Marinus Pharmaceuticals Inc (MRNS) 2021 Q3 法說會逐字稿

Greetings, and welcome to the Marinus Pharmaceuticals third quarter 2021 business update conference call. (Operator Instructions)

And now it is my pleasure to introduce your host, Sasha Damouni Ellis, Vice President of Corporate Affairs and Investor Relations. You may begin, Ms. Damouni Ellis.

Thank you. And good morning, everyone. With me from Marinus are Dr. Scott Braunstein, Chief Executive Officer; Dr. Joe Hulihan, Chief Medical Officer; and Steve Pfanstiel, Chief Financial Officer.

Before we begin, I would like to remind everyone that some of the statements made today are forward-looking statements under the securities laws. These forward-looking statements involve substantial risks and uncertainties that could cause our clinical development programs, future results, performance or achievements to differ significantly from those expressed or implied by such forward-looking statements. These risks and uncertainties and risks associated with our business are described in the company's reports filed with the Securities and Exchange Commission, including Form 10-K, 10-Q and 8-K.

I will now turn the call over to our CEO, Scott Braunstein. Scott?

Thank you, Sasha, and welcome to our third quarter 2021 business and financial update. Our teams continue to work diligently throughout the quarter on the regulatory, commercial, legal and clinical fronts. As it's only been a few weeks since our R&D Day, I will limit my initial remarks to our most recent corporate news items. Trials in both our oral and IV franchises remain on track as we continue to advance ganaxolone across multiple indications where there is high unmet medical need, both in the acute and chronic setting.

In addition, we achieved meaningful advances on the regulatory and patent exclusivity front this quarter and continue to make important progress with our patient-centric advocacy strategy, which I will discuss in further detail shortly. We are pleased to announce that the European Medicines Agency has validated the marketing authorization application for ganaxolone for the treatment of seizures associated with CDD, the application is being evaluated under accelerated assessment. As a result, the CHMP opinion is expected in the second quarter of 2022 and the European Commission decision early in the third quarter.

We're also delighted to share that the European Commission has officially granted orphan drug designation to ganaxolone in tuberous sclerosis complex. We've now been granted orphan disease status for oral ganaxolone in CDD and TSC in both the U.S. and Europe. As a reminder, we previously were granted orphan disease status for IV Ganaxolone in refractory status epilepticus in the United States. Let me add some additional color and briefly highlight the growing momentum for the IV franchise. We have seen continued improvements in site activation for our Phase III RAISE trial in refractory status epilepticus after facing several challenges in the second quarter, the result of resource allocations and other direct impacts of the COVID-19 pandemic. We now have 46 sites activated, 44 sites currently recruiting, 6 of which were added in the month of October. We're pleased to see the success of our clinical operations team, their growing ability to counter the difficult challenges caused by the pandemic as they remain diligently focused on advancing this critically important program.

I would like to share some of our excitement on other key corporate objectives. We are actively working on second-generation formulations and prodrugs of ganaxolone as well as exploring opportunities to reach more patients around the world. We've been collaborating extensively with the Orion team as they prepare ganaxolone's commercial readiness in the European Union.

In addition, we believe that there is a greater global opportunity for the ganaxolone franchise. For example, in our discussions with the CDKL5 alliance in China, we have learned that there are approximately 350 patients registered with the alliance and that 80 of those families have been considered active, and the number is growing rapidly with the adoption of genetic testing. This is just a single example of why our organization will continue to focus on improving global access to ganaxolone in its current lead and future indications.

December will be an equally busy month for the team. We will have a strong presence at the American Epilepsy Society 2021 Annual Meeting, where we've had 9 abstracts, including a late-breaker accepted for presentation. We are planning to host a virtual event for analysts and investors during the meeting on Monday, December 6.

Before turning the call over to Joe, let me quickly review our overall strategy and a few additional thoughts. Marinus is focused on the treatment of rare epilepsies that have limited therapeutic options. We believe that ganaxolone's novel mechanism of action, its strong efficacy in our lead potential indication, CDKL5 deficiency disorder and the encouraging safety profile differentiates it in the treatment of CDD and other refractory epilepsies. We have filed oral ganaxolone in its lead indication, CDKL5 with the FDA and have a PDUFA target action date scheduled in March.

We have also recently revealed our proposed trade name ZTALMY. Marinus This brand name has been established and a trademark is registered, subject to final FDA approval. We have a fully staffed medical science liaison team in place, who are actively engaging the medical community at CDD centers of excellence across the United States.

Our commercial team continues to expand with the vast majority of key leaders in place. Christy Shafer, our Chief Commercial Officer, and her team continued to prepare for our expected mid-2022 launch following FDA approval and DEA scheduling of ganaxolone. Steve will be sharing some of the pre-commercial highlights from the quarter in his remarks. Our goal following a potential approval next year is to establish ganaxolone as a central pillar in the comprehensive management of TDD and to ensure ganaxolone is available commercially, both in the U.S. and in Europe.

One additional reminder. If ganaxolone is approved for the treatment of CDD in the United States, we expect to receive a rare pediatric disease voucher, which will play an important role in bolstering our long-term financial position.

Let me move to our development strategy. We are committed to undertaking a series of clinical trials to investigate ganaxolone in several new indications. We are ready to initiate a registrational Phase III program in tuberous sclerosis complex, the Trust TSC trial with our first patient expected to be enrolled early in the first quarter of 2022 with the data from that trial expected in the first half of 2024. Our team is already working diligently to meet or exceed those time lines. Joe will review the key learnings from our Phase II study and the details of the Phase III design in his prepared remarks.

