MARINUS PHARMACEUTICALS, INC. Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements, within
the meaning of the
The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:
? our ability to develop and commercialize ganaxolone;
? status, timing and results of preclinical studies and clinical trials;
design of and enrollment in clinical trials, availability of data from ongoing
? clinical trials, expectations for regulatory approvals, or the attainment of
clinical trial results that will be supportive of regulatory approvals;
? the potential benefits of ganaxolone;
? the timing of seeking marketing approval of ganaxolone;
? our ability to obtain and maintain marketing approval;
? our estimates of expenses and future revenue and profitability;
? our estimates regarding our capital requirements and our needs for additional
financing;
? our plans to develop and market ganaxolone and the timing of our development
programs;
? our estimates of the size of the potential markets for ganaxolone;
? our selection and licensing of ganaxolone;
? our ability to attract collaborators with acceptable development, regulatory
and commercial expertise;
the benefits to be derived from corporate collaborations, license agreements,
? and other collaborative or acquisition efforts, including those relating to the
development and commercialization of ganaxolone;
sources of revenue, including contributions from our contract (BARDA Contract)
with the
? corporate collaborations, license agreements, and other collaborative efforts
for the development and commercialization of ganaxolone and our product
candidates;
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? our ability to create an effective sales and marketing infrastructure if we
elect to market and sell ganaxolone directly;
? the rate and degree of market acceptance of ganaxolone;
? the timing and amount of reimbursement for ganaxolone;
? the success of other competing therapies that may become available;
? the manufacturing capacity for ganaxolone;
? our intellectual property position;
? our ability to maintain and protect our intellectual property rights;
? our results of operations, financial condition, liquidity, prospects, and
growth strategies;
? the industry in which we operate;
the extent to which our business may be adversely impacted by the effects of
? the COVID-19 coronavirus pandemic or by other pandemics, epidemics or
outbreaks;
? the enforceability of the exclusive forum provisions in our fourth amended and
restated certificate of incorporation; and
? the trends that may affect the industry or us.
You should refer to Part II Item 1A. "Risk Factors" of this Quarterly Report on this Form 10-Q for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with: (i) the interim
financial statements and related notes thereto which are included in this
Quarterly Report on Form 10-Q; and (ii) our annual financial statements for the
year ended
Overview
We are a clinical stage pharmaceutical company focused on developing and commercializing innovative therapeutics to treat patients suffering from rare seizure disorders. Our clinical stage product candidate, ganaxolone, is a positive allosteric modulator of GABAA that is being developed in formulations for two different routes of administration: intravenous (IV) and oral. Ganaxolone is a synthetic analog of allopregnanolone, an endogenous neurosteroid. The different formulations are intended to maximize potential therapeutic applications of ganaxolone for
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adult and pediatric patient populations, in both acute and chronic care, and for both in-patient and self-administered settings. Ganaxolone acts at both synaptic and extrasynaptic GABAA receptors, a target known for its anti-seizure, antidepressant and anxiolytic potential.
Our Pipeline
We are developing ganaxolone in indications where there is a mechanistic rationale for ganaxolone to provide a benefit, including the following indications:
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Status Epilepticus (SE)
Status epilepticus (SE) is a life-threatening occurrence of continuous or
intermittent seizures lasting more than five minutes in duration without
recovery of consciousness. If SE is not treated immediately, permanent neuronal
damage may occur, which contributes to high rates of morbidity and mortality. SE
patients
We are initiating a Phase 3 pivotal clinical trial (the RAISE Trial) in RSE for
which the co-primary endpoints will be (i) proportion of patients with RSE
cessation within 30 minutes of treatment initiation without additional
medications for the acute treatment of RSE and (ii) proportion of patients with
no progression to IV anesthesia for 36 hours following treatment
initiation. Ganaxolone will be administered intravenously for 48 hours, the
first 12 hours of which is expected to target a 500 ng/ml serum concentration.
We anticipate the trial will enroll approximately 124 RSE patients,
predominately non-convulsive, at neurocritical care institutions in
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In addition to the RAISE Trial, we have also provided IV ganaxolone under
Emergency Investigational New Drug (eIND) applications for use in treating
patients with SRSE. We plan to disclose data on these treatments at the
CDKL5 Deficiency Disorder (CDD)
CDD is a serious and rare genetic disorder that is caused by a mutation of the cyclin-dependent kinase-like 5 (CDKL5) gene, located on the X chromosome. It predominantly affects females and is characterized by early-onset, difficult-to-control seizures and severe neuro-developmental impairment. The CDKL5 gene encodes proteins essential for normal brain function. Most children affected by CDD cannot walk normally, talk, or care for themselves. Many also suffer from scoliosis, visual impairment, gastrointestinal difficulties and sleep disorders. There are no treatments approved specifically for CDD. Genetic testing is available to determine if a patient has a mutation in the CDKL5 gene. To our knowledge, no previous late-stage clinical trials have been conducted in this patient population.
