Marinus Pharmaceuticals(US:MRNS)2024-05-08 11:07PART I – FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The company's Q1 2024 financials show decreased assets and revenue, a wider net loss, and a shift to a stockholders' deficit Consolidated Balance Sheets Total assets decreased to $137.4 million while total liabilities remained stable, resulting in a stockholders' deficit Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $104,253 | $120,572 | | Total current assets | $131,276 | $165,246 | | Total assets | $137,350 | $170,908 | | Liabilities & Equity | | | | Total current liabilities | $42,758 | $40,624 | | Total liabilities | $153,784 | $154,143 | | Total stockholders' (deficit) equity | $(16,434) | $16,765 | | Total liabilities and stockholders' (deficit) equity | $137,350 | $170,908 | Consolidated Statements of Operations and Comprehensive Loss Quarterly revenue declined to $7.7 million due to lower federal contract revenue, widening the net loss to $38.7 million Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Product revenue, net | $7,509 | $3,332 | | Federal contract revenue | $152 | $7,048 | | Total revenue | $7,679 | $10,380 | | Research and development | $24,118 | $27,933 | | Selling, general and administrative | $18,626 | $15,204 | | Total expenses | $43,500 | $43,343 | | Loss from operations | $(35,821) | $(32,963) | | Net loss | $(38,669) | $(34,730) | | Net loss per share—basic and diluted | $(0.68) | $(0.67) | Consolidated Statements of Cash Flows Net cash used in operations was $37.5 million, contributing to a $16.3 million net decrease in cash for the quarter Consolidated Statement of Cash Flows Highlights (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(37,461) | $(41,478) | | Net cash provided by (used in) investing activities | $20,885 | $(51,995) | | Net cash provided by (used in) financing activities | $257 | $(174) | | Net decrease in cash and cash equivalents | $(16,319) | $(93,647) | | Cash and cash equivalents—end of period | $104,253 | $146,904 | Notes to Consolidated Financial Statements Notes disclose substantial doubt about the company's ability to continue as a going concern due to insufficient cash to fund operations - The company is a commercial-stage pharmaceutical company focused on seizure disorders, with ZTALMY® (ganaxolone) approved in the U.S. and Europe for seizures associated with CDKL5 Deficiency Disorder (CDD)21 - There is substantial doubt about the company's ability to continue as a going concern, as cash and investments of $113.3 million as of March 31, 2024, are not sufficient to fund operations for the one-year period after the financial statements are issued28 - The company has a $75.0 million senior secured term loan with Oaktree, maturing in May 2026, with an interest rate of 11.50%8183 - A revenue interest financing agreement with Sagard provides for quarterly payments based on a percentage of U.S. net sales of ZTALMY, subject to a hard cap of 190% of the $32.5 million investment amount949596 - Subsequent to the quarter end, the RAISE trial's interim analysis did not meet pre-defined stopping criteria, and the company implemented a 20% reduction in its workforce137138 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses ZTALMY® commercialization, pipeline developments, and expresses substantial doubt about the company's ability to continue as a going concern Overview and Pipeline The company is advancing its ganaxolone pipeline for rare epilepsies, though the RSE trial faces uncertainty after its interim analysis - ZTALMY® (ganaxolone) is approved in the U.S. and Europe for seizures associated with CDD, with European commercialization partner Orion preparing for launches in select countries in 2024147 - The global Phase 3 TrustTSC trial for Tuberous Sclerosis Complex is actively enrolling, with top-line data anticipated in Q4 2024181 - The Phase 3 RAISE trial for RSE did not meet pre-defined interim stopping criteria, and the company will complete enrollment at 100 patients, with top-line results expected in summer 2024186 - The company is involved in a patent dispute with Ovid Therapeutics regarding the use of ganaxolone for Status Epilepticus, with a final decision expected by August 2024194 Results of Operations Q1 2024 revenue decreased due to lower federal contract revenue, while operating expenses remained flat, resulting in a net loss of $38.7 million Revenue Comparison (in thousands) | Revenue Source | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Product revenue, net | $7,509 | $3,332 | | Federal contract revenue | $152 | $7,048 | | Collaboration revenue | $18 | $0 | | Total revenue | $7,679 | $10,380 | Expense Comparison (in thousands) | Expense Category | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Research and development | $24,118 | $27,933 | | Selling, general and administrative | $18,626 | $15,204 | | Total Operating Expenses | $43,500 | $43,343 | - The decrease in R&D expenses was primarily due to reduced clinical trial activity for CDD, lower costs for the TSC trial, and reduced drug development costs243 - The increase in SG&A expenses was driven by a $1.5 million rise in commercial costs, $1.0 million in stock-based compensation, and $0.6 million in personnel costs246 Liquidity and Capital Resources With $113.3 million in cash, the company's runway extends only into Q1 2025, raising substantial doubt about its going concern status - The company's cash, cash equivalents, and short-term investments totaled $113.3 million as of March 31, 2024253 - Existing cash is projected to fund operations into Q1 2025, which raises substantial doubt about the company's ability to continue as a going concern253272 - The company has drawn $75.0 million under its credit agreement with Oaktree, with quarterly principal payments scheduled to begin on June 30, 2024254256 - The BARDA contract provides up to an estimated $51 million for the development of IV-ganaxolone for RSE on a cost-sharing basis263264 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Marinus is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk280 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter's end, with no material changes to internal controls - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective281 - No changes occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting282 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently a party to any material legal proceedings - The company reports no material legal proceedings as of the filing date285 Item 1A. Risk Factors Key risks include the uncertain outcome of the Phase 3 RAISE trial and potential adverse findings from post-marketing studies for ZTALMY - A significant risk is that the Phase 3 RAISE trial for RSE may not succeed, as the pre-defined interim analysis stopping criteria were not met291 - The company must complete several post-marketing studies for ZTALMY as required by the FDA and EMA, and adverse findings could negatively impact the product's label287288290 - Unfavorable results from any single clinical trial for ganaxolone could adversely impact the development programs for other indications295 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None296 Item 5. Other Information Several directors and an officer adopted Rule 10b5-1 trading plans during the first quarter of 2024 - Four individuals, including three directors and the Chief Commercial Officer, adopted Rule 10b5-1 trading plans during the quarter300