Ovid Therapeutics Inc. 10-K

Item 9A. Controls and Procedures Management’s Evaluation of our Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. We previously identified material weaknesses in our controls, including that the Company did not have sufficiently trained resources involving emerging and evolving threats related to spear phishing, vendor email compromise, and other cyberattack approaches and in designing and implementing controls over changes to vendor payment information. At December 31, 2024, remediation efforts included the hiring of a finance leader with significant training and experience in evaluating and mitigating cybersecurity risks, increasing finance team training and attention to cyber risks, and enhancing controls around vendor information changes, review and approval of disbursements. Based on these additional procedures and control, management has concluded this material weakness has been remediated as of December 31, 2024. As of December 31, 2024, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and effectiveness of our material weakness remediation activity. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principal financial officer have concluded based upon the evaluation described above, that as of December 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our management, under the supervision and with the participation of our Chief Executive Officer and Principal Financial and Accounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting and effectiveness of our material weakness remediation activity as of December 31, 2024 based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on the results of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2024. Attestation Report of the Registered Public Accounting Firm This Annual Report on Form 10-K does not include an attestation report on our internal control over financial reporting from our registered public accounting firm due to an exemption as a smaller reporting company and as a non-accelerated filer for the year ended December 31, 2024. Changes in Internal Control over Financial Reporting In the three month period ended December 31, 2024, the changes to internal controls over financial reporting consisted of the material weakness remediation efforts listed above. There have been no additional changes in internal controls over financial reporting during our most recent quarter ended December 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. 72 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not Applicable. 73 PART III Certain information required by Part III is omitted from this Annual Report because we will file with the SEC a definitive proxy statement pursuant to Regulation 14A, or the 2025 Proxy Statement, no later than 120 days after the end of our fiscal year, and certain information included therein is incorporated herein by reference. Item 10. Directors, Executive Officers, and Corporate Governance The information required by this item is incorporated by reference to the information set forth in the sections titled “Proposal 1 – Election of Directors,” “Executive Officers,” and “Information Regarding the Board and Corporate Governance” and “Delinquent Section 16(a) Reports,” if any, in our 2025 Proxy Statement. Information regarding our Code of Business Conduct and Ethics, or the Code of Conduct, required by this item will be contained in our 2025 Proxy Statement under the caption “Information Regarding the Board and Corporate Governance – Code of Business Conduct and Ethics,” and is hereby incorporated by reference. We intend to promptly disclose on our website or in a Current Report on Form 8-K in the future (i) the date and nature of any amendment (other than technical, administrative or other non-substantive amendments) to the Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and relates to any element of the code of ethics definition enumerated in Item 406(b) of Regulation S-K and (ii) the nature of any waiver, including an implicit waiver, from a provision of the Code of Conduct that is granted to one of these specified individuals that relates to one or more of the elements of the code of ethics definition enumerated in Item 406(b) of Regulation S-K, the name of such person who is granted the waiver and the date of the waiver. The full text of our Code of Conduct is available at the Investors section of our website at www.ovidrx.com . The reference to our website address does not constitute incorporation by reference of the information contained at or available through our website, and you should not consider it to be a part of this Annual Report. Item 11. Executive Compensation The information required by this item is incorporated by reference to the information set forth in the section titled “Executive Officer and Director Compensation” in our 2025 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item is incorporated by reference to the information set forth in the section titled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our 2025 Proxy Statement. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by this item is incorporated by reference to the information set forth in the section titled “Transactions with Related Persons” and “Information Regarding the Board and Corporate Governance – Board Independence” in our 2025 Proxy Statement. Item 14. Principal Accountant Fees and Services The information required by this item is incorporated by reference to the information set forth in Proposal 3 under the section titled “Independent Registered Public Accounting Firm Fees” and “Pre-Approval Policies and Procedures” contained in our 2025 Proxy Statement. 74 PART IV Item 15. Exhibits and Financial Statements and Schedules (a)(1) Financial Statements. (a)(2) Financial Statement Schedules. All schedules have been omitted because they are not required or because the required information is given in the Financial Statements or Notes thereto. (a)(3) Exhibits. The exhibits listed below are filed as part of this Annual Report on Form 10-K. Number Description 3.1 Amended and Restated Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-38085), filed with the Commission on May 10, 2017). 3.2 Corrected Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-38085), filed with the Commission on September 24, 2019). 3.3 Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-38085), filed with the Commission on May 10, 2017). 4.1 Form of Common Stock Certificate of the Company (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A (File No. 333-217245), filed with the Commission on April 25, 2017). 4.2 Description of the Securities of Ovid Therapeutics Inc. (incorporated herein by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K (File No. 001-38085), filed with the Commission on March 8, 2024). 4.3 Form of Series A Preferred Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-38085), filed with the Commission on February 21, 2019). 10.1+ Form of Indemnity Agreement by and between the Company and its directors and officers (incorporated herein by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.2+ 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.12 to the Company’s Registration Statement on Form S-8 (File No. 001-38085), filed with the Commission on May 22, 2017). 10.3+ Forms of Option Grant Notice and Option Agreement under 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.4+ Form of Restricted Stock Unit Grant Notice and Award Agreement under the 2017 Equity Incentive Plan . 10.5+ 2014 Equity Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.6+ Amendment to 2014 Equity Incentive Plan, effective as of March 9, 2015 (incorporated herein by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 75 10.7+ Amendment to 2014 Equity Incentive Plan, effective as of June 4, 2015 (incorporated herein by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.8+ Amendment to 2014 Equity Incentive Plan, effective as of July 28, 2015 (incorporated herein by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.9+ Amendment to 2014 Equity Incentive Plan, effective as of February 11, 2016 (incorporated herein by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.10+ 2017 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.14 to the Company’s Registration Statement on Form S-8 (File No. 001-38085), filed with the Commission on May 22, 2017). 10.11+ Amended Non-Employee Director Compensation Policy, effective February 22, 2024 . 10.12+ A mended Non-Employee Director Compensati on Policy, effective February 20, 2025. 10.13+ Executive Employment Agreement between the Registrant and Jeremy M. Levin, dated June 5, 2015 (incorporated herein by reference to Exhibit 10.13 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.14+ Executive Employment Agreement between the Company and Jeff Rona, effective June 2, 2021 (incorporated herein by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K (File No. 001-38085), filed with the Commission on March 15, 2021). 