In
We continue to execute on our pre-commercial development plans for CDD, while
simultaneously exploring commercialization opportunities for ganaxolone in CDD
with third parties to maximize patient access. In the meantime, we plan to
launch an Expanded Access Program (EAP), which will allow patients
In
In
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valid claim of the Ovid patents. This assessment is based on a number of factors including the fact that Ovid is not developing ganaxolone, these patents claim a method of using ganaxolone, Marinus has invested significant resources in developing ganaxolone for these rare pediatric epilepsies and there are no FDA approved drugs specific for treating CDLK5 Deficiency Disorder.
TSC is a rare genetic disorder that affects many organs and causes non-malignant tumors in the brain, skin, kidney, heart, eyes, and lungs. The condition is caused by inherited mutations in either the TSC1 gene or the TSC2 gene. TSC occurs with a frequency of 1:6,000 live births and a mutation is found in 85% of patients. While the disease phenotype can be extremely variable, epilepsy occurs in up to 85% of TSC patients. TSC is a leading cause of genetic epilepsy, often manifesting in the first year of life as either focal seizures or infantile spasms. There are currently limited disease-specific treatments approved for the treatment of seizures in TSC patients.
We are conducting a Phase 2 open-label trial (CALM Study) to evaluate the safety and tolerability of adjunctive ganaxolone treatment in patients with TSC. The trial is expected to enroll approximately 30 patients ages 2 to 65 and consists of a four-week baseline period followed by a 12-week treatment period followed by a 24-week extension. Patients will receive up to 600 mg of ganaxolone (oral liquid suspension) three times a day. The primary endpoint is the percent change in 28-day seizure frequency for the treatment period relative to baseline. We also plan to further explore whether allopregnanolone sulfate levels represent a response biomarker, and expect to report top line data in mid-2021.
PCDH19-Related Epilepsy (PCDH19-RE)
PCDH19-RE is a rare epileptic syndrome characterized by early-onset seizures, cognitive and sensory impairment, and psychiatric and behavioral disturbances. Seizures occur in clusters lasting from several hours to days. It is caused by a mutation in the PCDH19 gene on the X-chromosome. Unlike other X-linked disorders, it selectively affects females with very few cases reported in males. The gene encodes a protein involved in cell adhesion that is widely expressed in the central nervous system. There are no drugs approved specifically for the treatment of seizures associated with PCDH19-RE.
We are conducting a Phase 2 proof-of-concept (POC) clinical trial (Violet Study)
in PCDH19-RE, in which enrollment is stratified based on allopregnanolone
sulfate, a potential biomarker for the antiepileptic efficacy of ganaxolone. We
expect to enroll approximately 25 patients in one of two strata based on
baseline allopregnanolone sulfate levels. The trial consists of a 12-week
prospective baseline period, followed by a 17-week double-blind treatment phase.
Patients will titrate over four weeks to a dose of up to 600 mg of ganaxolone
oral liquid suspension or matching placebo three times daily and maintain that
dose for the following 13-weeks. Patients
COVID-19
In
The continued global spread of COVID-19 has affected our operations but has not
had a material impact on our business, operating results, financial condition or
cash flows as of and for the three and nine months ended
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enrollment and are expected to be completed by the end of the fourth quarter of
2020, despite experiencing delays in enrollment due to COVID-19. Further, in
response to COVID-19, for our ongoing clinical trials, we have implemented
multiple measures consistent with guidance of the FDA on the conduct of clinical
trials of medical products during the COVID-19 pandemic, including implementing
remote site monitoring and remote visits using telemedicine where needed.
