Ovid Therapeutics (NASDAQ:OVID) Inc., a pharmaceutical company, has announced a significant workforce reduction and the departure of key executives as part of a restructuring effort. The New York-based company disclosed in a regulatory filing that it will cut approximately 43% of its staff, affecting 17 employees, to extend its financial runway and prioritize programs.
The workforce reduction, which was communicated to the majority of impacted employees today, will take effect on July 11, 2024. Those affected will be eligible for severance payments and continued health insurance coverage for a specified period, contingent upon signing a general release of claims against the company.
The company anticipates a one-time charge of around $4 million related to severance and other associated costs, with the majority of cash payments expected to be completed by the end of the second quarter of 2025. Ovid Therapeutics cautions that actual costs may vary due to unforeseen events and the implementation of the reduction plan.
Concurrent with the layoffs, Thomas Perone, General Counsel, Chief Compliance Officer, and Corporate Secretary, and Jason Tardio, Chief Operating Officer, will step down from their roles on the separation date. Both executives will receive severance benefits in line with their employment agreements and are expected to enter consulting and transition arrangements to assist in handing over their duties.
Ovid Therapeutics also provided a forecast regarding its financial position, indicating that the expected savings from the workforce reduction will allow the company to fund operations into the first half of 2026.
Still, the company acknowledges substantial risks and uncertainties in its forward-looking statements, including potential impediments to the restructuring plan, variability in estimated charges, and the realization of projected cost savings.
The restructuring announcement comes as companies in the pharmaceutical industry face challenges in funding research and development activities. Ovid Therapeutics has not disclosed any specific programs that will be prioritized following the workforce reduction.
This announcement is based on a press release statement and filings with the U.S. Securities and Exchange Commission.
In other recent news, Ovid Therapeutics has experienced a series of adjustments in its stock ratings and price targets following mixed results from phase 3 clinical trials for Soticlestat. The drug narrowly missed the primary endpoint in the SKYLINE study for Dravet syndrome and failed to meet the primary endpoint in the SKYWAY study for Lennox-Gastaut syndrome.
Still, significant effects were observed in some secondary endpoints for Dravet syndrome. Analyst firm TD Cowen reiterated its Buy rating on Ovid Therapeutics' stock, while H.C. Wainwright reduced its price target to $3.00, maintaining a Buy rating. Similarly, BTIG and B.Riley also lowered their share target prices but kept their Buy ratings.
In contrast, Oppenheimer downgraded the stock from Outperform to Perform. These adjustments are a result of the recent clinical trial results and Ovid Therapeutics' commitment to strategically prioritize its programs to extend its cash runway into the first half of 2026.
InvestingPro Insights
In light of Ovid Therapeutics Inc .'s recent announcement regarding workforce reductions and executive departures, current and potential investors may find value in the latest metrics from InvestingPro. The company holds a market capitalization of $53.21 million and has exhibited a significant revenue growth of 283.93% over the last twelve months as of Q1 2024. Despite this growth, the company's P/E ratio stands at -1.04, reflecting its current lack of profitability.
InvestingPro Tips suggest that Ovid Therapeutics holds more cash than debt on its balance sheet, which could be a stabilizing factor amid its restructuring. Moreover, two analysts have revised their earnings upwards for the upcoming period, indicating potential optimism in the company's financial prospects.
However, it is important to note that analysts do not anticipate the company will be profitable this year, and the stock has faced significant price volatility. For investors looking for a deeper dive into Ovid's financials, InvestingPro offers additional tips and insights. Using the promo code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro, where there are 11 more tips available to help inform your investment decisions.
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