MRNS - Marinus Pharmaceuticals: A Capital Raise Is On The Horizon

2023-12-29 14:42:38 ET

Summary

• Today, we revisit Marinus Pharmaceuticals, Inc., a biopharmaceutical company focused on developing and commercializing therapeutic products for rare genetic epilepsies and seizure disorders.
• The company's main asset is an approved drug called ganaxolone, which is used to treat seizures associated with cyclin-dependent kinase-like 5 deficiency disorder.
• It was approved for this indication early in 2022 and is currently evaluating ganaloxone to treat other indications, which could lead to a much bigger potential market.
• An updated analysis around Marinus Pharmaceuticals follows in the paragraphs below.

Every battle is won or lost before it’s ever fought ” – Sun Tzu.

Today, we are revisiting Marinus Pharmaceuticals, Inc. ( MRNS ) for the first time since our article on this small biopharma name in September of 2022. The company primary asset is gaining some sales traction and is also in late-stage development against additional indications. An analysis follows below.

Company Overview:

The commercial stage biopharma concern is headquartered just outside of Philadelphia in Radnor, PA. The company is focused on the development and commercialization of therapeutic products for patients suffering from rare genetic epilepsies and other seizure disorders. The stock currently trades around $11.00 a share and has an approximate market capitalization of $600 million.

The company's main asset is an approved drug called ZTALMY, also known as ganaxolone. This is an oral suspension for the treatment of seizures associated with cyclin-dependent kinase-like 5 deficiency disorder for adult and pediatric patient populations in acute and chronic care, as well as in-patient and self-administered settings. It was approved for this indication in the U.S. in the March of 2022 and for Europe in July of 2023.

Third Quarter Results:

Marinus Pharmaceuticals posted its Q3 numbers on November 7th. The company had a GAAP loss of 61 cents a share, six cents above the consensus. Revenues just more than tripled from the same period to $7.34 million, beating expectations by $1 million.

Approximately 140 patients were active on ZTALMY at the end of the third quarter. Some 120 patients were on the therapy at the end of the second quarter. Management also raised FY2023 ZTALMY sales guidance to $18.5 million to $19 million from $17 million to $18.5 million previously.

The company is targeting ZTALMY for other indications to expand the potential population for the drug. Phase 3 study "RAISE" is about 75% enrolled to evaluate the compound to treat refractory status epilepticus , or RSE, as far as an interim analysis. The initial data from that study should be out some time in the second quarter. Enrollment has gone slower than originally envisioned but management believes this trial will kick off before the end of the first quarter of next year. Part of this study is being funded by the Biomedical Advanced Research and Development Authority, commonly known as BARDA. A registrational study for potential approval in Europe is just starting to enroll.

Marinus is also evaluating ganaxolone to treat Tuberous Sclerosis Complex or TSC. Topline data from a Phase 3 study called TrustTSC is expected mid-2024. Just over 20 patients have now been treated for super refractory status epilepticus ((SRSE)) with ganaxolone under emergency investigational new drug ((EIND)) applications, and the company has earlier stage efforts targeting Lennox-Gastaut syndrome as well.

Analyst Commentary & Balance Sheet:

Since third quarter earnings were posted, nine analyst firms including Jefferies and RBC Capital reiterated Buy/Outperform ratings on the stock. Price targets proffered range from $13 to $27 a share. Oppenheimer maintained its Hold rating and $9 price target on Marinus.

Approximately nine percent of the outstanding float in the shares are currently held short. Several insiders have made small sales in the stock in 2023. However, collectively they total less than $200,000 in disposals. The company ended the third quarter of this year with just over $175 million in cash and marketable securities on its balance sheet . Management has guided that funding in place is sufficient to fund all planned activities into the fourth quarter of next year. The company had a net loss of $33 million in the third quarter.

Verdict:

Marinus Pharmaceuticals had a loss of 51 cents a share in FY2022 on just over $25 million in revenues. The current analyst firm consensus has losses growing to $2.51 a share this year on $31.5 million in sales. They project losses will drop to just under two bucks a share in FY2024 on just over $42 million in revenues.

The stock is up more than 50% since we last looked at Marinus Pharmaceuticals. I continue to have a small, covered call position in MRNS as I like the long-term potential of ganaxolone as do most analyst firms. That said, I would not currently add to this holding. Given Marinus Pharmaceuticals, Inc.'s burn rate and cash on hand, a significant capital raise seems to be on the near-term horizon. That most likely occurs in the first half of 2024. This will likely knock the stock down some when it happens. If that decline comes to fruition, I will add to my position in MRNS at that time.

I know what I have given you... I do not know what you have received. ” ? Antonio Porchia.

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