- Delayed post-partum depression from the phase 2 Magnolia study presents a huge opportunity to buy shares of Marinus.
- Marinus is testing both an IV ganaxolone and an oral version of ganaxolone for post-partum depression reducing risk.
- A competing product brexanolone from Sage Therapeutics, with the same mechanism of action as ganaxolone, has shown positive results in patients with post-partum depression.
- Two other rare disease indications in the pipeline will act as backups just in case the depression studies don't succeed.
- Marinus has enough cash to fund operations well into 2020.
On Tuesday, Marinus Pharmaceuticals (NASDAQ:MRNS) revealed that it would push up the date for data until Q3 2018 for its phase 2 ganaxolone study treating women with post-partum depression (PPD). This study is known as the Magnolia study. This news sent shares of Marinus down by 10% pre-market, but I believe that the delay provides a buying opportunity. That's because the company is expected to initiate a phase 3 study for a pediatric indication by mid-2018. In addition, there are other readouts due out by the end of the year. That's why I believe that despite the delay in data Marinus is still a buy as a speculative investment.
Phase 2 Magnolia Study
The trial that is being delayed with respect to data is the phase 2 Magnolia study. This study was to recruit up to 60 patients with PPD. This study is a multiple-dose escalation study that will be conducted primarily in the United States. One thing to note about this study, is that it is treating patients with an IV version of ganaxolone. Why did I mention that? The reason being is because Marinus is also developing an oral version of ganaxolone to treat patients with PPD as well. The oral version of ganaxolone in patients with PPD is being explored in a study known as the Amaryllis Study. That means data from the IV ganaxolone study is important, but the company also has a backup with the oral version. This is something that investors should keep in mind despite the results being delayed for the Magnolia study. While the delay is disappointing, I feel that the company's reasoning is highly logical. This is the company's reasoning for the most recent press release from its earnings report:
Based upon the effect size shown in a recent study for a compound with similar mechanism of action, the Company has increased targeted enrollment in this study. This increase in study scope and the corresponding forecast for patient recruitment have extended our expected timing for completion of the first part to the third quarter of 2018.
First of all, it makes perfect sense that a study would be delayed if additional recruitment is added into the study. Secondly, there must be insight as to why Marinus was forced to move up the study. Well, it is in the language of the quote above. Specifically in the section where it mentions that a compound with a similar mechanism of action showed improved effect in patients with PPD. In other words, a competitor had seen positive effect with respect to a drug with a similar mechanism of action as ganaxolone. Therefore, the company took it upon itself to increase enrollment. This company with a similar mechanism of action drug to ganaxolone is known as Sage Therapeutics (SAGE). If anything there is reason to be bullish on Marinus, because of Sage Therapeutics. That's because Sage's drug brexanolone achieved positive results in post-partum depression, which is what Marinus is working on. Sage also achieved positive results in two lage-stage studies in major depressive disorder (MDD) as well. As I mentioned before, ganaxolone is similar in mechanism of action to brexanolone. That's why I have high hopes that the data for the Magnolia study will also be positive.
Phase 3 Study For Pediatric Disease
The delay for the study is disappointing, but I think that it is not wise to dismiss the rest of Marinus' pipeline. That's because it is expecting to initiate a phase 3 trial treating children with CDKL5 Deficiency Disorder. This is a disorder characterized by severe seizures, in which there are no approved treatment options. I must note, that this phase 3 study is going to use an oral version of ganaxolone. Ganaxolone may offer hope for these patients who experience these seizures daily. Even worse, they are resistant to current seizure medications. Therefore, this clinical program offers a great opportunity for share price appreciation. That's not to say that the PPD program is not important, it is. The thing is that there is something else such as this rare disease drug program that can also act as a catalyst for the stock. Data from this study is expected by Q4 of 2018.
One Additional Rare Disease Indication
If one rare disease wasn't enough, well Marinus is working on another. This involves a rare disease known as status epilepticus. This rare disease is one that is far dangerous. That's because it involves seizures that occur one after another with no recovery period. There are two types of status epilepticus seizures. One is a convulsive type, and the other is a non-convulsive type. Convulsive status epilepticus requires immediate medical attention in a hospital. As you can see this disease is life threatening. Therefore, this is another opportunity for Marinus to go after an indication that has an unmet medical need. One form of treatment used for this disease are Benzodiazepines. The problem is that they can become habit forming and addictive. With that in mind, Marinus has initiated a phase 2 study using the IV ganaxolone in these patients with status epilepticus. Data from this study is expected by Q4 2018.
According to the most recent earnings report, Marinus has cash and cash equivalents of $58.4 million as of December 31, 2017. According to the company it has enough cash to fund operations well into 2020. That means there is no near-term risk of dilution. In addition, that is plenty of cash to get its three clinical trial results readout before the end of 2018. If all or some of the trials are positive, then I expect it will be easy for Marinus to find a partner if it is willing to do so.
Marinus Pharmaceuticals presents itself as a buying opportunity after the announcement that data from the phase 2 Magnolia study has been delayed. It is my opinion that the company remains a great speculative buy. There is still the risk that all the trials above could end up failing, and investors should account for that. Even if the phase 3 CDKL5 Deficiency Disorder study is successful, there is no guarantee that it will meet the FDA's standard for marketing approval. In any case, Marinus still has a lot going for itself and why I believe it remains a strong buy. It is possible that it could dip in the short-term on the delayed trial announcement, however, with three data readouts before the end of this year I think that the value of the company will be changed dramatically one way or another.
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