Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q3 2023 Earnings Call Transcript
Marinus Pharmaceuticals, Inc. (NASDAQ:MRNS) Q3 2023 Earnings Call Transcript November 7, 2023
Marinus Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-0.61, expectations were $-0.67.
Operator: Greetings and welcome to the Marinus Pharmaceuticals' Third Quarter 2023 Financial Results and Business Update Call. [Operator Instructions]. And now, it is my pleasure to introduce your host, Sonya Weigle, Senior Vice President, Investor Relations, Human Resources and Corporate Affairs. You may begin, Ms. Weigle.
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; T.J. Lyons, Chief Business 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, and welcome to our call. Before I turn to our progress in the third quarter, I want to express my appreciation to those of you who attended in person or via webcast our investor and analyst events in September. I also want to thank our key opinion leaders, Dr. Dhar, Dr. Koenig and Dr. Kahn, who reviewed their clinical experience treating patients with status and TSC. The third quarter of 2023 was marked by strong ZTALMY sales growth, meaningful progress in expanding global access to ZTALMY, continued advancement of our late-stage clinical programs, and ongoing development of our second generation oral ganaxolone product. We are pleased to report that ZTALMY sales in the third quarter slightly exceeded our mid-September expectations with revenues of $5.4 million, and we are once again raising our guidance to the range of $18.5 million to $19 million.
Just 4 full quarters into our launch, we are pleased to report our annual revenue run rate is well north of $20 million. These results validate our efforts to build a strong commercial organization and execute on our rare disease-focused strategy. Christy Shafer, our Chief Commercial Officer, will review our achievements and the steps we are taking to prepare for 2 new potential launches in 2025. In addition to the early commercial success in the U.S., we are making meaningful progress in expanding access to ZTALMY for patients around the world. Today, we announced the launch of our new global managed access program designed to provide physicians the opportunity to formally request the use of ZTALMY for their patients and geographies where the product is not commercially available and as supported by local regulatory requirements.
We are pleased to be collaborating with Durbin, an experienced leader in this area, who will facilitate the program. Thomas Lyons, our Chief Business Officer, will provide an overview following comments from Christy. Our commercial partners in the EU, China and MENA regions have also made notable progress. The Center for Drug Evaluation of the China National Medical Product Administration, granted priority review of the NDA submitted by Tenacia Biotechnology for ZTALMY in CDD. Additionally, Orion Corporation continues to plan for the commercial launch of the ZTALMY in selective European countries in 2024. And we expect our partner in the MENA region, Biologix, to have product available for distribution by the end of this year. We are proud that in such a short period of time, Marinus has created a global network that will provide the opportunity for CDD patients and their families to access our novel anticonvulsant therapy.
Let me take a few moments to review our clinical pipeline, starting with an update on the Phase III RAISE trial of IV ganaxolone in refractory status epilepticus. And our last update provided at our investor and analyst event in September, we noted the RAISE trial enrollment was on an upward trajectory since early August, following the activations of all clinical sites. Although total enrollment has continued to grow and screening activity remains quite high, the rate of enrollment has continued to show more variability than we expected. Based on current enrollment trends, we now project to enroll the number of patients required for the interim analysis by the end of the first quarter of 2024 rather than our previous guidance of January. As a result, we now anticipate top line data in the second quarter of 2024 if the predefined stopping criteria for the interim analysis are met.
The entire organization remains acutely focused on advancing our Phase III clinical trials in refractory status epilepticus and TSC. We are confident in the benefit that IV ganaxolone could bring to critically ill patients and the significant commercial opportunity for the first novel therapy for acute status in well over a decade. We are committed to successfully completing both the RAISE and TrustTSC trials in 2024 and continue to make the investments to prepare for these commercial launches. Preparations are underway for an NDA filing, and we don't expect the additional delays to significantly impact the timing of our commercial launch. Finally, with the success of ZTALMY, the recent extension of our cash runway into Q4 2024 and tightening of our spend to focus on our most valuable market opportunities, we believe we have the appropriate resources required to complete 2 key data readouts and prepare for a bright future.