However, COVID-19 may still adversely impact our clinical trials. For example,
our Phase 3 clinical trial in refractory status epilepticus is conducted in the
hospital and resources related to the COVID-19 outbreak may divert staffing in
the hospital taking resources away from our clinical trial. Our ganaxolone
clinical trials in the outpatient setting may be negatively impacted if patients
and their caregivers do not want to participate in a clinical trial while
COVID-19 outbreaks continue. Although operations have not been materially
affected by the COVID-19 pandemic as of and for the three and nine months ended
Reverse stock split
On
Operations
Our operations to date have consisted primarily of organizing and staffing our
company and developing ganaxolone, including conducting preclinical studies,
clinical trials and raising capital. We have funded our operations primarily
through sales of equity and debt securities. At
We anticipate that our expenses will increase substantially as we:
? conduct later stage clinical trials in targeted indications, which could
include SE, CDD, TSC, PCDH19-RE and possibly other indications;
? continue the research, development and scale-up manufacturing capabilities to
optimize ganaxolone and dose forms for which we may obtain regulatory approval;
conduct other preclinical studies and clinical trials to support the filing of
? NDAs with the FDA, MMAs with the EMA and other marketing authorization filings
with regulatory agencies in other countries;
? acquire the rights to other product candidates and fund their development;
? maintain, expand and protect our global intellectual property portfolio;
? hire additional clinical, manufacturing and scientific personnel; and
add operational, financial and management information systems and personnel,
? including personnel to support our drug development and potential future
commercialization efforts.
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We believe that our cash, cash equivalents and investment balances as of
Financial Overview
Federal Contract Revenue
In
The BARDA Contract consists of an approximately two-year base period-during
which BARDA will provide approximately
We recognize federal contract revenue from the BARDA Contract in the period in which the allowable research and development expenses are incurred. We expect federal contract revenue to increase as the associated costs with our RSE Phase 3 clinical trial increase.
Research and Development Expenses
Our research and development expenses consist primarily of costs incurred for the development of ganaxolone, which include:
? employee-related expenses, including salaries, benefits, travel and stock-based
compensation expense;
expenses incurred under agreements with clinical research organizations (CROs)
? and investigative sites that conduct our clinical trials and preclinical
studies;
? the cost of acquiring, developing and manufacturing clinical trial materials;
facilities, depreciation and other expenses, which include direct and allocated
? expenses for rent and maintenance of facilities, insurance and other supplies;
and
? costs associated with preclinical activities and regulatory operations.
We expense research and development costs when we incur them. We record costs for some development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations and information our vendors provide to us.
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We will incur substantial costs beyond our present and planned clinical trials in order to file an NDA and Supplemental New Drug Applications (sNDAs), or an MAA outside the US, for ganaxolone for various clinical indications, and in each case, the nature, design, size and cost of further clinical trials and other studies will depend in large part on the outcome of preceding studies and trials and discussions with regulators. It is difficult to determine with certainty the costs and duration of our current or future clinical trials and preclinical studies, or if, when or to what extent we will generate revenue from the commercialization and sale of ganaxolone if we obtain regulatory approval. We may never succeed in achieving regulatory approval for ganaxolone. The duration, costs and timing of clinical trials and development of ganaxolone will depend on a variety of factors, including the uncertainties of future clinical trials and preclinical studies, uncertainties in clinical trial enrollment rate and significant and changing government regulation.
In addition, the probability of success for our clinical programs will depend on numerous factors, including competition, manufacturing capability and commercial viability. See "Risk Factors." Our commercial success depends upon attaining significant market acceptance, if approved, among physicians, patients, healthcare payers and the medical community. We will determine which programs to pursue and how much to fund each program in response to the scientific and clinical success, as well as an assessment of commercial potential.
General and Administrative Expenses
General and administrative expenses consist principally of salaries and related costs for executive and other administrative personnel and consultants, including stock-based compensation and travel expenses. Other general and administrative expenses include professional fees for legal, patent review, consulting and accounting services. General and administrative expenses are expensed when incurred. We expect that our general and administrative expenses will increase in the future as a result of employee hiring and our scaling-up of operations commensurate with supporting more advanced clinical trials and in preparation for commercial infrastructure. These increases will likely include increased costs for insurance, hiring of additional personnel, outside consultants, legal counsel and accountants, among other expenses.
Interest Income
Interest income consists principally of interest income earned on cash and cash equivalents and investment balances.
Results of Operations
Federal Contract Revenue
Federal contract revenue was
Research and Development Expenses
We allocate direct research and development expenses, consisting principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical trials, and costs related to manufacturing or purchasing clinical trial materials, to specific product development programs. We do not allocate employee and contractor-related costs, costs associated with our facility expenses, including depreciation or other indirect costs, to specific product programs because these costs are deployed across multiple product programs under research and development and, as such, are separately classified. The table below shows our research and development expenses incurred with respect to each active program, in thousands. The primary drivers of our research and development expenditures are currently in our product development programs in SE, CDD, TSC and PCDH19-RE. We expect our research and development expenses for ganaxolone will continue to increase during subsequent periods. We
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did not allocate research and development expenses to any other specific product development programs during the periods presented (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
CDKL5 deficiency disorder (1) $ 2,365 $ 2,928 $ 9,070 $ 5,863
Status epilepticus (2) 2,484 1,238 5,806 2,570
PCDH19-related epilepsy (3) 1,064 1,755 3,979 4,464
Tuberous Sclerosis (4) 281 - 332 -
Postpartum depression (5) - 2,185 - 7,115Indirect research and development (6) 5,112 3,466 18,875 10,442 Total
$ 11,306 $ 11,572 $ 38,062 $ 30,454
Note: Certain prior year expenses have been reclassified to conform to current year presentation.
