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Edited Transcript of MRNS.OQ earnings conference call or presentation 9-Nov-20 9:30pm GMT

·50 min read

Q3 2020 Marinus Pharmaceuticals Inc Earnings Call RADNOR Nov 10, 2020 (Thomson StreetEvents) -- Edited Transcript of Marinus Pharmaceuticals Inc earnings conference call or presentation Monday, November 9, 2020 at 9:30:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Edward F. Smith Marinus Pharmaceuticals, Inc. - VP, CFO, Treasurer * Joseph Hulihan Marinus Pharmaceuticals, Inc. - Chief Medical Officer * Sasha Damouni Ellis Marinus Pharmaceuticals, Inc. - VP of IR & Corporate Communication * Scott Braunstein Marinus Pharmaceuticals, Inc. - CEO & President ================================================================================ Conference Call Participants ================================================================================ * Douglas Dylan Tsao H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst * Guofang Li SVB Leerink LLC, Research Division - Associate * Jay Olson Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst * Joon So Lee Truist Securities, Inc., Research Division - VP * Joseph John-Charles Thome Cowen and Company, LLC, Research Division - VP of Healthcare * Li Wang Watsek Cantor Fitzgerald & Co., Research Division - Research Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Greetings, and welcome to the Marinus Pharmaceuticals Third Quarter 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. And it's now my pleasure to introduce your host, Sasha Damouni Ellis, Vice President, Investor Relations and Corporate Communications. You may begin, Ms. Damouni Ellis. -------------------------------------------------------------------------------- Sasha Damouni Ellis, Marinus Pharmaceuticals, Inc. - VP of IR & Corporate Communication [2] -------------------------------------------------------------------------------- Thank you, and good afternoon, everyone. With me from Marinus are Dr. Scott Braunstein, Chief Executive Officer; Dr. Joe Hulihan, Chief Medical Officer; and Edward Smith, Chief Financial Officer. Before we begin, I would like to remind everyone that some of the statements made today could be termed as forward looking under the securities laws. These forward-looking statements, of course, are subject to certain risks and uncertainties that are associated with our business and that could cause our future results to differ significantly from those expressed or implied by the forward-looking statements. For a description of these risks and uncertainties see the company's Form 10-K and 10-Qs as filed with the Securities and Exchange Commission. I will now turn the call over to Scott. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [3] -------------------------------------------------------------------------------- Thank you, Sasha. Good afternoon, everyone, and welcome to our third quarter 2020 business and financial update. I want to begin by saying this is one of the most exciting periods in Marinus' history. Our team is growing quickly and working incredibly hard to help drive our operations forward. Consider what the organization has accomplished in just the last few months. Firstly, we achieved the primary endpoint in the Marigold Study, the pivotal Phase III clinical trial, evaluating oral ganaxolone in children and young adults with CDKL5 deficiency disorder or CDD. Secondly, we've been awarded a 5-year potentially $84 million cost sharing contract with BARDA for refractory status epilepticus. Finally, we remain highly focused on our Phase III IV ganaxolone clinical trial in refractory status epilepticus or the RAISE trial. Our team has continued to work diligently to finalize sites, and it is our expectation that we will have the vast majority of these sites activated by the end of Q1 2021, which is incrementally earlier than we had anticipated a year ago prior to the world being affected by COVID-19 virus. In addition to these 3 major accomplishments, we continued to enjoy similar success, advancing our multiple programs and initiatives. I would like to highlight them for you. Our tuberous sclerosis complex, or TSC Phase II study enrollment curve is showing market improvement, likely due to the positive top line Marigold Study data, the additional number of new sites that have opened are partnering with the TSC alliance and the easing of COVID-19 restrictions. This open-label design gives us the opportunity to perform an interim data analysis and consider an end of Phase II meeting with the FDA sometime in the first half of next year, should we see a consistent clinical signal. We strongly believe that the dosing of these patients 3 times a day and up to 1,800 milligrams is a critical piece of the study design replicating the Marigold dosing schedule. A meaningful number of patients with TSC continue to suffer from significant seizure burden despite currently available therapies. We are on track for top line data in the summer of 2021. Let me next turn to the Violet Study, our Phase II double-blind placebo-controlled clinical trial, examining the use of oral ganaxolone in PCDH19 patients. As a reminder, a proportion of children with PCDH19 suffer from intractable cluster seizures despite treatment with multiple antiepileptic therapies. Recruitment completed in July, and all patients will finish the double-blind portion of the trial in Q1 of 2021. Once again, the dosing paradigm is identical to the Marigold Study. The Violet Study will not only evaluate the efficacy of ganaxolone when compared to placebo, but it will also examine the role of allopregnanolone sulfate as a biomarker directed therapy. We currently believe that both our IV and oral programs will yield important therapeutics in major markets around the world. Accordingly, we successfully submitted the EU status epilepticus request for scientific advice with the European Medicines Agency and expect to engage in a presubmission meeting to review that trial design in the first quarter of next year. As a reminder, the European regulators prefer clinical trial programs that compare a novel therapy to a currently existing agent. We will share the study protocol in detail with you once we have met with the EU regulators and are confident in our path forward. Let me provide a brief overview of both our IV and oral clinical programs before turning the call over to Joe for additional detailed discussion. Starting with our IV franchise. We've been making tremendous progress with our status epilepticus program. Having quickly satisfied the FDA's protocol specific questions, we now have activated our first site, and those sites are ready to screen and enroll refractory status epilepticus patients. We expect the number of eligible sites to grow steadily over the next several months. Over 75% of the sites have been approved and preselected to participate in the study, and we expect the vast majority of these sites to be finalized by year-end and open by the end of first quarter 2021. The Marinus team has done a tremendous job meeting with sites and choosing the best centers to participate in this study. The team of recently hired medical science liaisons, or MSLs, have partnered with our clinical operations team and together, have been instrumental in focusing on neurocritical care and neurointensivists since those positions are on the front lines of treating patients experiencing RSE. Our clinical operations team and our MSLs are also increasing awareness and engagement of the RAISE trial through the review of the Phase II clinical trial data and critical scientific exchange, respectively. As a reminder, our patient population in the RAISE trial is primarily nonconvulsive status epilepticus, and that is expected to be a determining factor in driving enrollment. We believe that the