Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q4 2023 Earnings Call Transcript

Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q4 2023 Earnings Call Transcript March 5, 2024

Marinus Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.74 EPS, expectations were $-0.64. Marinus Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, greetings and welcome to Marinus Pharmaceuticals’ Fourth Quarter and Full Year 2023 Financial Results and Business Update Call. Today’s call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. And it is my pleasure to introduce your host, Sonya Weigle, Senior Vice President of Investor Relations, Human Resources and Corporate Affairs. Ms. Weigle, you may begin.

Sonya Weigle: Thank you and good morning. With me from Marinus are Dr. Scott Braunstein, Chairman and Chief Executive Officer; Christy Shafer, Chief Commercial Officer; Dr. Joe Hulihan, Chief Medical 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, Dr. Scott Braunstein.

Scott Braunstein: Thank you, Sonya. Marinus concluded 2023 with a strong finish across all fronts; commercial, clinical and operational. On today’s call, I’ll provide a brief overview of some of the key areas before turning it over to our leadership team. Starting with an update on ZTALMY. We finished 2023 with another strong quarter of enrollment and robust quarterly growth. As a result of the progress made by our commercial team, we expect to achieve profitability on our ZTALMY commercial investment by the second quarter of 2024, ahead of our previous two-year target. Christy will provide a summary of our revenue results in her remarks as well as an update on our investments to continue to grow the CDD business and our launch plans as we prepare for two critical Phase 3 data readouts in the second and fourth quarters of this year.

Our commercial partners in the EU, China and MENA regions continue to make important progress to support the ZTALMY launches around the globe. In China, the Tenacia team has been granted priority review of the NDA submission in CDD as well as contributing to the enrollment of the TrustTSC trial. In Europe, Orion continues to plan for the launch of ZTALMY in select European countries in 2024. Finally, in the MENA region, we are targeting that our partner Biologix will begin their distribution strategy in the second half of this year. Concurrently, we are expanding our manufacturing investments to ensure that we can adequately supply not only our global partners but the broader market opportunities for ZTALMY over the coming years. Turning to our clinical pipeline, I’ll first share an update on our Phase 3 RAISE trial of IV ganaxolone in refractory status epilepticus.

As we announced in our press release this afternoon, we are pleased to report that we have met the enrollment criteria for the interim analysis and now have more than 90 patients enrolled in the trial. We expect to deliver the interim results to the data monitoring committee over the coming weeks and plan to announce the outcome within the first half of the second quarter. Based on continued strong enrollment seen over the past six months, we project approximately 100 patients to be included in the secondary endpoint analyses. This growing data set should drive a robust package for both the FDA filing and our health economic outcomes. We expect to have the comprehensive trial results over the summer and to present this data at a series of medical meetings in the fourth quarter.

We are currently planning for an NDA submission in the first quarter of 2025 and are expecting a priority review. We see the recent uptick in enrollment as a strong reflection of the potential market opportunity for the IV franchise. Domestically, we believe the addressable market for RSE is approximately 35,000 patients per year, and we have the unique opportunity to bring a novel therapy to physicians. We plan to build our leadership in the hospital by continuing to invest in future status epilepticus research while making the appropriate commercial investments with the goal of ascertaining value-based pricing and broad physician adoption. Let me move to an update on our oral pipeline. Approximately 85% of the patients have been enrolled in our TrustTSC trial and the discontinuation rate is below 7%.

Due to some minor delays in screening, we expect to complete enrollment in the TrustTSC trial during the first half of the second quarter. As a result, we now anticipate our top line Phase 3 results in the first half of the fourth quarter of this year rather than the end of Q3. We could not be more pleased with the baseline demographics of the patients enrolled, the high percentage of patients rolling over to the open-label portion of the study and the low overall discontinuation rates, which are substantially different than what we saw in Phase 2. We believe the quality of this data set will support a compelling pricing strategy consistent with what we’ve seen to date for ZTALMY. The commercial team continues to make the appropriate investments to prepare for a potential launch in 2025, and we are eager to offer patients suffering from refractory TSC, a novel anti-seizure therapy.

Based on our market analysis, the addressable patient population in refractory TSC is projected to be about 10,000 patients in the United States. By leveraging our current commercial organization, we believe successful expansion of this opportunity will require a modest incremental investment. As a result, our goal is to drive profitability for the entire ZTALMY franchise within 6 to 12 months of the 2025 TSC launch. 2024 will be a pivotal year for the company as we have built a solid foundation that has us well positioned to drive future growth. Together, the CDD, RSE and TSC markets represent a multibillion-dollar opportunity, where we believe we can take a firm leadership position for these disease states and other refractory epilepsies.

With an established commercial and clinical track record, we look forward to building our momentum for ZTALMY, while also reporting on these key data milestones later this year. I’ll now turn the call over to our Chief Commercial Officer, Christy Shafer.

