Marinus Pharmaceuticals Inc (MRNS) 2021 Q2 法說會逐字稿

Greetings, and welcome to the Marinus Pharmaceuticals Second Quarter 2021 Business Update 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. With me from Marinus are Dr. Scott Braunstein, Chief Executive Officer; Dr. Joe Hulihan, Chief Medical Officer; Steve Pfanstiel, Chief Financial Officer; and Kimberly McCormick, Senior Vice President of Regulatory affairs. Also on the call is Christy Shafer, Chief Commercial Officer, who will be available during Q&A. 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 second quarter 2021 business and financial update. Building on our busy first quarter, we've continued to make significant progress across our oral and IV clinical programs. Just last week, we made 2 important announcements. First, we entered into an exclusive collaboration with Orion Corporation for European commercialization of ganaxolone in CDKL5 deficiency disorder, tuberous sclerosis complex, and refractory status epilepticus. We believe that the Orion team will be an excellent strategic partner for the ganaxolone franchise. We also announced that we have submitted a new drug application to the FDA for ganaxolone for the treatment of seizures associated with CDD. Within 60 days of the submission, we expect to receive a filing notification letter from the FDA. That communication should occur prior to the end of the third quarter. Not only are these 2 events meaningful accomplishments, but they represent important milestones in the evolution of our business.

The European collaboration provides significant capital to continue advancing the development of ganaxolone across Europe and the FDA acceptance of the NDA for filing provides an opportunity to draw on the Oaktree credit facility, extending our cash runway and allowing us to continue to expand our pre-commercial activities. In addition, the organization is executing on a number of regulatory milestones. During Q2, we submitted our Phase III TSC trial design to the FDA, and the agency indicated that they were in overall alignment with our clinical development plan. I will leave the details to Kim. We continue to prepare for the TSC Phase III trial that we have named Trust TSC with an expected first patient enrolled in the fourth quarter of this year. I would like to thank the TSC alliance, whose support has been instrumental in driving this program forward.

Let me move to an important update for the IV franchise. We received a notice of allowance for the patent application for the RSE IV dosing and method of treatment from the U.S. Patent and Trademark Office. We anticipate the patent to be formally granted later in the third quarter. When granted, we expect the patent to run through 2040. The patent application highlights the dosing regimen and method of treatment for RSE and aligns with the Phase III trial. We believe this patent has the potential to create meaningful shareholder value following the completion of our Phase III U.S. registrational study, the RAISE trial. The organization is continuing their work on other key initiatives. Plans for the CDD launch are progressing. We look towards an FDA action date on the ganaxolone NDA by the end of the first quarter of 2022. As a reminder, FDA approval would result in a 3-month period for DEA scheduling, followed by a mid '22 launch.

As mentioned, we have signed a European collaboration agreement with Finland-based Orion Corporation. After a diligent and competitive process, we believe that Orion checked all the boxes that we were looking for, a strong presence across Western Europe in rare neurological disorders, a desire to be a leader in orphan diseases and epilepsy, significant expertise in the hospital and the ICU as well as an extensive European commercial infrastructure. Importantly, Orion offers a strong cultural fit to our organization, and we look forward to working together towards future milestones. Orion has been granted exclusive rights to commercialize the oral and IV formulations of ganaxolone in the European economic area, the U.K., and Switzerland, where they will be responsible for all reimbursement and pricing approvals. We've received approximately $30 million as an upfront payment and are eligible to achieve up to approximately $150 million in R&D reimbursement, development, and commercialization payments as well as tiered royalties on future net sales that could reach the high teens for the oral programs and low 20s for the IV program. We believe that this deal structure strikes the right balance on upfront payments and royalties, allowing Marinus and our shareholders to benefit from the long-term success of the ganaxolone franchise.

Importantly, this agreement supports a mid '22 European launch of oral ganaxolone for CDD and underscores our commitment to the CDD patient community. We are on track to file a European marketing authorization application for ganaxolone in CDD by the end of Q3 2021. In the near term, we see this collaboration having the potential to provide an important new alternative for patients and families living with CDD throughout Europe. Both organizations are committed to improving the availability of ganaxolone to refractory CDD patients, including the desire to support a geographically broader expanded access program.

