Marinus Pharmaceuticals(US:MRNS)2024-03-05 21:14Part I Item 1. Business Marinus Pharmaceuticals is a commercial-stage company developing treatments for seizure disorders, led by its primary product ZTALMY® (ganaxolone) Overview The company's main product, ZTALMY® (ganaxolone), is approved for CDD-related seizures and is in development for other rare epilepsies - ZTALMY® (ganaxolone) was approved by the U.S. FDA on March 18, 2022, for treating seizures associated with Cyclin-dependent Kinase-like 5 (CDKL5) Deficiency Disorder (CDD) in patients two years of age and older31 - The European Commission (EC) granted marketing authorization for ZTALMY for CDD on July 28, 2023, with Orion Corporation handling European commercialization31 - The company is also developing ganaxolone for other rare genetic epilepsies, including Tuberous Sclerosis Complex (TSC) and Refractory Status Epilepticus (RSE)32 - Ganaxolone is being developed in both intravenous (IV) and oral formulations and is a synthetic analog of allopregnanolone that targets GABAA receptors33 Our Strategy The company's strategy focuses on maximizing ganaxolone's value by targeting rare seizure disorders and expanding its product pipeline - Pursue orphan, genetic epilepsy indications for ganaxolone, such as CDD, TSC, and LGS, leveraging efficient development and commercialization paths34 - Develop ganaxolone for hospital-based orphan indications, including a pivotal Phase 3 trial (RAISE) in Refractory Status Epilepticus (RSE)39 - Advance a second-generation ganaxolone formulation and a prodrug to improve pharmacokinetic profiles, reduce dosing frequency, and generate new intellectual property39 - Expand and diversify the product pipeline by acquiring additional drug candidates that align with the business strategy39 Our Products and Product Candidates ZTALMY® (ganaxolone) generated $19.6 million in 2023 net revenue and is supported by a comprehensive U.S. commercial strategy ZTALMY Net Product Revenue | Period | Net Product Revenue | | :--- | :--- | | Year ended Dec 31, 2023 | $19.6 million | - The U.S. commercial strategy utilizes Orsini Pharmaceutical Services as the specialty pharmacy and ASD Specialty Healthcare as the specialty distributor5354 - The U.S. Drug Enforcement Agency (DEA) has classified ganaxolone as a Schedule V controlled substance, subjecting it to specific regulations for manufacturing, distribution, and prescription5759 - The company has several post-marketing requirements from the FDA and post-authorization measures from the EC, including carcinogenicity and toxicity studies6063 Our Pipeline The pipeline is advancing ganaxolone through late-stage trials for RSE and TSC, with key data readouts expected in 2024 - The Phase 3 RAISE trial in Refractory Status Epilepticus (RSE) reached its interim analysis enrollment target in Q1 2024, with top-line data expected in Q2 20246671 - A global Phase 3 trial (TrustTSC) in Tuberous Sclerosis Complex (TSC) is actively enrolling, with top-line data anticipated in Q4 202484 - A second-generation formulation of ganaxolone is being developed for Lennox-Gastaut Syndrome (LGS), with a Phase 2 clinical trial expected to start in 20258687 - The company has filed a petition for post-grant review (PGR) with the USPTO to challenge Ovid Therapeutics' U.S. Patent No. 11,395,817, which claims to cover the use of ganaxolone for treating Status Epilepticus (SE)75 Safety Overview Ganaxolone has been generally well-tolerated in over 2,200 individuals, with somnolence being the most common side effect - As of October 2023, over 2,200 individuals have received ganaxolone, with the most common side effects with oral ganaxolone being sedation or somnolence97 - In the pivotal Phase 3 Marigold Trial for CDD, the most common adverse reactions were somnolence, pyrexia, salivary hypersecretion, and seasonal allergy98 - In a Phase 2 trial for RSE, IV ganaxolone had an acceptable safety profile, with the most common treatment-related adverse events being somnolence, mild hypotension, and sedation103104 Intellectual Property The company's intellectual property portfolio protects ganaxolone formulations, manufacturing processes, and methods of use through 2044 - The company owns patent families covering nanoparticle formulations of ganaxolone, with terms running through 2026 and a potential five-year extension to 2031 pending112 - Patents covering the synthetic process for manufacturing ganaxolone have terms running through 2030114 - Multiple patent families are directed to IV ganaxolone formulations and therapeutic regimens for treating Status Epilepticus (SE), with patent terms extending through 2036 to 2044115117 - The company has licensed patents from Ovid Therapeutics covering certain therapeutic uses of ganaxolone for CDD, with terms running through 2037119 Licenses and Collaborations Marinus has established key strategic collaborations with Orion, Tenacia, and others to support the global commercialization of ganaxolone - Orion: Exclusive rights for commercialization in Europe, with Marinus receiving