Christy Shafer: Thank you, Scott, and good afternoon, everyone. In my remarks today, I will share an update on our ZTALMY launch, the progress we are making to grow our CDD franchise and an update on our commercial readiness planning for potential launches into TSC and RSE. Starting with ZTALMY in our first full year of launch, we generated net product revenue of $19.6 million for the full year 2023. This solid performance is the result of our strategy to establish ZTALMY as a critical treatment in the comprehensive management of seizures associated with CDD and to ensure that patients have seamless access to ZTALMY from prescription through fulfillment. We ended 2023 with more than 165 patients active on therapy. We continue to see swift payer approval with time from enrollment to patients fill of approximately two weeks in the second half of 2023, representing a consistent improvement throughout the year and demonstrating payers’ understanding of ZTALMY’s impact on patients in need.

Additionally, payer approvals of CDD prescriptions remain at nearly 100%, indicating strong payer recognition of the value of ZTALMY for these patients. To date, discontinuation rates are still well within our anticipated expectations. Looking ahead, we continue to expect full year 2024 U.S. ZTALMY net product revenues of between $32 million and $34 million. The midpoint of this range represents growth of nearly 70% versus 2023. We are executing a number of strategies to maximize CDD market penetration. We are utilizing new data sources and analytics to better identify patients who are not build with the CDD ICD-10 code and third-party claims and identify patients who may have CDD, but had yet to have a confirmatory genetic test. Leveraging these data, we have also rolled out a genetic testing initiative, which will help accurately diagnose patients.

And with the open-label extension data published late last year, we are able to emphasize ZTALMY’s sustained efficacy and safety profile supporting the use of ZTALMY as a proven treatment for combating seizures associated with CDD. We are excited for the opportunity to bring ZTALMY to more CDD patients in need and believe our commercial strategy has us well positioned to realize the potential of this novel treatment. Our experience with ZTALMY provides Marinus with a solid foundation for two potential commercial launches in 2025. This includes ZTALMY’s expansion into TSC and the IV formulation of ganaxolone for RSE. Launch planning is well underway for both TSC and RSC in anticipation of two key trial readouts later this year. Let me take a few minutes to summarize our commercial planning in support of each of these programs.

Starting with TSC, our rare genetic epilepsy business is led by Senior Vice President, Lisa Legalon, a 30-year veteran in ultra-rare disease. We are planning to build on the strong foundation we have established with ZTALMY and CDD and expand our proven strategy to capture the larger TSC market. We believe there is a strong business rationale and market opportunity for the expansion of our ZTALMY business into TSC, where we know there is a significant unmet need in refractory patients. We plan to take advantage of synergies with CDD and TSC, while leveraging market data that will further support an additional commercial launch. Research suggests that there is a potential strong overlap with CDD rare disease treaters and unlike CDD, TSC patients may be easier to identify through a well-established ICD-10 code, which has been in use for more than 30 years and the physical TSC attributes, which may be identified at birth.

Our early plans to expand into the TSC market include; disease state education for payers, engagement with very active and supportive advocacy partners, including the TSC alliance, TrustTSC data education with payers and formulary decision-makers in the advance of a sNDA submission and an enhancement of our patient services and specialty pharmacy model. Turning to RSE with enrollment criteria now satisfied for the interim analysis and the RAISE trial and data anticipated in Q2, let me take a few moments to summarize our commercialization and launch plans. We have assembled a team with extensive commercial experience in the hospital setting under the leadership of industry veteran, Kristin Rudisill, our Vice President and Business Unit Lead for the Acute Care franchise.

In 2024, our acute care business is focusing on aligning development and execution with key milestones. Driving access post-approval is pivotal to our launch strategy. And this year we are aiming to complete key access strategies such as channel and distribution plans, NTAP filing and pricing. In addition to strategic planning, we are preparing for execution with the build and deployment of a field access team entering the market as early as this summer. Activating this team under the FDAMA 114 guidelines is designed to address key access stakeholder and payer groups with information that addresses their key value drivers. These teams are permitted to disseminate healthcare economic information that is critically important to these financial decision-makers who often control or influence formulary decisions for new therapies.

With corporate and system-level financial decision makers, we believe engaging with these key stakeholders can accelerate access and awareness leading to more favorable formulary placement and will ultimately provide patients with earlier access to treatment. The combination of our team’s leadership, the commercial plans we have outlined and the success of ZTALMY gives us the confidence that ganaxolone has the potential to become a blockbuster franchise across CBD, TSC and RSE. I look forward to providing further updates on our progress and plans throughout the year. At this time, I would like to turn the call over to our Chief Medical Officer, Dr. Joe Hulihan, for an update on our clinical programs and development.

Joseph Hulihan: Thank you, Christy, and good afternoon. I’m pleased to share an overview of our pipeline progress, which includes two key upcoming Phase 3 data readouts and initiatives to support our continued clinical and scientific understanding of RSE and TSC. Starting with the RAISE trial of IV ganaxolone in refractory status. After a strong end of 2023, I’m excited to report that in January, we hit our enrollment requirement for the interim analysis. With this critical milestone achieved and dates scheduled for DMC review of the data, we continue to expect to report top line results in the second quarter of 2024. Now that we’ve achieved the required enrollment target for the interim analysis, the clinical operations scheme has been hard at work, ensuring the integrity and completeness of the study data to be provided to the DMC for their review.