In keeping with our commitment to the CDD patient community, we plan to support a collaborative observational study in CDD, sponsored by the Loulou Foundation, a non-profit organization dedicated to advancing research to better the understanding and development of therapeutics for CDD. This observational study is designed to provide a high-quality natural history database on a variety of clinical outcomes to better describe disease severity, unmet need and inform future trials. We are excited to be a part of this research consortium and are committed to contributing critically necessary resources to the CDD community.

Moving to our TSC program. We remain on track to announce top-line data from the open-label Phase II trial in the third quarter. As I noted earlier, we believe that we have reached overall alignment with the FDA on an appropriate regulatory path. We are also expecting to obtain scientific advice from the EMA and now expect that meeting to occur in the first quarter of 2022. We continue planning for Phase III site initiations to begin in the third quarter, with the first patient expected to be enrolled in the fourth quarter of 2021. We are currently targeting initial sites in the U.S. and will add EU sites following our regulatory interaction with the EMA. We plan on providing enrollment timelines for a Trust TSC trial later this year.

Turning to our IV programs. Due to COVID-19 priorities in several major academic medical centers participating in the RAISE trial, we've experienced site initiation and enrollment delays. We believe these delays are primarily caused by staff turnover due to COVID-19 fatigue and the need for clinical sites to devote significant resources to patients with COVID-19. These challenges most acutely impacted second quarter site enrollment. Fortunately, our clinical operations team believes that the majority of these issues are now behind us.

Consequently, we expect to have the vast majority of our sites open by the end of third quarter 2021, with our top-line trial data readout in the second half of 2022. We've already seen July site initiation numbers improving, giving us confidence in this timeline. We are actively engaged with our sites, and we'll provide additional updates during our October R&D Day. As a reminder, planning continues for the RAISE 2 trial to support European registration of IV ganaxolone in RSE. This trial is on track to launch in the first half of 2022. The Phase II RESET trial of adjunctive ganaxolone in established status epilepticus, or ESE, is planned to begin U.S. enrollment in the first half of next year.

Before turning the call over to Kim, I wanted to share our thinking on Lennox-Gastaut Syndrome, or LGS. Of note, 6 CDD patients with an LGS phenotype were treated in the Marigold study. We have submitted that data for presentation at the Annual American Epilepsy Society Meeting. We have also reviewed the company's prior Phase II LGS study and noted that the majority of patients did not achieve an adequate serum blood concentration of ganaxolone. We believe that our current TID dosing regimen, including an appropriate titration schedule, should lead to higher blood concentrations that were seen in that earlier study, similar to those observed in the Marigold study.

That said, the LGS development landscape is highly competitive, and patients and families suffering from LGS are looking for the best possible antiepileptic therapy. Our team is committed to the right investment in LGS and that our clinical work should be closely tied to Marinus' next-generation oral program. We believe that these next-generation formulations or novel prodrugs, will deliver a solid drug candidate with improved bioavailability, more reliable steady-state plasma concentrations, and create the potential for incremental dose titration and higher efficacy.

Further on the new formulation front, we continue to evaluate several platform technologies for oral and IV ganaxolone. We plan to evaluate these new formulations in Phase I studies in 2022 and ultimately, additional refractory epilepsy indications. We expect to advance at least one of these formulations into the clinic next year and currently have reason to believe that it is more likely that we will advance 2 formulations in 2022. We are enthusiastic that our investments are the first step to a second-generation platform, more to come on our reformulations during Marinus' R&D Day.

I also want to welcome Dr. Santiago Arroyo to the Board of Directors. Dr. Arroyo brings a distinguished career in academic neurology and clinical research and development, including his leadership in the neurology department at the Johns Hopkins Hospital. In addition, he has extensive experience in epilepsy drug development, contributing to numerous new therapeutic alternatives.

With that, I would like to now turn the call over to Senior Vice President of Regulatory Affairs, Kim McCormick, for an update on our regulatory interactions. Kim?