clinical trial paradigm used in the Phase II study drove rapid enrollment, and we will use a very similar informed consent procedure and treatment algorithm in the Phase III study. We firmly believe that ganaxolone can provide a rapid onset of action, have a durable effect in patients with status epilepticus and potentially play an important role in preventing the devastating consequences of uncontrolled seizures. We believe that our trial sites share our enthusiasm in this novel therapy. There is no question that we are competing with COVID-19 for both resources and time across U.S. hospitals. However, despite the intense pressure that U.S. hospitals are feeling today, our investigator community and interested sites have been highly engaged with Marinus. Our team has continued to be creative and work hard to keep our site activations on track, and as a result, we still expect to report top line data in the first half of 2022. As an interesting aside, several physicians have requested on an emergency IND basis, access to ganaxolone to treat patients with super refractory status epilepticus. Our entire team takes such requests very seriously, and we feel it is our obligation to offer an option for patients who have been unable to come off general anesthesia following their bout with status epilepticus. We've thought very hard about how to best dose and treat these patients. I want to thank Dr. Joe Hulihan and the entire clinical team for their efforts. These patients are truly left with no other alternatives. We'll share more details on this at AES, where we expect to have a notable presence this year. To help lead RSE programs, Dr. Henri Vaitkevicius, who served on our scientific advisory board and as the principal investigator in our Phase II RSE study, has been appointed Vice President of Clinical Development. Henri's knowledge surrounding neurosteroids, his vast clinical experience and his insight and contributions to our scientific approach will help us further advance ganaxolone in additional indications in clinical trials, including the upcoming study in Europe that I just mentioned. Furthermore, we are planning a trial in an earlier treatment line to RSE known as established status epilepticus. The vast majority of these patients are suffering from convulsive status and have been treated with and failed benzodiazepines. Treatment success rates in established status are slightly below 50%. And as a result, it is equally important unmet medical need. We estimate this market to be approximately 50,000 to 75,000 additional patients in the U.S., and these patients are primarily treated in the emergency room. Further details of this trial design will also be discussed at AES. Finally, we have an ongoing preclinical work in the and intramuscular formulation of ganaxolone and continue to drive additional formulation partnerships and research projects to enhance our intermediate and long-term strategy for the oral franchise. Before I leave the IV program, I would like to spend a little time highlighting our BARDA contract that we announced in September. As briefly mentioned, BARDA agreed to fund up to $51 million of an $84 million contract for programs related to RSE development. The agreement covers a base period during which BARDA will provide subject matter expertise and $21 million to fund on a cost share basis, additional preclinical work and the company's planned Phase III clinical trial of ganaxolone for the treatment of RSE. We believe that this preclinical work and our planned Phase III trial will be the foundation of a long-lasting business relationship with the BARDA team. We've already held our BARDA kickoff, and it was a large collaborative team effort comprised of several scientists and multiple other experts from both sides. We see the BARDA team as an important resource, and we are pleased to be working with them. Their interactions to date have been thoughtful and extremely valuable to our scientific process. We are grateful to BARDA for their collaborative approach throughout this process and the opportunity to continue to innovate in the field of seizure disorders. Let me turn to the oral franchise and the tremendous progress we have made in the last several months. As I previously noted, we recently reported positive top line data from the pivotal Phase III Marigold Study. This was the first double-blind, placebo-controlled trial to provide evidence of efficacy specific to the CDD patient population and the first Phase III trial to examine 3 times a day dosing of ganaxolone in pediatric patients. We had a chance to share the top line data with the CDD community in October. The next few months will be equally exciting. Marinus is planning to meet with the FDA in the first quarter of 2021 to support an NDA submission by mid-2021. We also expect to launch our expanded access program in early December this year, enabling patients who are unable to participate in the Phase III trial access to the drug. Our early feedback on the EAP program has been extremely positive to date. We feel that this is important for us as an organization and as part of the biotech community to offer ganaxolone to patients who are suffering from CDD and were not able to participate in our Phase III trial. We expect further external commercialization discussions in CDD, especially as it pertains to strategic alliances and our global commercialization strategy as well as continued interaction with the community of medical professionals focused on treating epilepsy at the American Epilepsy Society Annual Meeting in December. We believe that AES provides a fantastic platform to discuss novel antiepilepsy therapies, and we are focused on making that meeting an important success for ganaxolone. We plan to present further details of the Marigold Study, including pharmacokinetic data at AES in December, which will be critically important roadmap to the future development of oral ganaxolone. We believe the data will strongly support our confidence in the results of the Marigold Study as a pivotal trial. We will be holding a separate investor event at AES, which Sasha will go into further details later on. Our CDD commercial strategy continues to evolve, and I am pleased to announce that concurrent with our Q3 business update this afternoon, we also announced and welcome Christy Shafer to Marinus as our Chief Commercial Officer. Christy's rare disease expertise and tremendous sales and marketing background provides the experience and leadership needed to prepare the U.S. commercial launch of ganaxolone in CDD and a potential debut of ganaxolone in status epilepticus soon after. Christy has spent almost 20 years in the biotech, pharma and medical device spaces, most recently at Alexion Pharmaceuticals. Christy is energetic and a fantastic leader, and we are thrilled to have her on board. We've also begun to build our team of MSLs to help drive a publication strategy, continue to build our relationship with advocacy groups, and expand our scientific plan for 2021. This team has been instrumental in helping identify clinical research sites for all our trials and leading our AES presence. On the IP front, as noted in our 10-Q, Ovid Therapeutics contacted us and disclosed that it owns 2 recently issued method of use patents that include claims to the use of ganaxolone to treat CDD and PCDH19. As you are aware, we have been developing ganaxolone for the treatment of focal onset seizures and rare genetic epilepsies since 2005. Meanwhile, both Ovid patents originated from a provisional patent application that was filed on August 11, 2016. We do not believe the Ovid patents will impact our time line for development, NDA commission and regulatory approval, nor do we believe that the Ovid patents will delay our planned launch. I have asked our lawyers to investigate these