Here’s what you can expect next in the process. Presently, the clinical operations team is focused on data cleaning in anticipation of generating interim analysis dataset. Once the preparatory steps are complete, the data will be provided to the DMC for a determination of whether the studies met the pre-specified efficacy stopping boundaries on the co-primary endpoints. If the study achieves these pre-specified stopping rules, the Marinus leadership team will then evaluate the data and share top line results publicly soon thereafter, including both the co-primary and key secondary endpoints. Successful results would serve as the basis for submission of a U.S. regulatory filing. While preparation of data for the upcoming DFC is ongoing, as Scott mentioned, we’ll continue to enroll patients in the double-blind phase of the study.

Cater from these additional patients will be pooled with the interim analysis dataset and will serve as the basis for analysis of other secondary and healthcare utilization end points. If double-blind enrollment is stopped based on immune analysis results, we will then enroll new patients in a planned open-label extension to collect additional safety data that will support upcoming regulatory filings and future discussions with payers and other key stakeholders. As a reminder, the interim analysis will include results of the co-primary and key secondary study endpoints which measure both onset of action and durability of effect in controlling status epilepticus. The co-primary endpoints are status cessation within 30 minutes and prevention of escalation to third-line treatment with IV anesthetics.

For the key secondary endpoints, we are looking at another measure of onset of action, the time to status cessation analysis and a further measure of treatment durability, lack of progression to IV anesthesia for 72 hours, which encompasses the 24-hour period following the end of the ganaxolone infusion. Following release of the top line data, analysis will continue and will yield results on other secondary endpoints and important healthcare utilization outcomes, including time on mechanical ventilation, days in the ICU in the hospital and discharge destination. The results are anticipated by the fall and we plan to present the major medical meetings later this year. Turning to our second refractory status trial; RAISE II is a Phase 3 double-blind placebo-controlled registration study targeting enrollment of 70 patients who have failed first-line Benzodiazepine treatment and at least one second-line IV anti-seizure medication.

In this study, we’re evaluating IV ganaxolone in the population, earlier in the continuum of refractory status in whom IV anesthesia is less likely to be an imminent next step in treatment. We believe this study, which is expected to complete enrollment by the end of 2025 will support a European approval and could be used to expand the U.S. label. Data presented at AES last December as well as other published research, suggest that earlier treatment intervention in patients with status improves clinical outcomes. At that December meeting, we presented results from a five-year analysis of status epilepticus treatment dynamics in the U.S. This analysis showed that even in the absence of IV anesthesia, refractory status that was treated with three or more IV anti-seizure medications had worse outcomes and longer lengths of stay.

RAISE II trial is designed in a way that will allow us to assess the impact of IV ganaxolone on clinical outcomes and healthcare utilization in this subgroup of patients. Moving to Super Refractory Status or SRSE, we continue to supply IV ganaxolone to physicians upon request under emergency INDs for these patients whose life-threatening condition has high rates of morbidity and mortality. To-date, over 25 patients have been treated for SRSE with ganaxolone under INDs. Preliminary data on outcomes have been encouraging, particularly since we implemented a dosing regimen tailored to the treatment of SRSE. This regimen incorporates a higher daily dose of approximately 1,000 milligrams of ganaxolone with 63 grams of Captisol. Based on the outcomes we’ve observed, we intend to conduct a proof-of-concept study of IV ganaxolone in approximately 50 patients with SRSE.

We plan to go to the FDA in the second quarter of this year with this modified dosing regimen and begin the study before year-end. Turning to our ZTALMY franchise, first with TSC. Seizures in TSC are often treatment-resistant, despite the availability of newer disease-specific anti-seizure medications. To address this unmet need, we’re evaluating ganaxolone in TSC patients with refractory seizures in our ongoing TrustTSC trial. This is a global Phase 3 randomized double-blind placebo-controlled trial of adjunctive ganaxolone which will enroll approximately 128 patients with TSC-associated seizures. As Scott mentioned, we’ve achieved over 85% of the target enrollment and are confident that we’ll complete full enrollment early in the second quarter of this year.

As a reminder, the trial provides 90% power to detect a 25% difference in seizure reductions between ganaxolone and placebo. As discussed previously, the titration schedule has been modified in consideration of the pharmacokinetics of ganaxolone and the timing of side effect onset in prior studies. Currently, the discontinuation rate in the study is below 7%, giving us confidence in the potential benefit of the revised titration, not just on tolerability, but potentially on efficacy as well. In addition, we’re seeing over 85% of patients who complete the study transitioned into the open-label extension, the rate as high or higher than observed in the Marigold study. We’re targeting submission of a supplemental NDA in the first half of 2025 with a priority review we expected.