10.15+ Amended and Restated Executive Employment Agreement between the Company and Margaret Alexander, dated September 9, 2024 (incorporated herein by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (File No. 001-38085), filed with the Commission on September 11, 2024 ) . 10.16^ License Agreement by and between Northwestern University and the Company, dated December 15, 2016. (incorporated herein by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q (File No. 001-38085), filed with the Commission on May 14, 2024). 10.17† License Agreement, dated as of December 30, 2021, by and between the Ovid Therapeutics Inc. and AstraZeneca AB (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-38085), filed with the Commission on January 3, 2022). 10.18^ Purchase and Sale Agreement, dated as of October 17, 2023, by and between the Company and Ligand Pharmaceuticals Incorporated. (incorporated herein by reference to Exhibit 10.21 to the Company’s Annual Report on Form 10-K (File No. 001-38085), filed with the Commission on March 8, 2024. 19.1 R e gist rant ’ s Insider Trading Policy . 23.1 Consent of Independent Registered Public Accounting Firm . 24.1 Power of Attorney (included on the signature page to this report) . 31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 76 97 Incentive Compensation Recoupment Policy (incorporated herein by reference to Exhibit 97 to the Company’s Annual Report on Form 10-K (File No. 001-38085), filed with the Commission on March 8, 2024). 101.INS* Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents. 104* Cover Page formatted as Inline XBRL and contained within Exhibit 101. * Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing. + Indicates a management contract or compensatory plan. † Confidential treatment has been granted for certain portions of this exhibit. These portions have been omitted and filed separately with the SEC. ^ Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the Securities and Exchange Commission, certain portions of this exhibit have been redacted. The Registrant hereby agrees to furnish supplementally to the Securities and Exchange Commission, upon its request, an unredacted copy of this exhibit. Item 16. Form 10-K Summary Not applicable. 77 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-K to be signed on its behalf by the undersigned thereunto duly authorized. OVID THERAPEUTICS INC. Date: March 11, 2025 By: /s/ Jeremy M. Levin Jeremy M. Levin Chief Executive Officer (Principal Executive Officer) Date: March 11, 2025 By: /s/ Jeffrey Rona Jeffrey Rona Chief Business and Financial Officer (Principal Financial and Accounting Officer) POWER OF ATTORNEY Each person whose individual signature appears below hereby authorizes and appoints Jeremy M. Levin, DPhil, MB BChir and Jeffrey Rona, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Jeremy M. Levin, DPhil, MB BChir Chief Executive Officer and Director (Principal Executive Officer) March 11, 2025 Jeremy M. Levin, DPhil, MB BChir /s/ Jeffrey Rona Chief Business and Financial Officer (Principal Financial and Accounting Officer) March 11, 2025 Jeffrey Rona /s/ Karen Bernstein, PhD Director March 11, 2025 Karen Bernstein, PhD /s/ Barbara Duncan Director March 11, 2025 Barbara Duncan /s/ Kevin Fitzgerald, PhD Director March 11, 2025 Kevin Fitzgerald, PhD /s/ Bart Friedman Director March 11, 2025 Bart Friedman /s/ Stelios Papadopoulos Director March 11, 2025 Stelios Papadopoulos OVID THERAPEUTICS INC. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (KPMG LLP, New York, NY PCAOB ID: 185 ) F- 2 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations F- 4 Consolidated Statements of Comprehensive Loss F- 5 Consolidated Statements of Changes in Stockholders’ Equity F- 6 Consolidated Statements of Cash Flows F- 7 Notes to Consolidated Financial Statements F- 8 F-1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Ovid Therapeutics Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Ovid Therapeutics Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion . Critical Audit Matters Critical audit matters are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters . /s/ KPMG LLP We have served as the Company’s auditor since 2015. New York, New York March 11, 2025 F-2 PART I—FINANCIAL INFORMATION Item 1. Financial Statements. OVID THERAPEUTICS INC. Consolidated Balance Sheets (in thousands, except share and per share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 26,301 $ 27,042 Marketable securities 26,774 78,792 Prepaid expenses and other current assets 2,865 3,763 Total current assets 55,940 109,598 Long-term equity investments 20,974 17,626 Restricted cash 1,931 1,931 Right-of-use asset, net 12,797 13,894 Property and equipment, net 433 769 Other assets 92 210 Total assets $ 92,167 $ 144,027 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 3,191 $ 3,703 Accrued expenses 5,994 6,524 Current portion, lease liability 1,336 1,246 Total current liabilities 10,522 11,473 Long-term liabilities: Lease liability 13,419 14,756 Royalty monetization liability — 30,000 Total liabilities 23,941 56,230 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 December 31, 2024 and 2023 — — Common stock, $ 0.001 par value; 125,000,000 shares authorized; 71,009,866 and 70,691,992 shares issued and outstanding at December 31, 2024 and 2023, respectively 71 71 Additional paid-in-capital 372,489 365,591 Accumulated other comprehensive income (loss) ( 35 ) 1 Accumulated deficit ( 304,299 ) ( 277,865 ) Total stockholders ’ equity 68,226 87,797 Total liabilities and stockholders ’ equity $ 92,167 $ 144,027 See accompanying notes to these consolidated financial statements F-3 OVID THERAPEUTICS INC. Consolidated Statements of Operations (in thousands, except share and per share data) For the Year Ended December 31, 2024 For the Year Ended December 31, 2023 Revenue: License and other revenue $ 566 $ 392 Total revenue 566 392 Operating expenses: Research and development 36,767 28,588 General and administrative 25,684 31,085 Total operating expenses 62,451 59,673 Loss from operations ( 61,885 ) ( 59,281 ) Other income (expense), net 35,452 6,943 Loss before provision for income taxes ( 26,433 ) ( 52,339 ) Provision for income taxes — — Net loss $ ( 26,433 ) $ ( 52,339 ) Net loss per share of Series A preferred stock, basic and diluted $ ( 366.33 ) $ ( 728.64 ) Weighted-average Series A preferred stock shares outstanding, basic and diluted 1,250 1,250 Net loss per share of common stock, basic and diluted $ ( 0.37 ) $ ( 0.73 ) Weighted-average common stock shares outstanding, basic and diluted 70,905,422 70,580,604 See accompanying notes to these consolidated financial statements F-4 OVID THERAPEUTICS INC. Consolidated Statements of Comprehensive Loss (in thousands) For the Year Ended December 31, 2024 For the Year Ended December 31, 2023 Net loss $ ( 26,433 ) $ ( 52,339 ) Other comprehensive income: Cumulative translation adjustment ( 42 ) — Unrealized gain on available-for-sale securities 7 1 Comprehensive loss $ ( 26,468 ) $ ( 52,338 ) See accompanying notes to these consolidated financial statements F-5 OVID THERAPEUTICS INC. Consolidated Statement of Changes in Stockholders’ Equity (in thousands, except shares) Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Shares Amount Balance, December 31, 2023 1 $ — 70,691,992 $ 71 $ 365,591 $ 1 $ ( 277,866 ) $ 87,797 Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 317,874 — 622 — — 622 Stock-based compensation expense — — — — 6,276 — — 6,276 Other comprehensive loss — — — — — ( 36 ) — ( 36 ) Net loss — — — — — — ( 26,433 ) ( 26,433 ) Balance, December 31, 2024 1 $ — 71,009,866 $ 71 $ 372,489 $ ( 35 ) $ ( 304,299 ) $ 68,226 (in thousands, except shares) Convertible Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Shares Amount Shares Amount Balance, December 31, 2022 1 $ — 70,466,885 $ 70 $ 357,771 $ ( 42 ) $ ( 225,527 ) $ 132,273 Issuance of common stock from exercise of stock options and purchases from employee stock purchase plan — — 225,107 — 535 — — 535 Stock-based compensation expense — — — — 7,285 — — 7,285 Other comprehensive income — — — — — 43 — 43 Net loss — — — — — — ( 52,339 ) ( 52,339 ) Balance, December 31, 2023 1 $ — 70,691,992 $ 71 $ 365,591 $ 1 $ ( 277,866 ) $ 87,797 See accompanying notes to these consolidated financial statements F-6 OVID THERAPEUTICS INC. Consolidated Statements of Cash Flows (in thousands) For the Year Ended December 31, 2024 For the Year Ended December 31, 2023 Cash flows from operating activities: Net loss $ ( 26,433 ) $ ( 52,339 ) Adjustments to reconcile net loss to cash used in operating activities: Change in fair value of royalty monetization liability ( 30,000 ) — Unrealized (gain) loss on equity investments ( 3,349 ) ( 2,003 ) Change in accrued interest and accretion of discount on marketable securities ( 2,765 ) ( 2,172 ) Stock-based compensation expense 6,276 7,285 Depreciation and amortization expense 613 568 Noncash operating lease expense 1,097 1,028 Change in lease liability ( 1,246 ) ( 534 ) Change in operating assets and liabilities: — — Prepaid expenses and other current assets 899 ( 1,385 ) Accounts payable ( 512 ) 1,750 Accrued expenses ( 537 ) 2,021 Net cash used in operating activities ( 55,956 ) ( 45,781 ) Cash flows from investing activities: Purchase of marketable securities ( 73,246 ) ( 112,443 ) Sales/maturities of marketable securities 128,000 120,000 Purchase of long-term equity investment — ( 10,000 ) Purchases of property and equipment ( 71 ) ( 40 ) Software development and other costs ( 90 ) ( 97 ) Net cash provided by (used in) investing activities 54,594 ( 2,581 ) Cash flows from financing activities: Proceeds from exercise of options and employee stock purchase plan 622 535 Proceeds from royalty monetization agreement — 30,000 Net cash provided by financing activities 622 30,535 Net decrease in cash, cash equivalents and restricted cash ( 740 ) ( 17,826 ) Cash, cash equivalents and restricted cash, at beginning of period 28,972 46,799 Cash, cash equivalents and restricted cash, at end of period $ 28,232 $ 28,972 See accompanying notes to these consolidated financial statements F-7 OVID THERAPEUTICS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – NATURE OF OPERATIONS Ovid Therapeutics Inc. (the “Company”) was incorporated under the laws of the state of Delaware, commenced operations on April 1, 2014, and maintains its principal executive office in New York, New York. The Company is a biopharmaceutical company that is dedicated to developing small molecule medicines for brain conditions with significant unmet need. The Company is currently focused on developing OV329, OV350, OV4071, OV4041 and OV888 (GV101) (to be evaluated pending review of emerging data from competitor and academic studies in CCM) (see Part I, Item 1 of the annual report on Form 10-K for the period ended December 31, 2024 for detailed program descriptions). 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 sale and/or licensing of certain assets and the licensing of certain intellectual property. 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 December 31, 2024, the Company had approximately $ 53.1 million in cash, cash equivalents and marketable securities. Since inception, the Company has generated $ 223.5 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 recurring negative operating cash flows and has required significant cash resources to execute its business plans, which the Company expects will continue for the foreseeable future. The Company has an accumulated deficit of $ 304.3 million as of December 31, 2024, working capital of $ 45.4 million and used $ 56.0 million of cash in operating activities for the year ended December 31, 2024. The Company recorded a net loss of $ 26.4 million during the year ended December 31, 2024 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 December 31, 2024 will be sufficient to fund its current operations through at least 12 months from the date of filing of the Company’s Annual Report on Form 10-K. Adequate additional funding may not be available to the Company on acceptable terms or at all. The failure to raise capital as and when needed will have a negative impact on the Company’s financial condition and ability to pursue its business strategy. If the Company is unable to raise capital on acceptable terms, the Company will 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 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; identifying, acquiring or in-licensing additional products or product candidates; pharmaceutical product development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing intellectual property rights; complying with applicable regulatory requirements; and obtaining regulatory approval of any of the Company’s product candidates, among others. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) Basis of Presentation and Consolidation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of Ovid Therapeutics Inc. and its wholly owned subsidiaries, Ovid Therapeutics Australia Pty Ltd and Ovid Therapeutics Hong Kong Limited. All material intercompany transactions and balances have been eliminated in consolidation. F-8 (B) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ materially from those estimates. (C) Marketable Securities Marketable securities consist of investments in U.S. 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 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 income (loss) in stockholders’ equity. (D) Restricted Cash The Company classifies as restricted cash all cash pledged as collateral to secure long-term obligations and all cash for which use is otherwise limited by contractual provisions. Amounts are reported as non-current unless restrictions are expected to be released in the next 12 months. (E) Long-term Equity Investments Long-term equity investments consist of equity investments in the preferred shares of Gensaic, Inc., formerly M13 Therapeutics, Inc. (“Gensaic”), and Graviton Bioscience Corporation (“Graviton”), both privately held corporations. The preferred shares are not considered in-substance common stock, and the investments are accounted for at cost, with adjustments for observable changes in prices or impairments, and are classified within long-term equity investments on the consolidated balance sheets with adjustments recognized in other income (expense), net on the consolidated statements of operations. The Company has determined that these equity investments do not have a readily determinable fair value and elected the measurement alternative. Therefore, the carrying amount of the equity investments will be adjusted to fair value at the time of the next observable price change for the identical or similar investment of the same issuer, or when an impairment is recognized. Each reporting period, the Company performs a qualitative assessment to evaluate whether the investments are impaired. The assessment includes a review of recent operating results and trends, recent sales/acquisitions of the investees’ securities, and other publicly available data. If an investment is determined to be impaired, the Company will then write it down to its estimated fair value. As of December 31, 2024 and 2023, the equity investment in Gensaic had a carrying value of $ 5.1 million. As of December 31, 2024 and 2023, the equity investment in Graviton had carrying values of $ 15.8 million and $ 11.2 million, respectively, which reflect unrealized gains recognized during the periods and recorded in other income (expense), net, in the consolidated statements of operations due to an observable change in price. Long-term equity investments also consist of an equity investment in the common shares of Marinus Pharmaceuticals, Inc. (“Marinus”) that was received as noncash consideration via the terms of a licensing agreement executed between the two companies effective March 2022. 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), net on the Company’s consolidated statements of operations. As of December 31, 2024 and 2023, the equity investment in Marinus had a carrying value of approximately $ 0.1 million and $ 1.3 million, respectively. In January 2025, Immedica Pharma, S.A. purchased Marinus in an all-cash tender offer, resulting in the Company’s sale of its position in Marinus for $ 0.07 million. No impairments were recognized in the years ending December 31, 2024 and 2023. (F) Fair Value of Financial Instruments Financial Accounting Standards Board 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). F-9 The three levels of the fair value hierarchy are as follows: • Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-traded instruments and listed equities. The Company’s Level 1 assets consisted of investments in a U.S. treasury money market fund and equity securities totaling approximately $ 25.8 million and $ 25.7 million, respectively, as of December 31, 2024 and 2023. • 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). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company’s Level 2 assets consisted of U.S. treasury bills totaling approximately $ 26.8 million and $ 78.8 million, respectively, as of December 31, 2024 and 2023. • Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when the fair values are determined using pricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Company’s Level 3 liabilities consist of a royalty monetization liability totaling $ 0.0 million and $ 30.0 million, respectively, as of December 31, 2024 and 2023. There were no Level 3 assets as of December 31, 2024 and 2023. The carrying amounts reported in the consolidated balance sheets for cash, cash equivalents and marketable securities, other current assets, accounts payable, and accrued expenses approximate their fair values based on the short-term maturity of these instruments. (G) Leases The Company determines if an arrangement is a lease at inception and recognizes the lease in accordance with ASC 842, Lease Accounting. Operating leases are included in right-of-use (“ROU”) assets, current portion, lease liability and long-term lease liability in the Company’s consolidated balance sheets. ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of the lease payments over the lease term. 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. (H) 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. (I) 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. (J) 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. F-10 Many of the assumptions require 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. The Company 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 aggregates employee and nonemployee awards for certain disclosures since nonemployee awards are not material. (K) Royalty Monetization Liability The Company accounted for its sale to Ligand Pharmaceuticals Incorporated (“Ligand”) of a 13 % share of royalties and milestones owed to the Company related to the potential approval and commercialization of soticlestat (“Ligand Agreement”) in accordance with ASC 470, Debt, classifying the proceeds received from the sale to Ligand as debt as the Company determined that it had significant continuing involvement in the generation of the cash flows to Ligand. The Company further elected to account for the debt at fair value with changes in the fair value of the debt classified as other income (expense) in the consolidated statements of operations. In June 2024, Takeda issued a press release indicating the soticlestat trials missed their primary endpoints and noted that while Takeda would discuss the program with FDA, Takeda fully impaired the asset representing soticlestat. In 2024, the Company recorded a gain of $ 30.0 million due to reducing the fair value of the Ligand Agreement debt to zero as a result of the improbability that the program would be further developed into a commercial product by Takeda or another party. In January 2025, Takeda announced the discontinuation the program. (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 tax laws is recorded in the period in which the law is enacted. (M) Net Loss per Share The rights and preferences of the Series A Preferred stock are negligible relative to common stock, therefore the Series A Preferred stock is treated as in-substance common stock on an as-converted basis when allocating Net Income (Loss) to actual and in-substance shares of common stock. The Company applies the two-class method to allocate earnings between common stock, Series A Preferred stock as well as other securities deemed in-substance common stock and participating securities, if any. Net loss per share of common stock is determined by dividing net loss attributable to common stockholders by the basic and diluted weighted-average shares of common stock outstanding during the period. Net loss per share of Series A Preferred stock is determined by dividing net loss attributable to Series A Preferred stockholders on an as-converted basis by the basic and diluted weighted-average shares of Series A Preferred stock outstanding during the period. Net loss 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 any preferred stock using the if-converted method. Net loss per diluted attributable to common stockholders omits the inclusion of options and common stock issuable upon conversion of our preferred stock as these securities would be anti-dilutive. (N) Retirement Plan The Company maintains a 401(k)-retirement plan for its employees that is intended to qualify under Sections 401(a) and 501(a) of the U.S. Internal Revenue Code of 1986, as amended (“Code”). The Company provides all active employees with a 100 % matching contribution equal to 3 % of an employee’s eligible deferred compensation and a 50 % matching contribution on employee contributions that are between 3 % and 5 % of an employee’s eligible deferred compensation. These safe harbor contributions vest immediately. For the years ended December 31, 2024 and 2023 the Company contributed $ 0.3 million. F-11 (O) 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: (i) identify the contract(s) with a customer; (ii) identify the promises and performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the performance obligations are satisfied. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services transferred to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract, determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Prior to recognizing revenue, the Company makes estimates of the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and when the uncertainty associated with the variable consideration is subsequently resolved. If there are multiple distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based on its relative standalone selling price. The standalone selling price is generally determined using expected cost and comparable transactions. Revenue for performance obligations recognized over time is recognized by measuring the progress toward complete satisfaction of the performance obligations using an input measure. Non-refundable upfront fees allocated to licenses that are not contingent on any future performance and require no consequential continuing involvement by the Company, are recognized as revenue when the license term commences and the licensed data, technology or product is delivered. The Company defers recognition of upfront license fees if the performance obligations are not satisfied. (P) Recent Accounting Pronouncements The Company has reviewed recently issued accounting standards and plans to adopt those that are applicable. The Company does not expect the adoption of those standards to have a material impact on its financial position, results of operations or cash flows. In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires the disaggregation of certain expense captions into specified categories in disclosures within the notes to the consolidated financial statements to provide enhanced transparency into the expense captions presented on the face of the statements of income and comprehensive income. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, with early adoption permitted, and may be applied either prospectively or retrospectively to financial statements issued for reporting periods after the effective date of ASU 2024-03 or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its related disclosures. The Company adopts new pronouncements relating to GAAP applicable to the Company as they are issued, and based upon the effective dates included in the pronouncements. Management does not believe that any recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying consolidated financial statements. F-12 N OTE 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 December 31, 2024 and 2023: December 31, 2024 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Cash $ 522 $ — $ — $ 522 Cash equivalents 25,779 — — 25,779 Marketable securities 26,767 7 — 26,774 Total cash, cash equivalents and marketable securities $ 53,068 $ 7 $ — $ 53,075 December 31, 2023 (in thousands) Amortized Cost Gross Unrealized Holding Gains Gross Unrealized Holding Losses Fair Value Cash $ 2,701 $ — $ — $ 2,701 Cash equivalents 24,340 — — 24,340 Marketable securities 78,791 1 — 78,792 Total cash, cash equivalents and marketable securities $ 105,833 $ 1 $ — $ 105,833 The Company did not hold any securities that were in an unrealized loss position for more than 12 months as of December 31, 2024 and 2023. There were no material realized gains or losses on available-for-sale securities during the years ended December 31, 2024 and 2023. NOTE 4 – PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS Property and equipment is summarized as follows: (in thousands) December 31, 2024 December 31, 2023 Furniture and equipment $ 1,534 $ 1,463 Leasehold improvements 306 306 Less accumulated depreciation ( 1,407 ) ( 1,001 ) Total property and equipment, net $ 433 $ 769 Depreciation expense was $ 0.4 million for the years ended December 31, 2024 and 2023. Intangible assets, net of accumulated amortization, were $ 0.1 million and $ 0.2 million as of December 31, 2024 and 2023, respectively, and are included in other assets. Amortization expense was $ 0.2 million and $ 0.1 million for the years ended December 31, 2024 and 2023, respectively. NOTE 5 – LEASES In September 2021, the Company entered into a 10 -year lease agreement for its corporate headquarters, with a term commencing in March 2022, for approximately 19,000 square feet of office space at Hudson Commons in New York, NY (“Hudson Commons Lease”). 