Turning back to the IV franchise. We believe that ganaxolone can dramatically improve outcomes of patients suffering from status epilepticus and prevent the escalation of treatment to IV anesthetics in a significant number of patients. There are 3 distinct trials that will play a role in our future success. Our Phase III RAISE trial in refractory status epilepticus continues to advance, and we expect to complete this trial in the second half of 2022. Our second Phase III trial, the RAISE II study remains on track, and we anticipate patient enrollment to begin in the first half of next year. This trial will not only serve as a critical piece of the European approval process, but has the potential ability to broaden the use of IV ganaxolone in the U.S. patient population.

Our third status trial is the RESET trial, and in contrast to the RAISE trials, which are focused on refractory SE, RESET is focused on established status epilepticus, which occurs early in the status continuum. We anticipate U.S. enrollment to begin in the first half of 2022. Finally, our new formulation programs continue to progress nicely. One of our goals is to develop a second-generation formulation with an improved clinical profile, including better bioavailability and a broader titration schedule for physicians. We expect that healthy volunteers will be dosed with our new formulation in the first half of 2022. Our strategic CMC and clinical operations team have been working together to help coordinate the future of our next-generation franchise.

We have a second candidate that should enter Phase I by the middle of next year. We are also focusing research efforts in the first half of 2022 on developing a sustained release formulation. If studies of a new oral formulation demonstrate the expected PK profile, we plan to move quickly to a Phase II trial in Lennox-Gastaut syndrome and would expect to begin that study in the second half of 2022. Joe will discuss this topic in greater detail shortly.

Beyond our clinical trials, we are making great strides, strengthening our intellectual property and enhancing our advocacy efforts. We've recently been granted a new method of use patent for IV ganaxolone, which specifies a dosing and method of treatment in status epilepticus. That patent expires in 2040, and we expect to continue our investment in the IV franchise, which we believe is supported by the newly issued IP.

With regard to our advocacy efforts, our view is that every patient matters, particularly in rare and orphan disease work. Our goal is to help educate, engage and empower patients, their families, caregivers and the advocacy community. To that end, we've joined forces with the LouLou Foundation and 6 other biotech and pharmaceutical organizations to undertake a key observational study to better understand the natural history and the utility of various clinical assessments in patients with CBD.

I will leave the details of the collaboration to Joe. We are privileged to be partnering with the LouLou Foundation in an effort to improve the scientific knowledge about the serious disorder and support the CDD community.

Now I would like to turn the call over to Joe for some additional comments.

Thanks, Scott, and good morning, everyone. As Scott mentioned, we had a very good meeting with the investment community in early October. So I want to quickly punctuate some of the key highlights of that meeting and provide a few updates. Since Scott provided a thorough overview of our CDKL5 program, let me start with our other oral indication, tuber sclerosis complex. We've submitted our amended TSC Phase III protocol with the FDA and EMA. As Scott mentioned, we've received orphan drug designation in the U.S. and in Europe. As was the case in Phase II, the Phase III study will enroll patients receiving Afinitor and EPIDIOLEX, making this the first registration study to evaluate efficacy of an AED in TSC associated seizures when added to those medications.

We've learned quite a lot from the results of our Phase II study, leading to modifications in the Phase III protocol, which we believe will improve tolerability of ganaxolone when added to the medications currently used to treat TSC and increase the likelihood of the trial success.

We anticipate initiating enrollment in the first quarter with 162 patients randomized 1:1 to ganaxolone or placebo. To achieve this enrollment target, we plan to engage about 60 study sites, focusing on the U.S. and Western Europe and are targeting top line data in the first half of 2024. The clinical sites are showing strong interest, which we hope can shorten our projected time lines.

Now turning to our IV franchise. The primary goal there is to expand the status epilepticus program. We currently have 2 trials in refractory status epilepticus. The ongoing Phase III RAISE trial is designed to demonstrate a rapid onset of action and durable SE cessation. The latter indicated by prevention of progression to IV anesthesia, which is associated with high rates of morbidity and mortality. RAISE II is our pivotal RSC trial for European registration and remains on target for launch in the first half of 2022.

We also have the RESET trial, a Phase II study in established status epilepticus being conducted in the U.S. that we plan to initiate in the first quarter of next year. In preparation, we are currently engaged in the process of exception from informed consent. This involves informing and gathering input from community stakeholders on the proposed study.

Furthermore, we've been supplying ganaxolone in response to emergency IND applications for super refractory status epilepticus and have treated 11 patients to date. There remains a considerable unmet need for treatment of this most severe form of status epilepticus. We're continuing to provide ganaxolone on an urgent basis for physicians who are requesting its use in super refractory status epilepticus. I would note that physicians are typically using higher doses than in our RSE trial for these difficult-to-treat patients.

And finally, let me add some color on our second-generation formulation and Lennox-Gastaut syndrome development plan. The aim is to develop a reformulation or prodrug approach that will improve absorption to achieve more consistent drug exposure and reduce peak to trough variability in plasma ganaxolone concentrations. Ultimately, we hope to achieve a PK profile that permits twice daily dosing. This is a challenging combination of goals in selecting a new formulation. Some of our development approach has been to assess a broad range of technologies from many sources, more than 20, and to progress shortlisted candidates through technical, CMC and preclinical evaluation with the aim of taking multiple candidates into early clinical development.

Scott mentioned our expectation to potentially have 2 new formulations in the clinic next year. On the prodrug front, we're pleased to report good progress with several candidates. With our reformulation and prodrug portfolio, we have multiple opportunities to achieve the desired PK profile.

We're currently in the planning phases for a program in LGS, which will use the new formulation. LGS is a rare epileptic encephalopathy that can result from many structural or genetic causes. It's highly treatment refractory, and we believe it's critical to study this indication with the new oral formulation to provide a more consistent and predictable exposure to ganaxolone, which would allow dose individualization in this difficult-to-treat disorder. Since the seizure types in LGS are much like those occurring in CDD, we believe ganaxolone is a promising candidate for development in LGS. We plan to present a case series of patients co-diagnosed with CDD and LGS from the Marigold study at an upcoming medical meeting. The preliminary data supports our plans for further development of ganaxolone and LGS.

