Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q4 2023 Earnings Call Transcript
Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q4 2023 Earnings Call Transcript March 5, 2024
Marinus Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-0.74 EPS, expectations were $-0.64. Marinus Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Ladies and gentlemen, greetings and welcome to Marinus Pharmaceuticals' Fourth Quarter and Full Year 2023 Financial Results and Business Update Call. Today's call is being recorded and all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. And it is my pleasure to introduce your host, Sonya Weigle, Senior Vice President of Investor Relations, Human Resources and Corporate Affairs. Ms. Weigle, you may begin.
Sonya Weigle: Thank you and good morning. With me from Marinus are Dr. Scott Braunstein, Chairman and Chief Executive Officer; Christy Shafer, Chief Commercial Officer; Dr. Joe Hulihan, Chief Medical Officer; and Steve Pfanstiel, Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that some of the statements we are making today are forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward-looking statements. These risks and uncertainties and risks associated with our business are described in the company's reports filed with the Securities and Exchange Commission, including Form 10-K, 10-Q and 8-K. I will now turn the call over to our CEO, Dr. Scott Braunstein.
Scott Braunstein: Thank you, Sonya. Marinus concluded 2023 with a strong finish across all fronts; commercial, clinical and operational. On today's call, I'll provide a brief overview of some of the key areas before turning it over to our leadership team. Starting with an update on ZTALMY. We finished 2023 with another strong quarter of enrollment and robust quarterly growth. As a result of the progress made by our commercial team, we expect to achieve profitability on our ZTALMY commercial investment by the second quarter of 2024, ahead of our previous two-year target. Christy will provide a summary of our revenue results in her remarks as well as an update on our investments to continue to grow the CDD business and our launch plans as we prepare for two critical Phase 3 data readouts in the second and fourth quarters of this year.
Our commercial partners in the EU, China and MENA regions continue to make important progress to support the ZTALMY launches around the globe. In China, the Tenacia team has been granted priority review of the NDA submission in CDD as well as contributing to the enrollment of the TrustTSC trial. In Europe, Orion continues to plan for the launch of ZTALMY in select European countries in 2024. Finally, in the MENA region, we are targeting that our partner Biologix will begin their distribution strategy in the second half of this year. Concurrently, we are expanding our manufacturing investments to ensure that we can adequately supply not only our global partners but the broader market opportunities for ZTALMY over the coming years. Turning to our clinical pipeline, I'll first share an update on our Phase 3 RAISE trial of IV ganaxolone in refractory status epilepticus.
As we announced in our press release this afternoon, we are pleased to report that we have met the enrollment criteria for the interim analysis and now have more than 90 patients enrolled in the trial. We expect to deliver the interim results to the data monitoring committee over the coming weeks and plan to announce the outcome within the first half of the second quarter. Based on continued strong enrollment seen over the past six months, we project approximately 100 patients to be included in the secondary endpoint analyses. This growing data set should drive a robust package for both the FDA filing and our health economic outcomes. We expect to have the comprehensive trial results over the summer and to present this data at a series of medical meetings in the fourth quarter.
We are currently planning for an NDA submission in the first quarter of 2025 and are expecting a priority review. We see the recent uptick in enrollment as a strong reflection of the potential market opportunity for the IV franchise. Domestically, we believe the addressable market for RSE is approximately 35,000 patients per year, and we have the unique opportunity to bring a novel therapy to physicians. We plan to build our leadership in the hospital by continuing to invest in future status epilepticus research while making the appropriate commercial investments with the goal of ascertaining value-based pricing and broad physician adoption. Let me move to an update on our oral pipeline. Approximately 85% of the patients have been enrolled in our TrustTSC trial and the discontinuation rate is below 7%.
Due to some minor delays in screening, we expect to complete enrollment in the TrustTSC trial during the first half of the second quarter. As a result, we now anticipate our top line Phase 3 results in the first half of the fourth quarter of this year rather than the end of Q3. We could not be more pleased with the baseline demographics of the patients enrolled, the high percentage of patients rolling over to the open-label portion of the study and the low overall discontinuation rates, which are substantially different than what we saw in Phase 2. We believe the quality of this data set will support a compelling pricing strategy consistent with what we've seen to date for ZTALMY. The commercial team continues to make the appropriate investments to prepare for a potential launch in 2025, and we are eager to offer patients suffering from refractory TSC, a novel anti-seizure therapy.