Thank you, Scott. We are pleased to have recently announced the submission of an NDA to the FDA for ganaxolone for the treatment of seizures associated with CDD. Within 60 days of the submission, the FDA will notify Marinus, whether the NDA is accepted for filing and is expected to notify us a Priority Review designation is granted during that 60-day period. The NDA also includes the request for a rare pediatric disease priority review voucher or PRV. If a PRV is granted, it may be used to obtain priority review for a subsequent human drug or biologic application or we could sell a transfer of PRV to a third party. The team is active to prepare for a potential advisory committee meeting. FDA's indicated that they may let Marinus know if they plan to hold an advisory committee meeting as early as at the end of a 60-day filing period. If priority review is granted, the PDUFA action date would be targeted for March 2022. If FDA approves the ganaxoloneNDA, DEA scheduling would then be expected within 90 days of the approval.

Consistent with our data set, our recommendation in the NDA as well as other benchmarks, we anticipate a schedule for designation. We look forward to working with the FDA in its review process and remain focused on preparing for anticipated launch. We've had several questions related to our M2 metabolite of ganaxolone. As a reminder, Marinus identified the M2 metabolite in 2019, and we have had discussions with the FDA on how best to characterize it. As part of the pre-NDA interactions with FDA, agreement was reached on what was required in the NDA submission with respect to the metabolite. We recently completed an activity assay for the M2 metabolite and have included the results in the NDA submission as agreed with the FDA. We are planning to conduct an in vivo micronucleus test with common analysis, anticipate that this testing will be complete in the first quarter of 2022. We expect that any additional studies are acquired such as a full toxicology package on the M2 metabolite, they can be conducted post-approval.

As Scott mentioned, we are dedicated to advancing ganaxolone for CDD in markets outside the U.S. and remain on track to file a marketing authorization application with the European Medicines Agency by the end of the third quarter. We are pleased to share that we expect the EMA to grant accelerated assessment of ganaxolone for the treatment of seizures associated with CDD. If granted, accelerated assessment will reduce the target review time to 150 days from the standard 210. This could mean we could receive a CHMP recommendation by the second quarter of 2022.

Applications are eligible for accelerated assessment if the CHMP determines that the product is of major interest for public health, particularly from the point of view of therapeutic innovation. With regard to TSC, the FDA indicated overall alignment on our TSC clinical development plans as part of written responses to our request for a type B meeting to review our proposed Phase III trial. Although it will be a matter of review, a single pivotal Phase III study could be sufficient to support the approval of ganaxolone in this indication following an approval of the CDD NDA. We believe this paradigm of a single pivotal trial would be applicable for other rare orphan indications that we will pursue with oral ganaxolone.

In addition, a scientific advice meeting with EMA on the TSC program is targeted for the first quarter of 2022. EU enrollment in a Phase III trial is likely to begin following that meeting. As a reminder, we have submitted orphan drug designation requests to FDA and EMA. We are expecting to receive responses by the end of the third quarter.

Turning to our trial and established status epilepticus, or ESC, I'm pleased to share that we reached an overall alignment with the FDA on the design for our ESE RESET trial. Additionally, we have recently received notfication that our IND to support the RESET trial may proceed, and we continue to expect to begin U.S. enrollment in the first half of 2022. There will be further detail from Joe on this.

Now I would like to turn the call over to our Chief Medical Officer, Dr. Joe Hulihan. Joe?

Thank you, Kim, and good morning, everyone. As you've heard, the first half of this year has been extremely productive, putting us on course for a busy next 12 months and beyond. I'd like to start by highlighting progress on our IV franchise. In the RAISE trial, as Scott mentioned, we expect to have the vast majority of sites opened by the end of the third quarter, although top-line data is now expected a little later than originally planned. Rates of screening at study sites are high with only those patients appropriate for the study being enrolled. That is those who meet protocol requirements. We believe we have the right study design and carefully considered response rates in the control arm, as I detailed last quarter.