Before I turn to our oral franchise, I want to give a brief update on our RESET trial in established SE. We have chosen to discontinue the Phase II RESET trial in established status to focus additional resources on the expansion of our refractory clinical programs, including further investigation of a potential development opportunity in super refractory status. Our efforts will continue to focus on completing the RAISE trial, accelerating the enrollment for RAISE II as well as generating additional data that has the potential to support further studies in SRSE and RSE health economic outcomes research. We will evaluate every investment the company is making and prioritize the opportunities that we believe will maximize shareholder value. Moving to our oral franchise.
We are actively enrolling patients in our global Phase III TrustTSC trial. We believe that ZTALMY can address a significant unmet medical need for patients suffering from refractory seizures associated with TSC, and we are currently the only product in Phase III development for this indication. Blinded discontinue rates in this trial remain low, which gives us high confidence in the tolerability and potential efficacy of our new titration schedule. We expect top line data mid-2024 and have every reason to believe that this study can replicate the success of ZTALMY even in the Marigold trial and our real-world experience to date. With several key readouts in 2024, we believe we have laid a strong foundation for near and long-term growth and have prioritized fee programs and our cash runway accordingly.
With that, I'd like to turn the call over to our Chief Commercial Officer, Christy Shafer.
Christina Shafer: Thank you, Scott, and good morning. I'm pleased to present the progress we have made in the third quarter and over the first year following our successful ZTALMY launch. We established ZTALMY as a brand that physicians and patients trust, which validates our innovative approach and positions us for success with 2 near-term additional potential launches. We continue to collaborate closely with our CDD centers of excellence, helping connect them with their community and local HCPs to maximize access to care for their patients. As a result of these successful efforts, net product revenues have grown steadily quarter-over-quarter since ZTALMY's launch. Importantly, our patient retention rate remains very strong at approximately 80%.
In the third quarter of 2023, net product revenues grew to $5.4 million. At the end of the third quarter, we had approximately 140 patients active on therapy, and on average, it takes approximately 13 days from prescription order to fulfillment. There are 225 million covered lives with over 100% of on-label claims reimbursed to date. Payers are continuing to recognize that this is a serious condition to treat, reducing reimbursement time from 4 to 2 weeks. Given our solid growth, we are pleased to increase our annual revenue guidance for 2023 to a range of $18.5 million to $19 million. I want to thank the entire commercial team for the dedication and passion they demonstrate day in and day out to bring meaningful change to the lives of the patients we serve.
Looking ahead, a cross-functional team of Marinus employees is working hard in preparation for the AES Annual Meeting where we will continue to establish Marinus as a committed member of the epilepsy community. We are excited to build on our presence from last year's conference and our first year in attendance as a commercial organization. We plan to engage with over 300 U.S.-based HCP attendees through various opportunities, including our ZTALMY exhibit booth, a ZTALMY product presentation by Dr. Daniel Gossett from Texas Child Neurology, and ongoing engagement with HCPs and patient advocacy groups. Additionally, our scientific and medical teams have planned for several data presentations that Joe will discuss in more detail. The rare genetic epilepsy franchise continues to evolve the ZTALMY brand with new initiatives surrounding the importance of genetic testing, early patient identification and caregiver engagement.
All support our continued progress into 2024 and focus on the CDD community while allowing us to plan for an expanded indication in TSC. TSC planning and development is well underway with a clear focus on franchise efficiencies and the distinct needs of the TSC community. In terms of the next phase of our planning for the acute care franchise, we are making significant progress in preparation for the IV launch and are taking a strategic approach to plan for and build a hospital-focused acute care commercial organization. During our Investor Day event in September, we underscored the clinical gaps faced by refractory status patients who progress through multiple ASMs or IV anesthesia as well as the significant treatment costs tied to each approach.
Since then, we have fully outlined the substantial economic burden on the healthcare system while administering usual care to these patients. These vital insights have bolstered our total value proposition, and going into next year, we will be testing the key value messages across both clinical and financial stakeholders. This feedback directly from our customer base will support and refine how we plan to address their distinct value drivers with the goal of maximizing the perceived value of IV ganaxolone and accelerating access. ZTALMY's success to date provides a positive foundation for growth and a continued reason to believe that ganaxolone revenues have the potential to reach an annual revenue of greater than $1 billion for the rare genetic epilepsy franchise and the acute care franchise combined.