Based on our market analysis, the addressable patient population in refractory TSC is projected to be about 10,000 patients in the United States. By leveraging our current commercial organization, we believe successful expansion of this opportunity will require a modest incremental investment. As a result, our goal is to drive profitability for the entire ZTALMY franchise within 6 to 12 months of the 2025 TSC launch. 2024 will be a pivotal year for the company as we have built a solid foundation that has us well positioned to drive future growth. Together, the CDD, RSE and TSC markets represent a multibillion-dollar opportunity, where we believe we can take a firm leadership position for these disease states and other refractory epilepsies.
With an established commercial and clinical track record, we look forward to building our momentum for ZTALMY, while also reporting on these key data milestones later this year. I'll now turn the call over to our Chief Commercial Officer, Christy Shafer.
Christy Shafer: Thank you, Scott, and good afternoon, everyone. In my remarks today, I will share an update on our ZTALMY launch, the progress we are making to grow our CDD franchise and an update on our commercial readiness planning for potential launches into TSC and RSE. Starting with ZTALMY in our first full year of launch, we generated net product revenue of $19.6 million for the full year 2023. This solid performance is the result of our strategy to establish ZTALMY as a critical treatment in the comprehensive management of seizures associated with CDD and to ensure that patients have seamless access to ZTALMY from prescription through fulfillment. We ended 2023 with more than 165 patients active on therapy. We continue to see swift payer approval with time from enrollment to patients fill of approximately two weeks in the second half of 2023, representing a consistent improvement throughout the year and demonstrating payers' understanding of ZTALMY's impact on patients in need.
Additionally, payer approvals of CDD prescriptions remain at nearly 100%, indicating strong payer recognition of the value of ZTALMY for these patients. To date, discontinuation rates are still well within our anticipated expectations. Looking ahead, we continue to expect full year 2024 U.S. ZTALMY net product revenues of between $32 million and $34 million. The midpoint of this range represents growth of nearly 70% versus 2023. We are executing a number of strategies to maximize CDD market penetration. We are utilizing new data sources and analytics to better identify patients who are not build with the CDD ICD-10 code and third-party claims and identify patients who may have CDD, but had yet to have a confirmatory genetic test. Leveraging these data, we have also rolled out a genetic testing initiative, which will help accurately diagnose patients.
And with the open-label extension data published late last year, we are able to emphasize ZTALMY's sustained efficacy and safety profile supporting the use of ZTALMY as a proven treatment for combating seizures associated with CDD. We are excited for the opportunity to bring ZTALMY to more CDD patients in need and believe our commercial strategy has us well positioned to realize the potential of this novel treatment. Our experience with ZTALMY provides Marinus with a solid foundation for two potential commercial launches in 2025. This includes ZTALMY's expansion into TSC and the IV formulation of ganaxolone for RSE. Launch planning is well underway for both TSC and RSC in anticipation of two key trial readouts later this year. Let me take a few minutes to summarize our commercial planning in support of each of these programs.
Starting with TSC, our rare genetic epilepsy business is led by Senior Vice President, Lisa Legalon, a 30-year veteran in ultra-rare disease. We are planning to build on the strong foundation we have established with ZTALMY and CDD and expand our proven strategy to capture the larger TSC market. We believe there is a strong business rationale and market opportunity for the expansion of our ZTALMY business into TSC, where we know there is a significant unmet need in refractory patients. We plan to take advantage of synergies with CDD and TSC, while leveraging market data that will further support an additional commercial launch. Research suggests that there is a potential strong overlap with CDD rare disease treaters and unlike CDD, TSC patients may be easier to identify through a well-established ICD-10 code, which has been in use for more than 30 years and the physical TSC attributes, which may be identified at birth.
