As September begins, one of the remaining key catalysts in our universe for Q3 is Ovid Therapeutics’ (Nasdaq: OVID) Phase 1b results for its GABA-AT inhibitor, OV329. We have discussed Ovid multiple times, including a July note, where we compared OV329’s development with Xenon Pharmaceuticals’ (Nasdaq: XENE) azetukalner (XEN1101). Ovid is expected to release pharmacodynamic data from the transcranial magnetic stimulation (TMS), magnetic resonance spectroscopy (MRS), and electroencephalogram (EEG) models late in September. Arguably, Ovid will generate and report one of the most robust sets of pharmacodynamic data for any development-stage epilepsy asset to date. Although these results will come from healthy volunteers, investors should view them as proof of concept, similar to how they regarded Xenon when it reported positive Phase 1b pharmacodynamic data for azetukalner. 
***Ovid’s June 2025 Biomarkers in Epilepsy Presentation
Beyond the TMS, MRS, and EEG data, investors should also monitor the safety data. Recall that the first-generation GABA-AT inhibitor, vigabatrin (Sabril), was linked to irreversible ocular toxicity in some patients, leading to a Black Box Warning from FDA. OV329 was designed to address vigabatrin’s safety liabilities. OV329 is 1000-fold more potent than vigabatrin, allowing for much lower doses to achieve similar or better efficacy, which should significantly reduce the risk of cumulative retinal exposure. Ovid has tested OV329 in numerous preclinical models, demonstrating no accumulation in the eye or retina at doses deemed efficacious. The company also has shared early safety data from 30 subjects in its ongoing Phase 1 study, showing no signs of ocular toxicity up to 30 days after OV329 treatment.
***Ovid’s August 2025 Corporate Presentation
Once again, we highlight the similarities with Xenon’s development of azetukalner and how they had to address investor concerns about the perceived ocular toxicity that tainted the first-generation Kv7 opener, ezogabine. Arguably, Xenon wasn’t able to fully ease investor worries until it began reporting longer-term safety data for azetukalner from its Phase 2b study’s open-label extension. We suspect the same will apply to Ovid with OV329.
Proof In The Pipeline
In our previous notes, we haven’t paid much attention to Ovid’s pipeline, which is entirely based on drugs derived from its potassium-chloride cotransporter 2 (KCC2) platform. The company has identified several KCC2 activators, which target intracellular chloride dysfunction and help restore GABA’s inhibitory effects. This mechanism has potential applications across neuropsychiatric, neurodevelopmental, and seizure disorders. Ovid currently has its first KCC2 activator, OV350, an IV formulation, in a Phase 1 trial. Results from this trial are expected by the end of the year. However, what’s more interesting, in our view, are the company’s plans for its second KCC2 activator, OV4071, an oral formulation. OV4071 is currently in IND-enabling studies and is expected to enter Phase 1 in early 2026. Ovid’s initial focus with OV4071 is to treat psychosis associated with Parkinson’s disease and Lewy body dementia. Similar to the development of OV329, the Phase 1 study of OV4071 will include a 1b biomarker-driven portion designed to generate early proof-of-concept data.
Foreshadowing
Since our last note, Ovid’s stock has made a notable move, yet it still has a valuation under $100 million. We are eager to see how investors will react to the upcoming OV329 pharmacodynamic data, and if positive, whether Ovid will be rewarded similarly to Xenon in 2018. Moreover, if investors respond well to the OV329 Phase 1b data, it could foreshadow how investors react to the company’s Phase 1b data for OV4071 in a little over a year.
An Important Data Readout Just Became More Important
Yesterday, Rezolute (Nasdaq: RZLT) announced that they have reached an alignment on an amended design with FDA for its pivotal Phase 3 trial for its antibody, ersodetug, for the treatment of the rare condition, tumor hyperinsulinism (tHI). Rezolute, a company we have discussed several times (our September 2024 note provides a good overview), is a highly watched name among biotech investors due to its upcoming Phase 3 results for ersodetug in another rare condition, congenital hyperinsulinism (cHI), expected in December. In yesterday’s announcement, Rezolute confirmed that the FDA will accept a smaller 16-patient, single-arm pivotal study in tHI instead of the previously planned 48-patient study, which was to include half the patients in a placebo-controlled design and the other half in an open-label design. This simplified tHI study is advantageous for Rezolute, as it should be easier to enroll and more cost-effective. However, it also raises the stakes for what was already a high-stakes Phase 3 cHI readout later this year.
