Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q1 2023 Earnings Call Transcript

Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q1 2023 Earnings Call Transcript May 11, 2023

Marinus Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.67, expectations were $-0.72.

Operator: Greetings and welcome to the Marinus Pharmaceuticals’ First Quarter 2023 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. And now it is my pleasure to introduce your host, Sasha Damouni Ellis, Vice President of Corporate Affairs and Investor Relations. You may begin Ms. Damouni Ellis.

Sasha Damouni Ellis: Thank you and good morning. With me from Marinus Pharmaceuticals are Dr. Scott Braunstein, Chairman and Chief Executive Officer; Christy Shafer, Chief Commercial Officer; Dr. Alex Aimetti, Chief Scientific Officer; and Steve Pfanstiel, Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that some of the statements we are making today are Forward-Looking Statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward-looking statements. These risks and uncertainties and risks associated with our business are described in the Company’s reports filed with the Securities and Exchange Commission including Form 10-K, 10-Q and 8-K.

I will now turn the call over to our CEO, Scott Braunstein.

Scott Braunstein: Thank you, Sasha and welcome to our call. During the first quarter of 2023, we made important progress advancing our oral and IV Ganaxolone programs further establishing Marinus as a leader in the development of innovative treatment options for patients with rare genetic epilepsy and refractory seizure disorders. We continue to make considerable strides with the launch of ZTALMY, are pleased with our first quarter sales of $3.3 million and are on-track to meet our previously stated full-year 2023 guidance of $15 million to $17 million. Christy Shafer, our Chief Commercial Officer will be reviewing some of the key initiatives for 2023 that we believe will support the continued growth of ZTALMY. We have also made significant progress in our commitment to bring Ganaxolone to more patients around the world.

Let me start with an update on our European PVV marketing authorization application. As part of the day 195 assessment report, the European Medicines Agency communicated that the major objection related to the choice of regulatory starting material has been resolved. We expect to receive the CHMP opinion prism calming in CDD by the end of May and are confident with the progress that we have made to-date. As a reminder, in August of 2021, we entered an exclusive agreement with Orion Corporation for the commercialization of Ganaxolone in Europe and have been collaborating with them to prepare for the potential launch. We look forward to sharing the formal CHMP opinion with you later this month. Furthermore, we are pleased to have entered into an exclusive distribution and supply agreement with Biologics with ZTAMLY in several markets in the Middle East and North Africa.

Biologics is a multinational pharmaceutical company based in Dubai. We hope to have ZTALMY available for patients in the MENA region in early 2024. In parallel, we are working closely with Tenacia, our partner in China and expect them to file a new drug application by the end of this year. We are engaged in active discussions with several strategists, who are interested in bringing our products to market in Japan. Our current and future ex-U.S. partnerships are essential part of our commitment to reach the global patient community. Moving to our clinical pipeline, we are excited to announce our plans to conduct an interim analysis for the Phase III RAISE trial in refractory status epilepticus later this year. Alex will discuss the process in more detail shortly.

But if the results meet the predefined stopping criteria, we expect to report interim top-line data in the second half of this year. Our leadership continues to prepare for a potential RSE filing, including a growing effort from our commercial, regulatory, CMC and medical science teams. Additionally, we are gratified that physicians across the U.S. are requesting the use of IV Ganaxolone for their most severe super refractory patients and some have seen important clinical improvements. We are actively recruiting for the Phase III TrustTSC trial in the U.S., Europe, and Canada, and expect the vast majority of clinical sites will be ready to enroll patients by mid-year, including new sites in Israel, Italy, Belgium, Australia, and China. Due to administrative and regulatory delays in certain EX-U.S. countries, many of these which have now been resolved, we expect top-line data no later than the middle of 2024.

Importantly, we learned with CDD efficacy and tolerability are key attributes to success in the refractory epilepsy population, and we are confident that the current protocol design maximizes our opportunity for a clinically meaningful outcome. Let me conclude with a few additional business updates. We continue to advance our IP portfolio and recently received a notice of allowance from the U.S. Patent and Trademark Office for a new method of use patent for Ganaxolone in TSC. When granted, the term of this patent will run through 2040, we have spent considerable time and energy broadening our patent portfolio and look forward to the final issuance of both this new method of use patent for the oral franchise and TSC, and an additional dosing method of use patent for our IV franchise in the treatment of RSE.