As we continue to advance CDD, we already have a fully staffed medical science liaison team in place. We're also developing a comprehensive publication strategy with multiple manuscripts in development that focuses on key themes and knowledge gaps related to CDD. Ganaxolone's unique mechanism of action, its pharmacokinetic and pharmacodynamic properties and most importantly, key clinical safety and efficacy data.

Our scientific affairs team is also leading the development of a life cycle evidence plan to ensure we provide the most relevant data that meets the needs of health care providers in the scientific community. To further support the CDD community, as mentioned, we recently entered into a collaboration with the LouLou Foundation, a private nonprofit U.K.-based organization to support a comprehensive observational study in CDD. With the goal of gaining a better understanding of the natural history of the disorder and what clinical assessments are best suited to characterize it and assess new treatments.

Marinus and 6 other industry organizations will share in the funding of a 3-year observational study, the Clinical Assessment Of Neurodevelopmental Measures in CDD or the CANDID study. The LouLou Foundation will lead the coordination of the study, which will involve CD clinical centers worldwide. We're pleased to be collaborating on the CANDID study to gain a more complete view of how CDD affects patients and define relevant endpoints for future clinical trials.

Importantly, we intend to engage with the medical community at upcoming conferences, such as the American Epilepsy Society meeting in December, where we've had 9 abstracts accepted and we'll be presenting the results of this research during the poster sessions.

As always, in closing, I'd like to thank the patients, families, medical professionals and advocacy groups, who've been so supportive of our efforts. Now I would like to turn the call over to our CFO, Steve Pfanstiel, for a financial update.

Thanks, Joe, and good morning to everyone. I am pleased to be able to share our financial results for the third quarter of 2021, including the impact of the Orion European collaboration agreement and an update on our credit facility with Oaktree Capital. But first, I want to provide 2 brief updates on our commercial progress as well as our collaboration with Orion.

On the commercial front, you heard a lot on this topic from our Chief Commercial Officer, Christy Shafer, during our recent R&D Day. However, I want to share a few key updates as we continue to progress these important efforts. Plans are underway to initiate sourcing for our sales team, which, as a reminder, will consist of 16 reps in the U.S. in parallel, we've had productive interactions with payers and look forward to continuing the momentum.

Moving on to our collaboration with Orion Corporation. It's clear that Orion has the ability to support both the oral and IV ganaxolone franchises. Their commercial presence includes over 700 deal sales personnel in 28 countries and the Commonwealth of Independent States throughout Europe. They also have commercial leadership with strong orphan drug experience and pricing and market access expertise across Europe. Our joint leadership steering committee has been diligently meeting to help map out the CDD launch strategy, and we look forward to our shared goal of bringing this product to market in the EU by the middle of next year.

Separately, we have begun to engage strategic partners to expand the global commercial footprint of ganaxolone with a goal of finalizing partnerships in 2022 for both China and Japan.

Moving on to financials. For the third quarter of 2021, we recognized $1.1 million and $4.8 million in Federal BARDA contract revenues for the 3 and 9 months ended September 30, 2021, respectively, as compared to $0.2 million in each of the same periods in the prior year. As a reminder, the BARDA contract was signed in September 2020, so revenues were limited in the prior year.

Research and development expenses increased to $18.4 million and $55.5 million for the 3 and 9 months ended September 30, 2021, respectively, as compared to $11.3 million and $38.1 million for the same periods in the prior year. The change was due primarily to costs associated with increased R&D headcount, clinical trial activity, including RSC and TSC and ongoing regulatory activities associated with CDD.

General and administrative expenses increased to $9.5 million and $26.7 million for the 3 and 9 months ended September 30, 2021, respectively, as compared to $4.6 million and $12.5 million for the same periods in the prior year. The primary drivers of the change were increased headcount and support for scale-up of the company's operations, commercialization preparations and contract acquisition costs associated with the Orion collaboration.

Separately, and as a result of the agreement with Orion, collaboration revenue of $9 million and a onetime cost of collaboration expense of $1.5 million were both recorded in the third quarter 2021. The company reported net losses of $19.8 million and $70.8 million for the 3 and 9 months ended September 30, 2021, respectively, as compared to net losses of $15.7 million and $50 million for the same periods in the prior year. These totals include noncash stock-based compensation expense of $2.8 million and $10.9 million for the 3 and 9 months ended September 30, 2021, respectively, as compared to $1.8 million and $5.5 million for the same periods in the prior year.

Cash used in operating activities was $33.7 million for the 9 months ended September 30, 2021, as compared to cash used in operating activities of $44.5 million for the same period in the prior year. As a note, the 2021 operational cash flow figure includes the upfront proceeds from the recently signed Orion collaboration agreement.

Within the third quarter, we received an upfront payment from Orion of EUR 25 million as a result of the collaboration agreement. Additionally, within the quarter, and as a result of the FDA's acceptance of our filing, we drew an additional $30 million from our credit facility with Oaktree. Thus, as of September 30, 2021, we had cash and cash equivalents of $145.1 million. We believe this balance is sufficient to maintain the minimum cash balance required under our debt facility and to fund our operations for at least 12 months.

For the fiscal year 2021, we are updating our guidance for BARDA revenues to be in the range of $6 million to $8 million and our GAAP operating expense estimate, inclusive of G&A and R&D expenses to be in the range of $111 million to $116 million, which includes approximately $14 million of noncash stock-based compensation. These values represent a slight adjustment to our prior BARDA revenue guidance of $7 million to $10 million and GAAP operating expenses of $113 million to $118 million, including approximately $16 million of noncash stock-based compensation. These revised figures reflect updated timing of key activities and their associated costs.