patents and all the possible options with respect to that, including challenging the patents at the USPTO and/or in the court. Another solution could certainly involve a royalty payment based on an in-licensing of the patent state. At this time, we are not going to say anything further, but we are confident that our plans for ganaxolone will not be delayed or disrupted. Regarding our partnership conversations, including those for the ex U.S. rights for CDD, those are ongoing. We remain committed in this process and other means of nondilutive financing for the company. These endeavors are the product of our broader clinical strategy to unlock the potential of ganaxolone across a range of rare seizure disorders. Our plans to expand ganaxolone franchise into TSC will continue to move forward. We remain on track to report top line data in the first half of 2021. Finally, our Violet Study is also making steady progress. Earlier this year, we transitioned this trial to a proof-of-concept study evaluating Allo-S as a biomarker in patients with a confirmed PCDH19 mutation. We believe the trial has the potential to detect a meaningful signal as a proof-of-concept for the allopregnanolone sulfate biomarker hypothesis as well as for the 3 times a day dosing regimen, which is intended to inform future development and indication selection. This trial is on track and data should report out in the first half of 2021 with the company's intention to subsequently submit the results of the study for publication. With that, I would now like to turn the call over to our Chief Medical Officer, Joe Hulihan. Joe? -------------------------------------------------------------------------------- Joseph Hulihan, Marinus Pharmaceuticals, Inc. - Chief Medical Officer [4] -------------------------------------------------------------------------------- Thank you, Scott. Good afternoon, everyone. Let me just quickly echo Scott's sentiment that these are indeed exciting times. So I'd like to update you on our clinical programs to illustrate the reasons why. First, I feel incredibly enthusiastic about the IV program. We've selected more than 75% of the sites for the Phase III trial of IV ganaxolone in refractory status epilepticus, which we're calling the RAISE study. Site identification and activation is focused on neurocritical care units and neurointensivists who are on the front lines of treating patients experiencing RSE. The studies are randomized, double-blind, placebo-controlled trial in patients with status epilepticus who have failed benzodiazepines and 2 or more second line IV AEDs. They will enroll approximately 125 patients who will be randomized to receive ganaxolone, a placebo in addition to their usual standard of care. The study will have greater than 90% power to detect a 30% efficacy difference between ganaxolone and placebo. Patients randomized to ganaxolone will receive an IV bolus followed by a 36-hour infusion, then a 12-hour taper for a total treatment period of 48 hours. This regimen targets a plasma concentration of greater than or equal to 500 nanograms per ml for the first 12 hours. Maintenance of this plasma concentration of ganaxolone for 8 hours was a key aspect in controlling status in our Phase II study in a similar patient population. In Phase III, formulation improvements will enable us to maintain ganaxolone at that target blood level for 12 hours or 50% longer than in Phase II. There are 2 co-primary endpoints for the study. These are: first, the proportion of patients with cessation of status within 30 minutes of treatment initiation without the use of other medications for control of status; and second, the proportion of patients who do not progress to IV anesthesia within 36 hours. These 2 co-primary endpoints address the major components of efficacy in status epilepticus, stopping it rapidly and maintaining control. We expect top line data in the first half of 2022. As part of our IV strategy, we plan to evaluate ganaxolone earlier in the treatment continuum of status epilepticus and are beginning to design a study in patients who experienced the convulsive form of status in which patients have major convulsions or tonic clonic seizures that continue for more than 5 minutes. Normally, a seizure terminates on its own within a minute or 2. In convulsive status, seizures are continuous over a prolonged period or occur so rapidly in succession that the patient does not regain awareness. It is a condition requiring urgent treatment to avoid potential medical complications or permanent neurologic impairment. If patients fail initial treatment with a benzodiazepine and an initial second line IV antiepileptic drug, the treating physician will typically intubate the patient and administer IV anesthesia, often progressing to this stage of treatment within minutes. The patient population for the study we're planning will mirror that of the multicenter established status epilepticus treatment trial or ESETT, whose results were published last year in the New England Journal of Medicine. This study compared the 3 most commonly used second line IV AEDs, levetiracetam, fosphenytoin and valproate, and had found that none of the 3 drugs was superior to the others in stopping convulsive status within 1 hour. Efficacy rates were 45% to 47%, with no statistical separation between the treatment arms. As Scott mentioned, the RAISE study will recruit patients from the ICU setting who have the nonconvulsive form of status epilepticus, which is more often treatment refractory and requires the use of 2 or more second line AEDs in succession. Unlike the RAISE study, the second study will focus its enrollment in the emergency department setting. We anticipate that patients earlier in the course of status who have convulsive seizures will be more treatment responsive. Therefore, we need to think carefully about dosing of ganaxolone and the duration of therapy, and we'll begin our clinical program in the earlier phase of status with dose-finding work. We've been talking to investigators about clinical study design, and this is an area where Henri's deep knowledge and expertise will prove particularly valuable. On the other end of the treatment spectrum, we've been receiving requests for emergency use of ganaxolone in super refractory status, or SRSE. This is an extremely complex clinical situation in which, as you know, another controlled trial of neurosteroid treatment has failed. We have continued to supply medication in response to these emergency IND requests for SRSE. And through this, we're working to understand the best dosing paradigm for its treatment. Through the treatment of these patients, some of whom have been in status for weeks and have no other options, we are thinking hard about how we can engage the FDA and investigators to understand how to best address this unmet clinical need. Some preliminary data in SRSE will be presented at the upcoming American Epilepsy Society Annual Meeting. Finally, as Scott noted earlier, we've just submitted a request for scientific advice to the European medicine agencies committee for medicinal products for human use to obtain feedback on the design of a second RSE study to be conducted in Europe. The study will be part of a filing strategy in Europe only. We expect feedback over the coming months, and we'll share that update with you accordingly. Now turning to our oral ganaxolone franchise. As Scott just noted, one of the highlights of the quarter was the success of the Marigold Study, our global Phase III trial in CDKL5 deficiency disorder. The trial enrolled 101 patients between the ages of 2 and 19 who had a confirmed genetic mutation involving the CDKL5 gene, which is important for normal brain development and functioning. The study showed a statistically significant result with patients given oral ganaxolone