We believe that there are additional opportunities to expand our patent portfolio based on our scientific advancements in the next several years. We look forward to our upcoming Phase III data readouts and the clinical progress in our second generation platforms. We expect the number of additional milestones before the end of the year, including enrolling our first patient in the RAISE II trial and completing enrollment of the first cohort of patients in the RESET trial in established status epileptic. We believe our second generation formulations have the potential to be the future of Ganaxolone franchise and are planning to initiate a multiple ascending dose study with our first new formulation in the third quarter with preliminary results expected by year-end.

If these results are consistent with the single ascending dose modeling, this formulation would be utilized in a future trial in Lennox-Gastaut syndrome with the clinical program designed, expected to be finalized in the first quarter of 2024. Finally, we are pleased to welcome Marvin Johnson to our Board of directors. Marvin has over 34-years of diverse commercial operations experience at Merck and will be invaluable in supporting this ZTALMY commercial efforts while preparing for potential hospital launch of IV Ganaxolone. Now, I would like to turn the call over to our Chief Commercial Officer, Christy Shafer.

Christy Shafer: Thank you Scott and good morning. I’m pleased to provide you with an update on our continued progress as we execute on the U.S. commercial launch of the ZTALMY. Today, I would like to focus on three topics, how does ZTALMY launch is progressing? What we are doing to accelerate growth and adoption of this important new medicine? And how we are preparing for a potential IV launch of Ganaxolone in the hospital and an expanded indication in TSC. Net sales as a ZTALMY in the U.S. in the first quarter were 3.3 million with approximately 100 commercial patients active on therapy by the end of the quarter. We continue to see a steady build of treatment naive commercial patients with prescriptions coming from a growing and diverse prescriber base of over 100 unique physicians.

Total payer coverage for ZTALMY increase to approximately 225 million lives, including both commercial and government programs. ZTALMY has received favorable coverage determinations from over 40 payers, representing approximately 130 million commercial lives and Medicaid access has been confirmed in all U.S. states as well as Washington, DC and Puerto Rico representing approximately 95 million lives. We have received meaningful uptake in all CDKL5 centers of excellence with encouraging trends persisting in surrounding areas where patients are managed routinely for ongoing treatment. Using sophisticated data sources we have seen an uptick in the usage of the ICD-10 code G 40-42 and continue to see this trend rising with educational efforts and awareness campaigns with over 700 unique patients since 2020.

We are evolving our commercial efforts in response to what we have learned. This includes investments in higher quality data sources, more sophisticated analytics, new educational materials around genetic testing and training in ultra rare market dynamics. Understanding the crucial role of the caregiver, we continue our commitment to providing ongoing support to the CDKL5 community. Recently, we hosted an educational webinar featuring Dr. Raj Rajaraman, a prominent pediatric neurologist from UCLA, ACBD Center of Excellence, and Dr. Alex Aimetti, Marinus’s Chief Scientific Officer to address questions received from the community. Additionally, we are in the process of shifting off our caregiver engager program to educate patients and families by sharing experiences of families who have initiated treatment with ZTALMY and what that experience has meant for them and their loved ones.

These stories will be incorporated into our branded promotion for CDD and will also include healthcare providers who can speak to the clinical profile of ZTALMY. We continue to plan for and are making significant progress as we look to expand our oral franchise and build out our acute care franchise in preparation for a potential hospital launch of IV Ganaxolone. For our expansion efforts the remainder of 2023 will be focused on building on our robust and comprehensive understanding of the U.S. TSC market. These efforts will include initiating an emotional and functional patient journey market research project, treater identification analyses, and a U.S. TSC landscape assessment to identify leverage points, existing behaviors and beliefs to create a brand strategy that enables the optimization of the introduction of ZTALMY to the U.S. TSC market.

For IV our commercial planning investments are ramping up significantly with priority on strategies that we believe will drive early launch success. To maximize the total market potential we are in the final stages of an innovative data project that is first of its kind as it relates to the identification and tracking of status epilepticus patients. Leveraging data across four distinct claims providers to generate patient progression through each episode resulted in a sophisticated and comprehensive look at inpatient pathways and outcomes associated with usual care. These key findings and insights deepen our understanding of the specific unmet needs as patients progress along the status continuum and will shape our commercial strategy. Finally, we are preparing to address the inherent challenges with inpatient reimbursements and complex DRGs, and do plan to pursue an NTAP is one component of our access and reimbursement strategy.