Now I'll turn the call back to Scott, who will provide concluding remarks.

Thanks, Steve. It's been a highly productive year thus far, and we look forward to continuing this momentum throughout the end of the year and into what we believe will be a pivotal 2022 as we await FDA action and plan for our evolution to a commercial stage company. None of this would be possible without the hard work of our dedicated Marinus employees and the support of our advocacy partners. We look forward to the exciting developments over the coming months, and we want to thank our shareholders for their support and encouragement.

Operator, can you now open the call for questions?

(Operator Instructions) Your first question comes from the line of Joon Lee with Truist Securities.

So for the first question, how has the NDA process been so far? Specifically, do you need a pre-approval site inspection? And if so, has that been done yet? And has there been any changes to the need for an (inaudible)?

Thanks, Joon. This is Scott. Good morning. We're having -- we lost our Internet service throughout the Greater Philadelphia area. So many of us are just using our phones this morning. So let me walk you through what we know and where we stand with the FDA. We filed the NDA in the summer in July. And since that time, we've had very constructive dialogue and responses from the FDA. We held a mid-cycle review meeting with the FDA this week. The FDA has been asking, as expected, several questions of the filing, which we're taking as very positive. They are engaging and interacting. They have asked for several clinical site reviews. The first has been completed with really no issues raised.

Not surprisingly, they're looking at our largest clinical sites. As of today, they have not asked for a manufacturing inspection site, but we are preparing for that. They have confirmed in our mid-cycle review meeting that at this time, they are not requesting a panel. So we feel as though we are on track, as expected, for an action date in the March time frame of 2022. And we've been incredibly pleased with the interaction from the agency. They've been a great partner. I think they've asked very fair questions, and our team is working to answer all those questions in a normal process in terms of the review. Joe, is there anything you wanted to add that I didn't comment on?

No. I think you mentioned, Scott. I mean we've got intensive inspection readiness activities going on. And the interactions with the agency have been very productive and cordial. So we're optimistic.

I just wanted to add one more question. Regarding your natural history study that you're doing in collaboration with LouLou Foundation, you mentioned 6 other biotech organizations. Are they biotech companies? And if so, do they all have also commercial interests in CBD? Just wanted to understand the dynamics there.

Yes. I think all but one have stated commercial interest in CDD. If I recall, Scott, is that correct? I think when we looked at that yesterday, in one way or another or more broadly in epileptic encephalopathies.

And I would include different approaches. Some are pure approaches to the seizure activity that these children and adults have, others are looking at genetic approaches to really correct the disease in its entirety. So I think it's a broad-based industry collaboration with the LouLou Foundation. And Joon, it's interesting because we now take "granted" that we have the opportunity to receive a rare pediatric disease voucher for this disease state. We owe a lot of that to Alex Aimetti, our Head of Scientific Affairs and the work that he did because there's really very limited public data on the natural history of this disease. Our Phase III study is actually one of the largest natural history databases for patients who are treated with placebo. There's a large database in Australia, but really limited information. And so that was a critical piece for us, putting all those pieces together. And again Alex did an awesome job and a critical piece of the FDA's understanding and granting us that priority disease voucher.

I was...

Go ahead, Joon. (inaudible) Just one point. But this is really aimed, the CANDID study is really aimed at the non seizure aspects of the disease and developing disease-modifying therapies. So I'll stop now. I'll let you go.

No, no, no. I was just curious if the opportunity was actually much bigger than we had modeled or if you were hoping to find some pockets of patients that were yet to be discovered through this collaboration. But just I was intrigued that there are so many companies interested in this -- supposedly ultra-rare disease.

Your next question comes from the line of Marc Goodman with SVB Leerink.

This is Rudy on the line for Marc. Can you provide more color on the site activation for the RAISE trials? And do you have any overlap in the U.S. sites across the 3 studies that RAISE, RAISE II and the RESET trials?

Sure. Well, we -- at the beginning of getting the study started, we were really confronted with a widespread Covid and distraction from clinical trials and problems like status, resources and hospitals being diverted to Covid. So we have started to take a very aggressive approach toward communicating with sites and doing a -- listening tours that were virtually some, some will be in person, each hospital is different and requires different solutions. So we're actually talking about staffing up to address that, having our physicians address it as well. Part of its relationships as well, getting in front of the sites and speaking with them. And so we've started to show some initial results. We've got over 60 sites activated and optimistic that we're on track to complete enrollment on time by the end of next year.

Yes. Let me add a few comments. Just to clarify those 50 sites, that's our year-end target. We're at 44 today, but we've got another set of sites that are really ready to go and our clinical office team is moving in that direction. I think a big part of the question, too, is how are we looking at sites across the 3 studies. As a reminder, the RESET trial is going to be specifically an ER based trial. Those patients are coming in with convulsive status.

We are using just a small number of sites that were very active in the RESET trial. And that group of patients, to a very large degree, don't overlap with the Phase III RAISE population. The RAISE 2 trial, we're going to kick that trial off in Europe. And we are going -- we will add U.S. sites but we don’t plan on adding US sites until the RAISE trial is very close or at completion. So from a company perspective, our first goal, our first priority is RAISE in that registrational trial. The RAISE II trial is critically important for both the European approval and market expansion, but we'll start with key European sites. And as a reminder, standard of care is slightly different in Europe.

And RESET in 2022 will really be just a handful of sites that are in the emergency room, and we don't see a meaningful overlap. In fact, when we talk to physicians in the emergency room, they tell us they really get one shot at these convulsive patients, which is why we'll be combining ganaxolone with standard of care, very different than our RAISE population that largely non-convulsive population that will fail 1 or several therapies before moving to general anesthesia. Joe, I hope I didn't cut you off. Were there other comments that you wanted to make?