Our clinical team is driving outreach to study centers and has expressed confidence in the outlook for site initiation and patient enrollment over the next few months. Our clinical operations and medical teams continue to have strong interactions with our sites, including regularly scheduled training, case studies, and interactive educational sessions. The RSE pivotal trial for European registration, RAISE 2, remains on target for launch in the first half of 2022.

As I discussed on the call last quarter, the RAISE 2 trial differs from the RAISE trial in the U.S., and that most notably, ganaxolone can be initiated earlier in the course of RSE in RAISE 2. If successful, this study will provide complementary data to the RAISE trial in the U.S. such that RAISE 2 could not only serve as a pivotal registration trial in Europe, but it also may have an important clinical implication for the global market. Since 1 of our goals is establishing leadership in the treatment of status epilepticus, we were pleased to hear that our approach to studying RSE could potentially influence the next version of EMA epilepsy treatment guidelines.

As Kim mentioned, we gained alignment from the FDA and plan to initiate a Phase II trial of adjunctive ganaxolone in established status epilepticus. A RESET trial, which stands for researching, established status epilepticus treatment is expected to begin U.S. enrollment in the first quarter of 2022 after we've completed the process of exception from informed consent. ESE is earlier than RSE continuum of status epilepticus. And it's defined as status continues their first-line treatment with benzodiazepines fails.

The RESET trial will examine a shorter dosing regimen in which ganaxolone will be initiated in conjunction with the initial second-line AED. The study will specifically target patients with convulsive rather than non-convulsive status epilepticus enrolled from emergency departments. Because patients who qualify for the RESET trial have a type of status distinct from those who would enter the RAISE trial. We can consider the same sites for our established status trial without compromising enrollment in the RAISE trial.

In the RESET trial, ganaxolone is intended to act as an adjuvant to the initial second-line standard of care AED, the established status epilepticus treatment trial, known as ESETT, showed that response rates to standard of care AEDs are less than 50% within the first hour. We believe the ganaxolone has the potential to increase response rates, including reducing the time to response and increasing the durability of effect compared with standard of care AEDs alone.

Our goal in this study is to find an effective, safe and well-tolerated dosing regimen for ganaxolone in ESE. The trial utilizes a novel sequential design to assess the safety and effectiveness of several doses and infusion durations of ganaxolone, with the optimal dose regimen progressing to a double-blind Phase II study versus placebo. In addition, we continue to field requests from investigators for IV ganaxolone for patients with super refractory status epilepticus, under emergency investigational new drug applications. We're optimistic that an additional case report will be presented at an upcoming medical meeting.

Now I'd like to provide more color on our oral programs. As Scott and KIm discussed, we recently submitted an NDA for CDD. We're diligently focused on advancing ganaxolone's clinical development for patients suffering from CDD, and this submission is a very important milestone in those efforts. The NDA is supported by data from the Phase III Marigold trial, a double-blind, placebo-controlled trial that enrolled 101 patients. Those treated with ganaxolone showed a 30.7% median reduction in 28-day major motor seizure frequency compared to a 6.9% reduction for those received in placebo, achieving the trial's primary endpoint with a p-value of 0.0036. We plan to submit a series of abstracts for the December AES meeting, including the 1-year open-label extension data from the Marigold study.

So far, with preliminary data on 48 patients who reached 1 year of open-label treatment, we're seeing a median percent reduction from baseline of 49.6%. We continue to work with several centers across the U.S. who have shown interest in the CDD expanded access program, and we're committed to making ganaxolone available to patients prior to a potential U.S. approval through this program. We're also committed to identifying opportunities throughout the rest of the world to help improve the lives of more patients, including through additional collaborations and compassionate use programs.

With regard to TSC, we're expecting to present the top-line data from the patients who participated in our Phase II open-label trial, the CALM study, in the third quarter. This trial is evaluating the effectiveness, safety, and tolerability of adjunctive ganaxolone treatment in patients with TSC. It consists of a 4-week baseline period, followed by a 12-week treatment period and a 24-week extension. We're expecting to initiate a global Phase III double-blind placebo-controlled trial in TSC later this year, which will enroll approximately 160 patients who've had inadequate seizure control and have been treated with at least 2 prior AEDs. We expect that 50% of our patients will have been treated with the most recently approved AED for TSC EPIDIOLEX.