Additionally, we plan to expand our investment in ZTALMY to explore its potential in the treatment of other rare epilepsies. Planning is underway for a clinical trial that would assess oral ganaxolone for the treatment of a broad range of epileptic encephalopathies. Many patients with seizures and neurodevelopmental disorders, don’t satisfy diagnostic criteria for Lennox-Gastaut Syndrome or other well-defined developmental and epileptic encephalopathies and we feel there is a substantial unmet for seizure treatment in these patients. We plan to initiate a proof-of-concept trial assessing ganaxolone in approximately 100 patients in the fourth quarter of this year. In closing, helping patients and families suffering from severe refractory seizure disorders remains at the core of what we do.

Our clinical team is motivated and focused on ensuring these lives are transformed with new, safe and effective treatment options. I’d now like to turn the call over to our CFO and COO, Steven Pfanstiel, for financial update.

Steven Pfanstiel: Thanks, Joe, and good afternoon, everyone. I am pleased to be able to provide a financial update as well as share our financial results for the fourth quarter and full year of 2023. First of all, I am proud of how we managed the business in 2023. And we ensured that we remain focused on our critical investments in the RSE and TSC trials and on the commercialization of CDD. On the latter, we now project a breakeven on our CDD commercial investment in the first half of 2024, which is ahead of our projections in less than two years from the launch. We were also not afraid to make tough decisions, such as discontinuing the established status epilepticus trial and making other cost reductions to ensure adequate cash runway headed into two significant data readouts.

As a result, we ended 2023 with cash, cash equivalents and short-term investments of 150.3 million. This is expected to provide cash runway late into the fourth quarter of 2024. And importantly, we project a cash balance of greater than 100 million at the expected RSE readout. We announced earlier in the quarter that we project 2024 U.S. ZTALMY net product revenues of between 32 million and 34 million. As Christy mentioned, this increase from 2023 represents continued strong and steady execution on the launch. Unlike 2023, we are not providing full year 2024 operating expense guidance at this time as the level of investment will depend on the outcome of the RSE and TSC Phase 3 trials. However, we expect operating expenses and cash burn in the near term to be consistent with the 2023 trends.

I’ll now take a few minutes to summarize our financial results for 2023. We recognized ZTALMY product revenues of 6.6 million and 19.6 million for the 3 and 12 months ended December 31, 2023, as compared to 2.3 million and 2.9 million for the same period in the prior year. The full year total of 19.6 million exceeded our revised ZTALMY revenue guidance range of between 18.5 million and 19 million. Separately, we recognized BARDA revenues of 0.6 million and 11.4 million for the 3 and 12 months ended December 31, 2023, as compared to 1.8 million and 6.9 million for the same period in the prior year. Our actual 2023 BARDA revenue of 11.4 million was within our guidance range of between 11 million and 12 million. Research and development expenses were 26.4 million and 99.4 million for the 3 and 12 months ended December 31, 2023, as compared to 21.4 million and 79.9 million for the same periods in the prior year.

The year-to-date change was due to increased costs associated with our API onshoring efforts, increased TSC and RSE clinical trial activity and increased headcount. As a reminder, the API onshoring effort is approximately 70% funded by BARDA, so the increase in R&D expenses is partially offset by the increased BARDA revenue. Selling, general and administrative expenses were 15.4 million and 61.2 million for the 3 and 12 months ended December 31, 2023, as compared to 14.7 million and 56.8 million for the same period in the prior year. The primary drivers of the change on a year-to-date basis were annualization of the U.S. ZTALMY launch costs and increased headcount. Full year 2023 GAAP operating expenses consisting of both SG&A and R&D expense was 160.5 million, which was within our revised guidance range of between 158 million and 162 million.

Interest income was 1.7 million and 8.1 million for the 3 and 12 months ended December 31, 2023, as compared to 1.7 million and 2.4 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. Interest expense was 4.3 million and 16.9 million for the 3 and 12 months ended December 31, 2023, as compared to 3.7 million and 10.7 million for the same periods in the prior year. The increase is driven by drawdown of an additional 30 million of credit under the Oaktree agreement in March 2022 and noncash interest expense related to our revenue interest financing with Sagard. The company reported a net loss before income taxes of 41.8 million and 142.9 million for the 3 and 12 months ended December 31, 2023, as compared to a net loss before income taxes of 32.7 million and 16.4 million for the same period in the prior year.

As a reminder, the prior year’s results included the onetime sale of our priority review voucher in the third quarter. These totals include noncash stock-based compensation expense of 3.9 million and 15.6 million for the 3 and 12 months ended December 31, 2023, as compared to 3.8 million and 14.9 million for the same period in the prior year. Cash used in operating activities was 118 million for the 12 months ended December 31, 2023, and as compared to cash used in operating activities of 112.9 million in the prior year. Before we move to the Q&A, I will make a few concluding remarks. We are very pleased with our progress to date all of which has led to a number of potentially transformational milestones in 2024. We have two key data readouts in RSE and TSC that is positive to drive significant growth for our ganaxolone franchise and we look forward to sharing these and other important updates in the months ahead.

Thanks again for your continued interest in Marinus. Operator, you may now open the call to questions.

See also 12 Most Undervalued REIT Stocks To Buy According To Analysts and 12 Most Undervalued Bank Stocks To Buy According To Analysts.

