In the ever-evolving world of pharmaceuticals, it’s not uncommon for companies to weather the storm of losses before eventually reaping the rewards of groundbreaking discoveries. Marinus Pharmaceuticals, Inc. (NASDAQ: MRNS) is one such company that has recently caught our attention, and we’re circling back to revisit its investment potential in light of some positive developments.
Company Overview: Marinus Pharmaceuticals is dedicated to developing therapies for the treatment of rare genetic epilepsies and other seizure disorders. Based in Philadelphia, PA, the company’s stock is currently trading at around $6.50 per share, with an approximate market capitalization of $260 million.
Recent Developments for Marinus:
Marinus Pharmaceuticals’ primary asset in development is ganaxolone, a compound also known as Ztalmy, which gained FDA approval in March for seizures associated with cyclin-dependent-kinase-like 5 (CDKL5) deficiency disorder (CDD). The company has submitted marketing authorization applications for Ztalmy in Europe, with a decision expected in the first quarter of the next year.
In August, Marinus received a significant boost when it sold a priority review voucher for $110 million, substantially bolstering its cash reserves. This transaction falls within the range of $100 million to $125 million, which such vouchers have recently commanded.
Additionally, the Biomedical Advanced Research and Development Authority (BARDA) exercised its first contract option, valued at approximately $12.3 million, to support the onshoring of Ztalmy’s manufacturing capabilities in the U.S. This contract still holds the potential for $39 million in additional awards, with $21 million in previously approved base-period funding and up to $18 million in two additional option periods.
Marinus is advancing ganaxolone for various indications. The Phase 3 trial “RAISE,” funded by BARDA, is evaluating ganaxolone for the treatment of Refractory Status Epilepticus (RSE), with topline results expected in the second half of 2023. Additionally, a Phase 3 trial for RSE, known as “RAISE II” for European registration, is slated to begin enrollment in the second half of 2023.
Recently, the first patient was randomized and dosed in a Phase 3 trial evaluating ganaxolone for Tuberous Sclerosis Complex (TSC). This trial involves approximately 80 clinical sites, with topline results anticipated in the first quarter of 2024 at the earliest.
Marinus also published results from a Phase 2 trial on RSE in June, with a Phase 3 examination planned to commence enrollment in the second half of 2023. Furthermore, a Phase 2 trial known as “RESET,” evaluating ganaxolone in established status epilepticus, is on track to begin U.S. enrollment in the second half of this year. Another Phase 2 trial, assessing naloxone for the treatment of Lennox-Gastaut syndrome, is targeted to commence in 2023.
Analyst Commentary & Balance Sheet:
Analysts have been warming up to Marinus’ story in recent weeks. Over the past five weeks, four analyst firms, including Robert W. Baird and JMP Securities, have reiterated Buy ratings on MRNS, with price targets ranging from $17 to $32 per share.
Approximately 5% of the outstanding float is currently held short, and there has been no insider activity in this equity since March 2021. As of the end of the second quarter of this year, Marinus held just over $90 million in cash and marketable securities on its balance sheet, following a net loss of $39.4 million in the quarter. With the proceeds from the priority review voucher, management believes its current funding levels are sufficient until the fourth quarter of 2023. The company carries approximately $70 million in long-term debt.
Verdict:
Marinus Pharmaceuticals presents a spectrum of sales and earnings estimates among analysts. While losses are projected to exceed $2 per share in FY2022 and over $3.50 per share in FY2023 due to investments in the rollout of Ztalmy and pipeline advancement, revenue estimates range from approximately $15 million to $60 million in the next fiscal year.
Ztalmy (Ganaloxone) exhibits significant potential across a range of indications, even though its current approved use has a small target market of approximately 2,000 individuals. However, profitability for Marinus remains a few years down the road.
In conclusion, Marinus Pharmaceuticals is best approached from the perspective of a covered call strategy, given its robust (though thinly traded) option premiums. Despite some positive developments, this approach still appears to be the most prudent way to establish a small position in this evolving and potentially lucrative story.
Disclaimer: This article is intended for general informational purposes. It does not constitute financial advice or a recommendation to buy or sell any stock. Individual financial situations and objectives should be considered. The analysis provided here is based on historical data and analyst forecasts, using an unbiased methodology. Please note that the analysis may not incorporate the latest company announcements or qualitative information that could impact stock prices. There are risks associated with investing in companies with ongoing losses. Simply Wall St has no positions in any of the mentioned stocks.