No. Just to add a little bit of detail on the RESET study. That's in convulsive status. And so if you really look at the patient pathway, when they come to the emergency room. The patients, as Scott mentioned, for the RESET trial are really a different population. And we don't expect either the RESET trial to compromise enrollment in the RAISE trial at shared sites. It's different patients, different treating physicians. And ultimately, if we achieve both indications, I think they'll be pretty much separate populations.

I just have a quick follow-up question. So we recorded a collaboration revenue of $9 million in the quarter. Should we expect similar revenue for that line in the coming quarters?

Yes. This is Steve. I can weigh in on that. So the $9 million that we brought in and recognized as revenue was really primarily related to the upfront associated with the Orion deal. So that's an allocation of kind of the value that we take at the upfront of the deal. So that's -- I view that as more of a onetime. As we get through some of the M2 metabolite work, which is related to the claw back and other actions, we'll have periods where we allocate more revenue from that deal over, but that's not an ongoing number. Where we'd expect to see the ongoing revenues coming in is once we have sales, we'll have royalties. There'll be other milestones going with that. But that's more of an upfront deal accounting activity than anything else.

Your next question comes from the line of Joseph Thome with Cowen & Company.

The first one, just on the next-generation formulations. I think you're going to advance too into the clinic next year. Is the plan to kind of assess those and take one forward? Or is it possible that they would have profiles that may be amenable to sort of specific epilepsy disorders and you would take them both forward? And then second, when we think about the launch in CDD, is there a patient population that would be sort of the earlier adopter? Are these patients built up? Or would it really just beyond the physician and patient preference once it launches?

Joe, why don't I kick it off, and then I'll turn it over to you. Let me start with the latter question, Joe, and good morning, on CD. As a reminder, our Phase III population, the average age of that patient group was 6 years old. These children typically present very early in life. We'll have genetic testing more often than not by the age of 1 to 2. Well -- by the published literature, we'll have a very high failure rate. About 85% of patients will fail antiepileptic therapies at the end of the year. And so our expectation is that this population will be presenting after several failures relatively early.

And it's interesting, Joe, because we're putting a lot of thought into that process now and continuing to look at the data, and we will start to have ICD-10 data by -- we've had it for about a year, but we're really going to look at that data very closely at year-end going into the launch. But our general expectations the early days of this launch is going to be a younger population. They are in -- many of them are seen or taken care of in centers of excellence. However, we really feel as though we can hit -- we can interact with a significant number of physicians who are really treating the bulk of these patients.

On the second-generation compounds, I'll turn most of this over to Joe, but what I would say is, right now, I think we're looking at second-generation programs that would target both a very friendly pediatric dosing schedule and an adult dosing schedule. So right now, we're thinking about this being a sprinkle in the pediatric population and, of course, a solid dosing formulation in adult. And that, more than likely, for us to get to a modified release formulation will probably take the form of 2 different products at the end of the day. Right now, we very likely will be able to test 3 different formulations in 2022. And the key for us is going to be replicating a PK curve that we think is differentiated compared to the first generation ganaxolone, start to think about the modified release profile, start to think about the right titration schedule with the new formulation and, of course, moving into the correct patient population. Joe, maybe I'll turn over to you. Any other thoughts on what you think, as an epileptologist, about the CDD population or any other comments you'd like to make on the next generation program?

Yes. Thanks, Scott. I think one of the principles for managing these refractory epilepsies is that you'd be able to have dose individualization, if a patient is tolerating the drug to go up on the dose. And I think that having a new formulation that's got consistent delivery and a linear dose exposure relationship that will really be a big advantage. And then ultimately, a modified release profile that allows at least twice a day dosing. In terms of CDD, one of the principles of the epileptic encephalopathies is that the seizures or seizures cause the other neurodevelopmental impairments to be worse. I think that supports from a clinical standpoint that we'll see early patients. They're younger patients treated early to try and aggressively control the seizures and potentially prevent developmental or slow developmental deterioration.

Your next question comes from the line of Andrew Tsai of Jefferies.

This is [E. Chung] for Andrew. I have a question about the CBD program. So you'll be providing the metabolite data to the FDA maybe just 2 or 3 months before the PDUFA. Do you think that's cutting it close? And what drives your confidence that this won't be an issue and that a PDUFA extension would be unlikely and we ask because you've seen quite a few PDUFA extensions this year.

Yes. Thanks for the question. And just to clarify, we have now begun the M2 metabolite work. We've talked about having it available publicly early in Q1, and that is 100% on track. We -- the M2 metabolite issue has been one that has kept me very busy as well as the CMC team and our preclinical team from the time that I joined the organization. Because at the time that I joined 2 years ago, we had not done a thorough metabolite work of ganaxolone. We did the first detailed work in 2019, where we saw this M2 metabolite. And from that period on, we've had very constructive dialogue with the agency about it. We put a ton of resources behind it. It was about a 6 step process to synthetically recreate the M2 metabolite.

So that in and of itself is a major undertaking. We are now -- we spend a meaningful amount of resources to actually now synthesize it in the lab so that we can run the appropriate test to give the agency comfort. Now I'd also say we've treated 1,900 patients with ganaxolone, and we feel as though it's got an impeccable safety profile. But because we have a metabolite, which is greater than 10% in the blood, there is an FDA regulation about the work that needs to be done. So we've talked with the agency, we aligned on a plan over a year ago. A big piece of that plan was showing that the M2 metabolite does not have activity to [geologic] activity, and we've demonstrated that.

And we've also walked the agency through the plan that we would have in terms of a better aligning with prior guidelines, and they have been very supportive of our plan. This will be a relatively short single page report, not showing that it has any -- tox risk. And we will actually, in all probability, request a Type C meeting to really review the long-term plan for our metabolite work with them before the PDUFA date. So they are expecting this work. We don't see it as a major amendment.

