trials were distinct from each other, as each had value without the other.

As such, for the purposes of ASC 606, the Company determined that these two material promises, represented distinct performance obligations.

Pursuant to the Angelini License Agreement and during the year ended December 31, 2020, Angelini made an upfront payment to the Company of $ 20.0 million.

Upon the transfer of the specified amount of compound and related information and acceptance by Angelini, Angelini paid the Company an additional $ 5.0 million.

This payment was determined to be variable consideration which was constrained and not considered part of the upfront transaction price allocation.

The Company determined the transaction price was equal to the upfront fee of $ 20.0 million.

The transaction price was allocated based on the standalone selling price of the license and the ongoing trials.

During the nine months ended September 30, 2022, no revenue was recognized pursuant to the Angelini License Agreement.

During the nine months ended September 30, 2021 and effective upon termination of the Angelini License Agreement, the Company recognized $ 12.4 million of revenue consisting of $ 5.4 million of license revenue related to ongoing trials and the $ 7.0 million related to the potential 35 % funding of the cost for Angelini future trials.

Takeda Collaboration

On January 6, 2017, the Company entered into a license and collaboration agreement with Takeda under which the Company licensed from Takeda certain exclusive rights to develop and commercialize soticlestat in certain territories.

In March 2021, the Company entered into the Takeda License and Termination Agreement, pursuant to which Takeda secured rights to the Company’s 50 % global share in soticlestat, and the Company granted to Takeda an exclusive worldwide license under the Company’s relevant intellectual property rights to develop and commercialize the investigational medicine soticlestat for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome.

Under the Takeda License and Termination Agreement, all rights in soticlestat were owned by Takeda or exclusively licensed to Takeda by the Company.

In March 2021, the Company entered into the RLT Agreement, pursuant to which Takeda secured rights to the Company’s 50 % global share in soticlestat, and the Company granted to Takeda an exclusive worldwide license under the Company’s relevant intellectual property rights to develop and commercialize the investigational medicine soticlestat for the treatment of developmental and epileptic encephalopathies, including Dravet syndrome and Lennox-Gastaut syndrome.

Under the RLT Agreement, all rights in soticlestat were owned by Takeda or exclusively licensed to Takeda by the Company.

Takeda assumed all responsibility for, and costs of, both development and commercialization of soticlestat, and the Company will no longer have any financial obligation to Takeda under the original collaboration agreement, including milestone payments or any future development and commercialization costs.

On March 29, 2021 upon the closing of the Takeda License and Termination Agreement, the Company received an upfront payment of $ 196.0 million and, if soticlestat is successfully developed, will be eligible to receive up to an additional $ 660.0 million upon Takeda achieving developmental, regulatory and sales milestones.

On March 29, 2021 upon the closing of the RLT Agreement, the Company received an upfront payment of $ 196.0 million and, if soticlestat is successfully developed, will be eligible to receive up to an additional $ 660.0 million upon Takeda achieving developmental, regulatory and sales milestones.

In addition, the Company will be entitled to receive tiered royalties beginning in the low double-digits, and up to 20 % on sales of soticlestat if regulatory approval is achieved.

Royalties will be payable on a country-by-country and product-by-product basis for any indications that soticlestat is approved for and sold during the period beginning on the date of the first commercial sale of such product in such country and ending on the later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

The Company identified the following material promises under the Takeda License and Termination Agreement:

(1) no later than the second business day prior to the closing of the Takeda License and Termination Agreement (the “Closing Date”), the Company and Takeda were required to agree on an estimate of the development expenses that accrued, or would accrue, under the original collaboration agreement as of March 31, 2021;

(2) on the Closing Date, the Company was required to (i) provide and transfer to Takeda the materials, information and data relating to the soticlestat program, including clinical trial data and results, as further set forth in the Takeda License and Termination Agreement, (ii) assign to Takeda certain agreements applicable to the soticlestat program, and (iii) assign to Takeda all of its right, title and interest in, to and under all intellectual property rights developed or created pursuant to the original collaboration agreement and owned jointly by the Company and Takeda as of the Closing Date;

later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

The Company identified the following material promises under the RLT Agreement:

(1) no later than the second business day prior to the closing of the RLT Agreement (the “Closing Date”), the Company and Takeda were required to agree on an estimate of the development expenses that accrued, or would accrue, under the original collaboration agreement as of March 31, 2021;

(2) on the Closing Date, the Company was required to (i) provide and transfer to Takeda the materials, information and data relating to the soticlestat program, including clinical trial data and results, as further set forth in the RLT Agreement, (ii) assign to Takeda certain agreements applicable to the soticlestat program, and (iii) assign to Takeda all of its right, title and interest in, to and under all intellectual property rights developed or created pursuant to the original collaboration agreement and owned jointly by the Company and Takeda as of the Closing Date;