Q&A Session

Operator: [Operator Instructions]. And we will take our first question from Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams: Good afternoon. Congrats on the enrollment completion of the interim cohort and thanks for taking my question. I guess on TSC, as we think about the potential future commercial opportunity there, I’m curious how the reimbursement dynamics that you’re seeing with ZTALMY both for on and off label use are shaping your view of what the ultimate — what the future dynamics might look like commercially in the TSC indication. Thanks

Scott Braunstein: Thanks, Brian. I’ll kick it off. This is Scott. Thanks for the congratulations, and then I’ll kick it over to Christy. We’re incredibly proud of the job that Christy’s team has done within six or so months of launch, we had every state Medicaid program reimbursing ZTALMY. We currently have over 80% of commercial plans with relatively straight guidelines, and we’ve yet to have a patient who’s been denied a therapy. Equally interesting since launch. We’ve had a meaningful number, about 10% of our current sales are coming from spontaneous use refractory epilepsy or DEE [ph] patients. And we’re seeing, overall, about two-thirds of those script, those prior authorization forms being reimbursed by the payers. So I think we really understand that the payers recognize that there are not a lot of therapy for these refractory patients.

We have a limited data set, and we’re very pleased with the reimbursement dynamics as of today. And I think going into TSC, we will have a second randomized control study showing the value propositions will have a patient population in TSC, which in many ways mimics the CDD population, a highly refractory patient population that has failed multiple prior therapies, a patient population currently getting standard of care, either Epidiolex or Afinitor or mTOR inhibitors and this will be the first add-on study ever with Afinitor that’s randomized double-blind placebo control. So I think we’re going to go into all of our discussions with a high level of I would say, a high level and high expectations that what we will share with payers will be equally compelling to that of the data in CDKL5 for ZTALMY.

Christy, do you want to add? I know I rambled on, I apologize. But anything you want to add?

Christy Shafer: Nothing additional that I want to add, but I think the most important thing is that we regularly are confirming assumptions that in the refractory patient population that payers have a very, very distinct appreciation for what these patients have gone through. It’s a different disease state than CDD, yes. But I do think that data is suggesting that although these patients have gone through many, many different medications they still are significantly in need in the refractory patient population. If CDD is an indicator of that success that we’ve had in the CDD population, we’ll be thrilled to see that again in TSC.

Brian Abrahams: Got it. Thanks.

Scott Braunstein: Thanks, Brian.

Operator: And we will take our next question from Peyton Bohnsack with TD Cowen. Your line is open.

Peyton Bohnsack: Hi, guys good afternoon. And thanks for taking our questions. I guess looking forward to potentially the data is positive, what remains to be done for the NDA package? How quickly do you think besides the guidance that you’ve given — and is there anything outstanding on either the safety database that needs to be completed or TMC — and that’s it for me.

Scott Braunstein: Yes. Let me kick it off and then I’ll pass it over to Joe. So for everyone out there as a reminder, — this is the same API material that we have approved in ZTALMY. So a substantial proportion of the NDA package has already been effectively blessed by the FDA. Certainly, the process from API to an IV product is — will be new. We have — as many of you know, we made a formulation change over a year ago. We did that with guidance from the FDA about half of the study will be actually in patients who have received that new formulation. And over the coming weeks after positive data, we will set up a meeting with the FDA, a pre-NDA CMC meeting very similarly what we did with ZTALMY and that was an incredibly successful strategy.

For the filing, we will want to gather all the data from roughly 100 patients to provide that to the FDA, although our expectation is the label will be driven from those — from the interim and just to share with folks, we actually will have 83 patients in the interim. We had two patients enrolled in the same day to finish the study. Because we’re Marinus, nothing is ever simple. But — so that interim will be based on efficacy on 83 patients, but we will — we are expecting a label around those 83 patients, but certainly we’ll provide all of the safety data and all of the double-blind data from all 100 patients as part of the filing. We will keep our sites open, and we will enroll patients should the interim be stopped for efficacy. We will continue to enroll patients in an open-label fashion to continue to allow physicians to experience using the drug, and we’ll also file that additional open-label data with the FDA.

Certainly, the regulatory team is expecting to have a pre-NDA meeting with the FDA soon after the top line data with our current plan for filing the NDA in the first quarter of ’25 early in the first quarter. And that’s really aligned both with the data that we have to compile, but equally important with our commercial team’s best thinking about the time of launch and when we’re thinking about major reimbursement, including NTAP in 2026. So, the wheels are in place from our standpoint to be 100% prepared and we’ll walk you through as we go through these processes through 2024. Joe, anything that you want to add on the data sets?

Joseph Hulihan: No. I mean as Scott mentioned, I mean, the pivotal data set for efficacy is going to be the 83 patients from the interim analysis. And then we’ll be supplementing that, especially the secondary endpoints, we’ll be looking at — we expect somewhere around, I don’t know — we’ll continue to enroll until the DMC meets, but that full data set of 100, who knows how many patients enrollment has picked up quite a bit. We’ll analyze healthcare utilization endpoints and secondary endpoints on that larger data set. And so that will give us more patients with those secondary endpoints. And we’ll have a good sized safety data set as well. As Scott said, especially we’re continuing to enroll open label if the DMC stops the study for efficacy.