Right now, we've provided them quite a bit of data. And certainly, they have not yet asked us about it, but we are very prepared for them to ask questions about this and have these results in hand to share with them over the coming weeks. So it's one, they've been a great partner. And I think it's helped us quite a bit to be very open with the agency, and we continue to have very good dialogue. So we don't see this as an issue that will cause a delay in the approval. One never knows. But certainly, given the interactions to date, we don't see it as a major risk.

(inaudible) And just a follow-up on the commercial opportunity here. So how comfortable are you with 2022 consensus sales numbers? Consensus is maybe a $3 million for third quarter and $5 million for fourth quarter. And you've mentioned how the conversion of patients from your oral and IV [AE] programs to take the 9 months? So I just want to manage expectations here. Also, how should we be expecting some inventory build in the third quarter?

Steve, do you want to talk about the inventory?

Yes. I mean, I can touch on both of those. So we're certainly still in the planning stages, finalizing pricing. So I think it's premature to put out any kind of revenue guidance at this point. So I think more to come down the road. But obviously, with the PDUFA date in March and DEA scheduling taking 3 months, we're looking at kind of a midyear launch timing for the U.S. market. So there will be some period then when we're working with payers and other things. So we will take some time to ramp up our patients and really have kind of significant revenue streams.

In terms of inventory, we're certainly going to want to make sure we have adequate inventory in place for a strong launch. We're looking at our EAP and open-label patients and hoping to transition those as quickly as we can, if approved. So we'll make sure that we have adequate plans in place. I think that's probably as much as I can say on that one.

Yes. The only thing I'll add to Steve's comments is that we've been pretty transparent that from the time of DEA scheduling, which we would expect to be a little before July 1 where our PDUFA date is March 20. And so we look for DEA schedule in the end of June. We have been very clear that it will take 3 to 6 months for payers to really start reimbursing ganaxolone. So I do think that's an important consideration, but we have quite a few patients on open-label extension, we're getting increasing interest in the expanded access program every month, which is great to see. We've been able to really make the expanded access program incrementally easier. So for us, in '22, it's really about patient identification, making sure there's good access for patients, and we're quite confident that there is a meaningful unmet need. These patients are well identified and the commercial team will be in great position going into the second half of '22.

Next question comes from the line of Alethia Young with Cantor Fitzgerald.

This is [Lee Norton] for Alethia. Maybe another one on the new formulations. Is there a chance that there will be more than 2 formulations that enter the clinic next year. And overall, what do you think is the cadence over the next few years for the new formulations?

Well, thanks for the question. We really run the process of our new formulations in parallel. We've looked at several -- as Joe mentioned, we've looked at several drug delivery technology platforms. We do believe that 2 of those specific platforms will go into the clinic in 2022. We're also running in parallel a prodrug work, and we do believe we'll have a candidate selected in 2022. Although I'll be honest, I think it really depends on what the final prodrug looks like and how much preclinical work we would have to do.

And it's much harder to predict whether we would absolutely have 1/3 in the clinic in '22, and that would be really around the prodrug work, respectively. Again, how much preclinical data that we would require, how different the molecule looks like in [Exelon] and what the FDA regulations are. So it is a little bit early. And so I apologize if I jumped the gun a little bit there. But certainly, we feel very confident about having 3 different platforms well-defined in '22. The clinical team has been really terrific. Joe, our new Head of Clinical Operations.

Mark has done a great job thinking about our clinical program here. We've had contributions across the organization, as I mentioned earlier. And we think we can do really a relatively straightforward Phase I work to understand what the PKs look like of this new compound. And that -- and given we know so much about the PK of ganaxolone and so much that we've learned over the last few years, it's really going to help us, we believe, accelerate the programs.

Joe, do you want to add any comments around the clinical development programs?

Yes. I mean, I think there are a number of different pathways that we've mapped out for potential clinical development initially in Lennox-Gastaut Syndrome. And the timing depends to some extent on which one we take, whether we do a full-blown Phase II study or -- which even if we do a full Phase II with some dose exploration, I think that we would do that as efficiently as possible, potentially with a novel trial designs or something else to speed time to complete it or we could do additional Phase I work and then go straight to Phase III. So there are a number of different branch points. I think a lot of it will depend on the profile we see in the first-in-human studies.

Your next question comes from the line of Jay Olson with Oppenheimer.

This is Matt on for Jay. So we were wondering if you could just please speak about any physician feedback that you received at the Neurocritical Care Society meeting in October about the Phase (inaudible) data? And then also, what kind of data or analyses we could expect to see at AES in December? That would be great.

Yes. We had very productive meetings at the Neurocritical Care Society. We really concentrated on speaking to our current investigators and potential investigators about the Phase III study. Our Scientific Affairs Group, Alex Aimetti and (inaudible) from our Scientific Affairs Group led a focus group about the Phase III study, the feedback was very positive. We're getting positive feedback from sites across the board about the study design and about the ability to execute the study. We did identify some potential additional sites and we're looking at the types of sites, whether we need to go to quaternary kind of referral centers, but maybe large academic hospitals in community hospitals in either rural or urban settings who see a range of patients and take care of them themselves rather than transferring them out, might be the places to go, and we identified 2 sites and have a profile of different type of site, and we're looking at several of those. So we got great feedback across the board and great ideas in terms of initiatives at sites to help them with enrollment. So it was a very productive meeting.

Joe, any highlights on (inaudible) to this big picture without (inaudible) embargo that you want to talk about?

Yes. No, we'll be presenting data across the board from our programs in terms of TSC and the CDD program as well as the IV programs. So really, we had, as we said, 9 abstracts submitted and 9 accepted for presentation.

Your next question comes from the line of Brian Skorney with Baird.