(3) within 45 days after March 31, 2021, the Company and Takeda were required to provide a written report to the finance officer designated by the other party setting forth a final total of the development expenses that accrued as of March 31, 2021 and, within 10 business days after receipt of such report, the finance officers shall agree on whether a net settlement payment is due from Takeda to the Company or from the Company to Takeda;

and (4) within 75 days after the Closing Date, to the extent not provided on the Closing Date, Ovid shall provide to Takeda (i) any materials, information and data relating to the soticlestat program, including clinical trial data and results, as further set forth in the Takeda License and Termination Agreement, (ii) other documents (including all expired agreements and related data developed thereunder) to the extent relating to the soticlestat program that are necessary for the exploitation, development, commercialization and manufacture of soticlestat, as further set forth in the Takeda License and Termination Agreement and (iii) any tangible embodiments of the intellectual property rights controlled by Ovid that are reasonably necessary for, used in or held for use in Takeda’s exploitation of the soticlestat program.

and (4) within 75 days after the Closing Date, to the extent not provided on the Closing Date, Ovid shall provide to Takeda (i) any materials, information and data relating to the soticlestat program, including clinical trial data and results, as further set forth in the RLT Agreement, (ii) other documents (including all expired agreements and related data developed thereunder) to the extent relating to the soticlestat program that are necessary for the exploitation, development, commercialization and manufacture of soticlestat, as further set forth in the RLT Agreement and (iii) any tangible embodiment of the intellectual property rights controlled by Ovid that are reasonably necessary for, used in or held for use in Takeda’s exploitation of the soticlestat program.

The Company determined the transaction price is equal to the upfront fee of $ 196.0 million and is associated with all four performance obligations identified above.

It is noted that the incremental effort associated with performance obligations three and four is negligible and not material in the context of the Takeda License and Termination Agreement since all of the information is related to the collaboration period for which the Company already has the information readily available.

Therefore, since they are not material in the context of the Takeda License and Termination Agreement, the full upfront fee was allocated to the two performance obligations satisfied at closing.

During the nine months ended September 30, 2022, no expense was recognized pursuant to the Takeda License and Termination Agreement.

During the nine months ended September 30, 2021, the Company recognized a credit in research and development expenses of $ 2.6 million and recognized $ 0.1 million in general and administrative expenses representing costs which were reimbursed to the Company from Takeda.

It is noted that the incremental effort associated with performance obligations three and four is negligible and not material in the context of the RLT Agreement since all of the information is related to the collaboration period for which the Company already has the information readily available.

Therefore, since they are not material in the context of the RLT Agreement, the full upfront fee was allocated to the two performance obligations satisfied at closing.

During the three months ended March 31, 2023, no expense was recognized pursuant to the RLT Agreement.

Healx License and Option Agreement

On February 1, 2022, the Company entered into the Healx License and Option Agreement.

On February 1, 2022, the Company entered an exclusive license option agreement (“Healx License and Option Agreement”) with Healx, Ltd.

Under the terms of the Healx License and Option Agreement, Healx has secured a one-year option to investigate gaboxadol (“OV101”) as part of a potential combination therapy for Fragile X syndrome in a Phase 2A clinical trial, as well as a treatment for other indications, for an upfront payment of $ 0.5 million, and fees to support prosecution and maintenance of our relevant intellectual property rights.

At the end of the one-year option period, Healx has the option to secure rights to an exclusive license under the Company's relevant intellectual property rights, in exchange for an additional payment of $ 2.0 million, development and commercial milestone payments, and low to mid-tier double digit royalties.

On February 1, 2023, the Company granted an extension of the option period for up to four months for Healx to continue to investigate gaboxadol.

Royalties are payable on a country-by-country and product-by-product basis during the period beginning on the date of the first commercial sale of such product in such country and ending on the later to occur of the expiration of patent rights covering the product in such country and a specified anniversary of such first commercial sale.

Healx will assume all responsibility for, and costs of, both development and commercialization of gaboxadol following the exercise of the option.

The Company will retain the option to co-develop and co-commercialize the program with Healx, or the Ovid Opt-In Right, at the end of a positive readout of clinical Phase 2B and would share net profits and losses in lieu of the milestones and royalty payments.

The Company will retain the option to co-develop and co-commercialize the program with Healx (“Ovid Opt-In Right”) at the end of a positive readout of clinical Phase 2B and would share net profits and losses in lieu of the milestones and royalty payments.

If the Ovid Opt-In Right were exercised, the Company would be required to pay Healx 50 % of development costs.