Photo by The Tonik on Unsplash

As a reminder, the NTAP or the new technology add-on payment designation enables additional payment to hospitals above the standard Medicare severity diagnosis related group payment amount. Under this policy, for eligible technologies, Medicare pays the applicable MS DRG payment rate up to an additional 65% of the cost of the approved new technology. The team is closely monitoring CMS proposed changes to filing requirements, while also determining an optimal filing approach that allows our hospital customers to maximize the NTAP period post approval. We look forward to providing more details in our Investor and Analyst Day in September which Sasha will discuss in more detail at the end of the call. We feel there are many opportunities to continue to grow our brand and are committed to supporting CDD families in new and meaningful ways, while expanding our commercial infrastructure in-line with our clinical development programs.

I will now hand the call over to our Chief Scientific Officer, Alex Aimetti, to discuss our ongoing development program.

Alex Aimetti: Thank you, Christy, and hello, everyone. I’m pleased a step in for Dr. Joe Hulihan, our Chief Medical Officer to provide an update on our clinical programs today. Joe is currently in China meeting with our strategic partner to further strengthen our R&D collaboration. He will be participating in a local CDD Advisory Board, attending a TSC Investigator Meeting and connecting with doctors around the country, who have expertise in CDD, TSC and status epilepticus. I will now provide an update on our clinical programs. As a reminder, the TrustTSC trial is 162 patient, double-blind, placebo controlled trial in patients experiencing a minimum of eight countable seizures per month, despite adequate treatment with existing therapies, including recently approved anti-seizure medications.

This is a highly refractory pediatric and adult population and we believe the estimated number of patients with refractory seizures to be between 25,000 and 40,000 patients in the U.S. Based on our observations from the Phase II open-label TSC trial where we saw a higher rate of reported somnolence than our Marigold study we developed a new titration schedule for this Phase III study. The new titration schedule is designed to slowly increase the dose early on and increase more rapidly towards the end of the four week schedule to successfully titrate TSE patients to target doses. We believe that, slower titration initially will optimize tolerability and lead to improved efficacy. The low discontinuation rate observed in the TrustTSC study to-date gives us increased confidence that the changes we made to the Phase III dose titration are having the desired effect.

We continue to actively enroll patients in the TrustTSC trial at sites in the U.S., Europe and Canada. Due to administrative and regulatory delays getting certain ex-U.S. sites up and running, we now anticipate top-line data 2024. The team has been working hard to overcome these country specific delays and we are confident that the vast majority of sites in the trial will be ready to enroll by the summer. We expect to begin enrolling patients at new clinical sites in Israel and China this quarter with additional site activations planned in Italy, Belgium and Australia by mid-year. With these new initiations, we expect to see increased enrollment across our global sites. To further support study recruitment and enrollment, Marinus has sponsored two educational webinars in the U.S. and Europe, featuring prominent key opinion leaders.

The first was held in April for U.S. families and hosted by the TSE Alliance, and the second one will be hosted by the TSE Association with a European focus, and will be recorded later this month as we continue to build and strengthen our relationships with global TSE Advocacy Groups. Now, I would like to provide an update on our clinical programs in status epilepticus. Our Phase III RAISE trial studying intravenous or IV Ganaxolone in refractory status epilepticus continues to advance. We have dedicated considerable cross-functional resources to prioritize site engagement and scientific education and are confident that it has had a positive impact on enrollment and overall study awareness. Today, we announced that we are planning to conduct an interim analysis in the second half of the year.

The RAISE study protocol provides for a pre-specified interim analysis to evaluate the co-primary endpoints of status epilepticus cessation within 30 minutes and no progression to IV anesthesia for 36-hours, when two-thirds of the patients or approximately 82 patients have completed the trial. The interim analysis is more than 90% power to show a 40% treatment effect. We continue to enroll patients in the RAISE d trial that are representative of the Phase II patient population, which gives us strong confidence in a robust and clinically meaningful treatment effect that can be observed at the interim analysis. We expect that successful achievement of the co-primary endpoints would serve as the basis for submission of a regulatory filing in the U.S. I would like to review the process of the interim analysis.