Just wanted to get a little more color on the new formulations that you're moving into the clinic. And maybe you could just help us understand sort of the drivers, as you see in terms of some of the GABAergic safety issues and the antiseizure effects. I know you said you're kind of targeting minimalization of peak to trough exposure. I guess is there a specific plasma exposure level at peak that you kind of consider too high and what plasma exposure level you really kind of want to be at it, I don't know, 12 hours post dosing or any interim period to kind of be within your target profile in humans?

Yes. Scott, do you want -- I can start off a little bit.

Go ahead, Joe. Kick it off, please kick it off.

Yes. So we're finding -- one of the things about the current formulation, patients respond. Some patients respond to relatively low exposures. On the flip side, some patients have high exposures and tolerate the drug very well. And so I think the responses are in terms -- especially in terms of tolerability, differ by patient population. Perhaps a TSC has more of a sensitivity to side effects like somnolence, whereas LGS may be more -- maybe closer to the CBD population. And so in general, the midpoint of the range we see for efficacy is around 140, 150 nanograms per NO. We'll get a better idea of tolerability, what Cmax do we want to go for. I think above -- we've seen patients tolerate 300, but on a population basis, maybe closer to 200 is what we want to look at.

But then again, as I said, with the ability to go up higher for patients who tolerate it and who need the extra control. And so ultimately, the peak to trough variability would be reduced, we think, by a modified release formulation. And so again, in the immediate release, targeting a profile that lends itself to that, perhaps a higher Cmax than we use in an immediate release, but that may lend itself to increasing the area under the curve in the modified release formulation. So Scott, I don't know if you have anything to add to that.

Yes. No. Thanks, Joe. Yes, I'll add a few things. So I think you raised a great question, Brian, but I -- but we have to do this in progressive steps. So step one is showing reproducible bioavailability. And so we want to make sure that all patients are achieving similar blood concentrations, no patient is left behind, which has really been the problem with the current formulation. Roughly 20% to 25% of patients are just not going to achieve that at the blood levels. And almost every study we've looked at, where the drug has "failed", we've seen serum plasma concentrations below 50 nanograms per ml.

And I think to a large degree, the titration schedule has helped that quite a bit in terms of tolerability and more patients getting to serum concentrations that can have therapeutic effects as one piece, but back to the specifics, we want to see that reproducibility across all patients. We are going to look for higher Cmax in this Phase I study. But really, that's a function of seeing better bioavailability from the get-go, that's something that we feel we can reproduce. And then to Joe's point, once we achieve those higher Cmax's, we can then use a more gradual titration schedule to replicate that in all patients, and our CMC team is already starting to do the work on how we would then modify the release.

And our internal team, and they've done fantastic work, really believe is that we have a high probability of success for a modified release and with different technologies out there, but we've got 1 or 2 that we've already identified. So you can't do MR without better bioavailability. And I think once we see that in the Phase I studies, we will really be able to move aggressively to an MR strategy. And I think what's equally important is that we understand that if we want to be competitive in LGS, a twice a day schedule is really important. I mean if you go back and look at the history of this molecule and the failed Phase III in focal seizures, that was a commercial decision that the company needed a BID formulation. The problem was that they didn’t have the right formulation for BID.

So I think you've got to have the right formulation going into a BID schedule, we're confident we can do that in conjunction with the ongoing development program. We think we can get real proof-of-concept data with what would be an immediate release formulation and begin that work in 2022. But ultimately, our goal would be a Phase III study with a modified release formulation, again, minimizing certainly peaks and minimizing troughs. And then being able to target 100, 150 or 200 nanograms per ml in that type of -- in a Phase III design. And I think that will yield unquestionably the strongest efficacy results, doing it with the appropriate titration schedule will certainly maximize tolerability. And I think if you do both of those things, we've got a really competitive and exciting oral franchise.

Your next question comes from the line of Jason Butler with JMP Securities.

Just one on the partnership priorities for China and Japan. Just any thoughts you have at this point about how much additional clinical data you would need to support regulatory approvals in those countries?

It depends, Jason. It's a great question. In China, there is a SaaS path for orphan disease indications, where the Chinese government has specifically already anointed those diseases. And TSEs on that list, as of today, CDD is not on that list, but something that is very important for us to discuss with the advocacy groups to try to move -- to try to add CDD to that list, where U.S. data can be used for the registration process.

On the Japanese side of the equation, we've already done in-house work. We feel very comfortable that our preclinical programs are all well within accepting for an ultimate Japanese approval. Our plan is to really start Phase I work in Japanese patients in 2022 and have an interaction with the regulatory bodies in Japan in 2022. But it's a relatively straightforward path. We've already had an outside agency confirm that pathway for us. Our clinical team and strategy team, I think, is now very well versed with that path. And as a reminder, as of today, cannabinoids are not CBDs are not on the market in Japan. I know that the GW folks are working very hard and have created a pathway there. But as of today, the product is not on the market. So again, that unmet need in TSC is quite high as of today, and certainly CBD as well. And so we think this is something that is -- will be relatively straightforward. And we're ready to commit to the early work, and we'll continue to have very vibrant discussions moving forward. Hope that helps.

Yes. Just a quick follow-up, and this, I guess, is in part an IP question as well. But as you think about those potential partnerships, is the focus primarily on ganaxolone? Or could it also include additional formulations?

Thanks. It's a great question. It's interesting when I was heavily involved in strategic partnerships at Pacira with Chinese partners. There were a lot of folks who were really interested in being a manufacturing partner. And I don't see that as a critical piece of the puzzle today. I'm much more focused, and I've asked our strategy team to really focus on partners in China who can really help expedite our clinical ideas in our clinical programs. I think we've seen that work really nicely in the CAR-T space and other oncology spaces. And we've already talked to several strategics who do believe they could help us on the clinical front. One example, we are hungry to start an infantile spasm program, and we certainly think that a Chinese partner with good clinical, a strong clinical team, great KOL connections could really help us expedite that program in 2022. So our focus is as of today is really finding a strategic partner who has the clinical skill sets and potentially can really help accelerate our clinical pipeline.

