On Thursday, Truist Securities revised its stance on Marinus (NASDAQ:MRNS) Pharmaceuticals (NASDAQ:MRNS), moving the rating from Buy to Hold. The adjustment follows a recent announcement from the company regarding the Phase 3 TrustTSC clinical trial. Marinus reported that the trial did not achieve the primary goal of reducing seizures compared to placebo. Consequently, the company has decided to halt further clinical development of the drug and is now considering strategic alternatives.
The Phase 3 trial results showed that the oral drug candidate GNX reduced seizures by 19.7%, which was not significantly different from the placebo's 10.2% reduction. Management expressed their unexpected findings, noting the Phase 3 results were similar to Phase 2 despite better tolerability and fewer dropouts. They also indicated that the drug's mechanism of action might not be as effective as anticipated.
Truist Securities has removed its previous $10 price target for Marinus Pharmaceuticals' shares, citing the recent volatility and the current low share price. The company's management team is awaiting further details from the TrustTSC study, including laboratory data, seizure types, and demographic information. However, they do not anticipate these details will alter the drug's commercial prospects.
The market research conducted by the company suggested that a placebo-corrected seizure reduction of 20% would be necessary for commercial success. With only a 10% reduction observed in Phase 3, the commercial outlook for the drug is considered poor. Despite this setback, Truist acknowledges the value in Marinus's other product, Ztalmy, which is already on the market for the treatment of CDKL5 Deficiency Disorder (CDD).
Truist estimates that Ztalmy could generate sales of $33 million by the end of 2024 and projects its peak sales could surpass $100 million by 2030. However, this projection is not sufficient to maintain a positive outlook on the stock, leading to the downgrade to Hold and the removal of the price target.
In other recent news, Marinus Pharmaceuticals has experienced a series of developments. The company decided to halt the development of ganaxolone following a Phase 3 trial setback. Despite this, Marinus reported promising results from its Phase 3 RAISE trial on the seizure treatment drug, ganaxolone. The company also secured a new U.S. patent for its epilepsy drug, ZTALMY, set to expire in September 2042, and successfully upheld a patent related to the use of ganaxolone.
Marinus Pharmaceuticals' net product revenues increased to $8 million for the second quarter, primarily due to ZTALMY. The company plans to launch ZTALMY for tuberous sclerosis complex in the second half of 2025. Despite a net loss before income taxes of $35.8 million for the quarter, the company aims to meet its revenue guidance for 2024, targeting net product revenues between $33 million and $35 million.
Analysts have continued to follow Marinus closely. TD Cowen maintained its Buy rating on the company, while Oppenheimer upgraded the stock to Outperform. Both firms expressed confidence in the trial design and potential efficacy of ganaxolone.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Marinus Pharmaceuticals' financial situation, aligning with the challenges highlighted in the article. The company's market capitalization stands at a modest $16.25 million, reflecting the market's reaction to the disappointing Phase 3 trial results.
InvestingPro Tips indicate that Marinus is "quickly burning through cash" and "suffers from weak gross profit margins," which corroborates the company's decision to halt further clinical development and explore strategic alternatives. The tip that "analysts do not anticipate the company will be profitable this year" aligns with the article's discussion of the setback in drug development.
Despite these challenges, InvestingPro data shows that Marinus has experienced a strong return of 19.43% over the last three months. This contrasts with the overall negative sentiment expressed in the article, suggesting that some investors may still see potential in the company's marketed product, Ztalmy.
For readers interested in a more comprehensive analysis, InvestingPro offers 10 additional tips for Marinus Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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