showing a reduction in the frequency of major motor seizures with ganaxolone compared to placebo. This was the study's primary endpoint. The median reduction in seizures was 32.2% in the ganaxolone group and 4% in the placebo group, yielding a p-value of 0.002. Ganaxolone was generally well tolerated with a safety profile consistent with previous clinical studies, with the most frequent adverse event being somnolence. Despite the rarity of CDD, we were able to fully enroll the targeted sample of 100 patients on time. Based on the robust results of the study, we're confident that it provides evidence for efficacy and safety and will address an important treatment need for patients and their families. We look forward to meeting with the FDA to discuss an NDA submission in mid-2021. This study also provides a rich data set for further analysis, and next month at the American Epilepsy Society Meeting, we'll be presenting results of analyses that further support the efficacy of ganaxolone in CDD. The Marigold Study also shows for the first time that ganaxolone is efficacious when given as a 3-times-a-day regimen. This demonstration of the PK/PD profile gives us great confidence in its ability to demonstrate anticonvulsion efficacy in our upcoming studies. We've also taken a preliminary look at data from the open-label extension of the Marigold Study that suggests that patients remaining on ganaxolone can have a durable effect. We're also planning to provide for access to ganaxolone for CDD patients who are not able to participate in the Marigold Study. More on that at the upcoming AES meeting. Let's move next to tuberous sclerosis complex, or TSC, our newest clinical program. As we noted, this represents the next step in the assessment of our biomarker hypothesis. Recall that the decision to conduct a TSC trial resulted from our discovery of a novel biomarker, allopregnanolone sulfate or Allo-S, during our Phase II study in PCDH19 related epilepsy. Patients with CDD, PCDH19 and TSC all appear to make abnormally low levels of this inhibitory neurosteroid, and we now know that patients with TSC not only have low levels of neurosteroids, but also functional abnormalities involving GABA. This study will help determine whether allopregnanolone plays a role in the pathophysiology of TSC and if abnormal neurosteroid production provides an opportunity for demonstration of a response biomarker in TSC and potentially other rare genetic epilepsies. As Scott mentioned, we've instituted efforts to boost enrollment in the Phase II TSC study, including enlisting additional sites and having discussions with the investigators about participant recruitment. And the initial results have been encouraging. We realize that there are other factors that could also be playing a role, including response of the participating physicians to the top line data in CDD as well as decreases in the reallocation of medical services to deal with COVID. Regardless of the reason, we're seeing an increase in patient screening. I can also provide a bit more detail about the ongoing Phase II TSC study, which will evaluate the safety and tolerability of adjunctive ganaxolone for treatment of the refractory seizures in TSC. We plan to enroll approximately 30 patients from age 2 to 65, who will enter a 4-week baseline period, followed by a 12-week treatment period during which they'll receive up to 600 milligrams of ganaxolone 3 times daily. The study will also have a 24-week extension in which qualifying patients can continue ganaxolone treatment. We expect that patients in this study, as in the CDD trial, will have highly refractory seizures that have been unresponsive to multiple antiseizure medications. The primary endpoint is the percent change in the 28-day frequency of the most significant types of seizures seen in TSC during the treatment period relative to the baseline. And we will also analyze Allo-S levels and their relationship to treatment response. We plan to report top line data during the third quarter of 2021. Our goal is to meet with the FDA in 2021 based on an interim analysis of the trial data, and to share initial safety data in advance of initiating a Phase III study. We plan to conduct a double-blind placebo-controlled trial with the ultimate goal of filing an sNDA for TSC as closely to our CDD filing as possible. Finally, a quick update on the Violet Study, our proof-of-concept study in PCDH19-related epilepsy. We've completed patient enrollment, which has the potential to provide additional support for the Allo-S biomarker hypothesis as well as for the improved PK/PD of the 3 times a day dosing regimen. The study will stratify patients into 1 or 2 biomarker groups based on Allo-S levels and who were then randomized to ganaxolone or placebo within each of these strata. The study has a prospective baseline period followed by a 17-week double-blind treatment phase. Patients randomized to ganaxolone titrate over 4 weeks to a dose of up to 600 milligrams of oral liquid suspension 3 times a day and maintain that dose for an additional 13 weeks. We expect to complete the double-blind phase of the trial with approximately 20 patients and anticipate top line data in the first half of 2021. And while the Violet Study is not intended to support registration for an indication in PCDH19 related epilepsy, it will provide important information for the biomarker hypothesis for ganaxolone. These studies represent a well-defined and strategically targeted program focused on rare epilepsies with high unmet need, where we believe ganaxolone has true potential to improve patient outcomes. 2020 has certainly been exciting, but we see 2021 as equally full of promise and opportunity. We'll have several significant data readouts, regulatory meetings and filings, including in the submission of the NDA for CDD in the treatment of rare and often devastating seizure disorders. Before I turn the call over to Ed to review our financials, I would like to thank the patients and their families who participate in these trials directed to treatment for rare genetic epilepsies. We can't thank you enough for your support to improve the lives of all patients and families suffering from these often debilitating neurologic disorders. With that, I'll turn the call over to Ed. -------------------------------------------------------------------------------- Edward F. Smith, Marinus Pharmaceuticals, Inc. - VP, CFO, Treasurer [5] -------------------------------------------------------------------------------- Thank you, Joe, and good afternoon, everyone. Our financial results for the third quarter of 2020 released this afternoon reflect results from operations in support of ganaxolone development and commercial preparedness activities. I'm pleased to report that this quarter is the first quarter for which we have recognized federal contract revenue in connection with our BARDA contract, which we entered into in September. Federal contract revenue for Q3 was just under $200,000 for the 3 months ended September 30, 2020, compared to no such revenue for the same period a year ago. Revenue recognized in connection with our BARDA contract represent reimbursement for activities within the contract scope and will vary quarter-to-quarter based on the timing of these activities. As Scott mentioned earlier, our base BARDA contract initially provides $21 million of non-dilutive funding over approximately the next 24 months most of which will be directed towards our Phase III program in refractory status epilepticus, with options based on success milestones that may expand to up to $51 million in total BARDA funding. Research and development expenses were $11.3 million and $38.1 million for the 3 and 9 months ended September 30, 2020, compared to $11.6 million and $30.5 million for the same period in 2019. Changes