Our early plans to expand into the TSC market include; disease state education for payers, engagement with very active and supportive advocacy partners, including the TSC alliance, TrustTSC data education with payers and formulary decision-makers in the advance of a sNDA submission and an enhancement of our patient services and specialty pharmacy model. Turning to RSE with enrollment criteria now satisfied for the interim analysis and the RAISE trial and data anticipated in Q2, let me take a few moments to summarize our commercialization and launch plans. We have assembled a team with extensive commercial experience in the hospital setting under the leadership of industry veteran, Kristin Rudisill, our Vice President and Business Unit Lead for the Acute Care franchise.
In 2024, our acute care business is focusing on aligning development and execution with key milestones. Driving access post-approval is pivotal to our launch strategy. And this year we are aiming to complete key access strategies such as channel and distribution plans, NTAP filing and pricing. In addition to strategic planning, we are preparing for execution with the build and deployment of a field access team entering the market as early as this summer. Activating this team under the FDAMA 114 guidelines is designed to address key access stakeholder and payer groups with information that addresses their key value drivers. These teams are permitted to disseminate healthcare economic information that is critically important to these financial decision-makers who often control or influence formulary decisions for new therapies.
With corporate and system-level financial decision makers, we believe engaging with these key stakeholders can accelerate access and awareness leading to more favorable formulary placement and will ultimately provide patients with earlier access to treatment. The combination of our team's leadership, the commercial plans we have outlined and the success of ZTALMY gives us the confidence that ganaxolone has the potential to become a blockbuster franchise across CBD, TSC and RSE. I look forward to providing further updates on our progress and plans throughout the year. At this time, I would like to turn the call over to our Chief Medical Officer, Dr. Joe Hulihan, for an update on our clinical programs and development.
Joseph Hulihan: Thank you, Christy, and good afternoon. I'm pleased to share an overview of our pipeline progress, which includes two key upcoming Phase 3 data readouts and initiatives to support our continued clinical and scientific understanding of RSE and TSC. Starting with the RAISE trial of IV ganaxolone in refractory status. After a strong end of 2023, I'm excited to report that in January, we hit our enrollment requirement for the interim analysis. With this critical milestone achieved and dates scheduled for DMC review of the data, we continue to expect to report top line results in the second quarter of 2024. Now that we've achieved the required enrollment target for the interim analysis, the clinical operations scheme has been hard at work, ensuring the integrity and completeness of the study data to be provided to the DMC for their review.
Here's what you can expect next in the process. Presently, the clinical operations team is focused on data cleaning in anticipation of generating interim analysis dataset. Once the preparatory steps are complete, the data will be provided to the DMC for a determination of whether the studies met the pre-specified efficacy stopping boundaries on the co-primary endpoints. If the study achieves these pre-specified stopping rules, the Marinus leadership team will then evaluate the data and share top line results publicly soon thereafter, including both the co-primary and key secondary endpoints. Successful results would serve as the basis for submission of a U.S. regulatory filing. While preparation of data for the upcoming DFC is ongoing, as Scott mentioned, we'll continue to enroll patients in the double-blind phase of the study.
Cater from these additional patients will be pooled with the interim analysis dataset and will serve as the basis for analysis of other secondary and healthcare utilization end points. If double-blind enrollment is stopped based on immune analysis results, we will then enroll new patients in a planned open-label extension to collect additional safety data that will support upcoming regulatory filings and future discussions with payers and other key stakeholders. As a reminder, the interim analysis will include results of the co-primary and key secondary study endpoints which measure both onset of action and durability of effect in controlling status epilepticus. The co-primary endpoints are status cessation within 30 minutes and prevention of escalation to third-line treatment with IV anesthetics.
For the key secondary endpoints, we are looking at another measure of onset of action, the time to status cessation analysis and a further measure of treatment durability, lack of progression to IV anesthesia for 72 hours, which encompasses the 24-hour period following the end of the ganaxolone infusion. Following release of the top line data, analysis will continue and will yield results on other secondary endpoints and important healthcare utilization outcomes, including time on mechanical ventilation, days in the ICU in the hospital and discharge destination. The results are anticipated by the fall and we plan to present the major medical meetings later this year. Turning to our second refractory status trial; RAISE II is a Phase 3 double-blind placebo-controlled registration study targeting enrollment of 70 patients who have failed first-line Benzodiazepine treatment and at least one second-line IV anti-seizure medication.