Peyton Bohnsack: Thank you guys so much for taking my question.

Joseph Hulihan: Thank you.

Operator: And we’ll take our next question from Andrew Tsai with Jefferies. Your line is open.

Andrew Tsai: Hi. Thanks. Good afternoon. Congrats on the enrollment completion as well as other updates. So — maybe an open-ended question for you guys. If an investor were to ask you what are maybe one or two things that keep you up at night with the Phase 3 RSE study? What things could have been done better or on an execution or a trial design standpoint, what would they be? And then really quickly, if the stopping criteria is not met, would you still provide some type of update right away to the Street? Thank you.

Scott Braunstein: Yeah. Thanks, Andrew. I’ll take the second one. We will unequivocally update you all on should the DSMB suggest that we continue the study. So you should expect some update from us in the first part of the second quarter. I think one of the things probably in the last few weeks was keeping me awake these are very complex patients. In our Phase 2, we had one patient who was on 100 different drugs and just collecting all of that data to me — it could create issues. I’m going to really give a shout out to our clinical team several months ago, started to create really a computer-generated checkpoints for the data to make sure that the individual data sets were aligning with our primary endpoints accordingly. And with what physicians are filling out and what was being filled out at the site.

And we could do that in a way to really ensure a high quality of the data. I would say, as Joe mentioned in his prepared remarks, we finished enrolling the study at the end of January. We’ve now had several weeks to start cleaning the data. And so I feel what was keeping me awake at night was the integrity and the complexity, but I think the team has really worked hard to get us there. And we’re confident in delivering the data set as we talked about and probably even more excited about sharing some of the secondaries in the fall as well, Andrew. So the last few weeks — the team has made great progress. And we are looking forward, this has been a three year project, the labor of love I think our clinical team has done an amazing job at enrolling the right type of patients for the study.

And I think we’re going to unequivocally know that not only does this drug work, but can it have a material impact in the treatment of refractory status patients. And I was just at a meeting in Orlando this weekend I met with five investigators. And there was a lot of excitement about the data set from the investigator team and I think they’re equally excited to see the results as well. Thanks for the question.

Andrew Tsai: Yeah. Fingers crossed. Thank you, Scott.

Scott Braunstein: Thanks.

Operator: We will take our next question from Charles Duncan with Cantor Fitzgerald. Your line is open.

Charles Duncan: Yeah, hey. Good afternoon Scott and team congrats on completing that enrollment and commercial progress in the year. I had a question regarding RAISE I. I can’t recall if you’ve ever shared with us stopping rules. And if you don’t want to be all that granular, if you could just give us some guideposts. And then Also, I didn’t hear anything about second-generation oral ganaxolone. Do you have any color on the progress there? Thanks.

Scott Braunstein: Thanks, Charles. I’m going to pass over the stopping criteria to Joe, but I’ll just quickly say we didn’t talk on this call. We were trying to keep the call brief, number one. So we kept it to 30 minutes. On the second gen program, I would tell you all that we’re really thinking about our prodrug program now being our lead candidate. We are doing IND-enabling work. We have a very high reason to believe that the prodrug both ganaxolone and the cleavage of the prodrug structurally looks incredibly safe. We will have that data over the summer, which, in my view, is a derisking event. For those of you who are not too familiar with what we talked about the prodrug program, the data looks to have a once-a-day dosing regimen, a blunted Cmax.

We’ll have new intellectual property. We’ll have improved cost of goods. And there are some other important business issues that we will talk about over the coming months on the prodrug program. And so our hope would be that we will finish that IND-enabling work by year-end and be able to take that program into the clinic next year. And I think, quite honestly, that’s going to align great with TSC data and the additional study that we’re going to start in the fourth quarter in other refractory epilepsies. Joe, you want to talk about the stopping criteria?

Joseph Hulihan: Yes, sure Charles. I mean, we’re glad to share what the details of that are — so the stopping criteria are based on the co-primary endpoints, cessation within 30 minutes and lack of progression to IV anesthesia within 36 hours, each of their co-primary endpoints, so both of those need to hit on the statistical significance independently. And the way the powering based on an alpha spending function, the p-value — required p-value at the interim is 0.0293. And that — with that p-value, we have over 90% power to detect a 40% treatment difference. With that said, if we get deltas 25%, 30% it will still be statistically significant. The analysis is very robust. And so we have a lot of power at the interim analysis based on the 83 patients. And then we’ll also be looking at the key secondary endpoints at the interim, but the stopping rules depend on the co-primaries.

Charles Duncan: Very helpful. Thanks for the added color.

Joseph Hulihan: Sure thing.

Scott Braunstein: Thanks, Charles.

Operator: And we will take our next question from Joon Lee with Truist Securities. Your line is open.