reflect the winding down of our PPD program, and focused development efforts and resource investment on seizure disorders, including a Phase III study in CDD, Phase II studies in PCDH19 and TSC and gearing up for our Phase III study in RSE as well as preclinical and manufacturing activities in preparation for a potential NDA filing in CDD. General and administrative expenses were $4.6 million and $12.5 million for the 3 and 9 months ended September 30, 2020, which compares to $2.3 million and $8.5 million for the same period last year. The primary drivers of the increase were increased legal and consulting fees as we scale up our operations and prepare for potential commercialization and noncash stock-based compensation expense. Our net loss for the third quarter of 2020 was $15.7 million or $0.51 per basic and diluted share compared with a net loss of $13.8 million or $1.05 per basic and diluted share loss for the same period in 2019. Our net loss for the 9 months ended September 30, 2020, was $58.9 million or $2.29 per basic and diluted share compared to $38.7 million or $2.95 per basic and diluted share for the same period in 2019. At September 30, 2020, we had cash, cash equivalents and investment balances of $91.3 million compared with approximately $91.7 million at the end of 2019. Without taking into consideration any potential inflows to the company other than expected federal contract revenue from our BARDA contract, we believe that our cash, cash equivalents and investments as of September 30, 2020, will enable us to fund operating expenses and capital expenditure requirements into 2022, assuming our current scale of operations. I'd like to thank our investors for their continued support and confidence in our programs. I also want to, of course, thank the entire management team and all Marinus' employees for their hard work and dedication to our mission. We look forward to continued momentum and progress as we round the corner into another exciting year for Marinus. I'll now turn the call back over to Scott before we enter the Q&A portion of the call. Scott? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [6] -------------------------------------------------------------------------------- Thanks, Ed. It's important for me to say that we are grateful for the continued commitment and dedication of the Marinus team, study site personnel and our investigators. They have enabled us to successfully navigate these unprecedented and challenging times to which our entire organization has risen to the occasion. 2020 has been an exciting year and we believe the best is yet to come. Thank you. And with that, we will now open the call for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) Your first question comes from the line of Joseph Thome from Cowen and Company. -------------------------------------------------------------------------------- Joseph John-Charles Thome, Cowen and Company, LLC, Research Division - VP of Healthcare [2] -------------------------------------------------------------------------------- Congratulations on all the great progress. Maybe the first one on TSC. When we see those data next year, is there a 28-day seizure frequency reduction that you're targeting to give you confidence to go forward in the Phase III? Or is there something else in the data package that you'll be looking for outside of just the seizure reduction? And then maybe 1 more, if I can. I know you've previously indicated pursuing potential partnerships for either oral ganaxolone in CDD alone or sort of the entire oral franchise. Does that Ovid communication regarding the method of use patents in CDD and PCDH19 effect how you're thinking about partnership discussions at all? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [3] -------------------------------------------------------------------------------- Thanks for the question, Joe. Let me tackle TSC, and then I'll flip it over to Joe, and then I'll happily come back to the Ovid question. So on TSC, when we did our work and we talked to several consultants about the Phase II trial, many of them recommended -- majority of them recommended a similar path that others have taken in the field of that a single-arm study looking for a specific efficacy signal, particularly I think that message has been even reinforced since the positive CDD data. Joe, why don't I flip it over to you to talk a little bit more about the efficacy signal you'd like to see and what you'll be looking at to really help us design the Phase III? -------------------------------------------------------------------------------- Joseph Hulihan, Marinus Pharmaceuticals, Inc. - Chief Medical Officer [4] -------------------------------------------------------------------------------- Sure. Yes. Thanks, Scott. Well, I think the study is going to help us design a Phase III study more than anything else. In addition to whatever absolute reduction we see and something in the range, the placebo rates and other studies have been in the range 15%, 20%. So we'd like to see probably at least 15% above that. So 45%. But I don't think we'd live or die on the absolute reduction. We can look at seizure types and how the drug performs, not just overall in TSC, whether there are differences based on seizure type. They may have different seizure types in TSC than in CDD. So we'll get -- be the first to look in that population, and also potentially give us another look at biomarker hypothesis. So there's a lot we can get out of that study beyond the absolute reduction in seizure frequency and safety also. We can read on safety, which we expect to be fine. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [5] -------------------------------------------------------------------------------- So Joe, let me take your question on Ovid. And as a reminder for everyone on the call, we are in multiple strategic discussions, both with strategics who are interested in some global commercialization as well as other strategics who see this franchise as very meaningful and one that we could potentially monetize. And we've raised this topic with our strategic for -- with strategic partners for the CDD and the entire oral franchise. And we know that biopharmaceutical companies and other strategics who are seriously engaged with us understand and are highly knowledgeable in patent matters. And to this degree, we do not see this issue at all as a significant impediment to us completing a deal. And just finally, as we previously mentioned, I really can't comment further on the Ovid patents at this time other than to say that we are extremely confident with our plans on ganaxolone, and we do not expect to be delayed or disrupted with our launch plans. Operator, next question? -------------------------------------------------------------------------------- Operator [6] -------------------------------------------------------------------------------- Your next question comes from the line of Marc Goodman from SVB Leerink. -------------------------------------------------------------------------------- Guofang Li, SVB Leerink LLC, Research Division - Associate [7] -------------------------------------------------------------------------------- This is Rudy on the line for Marc. I just have a quick question regarding the R&D spending because 3Q spending for R&D seems to be light. So can you provide some color on R&D spending going into 4Q '20 and 2021? And how should we model the expenses for status epileptics, given that you're studying 2 pivotal trial and you have new trials for earlier line of these programs? -------------------------------------------------------------------------------- Edward F. Smith, Marinus Pharmaceuticals, Inc. - VP, CFO, Treasurer [8] -------------------------------------------------------------------------------- This is Ed. I'll take that question. Thanks for the question. As we've discussed on the call, we've been -- we essentially have completed and are just essentially moving into the open-label phase of our CDD study. And there have been some drop-off in expenses in that regard. But then at the same time, we're -- in that point in time where we're going to be gearing up expenses associated with the Phase III program in refractory status epilepticus. So expenses on the R&D side tend to ebb and flow. But I think if you look historically, say, over the last 12 months, look at our R&D line, I think things are really going to be rather consistent from an expense standpoint through the end of this year when you normalize them over the course of the last 12 months. And it's our expectation that expenses will start to gear up in the front half of next year as we prepare for an NDA filing in CDD and then secondly, as we start to think about commercialization, it'll be expenses that ramp-up in the back half of next year. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [9] -------------------------------------------------------------------------------- And Ed, this is Scott. I'll just add, too, as a reminder, we made an important strategic decision to truncate the PCDH19 study and limit that to a 20-patient study, and that will have important savings as we move forward as well. So that was a hard decision for us, but unequivocally, we believe, the right one. And certainly, that incrementally is helping on the R&D spend. And we think it's much more important that, that spend go into TSC, go into the RSE program. And I think we have some interesting trials we're planning for the second half of '21. You'll hear about -- more about those at AES. -------------------------------------------------------------------------------- Guofang Li, SVB Leerink LLC, Research Division - Associate [10] -------------------------------------------------------------------------------- Got it. And congrats on the quarter. -------------------------------------------------------------------------------- Operator [11] -------------------------------------------------------------------------------- Your next question comes from the line of Joon Lee from Truist Securities. -------------------------------------------------------------------------------- Joon So Lee, Truist Securities, Inc., Research Division - VP [12] -------------------------------------------------------------------------------- We fully appreciate the sensitivities around the IP issues, but with the Ovid patent infringement only be enforceable on the CCD (sic) [CDD] indication or other indications as well. And what types of royalty rates would be appropriate? And also, can you guide us to the timing of the resolution of the patent issue? And I have a follow-up. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [13] -------------------------------------------------------------------------------- Thanks for the question, Joon. Let me start with the first piece of that question. Those -- the Ovid patents are very specific method of use patents for CDD and PCDH19 only. So they have no impact on either our status program or our TSC program. I can't guide you to specific rates, but I can certainly reference -- encourage you to look into patent settlement cases that are specific for method of use patents rather than composition of matter patents, and they typically can be associated with specific royalty rates. But again, we're not commenting or being more specific at this time of what we -- what our ultimate business decision will be. Certainly, patent settlement is one of the things we could consider and in-licensing those patents. But certainly, we are considering other business options as well at this time. Did I miss a piece of the question, Joon? Or did I get them all? -------------------------------------------------------------------------------- Joon So Lee, Truist Securities, Inc., Research Division - VP [14] -------------------------------------------------------------------------------- No, that was very helpful. And the follow-up question is how much of the $21 million in initial funding from the BARDA are you expecting to receive over the next 2 to 4 quarters? And what's the likelihood of that additional $30 million being triggered? And when do you expect that to be triggered? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [15] -------------------------------------------------------------------------------- Ed, do you want to take the first half, and I'll take the second half? -------------------------------------------------------------------------------- Edward F. Smith, Marinus Pharmaceuticals, Inc. - VP, CFO, Treasurer [16] -------------------------------------------------------------------------------- Sure. I'd be happy to. The $21 million from the initial funding of the grant, it's our expectation that, that will come in ratably over approximately the next 24 months. Now it's not going to come in on a straight-line basis. This is a cost share contract. So based on completion of activities, essentially, we bill BARDA for the work that's been completed. So it will ebb and flow, but it's our expectation that, like I said, the bulk of that $21 million will come in over the next, call it, 7 to 8 quarters. Scott, do you want to take it from here? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [17] -------------------------------------------------------------------------------- Yes, I'll take the second half. So Joon, the real key triggers for the next step of the BARDA program would be preclinical work, which is very much in line with the preclinical work that's done before, basically, the rodent models that look at nerve gas toxicity and the treatment of ganaxolone for that acute treatment paradigm. So we've run very similar studies before. So we're very confident about that. And the other major trigger is the actual Phase III itself. And on a successful Phase III, then that would trigger the next step of the BARDA contract. A big piece of that is a manufacturing scale-up piece. BARDA, as you can imagine, is very interested in the U.S. supply chain. We think that could have some very important impact long-term on our gross margins. And certainly, as we become a commercial stage company, having a more robust supply chain. And certainly, that would also allow BARDA the opportunity to ultimately purchase ganaxolone at a discounted rate via the federal government pricing strategy, but would still be important business for us. It's not linked to any specific amount of drug post approval. We have some guidelines about typically what BARDA would be interested in purchasing, but something that we're not talking about at this point in time. And that purchase is separate than the contract itself, just to be clear. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Your next question comes from the line of Alethia Young from Cantor. -------------------------------------------------------------------------------- Li Wang Watsek, Cantor Fitzgerald & Co., Research Division - Research Analyst [19] -------------------------------------------------------------------------------- This is Li on for Alethia. Want to add our congratulations as well. Just the first question is on your CDD program. I mean, since you released your positive top line, just kind of curious what are the feedback you're hearing from physicians and how they're going to use the drug. Do you think it's like a medicine that would be given to ORR patients? Or are they a particular subgroup? And I have a follow-up. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [20] -------------------------------------------------------------------------------- Well, thanks for the question. We've gotten a lot of positive feedback on the data thus far. We had the chance to present the data at the annual CDD meeting that was held virtually just a few weeks ago. Our scientific team was there. Alex Aimetti, our Head of Scientific Affairs presented the data and got some great feedback from the KOL community. We really think the bigger showcase for us is going to be around at AES. But certainly, when we tested this profile with market research, we did a large third-party market research project over the summer. We used an absolute delta of 25% versus placebo, and that profile was extremely well received. Our safety profile was incrementally better in the Phase III. So we have every reason to believe that the profile that we tested over the summer can be incrementally improved or is incrementally improved. We expect patients to be similar to what we've seen in the Phase III trial. The average age in the Phase III was 6 years old. The average patient had failed 7 prior therapies. And so we would expect many of these patients have cycled through early drugs and have the opportunity to add on ganaxolone to their current regimen. And given the safety profile, the tolerability of the drug, we are expecting that, ultimately, should we get approved that we would have very high demand in this patient population. And I think when we think about the TSC marketplace, we're thinking very similarly in terms of the patient population, more refractory patients that have gone through several other medicines that have limited options. And so we see those market opportunities for us much more similar than different. And I know you had a follow-up? -------------------------------------------------------------------------------- Li Wang Watsek, Cantor Fitzgerald & Co., Research Division - Research Analyst [21] -------------------------------------------------------------------------------- Yes. It's just for the status RAISE trial. Now you have like 75% site selected. Just wondering if you have any additional color on the placebo rate at this site? And how does it track with your original assumption? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [22] -------------------------------------------------------------------------------- That's great question. We haven't actually updated internally. So it's a great question for me to go back and push the team on. But a reminder, the first 50 sites that we ask the question, what do you expect to be the rate of general anesthesia after 2 failed antiepileptics? And the answer was about 75%, very consistent with what we expected, and incrementally higher use of general anesthesia than we're modeling for Phase III results. So we'll get that for you for next quarter once we have effectively all our sites ready to go. And I think the other really important piece that we talked about in our prepared remarks, the fact that our sites are almost all driven by neurointensivists. And I think those are the folks who really understand the pathway for nonconvulsive status and they're really going to be the users of the drug, and we really believe that's going to be the key to driving strong enrollment rates, and that certainly was the case in Phase II. It's -- so thank you. It's 5:24, we can take 2 or 3 more questions, but we want to break at 5:30. So operator, maybe the next question, please? -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Your next question comes from the line of Douglas Tsao from H.C. Wainright. -------------------------------------------------------------------------------- Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst [24] -------------------------------------------------------------------------------- And congrats on all the progress. So Scott, maybe just as a starting point, maybe provide your current thoughts on sort of the -- sort of what you plan to do with the oral business in terms of commercializing yourself. I know it sounds like you continue to be in talks and there appear to be -- or sounds like there's been some interest. Just curious, what are you waiting to see, is it data from the TSC study? Or is it sort of independent of additional data? And then just another question in terms of the RSE study. I know just given the condition getting informed consent can be a challenge and sort of a limiter in terms of your ability to enroll patients. Have you made changes versus the Phase II study that might ease that somewhat? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [25] -------------------------------------------------------------------------------- Thanks, Doug. Joe, you want to take the second question on informed consent, and then I'll talk about the oral business? -------------------------------------------------------------------------------- Joseph Hulihan, Marinus Pharmaceuticals, Inc. - Chief Medical Officer [26] -------------------------------------------------------------------------------- Sure. Yes. No, I think the main thing we've learned from the Phase II study was how to get consent from the sites, in particular, Henri's site at Brigham and Women's, how to get consent and what the approach should be. So getting consent early, kind of pre consent patients who may be candidates for the study, so that when the time comes they can be treated and entered quickly. So I think that's the key. And we've educated the sites about that. We've talked to them to make sure that they know they could -- they should pre consent patients. And so doing it that way, we anticipate that consent won't be an impediment to enrollment. -------------------------------------------------------------------------------- Douglas Dylan Tsao, H.C. Wainwright & Co, LLC, Research Division - MD & Senior Healthcare Analyst [27] -------------------------------------------------------------------------------- And do you think that given that, that you might be able to sort of have somewhat faster enrollment than what you saw or in terms of getting patients into the study from what those who sort of meet the eligibility requirements? -------------------------------------------------------------------------------- Joseph Hulihan, Marinus Pharmaceuticals, Inc. - Chief Medical Officer [28] -------------------------------------------------------------------------------- Yes. Well, I certainly hope so. But I think for now, until we get a better read on it, I think we need to stick with the projection that the operations team has given in terms of how we enroll. But I would certainly like to see it enroll quickly. Look, it depends on a lot of things. So -- but I think, at minimum, we'll have an enrollment time line put out. -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [29] -------------------------------------------------------------------------------- Yes. And Doug, let me just add to it. I've said this to many of you, in our Phase II, we had 4 key active sites from the time I joined in February through the summer. And we enrolled 0.5 patients per month per site, 0.5 patients per month per site. And with our 80 sites in this Phase III and with those all activated by the end of Q1, our predictions or our calculations to get top line data in the first half of '22 is roughly 0.2 patients per site per month. So we've taken a pretty conservative approach to the numbers. But to Joe's point, until we're up and running, we'll have to wait and see. So we heard from 1 site this week that they expected to enroll 10 to 20 patients in the study. And we said, sign them up. But even that, we're kind of waiting and seeing on that one. On the oral side, Doug, a lot's changed in the last 12 months. I think, one, we've really done a lot of work on the CDD franchise. And I think to your point, we -- our conviction that we can have a real opportunity and make a difference in patients with TSC is equally robust. And as a reminder to everyone, the Phase II TSC data is open label, which means