I'll now hand the call over to our Chief Business Officer, T.J. Lyons, to discuss our managed access program and how we're expanding global access to ZTALMY.
Thomas Lyons: Thank you, Christy. I'd like to take a moment to provide more detail on our new global managed access program announced this morning concurrent with our third quarter financials. This initiative supports our mission to bring innovative medicines to patients with a CDD diagnosis. Marinus intends to provide physicians access to ZTALMY for qualifying CDD patients in geographies where ZTALMY is not available commercially and as supported by local regulatory requirements. Marinus Access Program will be managed by Durbin, the leader in the international management and distribution of specialized pharmaceuticals, including providing medical support in certain countries. Part of Uniphar Group's Product Access Division, Durbin works in partnership with global pharmaceutical and biotech companies to facilitate and manage pharmaceutical product access programs throughout the world.
The company has over 25 years of experience in designing and implementing access programs. Access requests in geographies where Marinus has a commercial arrangement in place will be managed by the local commercial organization in their respective territory and are not eligible for the Marinus Access Program. Additional details can be found in our press release issued this morning. We believe this program has the potential to generate incremental revenue from Marinus and could be supported by funding from sources such as government agencies, local hospitals, charitable institutions, private insurance and in some cases, private pay, depending upon the country. Net of transaction fees, the revenue generated from this program will go to Marinus.
We're very pleased to be working with Durbin on the launch of the Marinus Access Program. This program, along with our collaboration agreements in place in Europe, China and the MENA regions, will allow us to expand our global access strategy and help make ZTALMY available for appropriate CDD patients in geographies where there are no approved treatment options and local regulations allow. 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 in development.
Joseph Hulihan: Thank you, T.J., and hello, everyone. It's my pleasure to provide an overview of the pipeline progress we've made since our second quarter call. I'll start with our development programs in status epilepticus. As Scott mentioned, the RAISE trial of IV ganaxolone in refractory status continues to enroll with over 75% of the patients required for the interim analysis randomized to date. U.S. centers account for the bulk of enrollment with newer sites continuing to add patients. With that said, based on the current enrollment rate, we believe the number of patients required for the interim analysis will be enrolled by the end of the first quarter, with top line data now expected in the second quarter 2024. As Scott mentioned, although patient screening continues at a high rate, we're seeing more enrollment variability than anticipated.
Our paramount consideration is limiting enrollment for the right patients to demonstrate the clinical benefit of ganaxolone in a highly refractory RSE population, and I'm confident that the criteria for study qualification will do that. We continue to maintain a strong emphasis on site engagement and education, including in-person site outreach from our medical scientific affairs team, peer-to-peer programs between site coordinators and principal investigators, virtual investigator meetings and case reviews. Now, let me provide a brief overview of what to expect from the interim analysis. The protocol provides for an analysis of 82 patients, which is powered at 94% to detect a 40% difference between ganaxolone and placebo. As we've discussed previously, the coprimary endpoints assess, one, onset of action, as measured by the proportion of participants with SE cessation within 30 minutes without medications for the acute treatment status; and two, durability of effect, as reflected in the proportion of participants who do not progress to IV anesthesia within 36 hours.
The key secondary endpoints are, first, time to status cessation following study drug initiation, which is another way to assess onset of effect. And second, lack of progression to IV anesthesia for 72 hours following study drug initiation. The latter endpoint's important because it assesses durability of effect after the infusion of study medication is completed. The top line data of the interim analysis will include results of the coprimary and key secondary endpoints, and we plan to announce these results if the study meets stopping criteria for efficacy. Other secondary and healthcare utilization endpoints will be analyzed after all patients have completed the full study and will be presented at upcoming scientific meetings. Following a successful interim analysis, we plan to begin transitioning the majority of RAISE sites to open-label enrollment and then shortly transition a subset of these sites to the RAISE II study.