HI Stakes
FDA’s willingness to accept a smaller single-arm tHI study probably stems from two factors outlined in yesterday’s press release: (1) the “...favorable outcomes that we have observed over the last two years treating more than 10 patients with tumor HI under our Expanded Access Program (EAP)” and (2) “Rezolute’s pivotal sunRIZE trial in congenital HI…would serve as confirmatory clinical evidence, and is demonstrative of FDA’s recognition of the broad applicability of ersodetug in multiple forms of HI.” As we have emphasized in earlier notes, ersodetug has shown benefits in treating tHI patients under the EAP, which is likely reassuring to FDA. More importantly, however, FDA, by using ersodetug’s Phase 3 cHI results as “confirmatory clinical evidence” for tHI, has essentially made Phase 3 success for ersodetug in cHI a prerequisite for a potential BLA submission for tHI. This raises the stakes for the upcoming cHI outcome in December, something we believe investors should support and welcome. The importance of the December cHI readout is now greater, which suggests the potential reward should be as well. This should make Rezolute even more attractive and appealing to investors who plan on playing the December cHI readout.
Enduring Response
Yesterday, Eupraxia Pharmaceuticals (Nasdaq: EPRX) reported 52-week data for EP-104GI, a long-acting polymer-coated formulation of fluticasone, in patients with eosinophilic esophagitis (EoE). The company has been dose-escalating EPI-104GI in cohorts of three patients in an ongoing Phase 1b/2 study. Starting with the fifth cohort (a one-time dose of 48 mg, administered in 12 x 4mg intra-esophageal injections), the company has been tracking patients for up to 52 weeks. Yesterday’s news release was the first look at the 52-week durability data from the fifth cohort with EPI-104GI. Albeit from a small sample size, Eupraxia reported an impressive 67% complete remission rate with EP-104GI at one year, as measured by the Straumann Dysphagia Index (SDI). The company is also expected to share 52-week histology data in the coming weeks. Based on these early SDI data, it appears that EP-104GI has the potential for once-a-year dosing.
Bridging The Gap
The EoE market would benefit from a new entrant, but clinical success for development-stage assets has proven elusive. Last month, Celldex Therapeutics (Nasdaq: CLDX) announced that its mast cell-targeting antibody, barzolvolimab, failed to show a clinical benefit in EoE patients, despite having a positive effect on histology. Celldex’s data for barzolvolimab follow a pattern similar to that of other development-stage assets for EoE from Allakos (lirentelimab), AstraZeneca (benralizumab), and Pfizer (etrasimod), all of which demonstrated a profound impact on histology but little to no effect on symptoms.
Currently, there are only two FDA-approved treatments for EoE: Sanofi/Regeneron’s Dupixent and Takeda’s Eohelia. Dupixent is effective but expensive and requires weekly dosing. Eohelia, budesonide solution taken twice daily, is only approved for 12 weeks of treatment due to safety concerns over long-term systemic corticosteroid use. What the EoE market needs is an efficacious, safe, and affordable drug to bridge patients between proton pump inhibitors (used off-label but generally first line in EoE) and Dupixent. Eupraxia’s EP-104GI appears to have the profile that fits that role. The data are early, but EP-104GI appears to have histological and clinical data that are superior to Eohelia and arguably on par with Dupixent. Yesterday’s 52-week data opens the possibility of once-a-year treatment with EP-104GI, which could be an important source of differentiation. The proper comparison of EP-104GI versus the EoE encumbents will come next year, when Eupraxia releases data from its ongoing 60-patient Phase 2b placebo-controlled study. In the meantime, it may be too early to be comparing Eupraxia’s EP-104GI data with Dupixent and Eohelia, but, as our friend Bough (@firebutworking on X) once stated.