Unlike the EPIDIOLEX TSC study, a trial will allow enrollment of patients taking a full range of concomitant medications. We expect to enroll the first patient during the fourth quarter of 2021. We're also reviewing our clinical development options for Lennox-Gastaut Syndrome, which we believe would complement our work in other pediatric epilepsies as we've had several patients in our CDD and TSC studies we carry the diagnosis of LGS. Rather than representing a clinical phenotype due to a single genetic mutation, LGS is a clinical syndrome that can have several underlying etiologies. Since LGS seizure types are much like those occurring in CDD, we expect that ganaxolone would be a good candidate for development in LGS regardless of its etiology. Our plans are to pursue an LGS trial with one of our new formulations to provide a greater and more consistent exposure to ganaxolone.

As always, in closing, I would 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.

Thank you, Joe. I am pleased to be able to share our financial results for the first half of the year. For the second quarter of 2021, we recognized 1.9 and $3.7 million in federal BARDA contract revenues for the 3 and 6 months ended June 30, 2021, respectively. As the BARDA contract was signed in September 2020, there are no revenues associated with this in the corresponding period from the prior year. Research and development expenses increased to 18.6 and $37.2 million for the 3 and 6 months ended June 30, 2021, respectively, as compared to 11.8 and $26.8 million for the same period in the prior year. The change was due primarily to start-up of the RSE Phase III trial, regulatory activities associated with the CDD submission, and increased R&D head count.

General and administrative expenses increased to 6.8 and $17.2 million for the 3 and 6 months ended June 30, 2021, respectively, as compared to 4.1 and $8 million for the same period in the prior year. The primary drivers of the change were increased support for scale-up of the company's operations as well as preparation for commercialization. The company reported net losses of 23.8 and $51 million for the 3 and 6 months ended June 30, 2021, respectively, as compared to net losses of 15.7 and $34.3 million for the same period in the prior year. These totals include non-cash stock-based compensation expense of 3 and $8 million for the 3 and 6 months ended June 30, 2021, respectively, as compared to 1.8 and $3.7 million for the same periods in the prior year. Cash used in operating activities increased to 23 and $39.1 million for the 3 and 6 months ended June 30, 2021, respectively, as compared to cash used in operating activities of 16 and $30 million for the same periods in the prior year.

As of June 30, 2021, we had cash and cash equivalents of $112.5 million. We believe this balance, combined with the net upfront proceeds of the recently signed European collaboration with Orion, is sufficient to fund our operations for at least 12 months while maintaining the minimum cash balance required under the debt facility. Additionally, as Scott mentioned, upon FDA acceptance for filing of the NDA, we have the opportunity to draw an additional $30 million of financing under our Oaktree facility. We have further opportunities to significantly strengthen our balance sheet upon an FDA approval, including a second $30 million tranche of funding from Oaktree as well as the opportunity to monetize the PRV, if awarded.

For the fiscal year 2021, our GAAP operating expense estimate remains unchanged in the range of $113 million to $118 million, which includes approximately $16 million of non-cash stock-based compensation. Separately, for the fiscal year 2021, we are adjusting our guidance for BARDA revenues to be in a range of $7 million to $10 million compared to our prior guidance of $9 million to $12 million, which reflects updated timing of the contract activities. The total expected value of the BARDA contract revenue remains unchanged at $21 million.

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

Thanks, Steve. It has been a highly productive first half of 2021. None of this would have been 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 to questions?

Yes. (Operator Instructions) Our first question comes from the line of Joseph Thome with Cowen and Company.

Congratulations on the progress. Maybe just a first one on the new formulations because the CDD indication may potentially be approved is sort of the first generation and/or to be in the clinic of TSC. How are you thinking about it? Is it possible to bridge, I guess, the new formulation back to some of these initial indications? Or will the new formulations essentially just be for kind of the next wave of epilepsy indications? And then second, maybe just a point of clarification. The in vivo nuclease activity assay that was mentioned in the prepared remarks that you'll complete in the first quarter of next year. Is this necessary ahead of a decision on CDD NDA?