This will help support a smooth and rapid completion for RAISE II, with the goal of driving improved time lines. We anticipate enrolling the first patients in RAISE II prior to the end of the year. In addition to supporting the EU regulatory filing, RAISE II may also provide an opportunity for expansion of the U.S. label. We believe this study will serve a unique objective, which is to assess IV ganaxolone in a broader RSE patient population. The importance of treating at this earlier stage is supported by a recent study in JAMA Neurology that emphasized the value of rapid status cessation, showing the duration of status as an independent predictor of subsequent neurologic disability. Our research has shown that patients who would not progress to IV anesthesia for a variety of reasons and instead receive ongoing treatment with second-line IV AEDs also create a significant clinical and economic burden on healthcare system resources and create an important market opportunity for IV ganaxolone.
Additionally, we continue to supply IV ganaxolone to physicians upon request under emergency INDs for super refractory status epilepticus, or SRSE. To date, 21 patients have been treated for SRSE, including 7 with a new dosing regimen developed specifically for this use. So far, results with the new regimen have been highly encouraging. Because of its potential utility in treating SRSE, we're considering initiation of a proof-of-concept study with IV ganaxolone. Investigators will present additional clinical data on patients treated with ganaxolone for SRSE at the upcoming American Epilepsy Society Meeting. I'd now like to discuss updates on our oral franchise, starting with TSC. Seizures in TSC are often treatment resistant, despite the availability of newer disease-specific antiseizure medication.
To address this unmet need, we're evaluating ganaxolone in TSC patients with refractory seizures. This Phase III study, TrustTSC, is currently enrolling with top line data anticipated mid-2024. As a reminder, we announced at our September investor and analyst event that the protocol amendment for the TrustTSC trial has been finalized. The trial is now anticipated to enroll 128 patients, which provides 90% power to detect a 25% reduction in TSC-associated seizures. Based on the blinded data, the discontinuation rate in this trial remains low at approximately 10%, with only 1 treatment discontinuation to date attributed to the occurrence of somnolence. This bolsters our confidence in the new titration schedule, and we believe this new dosing paradigm can improve tolerability and, therefore, potentially have a favorable effect on efficacy as well.
A review of the baseline demographics for the TrustTSC study provides some insight into the patients being enrolled. It's an extremely refractory population with a median baseline seizure rate of 52 per month and with patients taking an average of 3.1 concomitant antiseizure medications. 41% enrolled to date are taking Afinitor, and 25% are taking Epidiolex. As a reminder, this will be the first study in TSC to evaluate a new antiseizure treatment added to these medications. Now, I'll turn to our second generation product development. As we previously announced, we initiated enrollment in our multiple ascending dose, or MAD study, with preliminary data from several cohorts expected by year end 2023. We're planning to finalize our clinical program for Lennox-Gastaut Syndrome in the first half of 2024, pending results for the MAD trial.
If the data from the MAD study are sufficiently informative, we could potentially move directly to a pivotal Phase III study. We believe this new formulation will be the future of the oral franchise, and we'll continue to target its use in patients suffering from LGS and other refractory epilepsies. We saw a meaningful improvement in pharmacokinetics in our single ascending dose trial and are hopeful that the MAD study will reinforce our belief that the second generation formulation will have pharmacokinetic properties allowing twice a day administration and will provide physicians the ability to individualize dosing. This is a crucial aspect of seizure management in treatment-resistant epilepsy. Also, we're pleased to share that all 7 of our submitted abstracts were accepted as poster presentations at the upcoming American Epilepsy Society Annual Meeting that will take place in Orlando from December 1st to 5th.
Among these will be a poster presentation from the open-label extension of the Marigold study with 2 years of patient follow-up, which will show data supporting the durability of effect of ganaxolone in treating refractory seizures associated with CDD. We've recently begun to analyze data from patients with 3 years of open-label follow-up, and our preliminary review shows that seizure reductions are stable over this longer duration of treatment and are consistent with outcomes at 2 years. We'll be hosting a scientific exhibit at AES highlighting the breadth of our ganaxolone research program, and we hope to see many of you there. To conclude, we have a number of key data announcements in the next year, and we are being resolute in our goal to successfully advance our ongoing clinical trials and develop new treatment options to help patients and families suffering from severe refractory seizure disorders.