The Company does not plan to conduct further trials of gaboxadol.

The term of the Healx License and Option Agreement will continue until the later of (a) the expiration of all relevant royalty terms, or in the event that Healx does not exercise its option during the option period defined in the Healx License and Option Agreement, or the Option Period, the expiration of such period, or (b) in the event that Healx does exercise its option during the Option Period, and the Company does not exercise the Ovid Opt-In Right during the period of time we have to opt-in, or the Opt-In Period, or the opt-in terms are otherwise terminated, upon the expiration of all payment obligations, or (c) in the event that Healx does exercise the Option during the Option Period, and the Company does exercise the Ovid Opt-In Right during the Opt-In Period, such time as neither Healx nor Ovid is continuing to exploit the gaboxadol.

As part of the revised contractual obligations with Lundbeck, Ovid will owe Lundbeck a share of all milestone and royalty payments received from Healx, if the Company does not exercise the Ovid Opt-In Right.

If the Company does exercise the Ovid Opt-In Right to co-develop and co-commercialize the program with Healx, the Company will owe a share of the net profit share to Lundbeck.

No revenue was recognized relating to this agreement during the three months ended September 30, 2022.

During the nine months ended September 30, 2022, the Company recorded revenue of $ 0.5 million associated with the Healx License and Option Agreement.

The term of the Healx License and Option Agreement will continue until the later of (a) the expiration of all relevant royalty terms, or in the event that Healx does not exercise its option during the option period defined in the Healx License and Option Agreement, or the Option Period, the expiration of such period, or (b) in the event that Healx does exercise its option during the Option Period, and the Company does not exercise the Ovid Opt-In Right during the period of time it has to opt-in, or the Opt-In Period, or the opt-in terms are otherwise terminated, upon the expiration of all payment obligations, or (c) in the event that Healx does exercise the Option during the Option Period, and the Company does exercise the Ovid Opt-In Right during the Opt-In Period, such time as neither Healx nor the Company is continuing to exploit gaboxadol.

Further, if the Company exercises the Ovid Opt-In Right to co-develop and co-commercialize the program, it will owe a share of the net profit share to a third party with which it previously established a licensing agreement.

If the Company does not exercise the Ovid Opt-In Right, it will owe the third party a share of all milestone and royalty payments.

No revenue was recognized relating to this agreement during the three months ended March 31, 2023.

During the three months ended March 31, 2022, the Company recorded revenue of $ 0.5 million associated with the Healx License and Option Agreement.

Marinus Pharmaceuticals Out-License Agreement

On March 1, 2022, the Company entered into an exclusive patent license agreement with Marinus, or the Marinus License Agreement.

On March 1, 2022, the Company entered into an exclusive patent license agreement with Marinus (“Marinus License Agreement”).

Under the Marinus License Agreement, the Company granted Marinus an exclusive, non-transferable (except as expressly provided therein), royalty-bearing right and license under certain Ovid patents relating to ganaxolone to develop, make, have made, commercialize, promote, distribute, sell, offer for sale and import licensed products in the territory (which consist of the United States, the European Economic Area, United Kingdom and Switzerland) for the treatment of CDKL5 deficiency disorders.

2 unchanged sentences

The Company recorded revenue and an associated investment in equity securities of approximately $ 0.9 million related to the patent license agreement on March 18, 2022, based on the price of Marinus common stock on March 1, 2022.

The Company had an unrealized gain on the Marinus common stock of $ 0.2 million and unrealized loss of $ 0.1 million for the three and nine months ended September 30, 2022, which was recorded as an unrealized loss on equity securities and is reflected in other (expense) income, net in the condensed consolidated statements of operation s.

The Company had unrealized gains on the Marinus common stock of $ 0.4 million and $ 0.2 million for the three months ended March 31, 2023 and 2022, respectively, which were recorded as unrealized gains on equity securities and are reflected in other income (expense), net in the condensed consolidated statements of operations.

NOTE 12 – RELATED PARTY TRANSACTIONS

In March 2021, the Company entered into the Takeda License and Termination Agreement with Takeda.

For a description of the Takeda License and Termination Agreement, see Note 11.

NOTE 13 – NET (LOSS) INCOME PER SHARE

Basic net (loss) income per share is calculated based upon the weighted-average number of common shares outstanding during the period, excluding outstanding stock options that have not yet vested.

Diluted net income per share is calculated based upon the weighted-average number of common shares outstanding during the period plus the dilutive impact of weighted-average common equivalent shares outstanding during the period resulting from the assumed exercise of outstanding stock options determined under the treasury stock method and the assumed conversion of preferred stock into common shares determined using the if-converted method.

In March 2021, the Company entered into the RLT Agreement with Takeda.