Thanks, Joe. And let me just jump and take the second question. We've had good interactions with the agency over the plan on the M2, and we will very likely provide them the in vivo micronucleus test, but not necessary for -- at the time of filing. So we'll get that year end, and we'll be happy to supplement it to the FDA require it. And we don't see that as a major amendment. We've had that discussion. It will be a relatively, in a brief report.

On the new formulation work, it's a step-by-step process. I think first and foremost, we're really excited where we are today. We've seen some early preclinical data from at least 2 formulations that are showing substantially higher bioavailability than ganaxolone. And we understand that we're going to start in humans with these new formulations. We're going to think about how to really maximize both peak and trough and to achieve steady-state concentrations. And certainly, right now, our thinking is to bring this formulation first into a new indication. And how we're thinking about prior indications like CDD, I would say, TBA.

I mean, my general feeling, Joe, is that if we know that 10% or 20% of patients don't respond to ganaxolone and CDD, there's an obvious opportunity to go back and restudy a new formulation in those patients, given that we really believe that blood levels are tied to the lack of success in those patients and that a new formulation with bioavailability would certainly increase the odds of success.

I think there are some real practical challenges with that, Joe. We'll -- can we enroll patients in a second CDD study? So I would say on the CDD front TBA, we certainly are thinking about the opportunity in new indications, first and foremost, and we're giving a lot of thought to TSC as well at this time. Most importantly, as I mentioned, I'm really excited about where we are and the opportunity to have several shots on goal next year. And I think we have a very good understanding from the Marigold data of exactly what we'd like to achieve with the new formulation. So I'll stop there. Thanks for the question, Joe. And operator, why don't we go to the next question.

Your next question comes from the line of Joon Lee with Truist Securities.

For the RSE trial, where are you now on enrollment? And what gives you the confidence that you can complete enrollment by year-end? And will the -- the start of RESET trial and an ESE be contingent on RAISE trial at enrollment completion? And I have a follow-up.

Thanks, Joon. Our -- all of our timelines on the RSE trial, and the RAISE trial are based on our expected per patient per site on a monthly basis initiations. And we're expecting -- we've been very transparent about this. We expect that our active sites will enroll somewhere between 3 to 6 patients per year. We have seen that early on in the trial, the sites that we expected to be high enrollment sites have really there, thus far, their enrollment curves have been in line with our per site enrollment expectations, where we've really hit a snag, particularly in Q2, getting some of our key new sites up and enrolling.

As I mentioned, we already feel much better about July. I talked to the clinical team last night, and we continue to be very enthusiastic about new sites getting opened in August and September. And then by the end of Q3, we expect to have the majority of our sites open. And then, of course, with the majority of those sites open, those key sites to enroll somewhere between 3 to 4 patients per year. And that is really how we align on our timing of second half '22.

So the change is really driven by the site initiations, which had really started very nicely end of '21 early '22 through COVID. But as both Joe and I mentioned on the call, really took a turn for the worse in Q2 as personnel changes. We lost several site investigators and more than double-digit site coordinators. And I think people changed their life, they change their lifestyle. It caught us off guard, but those major academic centers are now really playing catch up. Before we go to your second question, Joe, anything you want to add there?

No, Scott, I think you covered it.

And Joon just a quick follow-up because I want to make sure we get the other questions.

Yes. So the question was actually included, whether the start of recent trial to be contingent upon exceeding the enrollment rates?

Yes, sorry about that. RAISE 2, which we've now got alignment with the European regulatory authorities, is a study that we're certainly going to talk to our partner, Orion about. We see them as an important strategic partner. We have good alignment with the EMA on that study design. That being said, we'd love the opportunity to speak with Orion about the sites that we're using, CROs, sites that they've had experienced in. And we've already requested through our Alliance group to have those discussions progress. And so my expectation is by the end of this quarter, we will have very strong alignment with Orion and have every intention of moving RAISE 2 forward. RAISE 2 will certainly start in some key European sites will likely add potentially U.S. sites in '22, but we're expecting RAISE 2 to be largely driven by European sites. We don't see that as a conflict at all.