The decrease in the three months ended
completion of the Phase 3 trial and data read out in the third quarter of
(1) 2020. The increase in the nine months ended
continued enrollment in the CDD Phase 3 clinical trial in the first half of
2020 and analysis of data results after completion of the clinical trial.
The increase is due primarily to enhanced drug development activity,(2) including preclinical studies and manufacturing activities in preparation for
a Phase 3 clinical trial currently being initiated.
(3) The decrease in both periods was due to reducing the scope of the clinical
trial in 2020 from a Phase 3 trial to a Phase 2 proof-of-concept trial.
(4) We began making preparations for a Phase 2 clinical trial in TSC during the
first quarter of 2020.
(5) We completed our clinical trials in postpartum depression in 2019, and have
placed further development on hold.
Indirect research and development expenses in support of all our programs
(6) have increased due to the overall increase in preclinical, clinical, and
manufacturing activities.
General and Administrative Expenses
General and administrative expenses were
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Liquidity and Capital Resources
Since inception, we have incurred net losses and negative cash flows from our
operations. We incurred net losses of
In
The BARDA Contract consists of an approximately two-year base period-during
which BARDA will provide approximately
In connection with the closing of an equity financing in
In connection with the closing of concurrent equity financings during the fourth
quarter of 2019, we issued a total of 8,050,000 shares of common stock in an
underwritten public offering and 30,000 shares of Series A convertible preferred
stock in a private placement resulting in aggregate net proceeds, after
underwriting discounts and commissions in the public offering and other
estimated offering expenses, of
In
Cash Flows
Operating Activities. Cash used in operating activities increased to
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Investing Activities. Cash used in investing activities for the nine months
ended
Financing Activities. Cash provided by financing activities for the nine months
ended
Funding Requirements
We have not achieved profitability since our inception, and we expect to continue to incur net losses for the foreseeable future. We expect our cash expenditures to increase in the near term as we fund our continuing and planned clinical trials for ganaxolone, as well as scale up our operations and prepare for the potential commercialization of ganaxolone.
We believe that our cash, cash equivalents and investments as of
Our future capital requirements will depend on many factors, including:
? the effects of the COVID-19 pandemic on our business, the medical community and
the global economy;
? the results of our preclinical studies and clinical trials;
? the development, formulation and commercialization activities related to
ganaxolone;
the scope, progress, results and costs of researching and developing ganaxolone
? or any other future product candidates, and conducting preclinical studies and
clinical trials;
? the timing of, and the costs involved in, obtaining regulatory approvals for
ganaxolone or any other future product candidates;
the cost of commercialization activities if ganaxolone or any other future
? product candidates are approved for sale, including marketing, sales and
distribution costs;
the cost of manufacturing and formulating ganaxolone, or any other future
? product candidates, to internal and regulatory standards for use in preclinical
studies, clinical trials and, if approved, commercial sale;
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? our ability to establish and maintain strategic collaborations, licensing or
other arrangements and the financial terms of such agreements;
? our ability to receive funding under the BARDA Contract;
? any product liability, infringement or other lawsuits related to our product
candidates and, if approved, products;
? capital needed to attract and retain skilled personnel;
the costs involved in preparing, filing, prosecuting, maintaining, defending
? and enforcing patent claims, including litigation costs and the outcome of such
litigation; and
? the timing, receipt and amount of sales of, or royalties on, future approved
products, if any.
Please see "Risk Factors" for additional risks associated with our substantial capital requirements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Discussion of Critical Accounting Policies and Significant Judgments and Estimates
The preparation of financial statements in conformity with GAAP requires us to
use judgment in making certain estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities and the reported amounts of revenues and expenses in our
financial statements and accompanying notes. Critical accounting policies are
those that are most important to the portrayal of our financial condition and
results of operations and require difficult, subjective and complex judgments by
management in order to make estimates about the effect of matters that are
inherently uncertain. During the nine months ended
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