Ladies and gentlemen, please limit your questions to one and one follow up. Your next question comes from the line of Douglas Tsao with H.C. Wainwright.

Just curious in terms of the super refractory status epilepticus patients who you're supplying drug to, are you collecting the data from those? And have you seen any results? And I'm just curious, is there some consistency in terms of where you're making recommendations in terms of how that should be dosed.

Yes. In terms of the dosing, we're working with the site. It looks like the -- we're allowing a higher dose in the RSE study, the cap on Captisol is 50 grams. We're going up, and that gives you exposure, the maximum daily exposure around 830 milligrams of ganaxolone. We're actually going up to a little bit over 1,000 milligrams of ganaxolone at the maximum dose and allowing some re-bolusing for the patients who need it. So we're still trying to find them maximally effective regimen rather than waiting until the patient's on anesthetics, we've been looking at initiating the drug as they taper down, looking at different dosing regimens, bolus versus infusion.

We haven't seen a consistent pattern in terms of results. It's worked in many patients and in some patients, it hasn't worked. But the pattern isn't consistent. We've seen kids respond. That's been one thing. But older patients with very refractory epilepsies have also responded. So it's been a small number of patients, not enough yet to really draw conclusions. But again, as we said, we'll continue to supply it if physicians request it. And it looks potentially promising, although as we've said, we don't have any plans to pursue an indication. Our goal is to try and -- if we can prevent a lot of patients to getting to that stage. That would be the ultimate goal.

And Steve, do you want to talk a little bit...

I'm sorry, Doug, just to have Joe respond to your last piece. Do you -- Joe, what's your -- do we -- do you want to talk a little bit about your thinking about a publication strategy or whether we, at Marinus, undertake some other path? Have you chat about that?

Yes. No. I mean we'll absolutely publish and present the results of the entire series at the appropriate time. We've had case studies presented of the patients. Some of the patients have done well. But we will publish the results and put them out there. I think we'd be obligated to do that. Scott, I don't know if you have comments beyond that.

The only thing I'd add, Doug, is -- and I think it's important. First of all, I really want to thank our physicians on the team, Henri Vaitkevicius, Maciej Gasior who have really worked closely with investigators in these really refractory patients because this is a whole new paradigm, right, Doug? And not only are we dosing in the slightly over 1,000 milligrams a day, but often for 4 or 5 days in patients. And so the regimen will be different. And one of the things I'm particularly interested in our current prodrug approach is that, that prodrug would be very applicable to an IV formulation. There may be some theoretical advantages why the prodrug might actually get to the brain even incrementally faster than ganaxolone today, but I think our current formulation gets to the brain quite quickly and stays in the brain.

But what I really like about our prodrug approach is it really eliminates the need for Captisol, and that creates the opportunity to really flex our muscle on dosing paradigms. And so we're equally focused on moving the IV prodrug program forward aggressively to really allow us to do much more than we're able to do today with Captisol. So the folks at [ligand] have been great partners for us, and they continue to be. But it's more difficult developing 2 drugs in 1 rather than a single drug. And really, right now, Captisol has created more limitations in our program than ganaxolone itself. Sorry, Doug, I cut you off. If you had another question.

And I guess, obviously, I understand why you want to prioritize. I just wanted to ask about the RESET and RAISE trials. And I understand why you want to prioritize getting enrollment for RAISE and not potentially sort of impacting that with RESET. But just as those trials fill up, would you anticipate expanding the universe of the RESET universe? And are they sort of -- I know you're sort of not -- you're targeting centers that aren't overlapping. Is there a different profile for between the 2 trials that you're thinking about?

Yes. Well, let me just say, the recent trial is a big undertaking for us. A big piece of this is again in community consent. It's quite a bit of work. I really appreciative of Sasha and her team and how much she has helped with our clinical operations team. We've got to go into the community. We've got to really educate the community on the study. We've got to get their buy-in. We've got to run a certain number of educational programs because, again, as these patients hit the emergency room, there is no time for them to be consented.

So it's a big undertaking, and our proof-of-concept study will, I think, have some great data points, and we're also going to use some form of EEG in that study, which has never been done before. When you look at RESET, they did not use EEG as a critical outcome measure in that study. So it's one that we're really excited about. I think, let's be honest, we're doing a lot. We have about 15 clinical trials ongoing. We see this as a critically important piece of the IV story. I think commercially, what we want to understand is what's the right dosing paradigm for the frontline study when we launch into the RSC marketplace.

And ultimately, we'll run the appropriate registrational trial in early status. But we still believe the bigger market opportunity is in the refractory setting. And I think what we're going to actually sit down with our SAB and talk about is what are the other Phase IV strategies we should be thinking about to really maximize adoption. I think RAISE II is a fabulous study to really expand the use of this product in the refractory setting with the right outcome measures.

But these are still relatively small studies in the scope of a very common disease. And I think it's going to leave us a lot of opportunity to do more post approval. The frontline setting is really meaningful to us as well. But we -- our eye on the prize is certainly refractory first and foremost and frontline an important piece, but we've got some time to figure that one out. Joe, anything you want to add?

No, Scott, nothing. I think that covers it.

There are no questions at this time. I would now like to turn the floor back to Scott Braunstein for any additional or closing remarks.

Well, thank you, operator. Thanks, everyone, for the questions. I've seen that we've done well over our hour. So I'm glad there are no other questions. I really appreciate all your support for the analyst community, our investors and just want to say, again, thank you to the Marinus team. They've been working really hard. This is an incredibly challenging environment in the hospital space today. And I'm really proud of how well the team is meeting this very difficult challenge. And we look forward to speaking to you next quarter. Thanks again.

Thank you for participating in today's conference call. You may now disconnect your lines at this time.