Big Brain Idea
Before the end of the year, we expect Ovid Therapeutics (Nasdaq: OVID) to release Phase 1 safety data for its intravenous potassium chloride contransporter (KCC2) direct activator, OV350. Unlike the Phase 1 data announced in September for its GABA-AT antagonist, OV329, which included proof-of-concept pharmacodynamic biomarker data, the Phase 1 study for OV350 is more of a traditional safety-focused study. Generally, a Phase 1 study of this kind doesn’t attract much investor attention. However, this is the first time a KCC2 activator has been tested in humans, and KCC2 isn’t a typical CNS target.
Ovid describes KCC2 as a “master switch” for neurological disorders where hyperexcitability is central to the pathophysiology. While fully recognizing that biotech companies, especially small ones, are prone to hyperbole when describing their assets, KCC2 has all the appearance of a big idea in CNS drug development.
KCC2 hypofunction impairs neurons’ response to GABA, the primary inhibitory neurotransmitter of the CNS. Activating KCC2 restores GABAergic tone, helping to maintain a proper balance between excitation and inhibition. According to Ovid, KCC2 cannot be overactivated beyond its electrochemical equilibrium, which should prevent tolerability issues like sedation and the abuse potential associated with many GABA-modulating drugs. Unsurprisingly, due to the widespread implications of GABA dysfunction in the CNS, the company believes KCC2 activation could be beneficial across many psychiatric, neurodevelopmental, and neurodegenerative disorders.
***Ovid December Corporate Presentation
Feeling Picked On
Assuming OV350 shows acceptable tolerability in the 72-patient healthy volunteer Phase 1 study, Ovid will transition to oral KCC2 activators, the first being OV4071. With a target as broadly applicable as KCC2, Ovid could go big indication hunting. However, with OV4071, they are taking a more measured approach, targeting psychoses in Parkinson’s disease (PD) and Lewy body dementia (LBD), indications where the biologic evidence for KCC2 activation is strong, the commercial landscape is relatively open, the clinical program is manageable (for a small company), and the regulatory path is defined.
Acadia Pharmaceuticals’ (Nasdaq: ACAD) Nuplazid (pimavanserin) is the only drug FDA-approved for PD psychosis. The regulatory precedent set by Nuplazid suggests that a modest Phase 3 study, likely less than 200 patients, could be sufficient for approval. Although it has limited efficacy, Nuplazid is expected to generate almost $700 million in revenue this year. There are currently no drugs approved for LBD psychosis, but Acadia is running a Phase 2 trial for this indication with a next-generation Nuplazid compound.
***Ovid December Corporate Presentation
Later in the year, Ovid plans to have an IND cleared for a second oral KCC2 activator, OV4041, aimed at neurodevelopmental disorders. Ovid has indicated that Rett syndrome is the most likely initial indication they will pursue with OV4041. Again, Rett is an indication where the biologic evidence for KCC2 activation is strong, the commercial landscape is relatively open, the clinical program is manageable, and the regulatory path is defined. Acadia can be forgiven if they feel Ovid is picking on them, as they also have the only FDA-approved treatment (Daybue) for Rett syndrome.
Ovid has stated that it plans to obtain IND clearance for a new KCC2 activator each year in the foreseeable future. The KCC2 platform could also serve as a valuable source of business development for the company if it chooses to pursue that path.
Big Idea, But Safety First
Before Ovid can proceed with its ambitious plans for OV4071, OV4041, and other future KCC2 activators, it must first demonstrate safety with OV350. As mentioned earlier, in general, a Phase 1 study without meaningful biomarker data is often a non-event. However, since this is a first-in-human study for this mechanism and considering the broad potential of KCC2 activation across CNS disorders, these safety data seem more substantial and risk-reducing than most Phase 1 results. If the safety data are acceptable, investors should start giving Ovid value for the big-idea potential of KCC2.
Gaining Momentum
Gain Therapeutics (Nasdaq: GANX) is set to release interim data for its lead asset, GT-02287, in Parkinson’s disease (PD) patients this month. We last discussed Gain in September, ahead of their initial October data release. We highlighted it as a name that could perform well in a “risk-on” biotech tape, and it has behaved accordingly.
In October, the company reported data from the Movement Disorder Society Unified Parkinson’s Disease Rating Scale (MDS-UPDRS) on nine PD patients treated with GT-02287. These early results were promising, showing improvements from baseline at day 90 in UPDRS Parts II and III with GT-02287 treatment. However, as expected with a small sample size, the data were noisy, with a few super-responders and another who was a super-non-responder (if such a term exists), affecting the overall data.
***Taken from the 2025 International Congress of Parkinson’s Disease and Movement Disorders poster “GT-02287 in Parkinson’s Disease: Interim data from a Phase 1b study”
Interestingly, the patient who showed the most significant improvement on the UPDRS scale (participant 003-001) had a severe GBA1 mutation. Recall that GT-02287 specifically targets the lysosomal enzyme glucocerebrosidase (GCase), whose misfolding is caused by a mutation in the GBA1 gene, the most common genetic risk factor for PD. GT-02287 is intended to restore GCase function. Although this is only one patient, the strong response in a GBA1-PD patient treated with GT-02287 is encouraging proof of concept.
Strengthening Its Case
The upcoming data release should build on October’s functional data by including key biomarker information, such as alpha-synuclein, neurofilament light chain, and GCase levels. Since the company shared patient-level UPDRS data, we hope they will provide the same with the upcoming biomarker data. This way, investors can assess whether changes in biomarkers are linked to functional improvements, which would be a positive sign of a real drug effect.
We continue to believe Gain has a compelling narrative and an attractive $150 million valuation. However, we want to emphasize, as we did in our September note, that the company’s balance sheet will need to be addressed in the near term. Running a Phase 2 PD study will not be inexpensive, which also raises the question of whether the best path forward for Gain may be out-licensing GT-02287 or pursuing an outright exit. It is worth noting that Gain has an active ATM with approximately $35 million remaining, which could serve as a source of bridge capital as it explores its options. Regardless, if the company can provide additional data linking functional benefit with improvements in PD-related biomarkers, it should only strengthen its case and its ability to access the capital markets or pursue business development.
Timelines Intact
As part of our September note on Gain, we also discussed another small company, Satellos Biosciences (US: MSCLF, TSX: MSCL), that could benefit from a risk-on biotech sentiment. Unfortunately, while Gain has doubled, Satellos has traded sideways. However, Satellos’ momentum could change after this week’s announcement that it has regulatory clearance across multiple jurisdictions, including IND clearance from the FDA, to start a Phase 2 randomized controlled study with SAT-3247 in 51 ambulatory children with Duchenne muscular dystrophy (DMD). With a regulatory green light in hand, the company remains on track for what we described in our last note as a “data-rich 26”.