Marinus Pharmaceuticals(MRNS) - 2020 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements For the nine months ended September 30, 2020, Marinus Pharmaceuticals reported a net loss of $50.0 million, an increase from the $38.7 million loss in the same period of 2019, with operations primarily funded by equity offerings Balance Sheets Balance Sheet Summary (in thousands) | Account | September 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $87,337 | $90,943 | | Total current assets | $95,172 | $94,134 | | Total assets | $99,526 | $98,842 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $9,439 | $8,031 | | Total liabilities | $12,103 | $11,073 | | Total stockholders' equity | $87,423 | $59,569 | | Total liabilities and stockholders' equity | $99,526 | $98,842 | Statements of Operations and Comprehensive Loss Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | Federal contract revenue | $171 | $0 | $171 | $0 | | Research and development expense | $11,306 | $11,572 | $38,062 | $30,454 | | General and administrative expense | $4,564 | $2,327 | $12,543 | $8,496 | | Loss from operations | ($15,699) | ($13,899) | ($50,434) | ($38,950) | | Net loss | ($15,659) | ($13,806) | ($50,006) | ($38,712) | | Net loss per share—basic and diluted | ($0.51) | ($1.05) | ($2.29) | ($2.95) | Statements of Cash Flows Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | ($44,514) | ($32,384) | | Net cash (used in) provided by investing activities | ($3,220) | $1,917 | | Net cash provided by (used in) financing activities | $44,128 | ($101) | | Net decrease in cash and cash equivalents | ($3,606) | ($30,568) | | Cash and cash equivalents—end of period | $87,337 | $37,159 | Notes to Financial Statements - The company is a clinical-stage pharmaceutical firm focused on developing ganaxolone for rare seizure disorders, with no product revenue and an accumulated deficit of $294.5 million as of September 30, 2020[26][29] - In September 2020, the company secured a contract with BARDA for up to $51 million in funding to support the development of IV-administered ganaxolone for refractory status epilepticus (RSE)[31][32] - On September 23, 2020, the company effected a 1-for-4 reverse stock split, adjusting all share and per-share amounts in the financial statements[35] - In May 2020, a registration statement for the resale of common stock underlying the Series A Convertible Preferred Stock became effective, reclassifying the Preferred Stock into permanent equity[58] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses ganaxolone's clinical development, increased operating expenses, and liquidity to fund operations into 2022 Pipeline Overview - The company is initiating a Phase 3 pivotal trial (RAISE Trial) in Refractory Status Epilepticus (RSE), with topline data expected in the first half of 2022[78] - In September 2020, the pivotal Phase 3 Marigold Study in CDKL5 Deficiency Disorder (CDD) met its primary endpoint, showing a 32.2% median reduction in major motor seizure frequency versus 4.0% for placebo, with NDA and MAA submissions planned for mid-2021 and Q3 2021 respectively[81] - A Phase 2 open-label trial (CALM Study) in Tuberous Sclerosis Complex (TSC) is ongoing, with top-line data expected in mid-2021[88] - A Phase 2 proof-of-concept trial (Violet Study) in PCDH19-Related Epilepsy is expected to announce results in the first half of 2021[90] Results of Operations - Federal contract revenue of $0.2 million was recognized for the three and nine months ended September 30, 2020, resulting from the new BARDA contract[110] Research and Development Expenses by Program (in thousands) | Program | Three Months Ended Sep 30, 2020 | Three Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2019 | | :--- | :--- | :--- | :--- | :--- | | CDKL5 deficiency disorder | $2,365 | $2,928 | $9,070 | $5,863 | | Status epilepticus | $2,484 | $1,238 | $5,806 | $2,570 | | PCDH19-related epilepsy | $1,064 | $1,755 | $3,979 | $4,464 | | Tuberous Sclerosis | $281 | $0 | $332 | $0 | | Postpartum depression | $0 | $2,185 | $0 | $7,115 | | Indirect research and development | $5,112 | $3,466 | $18,875 | $10,442 | | Total | $11,306 | $11,572 | $38,062 | $30,454 | - General and administrative expenses increased to $4.6 million for Q3 2020 from $2.3 million in Q3 2019, and to $12.5 million for the nine months of 2020 from $8.5 million in the prior year period, driven by higher legal and consulting fees and noncash stock-based compensation[115] Liquidity and Capital Resources - As of September 30, 2020, the company had $91.3 million in cash, cash equivalents, and investments[116] - In June 2020, the company raised $42.9 million in net proceeds from an underwritten public offering of 4,600,000 shares of common stock[119] - The company believes its existing cash, cash equivalents, and investments will be sufficient to fund operating expenses and capital expenditure requirements into 2022[99][127] - Cash used in operating activities increased to $44.5 million for the nine months ended September 30, 2020, up from $32.4 million in the same period of 2019, primarily due to a higher net loss and increased prepaid expenses for commercial preparations[122][123] Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide the information under this item - As a smaller reporting company, Marinus Pharmaceuticals is not required to provide quantitative and qualitative disclosures about market risk[134] Controls and Procedures Management concluded disclosure controls were effective and remediated a material weakness in IT general controls as of September 30, 2020 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2020[138] - The company completed testing in September 2020 and concluded that the material weakness in IT general controls, disclosed in the 2019 Form 10-K, has been remediated[140] PART II – OTHER INFORMATION Legal Proceedings The company is not currently a party to any material legal proceedings and is not aware of any pending or threatened legal proceedings that could have a material adverse effect on its business - The company reports no material legal proceedings as of the filing date[143] Risk Factors The company outlines significant risks including historical losses, ganaxolone dependence, clinical development uncertainties, and COVID-19 impact - The company has a history of significant losses ($294.5 million accumulated deficit as of Sep 30, 2020) and expects to incur substantial losses in the future, requiring additional capital to fund operations[156][162] - Future success is entirely dependent on the successful clinical development, regulatory approval, and commercialization of its sole clinical-stage product candidate, ganaxolone[169][173] - The COVID-19 pandemic could adversely affect business operations, including delays in clinical trial enrollment and disruptions to the clinical supply chain[318][319][323] - A potential intellectual property conflict exists with Ovid Therapeutics, which owns two recently issued patents with claims that encompass ganaxolone for the treatment of CDD and PCDH19, potentially leading to litigation or requiring licensing[304] - The company relies on third-party contract manufacturing organizations (CMOs) for all manufacturing of ganaxolone, creating risks related to regulatory compliance, quality assurance, and supply chain continuity[246][247] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[360] Exhibits This section lists the exhibits filed with the Form 10-Q, including the Equity Distribution Agreement, corporate governance documents, the BARDA contract, and officer certifications - Key exhibits filed include the Equity Distribution Agreement with JMP Securities, the contract with BARDA, and certifications from the CEO and CFO[363]