a €25 million upfront fee and eligibility for up to €97 million in milestones plus royalties125 - Tenacia: Exclusive rights for development and commercialization in Greater China, with Marinus receiving a $10 million upfront payment and eligibility for up to $256 million in milestones plus royalties126 - Purdue: A settlement was reached in February 2024 regarding the 2022 sale of the Priority Review Voucher (PRV), with Marinus agreeing to pay Purdue $4 million135 - Ovid: An exclusive patent license agreement for certain patents related to the treatment of CDD, with Marinus issuing 123,255 shares of its common stock to Ovid136138 Competition The company faces significant competition from established therapies and large pharmaceutical companies across its targeted indications - Status Epilepticus (SE): No treatments are specifically indicated for RSE, with standard care involving benzodiazepines and second-line IV AEDs143 - CDD and TSC: ZTALMY is the only approved drug for CDD, while competitors for TSC include Novartis's Afinitor DISPERZ® and Jazz Pharmaceuticals' EPIDIOLEX®145 - LGS: Approved branded drugs for LGS include SYMPAZAN®, EPIDIOLEX®, and FINTEPLA®146 Manufacturing The company relies entirely on third-party contract manufacturing organizations for the supply of ganaxolone API and finished drug products - The company relies on contract manufacturing organizations (CMOs) for all clinical and commercial supplies of ganaxolone API and finished products147 - A master supply agreement has been executed with a second API supplier in the U.S. to support onshoring of manufacturing147 - The company's patented nanoparticulate formulation is designed to address the challenges of ganaxolone being a high-dose, water-insoluble compound148 Government Regulation The company is subject to extensive regulation by the FDA and other global authorities, covering all aspects of its product lifecycle - The company's operations are subject to extensive regulation by the FDA and other agencies under the Federal Food, Drug, and Cosmetic Act (FDC Act)153 - ZTALMY is scheduled as a controlled substance under the Controlled Substances Act, subjecting it to stringent regulation by the DEA173175 - The company has received orphan drug designation for ganaxolone in multiple indications, providing benefits like market exclusivity post-approval19991 - Healthcare reform measures, including the Inflation Reduction Act (IRA), impact pricing and reimbursement, creating downward pressure on drug prices226232441 Human Capital As of year-end 2023, the company employed 165 full-time staff and anticipates further headcount growth to support its operations - As of December 31, 2023, the company had 165 full-time employees and one part-time employee273 Item 1A. Risk Factors The company faces substantial risks including going concern doubts, commercial dependency on ZTALMY, and clinical development uncertainties Risks Related to our Financial Position and Need for Additional Capital The company faces a going concern warning due to significant losses, with cash reserves sufficient only into Q4 2024 - The company has identified conditions and events that raise substantial doubt about its ability to continue as a going concern276278 - As of December 31, 2023, existing cash, cash equivalents, and short-term investments are expected to fund operations only into the fourth quarter of 2024285 - The company has a history of limited revenue and significant net losses, with an accumulated deficit of $571.9 million as of December 31, 2023276279 - Debt agreements with Oaktree and Sagard contain restrictive covenants, and failure to comply could result in default and acceleration of repayment obligations289303307 Risks Related to the Commercialization of ZTALMY and Other Future Product Candidates The commercial success of ZTALMY is uncertain and depends on market acceptance, reimbursement, and navigating a competitive landscape - Even with U.S. and EU approval, ZTALMY faces extensive post-marketing regulatory requirements, including costly studies, which could impact its marketing319321 - Commercial success depends on achieving significant market acceptance and obtaining sufficient reimbursement from government and private payers330344 - The company faces substantial competition from well-established AEDs and companies with significantly greater financial and commercial resources334336338 - As the company's first commercial product, there is a risk that its sales and marketing capabilities may not be effective enough to generate meaningful revenue343 Risks Related to Clinical Development and Regulatory Approval of Our Product Candidates Future success depends on successful clinical development and regulatory approval of ganaxolone for new indications, an uncertain process - Future success depends on the successful clinical development and regulatory approval of ganaxolone for additional indications, which requires significant capital and time361 - Ganaxolone may cause undesirable side effects that could delay or prevent regulatory approval