In this study, we're evaluating IV ganaxolone in the population, earlier in the continuum of refractory status in whom IV anesthesia is less likely to be an imminent next step in treatment. We believe this study, which is expected to complete enrollment by the end of 2025 will support a European approval and could be used to expand the U.S. label. Data presented at AES last December as well as other published research, suggest that earlier treatment intervention in patients with status improves clinical outcomes. At that December meeting, we presented results from a five-year analysis of status epilepticus treatment dynamics in the U.S. This analysis showed that even in the absence of IV anesthesia, refractory status that was treated with three or more IV anti-seizure medications had worse outcomes and longer lengths of stay.
RAISE II trial is designed in a way that will allow us to assess the impact of IV ganaxolone on clinical outcomes and healthcare utilization in this subgroup of patients. Moving to Super Refractory Status or SRSE, we continue to supply IV ganaxolone to physicians upon request under emergency INDs for these patients whose life-threatening condition has high rates of morbidity and mortality. To-date, over 25 patients have been treated for SRSE with ganaxolone under INDs. Preliminary data on outcomes have been encouraging, particularly since we implemented a dosing regimen tailored to the treatment of SRSE. This regimen incorporates a higher daily dose of approximately 1,000 milligrams of ganaxolone with 63 grams of Captisol. Based on the outcomes we've observed, we intend to conduct a proof-of-concept study of IV ganaxolone in approximately 50 patients with SRSE.
We plan to go to the FDA in the second quarter of this year with this modified dosing regimen and begin the study before year-end. Turning to our ZTALMY franchise, first with TSC. Seizures in TSC are often treatment-resistant, despite the availability of newer disease-specific anti-seizure medications. To address this unmet need, we're evaluating ganaxolone in TSC patients with refractory seizures in our ongoing TrustTSC trial. This is a global Phase 3 randomized double-blind placebo-controlled trial of adjunctive ganaxolone which will enroll approximately 128 patients with TSC-associated seizures. As Scott mentioned, we've achieved over 85% of the target enrollment and are confident that we'll complete full enrollment early in the second quarter of this year.
As a reminder, the trial provides 90% power to detect a 25% difference in seizure reductions between ganaxolone and placebo. As discussed previously, the titration schedule has been modified in consideration of the pharmacokinetics of ganaxolone and the timing of side effect onset in prior studies. Currently, the discontinuation rate in the study is below 7%, giving us confidence in the potential benefit of the revised titration, not just on tolerability, but potentially on efficacy as well. In addition, we're seeing over 85% of patients who complete the study transitioned into the open-label extension, the rate as high or higher than observed in the Marigold study. We're targeting submission of a supplemental NDA in the first half of 2025 with a priority review we expected.
Additionally, we plan to expand our investment in ZTALMY to explore its potential in the treatment of other rare epilepsies. Planning is underway for a clinical trial that would assess oral ganaxolone for the treatment of a broad range of epileptic encephalopathies. Many patients with seizures and neurodevelopmental disorders, don't satisfy diagnostic criteria for Lennox-Gastaut Syndrome or other well-defined developmental and epileptic encephalopathies and we feel there is a substantial unmet for seizure treatment in these patients. We plan to initiate a proof-of-concept trial assessing ganaxolone in approximately 100 patients in the fourth quarter of this year. In closing, helping patients and families suffering from severe refractory seizure disorders remains at the core of what we do.
Our clinical team is motivated and focused on ensuring these lives are transformed with new, safe and effective treatment options. I'd now like to turn the call over to our CFO and COO, Steven Pfanstiel, for financial update.
Steven Pfanstiel: Thanks, Joe, and good afternoon, everyone. I am pleased to be able to provide a financial update as well as share our financial results for the fourth quarter and full year of 2023. First of all, I am proud of how we managed the business in 2023. And we ensured that we remain focused on our critical investments in the RSE and TSC trials and on the commercialization of CDD. On the latter, we now project a breakeven on our CDD commercial investment in the first half of 2024, which is ahead of our projections in less than two years from the launch. We were also not afraid to make tough decisions, such as discontinuing the established status epilepticus trial and making other cost reductions to ensure adequate cash runway headed into two significant data readouts.