Upon completing enrollment of 82 patients with plan to clean and lock the database and an unblinded statistician will supervise the running of tables and quality check to maintain integrity of the data. These data would then be provided to the Data Monitoring Committee or DMC to evaluate for efficacy and safety. The DMC would then inform Marinus as to whether or not the study met the pre-specified efficacy stopping boundaries on the co-primary endpoints. If the study does achieve the pre-specified efficacy stopping rules, the Marinus Leadership Team would then have the opportunity to evaluate the data and share top-line results soon after. If the trial is complete, at the interim analysis, we will continue to enroll new patients in a planned open label extension to collect additional safety data, which we believe would be supportive for regulatory filings.

We also continue to progress our other trials in status epilepticus. Enrollment in our Phase III RAISE II trial in RSC for European registration is anticipated to begin in the second half of 2023. On a successful interim analysis, we would plan to transition a significant number of our U.S. RAISE II sites to the RAISE II trial in an effort to expedite enrollment. We also expect a complete enrollment of the first cohort of our Phase II reset trial in established status epilepticus before the end of the year. Finally, we continue to provide IV Ganaxolone to physicians who request it for their severe patients in super refractory status epilepticus under an emergency IND mechanism. To-date, 16 patients with super refractory status have been treated with IV Ganaxolone.

Some cases have already been presented at major medical meetings or as case reports in the literature, and we anticipate additional cases to be published in the future. I would now like to turn to our second generation product development efforts. We have completed our single ascending dose study in healthy volunteers with our new oral formulation. The new formulation exhibited linear pharmacokinetics at single doses of 100 to 1200 milligrams overcoming some of the limitations of the current suspension. Modeled data suggests effective trough levels can be obtained with BID dosing with this new formulation enabling Ganaxolone to be studied in additional rare epilepsy patient populations. Our multiple ascending dose study is expected to initiate enrollment in the third quarter of 2023 with preliminary data by the end of the year.

In parallel, we are aiming to finalize the clinical program design for Lennox-Gastaut syndrome in the first quarter of 2024 pending results of the MAD Study. Our pro-drug development continues to advance and a lead oral candidate has been selected. We are targeting Phase I data in 2024.On the scientific affairs side of the organization we continue to generate relevant and compelling data aimed at addressing the needs of the medical and caregiver communities. We are excited about the data sets we have planned to share with you all this year. First, we are planning to share the two year data from the CDD Marigold Open-Label Extension Study at this year’s International Epilepsy Congress in Dublin, and then expanded data at the American Epilepsy Society meeting in Orlando.

In addition, we are planning to present multiple abstracts, including the complete single ascending dose study data, some early real world data on ZTALMY use in the U.S., as well as new preclinical data of IV Ganaxolone in a severe status epilepticus model. The Marinus Scientific and Medical teams will have a considerable presence at this year’s Neurocritical Care Society, Child Neurology Society, and American Epilepsy Society’s annual meetings as we continue to educate about Ganaxolone and the disease states in which it is being studied in, as well as raise Marinus’ scientific awareness. All in all, I’m excited about the progress we are making on our clinical programs, and it is shaping up to be a very exciting year with multiple data catalysts along the way.

I would now look to turn the call over to our CFO and COO, Steve Pfanstiel, who will provide you with a financial update.

Steven Pfanstiel: Thanks, Alex and good morning to everyone. I’m pleased to be able to share our financial results for the first quarter of 2023. Before going through the details of our financial performance, I want to touch on a few key updates for the business. We are very pleased to have initiated significant startup work related to our API on shoring initiative. As you may recall, BARDA exercised its option late last year to support this initiative, which included funding of up to 12.3 million. Importantly, this work is expected to provide a second domestically sourced manufacturing capability for Ganaxolone API and has the potential to drive a greater than 30% reduction in API supply cost, which represents a significant portion of the overall manufacturing cost for Ganaxolone.

We have also been active in our deal making over the past two years, partnering with Orion for the European market, Tenacia for China, and now biologics for MENA. We remain active for further expansion with the current focus on Japan. As we continue to advance Ganaxolone’s development in ex-U.S. markets such as Europe, we have the potential to see royalty and milestones contributing to our cash inflows in the near-term in addition to ongoing R&D reimbursement. For the fiscal year 2023, we are maintaining our guidance with U.S. ZTALMY revenues projected to be in the range of $15 million to $17 million and BARDA revenues to be in the range of $8 million to $11 million. We continue to project our GAAP operating expenses inclusive of SG&A and R&D expenses to be in the range of $165 million to $175 million of which we expect approximately $16 million to be non-cash stock-based compensation.

