Ovid Therapeutics (OVID): Evaluating Valuation After Positive Phase 1 Trial Results and $175 Million Financing

Ovid Therapeutics has grabbed investor attention after unveiling encouraging Phase 1 results for its next-generation epilepsy drug, OV329. In addition to the promising data, the company secured $175 million in new financing, extending its cash runway.

See our latest analysis for Ovid Therapeutics.

After surging on the back of positive Phase 1 data and a major private financing announcement, Ovid Therapeutics has seen renewed bullishness, with momentum building over the short term. While the latest share price sits at $1.84, the one-year total shareholder return still reflects only a modest gain. This underscores how much investor sentiment is riding on future pipeline milestones rather than recent price action.

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With shares rallying but still trading well below analyst targets, investors are left to wonder: is Ovid Therapeutics undervalued on new data and funding, or is the market already pricing in its future growth potential?

Price-to-Sales of 19.7x: Is it justified?

Ovid Therapeutics trades at a price-to-sales ratio of 19.7x, placing its valuation well above sector peers despite its $1.84 closing price. This high multiple positions the stock in overvalued territory compared to both the broader biotech industry and similar growth-stage firms.

The price-to-sales ratio is a key metric for companies without profits, such as Ovid Therapeutics. It shows investors how much they are paying for each dollar of company revenue, which is crucial when profits remain elusive. A higher ratio suggests the market expects rapid revenue growth or significant future breakthroughs.

Ovid’s elevated 19.7x multiple is significantly greater than the US Biotechs industry average of 10.5x as well as the peer average of 4.7x. However, market participants are paying a premium even though the business remains unprofitable and loss-making trends persist. If Ovid can deliver on its ambitious future growth plans, the market could move toward a lower, more sustainable ratio closer to the estimated Fair Price-to-Sales Ratio of 4.4x.

Explore the SWS fair ratio for Ovid Therapeutics

Result: Price-to-Sales of 19.7x (OVERVALUED)

However, continued losses and revenue growth that may not keep pace with expectations remain key risks. These factors could challenge the bullish outlook for Ovid Therapeutics.

Find out about the key risks to this Ovid Therapeutics narrative.

Build Your Own Ovid Therapeutics Narrative

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A great starting point for your Ovid Therapeutics research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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