Joon Lee: Congrats on the enrollment as well and thanks for taking our questions. Good to hear that you’re already planning for launch of ZTALMY and IV ganaxolone next year. As you do the market research in preparation of the launch, is there a specific efficacy profile that patients are looking for and the docs are looking for? And is that consistent with your pre-specified stopping criteria? Thank you.

Scott Braunstein: So I just want to be clear, the market research on the IV form of ganaxolone?

Joon Lee: Yes.

Scott Braunstein: Or ZTALMY for TSC, I wanted to be clear.

Joon Lee: Both actually, but I think ganaxolone will be right, yes.

Scott Braunstein: Christy, I’m happy to pass it to you.

Christy Shafer: Yes. As Scott mentioned, one of the things that keeps him up at night is that these patients are quite sick. And I think what we’ve learned in our market research is, yes, these patients are quite sick. And the value that we believe that IV ganaxolone can bring is quite extensive because everything is confirmatory, everything that has been done in RAISE I to identify these patients is really what we’ve seen in real-world evidence as well. So they really mirror each other. And quite frankly, that’s super supportive of the commercialization efforts that we’re trying to build. Similarly, on the ZTALMY side of the business, I think that it is really important that we realize that this is the refractory patient population. And in TrustTSC, it is exactly what they have been doing there as well. A little bit different from CDD, but again it’s super refractory patients. And so again, exactly who we’d be commercializing for.

Scott Braunstein: Yes. And the only thing I’ll add to Christy’s comments is that, the literature is quite clear that IV anesthesia leads to increased morbidity and mortality. And I think we designed that Phase 3 trial specifically to replace a treatment paradigm, which is antiquated and really deleterious to the patient’s outcome. So that, in my mind, the study design in and of itself, is exactly what physicians told us they wanted. And certainly, I think it’s going to be critical for the IV launch. Thanks for the question, Joon.

Joon Lee: Looking forward. Thank you.

Operator: And we will take our next question from Marc Goodman with Leerink Partners. Your line is open.

Basma Radwan: Hi. Good afternoon. This is Basma on for Marc. Thanks for taking our questions. I had a question regarding RAISE. So if RAISE is successful and ganaxolone is approved in RSE, how much of label use would you expect in the ESE and SRSE settings? And along the same lines, you mentioned that their 10% of ZTALMY sales are coming from off-label use. Would you expect this percentage to stabilize or to increase? Thank you.

Scott Braunstein: Well, let me start with the second question, and then we’ll work our way to the first. Look, I think we, as a company, will never predict nor give specific estimates about off-label use. It’s — our sales organization is hyper-focused on the CDD population, hyper focused on educating physicians about the use of genetic testing, and we would be the same with TSC. That said, traditionally, you know the market better than us. When GW was an independent company, we saw Epidiolex sales as high as 20% or 25% in the spontaneous use category. I think we will focus on doing additional studies either with ZTALMY or second-generation and drive for label expansion over the coming years. But I think it’s pretty clear that there is a significant number of patients with needs in the refractory epilepsy population.

So I think — it’s great to see that physicians are asking payers to try ZTALMY. It’s great that payers are reimbursing, and we’re seeing about the same discontinuation rates in CDKL5 patients of low 20% range. So that’s also encouraging on the efficacy side. On the IV side, the commercial team will be hyper focused on the refractory status population. I think that is our best strategy for reimbursement for formulary acceptance. I think we really believe that there are three major parts of the refractory population, and we will start with the most difficult to treat and continue to focus on the importance of earlier intervention where there is significant data in the literature that the later you treat status patients, the worse your outcomes; the longer status patients are in status, the worst their outcomes, and we have good justification for moving up the treatment paradigm, starting with RAISE II, but other studies that we are considering today.

I think we find equally compelling is the super refractory opportunity. We think there are about 5,000 patients in the U.S. today suffering from super-refractory status. The typical eIND patients that we are seeing today are spending about 30 days in the ICU as physicians ask to use our drug on a compassionate use basis. We continue to get one to three requests a month. We’ve had two more requests this month as eINDs. And I think our — a critical goal for us is to go back to the FDA and align on a dosing strategy, which would change from the raise dosing of 830 milligrams and 50 grams of Captisol to a daily dose of about a little over 1,000 milligrams of ganaxolone and 63 grams of Captisol. We think there’s adequate safety there. But we do want to go to the FDA, get their alignment and Joe is working on that final clinical trial design.

Christy, on the commercial side, do you want to add anything?

Christy Shafer: Honestly, Scott, I think you hit on all points wonderfully. Thanks.

Scott Braunstein: Good. Thanks so much. Thanks for the question.

Operator: And we will take our next question from Douglas Tsao with HC Wainwright. Your line is open.

Douglas Tsao: Hi. Good afternoon. Thanks for taking the questions and congrats on all the progress. Maybe starting with ZTALMY, just given now we’re entering our, I guess, a third year of commercialization, I’m just curious if we’ve seen a shift in where new patients are coming from and how that’s evolved and how you expect to see that sort of change over the next 12 to 24 months? And then I have a follow-up on the IV franchise.

Scott Braunstein: Christy, do you want to jump in?

Christy Shafer: Absolutely. Thanks for the call, Doug. Over time, we launched this drug in September of 2022, and there were a couple of interested things to start. But after we really leveled off, patients are coming from a myriad of places. We get an enormous amount of patients from our centers of excellence. I’ll remind you, there’s 10 of them across the United States. But these patients also are being seen by their local or community physicians on a regular basis. And so we tend to see great involvement from pediatric neurologists or pediatricians and some slower function around these patients throughout. So what we do know is that the targeting that we’ve done has been very, very good from ’22 to now. We’ve now given that a little bit more of a tick, if you will, and it’s a little bit more robust for 2024, and we’ve broadened our scope a little bit on who we’re targeting.

But I don’t see us targeting differently just a little bit more broad going into 2024, and there’s no wild shifts on who’s writing for the drug.

Douglas Tsao: Okay. Great. That’s really helpful. And then just to understand a little bit what you’re trying to do in SRSE, Joe, you spoke about and Scott as well about getting alignment with the FDA in terms of the higher dosing. My guess is you’re not planning on sort of doing another sort of placebo-controlled study in SRSE. I’m just curious in terms of the language or sort of on the dosing, would it be sort of just because SRSE in theory should be on label to what your label will be in terms of RSE. Would it just be labeling to give specific guidance for that 1,000 milligrams dose for an SRSE patient? Or would it just be sort of providing loose language that you can dose up to 1,000 milligrams a day. Thank you.

Scott Braunstein: Let me kick it off and then Joe, I’ll pass it to you. Yes, I mean we’re expecting our label is going to be the RAISE regimen, which is that 830 milligrams over 24 hours, which contains 50 grams of Captisol. So we wanted unequivocally align with the agency at that higher dose can be studied safely. We don’t think there’ll be an issue. Almost all of these EID patients have gotten 63 grams of Captisol. We have not seen a renal signal. We’ve never asked the agency because we never had to go that high for raise. So want to get their buy-in. And along with that buy-in, we will be doing what will be a single-arm study, and I’m going to pass it over to Joe. And yes, I don’t think there’s any reason that we need to do a double-blind placebo-controlled trial in this population.

I think we need to show safety in this population, but all of those patients would have failed multiple therapies. And I think that’s the way we’re approaching it. And I think we also want to really create a more robust data set for the drug outside of simply our RAISE and RAISE II populations. Joe, you want to talk about what you’re thinking about for a trial design?

Joseph Hulihan: Yes. We’ve been working on this with Henri Vaitkevicius, our former Brigham ICU doc who’s been really leading the design on this. And we’re looking, as Scott mentioned, single-arm open-label trial — the dosing regimen is different. It’s — whereas RAISE is 48 hours, it’s been several days. This dosing regimen we’ve implemented more recently for the emergency INDs and without as much of a bolus up front, it’s really a different approach. We start the drug while the patients on IV anesthesia continue it for a period of time and then bring it down. And a dose of total — high daily doses 1,050 milligrams per day. And as Scott mentioned, was 63 grams of Captisol. And as I said, we’ve treated over 25 patients with this regimen, including children.

And we haven’t seen any safety signals from this higher regimen. And it looks like this higher dose regimen, it’s hard to say based on the INDs with 100% certainty, but it looks like it’s having an effect beyond the regimen that we had used previously, which was basically the raise regimen. So we really want to make sure that if docs are going to use it, that they use it appropriately. It’s not anything we promote, but I do think potentially they use it. And so the dosing regimen is different, and we want to get some data on that from a clinical trial.

Douglas Tsao: And so Joe, just as a final clarify. So would you anticipate having that new dosing regimen on the label itself? Or would it just be to get the higher dosing limits sort of on the label?

Joseph Hulihan: I mean this is a first step. It’s a proof-of-concept study. So I think it depends on what we see there. But I mean we’re just taking it a step at a time. We really need to see kind of safety and preliminary efficacy from a proof-of-concept study. And Scott, I don’t know if you have any more comments about the dosing.

Scott Braunstein: No, I think you’re right on target, Joe. I think, Doug, after we have this data, we’ll go to the FDA, the team is ready to go, and we’ll hear what they have to say. And we certainly see it as next steps. I mean I think I’d love to see us get safety into the label, but we haven’t had those discussions with the agency yet, but certainly, that would be our goal, our hope and our plan. .

Douglas Tsao: Okay great. Thank you so much.

Joseph Hulihan: Thanks for the question.

Operator: And we’ll take our next question from Jason Butler with Citizens JMP. Your line is open.

Jason Butler: Hi. Thanks for taking the question, and let me add my congrats on all the progress. Just one about the proof-of-concept study for oral ganaxolone and Lennox-Gastaut and the other rare epilepsies. Can you maybe just speak to the amount of data you would need to generate from that study before moving into a registration study in any specific patient population? And would there be any opportunity in that study to introduce the next-gen formulation, the prodrug formulation or when would be the first time that you could bring that formulation into this patient population? Thank you.