OVID Ovid Therapeutics Inc

Item 1.01Entry into a Material Definitive Agreement.

On December 30, 2021 (the “Effective Date”), Ovid Therapeutics Inc. (the “Company”) entered into a License Agreement (the “License Agreement”) with AstraZeneca AB (“AstraZeneca”), pursuant to which AstraZeneca granted to the Company worldwide exclusive rights to develop and commercialize AstraZeneca’s library of early-stage small molecules targeting the K+ Cl- co-transporter (“KCC2”), including lead candidate OV350 (the “Licensed Compounds”).   

The licenses granted to the Company include licenses under AstraZeneca’s patents and know-how covering the Licensed Compounds.  The Company is required to use commercially reasonable efforts to conduct development activities for the Licensed Compounds, and following regulatory approval, to commercialize the Licensed Compounds.  At the time of proof of clinical efficacy, AstraZeneca will have the right of first negotiation to opt-in to a strategic collaboration.  

Pursuant to the License Agreement, the Company agreed to (i) make an upfront payment to AstraZeneca of $5.0 million in cash within 10 days following the Effective Date, and (ii) issue AstraZeneca 2,272,727 shares (the “License Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”), on the Effective Date or as soon as reasonably practicable thereafter, with the number of shares of Common Stock issued to AstraZeneca determined by dividing (x) $7,500,000 by (y) the volume-weighted average price of one share of Common Stock on the Nasdaq Global Select Market for the 30 consecutive trading days immediately preceding the Effective Date.  Pursuant to the License Agreement, AstraZeneca is eligible to receive potential clinical development milestones of up to $8.0 million, regulatory milestones of up to $45.0 million and commercial milestones of up to $150.0 million.  In addition, pursuant to the License Agreement, the Company will be required to pay tiered royalties on net sales by the Company, its affiliates or sublicensees ranging from single digit percentages to 10.0%, subject to certain standard reductions and offsets.  Royalties will be payable on a product-by-product and country-by-country basis until the latest of the expiration of the licensed patents covering such product in such country, the expiration of market exclusivity for such product in such country, and a specified number of years from the first commercial sale of such product in such country.

Either party may terminate the License Agreement for the uncured material breach of the other party or in the case of the other party’s insolvency.  AstraZeneca may terminate the License Agreement if the Company challenges any of the licensed patents or if the Company permanently ceases development of all products subject to the License Agreement and no such product is being commercialized.  The Company may terminate the License Agreement for convenience upon specified notice periods.

The foregoing description of the License Agreement is not complete and is qualified in its entirety by reference to License Agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1, which is incorporated herein by reference.