I'd now like to turn the call over to our CFO and COO, Steven Pfanstiel, who will provide you with a financial update.
Steven Pfanstiel: Thanks, Joe, and good morning, everyone. I am pleased to be able to share our financial results for the third quarter of 2023. We ended the third quarter with cash, cash equivalents and short-term investments of $176.4 million, which is expected to provide cash runway into the fourth quarter of 2024. The cash balance includes net proceeds of $25.9 million from the sale of 3.7 million shares through our ATM facility in the quarter. Turning to our revenue and operating guidance. As Christy mentioned in her update, we experienced another strong quarter of ZTALMY sales. Therefore, we are increasing our ZTALMY annual guidance again with net revenues now projected to be in the range of $18.5 million to $19 million, which represents an increase of $1.5 million on the lower end and $0.5 million on the higher end of the prior guidance range.
For BARDA revenue, we continue to expect revenues to be in the range of $11 million to $12 million. We project our GAAP operating expenses, inclusive of SG&A and R&D expenses, to be in the range of $158 million to $162 million, of which we expect approximately $16 million to be non-cash stock-based compensation. This is a reduction from our prior guidance of $160 million to $165 million and is driven by ongoing efforts to carefully manage costs and prudently invest in ZTALMY commercialization and our ongoing Phase III trial. I'll now take a few minutes to summarize our financial results. For the third quarter of 2023, we recognized product revenues of $5.4 million and $13 million for the 3 and 9 months ended September 30, 2023, as compared to $0.6 million for each of the same periods in the prior year.
These revenues consist of ZTALMY product sales, which we launched in the third quarter of 2022. Separately, we recognized BARDA revenues of $1.9 million and $10.8 million for the 3 and 9 months ended September 30, 2023, as compared to $1.8 million and $5.1 million for the same periods in the prior year. The increase is driven primarily by activity associated with startup of our API onshoring initiatives. Research and development expenses were $23.7 million and $73 million for the 3 and 9 months ended September 30, 2023, as compared to $19 million and $58.5 million for the same periods in the prior year. The year-to-date change was due to increased costs associated with our API onshoring effort, 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 revenues in 2023. Selling, general and administrative expenses were $14.9 million and $45.8 million for the 3 and 9 months ended September 30, 2023, as compared to $13.4 million and $42.2 million for the same periods in the prior year. The primary drivers of the change on a year-to-date basis were increased headcount related to the U.S. launch of ZTALMY. Interest income was $1.9 million and $6.4 million for the 3 and 9 months ended September 30, 2023, as compared to $0.5 million and $0.6 million for the same periods 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 $4.2 million and $12.6 million for the 3 and 9 months ended September 30, 2023, as compared to $2.6 million and $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 upon FDA approval for ZTALMY and non-cash interest expense related to our revenue interest financing with Sagard. The company reported a net loss before income taxes of $33 million and $101.2 million for the 3 and 9 months ended September 30, 2023, as compared to net income before taxes of $75 million and $16.2 million for the same periods in the prior year. As a reminder, the prior year results included the one-time sale of our priority review voucher in the third quarter.
These totals include non-cash stock-based compensation expense of $4 million and $11.6 million for the 3 and 9 months ended September 30, 2023, as compared to $3.9 million and $11.1 million for the same periods in the prior year. Cash used in operating activities was $91 million for the 9 months ended September 30, 2023, as compared to cash used in operating activities of $91 million for the same period in the prior year. Before we move to Q&A, I will make a few concluding remarks. We are making meaningful progress in a number of areas, including strong ZTALMY sales growth, progress in expanding global access to ZTALMY, continued advancement of our oral and IV ganaxolone clinical programs and ongoing development of our second generation products.
As a result of these efforts, 2024 promises to be an exciting year for Marinus with 2 key data readouts expected. We look forward to seeing those of you attending the AES conference or one of the other investor or scientific conferences we will be attending in the coming months. Thanks again for your continued interest in Marinus. Operator, you may now open the call to questions.
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