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 commenced ten months following the commencement of the lease, or January 2023, and continue for ten years following the rent commencement date. The Company issued a letter of F-13 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 Company’s consolidated balance sheets. The Hudson Commons Lease has a remaining lease term of approximately eight 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. The present value of the lease payments is calculated using an incremental borrowing rate of 7.02 %. Lease expense is included in general and administrative and research and development expenses in the consolidated statements of operations. ROU asset and lease liabilities related to the Company’s operating lease are as follows: (in thousands) December 31, 2024 December 31, 2023 ROU asset, net $ 12,797 $ 13,894 Current lease liability $ 1,336 $ 1,246 Long-term lease liability $ 13,419 $ 14,756 The components of operating lease cost for the year ended December 31, 2024 and 2023 were as follows: (in thousands) December 31, 2024 December 31, 2023 Operating lease cost $ 2,167 $ 2,167 Variable lease cost — — Short-term lease cost — — Future minimum commitments under the non-cancelable operating lease are as follows: (in thousands) 2025 $ 2,316 2026 2,316 2027 2,316 2028 2,469 2029 2,469 Thereafter 7,408 $ 19,296 NOTE 6 – ACCRUED EXPENSES Accrued expenses consist of the following: (in thousands) December 31, 2024 December 31, 2023 Payroll and bonus accrual $ 2,959 $ 4,277 Research and development accrual 2,779 1,396 Professional fees accrual 168 522 Other 89 329 Total $ 5,994 $ 6,524 NOTE 7 – STOCKHOLDERS’ EQUITY The Company’s capital structure consists of common stock and 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 10,000 of the 10,000,000 authorized shares of preferred stock as non-voting Series A Convertible Preferred Stock (“Series A Preferred Stock”). F-14 The holders of common stock are entitled to one vote for each share held. The holders of common stock have no preemptive or other subscription rights, and there are no redemption or sinking fund provisions with respect to such shares. Subject to preferences that may apply to any outstanding series of preferred stock, holders of the common stock are entitled to receive ratably any dividends declared on a non-cumulative basis. The common stock is subordinate to all series of Preferred Stock with respect to rights upon liquidation, winding up and dissolution of the Company. The holders of common stock are entitled to liquidation proceeds after all liquidation preferences for the preferred stock are satisfied. On February 10, 2025, the Company received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC notifying the Company that the average closing bid price of the Company’s shares of common stock was below the closing bid price of $1.00 per share during the last 31 consecutive trading days. We have an initial period of 180 calendar days, or until August 11, 2025, to regain compliance with the minimum bid price requirement. There were 1,250 shares of Series A Preferred Stock outstanding as of December 31, 2024 and 2023. Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock at any time at the holder’s option. However, the holder will be prohibited, subject to certain exceptions, from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, the holder, together with its affiliates, would own more than, at the written election of the holder, either 9.99 % or 14.99 % of the total number of shares of common stock then issued and outstanding, which percentage may be changed at the holder’s election to any other number less than or equal to 19.99 % upon 61 days’ notice to the Company; provided, however, that effective 61 days after delivery of such notice, such beneficial ownership limitations shall not be applicable to any holder that beneficially owns either 10.0 % or 15.0 %, as applicable based on the holder’s initial written election noted above, of the total number of shares of common stock issued and outstanding immediately prior to delivery of such notice. 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. Holders of Series A Preferred Stock are entitled to receive dividends paid to holders of common stock at an equal rate, in the same form, and in the same manner on an as-if-converted basis. Dividends Through December 31, 2024, the Company has not declared or paid any dividends. No dividends on the common stock shall be declared and paid unless dividends on the preferred stock have been declared and paid. NOTE 8 – STOCK-BASED COMPENSATION The Company’s Board of Directors (the “Board”) 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 under the 2017 Plan was 3,052,059 shares. The 2017 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units (“RSUs”), 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, consultants and advisors are eligible to receive awards under the 2017 Plan. Upon the adoption of the 2017 Plan, no further awards were granted under the 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 may determine in its discretion. On January 1, 2023, an additional 3,523,344 shares were reserved for issuance under the 2017 Plan. On January 1, 2024, an additional 3,534,599 shares were reserved for issuance under the 2017 Plan. As of December 31, 2024, there were 7,276,450 shares of the Company’s common stock reserved for issuance under the 2017 Plan. On January 1, 2025, no additional shares were reserved for issuance under the 2017 Plan. The Board adopted, and the Company’s stockholders approved, the 2017 employee stock purchase plan (“ESPP”), which became effective on May 4, 2017. The initial reserve of shares of common stock that may be issued under the ESPP was 279,069 shares. The ESPP allows employees to purchase common stock of the Company at a 15 % discount to the market price on designated purchase dates. During the years ended December 31, 2024 and 2023, 69,850 and 63,761 shares were purchased under the ESPP and the Company recorded expense of $ 65,000 and $ 57,000 , respectively. The number of shares of common stock reserved for issuance under the 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 capital 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 January 1, 2024 to provide F-15 that there be no increase in the number of shares reserved for issuance under the ESPP. As of December 31, 2024 and 2023, there were 282,996 and 352,846 shares of the Company’s common stock reserved for issuance under the ESPP. The Board adopted, and the Company’s stockholders 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, nonstatutory 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 December 31, 2024, options to purchase 1,328,715 shares of common stock were outstanding under the 2014 Plan. Unless specified otherwise in an individual option agreement, stock options granted under the 2014 Plan and 2017 Plan 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 options granted are exercisable from the date of grant until they expire. The option grants are non-transferable. Vested options remain exercisable for 90 days under the 2017 Plan and 30 days under the 2014 Plan subsequent to the termination of the option holder’s service with the Company. 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 18 months or 12 months, respectively, under the 2017 Plan and 6 months under the 2014 Plan. Performance-based option awards generally have similar vesting terms, with vesting occurring on the date the performance condition is achieved and expire in accordance with the specific terms of the agreement. At December 31, 2024 and 2023, there were no performance-based options outstanding and unvested that include options to vest upon the achievement of certain research and development milestones. The fair value of options granted during the years ended December 31, 2024 and 2023 was estimated using the Black-Scholes option valuation model. The inputs for the Black-Scholes option valuation model require assumptions made by management and are detailed in the table below. The risk-free interest rates were based on the rate for U.S. Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date. The expected life was based on the simplified method in accordance with the SEC Staff Accounting Bulletin No. Topic 14D. The expected volatility was estimated based on the Company’s published historical stock prices. The Company granted 4,699,810 and 3,038,000 stock options during the years ended December 31, 2024 and 2023, respectively. There were 5,688,743 and 5,475,452 unvested options outstanding as of December 31, 2024 and 2023, respectively. Total expense recognized related to the stock options for the years ended December 31, 2024 and 2023 was $ 6.2 million and $ 7.7 million, respectively. Total unrecognized compensation expense related to stock options was $ 9.1 million and $ 9.4 million as of December 31, 2024 and 2023, respectively. During the years ended December 31, 2024 and 2023, the Company recognized no expense for performance-based option awards. The Company granted 348,575 RSUs during the year ended December 31, 2024. No RSUs were granted by the Company in prior periods. The RSUs granted will vest in equal installments over three years beginning in the first quarter of 2025. The Company’s stock-based compensation expense was recognized in operating expenses as follows: F-16 For the Year Ended December 31, (in thousands) 2024 2023 Research and development $ 1,631 $ 1,937 General and administrative 4,645 5,348 Total $ 6,276 $ 7,285 For the Year Ended December 31, (in thousands) 2024 2023 Stock options and RSUs $ 6,212 $ 7,228 Employee Stock Purchase Plan 65 57 Total $ 6,276 $ 7,285 The fair value of stock options granted during the years ended December 31, 2024 and 2023, respectively, was estimated by utilizing the following assumptions: For the Year Ended December 31, 2024 2023 Weighted Average Weighted Average Volatility 87.18 % 83.55 % Expected term in years 5.93 6.00 Dividend rate 0.00 % 0.00 % Risk-free interest rate 4.18 % 3.96 % Fair value of option on grant date $ 1.88 $ 2.14 F-17 The following table summarizes the number of options outstanding and the weighted average exercise price: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life in Years Aggregate Intrinsic Value Options outstanding at December 31, 2022 12,961,238 $ 4.13 7.42 $ 62,158 Vested and exercisable at December 31, 2022 6,742,890 $ 5.05 6.20 $ 61,214 Granted 3,038,000 2.63 9.20 Exercised ( 146,346 ) 2.76 Forfeited or expired ( 728,346 ) 3.44 Options outstanding December 31, 2023 15,124,546 $ 3.87 6.90 $ 5,212,586 Vested and exercisable at December 31, 2023 9,649,094 $ 4.47 5.97 $ 2,464,620 Granted 4,699,810 2.58 5.87 Exercised ( 248,024 ) 3.13 Forfeited or expired ( 4,234,976 ) 3.77 Options outstanding December 31, 2024 15,341,356 $ 3.49 5.87 $ — Vested and exercisable at December 31, 2024 9,652,613 $ 4.07 5.87 $ — At December 31, 2024, there was $ 9.1 million of unamortized stock-based compensation expense, which is expected to be recognized over a remaining average vesting period of 2.15 years. At December 31, 2023, there was $ 9.4 million of unamortized stock-based compensation expense, which is expected to be recognized over a remaining average vesting period of 2.23 years. NOTE 9 – INCOME TAXES At December 31, 2024, the Company has available $ 177.3 million and $ 197.5 million of unused net operating loss (“NOL”) carryforwards for federal and state tax purposes, respectively, that may be applied against future taxable income. The Company also has $ 163.8 million of unused NOL carryforwards for New York City purposes. The NOL carryforwards will begin to expire in the year 2037 if not utilized prior to that date. Under Section 382 and Section 383 of the Internal Revenue Code of 1986, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. On each of August 10, 2015 and February 22, 2019 the Company experienced an ownership change. The Company anticipates a significant portion of its pre-change NOLs to be limited, however has not yet completed a formal Section 382 analysis subsequent to the last ownership change. The Company maintains a full valuation allowance against its net deferred tax assets. The valuation allowance decreased by $ 3.2 million for the year ended December 31, 2024 and increased by $ 18.9 million for the year ended December 31, 2023. The increase in valuation allowance in 2023 is primarily due to the royalty monetization liability, increase in stock-based compensation and increase in capitalized research and experimental costs. F-18 The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows: December 31, (in thousands) 2024 2023 Deferred tax assets/liabilities: Net operating loss carryovers $ 62,120 $ 55,653 Intangible assets 5,406 7,522 Capitalized research and experimental costs 14,939 10,909 Stock-based compensation 5,534 7,248 Lease liability 3,324 4,495 Royalty monetization liability — 8,428 Research and development tax credits 2,229 2,878 Charitable contributions 2 — Depreciation ( 93 ) ( 166 ) Right-of-use asset ( 2,883 ) ( 3,903 ) Other ( 1,103 ) ( 435 ) Total gross deferred tax assets/liabilities 89,474 92,629 Valuation allowance ( 89,474 ) ( 92,629 ) Net deferred tax assets (liabilities) $ — $ — A reconciliation of the statutory U.S. Federal rate to the Company’s effective tax rate is as follows: December 31, 2024 2023 Federal income tax benefit at statutory rate 21.00 21.00 State income tax, net of federal benefit ( 26.01 ) 9.12 Foreign rate differential 0.31 — Permanent items ( 1.70 ) ( 1.32 ) Change in valuation allowance 11.13 ( 29.23 ) Research and development tax credits — 1.05 Other ( 4.73 ) ( 0.62 ) Effective income tax expense rate 0.00 % 0.00 % The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies related to the tax benefit. For the years ended December 31, 2024 and 2023, the Company had no unrecognized tax benefits or related interest and penalties accrued. The Company would recognize both accrued interest and penalties related to unrecognized benefits in provision for income taxes. The Company’s uncertain tax positions yet to be determined would be related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available. NOTE 10 – COMMITMENTS AND CONTINGENCIES License Agreements Northwestern University License Agreement In December 2016, the Company entered into a license agreement (“Northwestern 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 F-19 related methods of use for such compound, along with certain know-how related to the practice of the inventions claimed in the Northwestern Patent Rights. The Company is developing OV329 under this agreement. Under the Northwestern Agreement, the Company was granted exclusive rights to research, develop, manufacture and commercialize products utilizing the Northwestern Patent Rights for all uses. The Company has agreed that it will not use the Northwestern Patent Rights to develop any products for the treatment of cancer, but Northwestern may not grant rights in the technology to others for use in cancer. The Company also has an option, exercisable during the term of the agreement to an exclusive license under certain intellectual property rights covering novel compounds with the same or similar mechanism of action as the primary compound that is the subject of the license agreement. Northwestern has retained the right, on behalf of itself and other non-profit institutions, to use the Northwestern Patent Rights and practice the inventions claimed therein for educational and research purposes and to publish information about the inventions covered by the Northwestern Patent Rights. Upon entry into the Northwestern Agreement, the Company paid an upfront non-creditable one-time license issuance fee of $ 75,000 and is required to pay an annual license maintenance fee of $ 20,000 , which will be creditable against any royalties payable to Northwestern following first commercial sale of licensed products under the agreement. The Company is responsible for all ongoing costs of filing, prosecuting and maintaining the Northwestern Patent Rights, but also has the right to control such activities using its own patent counsel. In consideration for the rights granted to the Company under the Northwestern agreement, the Company is required to pay to Northwestern up to an aggregate of $ 5.3 million upon the achievement of certain development and regulatory milestones for the first product covered by the Northwestern Patent Rights, and upon commercialization of any such products, will be required to pay to Northwestern a tiered royalty on net sales of such products by the Company, its affiliates or sublicensees, at percentages in the low to mid-single-digits, subject to standard reductions and offsets. The Company’s royalty obligations continue on a product-by-product and country-by-country basis until the later of the expiration of the last-to-expire valid claim in a licensed patent covering the applicable product in such country and 10 years following the first commercial sale of such product in such country. If the Company sublicenses a Northwestern Patent Right, it will be obligated to pay to Northwestern a specified percentage of sublicense revenue received by the Company, ranging from the high single-digits to the low-teens. The Northwestern agreement requires that the Company use commercially reasonable efforts to develop and commercialize at least one product that is covered by the Northwestern Patent Rights. Unless earlier terminated, the Northwestern agreement will remain in force until the expiration of the Company’s payment obligations thereunder. The Company has the right to terminate the agreement for any reason upon prior written notice or for an uncured material breach by Northwestern. Northwestern may terminate the agreement for the Company’s uncured material breach or insolvency. AstraZeneca AB License Agreement In December 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. Pursuant to the AstraZeneca license agreement, the Company agreed to potential milestone payments of up to $ 203.0 million upon the achievement of certain developmental, regulatory and sales milestones. The first payment of $ 3.0 million is due upon the successful completion of the first Phase 2 clinical study of a licensed product following a positive biomarker readout in a Phase 1 clinical study. Gensaic Equity Agreement and Collaboration and Option Agreement In August 2022, the Company entered into an equity agreement and a collaboration and option agreement with Gensaic (“Gensaic Collaboration Agreement”). Under the terms of the equity agreement, the Company invested a total of $ 5.1 million in exchange for convertible preferred stock in Gensaic. The Company also retained rights to invest in future equity financing rounds. Dr. Jeremy Levin, the Company’s Chairman and CEO, is currently the Chairman of Gensaic’s board of directors. The Gensaic Collaboration Agreement involves the research and development of Gensaic’s proprietary platform for certain rare central nervous system (“CNS”) disorder targets. Under the Gensaic Collaboration Agreement, Gensaic granted the Company an option to obtain an exclusive license with respect to certain identified lead phage-derived particle (“PDP”) products, which are exercisable at any time prior to the expiration of the option period. 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. F-20 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. In May 2023, the Company identified a lead PDP candidate for further research and provided $ 3.5 million to Gensaic to support the approved research plan and budget. The amount is expensed as the research and development occurs with the remaining amount included in prepaid expenses and other current assets in the condensed consolidated balance sheets. The balance of the previously provided research funds was $ 1.0 million and $ 2.5 million as of December 31, 2024 and 2023, respectively. Research and development expense was $ 1.5 million and $ 1.1 million during the years ended December 31, 2024 and 2023, respectively. If a product is ultimately commercialized under this agreement, the Company is required to make tiered royalty payments to Gensaic in the mid-single to low double-digit range based on the net sales of all licensed PDP products during the royalty term. The Company is also responsible for potential tiered milestone payments of up to $ 452.0 million based upon the achievement of certain sales milestone events and developmental milestone approvals for three or more products. Gensaic also has the option to become a collaborative partner in the development and commercialization of PDP products in exchange for a fee based on a percentage of the costs incurred by the Company through the date Gensaic exercises its option. The Company would no longer be required to pay Gensaic royalty or milestone payments if Gensaic elects to exercise its option. The Company may terminate this agreement by providing written notice to Gensaic 90 days in advance of the termination date. In March 2025, Novo Nordisk invested in Gensaic’s novel protein design technology with the aim to discover tissue targeting ligands and develop new therapeutic candidates to treat cardiometabolic disease. Under the agreement, Gensaic is eligible to receive up to $ 354 million in upfront payments, development and commercial milestones per target plus tiered royalties. As of December 31, 2024, none of these contingent payments were considered probable. Non-Operating Loss During the quarter ended September 30, 2024, the Company was the victim of a criminal scheme involving a business email compromise at one of its development collaborators, which led to a fraudulent transfer totaling $ 1.8 million to a third-party impersonating one of the Company’s development collaborators. The matter was reported to the U.S. Secret Service and Federal Bureau of Investigation and a loss was recorded in Other income (expense) in the Consolidated Statement of Operations. The Company continued to work with law enforcement authorities and the banks involved in the funds transfer to pursue recovery of the $ 1.8 million, but had no assurance of recovery until January 15, 2025, when the Company fully recovered the $ 1.8 million and intends to record a gain in Other income (expense) in the Consolidated Statement of Operations in the first quarter of 2025. Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company is not currently involved in any legal matters arising in the normal course of business. Under the terms of their respective employment agreements, each of the Company’s named executive officers is eligible to receive severance payments and benefits upon a termination without “cause” or due to “permanent disability,” or upon “resignation for good reason,” contingent upon the named executive officer’s delivery to the Company of a satisfactory release of claims, and subject to the named executive officer’s compliance with non-competition and non-solicitation restrictive covenants for two years following the termination date. NOTE 11 – COLLABORATION AGREEMENTS Takeda Collaboration In January 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 RLT Agreement with Takeda, 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 F-21 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 are 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. In March 2021, upon the closing of the RLT Agreement, the Company received a non-refundable upfront payment of $ 196.0 million and was eligible to receive up to an additional $ 660.0 million upon Takeda achieving developmental, regulatory and sales milestones. Additionally, the Company was entitled to receive tiered royalties beginning in the low double-digits, and up to 20 % on sales of soticlestat if regulatory approval was achieved. In 2023, the Company sold a 13 % stake in the royalty, regulatory and commercial milestone payments that the Company was eligible to receive under the RLT Agreement to Ligand for $ 30.0 million. During the years ended December 31, 2024 and 2023, no income or expense was recognized pursuant to the RLT Agreement. In June 2024, Takeda issued a press release indicating the soticlestat trials missed their primary endpoints and noted that while Takeda would discuss the program with FDA, Takeda fully impaired the asset representing soticlestat. In January 2025, Takeda discontinued the program. Healx License and Option Agreement In February 2022, the Company entered an exclusive license option agreement (“Healx License and Option Agreement”) with Healx, Ltd. (“Healx”). Under the terms of the Healx License and Option Agreement, Healx secured a one-year option to investigate gaboxadol (“OV101”) as part of a potential combination therapy for Fragile X syndrome in a Phase 1B/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 the Company’s relevant intellectual property rights. At the end of the one-year option period, Healx had 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. In February 2023, the Company granted an extension of the option period for up to four months for Healx to continue to investigate gaboxadol. Royalties on net sales, if any, 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 (“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 (“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 (“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 an equal share of any net profits 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 an equal share of all milestone and royalty payments received. In June 2023, the Company entered into an amendment to the Healx License and Option Agreement whereby revisions were made to terms regarding the timing of the option exercise fee payable by Healx to the Company, the clinical and regulatory milestone payment structure, and the royalty payment structure. Additionally, the parties agreed that following the exercise of the option, Healx would assume direct responsibility