or limit its commercial profile372373 - The company is required to conduct numerous post-marketing studies for ZTALMY, and adverse findings could materially impact the product's label365366 - Clinical development is a lengthy and expensive process with an uncertain outcome, and the company may experience delays in its ongoing or future clinical trials384385 Risks Related to Our Dependence on Third Parties Marinus is heavily reliant on third parties for manufacturing, clinical trials, and international commercialization, posing significant operational risks - The company relies on third-party CROs to conduct clinical trials, and if these parties fail to perform, development plans could be adversely affected403404 - With no manufacturing facilities, the company is entirely dependent on third-party manufacturers (CMOs), creating risks of supply disruption or compliance failures412413 - A product supply interruption for IV ganaxolone occurred in February 2022 due to particulates found in clinical supply, highlighting manufacturing risks406411 - The company depends on collaboration partners like Orion and Tenacia for commercialization outside the U.S418 Risks Related to Regulatory Compliance The company operates in a highly regulated environment where pricing pressures and complex healthcare laws pose significant compliance risks - Enacted and future legislation, including the Inflation Reduction Act (IRA), may adversely affect drug pricing and reimbursement441448 - Failure to comply with governmental pricing programs like the Medicaid Drug Rebate Program could result in significant penalties454455 - The company is subject to anti-kickback, fraud and abuse, and other healthcare laws, which could expose it to criminal sanctions and civil penalties477 - Compliance with complex and evolving data privacy regulations like HIPAA and GDPR is costly and poses a risk of significant penalties for non-compliance482489 Risks Related to Intellectual Property The company's competitive position depends on protecting its intellectual property, which is challenged by an off-patent compound and patent disputes - The ganaxolone compound is off-patent; therefore, the company's competitive position relies on patents for formulations, manufacturing processes, and methods of use502 - Ovid Therapeutics has been issued patents that encompass Marinus's product candidate for the treatment of Status Epilepticus (SE) and LGS, creating a risk of infringement litigation509512513 - The company has filed a petition for post-grant review (PGR) of Ovid's SE patent, but the outcome is uncertain and could be costly509 - Patent terms may be inadequate to protect the company's products for a sufficient amount of time, and obtaining patent term extensions is not guaranteed518519 Item 1B. Unresolved Staff Comments The company reports no unresolved staff comments - The company reports no unresolved staff comments557 Item 1C. Cybersecurity The company maintains a cybersecurity program based on the NIST framework, overseen by the Audit Committee, with no material incidents to date - The company maintains a cybersecurity program that leverages industry frameworks, including the National Institute of Standards and Technology (NIST) Cybersecurity Framework561 - Oversight is provided by the Audit Committee of the Board of Directors, with day-to-day management by the Head of IT565566 - To date, the company has not experienced any material cybersecurity incidents or threats569 Item 2. Properties The company leases approximately 22,500 square feet of office space in Radnor, Pennsylvania, under a lease expiring in 2025 - The company's principal offices are in a leased space of approximately 22,500 square feet in Radnor, Pennsylvania, with the lease expiring in 2025570 Item 3. Legal Proceedings The company is not currently a party to any material legal proceedings - The company reports that it is not currently a party to any material legal proceedings573 Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company574 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock is listed on the Nasdaq Global Market under the symbol "MRNS" - The company's common stock trades on the Nasdaq Global Market under the symbol "MRNS"577 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a $141.4 million net loss in 2023 on $31.0 million in revenue, with cash sufficient only into Q4 2024 Results of Operations Total 2023 revenue was $31.0 million, while a net loss of $141.4 million was driven by increased R&D and SG&A expenses Comparison of Operations (Years Ended December 31) | (In thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total revenue | $30,989 | $25,478 | | Product revenue, net | $19,561 | $2,872 | | Federal contract revenue | $11,374 | $6,935 | | Collaboration revenue | $54 | $15,671 | | Total expenses | $162,474 | $138,266 | | Research and development | $99,388 | $79,912 | | Selling, general and administrative | $61,152 | $56,845 | | Loss from operations | ($131,485) | ($112,788) | | (Loss) gain from sale of PRV, net | ($4,000) | $107,375 | | Net loss | ($141,405) | ($19,816) | - R&D expenses increased to $99.4 million in 2023 from $79.9 million in 2022, mainly due to increased activity in Phase 3 trials and API supplier validation costs629637 - SG&A expenses rose to $61.2 million in 2023 from $56.8 million in 2022, driven by higher personnel, legal, and professional costs632 Liquidity and Capital Resources The company's $150.3 million in cash is insufficient to fund operations for one year, raising substantial doubt about its going concern status - As of December 31, 2023, the company held $150.3 million in cash, cash equivalents, and short-term investments646 - Existing cash is only sufficient to fund operations into Q4 2024, which raises substantial doubt about the company's ability to continue as a going concern646672 - In September 2023, the company raised net proceeds of approximately $25.8 million from the sale of 3.7 million shares through its at-the-market (ATM) facility645663 - The company has outstanding debt of $75.0 million under a credit agreement with Oaktree, which matures in May 2026649651826 Item 7A. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Marinus Pharmaceuticals is not required to provide this information - The company is a smaller reporting company and is not required to provide this information684 Item 8. Financial Statements and Supplementary Data The company's financial statements and related notes are included in the report starting on page F-1 - The company's financial statements and related notes are included starting on page F-1 of the report685 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants - The company reports no changes in or disagreements with its accountants on accounting and financial disclosure686 Item 9A. Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2023 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2023687 - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of December 31, 2023690 Part III Item 10. Directors, Executive Officers and Corporate Governance Information for this item is incorporated by reference from the company's 2024 definitive proxy statement - Information for this item is incorporated by reference from the 2024 definitive proxy statement696 Item 11. Executive Compensation Information for this item is incorporated by reference from the company's 2024 definitive proxy statement - Information for this item is incorporated by reference from the 2024 definitive proxy statement698 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information for this item is incorporated by reference from the company's 2024 definitive proxy statement - Information for this item is incorporated by reference from the 2024 definitive proxy statement699 Item 13. Certain Relationships and Related Transactions, and Director Independence Information for this item is incorporated by reference from the company's 2024 definitive proxy statement - Information for this item is incorporated by reference from the 2024 definitive proxy statement700 Item 14. Principal Accountants Fees and Services Information for this item is incorporated by reference from the company's 2024 definitive proxy statement - Information for this item is incorporated by reference from the 2024 definitive proxy statement701 Part IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed with the report - This item lists the financial statements and exhibits filed with the report703 Item 16. Form 10-K Summary The company did not provide a summary for its Form 10-K - The company did not provide a summary for its Form 10-K711 Financial Statements Report of Independent Registered Public Accounting Firm The auditor's report expresses substantial doubt about the company's ability to continue as a going concern due to recurring losses - The auditor's report includes a paragraph expressing substantial doubt about the company's ability to continue as a going concern due to recurring losses from operations721 - Critical Audit Matters identified were: 1) Clinical Trial Prepaid and Accrued Expenses and 2) Revenue Interest Financing Payable, both due to complex estimation uncertainty725727731 Consolidated Financial Statements The company reported a net loss of $141.4 million for 2023, with an accumulated deficit of $571.9 million Key Financial Statement Data (Year Ended Dec 31, 2023) | Metric | Amount (in thousands) | | :--- | :--- | | Statement of Operations: | | | Total Revenue | $30,989 | | Total Expenses | $162,474 | | Net Loss | ($141,405) | | Net Loss Per Share | ($2.63) | | Balance Sheet (End of Period): | | | Cash and cash equivalents | $120,572 | | Total Assets | $170,908 | | Total Liabilities | $154,143 | | Accumulated Deficit | ($571,926) | | Total Stockholders' Equity | $16,765 | Consolidated Cash Flows (Year Ended Dec 31, 2023) | (In thousands) | Amount | | :--- | :--- | | Net cash used in operating activities | ($118,001) | | Net cash used in investing activities | ($28,605) | | Net cash provided by financing activities | $26,627 | | Net decrease in cash and cash equivalents | ($119,979) |