Marinus Pharmaceuticals Stock: Positive News Stream Worth Noting (NASDAQ:MRNS)

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Humility means accepting reality without trying to outsmart it. -David Richo

During our last visit to Marinus Pharmaceuticals, Inc. (NASDAQ: MRNS) in May, we recommended it for a small covered call position. It seems to have been a cautious call at this point, as the stock is trading mostly flat/slightly until the last time we looked at it. Given how poorly biotech stocks are trading in 2022, this marks a victory.

Stock chart

Looking for Alpha

We return today to update the investment thesis around Marinus, as the company has seen some positive news circulating in recent weeks. An analysis follows below.

Company presentation:

Marinus Pharmaceuticals is focused on developing therapies for the treatment of rare genetic epilepsies and other seizure disorders. The company is based out of Philadelphia, Pennsylvania. The stock trades at around $6.50 per share and has an approximate market capitalization of $260 million.

Company vision

May Company presentation

The company has a lead asset under development for multiple indications called ganaxolone. This compound is also known by its brand name Ztalmy was approved in March for seizures associated with cyclin-dependent kinase-like 5 (CDKL5) deficiency disorder (CDD). Ztalmy’s marketing application in Europe is currently under review by the European Medicines Agency or EMA. The company plans to submit full responses to the EMA’s questions in November and is expected to issue a decision in the first quarter of next year.

Current Ztalmy Market

May Company presentation

Recent developments for Marine:

The priority review voucher that Marinus obtained through Ztalmy’s FDA approval was sold in late August for $110 million. This significantly bolstered the company’s cash reserves and was within the range ($100-125 million) that these bonds have received in recent years.

Additionally, it was announced that the Biomedical Advanced Research and Development Authority or BARDA has exercised its first contract option worth approximately $12.3 million, to support the US relocation of Ztalmy’s manufacturing capabilities. That still leaves some $39 million in potential awards under this contract, $21 million in previously approved base period funding, and up to $18 million over two additional option periods.

Pipeline

Company Website

The company continues to advance ganaxolone against other indications. Marinus has a phase 3 “RAISE” trial to evaluate ganaxolone to treat Refractory status epilepticus or CSR. The main results of this study are expected to be published in the second half of 2023. This study is funded by BARDA.

INCREASE III

May Company presentation

Recently, the first patient was randomized and dosed in a phase 3 trial to evaluate ganaxolone to treat tuberous sclerosis complex or TSC. The study will consist of targeting approximately 80 clinical sites and the first results are not expected before the first quarter of 2024 at the earliest.

TSC potential market

May Company presentation

The results of a phase 2 study around RSE were published in June and a phase 3 study for RSE ‘RAISE II’ (for European registration) is expected to start recruitment in the second half of 2023.

Status epilepticus

May Company presentation

A “RESET” Phase 2 trial evaluating ganaxolone in established status epilepticus is on track to begin enrollment in the United States in the second half of this year. A phase 2 trial to evaluate ganaloxone to treat Lennox-Gastaut syndrome is now scheduled to start in 2023.

Analysts’ comments and review:

The analyst community also seems to be getting more bullish on the Marinus story. In the past five weeks, four analyst firms, including Robert W. Baird and JMP Securities, have reissued buy ratings on MRNS. Price targets offered range from $17 to $32 per share.

Approximately five percent of the outstanding float is currently held short. There has been no insider activity in these stocks since March 2021. The company ended the second quarter of this year with just over $90 million in cash and marketable securities on its balance sheet after recording a net loss of $39.4 million in the quarter.

With receipts from the Priority Review Voucher in hand, management estimates that current funding levels are sufficient to fund it through the fourth quarter of 2023. Marinus has long-term debt of approximately $70 million.

Verdict:

There is a wide range of sales and income estimates of the analyst community today. Currently, they expect the company to lose just over two dollars per share in fiscal year 2022 and over $3.50 per share in fiscal year 2023, as the company is spending a lot on deploying Ztalmy and advancing its pipeline. Revenue estimates range from about $15 million to $60 million for the next fiscal year. The company only made $1.8 million in revenue in the second quarter.

Ztalmy Market Opportunity

May Company presentation

Ztalmy or Ganaloxone has significant potential in a variety of indications, although its currently approved indication has a small target market (approximately 2,000 addressable people). However, the profitability of Marinus is still in the years to come.

We concluded our last article about Marinus Pharmaceuticals with this conclusion:

With robust (if thinly traded) option premiums, Marinus is currently best played from a covered call angle.

Even with some positive news since then, it still seems like the best way to establish a little ‘watch the article‘ position in this developing and potentially lucrative story.

There are times when wisdom cannot be found in the chambers of parliament or the halls of the university, but in the unassuming setting of the kitchen table..” ― EA Bucchianeri

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