For a description of the RLT Agreement, see Note 11.

NOTE 13 – NET LOSS PER SHARE

Basic net loss per share is calculated based upon the weighted-average number of common shares outstanding during the period, excluding outstanding stock options that have not yet vested.

For any period in which the Company records net income, diluted net income per share is calculated based upon the weighted-average number of common shares outstanding during the period plus the dilutive impact of weighted-average common equivalent shares outstanding during the period resulting from the assumed exercise of outstanding stock options determined under the treasury stock method and the assumed conversion of preferred stock into common shares determined using the if-converted method.

Diluted net loss per share is equivalent to the basic net loss per share due to the exclusion of outstanding stock options and convertible preferred stock because the inclusion of these securities would result in an anti-dilutive effect on per share amounts.

The basic and diluted net (loss) income per common share is presented in conformity with the two-class method required for participating securities and multiple classes of shares.

The basic and diluted net loss per common share is presented in conformity with the two-class method required for participating securities and multiple classes of shares.

The Company considers its preferred stock to be participating securities.

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For periods in which the Company recognizes a net loss, undistributed losses are allocated only to common shares as the participating securities do not contractually participate in the Company’s losses.

Basic net (loss) income per share is computed by dividing the net (loss) income attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period.

Participating securities are excluded from basic weighted-average common shares outstanding.

The following table summarizes the calculation of basic and diluted net (loss) income per share:

Three Months Ended September 30, Nine Months Ended September 30,

The following table summarizes the calculation of basic and diluted net loss per share:

For the Three Months Ended March 31,

Net loss $ ( 13,356,209 ) $ ( 16,108,056 )

Net loss attributable to participating securities — —

Net loss attributable to common stockholders $ ( 13,356,209 ) $ ( 16,108,056 )

For the Three Months Ended March 31,

Net loss attributable to common stockholders $ ( 13,356,209 ) $ ( 16,108,056 )

Weighted average common shares outstanding used in computing net loss per share - basic

70,490,704 70,345,828

Net (loss) income $ ( 11,967,771 ) $ ( 11,384,248 ) $ ( 42,664,240 ) $ 148,834,632

Net income attributable to participating securities — — — ( 3,845,373 )

Net (loss) income attributable to common stockholders $ ( 11,967,771 ) $ ( 11,384,248 ) $ ( 42,664,240 ) $ 144,989,259

Three Months Ended September 30, Nine Months Ended September 30,

Weighted average common shares outstanding used in computing net loss per share - diluted

70,490,704 70,345,828

Net (loss) income attributable to common stockholders $ ( 11,967,771 ) $ ( 11,384,248 ) $ ( 42,664,240 ) $ 144,989,259

Weighted average common shares outstanding used in computing net income (loss) per share - basic 70,430,554 67,929,894 70,408,657 67,282,495

Dilutive effect of outstanding stock options — — — 565,538

Weighted average common shares outstanding used in computing net income (loss) per share - diluted 70,430,554 67,929,894 70,408,657 67,848,033

Net (loss) income per share, basic $ ( 0.17 ) $ ( 0.17 ) $ ( 0.61 ) $ 2.15

Net (loss) income per share, diluted $ ( 0.17 ) $ ( 0.17 ) $ ( 0.61 ) $ 2.14

Net loss per share, basic $ ( 0.19 ) $ ( 0.23 )

Net loss per share, diluted $ ( 0.19 ) $ ( 0.23 )

The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as they would be anti-dilutive:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

For the Three Months Ended March 31,

Stock options to purchase common stock 15,418,577 12,755,657

Common stock issuable upon conversion of Series A convertible preferred stock 1,250,000 1,250,000

NOTE 14 – SUBSEQUENT EVENT

Graviton License Agreement and Equity Purchase

On April 30, 2023, the Company entered into an agreement with Graviton Bioscience Corporation (“Graviton”), whereby it secured from Graviton an exclusive license to develop and commercialize Graviton's library of ROCK2 inhibitors including their lead program GV101 in rare central nervous system (“CNS”) disorders (excluding amyotrophic lateral sclerosis) worldwide (excluding China, Hong Kong, Macau and Taiwan).

Under the agreement, the Company and Graviton plan to investigate GV101 in cerebral cavernous malformations as well as Graviton's library of ROCK2 inhibitors in other rare CNS disorders.

The Company will be responsible for all development and commercialization costs of the products.

Should the Company receive regulatory approval and commercialize any of Graviton’s ROCK2 inhibitors, it will pay Graviton tiered royalties on net sales ranging from the mid to high teens.

As part of the collaboration the Company also purchased shared of Graviton's Series A Preferred Stock for $ 10 million .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements