Ovid Therapeutics Inc.
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K (Mark One) ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2018OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Transition Period from to Commission File Number: 001-38085 Ovid Therapeutics Inc.(Exact name of Registrant as specified in its charter) Delaware 2834 46-5270895(State or Other Jurisdiction ofIncorporation or Organization) (Primary Standard IndustrialClassification Code Number) (I.R.S. EmployerIdentification Number) 1460 Broadway, Suite 15044New York, New York 10036(646) 661-7661(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which RegisteredCommon Stock, par value $0.001 per share Nasdaq Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Act. Yes ☐ No ☒Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of theregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. Seethe definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.: Large Accelerated Filer ☐ Accelerated Filer ☒Non-accelerated Filer ☐ Smaller Reporting Company ☒Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act ☒Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒As of June 30, 2018, the last day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the Common Stock held by non-affiliates of theregistrant was approximately $90.4 million based on the closing price of the registrant’s common stock on June 30, 2018. The calculation excludes shares of the registrant’s common stock heldby current executive officers, directors and stockholders that the registrant has concluded are affiliates of the registrant. This determination of affiliate status is not a determination for otherpurposes.As of February 28, 2019, there were 38,647,892 shares of common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement for its 2018 Annual Meeting of Stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securitiesand Exchange Commission not later than 120 days after the registrant’s fiscal year ended December 31, 2018, are incorporated by reference into Part III of this Annual Report on Form 10-K.  TABLE OF CONTENTS PageSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS ii PART I Item 1. Business 1Item 1A. Risk Factors 36Item 1B. Unresolved Staff Comments 64Item 2. Properties 64Item 3. Legal Proceedings 65Item 4. Mine Safety Disclosures 65 PART II Item 5. Market for Registrant’s Common Equity Related Stockholder Matters and Issuers Purchases of Equity Securities 66Item 6. Selected Financial Data 67Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 69Item 7A. Quantitative and Qualitative Disclosures about Market Risk 76Item 8. Financial Statements and Supplementary Data 76Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 76Item 9A. Controls and Procedures 76Item 9B. Other Information 76 PART III Item 10. Directors, Executive Officers and Corporate Governance 77Item 11. Executive Compensation 77Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 77Item 13. Certain Relationships and Related Transactions, and Director Independence 77Item 14. Principal Accountant Fees and Services 77 PART IV Item 15. Exhibits and Financial Statement Schedules 78Item 16. Form 10-K Summary 80 i SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” forpurposes of this Annual Report on Form 10-K. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “believe,”“could,” “estimate,” “expects,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative or plural of those terms, andsimilar expressions.Forward-looking statements include, but are not limited to, statements about: •the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and developmentprograms; •our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; •our ability to identify additional novel compounds with significant commercial potential to acquire or in-license; •our ability to successfully acquire or in-license additional drug candidates on reasonable terms; •our ability to obtain regulatory approval of our current and future drug candidates; •our expectations regarding the potential market size and the rate and degree of market acceptance of such drug candidates; •our ability to fund our working capital requirements; •the implementation of our business model and strategic plans for our business and drug candidates; •developments or disputes concerning our intellectual property or other proprietary rights; •our ability to maintain and establish collaborations or obtain additional funding; •our expectations regarding government and third-party payor coverage and reimbursement; •our ability to compete in the markets we serve; •the impact of government laws and regulations; •developments relating to our competitors and our industry; and •the factors that may impact our financial results.Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A, “RiskFactors,” herein and for the reasons described elsewhere in this Annual Report on Form 10-K. Any forward-looking statement in this Annual Report on Form 10-Kreflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results ofoperations, industry and future growth. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events.Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity,performance or achievements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if newinformation becomes available in the future.This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business and the markets forcertain drugs and consumer products, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medicalconditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events orcircumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry,business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications,government data and similar sources and we have not independently verified the data from third party sources. In some cases, we do not expressly refer to thesources from which these data are derived.In this Annual Report on Form 10-K, unless otherwise stated or as the context otherwise requires, references to “Ovid,” “the Company,” “we,” “us,” “our”and similar references refer to Ovid Therapeutics Inc. and its wholly owned subsidiaries. This Annual Report on Form 10-K also contains references to ourtrademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to, including logos, artwork and other visualdisplays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to thefullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationshipwith, or endorsement or sponsorship of us by, any other companies. ii PART IItem 1. BUSINESSOverviewWe are a biopharmaceutical company focused exclusively on developing impactful medicines for patients and families living with rare neurologicaldisorders. We believe these disorders represent an attractive area for drug development as the understanding of the underlying biology has grown meaningfullyover the last few years, yet has remained underappreciated by the industry. Our experienced team began with a vision to integrate the biology and symptomologyof rare neurological conditions to employ innovative research and clinical strategies for the development of our drug candidates. Based on recent scientificadvances in genetics and the biological pathways of the brain, we created a proprietary map of disease-relevant pathways and used it to identify and acquire novelcompounds for the treatment of rare neurological disorders. We are executing on our strategy by in-licensing and collaborating with leading biopharmaceuticalcompanies and academic institutions. We are developing a robust pipeline of clinical assets with an initial focus on neurodevelopmental disorders anddevelopmental and epileptic encephalopathies (“dEE”). Our most advanced candidate, OV101, has completed a Phase 2 trial in adults and adolescents withAngelman syndrome, and met its primary end point demonstrating a favorable safety profile and was generally well tolerated. It also demonstrated statisticallysignificant exploratory endpoints of efficacy including those of Clinical Global Impressions-Improvement (CGI-I), sleep parameters, and motor function. PendingU.S. Food and Drug Administration (“FDA”) concurrence on the study protocol and supporting framework and materials, we intend to initiate a Phase 3 pivotaltrial in 2019 in pediatric patients with Angelman syndrome called the NEPTUNE trial. Similarly, we have initiated an open-label extension study for individualswith Angelman syndrome called ELARA which is currently recruiting. ELARA enrolled its first subject in February of 2019 and is open to any subject who haspreviously been part of an OV101 clinical trial. Along with our collaborator, Takeda Pharmaceutical Company Limited, or Takeda, we recently completed a Phase1b/2a trial of OV935 in adults with dEE. As announced on December 17, 2018, the Phase 1b/2a trial of OV935 achieved its primary endpoint of safety andtolerability and showed OV935 was generally well tolerated and met its secondary exploratory endpoints including a satisfactory pharmacokinetic profile andsignals of efficacy. Exploratory analyses also showed the potential applicability of using plasma 24-hydroxy cholesterol (24HC) as a serum biomarker. We haveinitiated an open-label extension trial for those who have completed an OV935 clinical trial called ENDYMION and that study is currently enrolling. We havealso initiated two additional trials, ELEKTRA and ARCADE, in patients with dEE. ELEKTRA is an international Phase 2, multi-center, randomized, double-blind, placebo-controlled study that will evaluate the treatment of OV935 in pediatric patients, aged 2 to 17 years, with epileptic seizures associated with Dravetsyndrome or Lennox-Gastaut syndrome (LGS). ARCADE is a Phase 2, multi-center, open-label, pilot study that will evaluate the treatment of OV935 in pediatricpatients, aged 2 to 35 years old, with epileptic seizures associated with CDKL5 Deficiency Disorder (CDD) or Duplication 15q (Dup15q) syndrome. BothELEKTRA and ARCADE are currently enrolling patients.Our most advanced drug candidate is OV101, which we acquired from H. Lundbeck A/S, or Lundbeck, in 2015. We believe our development plan forOV101 highlights our ability to translate new scientific insights into drug candidates that target an unexplored disease-relevant pathway. OV101 targets disorderscharacterized by diminished tonic inhibition, a neurological signaling abnormality that has been identified as a potential central cause of the symptoms seen in anumber of disorders of the brain. This can lead to certain symptoms including, but not limited to motor deficiencies, sleep abnormalities, behavioral manifestationsand seizures. We believe modulating tonic inhibition may have a meaningful clinical impact in patients with Angelman syndrome and Fragile X syndrome. TheFDA granted orphan drug designation for OV101 for the treatment of Angelman syndrome and for the treatment of Fragile X syndrome in September 2016 andOctober 2017, respectively, and the FDA granted fast track designation for the treatment of Angelman syndrome and for the treatment of Fragile X syndrome inDecember 2017 and March 2018, respectively. In January 2017, we entered into a collaboration with Takeda for its compound TAK-935, which we refer to as OV935. The collaboration enables us toshare equally in building upon Takeda’s discoveries, bringing together the capabilities of both companies in development, regulatory and commercializationactivities. We believe that OV935’s inhibition of the cholesterol metabolism pathway may down regulate the excitatory signals involved in epilepsy, which maysuppress seizures and also lead to a long-term disease-modifying effect. We are initially targeting OV935 for rare epileptic encephalopathies with high unmetmedical need, including Dravet syndrome, Lennox-Gastaut syndrome, CDKL5 Deficiency Disorder, Dup15Q syndrome, and Tuberous Sclerosis Complex. OV935has completed four Phase 1 trials in certain epileptic encephalopathies, preliminarily demonstrating favorable tolerability at doses that we believe may betherapeutically relevant.Our management team is a critical component to the execution of our overall strategy and our business model. We have assembled a team with significantexperience in translational science, drug evaluation, clinical development, regulatory affairs and business development. We believe these capabilities will drive ourability to identify, acquire, develop and commercialize novel compounds that have the potential to modify the devastating course of rare neurological disorders. Webelieve our expertise will make us the partner of choice for leading biopharmaceutical companies or academic institutions that wish to maximize the value of theirneurology drug candidates. The members of our team have been collectively involved in the development and approval of over 20 marketed drugs. Further, webelieve that we are particularly well positioned to execute on our business development strategy given the extensive network and breadth of expertise of ourChairman and Chief Executive Officer Dr. Jeremy Levin and the other members of1 our management team. Our management team is supported by our board of directors, which has extensive experience in the biopharmaceutical industry.Our Focus: Rare Neurological DisordersRare neurological disorders are among the most devastating in their impact on patients and their families. Patients suffering from these disorders typicallyrequire full-time care, and yet are among the most underserved. We believe that there are at least 100 neurodevelopmental disorders, epileptic encephalopathiesand other related rare neurological disorders that we may be able to target. These disorders are characterized by impairments and pathologies in the growth anddevelopment of the brain. Due to a historical overwhelming preference in the drug industry to develop drugs for broader neurological indications, many of thesedisorders have no approved therapies. As a result, recent scientific advancements have been overlooked, which we believe presents us with an opportunity topursue these indications. These reasons include: •High penetrance linking genetic defect to disorder pathology. Rare neurological disorders that are genetic in origin typically have a strongcorrelation, or penetrance, between the presence of a gene and the manifestation of the corresponding disease pathology. As a result, we believe wecan develop drug candidates that will be efficacious in patients with a given genetic profile. •Predictive genetic and other models. Recent advances in genetics enable us to employ predictive in vivo genetic models of certain of these disorders.These models allow us to evaluate and observe a drug candidate’s potential activity prior to initiation of clinical trials. Through these models, webelieve we will be able to select the most relevant clinical endpoints for our trials and increase the potential for clinical success. •Overlapping pathophysiology and symptoms. Neurological disorders are often characterized by a number of overlapping symptoms, such asseizures, sleep disturbances, movement deficiencies and behavioral manifestations. We believe these commonalities will enable us to employ clinicalendpoints that may be translatable from one disorder to another, and to develop drugs that may provide a clinical benefit across multiple indications. •Early observation of proof-of-concept. By employing clinical endpoints that are highly relevant and are designed to detect meaningful clinicalbenefits, we anticipate that many of our studies may provide early proof-of-concept in clinical development. •Potential ability to affect disease progression. We are focusing on disorders that are typically diagnosed in early childhood when the brain is stilldeveloping. We believe that we may be able to meaningfully address symptoms and potentially alter the progression of disease, especially if thedrug can be administered early in life. •Motivated and accessible patient populations. We are targeting our programs for disorders with motivated and accessible patient populations. Webelieve that the patients and caregivers affected by these disorders are avid users of social media, in order to learn about and share relevantinformation and experiences. We use digital platforms to efficiently identify new patients for our clinical trials, raise disease awareness and helpconnect the patient and caregiver communities.The Ovid Strategy The Ovid Strategy is to pursue drug development for rare neurological disorders in a manner that is scientifically driven, patient focused and businessdevelopment oriented. As we build on our understanding of these rare neurological conditions, we gain an appreciation of the way the different molecularpathways underlying these disorders help drive the symptoms patients suffer. This in turn allows us to transfer the knowledge gained about relevant molecularpathways and clinical endpoints from one disorder to another, which we believe will enable us to build a scalable business model. Ovid has set out to be a leader inthis field, and by keeping our focus on neurology, it is our belief that our model offers us the potential to produce multiple medicines in the future, and therebysucceed in our mission. 2 Scientifically DrivenWe take a scientifically driven approach to identify promising drug candidates for our pipeline. We are building our portfolio based on the existence ofclear biological rationales, including a focus on disorders that have, where possible, a direct genetic linkage. We used our proprietary map to identify initial drugcandidates across all stages of development for potential acquisition or in-licensing. As we advance our drug candidates into the clinic, we are building on theemerging body of scientific and clinical insights developed by us and others in the biopharmaceutical industry to target these new disease pathways of the brain. Aswe evaluate data from previous and ongoing preclinical studies and clinical trials, we intend to refine our scientific approach and apply these insights to continue tobuild our pipeline and operationalize our clinical trials. Currently our portfolio is focused on inhibitory neuronal signaling pathways mediated by GABA (‘GABA-ergic’ paths) and excitatory neuronal pathways mediated via glutamate signaling. (‘glutamatergic’ paths).In particular, the Ovid approach is driven by the following scientific principles: •map biological pathways that are relevant for rare neurological disorders with significant unmet need; •target biological pathways for which proof-of-concept has been established via in vitro or animal models; •focus on biological pathways that cause the pathology of the disorder and that have common symptoms that we can target; and •identify and utilize biomarkers that can provide evidence of the activity of our drug candidates.Patient FocusedWe are highly focused on the patient communities affected by the rare neurological disorders we are addressing. We believe this aspect of our approach iscritical, given that these disorders affect a small population of patients, but carry serious morbidities and require extensive involvement from the patients’ families,caregivers, physicians and patient advocacy groups.The Ovid Strategy is driven by the following patient-focused principles: •develop close relationships with patients, caregivers, families, disease foundations and key opinion leaders, to better understand the history of thesedisorders, raise awareness, identify patients and facilitate enrollment of clinical trials; •identify clinically meaningful endpoints based on input from patients and their physicians and caregivers; and •develop digital capabilities to engage, foster and maintain close relationships with patient communities.Business Development OrientedWe have built a broad pipeline of potential drug candidates to treat rare neurological disorders through the in-licensing or partnering of drug candidates. Centralto the success of this process is a highly focused and disciplined business development effort aimed at securing relevant assets in each of our selected rareneurological disorders.We are developing a specialized, scalable and robust infrastructure that we believe will make us a leader in rare neurological disorders and the partner of choicefor leading biopharmaceutical companies or academic institutions that wish to maximize the value of their neurology drug candidates in these areas. Thisinfrastructure spans across critical domains of drug development. If and when our drug candidates are approved, we also plan to establish a highly focusedcommercial and distribution network dedicated to rare neurological disorders in the United States and Europe, where we believe the patient populations andmedical specialists are sufficiently concentrated to effectively market our drug candidates.We believe that we are particularly well positioned to execute on our business development strategy because of the extensive network of our Chairman andChief Executive Officer Dr. Jeremy Levin and the other members of our management team, who collectively have a track record of success in orphan drugdevelopment and evaluation.3 Our PipelineThe following table sets forth the status and mechanism of action of our drug candidates: Both the STARS trial for OV101 and the Oral Adult trial forOV935 have been completed.OV101We are developing OV101 for the treatment of Angelman syndrome and Fragile X syndrome, two neurodevelopmental disorders that are characterized bysimilar symptoms due to decreased tonic inhibition, an important mechanism whereby it is believed that the brain distinguishes signal from noise. Angelmansyndrome and Fragile X syndrome have overlapping symptoms, including sleep disorder, aberrant behavior, anxiety and cognitive or intellectual disabilities. Bothof these disorders are typically diagnosable in early childhood and require full-time care for the patients affected. In September 2016, the FDA granted orphan drugdesignation for OV101 for the treatment of Angelman syndrome; in October 2017 the FDA granted orphan drug designation for OV101 for the treatment of FragileX syndrome; in December 2017 the FDA granted fast track designation for the treatment of Angelman syndrome; and in March 2018, the FDA granted fast trackdesignation for the treatment of Fragile X syndrome.Angelman SyndromeIn July of 2018, we completed the Phase 2 STARS trial, a 12-week, double blind, placebo-controlled study in adults and adolescents with Angelmansyndrome that randomized 88 patients aged 13 to 49 years. The study achieved its primary endpoint of safety and tolerability with a similar incidence of adverseevents (“AEs”) across the OV101 and placebo treatment arms. The investigational medicine showed a favorable safety profile and was well tolerated in adults andadolescents with Angelman syndrome through the 12 weeks of treatment. The most common AEs reported in the trial were vomiting, somnolence, irritability,aggression, and pyrexia. Serious adverse events (“SAEs”) of seizure were reported in two patients with a previous history of seizures: one patient in the once-daily(“QD”) dose experienced a seizure that was deemed unrelated to study drug; one patient experienced a seizure in the twice-daily (“BID”) dose group that wasassessed as possibly related to study drug by the investigator. At the prespecified efficacy analysis at 12 weeks of treatment, OV101 once-daily and combineddosing groups showed a statistically significant improvement compared to placebo in the CGI-I. CGI-I was ranked first in the prespecified hierarchy of thestatistical analysis plan. Data from the full analysis indicate that OV101 positively impacts several relevant clinical features of Angelman syndrome (globalfunctioning, sleep, motor disruption) and therefore support further clinical development of OV101 in Angelman syndrome. Ovid met with the FDA in Novemberof 2018 to discuss OV101 as part of its End of Phase 2 Meeting and based upon the discussion, we intend to initiate NEPTUNE pending FDA concurrence on thestudy protocol and supporting framework and materials with initial enrollment anticipated in the second half of 2019. Based on the STARS trial data, we haveinitiated ELARA which enrolled its first patient in February of 2019 and is open to any subject who has previously been part of an OV101 clinical trial. Fragile X SyndromeIn July 2018, we initiated our Phase 2 ROCKET clinical trial, a randomized, double-blind, parallel-group trial evaluating OV101 for the treatment ofadolescent and young male adults with Fragile X syndrome. The trial is currently enrolling and is expected to enroll up to 30 males ages 13 to 22 with a confirmeddiagnosis of Fragile X syndrome. The primary endpoint is safety and tolerability of OV101 over 12 weeks of treatment in three different cohorts of either 5mgonce daily, 5mg twice daily, or 5mg three times daily. A secondary efficacy endpoint will evaluate changes in behavior during 12 weeks of treatment with OV101using the Activities-specific Balance Confidence Scale (ABC) that has been used in previous trials for Fragile X syndrome. We anticipate data4 from this trial in the second half of 2019. We also initiated the SKY ROCKET study in the fourth quarter of 2018. The SKY ROCKET study is a 12-week, non-drug study to assess the suitability of several behavioral scales in individuals with Fragile X syndrome. The trial is an observational study designed to provideadditional data on the key endpoints that are being explored in the ROCKET trial as well as provide contextual data on the benefit offered by the standard of care.The study will enroll 10-30 males ages 5 to 30 with Fragile X syndrome, and data from SKY ROCKET is expected in the second half of 2019. OV101 and Tonic InhibitionTonic inhibition is a critical regulatory mechanism that allows a healthy human brain to decipher excitatory and inhibitory neurological signals correctlywithout being overloaded. Defects of this system are thought to play a role in multiple disease states, including Angelman syndrome and Fragile X syndrome.Because of its unique mode of action, OV101 represents a promising compound targeting this mechanism.Decreased tonic inhibition results in an imbalance in the ratio of excitation to inhibition. If tonic inhibition is reduced, the brain becomes inundated withsignals and loses the ability to separate background noise from critical information. This imbalance disrupts normal brain functioning, including sensory processingand integration. This can lead to symptoms characteristic of neurodevelopmental disorders, including those related to behavior, learning, cognitive development,motor function, sleep disturbances and seizures. By modulating tonic inhibition, OV101 may have the potential to alleviate important symptoms and provide ameaningful clinical benefit to patients across several neurodevelopmental disorders including Angelman syndrome and Fragile X syndrome.Tonic Inhibition and Neurodevelopmental DisordersNeurotransmissionThe brain is composed of a vast network of interconnected neurons that facilitate the communication between cells. These communications are governed bythe release of chemical signals, or neurotransmitters, from one neuron to another. The neuron that releases the neurotransmitter is called the presynaptic neuron.The neuron that receives the neurotransmitter is called the postsynaptic neuron. The presynaptic neuron releases a neurotransmitter into a physical gap separatingthe two neurons, which is called the synaptic gap. The neurotransmitter then diffuses across the synaptic gap to bind to a receptor on the postsynaptic neuron. Thisbinding then triggers a signal to stimulate, inhibit or otherwise modulate the activity of the postsynaptic neuron. For example, gamma-aminobutyric acid, orGABA, is an inhibitory neurotransmitter that plays a role in anxiety, sleep, seizure, motor functions and certain other brain functions. The neurotransmitter GABAbinds to receptors in the synaptic gap, called synaptic receptors, as well as receptors outside the synaptic gap, called extrasynaptic GABA receptors. The followingfigure depicts the synaptic gap and extrasynaptic GABA receptors outside the synaptic gap: Figure 1: The neurotransmitter GABA binds to synaptic receptors in the synaptic gap and extrasynaptic GABAreceptors outside the synaptic gap.5 The Role of GABA in Phasic and Tonic InhibitionThere is a fine balance between an appropriate and an inappropriate response of the postsynaptic neuron to an incoming stimulus. Neurons are typicallyresponsive to incoming stimulus at two levels through processes known as phasic and tonic inhibition.Phasic Inhibition. Phasic inhibition is short-acting in nature and takes place in the synaptic gap. The brain processes signals passed between neurons inmilliseconds. To keep the system in balance, the body sets up a feedback loop so that signaling is interpreted appropriately. When the body determines that itshould cease responding to a specific signal, it triggers this feedback loop, which inhibits the receiving neuron from responding too strongly. This is done when theneurotransmitter GABA binds to receptors in the synaptic gap, or synaptic GABAA receptors. Once the receiving postsynaptic neuron has been inhibited, balancecan be restored and the receiving neuron can prepare to receive a new stimulus.Tonic Inhibition. Tonic inhibition is longer-acting in nature and takes place in the extrasynaptic region. Extrasynaptic GABAA receptors contain specificsubunits that make them different from synaptic GABA A receptors in structure and activity. In particular, many extrasynaptic GABA A receptors contain aspecific domain called the δ (delta) subunit, which is not expressed in synaptic GABA A receptors. These extrasynaptic GABA A receptors that contain the δsubunit receptors act with slower kinetics, hence the longer-acting inhibitory response of tonic inhibition. The following figure depicts the location and domains ofthe extrasynaptic GABA A receptor:Figure 2: Structure and localization of the δ (delta) subunit contained in the extrasynaptic GABAA receptor.6 The following figure depicts physiologic levels of phasic inhibition and tonic inhibition, the two levels of signaling between neurons:Figure 3: Phasic inhibition is rapid and short-lived. Tonic inhibition is more persistent.The same neurotransmitter, GABA, which stimulates the short-acting receptors in the synapse in the process of phasic inhibition, also stimulates the longer-acting receptors outside the synapse in the process of tonic inhibition.Under normal conditions there is sufficient GABA present in and around the synaptic region and both sets of receptors are stimulated. However, in certainneurodevelopmental disorders, the overall levels of GABA are reduced. This reduction can lead to a situation in which there is enough GABA in the synapse tomaintain normal short-term signaling, but GABA outside the synapse is insufficient to occupy the extrasynaptic receptors and maintain longer-term signaling. Thedecline in tonic inhibition triggered by the shortage of extrasynaptic GABA leads to the chronic activation of the receiving postsynaptic neurons and disruption ofnormal brain network activity.Tonic inhibition is a key mechanism of neural regulation that has not yet, to our knowledge, been specifically addressed by any approved drug. Tonicinhibition has been shown to be important in helping to discriminate important signals from the “noise” generated by the multitude of sensory signals entering thebrain. In patients with decreased tonic inhibition, the flood of incoming signals overwhelms the ability of the brain to process them.The clinical manifestations of decreased tonic inhibition are seen across several neurodevelopmental disorders, including Angelman syndrome and FragileX syndrome. When tonic inhibition is decreased, the body has trouble functioning normally in the presence of this chronic overstimulation of neurons. The result isprofound pathology that is manifested by seizures, anxiety and disturbances in motor function, behavior, sleep, cognition, learning, memory and ability tocommunicate effectively.In addition, learning and memory are closely linked to the ability of the brain to establish and maintain connections among nerve cells. Many brainprocesses, including tonic inhibition, play a role in the creation and maintenance of these connections. One of the long-term consequences of decreased tonicinhibition is the disruption of memory. The restoration of tonic inhibition has been observed to lead to improvements in memory in adult animal models.OV101 and Tonic Inhibition in Angelman Syndrome and Fragile X SyndromeOV101 is a delta selective extrasynaptic GABAA receptor agonist. An agonist is a chemical that binds to a receptor and activates the receptor to produce abiological response. OV101 specifically exerts its biological activity through the δ subunit of extrasynaptic GABAA receptors. Based on the biological pathwayand existing preclinical data, we anticipate developing OV101 as an orally active selective extrasynaptic GABA A agonist to compensate for the deficit in GABAconcentrations observed in patients with certain rare neurological disorders. We believe OV101 is the only drug candidate in development that exerts its biologicalactivity preferentially through the δ subunit of extrasynaptic receptors. We are initially developing OV101 for Angelman syndrome and Fragile X syndrome, andwe believe it has the potential to address multiple neurodevelopmental disorders characterized by decreased tonic inhibition.7 The following figure depicts how OV101 addresses tonic inhibition by restoring activity of the extrasynaptic GABAA receptors: Figure 4. How OV101 is designed to address tonic inhibition by restoring activity of the extrasynaptic GABAA receptors. The figures represent thesynapse between a GABAergic neuron and a postsynaptic cell. The top panel shows normal release and uptake of GABA with activation of both synapticand extrasynaptic receptors resulting in normal phasic and tonic inhibition. In the middle panel, an increase in GABA uptake (Angelman syndrome) ora reduction in GABA release (Fragile X syndrome) leads to a reduction in extracellular concentrations of GABA, preferentially impacting extrasynapticGABA receptor signaling and resulting in reduced tonic inhibition. In the bottom panel, OV101 acts selectively on the extrasynaptic GABA A receptorsrestoring tonic inhibition.8 Angelman SyndromeOverview. Angelman syndrome is a rare genetic disorder that is typically diagnosed in the United States after one year of age when parents notice severedevelopmental delays or the child suffers seizures. Characteristic features of this disorder include delayed development, intellectual disability, severe speechimpairment, problems with movement and balance, seizures, sleep disorders and anxiety. Individual patients with Angelman syndrome can have varied symptoms,including the inability to walk or control motor movement, which can limit their ability to handle daily functions such as feeding, dressing or bathing. Thesepatients are also often hyperactive, leading to various behavioral problems. Angelman syndrome symptoms, such as poor sleeping patterns, can lead to seriousconsequences, including increased frequency of seizures and exacerbation of behavioral manifestations. Different patients with identical genetic defects can showdifferent degrees of these symptoms. Most Angelman syndrome patients require full-time care and are unable to live independently, which can represent asubstantial emotional and financial burden on their families. In addition, Angelman syndrome has been associated with poor parental sleep and high parental stress.According to the National Organization for Rare Disorders, the approximate prevalence of Angelman syndrome is between 1 in 12,000 and 1 in 20,000people. There are no FDA-approved therapies for the treatment of Angelman syndrome. The current standard of care for seizures associated with Angelmansyndrome is traditional anticonvulsants, which are not designed to modulate tonic inhibition. There is no widely accepted standard of care for other symptoms ofAngelman syndrome, including sleep disruptions, motor dysfunction and behavioral abnormalities.Tonic Inhibition and Angelman Syndrome. In 1997, scientists traced the genetic causes of Angelman syndrome to mutations and other disruptions in theUBE3A gene. The UBE3A gene encodes the UBE3A protein, which plays a central role in protein degradation. Protein degradation is the breakdown of damagedor unnecessary proteins within the cell, which is an important aspect of maintaining normal cellular function. The UBE3A protein triggers the attachment of aprotein called ubiquitin to other cellular proteins. These ubiquitin attachments serve as tags that mark the tagged cellular proteins for degradation. Alterations in theUBE3A gene, and therefore the UBE3A protein, result in deficiencies in the tagging of proteins for degradation, leading to inappropriate protein accumulationwithin the cell.One of the proteins that the UBE3A protein normally tags for degradation is GABAA Transporter 1, or GAT1, a protein that is responsible for the uptake ofGABA by neurons. The disruption in the UBE3A gene results in an overabundance of GAT1, leading to an exaggerated uptake of GABA. This results in low levelsof GABA in both the synaptic and extrasynaptic regions. The deficiency of GABA in the extrasynaptic region culminates in a decrease of tonic inhibition,triggering a chronic activation of downstream neurons. The following figure depicts the biological pathway by which the UBE3A gene alteration present inAngelman syndrome patients leads to decreased tonic inhibition:Figure 5. Linkage between UBE3A gene alteration and tonic inhibition.9 By adding OV101, a GABA agonist, we believe it is possible to address this decreased tonic inhibition by compensating for the low GABA levels. OnceOV101 is added, the extrasynaptic receptors are activated to transport chloride, or Cl - ions, from outside the cell into the postsynaptic neuron. Negatively chargedCI - ions inside the postsynaptic neuron increase tonic inhibition, reducing the excessive activation of downstream neurons.Preclinical Data in Angelman Syndrome. In preclinical studies conducted by an independent academic group in Angelman syndrome mouse models,OV101 was observed to increase tonic inhibition and alleviate the key motor symptoms that are also observed in Angelman syndrome patients.In 2012, researchers published a study in the journal Science Translational Medicine, reporting that they had created mice that lacked a functional copy ofthe UBE3A gene. In these mouse models, the researchers observed several features of Angelman syndrome, including a loss of controlled bodily movements andmotor deficits. The researchers further observed that mice lacking a functional copy of the UBE3A gene had deficiencies in tonic inhibition and that increasedGABA could partially restore this deficiency.In this study, analysis of the activity of individual nerve cells in mice with a defective UBE3A gene demonstrated the effects of decreased tonic inhibition.Decreased tonic inhibition resulted in excessive neuronal activity, which caused disruption of the normal, tightly coordinated and regulated signaling within thebrain. The direct addition of OV101 to these nerve cells largely restored their activity and regional brain network activity. Based on these results, we believe thatOV101 may have a similar effect in increasing tonic inhibition in Angelman syndrome patients.The utility of these Angelman syndrome mouse models is also demonstrated by the effects of OV101 on walking gait. Angelman syndrome patients oftenhave an altered walking gait where the legs are wide-spaced and feet are turned out. The Angelman syndrome mouse models were observed to have an altered gait,involving rotation of the hind paws outward. In this study, Angelman syndrome mouse models and normal mice were each administered OV101 and a placebo.Administration of OV101 was observed to result in statistically significant reductions in hind paw rotation in the Angelman syndrome mice, but had no effect in thenormal mice. The following figure depicts the decrease in hind-paw rotation in the Angelman syndrome mice administered OV101 versus those that wereadministered a placebo:Figure 6: Administration of OV101 led to a reduction in the degree of hind paw rotation.**A p-value of 0.05 or less represents statistical significance, meaning that there is a less than 1-in-20 likelihood that the observed results occurredby chance. A p-value of 0.01 or less means that there is a less than 1-in-100 likelihood that the observed results occurred by chance.OV101 administration in Angelman syndrome mouse models was also observed to result in improved overall motor and clasping reflex function asmeasured by a rotarod test and tail suspension. In the rotarod test, mice are required to perch atop a rotating cylinder and use their legs and body in a coordinatedfashion in order to avoid falling off. Angelman syndrome mice that were administered OV101 were observed to have an increased time on the rotarod versus thosethat were administered a placebo. Administration of OV101 was not observed to have an effect in normal mice. The experiment showed that the increased amountof time shown on the rotarod after treatment was statistically significant (approximately 20%, p<0.05) relative to the time spent on the rotarod before injection. Inthe tail suspension test, Angelman syndrome mice showed a mild to moderate clasping reflex, represented by forelimb clasping and flexion to the body and smallerforelimb flexion. Angelman syndrome mice treated with OV101 showed improved clasping reflexes and significantly increased forelimb angles (p<0.01).10 Fragile X SyndromeOverview. Fragile X syndrome is a genetic condition that results in intellectual disability, anxiety disorders, behavioral and learning challenges andvarious physical disabilities. Patients with Fragile X syndrome exhibit autism-like symptoms, including cognitive impairment, anxiety, mood swings,hyperactivity, attention deficit and heightened sensitivity to various stimuli, such as sound. The severity of an individual patient’s impairment can range from mildlearning disabilities to more severe cognitive or intellectual disabilities. Fragile X syndrome is one of the most commonly inherited intellectual disabilitydisorders. Children with Fragile X syndrome also often have unusual sleep patterns and may have difficulty with routine activities such as feeding and dressing.The challenges presented by Fragile X syndrome often extend beyond the patient and can lead to significant hardships on the emotional and financial health oftheir families.Fragile X syndrome is caused by mutations in the fragile X mental retardation gene, or FMR1 gene. FMR1 is a gene that leads to the synthesis of the fragileX mental retardation protein, FMRP, which is needed for normal brain development. The FMR1 gene normally contains in its sequence between 5 and 44 copies ofa short, repeated motif, or recurring pattern in DNA. In Fragile X syndrome, there are more than 200 copies of this motif in the FMR1 gene, a genetic change thatprevents the synthesis of FMRP. Patients with intermediate numbers of repeats are able to make some FMRP and have milder symptoms.According to the National Fragile X Foundation, Fragile X syndrome affects approximately 1 in 3,600 to 4,000 males and 1 in 4,000 to 6,000 females. Theaverage age of diagnosis of Fragile X syndrome is approximately three years. Currently, there are no approved therapies for the treatment of Fragile X syndrome.The current standard of care for the psychiatric challenges of Fragile X syndrome is tailored to each patient and may include antipsychotics, antidepressants anddrugs to treat attention deficit and sleep disorders. Special education and symptomatic treatments for anxiety and irritability are often employed to lessen theburden of illness. Fragile X syndrome patients also may experience seizures, which are treated with traditional anticonvulsants.Tonic Inhibition and Fragile X Syndrome. Due to mutations in the FMR1 gene, patients with Fragile X syndrome have deficiencies in the levels of FMRP,an RNA binding protein that regulates the synthesis of proteins such as the two forms of glutamic acid decarboxylase, or GAD65 and GAD67, which we refer totogether as GAD65/67. GAD65/67 are the key enzymes required for synthesis of GABA. Knocking out the FMR1 gene results in reduced expression of GAD65/67in mouse models. The following figure depicts the reduced expression of GAD65/67 in mice containing a knockout of the FMR1 gene:Figure 7: Knockout of the FMR1 gene leads to reduced expression of GAD65/67 in mice.11 The reduced expression of GAD65/67 in this model results in decreased GABA production and subsequently lower extrasynaptic levels of GABA anddecreased tonic inhibition. Decreased tonic inhibition is believed to be responsible for a number of Fragile X syndrome-related symptoms, such as behavioral andcognitive problems. The following figure depicts the biological pathway by which an alteration in the FMR1 gene leads to decreased tonic inhibition:Figure 8: Linkage between FMR1 gene alteration and tonic inhibition.Preclinical Data in Fragile X Syndrome. The association between the FMR1 gene and physiological changes observed in Fragile X syndrome patients hasbeen evaluated in preclinical studies conducted by an independent academic group. Mice containing a knockout of the FMR1 gene exhibit behaviors similar tothose observed in Fragile X syndrome patients, such as hyperactivity, anxiety and increased sensitivity to sounds.In these studies, hyperactivity in FMR1-deficient mice was assessed by the distance traveled and average speed in an open field test. FMR1 -deficient micewere significantly more active than normal mice. It was observed that treatment of these mice with OV101 led to a statistically significant decrease in the distancetraveled and average speed. These results were considered to be indicative of a reduction in hyperactivity, which we believe resulted from increased tonicinhibition. The following figure depicts the normalization of hyperactivity in mice containing a knockout of the FMR1 gene when administered OV101:Figure 9: OV101 was observed to reduce signs of hyperactivity in mice containing a knockout of the FMR1 gene.12 In these studies, OV101 partially normalized the mice’s response to startling sounds in the pre-pulse inhibition test in which a pre-stimulus is given tosuppress the startle response and improve the signal to noise ratio. Additionally, mice with a knockout of the FMR1 gene were also observed to have higherneuronal activity as compared to normal mice and a lower threshold for action potential, or AP, generation leading to increased AP bursts, which reverted tonormal levels with the administration of OV101, as shown in the following figure:Figure 10. OV101 was observed to reduce levels of neuronal activity in mice with a knockout of the FMR1 gene.OV101 and its Potential Impact on Neurogenesis and on Learning and MemoryBased on preclinical data, we believe OV101 may facilitate neurogenesis, or the creation and maturation of new neurons, which may lead to cognitivebenefits. In a preclinical study in mice conducted by an independent academic group, OV101 was observed to promote the performance of certain memorybehaviors and facilitate neurogenesis.Extrasynaptic GABAA receptors contain a unique δ subunit, which is a specific domain on extrasynaptic GABAA receptors that is not expressed insynaptic GABA A receptors. OV101 mediates its pharmacological properties via the activity of this δ subunit and we believe that is a key differentiating aspect ofour drug. It is believed that GABA A receptor-dependent signaling regulates memory and also facilitates the growth of neurons after birth in the brain.Long-term administration of OV101 in normal mice, but not in mice deficient in the GABAA receptor delta subunit, was observed to result in significantincreases in neurogenesis. These treated mice also performed better on challenges that were dependent on long-term memory. We believe that these results in micesuggest that long-term treatment with OV101 in patients with Angelman syndrome and Fragile X syndrome may lead to improvement in cognitive abilities.Previous Clinical Development of OV101We acquired worldwide rights to OV101 from Lundbeck in March 2015. Prior to the acquisition, Lundbeck filed an investigational new drug application,or IND, with the FDA for the treatment of insomnia. Pursuant to this IND, Lundbeck and Merck & Co., Inc., or Merck, partnered to conduct several Phase 3 trialsfor primary insomnia between 2004 and 2007. Over the course of the development of OV101, over 4,000 adults were administered OV101, resulting in an OV101exposure of approximately 950 patient years. These trials were primarily randomized, placebo-controlled short-term and long-term safety and efficacy clinicalstudies, using classic sleep parameters such as total sleep time, time to sleep onset, wakefulness after sleep onset, and number of nocturnal awakenings as clinicalendpoints.The Phase 3 program consisted of three trials: two 3-month placebo controlled trials conducted in the United States and one 2-week trial conducted inEurope and Canada, each evaluating OV101 against placebo and the active comparator, zolpidem (Ambien). The primary endpoints of the trials included totalsleep time and time-to-sleep onset and the secondary endpoints included number of nocturnal awakenings, wakefulness after sleep onset and daytime function. InPhase 3 trials, which were conducted for durations of up to 12 months, OV101 was observed to have efficacy that was largely comparable to zolpidem (Ambien)on several sleep metrics. In the first 3-month trial, a dose of 15mg of OV101 met both of the primary endpoints as well as the secondary endpoints at week one andmonth three compared to placebo. In the second 3-month trial, the same dose met only total sleep time and number of awakenings at week one, but significancewas lost after adjusting for multiplicity at month three. The 2-week trial met all primary endpoints and wakefulness after sleep onset, for 15mg of OV101 at weeksone and two. Additionally, subjects who were administered OV101 showed no evidence of withdrawal symptoms or rebound insomnia after discontinuation ofshort-term treatment, whereas transient rebound insomnia was observed in subjects receiving zolpidem. In addition, clear differences were observed betweenOV101 and zolpidem from a sleep architecture perspective. OV101 has shown consistent increases in slow wave sleep compared to zolpidem with no significanteffect on stage 2 or REM sleep in healthy adult, elderly subjects. It is believed that slow wave sleep is important for encoding long-term, fact-based memories.Slow wave sleep has been associated with physical changes in neuronal connections.13 Safety and TolerabilityOverall, OV101 was observed to be well-tolerated in adult patients aged 18-64 years in the Phase 2 and Phase 3 trials at doses of 5mg to 15mg given asevening doses. Success in these previous trials does not ensure that our clinical trials in OV101 will generate the same results or otherwise provide adequate data todemonstrate the efficacy and safety of OV101. The most common reported adverse events were headache, nausea, vomiting, somnolence and dizziness. In general,the adverse events appeared to be dose-related. The majority of the serious adverse events observed were considered to not be related to treatment with OV101.One SAE, fatigue, was considered by Lundbeck and Merck as probably related to OV101 treatment. Among the 9 SAEs considered by Lundbeck and Merck to bepossibly related to OV101 treatment, there were three cases of fainting and one case each of: radius fracture, abnormal QRS axis, transient ischemic attack, non-cardiac chest pain, unresponsive to stimuli and atrial fibrillation. Across trials there were no apparent clinical trends regarding SAEs with respect to frequency,distribution across system organ classes or preferred terms. Also, there were no apparent clinical differences versus placebo. In the Phase 3 trials at the 15mg dose,at least one SAE was observed in 1.3% of subjects at two weeks and 3 months and 3.0% of subjects at 12 months versus 0.0% to 1.0% on placebo over the sametime frame.Consistent with the clinical development of other insomnia drugs, the FDA requested that Lundbeck and Merck conduct a series of preclinical and clinicalabuse studies as part of their development program. In preclinical studies, OV101 demonstrated low abuse potential. In one clinical trial, the abuse potential ofOV101 was investigated in doses up to 45mg in male and female subjects with a history of hypnotic/sedative abuse and other drug abuse. Safety results showedthat OV101 administered at doses of 30mg and 45mg in women and 45mg in men was not tolerated in this population of drug abusers, contrary to previousexperience with the same doses in healthy volunteers. This indicated that a history of drug abuse decreased tolerability to OV101 in these subjects. Adverse eventsthat were associated with a dose-dependent lack of tolerability in this trial included psychiatric, nervous system, musculoskeletal and gastrointestinal disorders.In 2007, following the completion of all clinical trials for OV101 in insomnia, Lundbeck and Merck discontinued the development program for insomnia,and announced that the overall clinical profile did not support further development of OV101 for insomnia.Clinical Development ProgramsOV101OV101 is a delta selective extrasynaptic GABAA receptor agonist. An agonist is a chemical that binds to a receptor and activates the receptor to produce abiological response. OV101 specifically exerts its biological activity through the δ subunit of extrasynaptic GABAA receptors. Based on the biological pathwayand existing preclinical data, we anticipate developing OV101 as an orally active selective extrasynaptic GABA A agonist to compensate for the deficit in GABAconcentrations observed in patients with certain rare neurological disorders. We believe OV101 is the only drug candidate in development that exerts its biologicalactivity preferentially through the δ subunit of extrasynaptic receptors. We are initially developing OV101 for Angelman syndrome and Fragile X syndrome, andwe believe it has the potential to address multiple neurodevelopmental disorders characterized by decreased tonic inhibition.OV101 in Angelman SyndromeMarket Overview and Current TreatmentsAngelman syndrome is a severe, lifelong, rare genetic condition that presents in early childhood and results in significant functional limitations inbehaviour, motor, sleep, and cognitive functions. Prevalence in the general population is 1in 12,000 to 20,000.1 There are currently no approved therapies in theUnited States or ex-US specifically for the treatment of Angelman syndrome. No standard of care exists for Angelman syndrome, and current therapeutic optionsare symptomatic, suggesting a high unmet clinical need. Given the likely high burden of Angelman syndrome, new treatments targeting the etiology of thesyndrome that result in even small improvements in features of the syndrome may be clinically meaningful for patients and their families Our Development of OV101 in Angelman SyndromeWe completed our Phase 2 trial of OV101 in adults and adolescents with Angelman syndrome, which we refer to as the STARS trial, and have completed aPhase 1 pharmacokinetic, or PK, trial in adolescents with Angelman syndrome or Fragile X syndrome. The Phase 1 PK data in adolescents with Angelmansyndrome and Fragile X syndrome showed OV101 to be generally safe and well tolerated and its PK profile in adolescents was similar to previous data generatedin young adults. 1 NORD, NIH website, Genetics Home Reference and NCBI14 The STARS TrialSTARS was a 12-week, double-blind, placebo-controlled Phase 2 study. The primary endpoint of the trial was to assess the safety and tolerability of OV101compared to placebo. The STARS trial explored the clinical utility of OV101 on improvements in clinical global impressions, maladaptive behavior, sleep, andgross and fine motor skills. Eighty-eight patients (adults, n=66; adolescents, n=22) aged 13 to 49 years of age diagnosed with Angelman syndrome were randomized at 13 clinical trialsites in the U.S. and Israel. The study randomized patients to one of three arms: QD dose of OV101 at night (15mg), BID dose of OV101 (10mg in the morningand 15mg at night), and placebo. Details of the trial design are provided below: Primary Endpoint: Safety and Tolerability DataThe study met its primary endpoint of safety and tolerability given that the AEs with OV101 treatment were similar to placebo treatment, with the majorityof AEs being mild. OV101 showed a favorable risk profile and was well tolerated through 12 weeks of treatment. Overall, the data are consistent with thefavorable risk profile observed in previous insomnia trials with OV101. The most common AEs reported in the trial were vomiting, somnolence, irritability, aggression, and pyrexia. Table 1: Most Frequent Adverse Events* IncidencePlacebo(n=29)OV101 QD(n=29)OV101 BID(n=29)Vomiting9 (31.0%)5 (17.2%)5 (17.2%)Somnolence5 (17.2%)5 (17.2%)3 (10.3%)Irritability4 (13.8%)3 (10.3%)5 (17.2%)Aggression5 (17.2%)4 (13.8%)1 (3.4%)Pyrexia2 (6.9%)7 (24.1%)1 (3.4%)*Descriptive dataEvents occurring in greater than 5 percent (two or more patients) compared to placebo in either treatment arm included pyrexia, rash, seizure, enuresis andmyoclonic epilepsy. Table 2: Adverse Events Occurring More Frequently in OV101 Arms vs. Placebo* IncidencePlacebo(n=29)OV101 QD(n=29)OV101 BID(n=29)Pyrexia2 (6.9%)7 (24.1%)1 (3.4%)Rash1 (3.4%)3 (10.3%)2 (6.9%)Seizure02 (6.9%)3 (10.3%)Enuresis02 (6.9%)1 (3.4%)Myoclonic epilepsy01 (3.4%)2 (6.9%)*Descriptive data SAEs of seizure were reported in two patients: one patient in the QD dose experienced a seizure and that was deemed unrelated to OV101; one patientexperienced a seizure in the BID dose group and that was assessed as possibly related to study drug by the investigator. 15 Treatment discontinuations due to AEs were low. One patient in the placebo arm discontinued compared to no patients and three patients in the once-dailydose group and twice-daily dose group, respectively. •Placebo arm: one patient with irritability •Twice-daily arm: one patient with myoclonus; one patient with seizure, and one patient with irritability/anxiety/sleep disorder Efficacy Endpoint DataAt 12 weeks of treatment, the first prespecified efficacy endpoint of CGI-I demonstrated a robust and statistically significant difference (p=0.0206; Fisher’sExact test) between the combined OV101 treatment arms and placebo. This reflects an improvement in two-thirds of the combined treatment groups versus one-third in placebo. Table 3: Response Based on CGI-I at Week 12; Comparison to Placebo ScalePooled treatment groups(10mg/15mg BID) and (15mg QD) (n=57)Placebo(n=28)Absolute number of patients whoimproved38 (66.7%)11 (39.3%)p-value0.0206 In the prespecified analysis using the Mixed Model Repeated Measures (MMRM), which evaluated each OV101 treatment arm independently againstplacebo, the difference in CGI-I mean score at 12 weeks was statistically significant (p=0.0006) in the once-daily OV101 group versus placebo and also in thecombined OV101 treatment group versus placebo (p=0.0103). Table 4: Mean CGI-I Symptoms Overall Score – by Dose Group at Week 12; Comparison to Placebo Scale**QD dose (15mg)(n=27)BID dose (10mg/15mg)(n=28)Pooled treatment groups(10mg/15mg BID) and (15mg QD) (n=55)Placebo(n=27)Mean change in CGI-I score (week 6)3.353.543.453.60Mean change in CGI-I score (week12)3.003.583.293.79p-value*** at week 120.00060.34460.0103 ***MMRM analysis was performed adjusting for fixed effects of visit, treatment, age (adult vs. adolescent) and visit by treatment interaction. In a post-hoc analysis of patients who were “much” or “minimally” improved having a CGI-I score of ≤3, the data suggest that younger patients whoreceived a once-daily dose had the greatest response to OV101 compared to older age groups. Table 5: Patients Who were ‘Much’ or ‘Minimally’ Improved in CGI-I Score (≤3) (Post-hoc Analysis) AgePlacebon (%)OV101 QDn (%)13-172/7 (29%)5/6 (83%)18-247/12 (58%)10/12 (83%)25-492/9 (22%)7/10 (70%)End of Phase 2 MeetingWe met with the FDA in November of 2018 to discuss the OV101 trial results and have determined to initiate the NEPTUNE trial in the second half of2019. Pending the outcome of data from this study, it is intended that the NEPTUNE trial data together with the STARS trial data will be the core studies used tosupport the filing of a New Drug Application (NDA) with the FDA. NEPTUNEPending FDA concurrence on the study protocol and supporting framework and materials, NEPTUNE is expected to be a single 12-week, two-arm,randomized, double-blind, placebo-controlled trial with a once daily dose of OV101 versus placebo with an16 enrollment of approximately 60 patients aged 4 to 12 years. It is expected that the primary endpoint will be the change in the overall CGI-I score from baselinebetween the OV101 and placebo arms. Enrollment initiation is expected in the second half of 2019.ELARABased on the STARS trial data, we have initiated ELARA which enrolled its first patient February of 2019 and is currently recruiting. OV101 in Fragile X SyndromeMarket Overview and Current TreatmentFragile X syndrome is an inherited form of intellectual disability which manifests as a disruption in behavior, motor, sleep and cognitive functions, and isthe most common cause of autism worldwide. Fragile X syndrome prevalence is ~1/3,600-4,000 males and ~1/4,000-6,000 females.2 Currently, there are nomedicines specifically approved to treat Fragile X. However, there are many medications to target specific symptoms such as stimulants to treat ADHD, moodstabilizers and antidepressants to treat clinical depression and generalized anxiety disorder, and sympatholytics for hyperarousal. Our Development of OV101 in Fragile X SyndromeROCKETIn July 2018, we initiated our Phase 2 ROCKET clinical trial, a randomized, double-blind, parallel-group trial evaluating OV101 for the treatment ofadolescent and young male adults with Fragile X syndrome. The trial is currently enrolling and is expected to enroll up to 30 males ages 13 to 22 with a confirmeddiagnosis of Fragile X syndrome. The primary endpoint is safety and tolerability of OV101 over 12 weeks of treatment in three different cohorts of either 5mgonce daily, 5mg twice daily, or 5mg three times daily. A secondary endpoint will evaluate changes in behavior during 12 weeks of treatment with OV101 using theABC, which has previously been used in clinical trials of Fragile X syndrome. We anticipate data from this trial in the second half of 2019. SKY ROCKETWe also initiated the SKY ROCKET study in the fourth quarter of 2018. The SKY ROCKET study is a 12-week, non-drug study to assess the suitability ofseveral behavioral scales in individuals with Fragile X syndrome. The trial is an observational study designed to provide additional data on the key endpoints thatare being explored in the ROCKET trial as well as provide contextual data on the benefit offered by the standard of care. The study will enroll 30 males ages 5 to30 with Fragile X syndrome, and data from SKY ROCKET are expected in the second half of 2019. OV935OV935 for Epileptic EncephalopathiesWe are developing OV935 in collaboration with Takeda for the treatment of rare epileptic encephalopathies. OV935 is a potent, highly selective inhibitor ofthe enzyme cholesterol 24-hydroxylase, or CH24H. We believe, if approved, OV935 has the potential to become a first-in-class inhibitor of CH24H. CH24H ispredominantly expressed in the brain, where it plays a central role in cholesterol homeostasis. Recent literature suggests that modulation of CH24H may have animpact on over-activation of neurotransmitter pathways that have been implicated in a number of neurological disorders, such as epilepsy. Preclinical data suggestthat inhibition of brain CH24H indirectly reduces glutamatergic signaling via NMDA receptors and modulates glial function and inflammation, which may impactdisease pathology and epileptogenesis.OV935 has completed four Phase 1 trials demonstrating favorable tolerability at doses that are believed to be therapeutically relevant. The Phase 1b/2a trialof OV935 in adults achieved its primary endpoint of safety and tolerability and showed OV935 was generally well tolerated. In December 2017, the FDA grantedorphan drug designation for OV935 for the treatment of Dravet syndrome and Lennox-Gastaut syndrome. We believe that OV935 offers the possibility not only tosuppress seizures, as was observed in preclinical studies, but also to modulate the underlying biological pathways that lead to the development of seizures. Thismay offer the possibility of a long-term, disease-modifying therapy. The primary objective of the Phase 1b/2a clinical trial was to characterize the safety andtolerability profile of OV935 in adult patients with a documented dEE. The secondary objective was to characterize the multiple dose PK profile of OV935 in adultpatients with a documented dEE. 2 National Fragile X Foundation17 Dravet SyndromeDravet syndrome is a severe form of childhood epilepsy largely genetically driven by the mutation of the SCN1A gene that typically presents during the firstyear of life. Eighty percent of patients have a mutation of the SCN1A-gene. Children experience frequent seizures, loss of muscle control, cognitive deficits and, inapproximately 10% of cases, death before the age of 12 years. Children continue to suffer from seizures and severe cognitive and developmental impairmentthroughout their lifetime. While some patients may survive into adulthood, their long-term intellectual development and seizure outcomes are typically extremelypoor. The incidence of Dravet syndrome in the United States ranges from 1 in 15,700 to 1 in 20,900 births. Patients are frequently treated with combinations ofclassic anti-epileptic drugs, none of which are particularly effective. However, no drug has been approved specifically for the treatment of Dravet syndrome in theUnited States and only one drug, the anticonvulsant stiripentol, has been approved in Europe.Lennox-Gastaut SyndromeLennox-Gastaut syndrome is a rare disorder that is often diagnosed between three and five years of age. Patients diagnosed with Lennox-Gastaut syndromeexperience a multitude of seizure types that are difficult to manage and have many of the same symptomologies as other rare pediatric epilepsies. Lennox-Gastautsyndrome affects over 30,000 people in the United States with approximately half being children under the age of 18. Some patients have de novo geneticmutations, including a mutation of the SCN2A gene. The annual incidence of Lennox-Gastaut syndrome in childhood is estimated to be 2 per 100,000 children. It isalso estimated that between 1% and 4% of childhood epilepsies are a result of Lennox-Gastaut syndrome. Only 10% of these patients have seizures that are fullycontrolled by existing therapies.CDKL5 Deficiency DisorderPatients with cyclin-dependent kinase-like 5 (CDKL5) mutations present with early epilepsy. In particular, early drug-resistant epilepsy, usually starting inthe first months of life, tends to be the most common feature. Complex partial seizures, infantile spasms, myoclonic, generalized tonic-clonic, and tonic seizureshave all been reported. Stereotypic hand movements, severe hypotonia, and impaired psychomotor development are usually associated with CDKL5 mutations andcommon to the general clinical manifestations.15q Duplication syndromeDuplications of the proximal arm of chromosome 15q11.2-q13.1 result in the genetic condition 15q Duplication syndrome (Dup15q syndrome). Multiplegenes including UBE3A from this region are implicated in the pathogenesis of autism spectrum disorders, epilepsy, and schizophrenia. Increased expression of theUBE3A gene contributes to epilepsy in 15q Duplication syndrome and it is thought to be the underlying cause of the autistic features of the syndrome as well. Themost devastating feature of 15q Duplication syndrome is difficult to control seizures. The most common seizure types are infantile spasm and generalized tonic–clonic seizures followed by atonic, myoclonic, focal-onset, and tonic seizures. Poorly controlled seizures severely impact the quality of life of both affectedindividuals and their caregivers. Current treatment options for 15q Duplication syndrome-associated epilepsy are often ineffective. GABAergic promotingantiepileptics are typically ineffective while broad-spectrum antiepileptic medications such as valproic acid and rufinamide provide some relief.Tuberous Sclerosis ComplexTuberous Sclerosis Complex is a genetic disorder that causes non-malignant tumors to form in many different organs, primarily in the brain, eyes, heart,kidney, skin and lungs and is often diagnosed in childhood. The brain and skin are the most affected organs. Tuberous Sclerosis Complex results from a mutationin tumor suppression genes TSC1 or TSC2. Most cases of Tuberous Sclerosis Complex are caused by de novo mutations of the TSC1 or TSC2 genes. According tothe Tuberous Sclerosis Alliance, Tuberous Sclerosis Complex is estimated to affect approximately 50,000 patients in the United States and occurs in 1 of 6,000live births. The most common symptom of Tuberous Sclerosis Complex is epilepsy, which occurs in 60% to 90% of patients, of which 70% experience seizureonset in their first year of life. Despite available therapies, a significant number of Tuberous Sclerosis Complex patients have treatment-resistant seizures. Thereare significant co-morbidities associated with Tuberous Sclerosis Complex, including cognitive impairment in 50%, autism spectrum disorders in up to 40% andneurobehavioral disorders in over 60% of individuals with Tuberous Sclerosis Complex.18 The Role of Cholesterol Metabolism in Epileptic Encephalopathies The brain is a cholesterol-rich organ, containing about 25% of the total cholesterol in the body. Cholesterol is an essential component of cellularmembranes, including the synaptic membranes that aid in the transmission of signals between cells. Cholesterol is also a key component of myelin, the protectivelayer of lipids and proteins that serves as an insulating sheath and facilitates electrical conduction in nerve cells.Cholesterol in the brain is entirely synthesized and metabolized locally to maintain physiologic levels. When cholesterol is metabolized in the brain, it isbroken down to 24-hydroxycholesterol, or 24HC, by CH24H, an enzyme predominantly expressed in the brain. Converting cholesterol to 24HC enables it to passthrough the blood-brain barrier and enter into the circulatory system, allowing it to be eliminated from the body. Since CH24H is primarily present in the brain,there is a strong correlation between circulating blood levels and brain levels of 24HC. The levels of 24HC can therefore serve as a biomarker of CH24H activityin the brain.24HC levels can profoundly impact key signaling pathways in the brain including glutamatergic signaling, or signaling by the neurotransmitter glutamate.In one subtype of glutamate receptors called N-Methyl-D-Aspartate, or NMDA, receptors, elevated levels of 24HC have been shown in various cellular and tissuemodels to lead to increased activation of the glutamate signaling pathway. Activation of NMDA receptors has been implicated in a number of neurologicaldisorders, including Alzheimer’s disease and epilepsy. As a result, modulation of cholesterol metabolism has been proposed as a potential therapeutic approach forseveral neurological disorders. We believe that decreasing 24HC levels, and thereby modulating NMDA receptor activity, represents a sound rationale foraddressing the underlying biology of epileptic encephalopathies. The following figure depicts inhibition of CH24H by OV935 and its impact on excitatorysignaling in the brain.Figure 12: Through inhibition of CH24H, OV935 is believed to reduce brain levels of 24HC, thereby reducing excitatory signaling.19 The glutamatergic pathway and NMDA receptors have been the targets of a number of approved drugs. Many of these approved drugs, includinganesthetics such as ketamine, were developed as antagonists of NMDA receptors, thus blocking the receptor. These drugs have not been used in disorders such asepilepsy, where the goal is not to entirely block the NMDA receptor, but rather to modulate its activity. The complete blockade of the NMDA receptor with long-term use is frequently associated with poor tolerability. In some cases, low doses of NMDA receptor antagonists have demonstrated clinical benefit outside theirprescribed use, including for treatment of neurological disorders. For example, memantine, a low affinity NMDA receptor antagonist, has been used to treatmoderate to severe Alzheimer’s disease patients because it does not completely block the NMDA receptor. Modulation of the NMDA receptor, rather than NMDAreceptor antagonism, could provide a more effective method for treatment of neurological disorders.A number of publications by independent academic groups have shown that 24HC is a potent modulator of the NMDA receptor. These publicationsdescribe 24HC as a positive allosteric modulator, a molecule that induces a conformational change within the protein structure of the receptor and increases itsactivity. Mice lacking CH24H expression have reduced brain levels of 24HC and decreased NMDA receptor signaling. Therefore reducing 24HC levels in thebrain offers an alternate mechanism for modulating NMDA receptor activity without blocking normal receptor function. We believe that reducing 24HC levelsrepresents an innovative approach to impacting the glutamatergic pathway to treat epileptic encephalopathies. The potential importance of this target, along withthe strength of the data supporting it, is what attracted us to OV935 as a potential treatment for these disorders.OV935 Preclinical DataOV935 has been evaluated in multiple preclinical epilepsy and seizure models. In these studies, OV935 was observed to have anti-convulsive activity ingenetic, pharmacologic and inflammation-induced seizure models. Based on the preclinical data available to us, OV935 may have diverse effects on overall brainfunction, affecting both seizure intensity and frequency, and potentially modifying the underlying disease biology. We believe the data provide a rationale to testOV935 in multiple epileptic encephalopathies. The models are summarized as follows: Model Observed OV935 ActivitySCN1A Knock-In Model of DS Increased temperature threshold for hyperthermia-induced seizuresPentylenetetrazol (PTZ) Kindling Model Reduced PTZ-induced seizure progressionFring’s Audiogenic Seizure Model Reduced audiogenic seizuresAPP/PS1 Transgenic Mouse Model Prolonged overall survivalTMEV Mouse Model Decreased seizure activity and durationSCN1A Knock-In Model of Dravet SyndromeOV935 was tested in a knock-in model of Dravet syndrome constructed by inactivation of the SCN1A gene. This gene encodes a voltage-gated sodiumchannel that plays a critical role in the normal functioning of inhibitory pathways in the brain. Deficiencies in the functioning of this channel allow brain excitatorypathways to function unchecked, resulting in severe seizures. The majority of Dravet syndrome cases are caused by mutations in this gene. Mice containing theSCN1A gene mutation have hyperthermia-induced or high-temperature-induced seizures. Mice treated with OV935 were observed to have a significantly raisedthreshold temperature for developing these seizures after seven days of dosing, relative to untreated mice, as depicted below. Source: RIKEN Brain Science Institute, Neurogenetics laboratory (Lab head; Kazuhiro Yamakawa).Figure 13: OV935 increases the threshold for temperature-induced seizures in mice containing the SCN1A gene mutation.20 PTZ Kindling ModelOV935 was tested in a preclinical kindling seizure model. Scientists use kindling models to study the effects of repeat seizures in the brain. One suchkindling model described here is the pentylenetetrazol, or PTZ, model. As depicted in the figure below, it has been observed that repeat stimulation can increasethe likelihood of seizures, presumably because there is a threshold for seizures to occur and the repeat stimulation lowers this threshold. In this model, PTZ is usedto chemically stimulate mice at sub-convulsive levels. PTZ also increases the density and sensitivity of glutamate receptors in specific regions of the brain. Micethat were dosed daily with OV935 demonstrated a significant delay in seizure development in this model.Figure 14: OV935 delayed seizure development in the PTZ-induced kindling mouse model.Fring’s Audiogenic Seizure ModelOV935 was tested in a preclinical audiogenic seizure model. The Fring’s audiogenic seizure model is widely used by scientists to investigate the effects ofinvestigational drugs in a model sensitive to sound-induced seizures. In the experiment, OV935 was dosed once a day for either one or three days. The effect ofOV935 on the duration of seizures was determined after the induction of a seizure either one hour or 24 hours following administration of the last dose. As depictedin the figure below, it was observed that OV935 treatment resulted in a significant dose-dependent reduction in sound-induced seizures following single and 3-dayrepeat dosing.Figure 15: OV935 dose-dependently reduced seizure in the Fring’s audiogenic seizure model.90APP/PS1 Transgenic Mouse Model21 OV935 was tested in a preclinical Alzheimer’s disease model where an amyloid precursor protein, or APP, overexpressing mouse was crossed with apresenilin-1, or PS1, mutant mouse that is highly prone to developing spontaneous seizures. We believe that results obtained in this model yield some valuableinsights into neurological disorders, and particularly into the biochemistry of the brain. Mice in this model typically have a high incidence of sudden death withonly 50% of them surviving after three months. As depicted in the figure below, mice treated with OV935 in this model were observed to have a significantincrease in overall survival. While it is unclear if the increase in survival is directly related to reduction in seizures, increase in survival has previously beenobserved in APP/PS1 mice when one copy of the gene for CH24H is inactivated, suggesting that the survival benefit observed after treatment with OV935 may bedue to inhibition of its intended target, CH24H.Figure 16: OV935 increased survival in APP/PS1 transgenic mouse model.TMEV Mouse ModelOV935 was tested in a Theiler’s murine encephalomyelitis virus, or TMEV, model to determine the role of OV935 in reducing inflammation-inducedseizures. Infection with TMEV in this model leads to acute seizures and significant elevations in inflammatory signaling molecules, known as cytokines. A largefraction of the mice develop spontaneous, recurrent seizures and various behavioral co-morbidities weeks later. As depicted below, treatment with OV935demonstrated reduction in the overall number and average severity of seizures in the mice in the acute phase. In addition, long-term benefits were observed, basedon significant improvements in anxiety assays such as the open field test.Figure 17: OV935 reduced the number of seizures and the number of severe (Stage 4/5) seizures in theTMEV model.OV935 Clinical DataOV935 has been tested in 86 healthy volunteers across four Phase 1 trials. Single oral doses of up to 1,350mg of OV935 were well-tolerated. The mostfrequently reported adverse events were headache, ECG electrode application site dermatitis and nausea. All reported events were mild with no apparent dose-response. In a 14-day repeat dosing trial, doses of 100mg QD, 300mg QD and 400mg QD were well-tolerated. One volunteer at the 300mg BID experienced anevent of confusional state and another volunteer at the 600mg QD dose experienced acute psychosis. Both volunteers discontinued the trial at day 11. Onevolunteer receiving placebo reported events of nightmares, spatial disorientation, insomnia and dizziness. All AEs resolved with continued dosing through day 15.No SAEs were reported. Overall, no safety issues of concern were identified in the Phase 1 trials based on assessments of physical examinations, vital signmeasurements, clinical laboratory values or 12-lead electrocardiogram findings.22 The following table summarizes each trial: Trial Purpose Design Number ofVolunteers Dosage1 Safety and tolerability Phase 1, randomized, double-blind, placebo-controlled, single ascending dose trial 48 15-1,350mg, oral 2 Safety and tolerability Phase 1, randomized, double-blind, placebo-controlled, multiple ascending dose trial 40 100-600mg QD,and 300mg BID, 14 days,oral 3 Brain CH24H enzyme occupancy usingpositron emission tomography, or PET Open-label, non-randomized 11 50-600mg, oral 4 Relative bioavailability of tablet versus solutionformulation; effect of food Phase 1, randomized, open-label, single dosetrial 9 300mg (tablet), oral;300mg (solution), oralIn the Phase 1 PET imaging trial, following administration of OV935, levels of plasma 24HC decreased as the dose increased, reaching an apparent plateauof a 60% reduction at a dose of 300mg, as depicted in the figure below.Figure 18: Dose-dependent reduction in plasma 24HC by OV935 in a Phase 1 multiple ascending-dose trial.OV935 Clinical Development PlanPhase 1b/2a TrialThe Phase 1b/2a trial of OV935 achieved its primary endpoint of safety and tolerability and showed OV935 was generally well tolerated. The trial wasdesigned to have two parts. Part 1 was a randomized, double-blind, placebo-controlled (OV935 vs. placebo with a ratio of 4:1), 30-day phase that included atitration period (20 days: 100 mg, 200 mg twice daily), and treatment period (10 days). Details of the trial design are provided below:23 The target final dose of 300 mg BID could be reached after the 20-day titration period. Part 2 was a 60-day open-label phase to explore the extent to whichOV935 reduces seizure frequency as well as longer-term safety, tolerability, PK, and 24HC plasma levels. Patients who rolled over to Part 2 started OV935 at 200mg BID for 10 days (second titration period) and increased to 300 mg BID until Day 85 followed by down titration to Day 92 (end of treatment period). Patientsreceived OV935 or placebo in addition to their standard antiepileptic treatment regimens. Primary Endpoint: Safety and Tolerability Results OV935 achieved the primary endpoint of safety and tolerability as measured by incidence of AEs. AEs in patients treated with OV935 were similar to thosewho received placebo in Part 1. The majority of AEs in both treatment arms were mild. Overall, the data are consistent with a favorable safety and tolerabilityprofile and support the continued clinical development of OV935.AEs that occurred more frequently in the OV935-treatment group versus the placebo group were: dysarthria, insomnia, lethargy, seizure cluster, and upperrespiratory infection. Four patients discontinued due to an AE or an SAE in the OV935 treatment arm. Of these, in Part 1, one patient discontinued due todifficulty with walking and worsening lethargy and a second discontinued due to weakness. In Part 2, one patient discontinued due to a single episode of seizurecluster and a second experienced multiple seizure clusters. An increase in seizure frequency was seen in three patients, all of whom were on perampanel. This suggests the potential for a drug-drug interactionbetween medicines acting on different glutamatergic receptors. Accordingly, changes in seizure frequency data for the Phase 1b/2a trial are now reported with theinclusion and exclusion of the three patients on perampanel, respectively. Secondary and Exploratory Endpoint Results PK parameters: The data reaffirm the PK profile seen in previous studies. Specifically, plasma levels of OV935 were dose-proportional and consistent withlevels observed in four prior Phase 1 studies in healthy volunteers. In Part 1, a dose-dependent reduction of plasma 24HC levels was observed with OV935 treatment compared to placebo. A similar reduction was observed inPart 2 in both the OV935-treatment arm and patients in the placebo arm who crossed over to receive study drug. Importantly, there was an association between thereduction of 24HC and the median reduction of seizure frequency with OV935 treatment. By end of treatment period, 12 of 14 patients had interpretable 24HCdata and seizure frequency counts. Individuals achieving plasma levels of <10 ng/ml (an approximate 80 percent decrease from baseline) at Day 85 (n=7) showeda median seizure reduction of 69 percent compared to 3 percent for those who did not obtain this degree of 24HC reduction (n=5). Accordingly, 24HC will befurther studied as a potential biomarker in OV935 clinical trials. Exploratory analysis of seizure data: Median percent reduction from baseline seizure frequency is being reported on patients treated with OV935 during the60-day open-label Part 2 period for all seizure types (Table 1). Based on individual patient analysis, three patients on concomitant perampanel had increasedseizure frequency during the study, consistent with a potential drug-drug interaction, as described above. A subset analysis was conducted on 11 patients, whowere not taking perampanel. (Table 1). Overall, seizure frequency reduction was observed with maximal effect in the later part of the treatment period. Table 1: Median Seizure Frequency Full Analysis Set (FAS) Part 2*FAS Part 2 excluding patients onPerampanel**Reduction from Baseline in Seizure FrequencyDay 92 (measured from Day 65-92) 45% (n=14) 61% (n=11)Day 85 (measured from Day 58-85) 28% (n=14) 41% (n=11)Day 69 (measured from Day 42-69) 24% (n=16) 37% (n=13)Total Seizure Free DaysBaseline11.7 (n=16)12.7 (n=13)Day 92 (measured from Day 65-92)14.0 (n=14)16.8 (n=11)Responder Analysis – Proportion of Patients with Seizure Reduction from BaselineDay 65-92: 100% reduction (seizure free) 14.3% (n=14)18.2% (n=11)Day 65-92: ≥50% reduction 42.9% (n=14)54.5% (n=11) *FAS: 18 patients randomized to receive OV935 in Part 1 (titration period). Two withdrew from Part 1 and 16 patients rolled over to Part 2 (treatmentperiod); 14 patients completed the trial.24 **FAS Part 2 without perampanel: Excludes 3 patients taking perampanel for a total of 13 patients; 11 patients completed the trial.Exploratory analysis of OV935 showed reduction in seizure frequency that was correlated with decreases in plasma 24-hydroxycholesterol (24HC) levels inadults across multiple dEE. OV935 is a potent, highly-selective first-in-class inhibitor of the enzyme cholesterol 24-hydroxylase (CH24H) being investigated as anovel approach to treating epilepsy. Based on the insights gained from the Phase 1b/2a trial, Ovid and Takeda will continue with the dose and titration scheduleused in the Phase 2 ELEKTRA and ARCADE trials of OV935 in patients ages 2 to 17 years. In addition, Ovid will amend the protocols for these trials to excludepatients being treated with perampanel and, in light of the mode of action of OV935, the duration of treatment will be extended with the potential to observe theextent of the effects of OV935 on seizure reduction over time.ENDYMIONOvid and Takeda will continue to enroll eligible patients in the ENDYMION open-label extension study. ENDYMION is a multi-center open-labelextension study of OV935 in patients with dEE who have participated in a previous OV935 clinical study. The primary objective is to assess the long-term safetyand tolerability of OV935 over two years of treatment in patients with rare epilepsies. A secondary endpoint will evaluate the effect of OV935 on seizurefrequency over two years. ELEKTRAELEKTRA is an international Phase 2, multi-center, randomized, double-blind, placebo-controlled study that will evaluate the treatment of OV935 inpediatric patients, aged 2 to 17 years, with epileptic seizures associated with Dravet syndrome or Lennox-Gastaut syndrome (LGS). The study consists of a four tosix-week screening period to establish baseline seizure frequency followed by a 20-week treatment period that includes an 8-week dose optimization period and a12-week maintenance period. The primary endpoint is the change from baseline in seizure frequency in patients treated with OV935 compared to placebo bydisorder (Dravet, LGS). The secondary endpoints include safety, tolerability, and pharmacokinetic (PK) assessments as well as the percentage of patientsconsidered treatment responders, changes in Clinician’s Clinical Global Impressions of Severity and Change (CGI-S/C), and correlation of OV935 concentrationwith plasma 24HC levels. ELEKTRA is expected to enroll 126 pediatric patients at approximately 45 clinical trial sites in North America, Israel, Australia, EUCountries, and China. At the end of the study, eligible patients, including those in the placebo arm, have the option to roll over into the ENDYMION study, anopen-label extension trial for patients with dEE who have previously participated in an OV935 clinical trial. ARCADEARCADE is a Phase 2, multi-center, open-label, pilot study that will evaluate the treatment of OV935 in patients, aged 2 to 35 years old, with epilepticseizures associated with CDKL5 Deficiency Disorder (CDD) or Duplication 15q (Dup15q) syndrome. The primary endpoint is the change in motor seizurefrequency in patients treated with OV935 by disorder type (either CDD or Dup15q). The key secondary endpoints include safety and tolerability, includingpercentage of participants considered treatment responders, change in CGI-S/C, and correlation of OV935 concentration and plasma 24HC levels.ARCADE is expected to enroll approximately 15 children with each condition at clinical trial sites in the United States. This study consists of a four to six-week screening period to establish baseline seizure frequency followed by a 20-week treatment period (8-week dose optimization and 12-week maintenanceperiod). At the end of treatment, eligible patients can roll over into the ENDYMION study. License and Collaboration AgreementsLicense Agreement with H. Lundbeck A/SIn March 2015, we entered into a license agreement with Lundbeck, or the Lundbeck agreement, pursuant to which we obtained from Lundbeck anexclusive (subject to certain reserved non-commercial rights), worldwide license to develop, manufacture, and commercialize OV101, also known as gaboxadol,for the treatment of human disease. Under the Lundbeck agreement, we are responsible for and will use commercially reasonable efforts to carry out all futuredevelopment and commercialization of OV101. Initially, we will purchase OV101 compound from Lundbeck’s existing inventory at a specified price. Followingthe depletion of the existing inventory, we may purchase the compound from a third party or, if the parties agree, Lundbeck may continue to supply the compoundto us. We are also obligated to make certain manufacturing-related payments to Lundbeck, including for its preparation of a drug master file for OV101. Wegranted Lundbeck a right of first negotiation if we decide at any time to seek a partner to develop or commercialize OV101 in one or more specified countries.In connection with the Lundbeck agreement, we issued 489,756 shares of our common stock to Lundbeck. We also agreed to pay to Lundbeck milestonepayments up to an aggregate of $181.0 million upon the achievement of certain global development, regulatory and sales milestone events. In addition, if wesuccessfully develop and commercialize OV101, we will be obligated to pay to Lundbeck tiered royalties in the range of low to middle teens based on the net salesof OV101, subject to certain reductions for generic product sales and for royalties paid for licenses to third party intellectual property. In the event that wecommercialize OV101 with a partner in China, Japan or South Korea, each, an Asian Partner, we will instead share with Lundbeck specified percentages of25 the payments we receive from the Asian Partner, including any upfront payment, milestone payments and royalties, provided that we may deduct certain OV101development expenses from the amounts owed to Lundbeck. Our obligation to make royalty payments, and to share amounts received from Asian Partners, willexpire on a country-by-country basis upon the later of the expiration of the last solely owned licensed patent or 10 years after the first commercial sale. If Lundbeckmanufactures OV101 compound for us after the expiration of the royalty term, we will pay to Lundbeck, in addition to the fully burdened cost of such manufacture,a low, single digit manufacturing royalty on the net sales of OV101 manufactured by Lundbeck.The Lundbeck agreement will continue until the expiration of all relevant royalty terms, and may be earlier terminated by either party for the other party’suncured material breach or insolvency. In addition, we can terminate the Lundbeck agreement upon advance notice for convenience at any time prior to firstregulatory approval of OV101. If the Lundbeck agreement is terminated by us for convenience or by Lundbeck for our breach or insolvency, the OV101 compoundwill revert to Lundbeck and we will grant Lundbeck an exclusive license to develop and commercialize OV101; such license will be royalty-bearing if we filed anapplication for regulatory approval prior to termination. If we terminate the Lundbeck agreement for Lundbeck’s breach or insolvency, our license will continueand our obligations to make royalty payments to Lundbeck and to share Asian Partner payments with Lundbeck will continue but we will not be obligated to makefurther milestone payments to Lundbeck or to purchase any additional quantities of OV101 compound from Lundbeck’s existing inventory.License and Collaboration Agreement with TakedaIn January 2017, we entered into a license and collaboration agreement with Takeda, or the Takeda license agreement. All activities of the collaborationregarding OV935 will be guided by the Takeda/Ovid “One Team” concept, an integrated and interdisciplinary team from both companies devoted to the successfuladvancement of OV935 across rare epilepsy syndromes. Pursuant to the Takeda license agreement, we will take the lead in clinical development activities andcommercialization of the compound OV935 and products containing this compound (as well as certain other similar compounds, including any prodrug whereTAK-935 is the primary pharmacologically active metabolite) for the treatment of certain rare neurological diseases in the United States, Canada, the EuropeanUnion and Israel. Takeda will take the lead in commercialization of OV935 in Japan and has the option to lead in Asia and the rest of the world, or the TakedaTerritory. While we and Takeda have agreed to initially focus on certain rare neurological disorders, the scope of the collaboration may in the future include othermutually agreed upon rare neurological disorders.Under the Takeda license agreement, Takeda granted to us an exclusive license in our territory under certain patents and other intellectual propertycontrolled by Takeda to commercialize OV935 and products containing OV935 for the treatment of certain rare neurological disorders. Takeda also granted to us aworldwide, co-exclusive license to develop, manufacture and otherwise exploit (but not commercialize) OV935 and products containing OV935 for the treatmentof certain rare neurological disorders.Under the Takeda license agreement, we granted to Takeda an exclusive license in the Takeda Territory under certain patents and other intellectual propertycontrolled by us to commercialize OV935 and products containing OV935 for the treatment of certain rare neurological disorders. We also granted to Takeda aworldwide, co-exclusive license to develop, manufacture and otherwise exploit (but not commercialize) OV935 and products containing OV935 for the treatmentof certain rare neurological disorders and a co-exclusive license in certain countries to commercialize OV935 and products containing OV935 for the treatment ofcertain rare neurological disorders that are subsequently included in the collaboration.We and Takeda will collaborate in the development of OV935. Pursuant to the terms of the Takeda license agreement, each party is required to usecommercially reasonable efforts to develop OV935 for the treatment of certain rare neurological disorders in accordance with a mutually agreed upon developmentplan. We are primarily responsible for activities related to the development of OV935, and as such Takeda will transition certain development activities to us.Takeda is initially responsible for regulatory activities in all countries (excluding Israel). We are initially responsible for regulatory activities in Israel, and, uponregulatory approval in the United States, Canada, and the European Union, we will assume responsibility for further regulatory activities in such jurisdictions.We and Takeda will collaborate in the commercialization of OV935. Pursuant to the terms of the Takeda license agreement, each party is required to usecommercially reasonable efforts to commercialize OV935 for the treatment of certain rare neurological disorders in its territory. We are responsible forcommercialization of OV935 in the United States, Canada, the European Union and Israel, and Takeda is responsible for commercialization of OV935 in Japan,and has the first right to elect to commercialize the products in the Takeda Territory. Additionally, Takeda has the right to jointly commercialize the products withus in the United States and/or the European Union for any additional mutually agreed upon rare neurological indication.Under the Takeda license agreement, we and Takeda will initially share equally all development and commercialization costs and expenses prior to launchof a product and all revenues and commercialization costs and expenses after launch. In the event that we and Takeda agree to expand the scope of thecollaboration to include additional rare neurological disorders, either party may elect not to fund all or a portion of the development of such indication, in whichcase such party’s overall share of revenues and commercialization costs and expenses after launch of a product may be reduced under certain circumstances.26 During the period commencing on the effective date of the Takeda license agreement, we and Takeda have both agreed that we will not, directly orindirectly, and will cause all of our respective affiliates, not to, alone or with others, commercialize any competing product in the field of rare neurologicaldisorders. For these purposes, a competing product is any product or compound directed against CH24H as its primary, intended mode of action. If, during suchperiod, we or any of our affiliates is acquired by a third party that is commercializing a competing product, then we must divest our interest or terminate thecommercialization of the competing product or cause our affiliate to do so.The Takeda license agreement will expire upon the cessation of commercialization of the products by both us and Takeda. Either party may terminate theTakeda license agreement as a result of the other party’s uncured material breach or insolvency, for safety reasons, or, after completion of the first proof ofmechanism clinical trial, for convenience. Takeda may terminate the Takeda license agreement for our (or our sublicensee’s) challenge to the patents licensed underthe Takeda license agreement. If the agreement is terminated by Takeda for our material breach, bankruptcy or patent challenge or by us for convenience or safetyreasons, our rights to the products will cease, we will transition all activities related to the products to Takeda, and we will grant Takeda an exclusive, royalty-bearing license under certain patents and other intellectual property controlled by us to commercialize OV935 and products containing OV935 for the treatment ofcertain rare neurological disorders. If the agreement is terminated by us for Takeda’s material breach or bankruptcy or by Takeda for convenience or safety reasons,Takeda’s rights to the products will cease, Takeda will transition all activities related to the products to us, and Takeda will grant us an exclusive, royalty-bearinglicense under certain patents and other intellectual property controlled by Takeda to commercialize OV935 and products containing OV935 for the treatment ofcertain rare neurological disorders.Under the Takeda license agreement, in the event of an acquisition of us by certain types of acquirers prior to the final dosing of a patient in the first Phase3 trial, Takeda would have the right to elect to take over all development and commercialization activities with respect to the products, so long as Takeda at suchtime has (or will have) sufficient commercial infrastructure to commercialize the products. Even if Takeda exercises such right to take over all development andcommercialization activities with respect to the products, we and Takeda will continue to share equally all development and commercialization costs and expensesprior to launch of a product and all revenues and commercialization costs and expenses after launch, unless otherwise set forth in the agreement.In connection with the Takeda license agreement and in consideration of certain license rights granted to us by Takeda, we issued 1,781,996 shares of ourSeries B-1 convertible preferred stock to Takeda. The shares of Series B-1 preferred stock held by Takeda automatically converted into 1,781,996 shares of ourcommon stock in May 2017. Under the Takeda license agreement, we are obligated to pay Takeda future payments if and when certain milestones are achieved.Upon the first patient enrollment in the first Phase 3 trial for the first of the initial disorders we and Takeda are focusing on, we are obligated to issue to Takeda thenumber of unregistered shares of our common stock equal to the lesser of (a) 8% of our outstanding capital stock on the issuance date or (b) $50.0 million dividedby the applicable share price, unless certain events occur. In the event such payment would cause Takeda to own over 19.99% of our outstanding capital stock orother events occur, such payment must be paid in cash. The remaining potential global commercial and regulatory milestone payments equal approximately$35.0 million and can be satisfied in cash or unregistered shares of our common stock at our election.Northwestern LicenseIn December 2016, we entered into a license agreement with Northwestern University, or Northwestern, pursuant to which Northwestern granted us anexclusive, worldwide license to patent rights in certain inventions, or the Northwestern Patent Rights, which relate to a specific compound and related methods ofuse for such compound, along with certain Know-How related to the practice of the inventions claimed in the Northwestern Patents. Under the Northwestern agreement, we were granted exclusive rights to research, develop, manufacture and commercialize products utilizing theNorthwestern Patent Rights for all uses. We have agreed that we 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. We also have an option, exercisable during the term of the agreement to anexclusive license under certain intellectual property rights covering novel compounds with the same or similar mechanism of action as the primary compound thatis the subject of the license agreement. Northwestern has retained the right, on behalf of itself and other non-profit institutions, to use the Northwestern PatentRights and practice the inventions claimed therein for educational and research purposes and to publish information about the inventions covered by theNorthwestern Patent Rights. Upon entry into the Northwestern agreement, we paid an upfront non-creditable one-time license issuance fee of $75,000, and we are required to pay anannual license maintenance fee of $20,000, which will be creditable against any royalties payable to Northwestern following first commercial sale of licensedproducts under the agreement. We are responsible for all ongoing costs of filing, prosecuting and maintaining the Northwestern Patents, but we also have the rightto control such activities using our own patent counsel. In consideration for the rights granted to us under the Northwestern agreement, we are required to pay toNorthwestern up to an aggregate of $5.3 million upon the achievement of certain development and regulatory milestones for the first product covered by theNorthwestern Patents, and, upon commercialization of any such products, will be required to pay to Northwestern a tiered royalty on net sales of such products bythe Company, its affiliates or sublicensees, at percentages in the low to mid single-digits, subject to standard reductions and offsets. Our royalty obligationscontinue 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 theapplicable product in such country and 10 years following the first commercial sale of such product in such country. If Ovid sublicenses a Northwestern PatentRight, it will be obligated to pay to Northwestern a specified percentage of sublicense revenue received by us, ranging from the high single digits to the low-teens. 27 The Northwestern agreement requires that we use commercially reasonable efforts to develop and commercialize at least one product that is covered by theNorthwestern Patent Rights. Unless earlier terminated, the Northwestern agreement will remain in force until the expiration of our payment obligations thereunder. We have the right toterminate the agreement for any reason upon prior written notice or for an uncured material breach by Northwestern. Northwestern may terminate the agreementfor our uncured material breach or insolvency.Sales and MarketingGiven our stage of development, we have not yet established a commercial organization or distribution capabilities. We plan to build focused capabilities inthe United States and European Union to commercialize our development programs focused on orphan disorders of the brain, where we believe the patientpopulations and medical specialists for the indications we are targeting are sufficiently concentrated to allow us to effectively promote our product, if approved forcommercial sale, with a targeted sales team. In other markets for which commercialization may be less capital efficient for us, we may selectively pursue strategiccollaborations with third parties in order to maximize the commercial potential of our drug candidates.Manufacturing and SupplyWe currently have no manufacturing facilities and we intend to use our collaborators and contract manufacturers for the foreseeable future. However,certain members of our management have broad experience in manufacturing, which we believe may provide a competitive advantage.We currently rely on Lundbeck to provide the drug substance supply for our planned clinical trials in OV101. Pursuant to the Lundbeck agreement, weagreed to purchase from Lundbeck, and Lundbeck agreed to sell to us, the entirety of their existing inventory of the OV101 compound. We have purchased andimported a portion of this inventory, which was requalified by Lundbeck, and expect that this supply will be sufficient to meet our needs through the completion ofour planned Phase 2 trials in Angelman syndrome and Fragile X syndrome. We further expect that Lundbeck’s remaining existing inventory will be sufficient tomeet our needs through the completion of all of our planned clinical trials in OV101 and potentially into commercialization, if approved. Following the depletionof Lundbeck’s existing inventory, we may purchase the OV101 compound from a third party or, if the parties agree, Lundbeck may continue to supply thecompound to us at the fully burdened cost of manufacture. We have contracted with a third-party contract development and manufacturing organization tomanufacture the drug product for our planned and ongoing clinical trials in OV101, and we expect to engage another third party to package, label and distribute thedrug. We plan to continue to rely upon Lundbeck and/or one or more alternative contract manufacturers to supply us with commercial quantities of drug substanceand drug product supply, including for OV101, if approved.We will continue to rely on Takeda to provide the drug product supply for our planned clinical trials in OV935 and, if approved, drug substance supply forcommercial use of OV935. We will be required to contract with a third-party development and manufacturing organization to manufacture the drug product for ourcommercial use, and we expect to engage another third party to package, label and distribute the drug.CompetitionCurrently, there are no therapies approved for the treatment of Angelman syndrome or Fragile X syndrome. However, certain symptomatic treatments,including traditional anticonvulsants, sedatives and antianxiety drugs, are employed to lessen the burden of these disorders. We believe SAGE Therapeutics, Inc.,Marinus Pharmaceuticals, Inc. and Zynerba Pharmaceuticals, Inc. are our most direct competitors with respect to OV101. We believe Zogenix, Inc., GWPharmaceuticals plc, Sage Therapeutics, Inc., Marinus Pharmaceuticals, Inc., Zynerba Pharmaceuticals, Inc. and PTC Therapeutics, Inc. are our most directcompetitors with respect to OV935. Biogen/Ionis, Roche, Agilix and GeneTx are working on genetic approaches to AS.Drug development is highly competitive and subject to rapid and significant technological advancements. Our ability to compete will significantly dependupon our ability to complete necessary clinical trials and regulatory approval processes, and effectively market any drug that we may successfully develop. Ourcurrent and potential future competitors include pharmaceutical and biotechnology companies, academic institutions and government agencies. The primarycompetitive factors that will affect the commercial success of any drug candidate for which we may receive marketing approval include efficacy, safety andtolerability profile, dosing convenience, price, coverage and reimbursement. Many of our existing or potential competitors have substantially greater financial,technical and human resources than we do and significantly greater experience in the discovery and development of drug candidates, as well as in obtainingregulatory approvals of those drug candidates in the United States and in foreign countries.Our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing.Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a small number of ourcompetitors.28 Accordingly, our competitors may be more successful than us in obtaining regulatory approval for therapies and in achieving widespread marketacceptance of their drugs. It is also possible that the development of a cure or more effective treatment method for the disorders we are targeting by a competitorcould render our current or future drug candidates non-competitive or obsolete or reduce the demand for our drug candidates before we can recover ourdevelopment and commercialization expenses.Intellectual PropertyOur commercial success depends in part on our ability to obtain and maintain proprietary protection for our current and future drug candidates, noveldiscoveries, product development technologies and know-how, to operate without infringing on the proprietary rights of others and to prevent others frominfringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing or in-licensing U.S. and foreign patentsand patent applications related to technology, inventions and improvements that are important to the development and implementation of our business. We alsorely on trademarks, trade secrets, copyright protection, know-how, continuing technological innovation and potential in-licensing opportunities to develop andmaintain our proprietary position. For example, the proprietary map of disease-relevant biological pathways underlying orphan disorders of the brain that wedeveloped would not be appropriate for patent protection and, as a result, we rely on trade secrets to protect this aspect of our business.While we seek broad coverage under our existing patent applications, there is always a risk that an alteration to the product or process may providesufficient basis for a competitor to avoid infringement claims. In addition, the coverage claimed in a patent application can be significantly reduced before a patentis issued and courts can reinterpret patent scope after issuance. Moreover, many jurisdictions including the United States permit third parties to challenge issuedpatents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. Moreover, we cannot provide any assurancethat any patents will be issued from our pending or any future applications or that any potentially issued patents will adequately protect our intellectual property.We have exclusively licensed a portfolio of issued U.S. and international patents from Lundbeck directed to polymorphic forms of OV101 and theirpreparation, and these patents expire on dates ranging from 2025 to 2028. In addition, we have exclusively licensed from Lundbeck a pending application directedto an OV101 manufacturing processes that, if issued, would have a statutory expiration in 2036. We have also filed, and own, multiple patent families directed tomethods of treatment and formulations with OV101. In particular, we currently own issued U.S. patents directed to treatment of Angelman syndrome and Fragile Xsyndrome with OV101 that expire in 2035, excluding any regulatory extensions. Additional issued patents and pending applications are directed to methods oftreating neurodegenerative diseases and developmental disorders. We intend to seek patent protection for these inventions in numerous countries and regionsincluding, among others, Europe, Australia, Canada, Mexico, Israel, Japan, China, and Korea.We licensed from Takeda a portfolio of U.S. and international patents and applications directed to the OV935 composition of matter, and these patents andapplications expire in 2032, excluding any regulatory extensions.Individual patents extend for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term ofpatents in the countries in which they are obtained. Generally, utility patents issued for applications filed in the United States are granted a term of 20 years fromthe earliest effective filing date of a non-provisional patent application. In addition, in certain instances, a patent term can be extended to recapture a portion of theU.S. Patent and Trademark Office, or the USPTO, delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatoryreview period. However, as to the FDA component, the restoration period cannot be longer than five years and the total patent term including the restoration periodmust not exceed 14 years following FDA approval. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically isalso 20 years from the earliest effective filing date. The actual protection afforded by a patent may vary on a product by product basis, from country to country andcan depend upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legalremedies in a particular country and the validity and enforceability of the patent.Furthermore, we rely upon trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seekto protect our proprietary information, in part, using confidentiality agreements with our employees and consultants and any potential commercial partners andcollaborators and invention assignment agreements with our employees. We also have or intend to implement confidentiality agreements or invention assignmentagreements with our selected consultants and any potential commercial partners. These agreements are designed to protect our proprietary information and, in thecase of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party. These agreementsmay be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independentlydiscovered by competitors. To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in theirwork for us, disputes may arise as to the rights in related or resulting know-how and inventions.29 Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of anythird-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities. Ourbreach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future drugs may have anadverse impact on us. Since patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially longer,and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of inventionscovered by pending patent applications. Moreover, we may have to participate in Interference, Derivation, Reexam, Post-Grant Review, Inter Partes Review, orOpposition proceedings brought by third parties or declared by the USPTO.Government RegulationThe FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirementsupon companies involved in the clinical development, manufacture, marketing and distribution of drugs, such as those we are developing. These agencies and otherfederal, state and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling,storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our drugcandidates.U.S. Government RegulationIn the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The process ofobtaining regulatory approvals and the subsequent compliance with applicable federal, state, local and foreign statutes and regulations requires the expenditure ofsubstantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approvalprocess or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New DrugApplications, or NDAs, withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partialsuspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.The process required by the FDA before a drug may be marketed in the United States generally involves the following: •completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP,regulations; •submission to the FDA of an IND which must become effective before human clinical trials may begin; •approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; •performance of adequate and well controlled human clinical trials in accordance with good clinical practice, or GCP, requirements to establish thesafety and efficacy of the proposed drug product for each indication; •submission to the FDA of an NDA; •satisfactory completion of an FDA advisory committee review, if applicable; •satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance withcurrent good manufacturing practice, or cGMP, requirements and to assure that the facilities, methods and controls are adequate to preserve thedrug’s identity, strength, quality and purity; and •FDA review and approval of the NDA.Preclinical StudiesPreclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety andefficacy. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical dataor literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automaticallybecomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials andplaces the clinical trial on a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Asa result, submission of an IND may not result in the FDA allowing clinical trials to commence.30 Clinical TrialsClinical trials involve the administration of the investigational new drug to human patients under the supervision of qualified investigators in accordancewith GCP requirements, which include the requirement that all research patients provide their informed consent in writing for their participation in any clinicaltrial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and theeffectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at thatinstitution. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for publicdissemination on their www.clinicaltrials.gov website.Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined: •Phase 1 clinical trial: The drug is initially introduced into healthy human volunteers or patients with the target disease or condition and tested forsafety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an early indication of its effectiveness. •Phase 2 clinical trial: The drug is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarilyevaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. •Phase 3 clinical trial: The drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in wellcontrolled clinical trials to generate enough data to statistically evaluate the efficacy and safety of the product for approval, to establish the overallrisk-benefit profile of the product, and to provide adequate information for the labeling of the product.Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if serious adverse eventsoccur. Each of Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or thesponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research patients are being exposed to an unacceptablehealth risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with theIRB’s requirements or if the drug has been associated with unexpected serious harm to patients.A drug being studied in clinical trials may be made available to individual patients in certain circumstances. Pursuant to the 21st Century Cures Act, orCures Act, which was signed into law in December 2016, the manufacturer of an investigational drug for a serious disease or condition is required to makeavailable, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational drug. Thisrequirement applies on the later of 60 calendar days after the date of enactment of the Cures Act or the first initiation of a Phase 2 or Phase 3 trial of theinvestigational drug.Marketing ApprovalAssuming successful completion of the required clinical testing, the results of the preclinical studies and clinical trials, together with detailed informationrelating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requestingapproval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under thePrescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDAfor a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because theFDA has approximately two months to make a “filing” decision.In addition, under the Pediatric Research Equity Act of 2003, or PREA, as amended and reauthorized, certain NDAs or supplements to an NDA mustcontain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to supportdosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of theapplicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from thepediatric data requirements.The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks.The REMS plan could include medication guides, physician communication plans, assessment plans, or elements to assure safe use, such as restricted distributionmethods, patient registries, or other risk minimization tools. The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, beforeaccepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information ratherthan accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject toreview before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDAto determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meetsstandards designed to assure the product’s continued safety, quality and purity.31 The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including cliniciansand other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions.The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve anapplication unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistentproduction of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assurecompliance with GCP requirements.After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding themanufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response lettergenerally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical orpreclinical testing in order for FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that theapplication does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issuean approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions beincluded in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval,require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions orother risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent orlimit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approvedproduct, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review andapproval.Orphan Drug ActUnder the Orphan Drug Act of 1983, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which isgenerally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and forwhich there is no reasonable expectation that the cost of developing and making available in the United States a drug for this type of disease or condition will berecovered from sales in the United States for that drug. Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drugdesignation, the name of the sponsor, identity of the drug or biologic and its potential orphan use are disclosed publicly by the FDA. The orphan drug designationdoes not shorten the duration of the regulatory review or approval process, but does provide certain advantages, such as a waiver of PDUFA fees, enhanced accessto FDA staff and potential waiver of pediatric research requirements.If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product isentitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full NDA, to market the same drug orbiologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drugexclusivity. Orphan drug exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug orbiologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of theapplication user fee. A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which itreceived orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designationwas materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease orcondition.The FDA granted orphan drug designation for OV101 for the treatment of Angelman syndrome and for the treatment of Fragile X syndrome in September2016 and October 2017, respectively. The FDA granted orphan drug designation for OV935 for the treatment of Dravet syndrome and Lennox-Gastaut syndromeboth in December 2017. We intend to pursue orphan drug designation for OV101 in additional indications, as well as for OV935 and potential other future drugcandidates as we deem it appropriate. Even if we were to obtain orphan drug designation for a drug candidate, we may not obtain orphan exclusivity and thatexclusivity may not effectively protect the drug from the competition of different drugs for the same condition, which could be approved during the exclusivityperiod.32 Post-Approval RequirementsDrugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among otherthings, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverseexperiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to priorFDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which such products aremanufactured, as well as new application fees for supplemental applications with clinical data.The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketingtesting, including Phase 4 clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register theirestablishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance withcGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulationsalso require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor andany third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area ofproduction and quality control to maintain cGMP compliance.Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or ifproblems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipatedseverity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approvedlabeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or otherrestrictions under a REMS program. Other potential consequences include, among other things: •restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; •fines, warning letters or holds on post-approval clinical trials; •refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; •product seizure or detention, or refusal to permit the import or export of products; or •injunctions or the imposition of civil or criminal penalties.The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for theapproved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulationsprohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability.33 Coverage and ReimbursementSales of our drug candidates, if approved, will depend, in part, on the extent to which such products will be covered by third-party payors, such asgovernment health care programs, commercial insurance and managed healthcare organizations. These third-party payors are increasingly limiting coverage orreducing reimbursements for medical products and services. In addition, the U.S. government, state legislatures and foreign governments have continuedimplementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Third-party payors decide which therapies they will pay for and establish reimbursement levels. Third-party payors often rely upon Medicare coverage policy andpayment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursementto be provided for any drug candidates that we develop will be made on a payor-by-payor basis. Each payor determines whether or not it will provide coverage for atherapy, what amount it will pay the manufacturer for the therapy, and on what tier of its formulary it will be placed. The position on a payor’s list of covereddrugs, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of suchtherapy by patients and physicians. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions withexisting controls and measures, could further limit our net revenue and results. Decreases in third-party reimbursement for our drug candidates or a decision by athird-party payor to not cover our drug candidates could reduce physician usage of our drug candidates, once approved, and have a material adverse effect on oursales, results of operations and financial condition.Other Healthcare LawsBecause of our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third-party payors, we willalso be subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we will conduct our business,including our clinical research, proposed sales, marketing and educational programs. Failure to comply with these laws, where applicable, can result in theimposition of significant civil, criminal, and administrative penalties.The U.S. laws that may affect our ability to operate, among others, include: the federal Health Insurance Portability and Accountability Act of 1996, orHIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcaretransactions and protects the security and privacy of protected health information; certain state laws governing the privacy and security of health information incertain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the sameeffect, thus complicating compliance efforts; the federal Anti-Kickback Statute, which prohibits, among other things, individuals or entities from knowingly andwillfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or thepurchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaidprograms; federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims forpayment from Medicare, Medicaid, or other third-party payors that are false or fraudulent; federal criminal laws that prohibit executing a scheme to defraud anyhealthcare benefit program or making false statements relating to healthcare matters; the Physician Payments Sunshine Act, which requires manufacturers of drugs,devices, biologics, and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and othertransfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership andinvestment interests held by physicians and their immediate family members.In addition, many states have similar laws and regulations, such as anti-kickback and false claims laws that may be broader in scope and may applyregardless of payor, in addition to items and services reimbursed under Medicaid and other state programs. Additionally, to the extent that our product is sold in aforeign country, we may be subject to similar foreign laws.Healthcare ReformCurrent and future legislative proposals to further reform healthcare or reduce healthcare costs may result in lower reimbursement for our products. Thecost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could significantlyreduce our revenues from the sale of our products.For example, implementation of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act,collectively the Affordable Care Act, or the PPACA, has substantially changed healthcare financing and delivery by both governmental and private insurers, andsignificantly impacted the pharmaceutical industry. The PPACA, among other things, established an annual, nondeductible fee on any entity that manufactures orimports certain specified branded prescription drugs and biologic agents, revised the methodology by which rebates owed by manufacturers to the state and federalgovernment for covered outpatient drugs under the Medicaid Drug Rebate Program are calculated, increased the minimum Medicaid rebates owed by mostmanufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled inMedicaid managed care organizations, provided incentives to programs that increase the federal government’s comparative effectiveness research and created alicensure frame work for follow-on biologic products. Since its enactment there have been judicial and Congressional challenges to certain aspects of the PPACA.Since January 2017, President34 Trump has signed two Executive Orders and other directives designed to delay the implementation of certain provisions of the PPACA or otherwise circumventsome of the requirements for health insurance mandated by the PPACA. Concurrently, Congress has considered legislation that would repeal or repeal and replaceall or part of the PPACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under thePPACA have been signed into law. The Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based sharedresponsibility payment imposed by the PPACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonlyreferred to as the “individual mandate”. Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018that delayed the implementation of certain PPACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans,the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. Further, theBipartisan Budget Act of 2018, or the BBA, among other things, amends the PPACA, effective January 1, 2019, to increase from 50 percent to 70 percent thepoint-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drugplans, commonly referred to as the “donut hole”. Congress could consider additional legislation to repeal or repeal and replace other elements of the PPACA. Thus,the full impact of the PPACA on our business remains unclear.In addition, other legislative changes have been proposed and adopted since the PPACA was enacted. In August 2011, then President Obama signed intolaw the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals forspending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering thelegislation’s automatic reduction to several government programs. This includes reductions to Medicare payments to providers of 2% per fiscal year, which wentinto effect in April 2013 and, due to subsequent legislative amendments, including the BBA, will remain in effect through 2027 unless additional Congressionalaction is taken. Additionally, in January 2013, then President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things,reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from threeto five years. More recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products. Forexample, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bringmore transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursementmethodologies for drug products.We expect that additional federal and state, as well as foreign, healthcare reform measures will be adopted in the future, any of which could result inreduced demand for our products or additional pricing pressure.EmployeesAs of December 31, 2018, we had 55 full-time employees, 33 of whom were primarily engaged in research and development activities and 21 of whom hadan MD or PhD degree. None of our employees is represented by a labor union and we consider our employee relations to be good.FacilitiesWe lease the space for our principal executive offices, which are located at 1460 Broadway, New York, New York, on a monthly basis. We believe that ourfacilities are adequate to meet our current needs.Corporate and Other InformationWe were incorporated in Delaware in April 2014. Our principal executive offices are located at 1460 Broadway, Suite 15044, New York, New York 10036and our telephone number is (646) 661-7661. Our corporate website address is www.ovidrx.com. Information contained on or accessible through our website is nota part of this Annual Report, and the inclusion of our website address in this Annual Report is an inactive textual reference only.We file electronically with the Securities and Exchange Commission, or the SEC, our annual reports on Form 10-K, Annual reports on Form 10-Q, currentreports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make available on our websiteat www.ovidrx.com under “Investors,” free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC. 35 Item 1A. Risk FactorsAn investment in our securities involves a high degree of risk. You should carefully consider the following information about these risks, together with theother information appearing elsewhere in this Annual Report on Form 10-K, including our unaudited condensed financial statements and related notes hereto,before deciding to invest in our common stock. The occurrence of any of the following risks could have a material adverse effect on our business, financialcondition, results of operations and future growth prospects or cause our actual results to differ materially from those contained in forward-looking statements wehave made in this report and those we may make from time to time. In these circumstances, the market price of our common stock could decline and you may loseall or part of your investment. We cannot assure you that any of the events discussed below will not occur.Risks Related to Our Financial Position and Need for Additional CapitalWe have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeablefuture and may never achieve or maintain profitability.Since inception in April 2014, we have incurred significant operating losses. Our net loss was $52.0 million for the year ended December 31, 2018. As ofDecember 31, 2018, we had an accumulated deficit of $152.7 million. We expect to continue to incur significant expenses and increasing operating losses for theforeseeable future. Since inception, we have devoted substantially all of our efforts to research and preclinical and clinical development of our drug candidates, aswell as hiring employees and building our infrastructure. It could be several years, if ever, before we have a commercialized drug. The net losses we incur mayfluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially if, and as, we: •continue the ongoing and planned preclinical and clinical development of our drug candidates; •continue to build a portfolio of drug candidates through the acquisition or in-license of drugs, drug candidates or technologies; •initiate preclinical studies and clinical trials for any additional drug candidates that we may pursue in the future; •seek marketing approvals for our current and future drug candidates that successfully complete clinical trials; •establish a sales, marketing and distribution infrastructure to commercialize any drug candidate for which we may obtain marketing approval; •develop, maintain, expand and protect our intellectual property portfolio; •implement operational, financial and management systems; and •attract, hire and retain additional administrative, clinical, regulatory and scientific personnel.In addition, because of the numerous risks and uncertainties associated with pharmaceutical products and development, we are unable to accurately predictthe timing or amount of increased expenses or when, or if, we will be able to achieve profitability. Our expenses could increase and profitability could be furtherdelayed if we decide to or are required by the U.S. Food and Drug Administration, or FDA, or other regulatory authorities such as the European Medicines Agency,or EMA, to perform studies or trials in addition to those currently expected, or if there are any delays in the development, or in the completion of any planned orfuture preclinical studies or clinical trials of our current and future drug candidates. Even if we complete the development and regulatory processes describedabove, we anticipate incurring significant costs associated with launching and commercializing our current and future drug candidates.Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remainprofitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand ourbusiness or continue our operations.We have a limited operating history and have never generated any revenue from drug sales. Our limited operating history may make it difficult to evaluatethe success of our business to date and to assess our future viability.We are a clinical-stage company founded in April 2014. Our operations have consumed substantial amounts of cash since our inception, primarily due toorganizing and staffing our company, business planning, raising capital, acquiring assets and undertaking the development of OV101 and OV935. We have not yetdemonstrated the ability to, obtain marketing approvals, manufacture a commercial-scale drug or conduct sales and marketing activities necessary for successfulcommercialization. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had more experiencedeveloping drug candidates.36 Our ability to generate revenue from drug sales and achieve profitability depends on our ability, alone or with any current or future collaborative partners, tosuccessfully complete the development of, and obtain the regulatory approvals necessary to commercialize, our current and future drug candidates. We do notanticipate generating revenue from drug sales for the next several years, if ever. Our ability to generate revenue from drug sales depends heavily on our, or anycurrent or future collaborators’, success in: •timely and successfully completing preclinical and clinical development of our current and future drug candidates; •obtaining regulatory approvals for our current and future drug candidates for which we successfully complete clinical trials; •launching and commercializing any drug candidates for which we obtain regulatory approval by establishing a sales force, marketing anddistribution infrastructure or, alternatively, collaborating with a commercialization partner; •qualifying for coverage and adequate reimbursement by government and third-party payors for any drug candidates for which we obtain regulatoryapproval, both in the United States and internationally; •developing, validating and maintaining a commercially viable, sustainable, scalable, reproducible and transferable manufacturing process for ourcurrent and future drug candidates that is compliant with current good manufacturing practices, or cGMP; •establishing and maintaining supply and manufacturing relationships with third parties that can provide an adequate amount and quality of drugs andservices to support clinical development, as well as the market demand for our current and future drug candidates, if approved; •obtaining market acceptance, if and when approved, of our current or any future drug candidates as a viable treatment option by physicians, patients,third-party payors and others in the medical community; •effectively addressing any competing technological and market developments; •implementing additional internal systems and infrastructure, as needed; •negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations pursuantto such arrangements; •our ability to obtain and maintain orphan drug exclusivity for any of our current and future drug candidates for which we obtain regulatory approval; •maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how •avoiding and defending against third-party interference or infringement claims; and •securing appropriate pricing in the United States, the European Union and other countries.We expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many ofwhich are beyond our control. We will need to eventually transition from a company with a research and development focus to a company capable of undertakingcommercial activities. We may encounter unforeseen expenses, difficulties, complications and delays and may not be successful in such a transition.We will require additional capital to finance our operations, which may not be available on acceptable terms, if at all. Failure to obtain this necessarycapital when needed may force us to delay, limit or terminate certain of our drug development efforts or other operations.Our operations have consumed substantial amounts of cash since our inception. We expect our expenses to increase in connection with our ongoing andplanned activities, particularly as we continue to develop and commercialize our drug candidates, in addition to costs associated with the acquisition or in-licensingof any additional drug candidates we may pursue. Our expenses could increase beyond expectations if the FDA or other regulatory authorities require us to performclinical and other studies in addition to those that we currently anticipate. In addition, if we obtain marketing approval for our drug candidates, we expect to incursignificant expenses related to manufacturing, marketing, sales and distribution. Furthermore, we expect to incur additional costs associated with operating as apublic company.We will require capital to pursue our preclinical and clinical activities, regulatory approval and the commercialization of our current or future drugcandidates. Even if we believe we have sufficient capital for our current or future operating plans, we may seek additional capital if market conditions are favorableor if we have specific strategic considerations. Any additional capital raising efforts may divert our management from their day-to-day activities, which mayadversely affect our ability to develop and commercialize our current and future drug candidates.37 If we do not raise additional capital in sufficient amounts, or on terms acceptable to us, we may be prevented from pursuing development andcommercialization efforts, which will harm our business, operating results and prospects.Raising additional capital or acquiring or licensing assets by issuing equity or debt securities may cause dilution to our stockholders, and raising fundsthrough lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.Until such time as we can generate substantial revenue from drug sales, if ever, we expect to finance our cash needs through a combination of equity anddebt financings, strategic alliances, and license and development agreements in connection with any collaborations. We do not have any committed external sourceof funds. To the extent that we issue additional equity securities, our stockholders may experience substantial dilution, and the terms of these securities mayinclude liquidation or other preferences that adversely affect your rights as a stockholder. In addition, we may issue equity or debt securities as consideration forobtaining rights to additional compounds. For example, in our arrangement with Takeda, upon the achievement of a certain development milestone, we will beobligated to issue to Takeda additional securities equal to up to 8% of our outstanding capital stock in certain situations which will dilute our stockholders. Inaddition, further dilution may occur if we elect to issue shares of common stock to Takeda as payment for the remaining potential global commercial andregulatory milestone payments, which aggregate to approximately $35.0 million.Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such asredeeming our shares, making investments, issuing additional equity, incurring additional debt, making capital expenditures, declaring dividends or placinglimitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could negatively impact our ability to conductour business. If we raise additional capital through future collaborations, strategic alliances or third-party licensing arrangements, we may have to relinquishvaluable rights to our intellectual property, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable tous.If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or terminate our drug development or futurecommercialization efforts, or grant rights to develop and market drug candidates that we would otherwise develop and market ourselves.We may be required to make significant payments in connection with our licenses of OV101 from Lundbeck and OV935 from Takeda.We acquired rights to OV101, pursuant to a license agreement with H. Lundbeck A/S (“Lundbeck”) in March 2015 (the “Lundbeck agreement”). Under theLundbeck agreement, we are subject to significant obligations, including payment obligations upon achievement of specified milestones and royalties on drugsales, as well as other material obligations. We are obligated to pay Lundbeck milestone payments up to an aggregate of $181.0 million upon the achievement ofcertain development, regulatory and sales milestone events. In addition, we are obligated to pay Lundbeck tiered royalties based on net sales of OV101. If thesepayments become due under the terms of the Lundbeck agreement, we may not have sufficient funds available to meet our obligations and our development effortsmay be harmed.We also acquired rights to OV935 pursuant to a license and collaboration agreement with Takeda (the “Takeda collaboration”) in January 2017. Under theTakeda collaboration, we are obligated to pay Takeda future payments upon achievement of specified milestones. Upon the first patient enrollment in the firstPhase 3 trial for the first of the initial indications we and Takeda are focusing on pursuant to the Takeda collaboration, we are obligated to issue to Takeda thenumber of unregistered shares of our common stock equal to the lesser of (i) 8% of our outstanding capital stock on the issuance date or (ii) $50.0 million dividedby the applicable share price, unless certain events occur. The remaining potential global commercial and regulatory milestone payments equal approximately$35.0 million and can be satisfied in cash or unregistered shares of our common stock at our election, unless certain events occur in which Takeda can require us topay such payments in cash. In the event a payment settled in shares of our common stock would cause Takeda to own over 19.99% of our outstanding capital stockor other events occur, such payment must be paid in cash. If these payments become due under the terms of the Takeda collaboration and we can only pay, orchoose to pay, these payments in cash, we may not have sufficient funds available to meet our obligations and our development efforts may be harmed.38 Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited to offset future taxable income may be subject tolimitationOur net operating loss, or NOL, carryforwards could expire unused and be unavailable to offset future income tax liabilities because of their limitedduration or because of restrictions under U.S. tax law. Our NOLs generated in tax years ending on or prior to December 31, 2017 are only permitted to be carriedforward for 20 years under applicable U.S. tax law. Under H.R. 1, “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution onthe budget for fiscal year 2018,” informally titled the Tax Cuts and Jobs Act, or the Tax Act, our federal NOLs generated in tax years ending after December 31,2017 may be carried forward indefinitely, but the deductibility of federal NOLs generated in tax years beginning after December 31, 2017 is limited. It is uncertainif and to what extent various states will conform to the Tax Act.In addition, under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law,if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-yearperiod, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-changeincome or taxes may be limited. We may have experienced ownership changes in the past and may experience ownership changes in the future as a result of shiftsin our stock ownership (some of which shifts are outside our control). As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offsetsuch taxable income will be subject to limitations. Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes. Inaddition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increasestate taxes owed.Consequently, even if we achieve profitability, we may not be able to utilize a material portion of our NOL carryforwards and certain other tax attributes,which could have a material adverse effect on cash flow and results of operations.Comprehensive tax reform legislation could adversely affect our business and financial condition.On December 22, 2017, President Trump signed into law the Tax Act, which significantly revises the Code. The Tax Act, among other things, reducesthe corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, repeals the alternative minimum tax for corporations, limits the tax deduction forinterest expense to 30% of adjusted taxable income (except for certain small businesses), limits the deduction for NOLs carried forward from taxable yearsbeginning after December 31, 2017 to 80% of current year taxable income, eliminates NOL carrybacks, imposes a one-time tax on offshore earnings at reducedrates regardless of whether they are repatriated, eliminates U.S. tax on foreign earnings (subject to certain important exceptions), allows immediate deductions forcertain new investments instead of deductions for depreciation expense over time, and modifies or repeals many business deductions and credits. Notwithstandingthe reduction in the corporate income tax rate, the overall impact of the Tax Act is uncertain and our business and financial condition could be adversely affected.In addition, it is uncertain if and to what extent various states will conform to the Tax Act. The impact of the Tax Act on holders of our common stock (includingour Series A preferred stock and the underlying shares of common stock) is also uncertain and could be adverse. We urge our stockholders to consult with theirlegal and tax advisors with respect to this legislation and the potential tax consequences of investing in or holding our common stock.Risks Related to the Development and Commercialization of Our Drug CandidatesOur future success is dependent on the successful clinical development, regulatory approval and commercialization of our current and future drug candidates.If we are not able to obtain required regulatory approvals, we will not be able to commercialize our drug candidates, and our ability to generate revenue willbe adversely affected.We do not have any drugs that have received regulatory approval. Our business is dependent on our ability to successfully complete preclinical and clinicaldevelopment of, obtain regulatory approval for, and, if approved, successfully commercialize our current and future drug candidates in a timely manner. Activitiesassociated with the development and commercialization of our current and future drug candidates are subject to comprehensive regulation by the FDA and otherregulatory agencies in the United States and similar regulatory authorities outside the United States. Failure to obtain regulatory approval in the United States orother jurisdictions would prevent us from commercializing and marketing our current and future drug candidates.Even if we obtain approval from the FDA and comparable foreign regulatory authorities for our current and future drug candidates, any approval mightcontain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, or may be subject to burdensomepost-approval study or risk management requirements. If we are unable to obtain regulatory approval, or any approval contains significant limitations, we may notbe able to obtain sufficient funding or generate sufficient revenue to continue the development of that drug candidate or any other drug candidate that we may in-license, develop or acquire in the future.Furthermore, even if we obtain regulatory approval for our current and future drug candidates, we will still need to develop a commercial organization,establish a commercially viable pricing structure and obtain approval for adequate reimbursement from third-party and government payors. If we are unable tosuccessfully commercialize our current and future drug candidates, we may not be able to generate sufficient revenue to continue our business.39 Because the results of preclinical studies or earlier clinical trials are not necessarily predictive of future results, our drug candidates may not have favorableresults in planned or future preclinical studies or clinical trials, or may not receive regulatory approval.Success in preclinical testing and early clinical trials does not ensure that subsequent clinical trials will generate similar results or otherwise provideadequate data to demonstrate the efficacy and safety of a drug candidate. Frequently, drug candidates that have shown promising results in early clinical trials havesubsequently suffered significant setbacks in later clinical trials. For instance, our STARS trial was the first clinical trial evaluating efficacy of OV101 in patientswith Angelman syndrome and OV101 has not been evaluated in a clinical trial to treat Fragile X syndrome. We may be unable to demonstrate efficacy in anyfuture trials, including any future clinical trials of OV101 to treat Angelman syndrome. Similarly, our Phase 1b/2a adult study in OV935 showed exploratorysignals of efficacy in seizure frequency reduction, but we may be unable to demonstrate efficacy in future trials in patients with dEE, or the related indications ofDravet syndrome, Lennox-Gastaut syndrome, CDKL5 deficiency or Duplication 15q syndrome, and the FDA has not yet made any determination regarding safetyand efficacy of OV935 in any of these indications. The results from preclinical studies of OV101 and OV935 in animal models and the results from our STARSclinical trial of OV101 in patients with Angelman syndrome and clinical trials of OV101 in patients with primary insomnia may not be predictive of the effects ofthese compounds in later stage clinical trials. Our approach of targeting the extrasynaptic GABAA receptor with OV101, and cholesterol 24-hydroxylase (CH24H)with OV935, are both novel and unproven, and as such, the cost and time needed to develop OV101 and OV935 is difficult to predict and our efforts may not besuccessful. If we do not observe favorable results in clinical trials of one of our drug candidates, we may decide to delay or abandon clinical development of thatdrug candidate. Any such delay or abandonment could harm our business, financial condition, results of operations and prospects.Risks associated with the in-licensing or acquisition of drug candidates could cause substantial delays in the preclinical and clinical development of our drugcandidates.Prior to March 2015, we had no involvement with or control over the preclinical and clinical research and development of OV101. We have relied onLundbeck or its prior licensee to have conducted such research and development in accordance with the applicable protocol, legal, regulatory and scientificstandards, having accurately reported the results of all clinical trials conducted prior to our acquisition of OV101 and having correctly collected and interpreted thedata from these trials. If the research and development processes or the results of the development programs prior to our acquisition of OV101 prove to beunreliable, this could result in increased costs and delays in the development of OV101, which could adversely affect any future revenue from this drug candidate.Similarly, we acquired rights to OV935 from Takeda in January 2017. Because we were not involved in the development of OV935 prior to January 2017,we may experience difficulties in the transition of certain development activities from Takeda and its affiliates to us, which may result in delays in clinical trials, aswell as problems in our development efforts, particularly if we do not receive all of the necessary products, information, reports and data from Takeda and itsaffiliates in a timely manner. To the extent any of these has not occurred, expected development time and costs may be increased which could adversely affect anyfuture revenue from this drug candidate.We may also acquire or in-license additional drug candidates for preclinical or clinical development in the future as we continue to build our pipeline. Therisks associated with acquiring or in-licensing current or future drug candidates could result in delays in the commencement or completion of our preclinicalstudies and clinical trials, if ever, and our ability to generate revenues from our drug candidates may be delayed.We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatoryauthorities.Before obtaining marketing approval from regulatory authorities for the sale of our drug candidates, we must conduct extensive clinical trials to demonstratethe safety and efficacy of the drug candidate for its intended indications. Clinical trials are expensive, time-consuming and uncertain as to outcome. We cannotguarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage oftesting. Events that may prevent successful or timely completion of clinical development include: •delays in reaching a consensus with regulatory authorities on trial design; •delays in reaching agreement on acceptable terms with prospective clinical research organizations (“CROs”) and clinical trial sites; •delays in opening sites and recruiting suitable patients to participate in our clinical trials; •imposition of a clinical hold by regulatory authorities because of a serious adverse event, concerns with a class of drug candidates or after aninspection of our clinical trial operations or trial sites; •delays in having patients complete participation in a trial or return for post-treatment follow-up;40 •occurrence of serious adverse events associated with the drug candidate that are viewed to outweigh its potential benefits; or •changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.Further, clinical endpoints for certain diseases we are targeting, such as Angelman syndrome and Fragile X syndrome, have not been established, andaccordingly we may have to develop new modalities or modify existing endpoints to measure efficacy, which may increase the time it takes for us to commence orcomplete clinical trials. In addition, we believe investigators in this area may be inexperienced in conducting trials in this area due to the current lack of drugs totreat these disorders, which may result in increased time and expense to train investigators and open clinical sites.Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenuefrom future drug sales and regulatory and commercialization milestones. In addition, if we make manufacturing or formulation changes to our drug candidates, wemay need to conduct additional testing to bridge our modified drug candidate to earlier versions. Clinical trial delays could also shorten any periods during whichwe may have the exclusive right to commercialize our drug candidates, if approved, or allow our competitors to bring comparable drugs to market before we do,which could impair our ability to successfully commercialize our drug candidates and may harm our business, financial condition, results of operations andprospects.Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our drug candidates,we may: •be delayed in obtaining marketing approval, if at all; •obtain approval for indications or patient populations that are not as broad as intended or desired; •obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; •be subject to additional post-marketing testing requirements; •be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; •have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a modified riskevaluation and mitigation strategy (“REMS”); •be subject to the addition of labeling statements, such as warnings or contraindications; •be sued; or •experience damage to our reputation.Our drug development costs will also increase if we experience delays in testing or obtaining marketing approvals. We do not know whether any of ourpreclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all.Further, we, the FDA or an institutional review board (“IRB”) may suspend our clinical trials at any time if it appears that we or our collaborators arefailing to conduct a trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice (“GCP) regulations, that we are exposingparticipants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug (“IND”) applications or the conduct of these trials.Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in thecommencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our drug candidates could benegatively impacted, and our ability to generate revenues from our drug candidates may be delayed.Angelman syndrome has no FDA-approved treatments, and the clinical endpoints to obtain approval are not well defined.We intend to seek a broad indication for OV101 to treat Angelman syndrome. However, Angelman syndrome is characterized by a variety of signs andsymptoms, such as delayed development, intellectual disability, severe speech impairment, problems with movement and balance, seizures, sleep disorders andanxiety. In order to obtain a broad indication for treatment of Angelman syndrome from the FDA, we may need to demonstrate efficacy on several of the keysymptoms of Angelman syndrome. If we fail to do so, our clinical development may be delayed and/or our label may be limited. Based on feedback from the FDA,we must develop an acceptable outcome measure and seek the FDA’s agreement before seeking approval of OV101. If we fail to reach such an agreement with theFDA as to how to measure efficacy in Angelman syndrome patients in our trials, our clinical development plan will be delayed.While OV101 showed a statistically significant improvement compared to placebo in CGI-I, this endpoint may not be sufficient for regulatory approval, and/orfuture clinical trials may not meet their respective clinical endpoints. 41 We released full data from our Phase 2 STARS trial of OV101 to treat adults and adolescents with Angelman syndrome in 2018. At 12 weeks of treatmentin the once-daily and combined dosing groups, OV101 showed a statistically significant improvement compared to placebo in the physician-rated clinical globalimpressions of improvement (“CGI-I”), a measure commonly used in neurology and psychiatry clinical trials to allow the physician to capture a constellation ofclinical symptoms. Analyses conducted on a prespecified subset of scales across the domains of behavior, sleep and gait did not show a statistically significantdifference from placebo. We met with the FDA in November 2018, and, based on feedback from the FDA, we will develop a framework for study investigators toensure uniform use of the validated CGI-I scale by focusing on specific symptoms that are relevant and important to patients with Angelman syndrome and theircaregivers, and move ahead with a single pivotal Phase 3 trial of OV101 in pediatric patients with Angelman syndrome, called NEPTUNE. While we are notaware of any circumstance where the FDA has accepted a CGI-I endpoint as the sole basis for regulatory approval, we are encouraged by the FDAfeedback. Despite that, the FDA may not approve the study protocol and supporting framework and materials. Further, even if the study protocol is approved, wemay not be able to demonstrate statistically significant results on CGI-I or any other clinical endpoints that we incorporate.We may need to conduct additional clinical or non-clinical studies in order to enroll children younger than 13 in any pivotal or other clinical trials.We met with the FDA in November 2018, and, based on feedback from the FDA, we are moving ahead with NEPTUNE pending FDA concurrence on thestudy protocol and supporting framework and materials. If we are delayed in enrolling pediatric patients in NEPTUNE, our regulatory approval could be delayed.We may not be able to obtain or maintain orphan drug designations or exclusivity for our drug candidates, which could limit the potential profitability of ourdrug candidates.Regulatory authorities in some jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs.Under the Orphan Drug Act of 1983, the FDA may designate a drug as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generallydefined as a patient population of fewer than 200,000 individuals in the United States. Generally, if a drug with an orphan drug designation subsequently receivesthe first marketing approval for an indication for which it receives the designation, then the drug is entitled to a period of marketing exclusivity that precludes theapplicable regulatory authority from approving another marketing application for the same drug for the same indication for the exclusivity period except in limitedsituations. For purposes of small molecule drugs, the FDA defines “same drug” as a drug that contains the same active moiety and is intended for the same use asthe drug in question. A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which itreceived orphan designation.For OV101, the FDA granted orphan drug designation for OV101 for the treatment of Angelman syndrome and for the treatment of Fragile X syndrome inSeptember 2016 and October 2017, respectively, and fast track designation for the treatment of Angelman syndrome and Fragile X syndrome in December 2017and March 2018, respectively. The FDA granted orphan drug designation for OV935 for the treatment of Dravet syndrome and Lennox-Gastaut syndrome both inDecember 2017. We intend to pursue orphan drug designation for OV101 in additional indications, as well as for OV935 and potential other future drugcandidates. Obtaining orphan drug designations is important to our business strategy; however, obtaining an orphan drug designation can be difficult and we maynot be successful in doing so. Even if we were to obtain orphan drug designation for a drug candidate, we may not obtain orphan exclusivity and that exclusivitymay not effectively protect the drug from the competition of different drugs for the same condition, which could be approved during the exclusivity period.Additionally, after an orphan drug is approved, the FDA could subsequently approve another application for the same drug for the same indication if the FDAconcludes that the later drug is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug exclusive marketing rights in theUnited States also may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assuresufficient quantity of the drug to meet the needs of patients with the rare disease or condition. The failure to obtain an orphan drug designation for any drugcandidates we may develop, the inability to maintain that designation for the duration of the applicable period, or the inability to obtain or maintain orphan drugexclusivity could reduce our ability to make sufficient sales of the applicable drug candidate to balance our expenses incurred to develop it, which would have anegative impact on our operational results and financial condition.42 If we are not successful in discovering, developing and commercializing additional drug candidates, our ability to expand our business and achieve ourstrategic objectives would be impaired.A key element of our strategy is to develop and potentially commercialize a portfolio of drug candidates to treat rare neurological disorders. We intend to doso by in-licensing and entering into collaborations with leading biopharmaceutical companies or academic institutions for new drug candidates. Identifying newdrug candidates requires substantial technical, financial and human resources, whether or not any drug candidates are ultimately identified. Our approach tobusiness development, including our efforts to map the biological pathways related to orphan disorders of the brain and our relationships among thepharmaceutical industry, may not result in viable drug candidates for clinical development. Even if we identify drug candidates that initially show promise, we mayfail to in-license or acquire these assets and may also fail to successfully develop and commercialize such drug candidates for many reasons, including thefollowing: •the research methodology used may not be successful in identifying potential drug candidates; •competitors may develop alternatives that render any drug candidate we develop obsolete; •any drug candidate we develop may nevertheless be covered by third parties’ patents or other exclusive rights; •a drug candidate may, on further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective orotherwise does not meet applicable regulatory criteria; •a drug candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and •a drug candidate may not be accepted as safe and effective by physicians, patients, the medical community or third-party payors.We have limited financial and management resources and, as a result, we may forego or delay pursuit of opportunities with other drug candidates or forother indications that later prove to have greater market potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugsor profitable market opportunities. If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquishvaluable rights to that drug candidate through collaboration, licensing or other royalty arrangements in circumstances under which it would have been moreadvantageous for us to retain sole development and commercialization rights to such drug candidate.If we are unsuccessful in identifying and developing additional drug candidates or are unable to do so, our key growth strategy and business will be harmed.We are heavily dependent on our relationship with Takeda for the development and commercialization of OV935. Any disruption in our relationship withTakeda could lead to delays in, or the termination of, the development of OV935, which would materially harm our business.We are jointly developing OV935 with Takeda pursuant to the Takeda collaboration, which also granted us intellectual property rights to OV935. Thedevelopment and commercialization of OV935 is highly dependent upon our relationship with Takeda, including Takeda’s submission of the IND to the FDA. Iffor any reason the Takeda collaboration is terminated, or we otherwise lose the intellectual property rights to OV935, our business would be adversely affected.The Takeda collaboration imposes on us rights and obligations, including but not limited to exclusivity, territorial rights, development, commercialization, funding,payment, diligence, sublicensing, insurance and intellectual property protection. After a negotiated time period, each party has the right to terminate the license forconvenience upon six to twelve months’ notice to the other party, which would result in us being unable to co-develop and sell OV935. Further, if we breach anymaterial obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages to Takeda, and Takeda mayhave the right to terminate the license. Takeda could also breach its obligations under the agreement or may not commit a sufficient amount of resources to satisfyits obligations, which would result in the development of OV935 being materially delayed or terminated.We may explore additional strategic collaborations that may never materialize or may fail.Our business strategy is based on acquiring or in-licensing compounds directed at rare neurological disorders. As a result, we intend to periodically explorea variety of possible additional strategic collaborations in an effort to gain access to additional drug candidates or resources. At the current time, we cannot predictwhat form such a strategic collaboration might take. We are likely to face significant competition in seeking appropriate strategic collaborators, and strategiccollaborations can be complicated and time consuming to negotiate and document. We may not be able to negotiate strategic collaborations on acceptable terms, orat all. We are unable to predict when, if ever, we will enter into any additional strategic collaborations because of the numerous risks and uncertainties associatedwith establishing them.43 Clinical trials are very expensive, time-consuming and difficult to design and implement.Our drug candidates will require clinical testing before we are prepared to submit a new drug application (“NDA”) for regulatory approval. We cannotpredict with any certainty if or when we might submit an NDA for regulatory approval for any of our drug candidates or whether any such NDA will be approvedby the FDA. Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements.For instance, the FDA may not agree with our proposed endpoints for any future clinical trial of our drug candidates, which may delay the commencement of ourclinical trials. In addition, we may not succeed in developing and validating disease-relevant clinical endpoints based on insights regarding biological pathways forthe disorders we are studying. The clinical trial process is also time-consuming. We estimate that the successful completion of clinical trials of our drug candidateswill take at least several years to complete, if not longer. Furthermore, failure can occur at any stage and we could encounter problems that cause us to abandon orrepeat clinical trials.Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible bymultiple factors outside our control.Identifying and qualifying patients to participate in our clinical trials is critical to our success. The number of patients suffering from Angelman syndrome,Fragile X syndrome and dEE, such as Dravet syndrome, Lennox-Gastaut syndrome and Tuberous Sclerosis Complex, is small and has not been established withprecision. If the actual number of patients with these disorders is smaller than we anticipate, we may encounter difficulties in enrolling patients in our clinical trials,thereby delaying or preventing development and approval of our drug candidates. Even once enrolled we may be unable to retain a sufficient number of patients tocomplete any of our trials. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of thetrial protocol, the existing body of safety and efficacy data, the number and nature of competing treatments and ongoing clinical trials of competing therapies forthe same indication, the proximity of patients to clinical sites and the eligibility criteria for the trial. Because we are focused on addressing rare neurologicaldisorders, there are limited patient pools from which to draw in order to complete our clinical trials in a timely and cost-effective manner. Furthermore, our effortsto build relationships with patient communities may not succeed, which could result in delays in patient enrollment in our clinical trials. In addition, any negativeresults we may report in clinical trials of our drug candidate may make it difficult or impossible to recruit and retain patients in other clinical trials of that samedrug candidate. Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmfuleffect on our ability to develop our drug candidates, or could render further development impossible. In addition, we may rely on CROs and clinical trial sites toensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our abilityto compel their actual performance.Our drug candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercialpotential or result in significant negative consequences following any potential marketing approval.During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their doctor. Often, it is notpossible to determine whether or not the drug candidate being studied caused these conditions. Regulatory authorities may draw different conclusions or requireadditional testing to confirm these determinations, if they occur. In addition, it is possible that as we test our drug candidates in larger, longer and more extensiveclinical programs, or as use of these drug candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and otheradverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by subjects. Manytimes, side effects are only detectable after investigational drugs are tested in large-scale, Phase 3 trials or, in some cases, after they are made available to patientson a commercial scale after approval. For example, in one of the trials conducted by Lundbeck, there were reports of hallucinations in drug abusers at 30mg and45mg doses of OV101, which are higher than the 10mg and 15mg doses that were effective for insomnia. In addition, some patients treated with OV101 in theLundbeck Phase 3 trials experienced headaches, nausea and dizziness. In the STARS study, the most frequent adverse events for OV101 treated arms that weregreater than placebo arm included pyrexia, rash, seizure, enuresis, myoclonic epilepsy, otitis media and viral infection. In the Phase 1b/2a OV935 trial, adverseevents that occurred more frequently in the OV935-treatment group versus the placebo group were dysarthria, insomnia, lethargy, seizure cluster, and upperrespiratory infection.Patients in our ongoing or planned clinical trials may experience similar or other adverse events after treatment with OV101. If additional clinicalexperience indicates that any of our current drug candidates, including OV101 and OV935, or any future drug candidates has adverse events or causes serious orlife-threatening adverse events, the development of that drug candidate may fail or be delayed, or, if the drug candidate has received regulatory approval, suchapproval may be revoked, which would harm our business, prospects, operating results and financial condition.Moreover, if we elect, or are required, to delay, suspend or terminate any clinical trial of our drug candidates, the commercial prospects of our drugcandidates may be harmed and our ability to generate revenue through their sale may be delayed or eliminated. Any of these occurrences may harm our business,financial condition and prospects significantly.Additionally, if any of our drug candidates receive marketing approval, the FDA could require us to include a black box warning in our label or adoptREMS to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the drug for distribution topatients and a communication plan to health care practitioners. Furthermore, if we or44 others later identify undesirable side effects caused by our drug candidates, several potentially significant negative consequences could result, including: •regulatory authorities may suspend or withdraw approvals of such drug candidate; •regulatory authorities may require additional warnings on the label; •we may be required to change the way a drug candidate is administered or conduct additional clinical trials; •we could be sued and held liable for harm caused to patients; •we may need to conduct a recall; and •our reputation may suffer.Any of these events could prevent us from achieving or maintaining market acceptance of our drug candidates and could significantly harm our business,prospects, financial condition and results of operations.We may be required to relinquish important rights to and control over the development and commercialization of our drug candidates to any futurecollaborators.Our current and future collaborations could subject us to a number of risks, including: •we may be required to undertake the expenditure of substantial operational, financial and management resources; •we may be required to issue equity securities that would dilute our stockholders’ percentage of ownership; •we may be required to assume substantial actual or contingent liabilities; •we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization ofour drug candidates; •strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a drug candidate, repeat or conductnew clinical trials or require a new version of a drug candidate for clinical testing; •strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaborationarrangement or may elect to discontinue research and development programs; •strategic collaborators may not commit adequate resources to the marketing and distribution of our drug candidates, limiting our potential revenuesfrom these products; •we rely on our current collaborators to manufacture drug substance and drug product and may do so with respect to future collaborators, which couldresult in disputes or delays; •disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development orcommercialization of our drug candidates or that result in costly litigation or arbitration that diverts management’s attention and consumesresources; •strategic collaborators may experience financial difficulties; •strategic collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in a manner thatcould jeopardize or invalidate our proprietary information or expose us to potential litigation; •business combinations or significant changes in a strategic collaborator’s business strategy may also adversely affect a strategic collaborator’swillingness or ability to complete its obligations under any arrangement; •strategic collaborators could decide to move forward with a competing drug candidate developed either independently or in collaboration withothers, including our competitors; and •strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost ofdeveloping our drug candidates.45 If the market opportunities for our drug candidates are smaller than we believe they are, even assuming approval of a drug candidate, our business maysuffer. Because the patient populations in the market for our drug candidates may be small, we must be able to successfully identify patients and acquire asignificant market share to achieve profitability and growth.We focus our research and drug development on treatments for rare neurological disorders. Given the small number of patients who have the disorders thatwe are targeting, our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our drug candidates. Ourprojections of both the number of people who have these disorders, as well as the subset of people with these disorders who have the potential to benefit fromtreatment with our drug candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including the scientificliterature, patient foundations, or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of thesedisorders. The number of patients may turn out to be lower than expected. Likewise, the potentially addressable patient population for each of our drug candidatesmay be limited or may not be amenable to treatment with our drug candidates, and new patients may become increasingly difficult to identify or gain access to,which would adversely affect our results of operations and our business.We face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us.The development and commercialization of new drugs is highly competitive. We face competition with respect to our current drug candidates and will facecompetition with respect to any other drug candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialtypharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currentlymarket and sell drugs or are pursuing the development of drug candidates for the treatment of the indications that we are pursuing. Potential competitors alsoinclude academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establishcollaborative arrangements for research, development, manufacturing and commercialization.More established companies may have a competitive advantage over us due to their greater size, resources and institutional experience. In particular, thesecompanies have greater experience and expertise in securing reimbursement, government contracts, relationships with key opinion leaders, conducting testing andclinical trials, obtaining and maintaining regulatory approvals and distribution relationships to market products, and marketing approved drugs. These companiesalso have significantly greater research and marketing capabilities than we do. If we are not able to compete effectively against existing and potential competitors,our business and financial condition may be harmed.As a result of these factors, our competitors may obtain regulatory approval of their drugs before we are able to, which may limit our ability to develop orcommercialize our drug candidates. Our competitors may also develop therapies that are safer, more effective, more widely accepted and cheaper than ours, andmay also be more successful than us in manufacturing and marketing their drugs. These appreciable advantages could render our drug candidates obsolete or non-competitive before we can recover the expenses of such drug candidates’ development and commercialization.Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smallernumber of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangementswith large and established companies. These third parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel,establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.Even if our current or future drug candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third-partypayors or others in the medical community necessary for commercial success.Even if our current or future drug candidates receive marketing approval, they may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If they do not achieve an adequate level of acceptance, we may not generate significant drug revenue and maynot become profitable. The degree of market acceptance of our current or future drug candidates, if approved for commercial sale, will depend on a number offactors, including but not limited to: •the efficacy and potential advantages compared to alternative treatments and therapies; •effectiveness of sales and marketing efforts; •the strength of our relationships with patient communities; •the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; •our ability to offer such drug for sale at competitive prices; •the convenience and ease of administration compared to alternative treatments and therapies; •the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;46 •the strength of marketing and distribution support; •the availability of third-party coverage and adequate reimbursement; •the prevalence and severity of any side effects; and •any restrictions on the use of the drug together with other medications.Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our drug candidates may requiresignificant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness ofour drug candidates. Because we expect sales of our drug candidates, if approved, to generate substantially all of our drug revenues for the foreseeable future, thefailure of our drugs to find market acceptance would harm our business and could require us to seek additional financing.Even if we obtain regulatory approval for our current or future drug candidates, they will remain subject to ongoing regulatory oversight.Even if we obtain any regulatory approval for our current or future drug candidates, such approvals will be subject to ongoing regulatory requirements formanufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Anyregulatory approvals that we receive for our current or future drug candidates may also be subject to a REMS, limitations on the approved indicated uses for whichthe drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 trials, andsurveillance to monitor the quality, safety and efficacy of the drug.In addition, drug manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and otherregulatory authorities for compliance with cGMP requirements and adherence to commitments made in the NDA or foreign marketing application. If we, or aregulatory authority, discover previously unknown problems with a drug, such as adverse events of unanticipated severity or frequency, or problems with thefacility where the drug is manufactured or if a regulatory authority disagrees with the promotion, marketing or labeling of that drug, a regulatory authority mayimpose restrictions relative to that drug, the manufacturing facility or us, including requesting a recall or requiring withdrawal of the drug from the market orsuspension of manufacturing.If we fail to comply with applicable regulatory requirements following approval of our current or future drug candidates, a regulatory authority may: •issue an untitled letter or warning letter asserting that we are in violation of the law; •seek an injunction or impose administrative, civil or criminal penalties or monetary fines; •suspend or withdraw regulatory approval; •suspend any ongoing clinical trials; •refuse to approve a pending NDA or comparable foreign marketing application (or any supplements thereto) submitted by us or our strategicpartners; •restrict the marketing or manufacturing of the drug; •seize or detain the drug or otherwise require the withdrawal of the drug from the market; •refuse to permit the import or export of drug candidates; or •refuse to allow us to enter into supply contracts, including government contracts.Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negativepublicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our current or future drug candidates and harm ourbusiness, financial condition, results of operations and prospects.In addition, the FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enactedthat could cause changes to or delays in the drug review process, or suspend or restrict regulatory approval of our drug candidates. We cannot predict thelikelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we areslow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatorycompliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would harm our business,financial condition, results of operations and prospects.47 If we are unable to establish sales and marketing capabilities, or enter into agreements with third parties to market and sell our current or any future drugcandidates, we may be unable to generate any revenue from drug sales.To successfully commercialize any drug candidate that may result from our development programs, we will need to build out our sales and marketingcapabilities, either on our own or with others. The establishment and development of our own commercial team or the establishment of a contract sales force tomarket any drug candidate we may develop will be expensive and time-consuming and could delay any drug launch. Moreover, we cannot be certain that we willbe able to successfully develop this capability. We may seek to enter into additional collaborations with other entities to utilize their established marketing anddistribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any current or future collaborators do not commitsufficient resources to commercialize our drug candidates, or we are unable to develop the necessary capabilities on our own, we will be unable to generatesufficient revenue to sustain our business. We compete with many companies that currently have extensive, experienced and well-funded marketing and salesoperations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third parties to assist us with the sales andmarketing efforts of our current and future drug candidates. Without an internal team or the support of a third party to perform marketing and sales functions, wemay be unable to compete successfully against these more established companies.Even if we obtain and maintain approval for our current or future drug candidates from the FDA, we may never obtain approval for our current or futuredrug candidates outside of the United States, which would limit our market opportunities and could harm our business.Approval of a drug candidate in the United States by the FDA does not ensure approval of such drug candidate by regulatory authorities in other countriesor jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Salesof our current and future drug candidates outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketingapproval. Even if the FDA grants marketing approval for a drug candidate, comparable regulatory authorities of foreign countries also must approve themanufacturing and marketing of the drug candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements andadministrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In manycountries outside the United States, a drug candidate must be approved for reimbursement before it can be approved for sale in that country. In some cases, theprice that we intend to charge for any drug candidates, if approved, is also subject to approval. Obtaining approval for our current and future drug candidates in theEuropean Union from the European Commission following the opinion of the EMA, if we choose to submit a marketing authorization application there, would bea lengthy and expensive process. Even if a drug candidate is approved, the FDA or the European Commission, as the case may be, may limit the indications forwhich the drug may be marketed, require extensive warnings on the drug labeling or require expensive and time-consuming additional clinical trials or reporting asconditions of approval. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficultiesand costs for us and could delay or prevent the introduction of our current and future drug candidates in certain countries.Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for our drugcandidates may be withdrawn. If we fail to comply with the regulatory requirements, our target market will be reduced and our ability to realize the full marketpotential of our current and future drug candidates will be harmed and our business, financial condition, results of operations and prospects could be harmed.If we seek approval to commercialize our current or future drug candidates outside of the United States, in particular in the European Union and Israel, avariety of risks associated with international operations could harm our business.If we seek approval of our current or future drug candidates outside of the United States, we expect that we will be subject to additional risks incommercialization including: •different regulatory requirements for approval of therapies in foreign countries; •reduced protection for intellectual property rights; •unexpected changes in tariffs, trade barriers and regulatory requirements; •economic weakness, including inflation, or political instability in particular foreign economies and markets; •compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; •foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doingbusiness in another country; •foreign reimbursement, pricing and insurance regimes; •workforce uncertainty in countries where labor unrest is more common than in the United States;48 •production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and •business interruptions resulting from geopolitical actions, including war and terrorism or natural disasters including earthquakes, typhoons, floodsand fires.We have no prior experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by both the EuropeanUnion, Israel and many of the individual countries in and outside of Europe with which we will need to comply. Many biopharmaceutical companies have foundthe process of marketing their own products in foreign countries to be very challenging.Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any drug candidate that we maydevelop.We face an inherent risk of product liability exposure related to the testing of our current and any future drug candidates in clinical trials and may face aneven greater risk if we commercialize any drug candidate that we may develop. If we cannot successfully defend ourselves against claims that any such drugcandidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: •decreased demand for any drug candidate that we may develop; •loss of revenue; •substantial monetary awards to trial participants or patients; •significant time and costs to defend the related litigation; •withdrawal of clinical trial participants; •the inability to commercialize any drug candidate that we may develop; and •injury to our reputation and significant negative media attention.Although we maintain product liability insurance coverage, such insurance may not be adequate to cover all liabilities that we may incur. We anticipate thatwe will need to increase our insurance coverage each time we commence a clinical trial and if we successfully commercialize any drug candidate. Insurancecoverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability thatmay arise.Risks Related to Regulatory ComplianceOur relationships with customers, physicians, and third-party payors will be subject, directly or indirectly, to federal and state healthcare fraud and abuselaws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fullycomplied, with such laws, we could face substantial penalties.Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescriptionof any drug candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, principal investigators,consultants, customers and third-party payors may subject us to various federal and state fraud and abuse laws and other health care laws, including, withoutlimitation, the federal Anti-Kickback Statute, the federal civil and criminal false claims laws and the law commonly referred to as the Physician PaymentsSunshine Act and regulations. These laws will impact, among other things, our clinical research, proposed sales, marketing and educational programs. In addition,we may be subject to patient privacy laws by both the federal government and the states in which we conduct or may conduct our business. The laws that willaffect our operations include, but are not limited to: •the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from knowingly and willfully soliciting, receiving,offering or paying any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, in returnfor the purchase, recommendation, leasing or furnishing of an item or service reimbursable under a federal healthcare program, such as the Medicareand Medicaid programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand, andprescribers, purchasers and formulary managers on the other. The Patient Protection and Affordable Care Act, as amended, or the PPACA, amendedthe intent requirement of the federal Anti-Kickback Statute. A person or entity no longer needs to have actual knowledge of this statute or specificintent to violate it; •federal civil and criminal false claims laws, including, without limitation, the False Claims Act, and civil monetary penalty laws which prohibit,among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare,Medicaid or other government payors that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to paymoney to the federal government. The PPACA provides, and recent government cases against pharmaceutical and medical device manufacturerssupport, the view that federal Anti-Kickback Statute violations and certain marketing practices, including off-label promotion, may implicate theFalse Claims Act;49 •the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit aperson from knowingly and willfully executing a scheme or making false or fraudulent statements to defraud any healthcare benefit program,regardless of the payor (e.g., public or private); •HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations,which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information withoutappropriate authorization on health plans, health care clearinghouses and certain health care providers, and their respective business associates thatperform certain services involving the use or disclosure of individually identifiable health information; •federal transparency laws, including the federal Physician Payments Sunshine Act, which is part of the PPACA, that require certain manufacturersof drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health InsuranceProgram, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to:(i) payments or other “transfers of value’’ made to physicians and teaching hospitals; and (ii) ownership and investment interests held by physiciansand their immediate family members; •state and foreign law equivalents of each of the above federal laws, state laws that require manufacturers to report information related to paymentsand other transfers of value to physicians and other healthcare providers or marketing expenditures, and state laws that require pharmaceuticalcompanies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by thefederal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may bemade to healthcare providers; and •state and foreign laws that govern the privacy and security of health information in some circumstances, many of which differ from each other insignificant ways and often are not preempted by HIPAA, thus complicating compliance efforts.Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of ourbusiness activities could be subject to challenge under one or more of such laws.It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case lawinvolving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any othergovernmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement,imprisonment, exclusion from participation in government funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements andoversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws and the curtailmentor restructuring of our operations.The risk of our being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authoritiesor the courts, and their provisions are open to a variety of interpretations. Efforts to ensure that our business arrangements with third parties will comply withapplicable healthcare laws and regulations will involve substantial costs. Any action against us for violation of these laws, even if we successfully defend against it,could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. The shifting compliance environmentand the need to build and maintain robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirementsincreases the possibility that a healthcare company may run afoul of one or more of the requirements.Coverage and adequate reimbursement may not be available for our current or any future drug candidates, which could make it difficult for us to sellprofitably, if approved.Market acceptance and sales of any drug candidates that we commercialize, if approved, will depend in part on the extent to which reimbursement for thesedrugs and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations andother private health insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels. Third-party payors often rely uponMedicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverageand amount of reimbursement to be provided for any drug candidates that we develop will be made on a payor-by-payor basis. One payor’s determination toprovide coverage for a drug does not assure that other payors will also provide coverage, and adequate reimbursement, for the drug. Additionally, a third-partypayor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Each payor determines whether or not itwill provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its formulary it will be placed. The position on apayor’s list of covered drugs, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influencethe adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such servicesgenerally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our drugs unless coverage is provided andreimbursement is adequate to cover a significant portion of the cost of our drugs.50 A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Third-party payors have attempted to control costs by limiting coverageand the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any drug that wecommercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, orthe price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only to limited levels, wemay not be able to successfully commercialize our current and any future drug candidates that we develop.Healthcare legislative reform measures may have a negative impact on our business and results of operations.In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changesregarding the healthcare system that could prevent or delay marketing approval of drug candidates, restrict or regulate post-approval activities, and affect ourability to profitably sell any drug candidates for which we obtain marketing approval.Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the statedgoals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus ofthese efforts and has been significantly affected by major legislative initiatives. In March 2010, the PPACA was passed, which substantially changed the wayhealthcare is financed by both the government and private insurers, and significantly impacts the U.S. pharmaceutical industry. The PPACA, among other things:(i) addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled,infused, instilled, implanted or injected; (ii) increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program andextends the rebate program to individuals enrolled in Medicaid managed care organizations; (iii) establishes annual fees and taxes on manufacturers of certainbranded prescription drugs; (iv) expands the availability of lower pricing under the 340B drug pricing program by adding new entities to the program; and(v) establishes a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (and 70% commencing January 1, 2019)point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for themanufacturer’s outpatient drugs to be covered under Medicare Part D. Additionally, in the United States, the Biologics Price Competition and Innovation Act of2009 created an abbreviated approval pathway for biologic drugs that are demonstrated to be “biosimilar or interchangeable” with an FDA-approved biologic drug.This new pathway could allow competitors to reference data from biologic drugs already approved after 12 years from the time of approval. This could expose usto potential competition by lower-cost biosimilars even if we commercialize a biologic drug candidate faster than our competitors. Some of the provisions of thePPACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges, as well as recent efforts by theTrump administration to repeal or replace certain aspects of the PPACA. Since January 2017, President Trump has signed two Executive Orders and otherdirectives designed to delay the implementation of certain provisions of the PPACA or otherwise circumvent some of the requirements for health insurancemandated by the PPACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the PPACA. While Congress hasnot passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the PPACA have been signed into law. The Tax Cutsand Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certainindividuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. Additionally, onJanuary 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain PPACA-mandated fees, including the so-called “Cadillac” tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insuranceproviders based on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, or the BBA,among other things, amends the PPACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donuthole”. Congress may consider additional legislation to repeal or repeal and replace other elements of the PPACA. We continue to evaluate the effect that thePPACA and its possible repeal and replacement has on our business.Other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include aggregate reductions to Medicarepayments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013, and due to subsequent legislative amendmentsto the statute, including the BBA, will remain in effect through 2027 unless additional Congressional action is taken. The American Taxpayer Relief Act of 2012,among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute oflimitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions inMedicare and other healthcare funding, which could have an adverse effect on customers for our drug candidates, if approved, and, accordingly, our financialoperations.Additional changes that may affect our business include the expansion of new programs such as Medicare payment for performance initiatives forphysicians under the Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, which will be fully implemented in 2019. At this time, it is unclearhow the introduction of the Medicare quality payment program will impact overall physician reimbursement. Also, there has been heightened governmentalscrutiny recently over the manner in which drug manufacturers set prices for their marketed products, which have resulted in several Congressional inquiries andproposed and enacted federal and state legislation designed to, among other things, bring more transparency to product pricing, review the relationship betweenpricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. At the federal level, the Trumpadministration’s budget proposal for fiscal year 2019 contains further drug price control measures that could be enacted during the 2019 budget process or in otherfuture legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B, to allow somestates to negotiate drug51 prices under Medicaid, and to eliminate cost sharing for generic drugs for low-income patients. While any proposed measures will require authorization throughadditional legislation to become effective, Congress and the Trump administration have indicated that they will continue to seek new legislative and/oradministrative measures to control drug costs. At the state level, legislatures are increasingly passing legislation and implementing regulations designed to controlpharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketingcost disclosure and transparency measures, and, in some cases, legislation designed to encourage importation from other countries and bulk purchasing.We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and inadditional downward pressure on the price that we receive for any approved drug. Any reduction in reimbursement from Medicare or other government programsmay result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent usfrom being able to generate revenue, attain profitability, or commercialize our drugs.Risks Related to Our Intellectual PropertyIf we are unable to obtain and maintain patent protection for our current or any future drug candidates, or if the scope of the patent protection obtained is notsufficiently broad, we may not be able to compete effectively in our markets.We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our developmentprograms and drug candidates. Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countrieswith respect to our current and any future drug candidates. We seek to protect our proprietary position by filing patent applications in the United States and abroadrelated to our current and future development programs and drug candidates. The patent prosecution process is expensive and time-consuming, and we may not beable to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.Pursuant to the Lundbeck Agreement, we obtained an exclusive, worldwide license to develop, manufacture and commercialize OV101 for the treatment ofhuman disease. However, the Lundbeck Agreement permits Lundbeck and certain other entities to manufacture and research OV101 and, in certain situations, toperform additional non-commercial activities involving OV101, all of which could result in new patentable inventions concerning the manufacture or use ofOV101. While the Lundbeck Agreement prohibits Lundbeck from filing certain patent applications regarding OV101 and obligates Lundbeck to include certainnewly filed patents in the license granted to us, if new patents issue that cover valuable methods for making or using OV101, we would be prohibited fromemploying such methods to manufacture or use OV101 unless we obtain a license to such patents.It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Thepatent applications that we own, or in-license may fail to result in issued patents with claims that cover our current or any future drug candidates in the UnitedStates or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found,which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patentscover our current or any future drug candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents beingnarrowed, invalidated, or held unenforceable. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rightsnecessary for the successful commercialization of any drug candidates or companion diagnostic that we may develop. Further, if we encounter delays in regulatoryapprovals, the period of time during which we could market a drug candidate and companion diagnostic under patent protection could be reduced.If the patent applications we hold or have in-licensed with respect to our development programs and drug candidates fail to issue, if their breadth or strengthof protection is threatened, or if they fail to provide meaningful exclusivity for our current or any future drug candidates, it could dissuade companies fromcollaborating with us to develop drug candidates and threaten our ability to commercialize, future drugs. Any such outcome could have a negative effect on ourbusiness.The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has inrecent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the UnitedStates. For example, European patent law restricts the patentability of methods of treatment of the human body more than United States law does. Publications ofdiscoveries in scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically notpublished until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventionsclaimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, theissuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not resultin patents being issued which protect our technology or drugs, in whole or in part, or which effectively prevent others from commercializing competitivetechnologies and drugs. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of ourpatents or narrow the scope of our patent protection.52 Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement ordefense of our issued patents. On December 16, 2011, the Leahy-Smith America Invents Act, (the “Leahy-Smith Act”), was signed into law. The Leahy-Smith Actincludes a number of significant changes to United States patent law. These include provisions that affect the way patent applications are prosecuted and may alsoaffect patent litigation. The United States Patent Office recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, andmany of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, only became effective onMarch 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Actand its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of ourissued patents, all of which could harm our business and financial condition.Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office, (the “USPTO”), or becomeinvolved in opposition, derivation, reexamination, inter partes review, post-grant review or interference proceedings challenging our patent rights or the patentrights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow thirdparties to commercialize our technology or drugs and compete directly with us, without payment to us, or result in our inability to manufacture or commercializedrugs without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened,it could dissuade companies from collaborating with us to license, develop or commercialize current or future drug candidates.The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged inthe courts or patent offices in the United States and abroad. An adverse determination in any such challenges may result in loss of exclusivity or in patent claimsbeing narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar oridentical technology and drugs, or limit the duration of the patent protection of our technology and drugs. Moreover, patents have a limited lifespan. In the UnitedStates, the natural expiration of a patent is generally 20 years from the earliest filing date of a non-provisional patent application. Various extensions may beavailable; however, the life of a patent, and the protection it affords, is limited. Without patent protection for our current or future drug candidates, we may be opento competition from generic versions of such drugs. Given the amount of time required for the development, testing and regulatory review of new drug candidates,patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfoliomay not provide us with sufficient rights to exclude others from commercializing drugs similar or identical to ours.We may be unable to prevent third parties from selling, making, promoting, manufacturing, or distributing alternative polymorphic forms of OV101.We currently have issued patents directed to polymorphic forms of OV101. These patents would not prevent a third-party from creating, making andmarketing alternative polymorphic forms that fall outside the scope of these patent claims. There can be no assurance that any such alternative polymorphic formswill not be therapeutically equivalent and/or commercially feasible. In the event an alternative polymorphic form of OV101 is developed and approved for use inindications that we may seek approval for, the marketability and commercial success of OV101, if approved, could be materially harmed.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirementsimposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.Periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or applications will be due to be paid to the USPTOand various government patent agencies outside of the United States over the lifetime of our owned and licensed patents and/or applications and any patent rightswe may own or license in the future. We rely on our outside counsel or our licensing partners to pay these fees due to non-U.S. patent agencies. The USPTO andvarious non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patentapplication process. We employ reputable law firms and other professionals to help us comply and we are also dependent on our licensors to take the necessaryaction to comply with these requirements with respect to our licensed intellectual property. In many cases, an inadvertent lapse can be cured by payment of a latefee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of thepatent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able toenter the market and this circumstance could harm our business.53 Patent terms may be inadequate to protect our competitive position on our drug candidates for an adequate amount of time.Given the amount of time required for the development, testing and regulatory review of new drug candidates such as OV101, patents protecting suchcandidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, ifavailable, in other countries where we are prosecuting patents. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits apatent term extension of up to five years beyond the normal expiration of the patent, which is limited to the approved indication (or any additional indicationsapproved during the period of extension). However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalentregulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to ourpatents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development andclinical trials by referencing our clinical and preclinical data and launch their drug earlier than might otherwise be the case.Intellectual property rights do not necessarily address all potential threats to our business.The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may notadequately protect our business. The following examples are illustrative: •others may be able to make compounds or formulations that are similar to our drug candidates but that are not covered by the claims of any patents,should they issue, that we own or control; •we or any strategic partners might not have been the first to make the inventions covered by the issued patents or pending patent applications that weown or control; •we might not have been the first to file patent applications covering certain of our inventions; •others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectualproperty rights; •it is possible that our pending patent applications will not lead to issued patents; •issued patents that we own or control may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result oflegal challenges; •our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patentinfringement claims for certain research and development activities, as well as in countries where we do not have patent rights and then use theinformation learned from such activities to develop competitive drugs for sale in our major commercial markets; •we may not develop additional proprietary technologies that are patentable; and •the patents of others may have an adverse effect on our business.The proprietary map of disease-relevant biological pathways underlying orphan disorders of the brain that we developed would not be appropriate forpatent protection and, as a result, we rely on trade secrets to protect this aspect of our business.Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain andcould have a negative impact on the success of our business.Our commercial success depends, in part, upon our ability and the ability of our current or future collaborators to develop, manufacture, market and sell ourcurrent and any future drug candidates and use our proprietary technologies without infringing the proprietary rights and intellectual property of third parties. Thebiotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. We mayin the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our current and anyfuture drug candidates and technology, including interference proceedings, post grant review and inter partes review before the USPTO. Third parties may assertinfringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties maychoose to engage in litigation with us to enforce or to otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court ofcompetent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a negative impact on our ability tocommercialize our current and any future drug candidates. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need toovercome a presumption of validity. As this burden is a high one requiring us to present clear and convincing evidence as to the invalidity of any such U.S. patentclaim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. If we are found to infringe a third party’svalid and enforceable intellectual property rights, we could be required to obtain a license from such third party to continue developing, manufacturing andmarketing our drug candidate(s) and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even ifwe were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same54 technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to ceasedeveloping, manufacturing and commercializing the infringing technology or drug candidate. In addition, we could be found liable for monetary damages,including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. A finding of infringementcould prevent us from manufacturing and commercializing our current or any future drug candidates or force us to cease some or all of our business operations,which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similarnegative impact on our business, financial condition, results of operations and prospects. See the section herein titled “Legal Proceedings” for additionalinformation. We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current orformer employers or claims asserting ownership of what we regard as our own intellectual property.Certain of our employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceuticalcompanies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietaryinformation or know-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property,including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against theseclaims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if weare successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual propertyto execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives ordevelops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing or the assignment agreementsmay be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of whatwe regard as our intellectual property.We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could beexpensive, time consuming and unsuccessful.Competitors may infringe or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter infringement orunauthorized use, we may be required to file legal claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court maydecide that a patent of ours or our licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the groundsthat our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk ofbeing invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. The initiation of a claim against a third party may also causethe third party to bring counter claims against us such as claims asserting that our patents are invalid or unenforceable. In patent litigation in the United States,defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any ofseveral statutory requirements, including lack of novelty, obviousness, non-enablement or lack of statutory subject matter. Grounds for an unenforceabilityassertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made amaterially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as exparte reexaminations, inter partes review, or post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or evenoutside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is noinvalidating prior art, of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we mayhave limited or no right to participate in the defense of any licensed patents against challenge by a third party. If a defendant were to prevail on a legal assertion ofinvalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future drug candidates. Such a loss ofpatent protection could harm our business.We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the lawsmay not protect those rights as fully as in the United States. Our business could be harmed if in litigation the prevailing party does not offer us a license oncommercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result insubstantial costs and distract our management and other employees.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of ourconfidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings,motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on theprice of our common stock.55 Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability toprotect our current and any future drug candidates.The United States has recently enacted and implemented wide-ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent casesin recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. Inaddition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to thevalue of patents, once obtained. Depending on actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents couldchange in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we have licensed or that we might obtain in the future.Similarly, changes in patent law and regulations in other countries or jurisdictions or changes in the governmental bodies that enforce them or changes in how therelevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we have licensed orthat we may obtain in the future.We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business.Filing, prosecuting and defending patents covering our current and any future drug candidates throughout the world would be prohibitively expensive.Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own drugs and, further, may export otherwiseinfringing drugs to territories where we may obtain patent protection, but where patent enforcement is not as strong as that in the United States. These drugs maycompete with our drugs in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights maynot be effective or sufficient to prevent them from so competing.Reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secretswill be misappropriated or disclosed.If we rely on third parties to manufacture or commercialize our current or any future drug candidates, or if we collaborate with additional third parties forthe development of our current or any future drug candidates, we must, at times, share trade secrets with them. We may also conduct joint research anddevelopment programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek toprotect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements orother similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information.These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. Despite the contractualprovisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secretsbecome known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Giventhat our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use ordisclosure could have an adverse effect on our business and results of operations.In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentiallyrelating to our trade secrets. Despite our efforts to protect our trade secrets, our competitors may discover our trade secrets, either through breach of ouragreements with third parties, independent development or publication of information by any third-party collaborators. A competitor’s discovery of our tradesecrets would harm our business.Risks Related to Our Dependence on Third PartiesWe do not have our own manufacturing capabilities and will rely on third parties to produce clinical and commercial supplies of our current and any futuredrug candidates.We do not own or operate, and we do not expect to own or operate, facilities for drug manufacturing, storage and distribution, or testing. We will bedependent on third parties to manufacture the clinical supplies of our drug candidates. The drug substance for OV101 was manufactured by Lundbeck. We believethat the drug substance transferred from Lundbeck under the Lundbeck agreement will be sufficient for us to complete our ongoing and future clinical trials. Wewill also continue to rely on Takeda to provide the drug product supply for our planned clinical trials of OV935.Further, we also will rely on third-party manufacturers to supply us with sufficient quantities of our drug candidates, including OV101 and OV935, to beused, if approved, for commercialization. Any significant delay in the supply of a drug candidate, or the raw material components thereof, for an ongoing clinicaltrial due to the need to replace a third-party manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatoryapproval of our drug candidates.56 Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured drug candidates ourselves, including: •inability to meet our drug specifications and quality requirements consistently; •delay or inability to procure or expand sufficient manufacturing capacity; •issues related to scale-up of manufacturing; •costs and validation of new equipment and facilities required for scale-up; •failure to comply with cGMP and similar foreign standards; •inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; •termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; •reliance on single sources for drug components; •lack of qualified backup suppliers for those components that are currently purchased from a sole or single source supplier; •operations of our third-party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including thebankruptcy of the manufacturer or supplier; and •carrier disruptions or increased costs that are beyond our control.Any of these events could lead to clinical trial delays, failure to obtain regulatory approval or impact our ability to successfully commercialize our currentor any future drug candidates once approved. Some of these events could be the basis for FDA action, including injunction, request for recall, seizure, or total orpartial suspension of production.We intend to rely on third parties to conduct, supervise and monitor our preclinical studies and clinical trials, and if those third parties perform in anunsatisfactory manner, it may harm our business.We do not currently have the ability to independently conduct any clinical trials. We intend to rely on CROs and clinical trial sites to ensure the proper andtimely conduct of our preclinical studies and clinical trials, and we expect to have limited influence over their actual performance. We intend to rely upon CROs tomonitor and manage data for our clinical programs, as well as the execution of future nonclinical studies. We expect to control only certain aspects of our CROs’activities. Nevertheless, we will be responsible for ensuring that each of our preclinical studies or clinical trials are conducted in accordance with the applicableprotocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities.We and our CROs will be required to comply with good laboratory practices, (“GLPs”), and good clinical practices, (“GCPs”), which are regulations andguidelines enforced by the FDA and are also required by the Competent Authorities of the Member States of the European Economic Area and comparable foreignregulatory authorities in the form of International Conference on Harmonization guidelines for any of our drug candidates that are in preclinical and clinicaldevelopment. The regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. Although wewill rely on CROs to conduct GCP-compliant clinical trials, we remain responsible for ensuring that each of our GLP preclinical studies and clinical trials isconducted in accordance with its investigational plan and protocol and applicable laws and regulations, and our reliance on the CROs does not relieve us of ourregulatory responsibilities. If we or our CROs fail to comply with GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA orcomparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. Accordingly, if ourCROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat clinical trials, which would delay theregulatory approval process.While we will have agreements governing their activities, our CROs will not be our employees, and we will not control whether or not they devotesufficient time and resources to our future clinical and nonclinical programs. These CROs may also have relationships with other commercial entities, includingour competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our business. We face the risk ofpotential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potentialcompetitors to access and exploit our proprietary technology. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expecteddeadlines, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatoryrequirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, orsuccessfully commercialize any drug candidate that we develop. As a result, our financial results and the commercial prospects for any drug candidate that wedevelop would be harmed, our costs could increase, and our ability to generate revenue could be delayed.57 If our relationship with these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonableterms. Switching or adding additional CROs involves substantial cost and requires management time and focus. In addition, there is a natural transition periodwhen a new CRO commences work. As a result, delays occur, which can negatively impact our ability to meet our desired clinical development timelines. Thoughwe intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that thesedelays or challenges will not have a negative impact on our business, financial condition and prospects.In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation inconnection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that afinancial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA maytherefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could resultin a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of our current and futuredrug candidates.Risks Related to Our Business Operations, Employee Matters and Managing GrowthWe are highly dependent on the services of our senior management team, including our Chairman and Chief Executive Officer, Dr. Jeremy Levin, and if weare not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business willbe harmed.We are highly dependent on our senior management team, including our Chairman and Chief Executive Officer, Dr. Levin. The employment agreements wehave with these officers do not prevent such persons from terminating their employment with us at any time. The loss of the services of any of these persons couldimpede the achievement of our research, development and commercialization objectives.In addition, we are dependent on our continued ability to attract, retain and motivate highly qualified additional management, clinical and scientificpersonnel. If we are not able to retain our management and to attract, on acceptable terms, additional qualified personnel necessary for the continued developmentof our business, we may not be able to sustain our operations or grow. This risk may be further amplified given the particularly competitive hiring market in NewYork City, the location of our corporate headquarters.We may not be able to attract or retain qualified personnel in the future due to the intense competition for qualified personnel among biotechnology,pharmaceutical and other businesses. Many of the other pharmaceutical companies that we compete against for qualified personnel and consultants have greaterfinancial and other resources, different risk profiles and a longer history in the industry than we do. They also may provide more diverse opportunities and betterchances for career advancement. Some of these characteristics may be more appealing to high-quality candidates and consultants than what we have to offer. If weare unable to continue to attract, retain and motivate high-quality personnel and consultants to accomplish our business objectives, the rate and success at which wecan discover and develop drug candidates and our business will be limited and we may experience constraints on our development objectives.Our future performance will also depend, in part, on our ability to successfully integrate newly hired executive officers into our management team and ourability to develop an effective working relationship among senior management. Our failure to integrate these individuals and create effective working relationshipsamong them and other members of management could result in inefficiencies in the development and commercialization of our drug candidates, harming futureregulatory approvals, sales of our drug candidates and our results of operations. Additionally, we do not currently maintain “key person” life insurance on the livesof our executives or any of our employees.We will need to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.As of December 31, 2018, we had 55 employees. As our development and commercialization plans and strategies develop, we expect to need additionalmanagerial, operational, sales, marketing, financial, legal and other resources. Our management may need to divert a disproportionate amount of its attention awayfrom our day-to-day operations and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage theexpansion of our operations, which may result in weaknesses in our infrastructure, operational inefficiencies, loss of business opportunities, loss of employees andreduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources fromother projects, such as the development of our current and potential future drug candidates. If our management is unable to effectively manage our growth, ourexpenses may increase more than expected, our ability to generate and grow revenue could be reduced and we may not be able to implement our business strategy.Our future financial performance, our ability to commercialize drug, develop a scalable infrastructure and compete effectively will depend, in part, on our ability toeffectively manage any future growth.58 Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.We are exposed to the risk that our employees, consultants, distributors, and collaborators may engage in fraudulent or illegal activity. Misconduct by theseparties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violates the regulations of the FDA and non-U.S.regulators, including those laws requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraudand abuse laws and regulations in the United States and abroad or laws that require the true, complete and accurate reporting of financial information or data. Inparticular, sales, marketing and business arrangements in the healthcare industry, including the sale of pharmaceuticals, are subject to extensive laws andregulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a widerange of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. It is not always possibleto identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective incontrolling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure tocomply with these laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, thoseactions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages,monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting obligationsand oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, contractualdamages, reputational harm, diminished profits and future earnings and curtailment of operations, any of which could adversely affect our ability to operate ourbusiness and our results of operations. Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs,including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations.Risks Related to Ownership of Our Common StockThe market price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for our common stock.The market price of our common stock is likely to be volatile. The stock market in general and the market for biopharmaceutical or pharmaceuticalcompanies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of thisvolatility, you may lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid for theshares.The market price for our common stock may be influenced by many factors, including: •results of clinical trials of our current and any future drug candidates or those of our competitors; •the success of competitive drugs or therapies; •regulatory or legal developments in the United States and other countries; •developments or disputes concerning patent applications, issued patents or other proprietary rights; •the recruitment or departure of key personnel; •the level of expenses related to our current and any future drug candidates or clinical development programs; •the results of our efforts to discover, develop, acquire or in-license additional drug candidates; •actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; •our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; •disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for ourtechnologies; •significant lawsuits, including patent or stockholder litigation; •variations in our financial results or those of companies that are perceived to be similar to us; •changes in the structure of healthcare payment systems; •market conditions in the pharmaceutical and biotechnology sectors;59 •general economic, industry and market conditions; and •the other factors described in this “Risk Factors” section.In addition, in the past, stockholders have initiated class action lawsuits against companies following periods of volatility in the market prices of thesecompanies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources.There is no public market for our Series A preferred stock.There is no established public trading market for our Series A preferred stock, and we do not expect a market to develop. In addition, we do not intend toapply for listing of the Series A preferred stock on any national securities exchange or other nationally recognized trading system. Without an active market, theliquidity of the Series A preferred stock will be limited.We may sell additional equity or debt securities or enter into other arrangements to fund our operations, which may result in dilution to our stockholders andimpose restrictions or limitations on our business.Until we can generate a sufficient amount of revenue from our products, if ever, we expect to finance future cash needs through public or private equity ordebt offerings. In June 2018, we filed a shelf registration statement on Form S-3 (Registration No. 333-225391) that allows us to sell up to an aggregate of$200 million of our common stock, which includes up to $50.0 million designated in the prospectus supplement for an at-the-market offering program. As ofDecember 31, 2018, no sales have been made pursuant to the at-the-market offering program. We may also seek additional funding through government or otherthird-party funding and other collaborations, strategic alliances and licensing arrangements. These financing activities may have an adverse impact on ourstockholders’ rights as well as on our operations, and such additional funding may not be available on reasonable terms, if at all. If we raise additional fundsthrough the issuance of additional debt or equity securities, it may result in dilution to our existing stockholders and/or increased fixed payment obligations.Furthermore, these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentiallyimpair our competitiveness, such as redeeming our shares, making investments, issuing additional equity, limitations on our ability to incur additional debt,limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct ourbusiness. Additionally, if we seek funds through arrangements with collaborative partners, these arrangements may require us to relinquish rights to some of ourtechnologies or product candidates or otherwise agree to terms unfavorable to us. Any of these events could significantly harm our business, financial conditionand prospects. Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors frominfluencing significant corporate decisions.Based upon our shares of our common stock outstanding as of February 28, 2019, our executive officers, directors and stockholders who owned more than5% of our outstanding common stock will, in the aggregate, beneficially own shares representing approximately 66.6% of our outstanding common stock.Takeda, a greater than 5% holder, may receive additional securities upon the achievement of certain development, commercial and regulatory milestonespursuant to the Takeda collaboration. Specifically, we will be obligated to issue additional securities to Takeda equal to the lesser of 8% of our outstanding capitalstock or $50.0 million unless certain events occur, and may issue, at our discretion, additional securities to Takeda upon the achievement of other milestones.Further, pursuant to the Series B-1 preferred stock purchase agreement entered into with Takeda in January 2017, or the Takeda stock purchase agreement, Takedahas agreed to, among other things, (i) a standstill provision, (ii) restrictions on its ability to sell or otherwise transfer it shares of our stock, (iii) vote its shares oncertain matters in accordance with the holders of a majority of shares of our common stock and (iv) restrictions on the percentage of our outstanding commonstock it may own.If our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock acted together, they may be able tosignificantly influence all matters requiring stockholder approval, including the election and removal of directors and approval of any merger, consolidation or saleof all or substantially all of our assets. The concentration of voting power, Takeda standstill provisions, voting obligations and transfer restrictions could delay orprevent an acquisition of our company on terms that other stockholders may desire or result in the management of our company in ways with which otherstockholders disagree with.If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our stock, the price of our stock coulddecline.The trading market for our common stock relies, in part, on the research and reports that industry or financial analysts publish about us or our business. Wedo currently have research coverage offered by several industry or financial analysts. If one or more of the analysts covering our business downgrade theirevaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we could lose visibility in the market for ourstock, which in turn could cause our stock price to decline.60 Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source ofgain.We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growthand development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, ifany, of our common stock will be your sole source of gain for the foreseeable future.If we engage in future acquisitions or strategic partnerships, this may increase our capital requirements, dilute our stockholders, cause us to incur debt orassume contingent liabilities and subject us to other risks.Our business plan is to continue to evaluate various acquisitions and strategic partnerships, including licensing or acquiring complementary drugs,intellectual property rights, technologies, or businesses. Any potential acquisition or strategic partnership may entail numerous risks, including: •increased operating expenses and cash requirements; •the assumption of additional indebtedness or contingent liabilities; •assimilation of operations, intellectual property and drugs of an acquired company, including difficulties associated with integrating new personnel; •the diversion of our management’s attention from our existing drug programs and initiatives in pursuing such a strategic partnership, merger oracquisition; •retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; •risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing drugs or drugcandidates and regulatory approvals; and •our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even tooffset the associated acquisition and maintenance costs.In addition, if we engage in future acquisitions or strategic partnerships, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisitionopportunities and this inability could impair our ability to grow or obtain access to technology or drugs that may be important to the development of our business.Sales of a substantial number of shares of our common stock in the public market could cause the market price of our common stock to drop significantly.Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market thatthe holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Some of the holders of our securities have rights,subject to certain conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may filefor ourselves or other stockholders. Registration of these shares would result in the shares becoming freely tradable without restriction under the Securities Actexcept for shares held by our affiliates. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our commonstock.We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock lessattractive to investors.We are an “emerging growth company,” or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. We will remain an EGCuntil the earlier of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1.0 billion or more; (ii) the last day of the fiscal yearfollowing the fifth anniversary of our IPO in May 2017; (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previousthree years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or SEC. For so longas we remain an EGC, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies thatare not emerging growth companies. These exemptions include: •not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404; •not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatoryaudit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements;61 •being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, withcorrespondingly reduced ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ disclosure; •reduced disclosure obligations regarding executive compensation; and •exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any goldenparachute payments not previously approved.We currently intend to take advantage of some, but not all, of the reduced regulatory and reporting requirements that will be available to us so long as wequalify as an EGC. For example, our independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of ourinternal control over financial reporting so long as we qualify as an EGC, which may increase the risk that material weaknesses or significant deficiencies in ourinternal control over financial reporting go undetected. Likewise, so long as we qualify as an EGC, we may elect not to provide you with certain information,including certain financial information and certain information regarding compensation of our executive officers, that we would otherwise have been required toprovide in filings we make with the SEC, which may make it more difficult for investors and securities analysts to evaluate our company. We cannot predict ifinvestors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result,there may be a less active trading market for our common stock, and our stock price may be more volatile and may decline.In addition, the JOBS Act provides that an EGC may take advantage of an extended transition period for complying with new or revised accountingstandards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We haveirrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revisedaccounting standards as other public companies that are not an EGC.We will continue to incur increased costs as a result of operating as a public company, and our management will devote substantial time to new complianceinitiatives.As a public company, and particularly after we are no longer an EGC, we will incur significant legal, accounting and other expenses that we did not incur asa private company. In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and The Nasdaq Global Stock Market LLC haveimposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporategovernance practices. Our management and other personnel devote a substantial amount of time to these and other compliance initiatives. Moreover, these rulesand regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly.Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, moredifficult and may prevent attempts by our stockholders to replace or remove our current management.Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholdersmay consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price thatinvestors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because ourboard of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholdersto replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, theseprovisions: •establish a classified board of directors such that not all members of the board are elected at one time; •allow the authorized number of our directors to be changed only by resolution of our board of directors; •limit the manner in which stockholders can remove directors from the board; •establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board ofdirectors; •require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; •limit who may call stockholder meetings;62 •authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a stockholder rights plan, orso-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that havenot been approved by our board of directors; and •require the approval of the holders of at least 66 2/3% of the votes that all our stockholders would be entitled to cast to amend or repeal certainprovisions of our charter or bylaws.Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, whichprohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of thetransaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.Additionally, the Takeda standstill provisions and transfer restrictions in the Takeda Stock Purchase Agreement may delay or prevent a merger, acquisitionor other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares.We may be subject to securities litigation, which is expensive and could divert management attention.The market price of our common stock may be volatile. For example, on August 6, 2018, we announced the topline results of our STARS clinical trial, andour stock experienced a material decline. In the past, companies that have experienced volatility in the market price of their stock have been subject to securitiesclass action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert ourmanagement’s attention from other business concerns, which could seriously harm our business.If we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately report our financialcondition, results of operations or cash flows, which may adversely affect investor confidence in us and, as a result, the value of our common stock.The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal controls for financial reporting and disclosure controls andprocedures. We are required, under Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financialreporting. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financialreporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting that results in more than a reasonablepossibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. Section 404 also generallyrequires an attestation from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. However, for aslong as we remain an emerging growth company as defined in the JOBS Act, we intend to take advantage of the exemption permitting us not to comply with theindependent registered public accounting firm attestation requirement.Our compliance with Section 404 will require that we incur substantial expense and expend significant management efforts. We currently do not have aninternal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accountingknowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able tocomplete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more materialweaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. We cannotassure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure tomaintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines wehave a material weakness or significant deficiency in our internal control over financial reporting once that firm begins its Section 404 reviews, we could loseinvestor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject tosanctions or investigations by The Nasdaq Global Market LLC, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internalcontrol over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access tothe capital markets.63 Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if anacquisition would benefit our stockholders and may prevent attempts by our stockholders to replace or remove our current management.Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could make itmore difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, or remove our currentmanagement. These provisions include: •authorizing the issuance of “blank check” preferred stock, the terms of which we may establish and shares of which we may issue withoutstockholder approval; •prohibiting cumulative voting in the election of directors, which would otherwise allow for less than a majority of stockholders to elect directorcandidates; •prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders; •eliminating the ability of stockholders to call a special meeting of stockholders; and •establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon atstockholder meetings.These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult forstockholders to replace members of our board of directors, who are responsible for appointing the members of our management. Because we are incorporated inDelaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or the DGCL, which may discourage, delay or preventsomeone from acquiring us or merging with us whether or not it is desired by or beneficial to our stockholders. Under the DGCL, a corporation may not, ingeneral, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among otherthings, the board of directors has approved the transaction. Any provision of our amended and restated certificate of incorporation or amended and restated bylawsor Delaware law that has the effect of delaying or deterring a change of control could limit the opportunity for our stockholders to receive a premium for theirshares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.Item 1B. Unresolved Staff CommentsNone.Item 2. PropertiesWe lease the space for our principal executive offices, which are located at 1460 Broadway, New York, New York, on a monthly basis. We believe that ourfacilities are adequate to meet our current needs.64 Item 3. Legal ProceedingsOn December 15, 2016, we and Northwestern University (“Northwestern”) entered into a license agreement (the “License Agreement”), pursuant to whichNorthwestern granted us an exclusive license to certain patent rights and know-how, including a patent application covering a specified composition of matter (the“Patent Application”). Northwestern previously entered into a license agreement with Catalyst Pharmaceuticals, Inc. (“Catalyst”), dated August 27, 2009, pursuantto which Northwestern granted Catalyst rights under certain intellectual property rights covering a different composition of matter (the “Catalyst License”). Inaddition, we are a party to a confidential disclosure agreement with Catalyst, dated September 16, 2016 (the “CDA”). On June 25, 2018, Catalyst sent a letter toNorthwestern and the Company alleging, among other things, that Northwestern breached the Catalyst License by licensing the Patent Application to us. Catalyst’sletter also asserted that we had breached our obligations under the CDA by allegedly failing to disclose that we had a license to the Patent Application, and that afurther breach would occur if the Company makes any use of information obtained under the CDA in connection with its development program arising from therights granted under the License Agreement. Catalyst has asserted that the combined conduct of Northwestern and the Company gives rise to various claims,including breach of contract, fraud, and tortious interference. We believe that Catalyst’s claims are without merit and responded by letter dated June 28, 2018,which denies any and all liability to Catalyst, and further denies that Catalyst has been damaged in any way.As previously disclosed in Part 1, Item 3 of our Annual Report on Form 10-K for the period ended December 31, 2017 (the “Annual Report”), in July 2017,a notice of opposition and petition for cancellation was filed at the Trademark Trial and Appeal Board of the USPTO by Ovid Technologies, Inc. (“OTI”) relatingto certain current and pending trademarks. OTI also instituted proceedings with the Canadian Trademark Office and European Union Intellectual Property Officeopposing applications in both jurisdictions. On October 9, 2018, we entered into a settlement agreement with OTI in resolution of this matter. We will amendcertain of our trademark registrations and applications and, upon acceptance of such amendments, OTI will withdraw all opposition and cancellation actions (withprejudice where possible). The parties have agreed to work in good faith to agree on alternative language if the proposed amendments are not accepted. Pleaserefer to the Annual Report for additional information.Item 4. Mine Safety DisclosuresNot applicable.65 PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock began trading on The Nasdaq Global Select Market on May 5, 2017, under the symbol “OVID” Prior to that time, there was no publicmarket for our common stock. Comparative Stock Performance GraphThe following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall suchinformation be incorporated by reference into any future filing under the Securities Act or Exchange Act. The following graph shows a comparison from May 5,2017 (the date our common stock commenced trading on the Nasdaq Global Select Market) through December 31, 2018, of the cumulative total return for ourcommon stock, the Nasdaq Composite Index, and the Nasdaq Biotechnology. The graph assumes an initial investment of $100 on May 5, 2017. The comparisons in the graph are not intended to forecast or be indicative of possiblefuture performance of our common stock.Holders of RecordAs of February 28, 2019, we had approximately 16 holders of record of our common stock. Certain shares are held in “street” name and accordingly, thenumber of beneficial owners of such shares is not known or included in the foregoing number. This number of holders of record also does not include stockholderswhose shares may be held in trust by other entities.Dividend PolicyWe have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings to fund the development and growthof our business. We do not expect to pay any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion ofour board of directors and will depend on then-existing conditions, including our financial conditions, operating results, contractual restrictions, capitalrequirements, business prospects and other factors our board of directors may deem relevant.66 Use of ProceedsOn February 22, 2019, the Company completed an offering, the February Offering, and sold 12,500,000 shares of its common stock and 2,500 shares ofSeries A Convertible Preferred Stock at an offering price of $2.00 and $2,000, respectively, for gross proceeds of $30.0 million and $28.2 million in estimated netproceeds after deducting underwriting discounts and commission and other offering expenses. None of these expenses consisted of payments made by us todirectors, officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates. In addition, the Company has granted theunderwriters a 30-day option to purchase an additional 1,750,000 shares of common stock offered in the common stock offering. On February 27, 2019, theunderwriters exercised a portion of the 30-day option and purchased 1,493,778 shares at an offering price of $2.00 for gross proceeds of $3.0 million and $2.8million in estimated net proceeds after deducting underwriting discounts and commission and other offering expenses.On May 10, 2017, we completed our IPO and sold 5,000,000 shares of common stock at the initial public offering price of $15.00 per share, for grossproceeds of $75.0 million and $66.7 million in net proceeds after deducting underwriting discounts and commissions and other offering expenses payable by us.None of these expenses consisted of payments made by us to directors, officers or persons owning 10% or more of our common stock or to their associates, or toour affiliates.The offer and sale of the shares in our IPO were registered pursuant to our Registration Statement on Form S-1 (File No. 333-217245), which was declaredeffective by the SEC on May 4, 2017. Citigroup Global Markets Inc. and Cowen and Company, LLC acted as joint book-running managers for the offering, andWilliam Blair & Company, L.L.C. and JMP Securities LLC acted as co-managers for the offering.There has been no material change in the planned use of proceeds from our IPO as described in our Prospectus that forms a part of the Company’sRegistration Statement on Form S-1 (File No. 333-217245), which was filed with the SEC pursuant to Rule 424 on May 5, 2017. As of December 31, 2018, weconsumed all of the net proceeds from the IPO, primarily to advance OV101 and OV935 through clinical trials, and for working capital and general corporatepurposes.Item 6. Selected Financial DataThe following table sets forth our selected consolidated financial data. We derived the consolidated statement of operations data for the years endedDecember 31, 2018 and 2017 and the consolidated balance sheet data as of December 31, 2018 and 2017, from our audited consolidated financial statements,included elsewhere in this Annual Report on Form 10-K. Our historical results are not necessarily indicative of results to be expected for any period in the future.The selected consolidated financial data presented below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and our consolidated financial statements and the related notes thereto, included elsewhere in this Annual Report on Form 10-K. Theselected consolidated financial data in this section are not intended to replace our consolidated financial statements and the related notes thereto.Consolidated Statement of Operations Data: For the Year Ended December 31, 2018 2017 (in thousands, except share and pershare data) Selected Statements of Operations and Comprehensive Loss Data: Operating expenses: Research and development $33,790 $49,972 General and administrative 19,142 15,035 Total operating expenses 52,932 65,007 Loss from operations (52,932) (65,007) Interest income 952 202 Net loss and comprehensive loss $(51,980) $(64,805)Net loss attributable to common stockholders $(51,980) $(64,805)Net loss per share attributable to common stockholders, basic and diluted $(2.11) $(3.35)Weighted -average common shares outstanding basic and diluted 24,631,011 19,344,35567 Balance Sheet Data: As of December 31, 2018 2017 (in thousands) Selected Balance Sheet Data: Cash and cash equivalents $36,490 $87,126 Short-term investments 5,011 - Working capital 35,424 82,567 Total assets 47,650 89,458 Total liabilities 8,844 6,021 Accumulated deficit (152,695) (100,716)Total stockholders’ equity 38,805 83,437 68 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis should be read in conjunction with “Selected Financial Data” and our financial statements and related notesincluded elsewhere in this Annual Report on Form 10-K. This discussion and analysis and other parts of this Annual Report on Form 10-K contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions, such as statements regarding our plans,objectives, expectations, intentions and projections. Our actual results and the timing of selected events could differ materially from those anticipated in theseforward-looking statements as a result of several factors, including those set forth under “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Youshould carefully read the “Risk Factors” section of this Annual Report on Form 10-K to gain an understanding of the important factors that could cause actualresults to differ materially from our forward-looking statements. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”OverviewWe are a biopharmaceutical company focused exclusively on developing impactful medicines for patients and families living with rare neurologicaldisorders. We believe these disorders represent an attractive area for drug development as the understanding of the underlying biology has grown meaningfullyover the last few years; yet has remained underappreciated by the industry. Our experienced team began with a vision to integrate the biology and symptomologyof rare neurological conditions to employ innovative research and clinical strategies for the development of our drug candidates. Based on recent scientificadvances in genetics and the biological pathways of the brain, we created a proprietary map of disease-relevant pathways and used it to identify and acquire novelcompounds for the treatment of rare neurological disorders. We are executing on our strategy by in-licensing and collaborating with leading biopharmaceuticalcompanies and academic institutions. We are developing a robust pipeline of clinical assets with an initial focus on neurodevelopmental disorders anddevelopmental and epileptic encephalopathies (“dEE”).During 2018, our most advanced candidate, OV101, completed a Phase 2 trial in adults and adolescents with Angelman syndrome. The Phase 2 trialachieved its primary endpoint of safety and tolerability and showed an improvement in the once-daily and combined OV101 dosing groups on the prespecifiedphysician-rated Clinical Global Impressions-Improvement (“CGI-I”) endpoint as well as improvements in relevant symptoms such as sleep and motor function.Based upon feedback from our End of Phase 2 Meeting with the FDA in November 2018, we intend to initiate a single pivotal Phase 3 trial of OV101 in pediatricpatients with Angelman syndrome (NEPTUNE). Pending FDA concurrence on the study protocol and supporting framework and materials, NEPTUNE is expectedto be a single 12-week, two-arm, randomized, double-blind, placebocontrolled trial with a once daily dose with an enrollment of 50-60 patients aged 4 to 12 years.It is expected that the primary endpoint will be the change in the overall CGI-I score between OV101 versus placebo groups with enrollment initiation expected inthe second half of 2019. Based on the STARS trial data, we also initiated an open-label extension study (ELARA) which enrolled its first patient in February of2019. Along with our collaborator, Takeda Pharmaceutical Company Limited, (“Takeda”), we initiated patient recruitment in our Phase 1b/2a trial of OV935 inadults with dEE in June 2017. As announced on December 17, 2018, the Phase 1b/2a trial of OV935 achieved its primary endpoint of safety and tolerability andshowed OV935 was generally well tolerated and met its secondary exploratory endpoints including a satisfactory pharmacokinetic profile and signals of efficacy.Exploratory analyses also showed the potential applicability of using plasma 24-hydroxy cholesterol (24HC) as a serum biomarker.In July 2018, we initiated our Phase 2 ROCKET clinical trial, a randomized, double-blind, parallel-group trial evaluating OV101 for the treatment ofadolescent and young male adults with Fragile X Syndrome. The trial is currently enrolling and is expected to enroll up to 30 males ages 13 to 22 with a confirmeddiagnosis of Fragile X Syndrome. The primary endpoint is safety and tolerability of OV101 over 12 weeks of treatment in three different cohorts of either 5mg QD,5mg BID, or 5mg three times daily. A secondary efficacy endpoint will evaluate changes in behavior during 12 weeks of treatment with OV101 using theActivities-specific Balance Confidence Scale (ABC) that has been used in previous trials for Fragile X syndrome. We anticipate data from this trial in the secondhalf of 2019.In December 2018, we initiated the SKY ROCKET study, a 12-week, non-drug study to assess the suitability of several behavioral scales in individualswith Fragile X Syndrome. The trial is an observational study designed to provide additional data on the key endpoints that are being explored in the trial as well asprovide contextual data on the benefit offered by the standard of care. The study will enroll 10-30 males ages 5 to 30 with Fragile X Syndrome.Ovid and Takeda continue to enroll patients in three clinical trials: a Phase 2 clinical trial in pediatric patients with Dravet syndrome or Lennox-GastautSyndrome (ELEKTRA); a Phase 2 clinical trial in pediatric patients with CDKL5 deficiency disorder or Duplication 15q syndrome (ARCADE); and an open-labelextension trial for patients with dEE who participated in a previous OV935 clinical trial (ENDYMION).Since our inception in April 2014, we have devoted substantially all of our efforts to organizing and planning our business, building our management andtechnical team, acquiring operating assets and raising capital.69 We have not generated any revenue and have funded our business primarily through the sale of our capital stock. Through December 31, 2018, we haveraised net proceeds of $142.3 million from the sale of our convertible preferred stock and our common stock. As of December 31, 2018, we had $41.5 million incash, cash equivalents and short-term investments. We recorded net losses of $52.0 million and $64.8 million for the years ended December 31, 2018 and 2017,respectively. The net loss for the year ended December 2017 included a non-cash charge of $25.9 million related to our Takeda collaboration (as defined below).As of December 31, 2018, we had an accumulated deficit of approximately $152.7 million.We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. Our net losses may fluctuatesignificantly from period to period, depending on the timing of our planned clinical trials and expenditures on our other research and development and commercialdevelopment activities. We expect our expenses will increase substantially over time as we: •continue the ongoing and planned preclinical and clinical development of our drug candidates; •build a portfolio of drug candidates through the acquisition or in-license of drugs, drug candidates or technologies; •initiate preclinical studies and clinical trials for any additional drug candidates that we may pursue in the future; •seek marketing approvals for our current and future drug candidates that successfully complete clinical trials; •establish a sales, marketing and distribution infrastructure to commercialize any drug candidate for which we may obtain marketing approval; •develop, maintain, expand and protect our intellectual property portfolio; •implement operational, financial and management systems; and •attract, hire and retain additional administrative, clinical, regulatory and scientific personnel.Recent EventsOn February 22, 2019, we completed an offering and sold 12,500,000 shares of our common stock and 2,500 shares of Series A convertible preferred stockat a public offering price of $2.00 and $2,000, respectively, for estimated net proceeds of $28.2 million after deducting underwriting discounts and commission andother offering expenses payable by us. Each share of non-voting Series A preferred stock is convertible into 1,000 shares of common stock, provided thatconversion will be prohibited, subject to certain exceptions, if, as a result, the holder and its affiliates would beneficially own more than 9.99% of the commonstock then outstanding. In addition, the Company has granted the underwriters a 30-day option to purchase an additional 1,750,000 shares of common stock offeredin the common stock offering. On February 27, 2019, the underwriters exercised a portion of the 30-day option and purchased 1,493,778 shares at an offering priceof $2.00 for gross proceeds of $3.0 million and $2.8 million in estimated net proceeds after deducting underwriting discounts and commission and other offeringexpenses.License and Collaboration Agreement with Takeda Pharmaceutical Company LimitedIn January 2017, we entered into a license and collaboration agreement with Takeda or the Takeda Collaboration. All activities of the collaborationregarding OV935 will be guided by the Takeda/Ovid “One Team” concept, an integrated and interdisciplinary team from both companies devoted to the successfuladvancement of OV935 across rare epilepsy syndromes. Under the agreement, we will take the lead in clinical development activities and commercialization of thecompound OV935 and products containing this compound for the treatment of certain rare neurological disorders in the United States, Canada, the EuropeanUnion and Israel. Takeda will take the lead in commercialization of OV935 in Japan and has the option to lead in Asia and other selected geographies. We andTakeda will initially share equally all development and commercialization costs and expenses prior to launch of a product and all revenues and commercializationcosts and expenses after launch.Financial Operations OverviewRevenueWe have not generated any revenue from commercial drug sales and do not expect to generate any revenue unless or until we obtain regulatory approval ofand commercialize one or more of our current or future drug candidates. In the future, we may also seek to generate revenue from a combination of research anddevelopment payments, license fees and other upfront or milestone payments.Research and Development ExpensesResearch and development expenses consist primarily of costs incurred for our research activities, including our product discovery efforts and thedevelopment of our product candidates, which include, among other things: •fees related to the acquisition of the rights to OV101 and OV935;70 •employee-related expenses, including salaries, benefits and stock-based compensation expense; •fees paid to consultants for services directly related to our drug development and regulatory effort; •expenses incurred under agreements with contract research organizations, as well as contract manufacturing organizations and consultants thatconduct preclinical studies and clinical trials; •costs associated with preclinical activities and development activities; •costs associated with technology and intellectual property licenses; •milestone payments and other costs under licensing agreements; and •depreciation expense for assets used in research and development activities.Costs incurred in connection with research and development activities are expensed as incurred. Costs for certain development activities, such as clinicaltrials, are recognized based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or otherinformation provided to us by our vendors.Research and development activities are and will continue to be central to our business model. We expect our research and development expenses toincrease for the foreseeable future as we advance our current and future drug candidates through preclinical studies and clinical trials. The process of conductingpreclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. It is difficult to determine with certainty the durationand costs of any preclinical study or clinical trial that we may conduct. The duration, costs and timing of clinical trial programs and development of our current andfuture drug candidates will depend on a variety of factors that include, but are not limited to, the following: •number of clinical trials required for approval and any requirement for extension trials; •per patient trial costs; •number of patients who participate in the clinical trials; •number of sites included in the clinical trials; •countries in which the clinical trial is conducted; •length of time required to enroll eligible patients; •number of doses that patients receive; •drop-out or discontinuation rates of patients; •potential additional safety monitoring or other studies requested by regulatory agencies; •duration of patient follow-up; and •efficacy and safety profile of the drug candidate.In addition, the probability of success for any of our current or future drug candidates will depend on numerous factors, including competition,manufacturing capability and commercial viability. We will determine which programs to pursue and how much to fund each program in response to the scientificand clinical success of each drug candidate, as well as an assessment of each drug candidate’s commercial potential.General and Administrative ExpensesGeneral and administrative expenses consist primarily of employee-related expenses, including salaries, benefits and stock-based compensation expense,related to our executive, finance, business development and support functions. Other general and administrative expenses include costs associated with operating asa public company described below, travel expenses, conferences, professional fees for auditing, tax and legal services and facility-related costs.We expect that general and administrative expenses will increase in the future as we expand our operating activities and incur additional costs associatedwith being a publicly traded company. These increases will include legal and accounting fees, costs associated with maintaining compliance with The NasdaqGlobal Market LLC and the Securities and Exchange Commission, or the SEC, directors’ and officers’ liability insurance premiums and fees associated withinvestor relations. In addition, if our current or future drug candidates are approved for sale, we expect that we would incur expenses associated with building ourcommercial and distribution infrastructure.Interest IncomeInterest income consists of interest income earned on our cash and cash equivalents maintained in money market funds.71 Results of OperationsComparison of the Years Ended December 31, 2018 and 2017The following table summarizes the results of our operations for the periods indicated: Year Ended Year Ended December 31, December 31, 2018 2017 Change $ (in thousands) Research and development $33,790 $49,972 $(16,182)General and administrative 19,142 15,035 4,107 Total operating expenses 52,932 65,007 (12,075)Loss from operations (52,932) (65,007) 12,075 Interest income 952 202 750 Loss (51,980) (64,805) 12,825 Net loss $(51,980) $(64,805) $12,825 Research and Development Expenses Year Ended Year Ended December 31, December 31, 2018 2017 Change $ (in thousands) Preclinical and development expense $20,101 $41,181 $(21,080)Payroll and payroll-related expenses 11,404 7,668 3,736 Other expenses 2,285 1,123 1,162 Total research and development $33,790 $49,972 $(16,182) Research and development expenses were $33.8 million for the year ended December 31, 2018 compared to $50.0 million for the year ended December 31,2017. The decrease of $16.2 million was primarily due to the issuance of Series B-1 Preferred Stock to Takeda as an upfront payment upon signing thecollaboration agreement during January 2017, partially offset by an increase in development activities related to our ongoing development programs. During theyear ended December 31, 2018, total research and development expenses consisted of $20.1 million in preclinical and development expenses, including a credit of$1.3 million representing costs reimbursed to us from Takeda in respect of the Takeda collaboration, $11.4 million in payroll and payroll-related expenses, ofwhich $3.1 million related to stock-based compensation, and $2.3 million in other expenses. During the year ended December 31, 2017, total research anddevelopment expenses consisted of $41.2 million in preclinical and development expenses, of which $25.9 million related to the issuance of Series B-1 PreferredStock associated with the collaboration rights to OV935 and $4.3 million represents amounts reimbursed to Takeda in respect of the Takeda Collaboration,$7.7 million in payroll and payroll-related expenses, of which $2.4 million related to stock-based compensation, and $1.1 million in other expenses.General and Administrative Expenses Year Ended Year Ended December 31, December 31, 2018 2017 Change $ (in thousands) Payroll and payroll-related expenses $10,455 $9,087 $1,368 Legal and professional fees 4,729 3,806 923 General office expenses 3,958 2,142 1,816 Total general and administrative $19,142 $15,035 $4,107 General and administrative expenses were $19.1 million for the year ended December 31, 2018 compared to $15.0 million for the year ended December 31,2017. The increase of $4.1 million primarily consisted of increases in payroll and payroll-related expenses of $1.4 million due to increased headcount, and anincrease of $0.9 million mainly due to increased professional fees associated with operating as a public company. Interest IncomeInterest income increased to $1.0 million for the year ended December 31, 2018 from $0.2 million for the year ended December 31, 2017. The increase isattributable to increased interest and investment income on our cash, cash equivalents and short-term investments due to the investment of the net proceedsreceived from our IPO.72 Income TaxesThere was no provision for income taxes for the years ended December 31, 2018 and 2017 because we have historically incurred operating losses and wemaintain a full valuation allowance against our net deferred tax assets. The valuation allowance was approximately $54.0 million and $35.3 million at December31, 2018 and 2017, respectively.Liquidity and Capital ResourcesOverviewAs of December 31, 2018, we had total cash, cash equivalents and short-term investments of $41.5 million as compared to $87.1 million as ofDecember 31, 2017. In February 2019 we completed the February Offering of our capital stock generating approximately $31.0 million of net proceeds afterdeducting underwriting discounts and commissions and other offering expenses payable by us.We have incurred losses and experienced negative operating cash flows since our inception and anticipate that we will continue to incur losses for at leastthe next several years. We incurred net losses of approximately $52.0 million and $64.8 million for the years ended December 31, 2018 and 2017, respectively. Asof December 31, 2018, we had an accumulated deficit of approximately $152.7 million and working capital of $35.4 million.We believe that our existing cash and cash equivalents as of December 31, 2018 combined with the proceeds from the February Offering, will be sufficientto fund our current operating plans through at least the next 12 months from the filing of this annual report on Form 10-K.Until such time, if ever, as we can generate revenue from drug sales, we expect to finance our cash needs through a combination of equity offerings, debtfinancings and potential collaborations and license and development agreements. To the extent that we raise additional capital through future equity offerings ordebt financings, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect yourrights as a common stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to takespecific actions, such as incurring additional debt, making capital expenditures or declaring dividends. There can be no assurance that such financings will beobtained on terms acceptable to us, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us we may have tosignificantly delay, scale back or discontinue our research and development programs or future commercialization efforts. If we raise additional funds throughcollaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties for one or more of our current or future drug candidates,we may be required to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or to grant licenses on termsthat may not be favorable to us. Our failure to raise capital as and when needed would have a material adverse effect on our financial condition and our ability topursue our business strategy. Cash FlowsThe following table summarizes our cash flows for the periods indicated: Year Ended Year Ended December 31, December 31, 2018 2017 (in thousands) Net cash provided by (used in): Operating activities $(45,558) $(31,470)Investing activities (5,364) (47)Financing activities 286 66,703 Net increase (decrease) in cash and cash equivalents $(50,636) $35,186 Net Cash Used in Operating ActivitiesNet cash used in operating activities was $45.6 million for the year ended December 31, 2018, which consisted of net losses of $52.0 million offset by $6.4million of net non-cash charges and changes in operating assets and liabilities compared to net cash used in operating activities of $31.5 million for the year endedDecember 31, 2017, which consisted of net losses of $64.8 million offset by $32.3 million of net non-cash charges, of which $25.9 million related to the issuanceof Series B-1 Preferred Stock associated with the collaboration rights to OV935. The increase of $14.1 million in net cash used in operating activities wasprimarily due to an increase in our costs and upfront payments related to our research and development programs and an increase in our payroll and payroll-relatedexpenses as the result of increased headcount as we continue to build our management team and expand our operations.73 Net Cash Used in Investing ActivitiesNet cash used in investing activities was $5.4 million for the year ended December 31, 2018, compared to $47 thousand for the year ended December 31,2017. The increase in net cash used for investing activities was primarily due to purchases of short-term investments.Net Cash Provided by Financing ActivitiesNet cash provided by financing activities of $0.3 million for the year ended December 31, 2018 was primarily due to the proceeds from the exercise ofstock options and purchases of shares under the 2017 employee stock purchase plan.Net cash provided by financing activities of $66.7 million for the year ended December 31, 2017 was primarily due to the receipt of $66.7 million of netproceeds from the completion of our IPO, after deducting underwriting discounts and commissions and other offering expenses payable by us.Contractual Obligations and CommitmentsAs of December 31, 2018, we had no contractual obligations or commitments. We had no long-term debt or capital leases and no material non-cancelablepurchase commitments with service providers, as we have generally contracted on a cancelable, purchase order basis. We excluded any potential contingentpayments upon the achievement by us of clinical, regulatory and commercial events, as applicable, or royalty payments that we may be required to make underlicense agreements we have entered into with various entities pursuant to which we have in-licensed certain intellectual property as contractual obligations orcommitments, including our license agreement with H. Lundbeck A/S, Northwestern, and our Takeda license agreement. Pursuant to these license agreements, wehave agreed to make milestone payments up to an aggregate of $271.3 million upon the achievement of certain development, regulatory and sales milestones. Weexcluded these contingent payments given that the timing and amount, if any, of such payments cannot be reasonably estimated at this time. See the section titled“Business—License and Collaboration Agreements—License Agreement with H. Lundbeck A/S”, Business—License and Collaboration Agreements—Northwestern License,” and “Business—License and Collaboration Agreements—License and Collaboration Agreement with Takeda” for additional information.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations ofthe SEC.Emerging Growth Company StatusWe are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and may remain an emerginggrowth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certaindisclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: •reduced disclosure about our executive compensation arrangements; •no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and •exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.We have taken advantage of reduced reporting requirements in this Annual Report on Form 10-K. In particular, in this Annual Report on Form 10-K, wehave not included all of the executive compensation related information that would be required if we were not an emerging growth company. We may takeadvantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerginggrowth company if we have more than $1.07 billion in annual revenues as of the end of any fiscal year, if we are deemed to be a large accelerated filer under therules of the SEC or if we issue more than $1.0 billion of non- convertible debt over a three-year period. Section 107 of the JOBS Act provides that an emerginggrowth company can take advantage of the extended transition period for complying with new or revised accounting standards. Thus, an emerging growthcompany can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected notto avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption ofsuch standards is required for other public companies.Critical Accounting Policies and EstimatesOur management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been preparedin accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates andassumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, aswell as the revenue and expenses incurred74 during the reported periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and stock-basedcompensation. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results ofwhich form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Changes in estimates arereflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.Our significant accounting policies are described in more detail in Note 2 to our audited financial statements appearing elsewhere in this Form 10-K. Webelieve the following critical accounting policies are most important to understanding and evaluating our reported financial results.Accrued Clinical ExpensesWhen preparing our consolidated financial statements, we are required to estimate our accrued clinical expenses. This process involves reviewing opencontracts and communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and theassociated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual cost. Payments under some of the contracts we havewith third parties depend on factors, such as successful enrollment of certain numbers of patients, site initiation and the completion of clinical trial milestones.When accruing clinical expenses, we estimate the time period over which services will be performed and the level of effort to be expended in each period. Ifpossible, we obtain information regarding unbilled services directly from our service providers. However, we may be required to estimate the cost of theseservices based only on information available to us. If we underestimate or overestimate the cost associated with a trial or service at a given point in time,adjustments to research and development expenses may be necessary in future periods. Historically, our estimated accrued clinical expenses have approximatedactual expense incurred.Stock-Based CompensationWe account for stock-based compensation awards in accordance with the Financial Accounting Standards Board Accounting Standards Codification, orASC, Topic 718, Compensation—Stock Compensation, or ASC 718. ASC 718 requires all stock-based compensation awards to employees to be recognized asexpense based on their grant date fair values. We recognized expenses over the requisite service period, which is generally the vesting period of the award underthe straight-line method. We account for forfeitures as they occur. We record the expense for stock-based compensation awards subject to performance-basedmilestone vesting over the remaining service period when management determines that achievement of the milestone is probable. Management evaluates when theachievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date.We measure the grant-date fair value based on the Black-Scholes option-pricing model, which uses highly subjective assumptions. These assumptionsinclude: •Expected Volatility. Due to the lack of sufficient volatility data, the expected volatility is estimated using weighted average measures of thehistorical volatility of a representative group of small, publicly traded drug development companies at a similar stage of development as ourselves. •Expected Term. The expected term of the options outstanding is determined using the “simplified” method for “plain vanilla” options based on themid-point between the vesting date and the end of the contractual term as prescribed by Staff Accounting Bulletin No. 107, Share-Based Payment. •Risk-Free Interest Rate. The risk-free interest rate is based on U.S. Treasury notes with remaining terms similar to the expected term of the option. •Expected Dividends. The dividend yield assumption is zero since we have never paid cash dividends and do not plan to pay cash dividends in theforeseeable future.We expect the impact of our stock-based compensation expense for stock options granted to employees and non-employees to grow in future periods due tothe potential increases in the value of our common stock and in headcount.75 Item 7A. Quantitative and Qualitative Disclosures About Market Risk.The primary objectives of our investment activities are to ensure liquidity and to preserve capital. As of December 31, 2018, we had cash and cashequivalents of $36.5 million that were held in an interest-bearing money market account. Our primary exposure to market risk is interest rate sensitivity, which isaffected by changes in the general level of U.S. interest rates. Due to the short-term maturities of our cash equivalents and the low risk profile of our investments,an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents. To minimize the risk in thefuture, we intend to maintain our portfolio of cash equivalents in institutional market funds that are comprised of U.S. Treasury and U.S. Treasury-backedrepurchase agreements.Item 8. Financial Statements and Supplementary DataOur financial statements, together with the report of our independent registered public accounting firm, appear in this Annual Report on Form 10-Kbeginning on page F-1.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and Procedures.Management’s Evaluation of our Disclosure Controls and ProceduresWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submitunder the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is (1) recorded, processed, summarized, and reported within the time periodsspecified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principalfinancial officer, to allow timely decisions regarding required disclosure.As of December 31, 2018 our management, with the participation of our principal executive officer and principal financial officer, evaluated theeffectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes thatany controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and managementnecessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our principal executive officer and principalfinancial officer have concluded based upon the evaluation described above that, as of December 31, 2018 our disclosure controls and procedures were effective atthe reasonable assurance level.Management’s Annual Report on Internal Control over Financial ReportingOur 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 andAccounting Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2018 based on the frameworkin Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on theresults of its evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2018.Attestation Report of the Registered Public Accounting FirmThis Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm due to an exemption established by theJOBS Act for “emerging growth companies.”Changes in Internal Control over Financial ReportingDuring the year ended December 31, 2018, we substantially completed the implementation of our new enterprise resource planning (“ERP”) system. Thenew ERP system was designed and implemented, in part, to enhance the overall system of internal controls over financial reporting through further automation andintegration of business processes.Except for the changes related to the ERP implementation, there have been no changes in our internal control over financial reporting that occurred duringthe quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Item 9B. Other Information.None.76 PART IIIItem 10. Directors, Executive Officers, and Corporate GovernanceThe 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 “Section 16(a) Beneficial Ownership Reporting Compliance” in our2019 Proxy Statement.Item 11. Executive CompensationThe information required by this item is incorporated by reference to the information set forth in the section titled “Executive Officer and DirectorCompensation” in our 2019 Proxy Statement.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this item is incorporated by reference to the information set forth in the section titled “Security Ownership of CertainBeneficial Owners and Management and “Equity Compensation Plan Information” in our 2019 Proxy Statement.Item 13. Certain Relationships and Related Transactions and Director IndependenceThe 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 2019 Proxy Statement.Item 14. Principal Accountant Fees and ServicesThe information required by this item is incorporated by reference to the information set forth in the section titled “Independent Registered PublicAccounting Firm Fees” contained in Proposal 2 in our 2019 Proxy Statement.77 PART IVItem 15. Exhibits, Financial Statements and Schedules(a)(1) Financial Statements.The response to this portion of Item 15 is set forth under Item 8 hereof.(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 Form 10-K other than Exhibit 32.1, which shall be deemed furnished 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 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 onForm S-1/A (File No. 333-217245), filed with the Commission on April 25, 2017). 4.2 Second Amended and Restated Investors’ Rights Agreement, by and among the Company and certain of its stockholders, dated January 6, 2017(incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with theCommission on April 10, 2017). 10.1+ Form of Indemnity Agreement by and between the Registrant and its directors and officers (incorporated herein by reference to Exhibit 10.1 to theCompany’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 theCompany’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.4+ 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). 10.5+ Amendment to 2014 Equity Incentive Plan, effective as of March 9, 2015 (incorporated herein by reference to Exhibit 10.6 to the Company’sRegistration 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 June 4, 2015 (incorporated herein by reference to Exhibit 10.7 to the Company’sRegistration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.7+ Amendment to 2014 Equity Incentive Plan, effective as of July 28, 2015 (incorporated herein by reference to Exhibit 10.8 to the Company’sRegistration 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 February 11, 2016 (incorporated herein by reference to Exhibit 10.9 to the Company’sRegistration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.9+ Form of Restricted Stock Purchase Agreement under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.10 to theCompany’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017).78 10.10+ Form of Stock Option Agreement—Early Exercise under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.11 to theCompany’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.11+ Forms of Stock Option Agreement under the 2014 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.12 to the Company’sRegistration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.12+ 2017 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 4.14 to the Company’s Registration Statement on Form S-8 (FileNo. 001-38085), filed with the Commission on May 22, 2017). 10.13+ Executive Employment Agreement between the Registrant and Jeremy M. Levin, dated June 5, 2015 (incorporated herein by reference to Exhibit10.14 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 Registrant and Amit Rakhit, dated February 8, 2016 (incorporated herein by reference to Exhibit10.15 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.15+ Executive Employment Agreement between the Registrant and Dirk Haasner, dated May 16, 2016 (incorporated herein by reference to Exhibit10.16 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on April 10, 2017). 10.16† License Agreement by and between H. Lundbeck A/S and the Registrant, dated March 25, 2015 (incorporated herein by reference to Exhibit 10.16to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with the Commission on May 2, 2017). 10.17† Collaboration and License Agreement, by and between the Registrant and Takeda Pharmaceutical Company Limited, effective January 6, 2017(incorporated herein by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed with theCommission on April 10, 2017). 10.18† Series B-1 Preferred Stock Purchase Agreement, by and between the Registrant and Takeda Pharmaceutical Company Limited, dated January 6,2017 (incorporated herein by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 (File No. 333-217245), filed withthe Commission on April 10, 2017). 10.19†† License Agreement by and between Northwestern University and the Registrant, dated December 15, 2016. (incorporated herein by reference toExhibit 10.19 to the Company’s Annual Report on Form 10-K (File No. 001-38085), filed with the Commission on April 10, 2017). 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 AdoptedPursuant 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 AdoptedPursuant 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 Section906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document *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”), andshall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933,79 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 insuch 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.††Portions of this exhibit have been omitted pursuant to a request for confidential treatment that will be separately filed with the Securities and ExchangeCommissionItem 16. Form 10-K SummaryNot applicable. 80 SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized. OVID THERAPEUTICS INC. Date: March 7, 2019 By: /s/ Jeremy M. Levin Jeremy M. Levin Chief Executive Officer(Principal Executive Officer) Date: March 7, 2019 By: /s/ Timothy Daly Timothy DalyPOWER OF ATTORNEYEach person whose individual signature appears below hereby authorizes and appoints Jeremy M. Levin, DPhil, MB BChir and Timothy Daly, and each ofthem, 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 hisor 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 allamendments 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 andExchange 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 doneby 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 andin the capacities and on the dates indicated. Signature Title Date /s/ Jeremy M. Levin, DPhil, MB BChirJeremy M. Levin, DPhil, MB BChir Chief Executive Officer and Director(Principal Executive Officer) March 7, 2019 /s/ Timothy DalyTimothy Daly Senior Vice President, Finance and Corporate Controller(Principal Financial and Accounting Officer) March 7, 2019 /s/ Matthew During, MD, DScMatthew During, MD, DSc President, Chief Scientific Officer and Director March 7, 2019 /s/ Karen Bernstein, PhDKaren Bernstein, PhD Director March 7, 2019 /s/ Barbara Duncan Director March 7, 2019Barbara Duncan /s/ Bart FriedmanBart Friedman Director March 7, 2019 /s/ Douglas Williams, PhDDouglas Williams, PhD Director March 7, 2019 81 OVID THERAPEUTICS INC.Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Comprehensive Loss F-5 Consolidated Statement of Changes in Stockholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8–F-21 F-1 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsOvid Therapeutics Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Ovid Therapeutics Inc. and subsidiary (the Company) as of December 31, 2018 and 2017, therelated consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in the two‑year periodended December 31, 2018, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements presentfairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for eachof the years in the two‑year period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidatedfinancial 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 andregulations 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 reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required tohave, 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 ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financialreporting. 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, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in theconsolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLPWe have served as the Company’s auditor since 2015.New York, New York March 7, 2019F-2 PART I—FINANCIAL INFORMATIONItem 1. Financial Statements.OVID THERAPEUTICS INC.Consolidated Balance Sheets December 31, December 31, 2018 2017 Assets Current assets: Cash and cash equivalents $36,489,618 $87,125,600 Short-term investments 5,011,034 - Prepaid and other current assets 2,767,495 1,462,448 Total current assets 44,268,147 88,588,048 Long-term prepaid expenses 2,797,561 604,646 Security deposit 122,155 88,940 Property and equipment, net 69,867 51,775 Other assets 391,872 124,194 Total assets $47,649,602 $89,457,603 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $3,755,595 $2,025,766 Accrued expenses 5,088,862 3,995,334 Total current liabilities 8,844,457 6,021,100 Stockholders' equity: Preferred stock, $0.001 par value; 10,000,000 shares authorized and no shares issued and outstanding at December 31, 2018 and 2017 - - Common stock, $0.001 par value; 125,000,000 shares authorized at December 31, 2018 and 2017, 24,654,114 and 24,606,256 shares issued and outstanding at December 31, 2018 and 2017, respectively 24,654 24,606 Additional paid-in-capital 191,477,598 184,127,565 Accumulated other comprehensive loss (1,829) - Accumulated deficit (152,695,278) (100,715,668)Total stockholders' equity 38,805,145 83,436,503 Total liabilities and stockholders' equity $47,649,602 $89,457,603 See accompanying notes to these consolidated financial statementsF-3 OVID THERAPEUTICS INC.Consolidated Statements of Operations For the Year EndedDecember 31, For the Year EndedDecember 31, 2018 2017 Operating expenses: Research and development $33,790,031 $49,972,102 General and administrative 19,141,652 15,035,461 Total operating expenses 52,931,683 65,007,563 Loss from operations (52,931,683) (65,007,563)Interest income 952,073 201,509 Net loss $(51,979,610) $(64,806,054)Net loss attributable to common stockholders $(51,979,610) $(64,806,054)Net loss per share attributable to common stockholders, basic and diluted $(2.11) $(3.35)Weighted-average common shares outstanding basic and diluted 24,631,011 19,344,355 See accompanying notes to these consolidated financial statementsF-4 OVID THERAPEUTICS INC.Consolidated Statements of Comprehensive loss For the Year EndedDecember 31, For the Year EndedDecember 31, 2018 2017 Net loss $(51,979,610) $(64,806,054)Other comprehensive loss: Unrealized loss on available-for-sale securities (1,829) - Comprehensive loss $(51,981,439) $(64,806,054) See accompanying notes to these consolidated financial statements F-5 OVID THERAPEUTICS INC.Consolidated Statement of Changes in Stockholders’ Equity Series A PreferredStock Series B PreferredStock Series B-1Preferred Stock Common Stock AdditionalPaid-In AccumulatedOtherComprehensive Accumulated Shares Amount Shares Amount Shares Amount Shares Amount Capital Loss Deficit Total Balance,December 31,2016 2,382,069 $2,382 5,599,282 $5,599 - $- 9,838,590 $9,839 $85,186,269 $- $(35,909,614) $49,294,475 Issuance ofSeries B-1PreferredStock - - - - 1,781,996 1,782 - - 25,859,446 - - 25,861,228 Proceeds fromInitial PublicOffering, netofunderwritingcosts andcommissions - - - - - - 5,000,000 5,000 69,745,000 - - 69,750,000 Deferredoffering costsreclassified to additionalpaid-in capital - - - - - - - - (3,087,481) - - (3,087,481)Conversion ofpreferred stockinto commonstock (2,382,069) (2,382) (5,599,282) (5,599) (1,781,996) (1,782) 9,763,346 9,763 (464) - - (464)Issuance ofcommon stockfrom exerciseof stockoptions 4,320 4 27,039 - 27,043 Stock-basedcompensationexpense - - - - - - - - 6,397,756 - - 6,397,756 Net loss - - - - - - - - - - (64,806,054) (64,806,054)Balance,December 31,2017 - $- - $- - $- 24,606,256 $24,606 $184,127,565 $- $(100,715,668) $83,436,503 Issuance ofcommon stockfrom exerciseof stockoptions - - - - - - 15,744 16 111,362 - - 111,378 Issuance ofcommon stockfrom employeestock purchaseplan - - - - - - 32,114 32 174,730 174,762 Stock-basedcompensationexpense - - - - - - - - 7,063,941 - - 7,063,941 Othercomprehensiveloss - - - - - - - - - (1,829) - (1,829)Net loss - - - - - - - - - - (51,979,610) (51,979,610)Balance,December 31,2018 - $- - $- - $- 24,654,114 $24,654 $191,477,598 $(1,829) $(152,695,278) $38,805,145 See accompanying notes to these consolidated financial statements F-6 OVID THERAPEUTICS INC.Consolidated Statements of Cash Flows Year Ended December 31, Year Ended December 31, 2018 2017 Cash flows from operating activities: Net loss $(51,979,610) $(64,806,054)Adjustments to reconcile net loss to cash used in operating activities: Non-cash research and development expense - 25,861,228 Stock-based compensation expense 7,063,941 6,397,756 Depreciation and amortization 141,733 80,310 Loss on disposal of intangible assets 4,610 - Change in accrued interest and accretion of discount on short-term investments (1,240) - Change in operating assets and liabilities: Prepaid expenses and other current assets (1,305,047) (793,258)Deferred transaction costs - 229,000 Security deposit (33,215) (36,590)Long-term prepaid expenses (2,192,915) (604,646)Accounts payable 1,649,735 1,076,349 Accrued expenses 1,093,528 1,118,627 Due from/ to related parties - 7,369 Net cash used in operating activities (45,558,480) (31,469,909) Cash flows from investing activities: Purchases of short-term investments (50,011,623) - Proceeds from maturities of short-term investments 45,000,000 - Purchase of property and equipment (33,871) (38,907)Software development and other assets (318,148) (8,480)Net cash used in investing activities (5,363,642) (47,387) Cash flows from financing activities: Proceeds from initial public offering, net of offering expenses - 69,750,000 Payments for transaction costs - (3,073,808)Proceeds from employee stock purchase plan 174,762 - Proceeds from exercise of options 111,378 27,043 Net cash provided by financing activities 286,140 66,703,235 Net increase (decrease) in cash and cash equivalents (50,635,982) 35,185,939 Cash and cash equivalents, at beginning of period 87,125,600 51,939,661 Cash and cash equivalents, at end of period $36,489,618 $87,125,600 See accompanying notes to these consolidated financial statements F-7 OVID THERAPEUTICS, INC.NOTES TO CONSOLIDATED FINANCIAL STATEMENTSNOTE 1 – NATURE OF OPERATIONSOvid Therapeutics Inc. (the “Company”) was incorporated under the laws of the state of Delaware on April 1, 2014 and maintains its principal executive office inNew York, New York. The Company commenced operations on April 1, 2014 (date of inception). The Company is a biopharmaceutical company focusedexclusively on developing impactful medicines for patients and families living with rare neurological disorders.Since its inception, the Company has devoted substantially all of its efforts to business development, research and development, recruiting management andtechnical staff, and raising capital, and has financed its operations through issuance of convertible preferred stock (“Preferred Stock”), common stock and otherequity instruments. The Company has not generated any revenue. The Company is subject to risks and uncertainties common to early-stage companies in thebiotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations,dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fundoperations.On February 22, 2019, the Company completed an offering and sold 12,500,000 shares of its common stock and 2,500 shares of Series A Convertible PreferredStock at an offering price of $2.00 and $2,000, respectively, for gross proceeds of $30.0 million and $28.2 million of estimated net proceeds, after deductingunderwriting discounts and commission and other offering expenses payable by the Company. On February 27, 2019, the underwriters partially exercised a portionof the 30-day option to purchase 1,493,778 shares at an offering price of $2.00 for gross proceeds of $3.0 million and $2.8 million in estimated net proceeds afterdeducting underwriting discounts and commission and other offering expenses.On May 10, 2017, the Company completed its initial public offering (“IPO”) of 5,000,000 shares of the Company's common stock at a public offering price of$15.00 per share. The gross proceeds from the IPO were $75.0 million and the net proceeds were $66.7 million, after deducting underwriting discounts andcommissions and other offering expenses payable by us. At the time of the IPO the Series A Preferred Stock, the Series B Preferred Stock, and the Series B-1Preferred Stock were automatically converted into common stock (see Note 6). The Company has not generated any revenue since inception. As a result, the Company has suffered recurring losses and requires significant cash resources tocontinue to execute its business plans. The Company has an accumulated deficit of $152.7 million as of December 31, 2018 and cash outflows from operatingactivities of $45.6 million for the year ended December 31, 2018. These losses are expected to continue for an extended period of time. Historically, the Company’s major sources of cash have comprised of proceeds from various public and private offerings of our capital stock and interest income.As of December 31, 2018, the Company had approximately $41.5 million in cash, cash equivalents and short-term investments and in February 2019, theCompany completed the February Offering, described in Note 12, generating an estimated $31.0 million in net proceeds. The actual amount of cash that theCompany will need to operate is subject to many factors. Management’s plans to mitigate any expected shortfall of capital, to support future operations, includeraising additional funds. There is no assurance that additional financing will be available when needed or that management will be able to obtain financing onterms acceptable to the Company or whether the Company will become profitable and generate positive operating cash flow.The Company has incurred operating losses since inception and had an accumulated deficit of $152.7 million as of December 31, 2018. The Company expects tocontinue to incur net losses for at least the next several years and is highly dependent on its ability to find additional sources of funding in the form of debt orequity financing to fund its operations. Management believes that the Company’s existing cash, cash equivalents and short-term investments as of December 31,2018 combined with the proceeds from the February Offering, will be sufficient to fund its current operating plans through at least the next 12 months from thedate of filing of this 10-K. Management expects that future sources of funding may include new or expanded partnering arrangements and sales of equity or debtsecurities. 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 couldhave a negative impact on the Company’s financial condition and ability to pursue business strategies. The Company may be required to delay, reduce the scope ofor eliminate research and development programs, or obtain funds through arrangements with collaborators or others that may require the Company to relinquishrights to certain drug candidates that the Company might otherwise seek to develop or commercialize independently.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 ofAmerica (“GAAP”) and include the accounts of Ovid Therapeutics Inc. and its wholly-owned subsidiary, Ovid Therapeutics Hong Kong Limited. Allintercompany transactions and balances have been eliminated in consolidation.F-8 (B) Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during thereporting period. Actual results could differ materially from those estimates. (C) Risks and Uncertainties The Company is subject to risks common to companies in the development stage including, but not limited to, dependency on the clinical and commercial successof its drug candidates, ability to obtain regulatory approval of its drug candidates, the need for substantial additional financing to achieve its goals, uncertainty ofbroad adoption of its approved products, if any, by physicians and consumers, and significant competition and untested manufacturing capabilities. (D) Deferred Transaction Costs Deferred transaction costs, primarily consisted of direct incremental legal, accounting, and other fees related to the Company’s offering of its capital stock arecapitalized as incurred. The deferred transaction costs are offset against proceeds upon the consummation of an offering.(E) Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions and economic events other than those withstockholders. For the year ended December 31, 2018 the Company had other comprehensive loss comprised of the loss on debt securities.(F) Collaboration ArrangementLicense and Collaboration Agreement with Takeda Pharmaceutical Company LimitedThe Company accounts for the license and collaboration agreement with Takeda Pharmaceutical Company Limited (“Takeda”) in accordance with AccountingStandard Codification (“ASC”) 808 – “Collaborative Arrangements.” As Ovid and Takeda are sharing 50/50 in the drug development and throughout the life ofthis compound, the Company records 50% of the development costs in research and development. When Ovid incurs the majority of the costs and Takeda transfersa payment to Ovid to equalize the costs, Ovid records the participation by Takeda as a reduction of its research and development expenses, as the parties under thecollaboration are sharing in the costs and the payment represents reimbursement of costs by Takeda. When Takeda incurs the majority of the costs and Ovidtransfers a payment to Takeda (to equalize the costs), Ovid records the participation in Takeda’s expenses as research and development costs in its statement ofoperations, as Ovid and Takeda are sharing in the research and development activities and this participation represents Ovid’s share of the research anddevelopment costs in the specific period. (G) Cash and Cash Equivalents The Company’s cash and cash equivalents consist of cash held in checking accounts and money market funds. The Company considers all highly liquidinvestments with an original maturity date of three months or less to be cash and cash equivalents. Accounts held at U.S. financial institutions are insured by theFDIC up to $250,000. Cash balances could exceed insured amounts at any given time. (H) Short-term InvestmentsShort-term investments consist of debt securities with maturities greater than three months from the date of purchase. The Company classifies all of itsinvestments as available-for-sale securities. Debt securities are recorded at fair value with unrealized gains and losses included in other comprehensive income(loss) as a component of stockholders’ equity until realized. Realized gains and losses, amortization and accretion of premiums and discounts are included withinnet loss. (I) Property and Equipment Property and equipment are stated at cost and depreciated over their estimated useful lives of three years using the straight-line method. Repairs and maintenancecosts are expensed. The Company reviews the recoverability of all long-lived assets, including the related useful life, whenever events or changes in circumstancesindicate that the carrying amount of a long-lived asset might not be recoverable. (J) Research and Development Expenses The Company expenses the cost of research and development as incurred. Research and development expenses comprise costs incurred in performing research anddevelopment activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, licensefees, and other external costs. Nonrefundable advance payments forF-9 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 beenreceived, rather than when the cost is incurred, in accordance with Accounting Standards Codification (“ASC”) 730, Research and Development. (K) Stock-Based Compensation The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation—Stock Compensation, which establishes accounting forstock-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 theoption, stock price volatility, risk-free interest rate, dividend yield, stock price and exercise price. Many of the assumptions require significant judgment and anychanges could have a material impact in the determination of stock-based compensation expense. The Company elected an accounting policy to record forfeituresas they occur. The Company recognizes employee stock-based compensation expense based on the fair value of the award on the date of the grant. Thecompensation expense is recognized over the vesting period under the straight-line method. The Company accounts for options awards granted to nonemployee consultants and directors under ASC 505 Equity. The fair value of the option issued orcommitted to be issued is used to measure the transaction, as this is more reliable than the fair value of the services received. The fair value is measured at thevalue of the Company’s common stock at the earlier of the date that the commitment for performance by the counterparty has been reached or the counterparty’sperformance is complete. Awards granted to nonemployees are remeasured to fair value at each period end date until vested and expensed on a straight-line basisover the vesting period. (L) Fair Value of Financial Instruments Financial Accounting Standards Board (“FASB”) guidance specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniquesare 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 lowestpriority to unobservable inputs (Level 3 measurement). 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 themeasurement date. Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as exchange-tradedinstruments and listed equities. The Company’s Level 1 assets consisted of money market funds and short-term investments totaling $40.5 millionand $86.6 million as of December 31, 2018 and 2017, respectively. •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 notactive). Level 2 includes financial instruments that are valued using models or other valuation methodologies. The Company had no Level 2 assetsor liabilities as of December 31, 2018 and 2017. •Level 3—Unobservable inputs for the asset or liability. Financial instruments are considered Level 3 when their fair values are determined usingpricing models, discounted cash flows or similar techniques and at least one significant model assumption or input is unobservable. The Companyhad no Level 3 assets or liabilities as of December 31, 2018 and 2017. The carrying amounts reported in the balance sheets for cash and cash equivalents, other current assets, accounts payable, and accrued expenses approximate theirfair value based on the short-term maturity of these instruments. (M) 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 estimatedfuture tax consequences attributable to differences between financial statement carrying amounts and respective tax bases of existing assets and liabilities, as wellas for net operating loss carryforwards and research and development credit. Valuation allowances are provided if it is more likely than not that some portion or allof the deferred tax assets will not be realized. The impact of a change in the tax laws is recorded in the period in which the law is enacted. (N) Net Loss Per Common Share Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average common sharesoutstanding during the period. For all periods presented, stock options have been excluded from the calculation because their effect would be anti-dilutive.Therefore, the weighted-average shares outstanding used to calculate both basic and diluted loss per common share are the same. F-10 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, 2018 2017 Stock options to purchase common stock 4,714,383 4,298,802 (O) Segment Data The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. (P) 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 Codeof 1986, as amended (“Code”), in 2016. The Company provides all active employees with a 100% matching contribution equal to 3% of an employee’s eligiblecompensation deferred and 50% matching contributions on employee contributions that are between 3% and 5% of an employee’s eligible compensation deferred.These safe harbor contributions vest immediately. For the years ended December 31, 2018 and 2017 the Company contributed $210,034 and $163,942,respectively. (Q) Recent Accounting PronouncementsRecent accounting standards which have been adoptedIn May 2017, the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This new standardclarifies when to account for a change to the terms or conditions of share-based payment award as a modification. Under the new guidance, modificationaccounting is required unless the fair value, the vesting conditions, and the classification of the award remain the same as the original award. ASU 2017-09 iseffective for public companies for fiscal years beginning on or after December 15, 2017. The adoption of this standard did not have a material impact on theCompany’s financial statements.In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies thedefinition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires, among others, thatwhen substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiableassets, the set is not a business. ASU 2017-01 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning afterDecember 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s financial statements.In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The newstandard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing,contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement ofcorporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. The newstandard also clarifies that an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of thenature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separatedby source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. ASU2016-15 is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of thisstandard did not have a material impact on the Company’s statement of cash flows upon adoption.In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This new standard was issued to increase transparency and comparability among entities byrecognizing for all leases lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. This new standardis effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company does not expectASU 2016-02 to have a material impact on its financial statements.In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets andFinancial Liabilities. This new standard amends certain aspects of accounting and disclosure requirements for financial instruments, including the requirement thatequity investments (other than equity method investees) with readily determinable fair values are to be measured at fair value with any changes in fair valuerecognized in a company's results of operations. Equity investments that do not have readily determinable fair values may be measured at fair value or at costminus impairment adjusted for changes in observable prices. The standard also includes certain amendments for the accounting for aF-11 financial liability that is measured at fair value in accordance with the fair value option and prescribes that a valuation allowance should be evaluated on deferredtax assets related to available-for-sale debt securities in combination with other deferred tax assets. The ASU makes targeted changes to the presentationrequirements for financial instruments under current GAAP. All entities are required to disclose financial assets and financial liabilities separately, grouped bymeasurement category and form of financial asset. ASU No. 2016-01 is effective for the Company as of January 1, 2018. As the Company does not have equityinvestments, financial liabilities measured at fair value in accordance with the fair value option or deferred tax assets, the recognition and measurement guidance ofthis new standard is not applicable to the Company. However, since the Company does have financial asset investments, it has adopted the presentation anddisclosure requirements of this standard.New accounting standards which have not yet been adoptedOn November 5, 2018, the FASB issued ASU 2018-18, which amends ASC 808 to clarify when transactions between participants in a collaborative arrangementunder ASC 808 are within the scope of the FASB’s new revenue standard, ASU 2014-09 (codified in ASC 606). The amendments require the application of ASC606 existing guidance to determine the units of account that are distinct in a collaborative arrangement for purposes of identifying transactions with customers. If aunit of account within the collaborative arrangement is distinct and is with a customer, an entity shall apply the guidance in Topic 606 to that unit of account. In atransaction between collaborative participants, an entity is precluded by ASU 2018-18 from presenting a transaction together with “revenue from contracts withcustomers” unless the unit of account is within the scope of ASC 606 and the entity applies the guidance in ASC 606 to such unit of account. The amendedguidance is effective for public business entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Companyhas a collaboration agreement with Takeda. However, the Company does not expect these amendments to have an impact on its financial statements, as Takedadoes not meet the definition of a customer and the Company does not currently apply any of ASC 606 guidance in analogy to the collaboration.On August 29, 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other - Internal-Use Software (Subtopic 350-40) - which amends ASC 350-40 to address a customer’s accounting for implementation costs incurred in a cloud computing arrangement (“CCA”) that is a service contract. ASU No. 2018-15aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing orobtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract andclarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized in a CCA that is considered a service contract.According to the standard the balance sheet line item for the presentation of capitalized implementation costs should be the same as that for the prepayment of feesrelated to the hosting arrangement and the manner in which an entity classifies the cash flows related to capitalized implementation costs should be the same asthat in which it classifies the cash flows for the fees related to the hosting arrangement. ASU 2018-15 is effective for the Company for fiscal years beginning afterDecember 15, 2019, including interim periods therein. Entities are permitted to apply either a retrospective or prospective transition approach to adopt theguidance. When prospective transition is chosen, entities must apply the transition requirements to any eligible costs incurred after adoption. The Company is inthe process of assessing the impact of this standard on its financial statements.On August 28, 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the DisclosureRequirements for Fair Value Measurement. This standard changes the fair value measurement disclosure requirements of ASC 820. The new standard eliminatedcertain disclosures, added new disclosures with regard to unrealized gains or losses included in other comprehensive income for recurring Level 3 fair valuemeasurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair valuemeasurements, as well as modified certain disclosure. ASU 2018-13 is effective for all entities for fiscal years beginning after December 15, 2019, includinginterim periods therein. Early adoption is permitted. The ASU requires application of the prospective method of transition for the aforementioned new disclosurerequirements and for modified disclosure with regard to measurement uncertainty while all other amendments made by the ASU must be applied retrospectively toall periods presented. The Company is in the process of assessing the impact of this standard on its financial statements.On June 20, 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based PaymentAccounting. This new standard simplifies the accounting for share-based payments granted to nonemployees for goods and services. The standard supersedes ASC505-50 and expands the scope of ASC 718 to include all share-based payment arrangements related to the acquisition of goods and services from bothnonemployees and employees. As such, among others, the measurement date for nonemployee awards would generally be the grant date same as the measurementdate for employee equity awards and for performance-based awards, an entity is required to recognize any cost on the basis of the probable outcome of theperformance conditions using the grant-date fair value of the award. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, includinginterim periods within those fiscal years. Due to the immaterial volume of nonemployee equity-based awards as well as the immaterial fair value of suchawards the Company does not expect ASU 2018-07 to have a material impact on its financial statements.On March 30, 2017, the FASB issued ASU 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization andPurchased Callable Debt Securities. This new standard requires premiums on callable debt securities, that have explicit, non-contingent call features that arecallable at fixed prices on preset dates, to be amortized to the earliest call date. TheF-12 amortization period for callable debt securities purchased at a discount will not be impacted. Under current GAAP, premiums on callable debt securities aregenerally amortized over the contractual life of the security. The guidance is applicable to the Company beginning on January 1, 2019. The Company will beimpacted if it will have on January 1, 2019 callable debt purchased with a premium. However, based on the Company’s current investment strategy where itpurchases debt securities with maturity dates of less than a year, it does not expect to have significant premiums for callable debt.In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments. This new standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including loans andtrade and other receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in moretimely recognition of credit losses. The standard also amends the impairment model for available-for-sale debt securities and requires entities to determine whetherall or a portion of the unrealized loss on an available-for-sale debt security is a credit loss. Under the new guidance, an entity will recognize an allowance for creditlosses on available-for-sale debt securities as a contra-account to the amortized cost basis rather than as a direct reduction of the amortized cost basis of theinvestment, as is currently required. ASU 2016-13 is effective for annual reporting periods, and interim periods within those years, beginning after December 15,2019. The Company does not expect this standard to have a material impact on its financial statements due to the immaterial level of its unrealized losses onavailable-for-sale securities and its immaterial level of loans and receivablesNOTE 3 – CASH EQUIVALENTS AND SHORT-TERM INVESTMENTSAll short-term investments are classified as available-for-sale. The following tables summarize the fair value of cash, cash equivalents, and short-term investments,as well as gross unrealized holding gains and losses as of December 31, 2018 and December 31, 2017: December 31, 2018 Amortized Gross unrealized Grossunrealized Fair cost holding gains holding losses value Cash $927,354 $- $- $927,354 Money market funds (a) 35,562,264 - - 35,562,264 Total cash and cash equivalents $36,489,618 $- $- $36,489,618 U.S. treasury notes (a) $5,012,863 $- $(1,829) $5,011,034 Total short-term investments $5,012,863 $- $(1,829) $5,011,034 (a) As of December 31, 2018, the Company's Level 1 assets consisted of money market funds and U.S. treasurynotes totaling $40.5 million. The Company had no level 2 or level 3 assets or liabilities as of December 31,2018. December 31, 2017 Amortized Gross unrealized Gross unrealized Fair cost holding gains holding losses value Cash $526,648 $- $- $526,648 Money market funds (a) 86,598,952 - - 86,598,952 Total cash and cash equivalents $87,125,600 $- $- $87,125,600 (a) As of December 31, 2017, the Company's Level 1 assets consisted of money market funds totaling $86.6million. The Company had no level 2 or level 3 assets or liabilities as of December 31, 2017. F-13 As of December 31, 2018 and December 31, 2017, the aggregate fair value of securities that were in an unrealized loss position for less than 12 months was $5.0million and zero, respectively. The Company did not hold any securities in an unrealized loss position for more than 12 months as of December 31, 2018.There were no realized gains or losses on available-for-sale securities during the years ended December 31, 2018 and 2017. NOTE 4 – PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETSProperty and equipment is summarized as follows: December 31, December 31, 2018 2017 Furniture and equipment $156,031 $102,690 Less accumulated depreciation (86,164) (50,915)Total property, plant and equipment, net $69,867 $51,775 Depreciation expense was $35,249 and $26,917 for the years ended December 31, 2018 and 2017 respectively.Intangible assets, net of accumulated amortization, were $391,872 and $124,194 as of December 31, 2018 and December 31, 2017, respectively, and are includedin other assets. Amortization expense was $106,484 and $53,393 for the years ended December 31, 2018 and 2017, respectively.NOTE 5 – ACCRUED EXPENSESAccrued expenses consist of the following: December 31, December 31, 2018 2017 Clinical trials accrual $1,352,133 $753,018 Collaboration agreement accrual - 754,841 Payroll and bonus accrual 2,779,021 1,919,120 Professional fees accrual 772,785 321,852 Other 184,923 246,503 Total $5,088,862 $3,995,334 NOTE 6 – STOCKHOLDERS’ EQUITY AND PREFERRED STOCK The Company’s capital structure consists of common stock and Preferred Stock. 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 thereare no redemption or sinking fund provisions with respect to such shares. The common stock is subordinate to all series of Preferred Stock with respect to dividendrights and rights upon liquidation, winding up and dissolution of the Company. The holders of common stock are entitled to liquidation proceeds after allliquidation preferences for the Preferred Stock are satisfied. On May 10, 2017, the Company filed an amended and restated certificate of incorporation with the Secretary of the State of Delaware, which was approved by theCompany’s Board of Directors and stockholders on April 12, 2017 and April 24, 2017, respectively, and which went effective immediately after the closing of theCompany’s IPO on May 10, 2017. Pursuant to the amended and restated certificate of incorporation, the Company is authorized to issue 125,000,000 shares ofcommon stock and 10,000,000 shares of preferred stock. Upon completion of its IPO, on May 10, 2017, the Company issued 5,000,000 shares of its commonstock, and 2,382,069 shares of Series A Preferred Stock, 5,599,282 shares of Series B Preferred Stock and 1,781,996 shares Series B-1 Preferred Stock wereconverted into 9,763,346 shares of common stock. As of December 31, 2018, no shares of preferred stock were issued or outstanding. Dividends No dividends on the common stock shall be declared and paid unless dividends on the Preferred Stock have been declared and paid. Through December 31, 2018,the Company has not declared any dividends.F-14 NOTE 7 – STOCK-BASED COMPENSATIONOn August 29, 2014, the Company’s Board of Directors adopted and approved the 2014 Equity Incentive Plan (the “2014 Plan”), which authorized the Companyto grant shares of common stock in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock and restricted stockunits. The types of stock-based awards, including share purchase rights amount, terms, and exercisability provisions of grants are determined by the Company’sBoard of Directors. The purpose of the 2014 Plan is to provide the Company with the flexibility to issue stock-based awards as part of an overall compensationpackage to attract and retain qualified personnel.The Company's Board of Directors adopted and the Company's stockholders approved the 2017 equity incentive plan (“2017 Plan”), which became effectiveimmediately prior to the execution of the underwriting agreement related to the IPO on May 4, 2017. The initial reserve of shares of common stock that may beissued under the 2017 Plan was 3,052,059 shares. The 2017 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stockawards, restricted stock unit awards, stock appreciation rights, performance-based stock awards, and other forms of stock-based awards. Additionally, the 2017Plan provides for the grant of performance cash awards. The Company's employees, officers, directors and consultants and advisors are eligible to receive awardsunder the 2017 Plan. Upon the adoption of the 2017 Plan, no further awards will be granted under the 2014 Plan. Pursuant to the terms of the 2017 Plan, on eachJanuary 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 precedingDecember 31 and (y) such lesser number as the Board of Directors may determine in its discretion. Accordingly, on January 1, 2018, an additional 1,230,312shares were reserved for issuance under the 2017 Plan. As of December 31, 2018, there were 3,657,972 shares of the Company’s common stock reserved forissuance under the 2017 Plan.The Company's Board of Directors adopted and the Company's stockholders approved the 2017 employee stock purchase plan (the “2017 ESPP”), which becameeffective immediately prior to the execution of the underwriting agreement related to the IPO on May 4, 2017. The initial reserve of shares of common stock thatmay be issued under the 2017 ESPP was 279,069 shares. On September 20, 2017, the Company’s Compensation Committee approved an offering period under the2017 ESPP, which began on October 20, 2017. The ESPP allows employees to purchase common stock of the Company at a 15% discount to the market price ondesignated purchase dates. During the years ended December 31, 2018 and 2017, 32,114 and zero shares were purchased under the ESPP and the Companyrecorded expense of $106,004 and $12,095, respectively. The number of shares of common stock reserved for issuance under the 2017 ESPP will automaticallyincrease 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 numberof 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 sharesdetermined by our Board. On January 1, 2018, an additional 246,062 shares were reserved for issuance under the 2017 ESPP. As of December 31, 2018, therewere 493,017 shares of the Company’s common stock reserved for issuance under the 2017 ESPP. Unless specified otherwise in an individual option agreement,stock options granted under the 2014 Plan and 2017 Plan generally have a ten-year term and a four-year graded vesting period. The vesting requirement isconditioned upon the grantee’s continued service with the Company during the vesting period. Once vested, all awards are exercisable from the date of grant untilthey expire. The option grants are non-transferable. Vested options generally remain exercisable for 90 days subsequent to the termination of the option holder’sservice with the Company. In the event of option holder’s death or disability while employed by or providing service to the Company, the exercisable periodextends to twelve months.Performance-based option awards generally have similar vesting terms, with vesting commencing on the date the performance condition is achieved and expire inaccordance to the specific terms of the agreement. At December 31, 2018, there were no performance-based options outstanding and unvested. The Companyrecognizes stock-based compensation expense based on the grant date fair value of the award over the vesting period when the performance condition becomesprobable of being achieved.F-15 The fair value of options granted during the years ended December 31, 2018 and 2017 was estimated using the Black-Scholes option valuation model. The inputsfor the Black-Scholes option valuation model require management’s significant assumptions and are detailed in the table below. Prior to the IPO, the commonstock price was determined by the Board of Directors. In the absence of market data for the Company’s common stock, the Board of Directors considered variousfactors in estimating the fair value of the common stock at the time of each option grant which included but was not limited to the common stock valuationperformed by a third party independent valuation firm, the Company’s performance and future economic outlook, the potential financing available to the Company,and the valuation of common stock of similar companies in the industry. The risk-free interest rates were based on the rate for U.S. Treasury securities at the dateof 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 theStaff Accounting Bulletin No. 107. The expected volatility was estimated based on historical volatility information of peer companies that are publicly available.All assumptions used to calculate the grant date fair value of nonemployee options are generally consistent with the assumptions used for options granted toemployees. In the event the Company terminates any of its consulting agreements, the unvested options underlying the agreements would also be cancelled.Unvested nonemployee options are marked-to-market at each reporting period until vested.The Company granted zero and 27,906 stock options to nonemployee consultants for services rendered during the years ended December 31, 2018, and 2017,respectively. There were 10,175 and 37,066 unvested nonemployee options outstanding as of December 31, 2018 and 2017, respectively. Total expense recognizedrelated to the nonemployee stock options for the years ended December 31, 2018 and 2017 was $136,639 and $416,457 respectively. Total unrecognizedcompensation expenses related to the nonemployee stock options was $5,933 as of December 31, 2018. During the years ended December 31, 2018 and 2017, theCompany recognized zero and $162,700 in expenses for non-employee performance-based option awards.The Company granted 1,440,578 and 1,510,436 stock options to employees during the years ended December 31, 2018 and 2017, respectively. There were2,366,277 and 2,528,063 unvested employee options outstanding as of December 31, 2018 and 2017, respectively. Total expense recognized related to theemployee stock options for the years ended December 31, 2018 and 2017 was $6,821,298 and $5,969,204, respectively. Total unrecognized compensation expenserelated to employee stock options was $11,802,475 as of December 31, 2018. During the years ended December 31, 2018 and 2017, the Company recognized zeroand $830,997 in expenses for employee performance-based option awards.The Company’s stock-based compensation expense was recognized in operating expense as follows: For the Year Ended December 31, 2018 2017 Research and development $3,134,395 $2,417,727 General and administrative 3,929,546 3,980,029 Total $7,063,941 $6,397,756 The fair value of employee options granted during the years ended December 31, 2018 and 2017, respectively, was estimated by utilizing the followingassumptions: For the Year Ended December 31, 2018 2017 WeightedAverage WeightedAverage Volatility 84.40% 80.39%Expected term in years 6.01 6.08 Dividend rate 0.00% 0.00%Risk-free interest rate 2.62% 2.06%Fair value of option on grant date $5.93 $6.30 F-16 The fair value of nonemployee options granted and remeasured during the years ended December 31, 2018 and 2017, respectively, was estimated by utilizing thefollowing assumptions: For the Year Ended December 31, 2018 2017 WeightedAverage WeightedAverage Volatility 79.40% 81.44%Expected term in years 3.23 4.39 Dividend rate 0.00% 0.00%Risk-free interest rate 2.46% 2.08%Fair value of option on grant date $0.62 $6.80 The following table summarizes the number of options outstanding and the weighted average exercise price: Weighted Weighted Average Average Remaining Aggregate Number of Exercise Contractual Intrinsic Shares Price Life in Years Value Options Outstanding at December 31, 2016 2,987,729 $7.46 8.82 $837,036 Vested and exercisable at December 31, 2016 683,070 $7.71 8.47 $253,969 Granted 1,538,342 9.03 9.19 Exercised (4,320) 6.26 Forfeited (222,949) 6.61 Options Outstanding December 31, 2017 4,298,802 $8.07 8.32 $8,174,686 Vested and exercisable at December 31, 2017 1,733,673 $7.65 7.92 $3,865,036 Granted 1,440,578 8.23 9.26 Exercised (15,744) 7.07 Forfeited (1,009,253) 8.16 Options Outstanding December 31, 2018 4,714,383 $8.10 7.89 $153,485 Vested and exercisable at December 31, 2018 2,337,931 $7.88 7.20 $153,485 At December 31, 2018 there was approximately $11,808,408 of unamortized share–based compensation expense, which is expected to be recognized over aremaining average vesting period of 2.17 years.NOTE 8 – INCOME TAXES At December 31, 2018, the Company has available approximately $106,501,000 and $112,636,000 of unused NOL carryforwards for federal and state taxpurposes, respectively, that may be applied against future taxable income. The Company also has approximately $105,984,000 of unused NOL carryforwards forNew York City purposes. The NOL carryforwards will begin to expire in the year 2035 if not utilized prior to that date. There is no provision for income taxesbecause the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The valuationallowance increased by approximately $18,748,000 and $18,971,000 during the years 2018 and 2017, respectively, and was approximately $54,033,000 and$35,285,000 at December 31, 2018 and 2017, respectively. The Company may be subject to the NOL utilization provisions of Section 382 of the Code. The effect of an ownership change would be the imposition of anannual limitation on the use of NOL carryforwards attributable to periods before the change. The amount of the annual limitation depends upon the value of theCompany immediately before the change, changes to the Company’s capital during a specified period prior to the change, and the federal published interest rate.The Company has not completed a Section 382 analysis to determine if a change in ownership has occurred. Until an analysis is completed, there can be noassurance that the existing net operating loss carry-forwards or credits are not subject to significant limitation. 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 orpositions is more likely than not to be realized following resolution of any potential contingencies related to the tax benefit. For the years ended December 31,2018 and 2017, the Company had no unrecognized tax benefits or related interest and penalties accrued. The Company has not yet conducted a study of researchand development credit carryforwards. This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until astudy is completed, and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been providedagainst the Company’s research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuationallowance. Thus, there would be no impact to the balance sheet or statement of operations if an adjustment were required. The Company would recognize bothaccrued interest and penalties related to unrecognized benefits in income taxF-17 expense. The Company’s uncertain tax positions are related to years that remain subject to examination by relevant tax authorities. Since the Company is in a losscarryforward 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 losscarryforward is available. The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets were as follows: December 31, 2018 2017 Deferred tax assets/liabilities: Net operating loss carryovers $37,195,164 $20,880,120 Research and development tax credits 1,737,870 714,087 Share-based compensation 5,333,006 3,392,111 Accrued compensation 869,446 633,745 Depreciation (19,949) (10,778)Charitable contributions 88,353 53,038 Intangible assets 8,828,914 9,622,535 Total gross deferred tax assets/liabilities 54,032,804 35,284,858 Valuation allowance (54,032,804) (35,284,858)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, 2018 2017 Federal income tax benefit at statutory rate (21.00) (34.00)State income tax, net of federal benefit (13.62) (11.77)Permanent items 0.61 0.89 Change in valuation allowance 36.02 29.18 Research and development tax credits (1.97) (0.56)Deferred re-measurement - 16.31 Other (0.04) (0.05)Effective income tax (benefit) expense rate 0% 0% NOTE 9 – COMMITMENTS AND CONTINGENCIESLicense AgreementsOn March 26, 2015, the Company entered into an exclusive agreement with H. Lundbeck A/S (“Lundbeck”) for a worldwide perpetual licensing right related theresearch, development and commercialization of OV101. Pursuant to the Lundbeck license agreement, the Company agreed to make milestone payments totaling up to $181 million upon the achievement of certaindevelopment, regulatory and sales milestones. The first payment of $10 million is due upon the successful completion of the first Phase 3 trial for a product inwhich OV101 is an active ingredient. In addition, the agreement calls for the Company to pay royalties for an initial term based on a low double-digit percentageof sales and provides for the reduction of royalties in certain limited circumstances. As of December 31, 2018, none of these contingent payments were consideredprobable.In December 2016, the Company entered into a license agreement with Northwestern University, or Northwestern, pursuant to which Northwestern granted us anexclusive, worldwide license to patent rights in certain inventions, or the Northwestern Patent Rights, which relate to a specific compound and related methods ofuse for such compound, along with certain Know-How related to the practice of the inventions claimed in the Northwestern Patents. Under the Northwestern agreement, the Company was granted exclusive rights to research, develop, manufacture and commercialize products utilizing theNorthwestern 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 ofcancer, 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 theagreement to an exclusive license under certain intellectual property rights covering novel compounds with the same or similar mechanism of action as the primarycompound that is the subject of the license agreement. Northwestern has retained the right, on behalf of itself and other non-profit institutions, to use theNorthwestern Patent Rights and practice the inventions claimed therein for educational and research purposes and to publish information about the inventionscovered by the Northwestern Patent Rights. F-18 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 anannual license maintenance fee of $20,000, which will be creditable against any royalties payable to Northwestern following first commercial sale of licensedproducts under the agreement. The Company is responsible for all ongoing costs of filing, prosecuting and maintaining the Northwestern Patents, but also has theright to control such activities using its own patent counsel. In consideration for the rights granted to the Company under the Northwestern agreement, theCompany is required to pay to Northwestern up to an aggregate of $5.3 million upon the achievement of certain development and regulatory milestones for thefirst product covered by the Northwestern Patents, and, upon commercialization of any such products, will be required to pay to Northwestern a tiered royalty onnet sales of such products by the Company, its affiliates or sublicensees, at percentages in the low to mid single-digits, subject to standard reductions andoffsets. 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-expirevalid claim in a licensed patent covering the applicable product in such country and 10 years following the first commercial sale of such product in suchcountry. If the Company sublicenses a Northwestern Patent Right, it will be obligated to pay to Northwestern a specified percentage of sublicense revenuereceived 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 bythe Northwestern Patent Rights. Unless earlier terminated, the Northwestern agreement will remain in force until the expiration of the Company’s payment obligations thereunder. The Companyhas the right to terminate the agreement for any reason upon prior written notice or for an uncured material breach by Northwestern. Northwestern may terminatethe agreement for the Company’s uncured material breach or insolvency.As of December 31, 2018, none of these contingent payments were considered probable. ContingenciesLiabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liabilityhas been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Companyis not currently involved in any legal matters arising in the normal course of business.Under the terms of their respective employment agreements, each of our named executive officers is eligible to receive severance payments and benefits upon atermination without “cause” or due to “permanent disability,” or upon “resignation for good reason,” contingent upon the named executive officer’s delivery to theCompany of a satisfactory release of claims, and subject to the named executive officer’s compliance with non-competition and non-solicitation restrictivecovenants for two years following the termination date.On December 15, 2016, the Company and Northwestern University (“Northwestern”) entered into a license agreement (the “License Agreement”), pursuant towhich Northwestern granted the Company an exclusive license to certain patent rights and know-how, including a patent application covering a specifiedcomposition of matter (the “Patent Application”). Northwestern previously entered into a license agreement with Catalyst Pharmaceuticals, Inc. (“Catalyst”), datedAugust 27, 2009, pursuant to which Northwestern granted Catalyst rights under certain intellectual property rights covering a different composition of matter (the“Catalyst License”). In addition, the Company is a party to a confidential disclosure agreement with Catalyst, dated September 16, 2016 (the “CDA”). On June 25,2018, Catalyst sent a letter to Northwestern and the Company alleging, among other things, that Northwestern breached the Catalyst License by licensing thePatent Application to the Company. Catalyst’s letter also asserted that the Company had breached our obligations under the CDA by allegedly failing to disclosethat the Company had a license to the Patent Application, and that a further breach would occur if the Company makes any use of information obtained under theCDA in connection with its development program arising from the rights granted under the License Agreement. Catalyst has asserted that the combined conductof Northwestern and the Company gives rise to various claims, including breach of contract, fraud, and tortious interference. The Company believes that Catalyst’sclaims are without merit and responded by letter dated June 28, 2018, which denies any and all liability to Catalyst, and further denies that Catalyst has beendamaged in any way.In July 2017, a notice of opposition and petition for cancellation was filed at the Trademark Trial and Appeal Board of the USPTO by Ovid Technologies, Inc.(“OTI”) relating to certain current and pending trademarks. OTI also instituted proceedings with the Canadian Trademark Office and European Union IntellectualProperty Office opposing applications in both jurisdictions. On October 9, 2018, the Company entered into a settlement agreement with OTI in resolution of thismatter. The Company will amend certain of our trademark registrations and applications and, upon acceptance of such amendments, OTI will withdraw allopposition and cancellation actions (with prejudice where possible). The parties have agreed to work in good faith to agree on alternative language if the proposedamendments are not accepted.F-19 NOTE 10 – COLLABORATION AGREEMENTTakeda CollaborationOn January 6, 2017, the Company entered into a license and collaboration agreement with Takeda, pursuant to which Takeda granted the Company an exclusivelicense to commercialize the compound TAK-935, which the Company now refers to as OV935, in certain territories, and a co-exclusive worldwide license,together with Takeda, to develop OV935. In consideration of certain license rights granted to the Company pursuant to the Takeda collaboration, the Companyissued 1,781,996 shares of its Series B-1 Preferred Stock (Note 6), pursuant to a Series B-1 preferred stock purchase agreement entered into on January 6, 2017, atan ascribed price per share of $14.513 on January 6, 2017 for an aggregate fair value of $25,861,228, which was recorded as research and development expense atthe date of the transaction. The 1,781,996 shares of Series B-1 Preferred Stock held by Takeda automatically converted into 1,781,996 shares of the Company’scommon stock upon the completion of its IPO. Under the Takeda collaboration, the Company is obligated to pay Takeda future payments if and when certainmilestones are achieved. Upon the first patient enrollment in the first Phase 3 trial for the first of the initial indications the Company and Takeda are focusing on inthe Takeda collaboration, the Company is obligated to issue to Takeda the number of unregistered shares of the Company’s common stock equal to the lesser of(a) 8% of the Company outstanding capital stock on the issuance date or (b) $50.0 million divided by the applicable share price, unless certain events occur. In theevent such payment would cause Takeda to own over 19.99% of our outstanding capital stock or other events occur, such payment must be paid in cash. Theremaining potential global commercial and regulatory milestone payments equal approximately $35.0 million and can be satisfied in cash or unregistered shares ofthe Company’s common stock at its election, unless certain events occur. As of December 31, 2018, none of these contingent payments were consideredprobable. During the year ended December 31, 2017, the Company recognized $4,321,951 in research and development expenses representing research anddevelopment expenses reimbursed to Takeda in respect of this collaboration agreement. During the year ended December 31, 2018, the Company recognized acredit in research and development expenses of $1,280,525, representing costs reimbursed to the Company from Takeda. F-20 The Takeda collaboration will expire upon the cessation of commercialization of the products by both the Company and Takeda. Either party may terminate theTakeda collaboration because of the other party’s uncured material breach or insolvency, for safety reasons, or, after completion of the first proof of mechanismclinical trial, for convenience. Takeda may terminate the Takeda collaboration for the Company’s (or the Company’s sublicensee’s) challenge to the patentslicensed under the Takeda collaboration. If the collaboration is terminated by Takeda for material breach by the Company, bankruptcy or patent challenge or by theCompany for convenience or safety reasons, the Company’s rights to the products will cease, the Company will transition all activities related to the products toTakeda, and the Company will grant Takeda an exclusive, royalty-bearing license under certain patents and other intellectual property controlled by the Companyto commercialize OV935 and products containing OV935 for the treatment of certain rare neurological disorders. If the collaboration is terminated by theCompany for Takeda’s material breach or bankruptcy or by Takeda for convenience or safety reasons, Takeda’s rights to the products will cease, Takeda willtransition all activities related to the products to us, and Takeda will grant us an exclusive, royalty-bearing license under certain patents and other intellectualproperty controlled by Takeda to commercialize OV935 and products containing OV935 for the treatment of certain rare neurological disorders.NOTE 11 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)The following tables contain selected quarterly financial information from 2018 and 2017. The Company believes that the following information reflects allnormal recurring adjustments necessary for a fair statement of the information for the periods presented. The operating results for any quarter are not necessarilyindicative of results for any future period. Three Months Ended (in thousands, except per share data)March 31, June 30, September 30, December 31, 2018 2018 2018 2018 Total operating expenses$13,430 $13,210 $13,176 $13,116 Total other income (expense), net 247 275 214 216 Net loss$(13,183) $(12,935) $(12,962) $(12,900)Net loss applicable to common stockholders$(13,183) $(12,935) $(12,962) $(12,900)Net loss per share applicable to common stockholders - basic and diluted$(0.54) $(0.53) $(0.53) $(0.52) Three Months Ended (in thousands, except per share data)March 31, June 30, September 30, December 31, 2017 2017 2017 2017 Total operating expenses$34,262 $10,288 $9,409 $11,048 Total other income (expense), net 23 40 51 88 Net loss$(34,239) $(10,248) $(9,358) $(10,960)Net loss applicable to common stockholders$(34,239) $(10,248) $(9,358) $(10,960)Net loss per share applicable to common stockholders - basic and diluted$(3.48) $(0.57) $(0.38) $(0.45) NOTE 12 – SUBSEQUENT EVENTSEquity AwardsFrom January 1, 2019 through the date of the filing of this Form 10-K, the Company has granted option awards for an aggregate of 864,963 shares to employeeswith a weighted average exercise price of $2.18. Public Stock Offering On February 22, 2019, the Company completed an offering, the February Offering, and sold 12,500,000 shares of its common stock and 2,500 shares of Series AConvertible Preferred Stock at an offering price of $2.00 and $2,000, respectively, for gross proceeds of $30.0 million and $28.2 million of estimated net proceedsafter deducting underwriting discounts and commission and other offering expenses. None of these expenses consisted of payments made by us to directors,officers or persons owning 10% or more of our common stock or to their associates, or to our affiliates. Each share of non-voting Series A stock is convertible into1,000 shares of common stock, provided that conversion will be prohibited, subject to certain exceptions, if, as a result, the holder and its affiliates wouldbeneficially own more than 9.99% of the common stock then outstanding. In addition, the Company has granted the underwriters a 30-day option to purchase anadditional 1,750,000 shares of common stock offered in the common stock offering. On February 27, 2019, the underwriters partially exercised a portion of the30-day option and purchased 1,493,778 shares at an offering price of $2.00 for gross proceeds of $3.0 million and net proceeds of $2.8 million after deductingunderwriting discounts and commission and other offering expenses. F-21EXHIBIT 23.1Consent of Independent Registered Public Accounting Firm The Board of DirectorsOvid Therapeutics Inc.: We consent to the incorporation by reference in the registration statement (Nos. 333-218167 and 333-224033) on Form S-8 and (No. 333-2253910) on Form S-3 ofOvid Therapeutics Inc. of our report dated March 7, 2019, with respect to the consolidated balance sheets of Ovid Therapeutics Inc. as of December 31, 2018 and2017, and the related consolidated statements of operations, comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years in thetwo‑year period ended December 31, 2018, and the related notes, which report appears in the December 31, 2018 annual report on Form 10-K of OvidTherapeutics Inc. and subsidiary. /s/ KPMG LLPNew York, New YorkMarch 7, 2019Exhibit 31.1CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Jeremy M. Levin, certify that:1. I have reviewed this Annual Report on Form 10-K of Ovid Therapeutics Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting.Date: March 7, 2019 By:/s/ Jeremy M. Levin Jeremy M. LevinChief Executive Officer(Principal Executive Officer) Exhibit 31.2CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Timothy Daly, certify that:1. I have reviewed this Annual Report on Form 10-K of Ovid Therapeutics Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) forthe registrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materiallyaffect, the registrant's internal control over financial reporting; and5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financialreporting.Date: March 7, 2019 By:/s/ Timothy Daly Timothy DalySenior Vice President, Finance and Corporate Controller(Principal Financial and Accounting Officer)  Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of Ovid Therapeutics Inc. (the “Company”) for the year ended December 31, 2018, as filed with the Securitiesand Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18 U.S.C.Section 1350, that to his or her knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.Date: March 7, 2019 By/s/ Jeremy M. Levin Jeremy M. LevinChief Executive Officer Date: March 7, 2019 By/s/ Timothy Daly Timothy DalySenior Vice President, Finance and Corporate Controller 

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