for patent maintenance and prosecution and that the Company would transfer to Healx all supply obligations with respect to the active pharmaceutical ingredient and finished gaboxadol products and any related licensed technology and know-how in the Company’s possession that is relevant to the manufacture of such licensed products. No revenue was recognized relating to this agreement during the years ended December 31, 2024 and 2023. Marinus Pharmaceuticals Out-License Agreement In March 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 F-22 develop, make, have made, commercialize, promote, distribute, sell, offer for sale and import licensed products in the territory (which consists of the United States, the European Economic Area, United Kingdom and Switzerland) for the treatment of CDKL5 deficiency disorders. Following the date of regulatory approval by the FDA of the first licensed product in the territory which was received on March 18, 2022, Marinus issued, at the Company’s option, 123,255 shares of Marinus common stock, par value $ 0.001 per share, as payment. The Marinus License Agreement also provides for payment of royalties from Marinus to the Company in single-digits on net sales of each such licensed product sold. The Company recorded revenue and an associated investment in equity securities of approximately $ 0.9 million related to the Marinus License Agreement in March 2022, based on the price of Marinus common stock at that time. The Company had unrealized losses on the Marinus common stock of $ 1.3 million and $ 0.8 million, respectively, for the years ended December 31, 2024 and 2023, which were recorded as unrealized gains (losses) on equity securities and reflected in other income (expenses), net in the consolidated statements of operations. Marinus was acquired by Immedica, S.A. in February 2025. Graviton License Agreement and Equity Purchase In April 2023, the Company entered into a collaboration and license agreement with Graviton (“Graviton Agreement”), whereby it secured from Graviton an exclusive license to develop and commercialize Graviton’s library of ROCK2 inhibitors including their lead program GV101 (OV888) in rare CNS disorders (excluding amyotrophic lateral sclerosis) worldwide (excluding China, Hong Kong, Macau and Taiwan). Under the Graviton 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 Graviton Agreement, the Company also purchased shares of Graviton’s preferred stock for $ 10.0 million. The Company recorded the purchase of the preferred stock as a long-term equity investment on its consolidated balance sheets. In December 2023 and March 2024, the Company recognized unrealized gains on the investment due to an observable change in price, and recorded the gain in other income (expense), net, in the consolidated statements of operations. The program related to this collaboration agreement is currently paused, pending regulatory feedback on another competitive clinical-stage development program. NOTE 12 – RELATED PARTY TRANSACTIONS 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 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 in-substance common stock (Note 2). The Series A Preferred stock was excluded from the calculation of net loss per share and presented as anti-dilutive in prior periods, but is deemed in-substance common stock and is now reflected as a class of common stock for purposes of calculating net loss per share for the years ended December 31, 2024 and 2023. The impact of the change to previously reported net loss per share is not material. Basic net loss per common share is calculated based upon the allocation of net loss to the weighted-average number of common shares outstanding during the period, excluding outstanding stock options that have not yet vested, and weighted-average number of shares of Series A Preferred stock outstanding during the period on an as-converted basis. For any period in which the Company records net income, diluted net income per share is calculated in the same manner as basic net loss per share, except that diluted net loss per common share includes outstanding common stock and common shares underlying outstanding options in the number of shares used to allocate net loss to share classes and as the denominator in calculating net loss per common share - diluted. Diluted net loss per common share is equivalent to the basic net loss per common share due to the exclusion of outstanding stock options because the inclusion of these securities would result in an anti-dilutive effect on per common share amounts. F-23 The following tables summarize the calculation of basic and diluted net loss per share: For the Year Ended December 31, 2024 (in thousands, except share and per share data) Series A Preferred Stock Common Stock Net loss per share, basic and diluted Allocation of loss $ ( 458 ) $ ( 25,975 ) Weighted-average shares outstanding, basic and diluted 1,250 70,905,422 Net loss per share, basic and diluted $ ( 366.33 ) $ ( 0.37 ) For the Year Ended December 31, 2023 (in thousands, except share and per share data) Series A Preferred Stock Common Stock Net loss per share, basic and diluted Allocation of loss $ ( 911 ) $ ( 51,428 ) Weighted average shares outstanding, basic and diluted 1,250 70,580,604 Net loss per share, basic and diluted $ ( 728.64 ) $ ( 0.73 ) The following potentially dilutive securities have been excluded from the computations of diluted weighted-average shares outstanding as they would be anti-dilutive: For the Year Ended December 31, 2024 2023 Stock options to purchase common stock 15,341,356 15,124,546 NOTE 14 – SEGMENT REPORTING In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280),” which requires companies to enhance disclosure of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker, extend certain annual disclosures to interim periods, and permits more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in years beginning after December 15, 2023, and interim periods within years beginning after December 15, 2024. The Company has determined that it operates as one segment focused on developing medicines for brain conditions with significant unmet need. The Company’s pre-commercial development drug candidates have similar economic and other characteristics, including all being in the small-molecule therapeutic class that share target markets, development pathways, and regulatory environments. The Chief Operating Decision Maker (“CODM”) is the Chairman and Chief Executive Officer (“CEO”), who reviews profit and loss information on a consolidated basis to assess performance and make operating and planning decisions, including resource allocations among active programs. The determination of the single segment is consistent with the information provided to the CEO. As the Company’s operations are comprised of a single reporting segment, the segment assets are reflected on the accompanying consolidated balance sheet as “total assets”. Segment asset information is not used by the CODM to allocate resources. F-24 The following tables summarize the Company’s segment information as presented to the CEO and as required in ASU 2023-07 for the periods indicated: For the Year Ended December 31, (in thousands) 2024 2023 Revenue $ 566 $ 392 Payroll and payroll-related expenses 9,889 10,541 Direct program expenses OV350/KCC2 library 8,785 2,656 OV888 (GV101) 8,212 3,788 OV329 4,485 4,285 Gensaic projects 1,493 1,057 Other programs 990 2,819 Total direct program expenses 23,965 14,605 Other research and development expenses 2,913 3,442 Total research and development expenses 36,767 28,588 Payroll and payroll-related expenses 13,835 17,131 Legal and professional fees 6,573 7,610 General office expenses 5,275 6,344 Total general and administrative expenses 25,684 31,085 Total operating expenses 62,451 59,673 Operating loss ( 61,885 ) ( 59,281 ) Other (income) expense ( 35,452 ) ( 6,943 ) Net loss $ ( 26,433 ) $ ( 52,339 ) Other research and development expenses include general office expenses allocated to research and development, b including costs related to rent and depreciation of leasehold improvements, and nonclinical contract labor. Other income/expense includes decrease in fair value of royalty monetization liability, loss on fraudulent funds transfer, unrealized net gain on equity investments and interest/accretion income on securities. Other significant segment information includes: For the Year Ended December 31, (in thousands) 2024 2023 Decrease in fair value of royalty monetization liability $ 30,000 $ — Stock-based compensation expense 6,276 7,285 Interest/accretion income on securities 3,915 4,940 Severance expense 3,508 1,653 Loss on fraudulent funds transfer 1,800 — Unrealized net gain on equity investments 3,337 2,003 Depreciation and amortization 613 568 F-25