At the end of September, we reinforced a thesis that we initially put forward at the start of this year for Marinus Pharmaceuticals Inc (NASDAQ:MRNS).
The company is up more than 420% year to data and has logged these gains against a backdrop of negative media coverage and weak analyst sentiment.
Right now, however, Marinus is trading more than 30% off early October highs and we think this could be a great opportunity to jump in at a discount ahead of a return to the overarching upside momentum.
Management just put out the company’s latest financials and, as is standard at this end of the sector, we also got an operational update alongside the numbers. The operational update has served to inject a bit of clarity into some of the aspects of the company’s growth strategy that we highlighted previously as being a bit uncertain (and, by proxy, a risk factor), so with the lifting of this uncertainty we not only have a bunch of solid catalysts to look for but also a trimmed down risk side of the equation.
Here’s what we’re looking for going forward as supportive of a bull thesis.
For those new to this one, Marinus has a lead asset called Ganaxolone and the company is currently trialing in two primary indications – an epilepsy type condition called CDKL5 and postpartum depression. The former of these is the real value driver but we’ll also touch on the PPD indication before we are done today. There’s a third indication, status epilepticus, that’s also a little deeper down in the company’s pipeline but we’re not resting any real near-term value on that one right now.
So, Ganaxolone in CDKL5 is the real focus and – as part of the latest update – we know that the company is going to sit down with the FDA in order to put together some sort of trial protocol for a pivotal investigation near term. Last time we discussed this trial, we didn’t have any real idea when the company planned to kick it off. As per the latest update, we know Marinus will initiate the study early 2018. It’s likely going to be a pretty quick investigation (these sorts of epilepsy studies generally involve 90 days of dosing) meaning we could see topline during the second half of next year at the outside. This is an indication with no treatments available right now and it’s an Orphan Designation target, meaning the drug could command some serious premium pricing if it hits shelves.
As far as the PPD program is concerned, Marinus is investigating the same drug in this indication as part of a phase II study that’s enrolling as we write this. That means the company should complete enrollment before the end of the year and expects to have data from a double-blind study during the first quarter of 2018. Again, if this data is strong, it will facilitate a move into a pivotal investigation in another unmet need type indication and – by proxy – could really get the stock running as and when it hits press.
Shortly after Marinus completed a mid-stage trial in the above mentioned CDKL5 indication, the company raised cash. This is (for the most part) what started the decline to current levels post-highs. Now the dust has settled on the raise, the long-term benefit of a substantial equity issue has become apparent – the company has $63 million cash on hand (as of the end of September) and management expects this to amount to a cash runway through 2020.
That’s a substantial risk limiting factor, given that we likely won’t see any further dilution for the next 24 months or so.
Summary: a wave of potential catalysts, no chance of dilution and a strong asset in a spectrum of unmet need-type indications, all available at a 30% discount to start of the month pricing.
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Disclosure: We have no position in MRNS and have not been compensated for this article.