As a result, we ended 2023 with cash, cash equivalents and short-term investments of 150.3 million. This is expected to provide cash runway late into the fourth quarter of 2024. And importantly, we project a cash balance of greater than 100 million at the expected RSE readout. We announced earlier in the quarter that we project 2024 U.S. ZTALMY net product revenues of between 32 million and 34 million. As Christy mentioned, this increase from 2023 represents continued strong and steady execution on the launch. Unlike 2023, we are not providing full year 2024 operating expense guidance at this time as the level of investment will depend on the outcome of the RSE and TSC Phase 3 trials. However, we expect operating expenses and cash burn in the near term to be consistent with the 2023 trends.
I'll now take a few minutes to summarize our financial results for 2023. We recognized ZTALMY product revenues of 6.6 million and 19.6 million for the 3 and 12 months ended December 31, 2023, as compared to 2.3 million and 2.9 million for the same period in the prior year. The full year total of 19.6 million exceeded our revised ZTALMY revenue guidance range of between 18.5 million and 19 million. Separately, we recognized BARDA revenues of 0.6 million and 11.4 million for the 3 and 12 months ended December 31, 2023, as compared to 1.8 million and 6.9 million for the same period in the prior year. Our actual 2023 BARDA revenue of 11.4 million was within our guidance range of between 11 million and 12 million. Research and development expenses were 26.4 million and 99.4 million for the 3 and 12 months ended December 31, 2023, as compared to 21.4 million and 79.9 million for the same periods in the prior year.
The year-to-date change was due to increased costs associated with our API onshoring efforts, increased TSC and RSE clinical trial activity and increased headcount. As a reminder, the API onshoring effort is approximately 70% funded by BARDA, so the increase in R&D expenses is partially offset by the increased BARDA revenue. Selling, general and administrative expenses were 15.4 million and 61.2 million for the 3 and 12 months ended December 31, 2023, as compared to 14.7 million and 56.8 million for the same period in the prior year. The primary drivers of the change on a year-to-date basis were annualization of the U.S. ZTALMY launch costs and increased headcount. Full year 2023 GAAP operating expenses consisting of both SG&A and R&D expense was 160.5 million, which was within our revised guidance range of between 158 million and 162 million.
Interest income was 1.7 million and 8.1 million for the 3 and 12 months ended December 31, 2023, as compared to 1.7 million and 2.4 million for the same period in the prior year. The increase in interest income was driven by the overall increase in cash, cash equivalents and short-term investments and increased yield on those balances. Interest expense was 4.3 million and 16.9 million for the 3 and 12 months ended December 31, 2023, as compared to 3.7 million and 10.7 million for the same periods in the prior year. The increase is driven by drawdown of an additional 30 million of credit under the Oaktree agreement in March 2022 and noncash interest expense related to our revenue interest financing with Sagard. The company reported a net loss before income taxes of 41.8 million and 142.9 million for the 3 and 12 months ended December 31, 2023, as compared to a net loss before income taxes of 32.7 million and 16.4 million for the same period in the prior year.
As a reminder, the prior year's results included the onetime sale of our priority review voucher in the third quarter. These totals include noncash stock-based compensation expense of 3.9 million and 15.6 million for the 3 and 12 months ended December 31, 2023, as compared to 3.8 million and 14.9 million for the same period in the prior year. Cash used in operating activities was 118 million for the 12 months ended December 31, 2023, and as compared to cash used in operating activities of 112.9 million in the prior year. Before we move to the Q&A, I will make a few concluding remarks. We are very pleased with our progress to date all of which has led to a number of potentially transformational milestones in 2024. We have two key data readouts in RSE and TSC that is positive to drive significant growth for our ganaxolone franchise and we look forward to sharing these and other important updates in the months ahead.
Thanks again for your continued interest in Marinus. Operator, you may now open the call to questions.
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