We expect that our current cash, cash equivalents and short-term investments of $199.2 million will be sufficient to fund our operations into the second half of 2024 inclusive of maintaining the minimum required cash balance of $15 million under our credit agreement. I will now move into our financial results. For the first quarter of 2023, we recognized product revenues of $3.3 million for the three-months ended March 31, 2023. These revenues consist of ZTALMY product sales which was launched in the third quarter of 2022. Separately, we recognized BARDA revenues of seven million for the three-months ended March 31, 2023, as compared to 1.5 million for the same period in the prior year. The increase is driven primarily by activity associated with start-up of our API on-shoring initiative and increased RAISE trial activity.

Research and development expenses increased to 27.9 million for the three-months ended March 31, 2023 as compared to 18 million for the same period in the prior year. The change was due to increased costs associated with their API on-shoring effort, increased TSC and RSE clinical trial activity and increased headcount. As a reminder, the API on-shoring effort is approximately 70% funded by BARDA that the increase in R&D expenses is partially offset by the increased BARDA revenues reflected in the first quarter. Selling general and administrative expenses increased to 15.2 million for the three-months ended March 31, 2023, as compared to 11.7 million for the same period in the prior year. The primary drivers of the change were increased headcount and commercial support for the U.S. launch of ZTALMY.

Interest expense was 4.1 million for the three-months ended March 31, 2023, as compared to 1.7 million for the same period in the prior year. The increase is driven by drawdown of an additional 30 million of credit under the Oaktree agreement in March 2022, upon FDA approval for ZTALMY and non-cash interest expense related to our revenue interest financing with Sagard. Interest income was 2.3 million for the three-months ended March 31, 2023 as compared to less than $0.1 million for the same period in the prior year. The increase in interest income was driven by the overall increase in cash, cash equivalents and short-term investments and increased yield on those balances. The company reported a net loss of 34.7 million for the three-months ended March 31, 2023 as compared to a net loss of 19.4 million for the same period in the prior year.

As a note, the 2022 net loss the one-time gain of 12.7 million related to our recognition of a portion of the upfront payment associated with our Orion partnership. These totals also include non-cash, stock-based compensation expense of 3.7 million for the three-months ended March 31, 2023, as compared to 3.4 million for the same period in the prior year. Cash used in operating activities was 41.5 million for the three-months ended March 31, 2023, as compared to cash used in operating expenses of 27.7 million for the same period in the prior year. Now I will turn the call back to Scott, who will provide concluding remarks.

Scott Braunstein: Thanks, Steve. 2023 is off to a strong start for Marinus, and we are thrilled to have a strong balance sheet to support a continued positive momentum of ZTALMY launch, the advancement of our two late stage clinical programs and our second generation product development. We are committed to delivering We are committed to delivering shareholder value and expanding opportunities to serve patients that may benefit from ZTALMY and IV Ganaxolone. I would like to thank our employees for their hard work and dedication to advancing our mission and our investors for their support. Sasha, I will turn it back to you.

Sasha Damouni Ellis: Thanks, Scott. Planning is underway for an Investor and Analyst Event in September, which we will share more details about in the coming months. We look forward to diving into our commercial planning at RSC and providing color around how we are advancing our strategic goals to prepare for a successful launch. Operator, can you now open the call to questions?

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Q&A Session

Operator: Thank you. [Operator Instructions] We will take our first question from Andrew Tsai at Jefferies.

Operator: We will move next to Charles Duncan at Cantor Fitzgerald.

Operator: We will take our next question from Brian Abrahams at RBC Capital Markets.

Operator: We will move next to Joseph Thome at TD Cowen.

Operator: We will go next to Douglas Tsao at H.C. Wainwright.

Operator: We will go next to Brian Skorney at Baird.

Operator: [Operator Instructions] We will go next to Joon Lee at Truist Securities.

Operator: We will move next to Mark Goodman at SVB Securities.

Operator: Well take our next question from Jay Olson at Oppenheimer.

Scott Braunstein: And operator, I just want to say thanks to everyone for staying on the call. I apologize that we went 20 minutes over, but we did want to answer your question. I’m sorry we didn’t put Steve to work on this call. But he has done such a great job helping us strengthen our balance sheet. I’m glad those are not issues that we had to tackle today, and appreciate all your time and support and we look forward to catching up live in the future. So thanks, thanks for dialing in.

Operator: And that does conclude today’s conference call. Thank you for your participation. You may now disconnect.