we can take some looks at that data and really understand whether or not there is a strong signal, and that's certainly going to have a big impact on how we view the franchise in terms of its size and its value to Pacira -- I'm sorry, to Marinus, excuse me. I was going to mention as well that our new Chief Commercial Officer, Christy Shafer, she and I worked together at Pacira, that's why I had that little slip. We were talking about the oral launch today, and I think we both agree as has our early market research that getting out into the oral market and talking about a novel mechanism of action and talking about the role of extrasynaptic GABA receptors can really help us as we're thinking about seeding the IV market for status epilepticus. So we really see the strategic value of the franchise in the U.S., the oral to IV market being really potentially important for us. And again, we know how difficult hospital launches can be. So everything we can do to help build that franchise from early days, we think it's very important. Certainly, we don't expect to go outside the U.S., and we're very actively engaging with strategics who can help us outside the U.S. But I would say, I think my job as CEO is to really do best for our shareholders. And if they're the right strategic deal for the entire oral franchise or some permutation of that, we have to think pretty hard about that as well. So we're really going to investigate all types of strategic options, but in a perfect world. We'd love the opportunity to launch the oral program in the U.S., particularly if we see a strong signal in TSC. And we think it's going to set us up very nicely for SE. So that's a big reason for my change of strategic thinking over the past few months. Thanks for the question. I think we can take 1 more operator, and then we're going to have to call it. -------------------------------------------------------------------------------- Operator [30] -------------------------------------------------------------------------------- Your last question comes from Jay Olson from Oppenheimer. -------------------------------------------------------------------------------- Jay Olson, Oppenheimer & Co. Inc., Research Division - Executive Director & Senior Analyst [31] -------------------------------------------------------------------------------- A couple of questions on status. Can you share any thoughts on the recent approval of fosphenytoin IV from Sedor Pharma for status epilepticus. Do you consider that to be a competitor? And what are some of the key points of differentiation for ganaxolone? And then separately, for your Phase III study of ganaxolone in Europe for RSE, what comparators would you consider putting into that study? Would the EMA accept second line benzos or other antiepileptic drugs? -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [32] -------------------------------------------------------------------------------- Thanks for the question. And let me take the first half, and then I'll pass it over to Joe for the second one, Jay. In terms of the approval today, I think the big difference, at least my opportunity looking at the label today, it's incrementally higher dosing to help patients achieve higher blood levels faster. We know from the ESETT study that all 3 different drugs that were tested in that frontline setting have less than a 50% response rate. We would expect drugs like fosphenytoin to be used in first and second line patients. We've talked to some big experts out there who said, no patient is really treated for status unless they've gotten a sodium channel blocker, although the data really would suggest that these agents are used interchangeably. And our view is, as of today, we've got a drug that's going to have a very high success rate, I'm comfortable saying 80% or greater. I would expect it to be 90% or greater. So in the hospital setting, there's really no chance that we're going to be the runaway first drug, right? We're going to be a drug that typically is going to be second and third line, at least in our early days of RSE. We certainly think there's an opportunity to move into the frontline setting in combination. And maybe that's the perfect lead for Joe to talk about what we may be comparing ourselves to in the future. -------------------------------------------------------------------------------- Joseph Hulihan, Marinus Pharmaceuticals, Inc. - Chief Medical Officer [33] -------------------------------------------------------------------------------- Yes. Sure. Well, for the European study, one thing about ganaxolone, I think we saw a very rapid onset of effect. And I think potency at that stage of status, I think it would clearly be, I would think, superior to fosphenytoin. And in terms of the comparators, it will be the investigator's choice. We're not going to restrict that in any way, Fosphenytoin has limited availability in Europe, it's available in some countries, but not many. And so -- and levetiracetam, as I understand, is by far the first drug of choice. So that would leave valproate, lacosamide, where it's available, fosphenytoin. And so it would have to be either a drug that they had already failed or were allowing a redose, a higher dose of a drug that's already been given if it's a substantial dose because otherwise, the pool of drugs would be fairly limited. So it's really the investigator's choice. And we don't expect -- actually don't expect the efficacy to be significantly different in the U.S. where it's given versus placebo versus in Europe where it will be against the comparators. -------------------------------------------------------------------------------- Operator [34] -------------------------------------------------------------------------------- I will now hand the conference over to... -------------------------------------------------------------------------------- Scott Braunstein, Marinus Pharmaceuticals, Inc. - CEO & President [35] -------------------------------------------------------------------------------- Thank you. Thank you so much. First I want to say thanks to everyone for dialing in. And really, I appreciate you mixing up the questions. Ed got great airtime tonight. It was nice to have the CFO answer a few questions on a biotech earnings call, so that was very good, without having real revenue. And otherwise, I'd like to thank you all for joining today, and we appreciate your continued support. Before we close, Sasha will run down some upcoming events that you may want to take note of. Sasha? -------------------------------------------------------------------------------- Sasha Damouni Ellis, Marinus Pharmaceuticals, Inc. - VP of IR & Corporate Communication [36] -------------------------------------------------------------------------------- Thanks, Scott. As mentioned throughout the call, we have had several -- we will have several presentations during the AES virtual meeting in December, including providing further analyses on the Marigold trial and SRSE. We will announce further details closer to the event. We also intend to hold a separate investor event on December 7 from 12:00 p.m. to 2:00 p.m. Eastern Time. Our leadership will also be presenting at a number of investor conferences over the coming weeks. So we encourage you to check out our website for more information. And finally, I want to acknowledge that Scott has accepted on behalf of the entire Marinus organization, LouLou Foundation's Company Making a Difference Award for clinical in recognition of our work on the Marigold Study. The LouLou Foundation is dedicated to helping those with CDKL5 deficiency disorder. And with that, thank you, everyone, for joining the call today. -------------------------------------------------------------------------------- Operator [37] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.