Remember, RAISE is in the U.S. For the ESE study, which, as we've talked about, will really initiate beginning in '22, we certainly feel by the time that study is up and running from a U.S. perspective, our U.S. RAISE trial will have our sites initiated, enrollment curves where they should be. And as Joe mentioned, we will have some overlap, just a handful of sites in the ESE study in the RESET trial. But remember, those patients are coming in through the emergency room, and we see them as very different patient populations.

So there may be a chance of some overlap by Q2 of '22, but we certainly don't think that will impact RAISE timelines at all. And certainly, there are going to be 1 or 2 sites that are just very active in the status epilepticus space, and we feel fortunate that we may have the opportunity to work with them with more than 1 trial. I would not expect any sites from the RAISE trial to be active enrollers in RAISE 2. That would create a potential overlap in terms of patients. So that's something we certainly would avoid between RAISE and RAISE 2. Is that clear Joon?

Yes, yes. That's exactly where I wanted to understand.

Absolutely. Operator next question.

Your next question comes from Douglas Tsao with H.C. Wainwright.

Just maybe since you have Christy on the line provide an update on the pre-commercialization activities for the company and what you've been able to accomplish so far and as you gear up ahead of the potential launch?

Christy, do you want to jump right in? Christy, do you want to jump right in? Did you hear that question? I think you're having some technical issues, Doug. So would you -- do you want me to give -- let's see. Sure. Christy has hired a great team. We now have leadership across sales, across marketing, a great commercial ops leader. And one of our first hires was on the reimbursement side. We -- I'll add to that. I don't want to forget anyone, our clinical supply chain. So we have all the key leadership positions in place. We're actually now recruiting for our sales leadership for our 2 territories. Those leaders will be responsible for hiring our sales reps. Our plan would be to make those offers early into 2022 contingent on approval. And from a sales team perspective, we're in great shape.

Just on the flip side, on the medical science liaison side, we're almost complete with our MSLs across our 5 territories. Our MSLs are now interacting with KOLs. We're building those relationships and really understanding who our key treaters are. And what's been interesting, Doug, is we continue to do a little bit of market research on the side, and we are finding many physicians who have significant numbers of CDD patients in their practice, much more than I would have expected. So the commercial team is really working hard. We feel like we're in great shape. We'll have solid identification of the CDD patient base to a large degree. And we're really looking forward to the launch. We're certainly going to have a very busy AES. Our MSL team is working on a major program in AES, we'll have abstracts. We'll see if we're live.

In fact, I talked to the team yesterday about preparing to our live meeting. I'm a little bit more suspicious come December. We're going to be inside in Chicago, given what's going on with the Delta virus, but we will certainly be ready for all forms of communication, it's online education is necessary in that regard. So I couldn't be happier with where the commercial team is today. Christy is doing a great job. I'm not going to give her a lot of grief because our audio is down today. Christy, are you still out for the count?

I am not. I am now back on.

Okay. Well, I did my best rambling, Christy. I'm sorry about that. Anything you want to add to that, please do.

So Doug, I'm sure that Scott hit on everything. I think some of the high-level things that we're really excited about. First, we're really excited about the filing, obviously. But in anticipation of a priority review, we're looking at a mid '22 launch and one of the largest pieces of work that we fully finalized is the integrated product launch strategy for all 5 functional departments. And then on the heels of that, we've now executed a full enterprise-wide launch readiness blueprint that will support all functional areas within Marinus as an organization to be on board with how this launch should look to the community.

From a marketing perspective, we have our new marketing agency on board. We would like to have a very balanced approach with our caregiver and our physician strategy. I think I heard Scott talk just a little bit about the market research that we're doing, and it continues to inform how we will launch into CDKL5, but we continue to be really encouraged with the communication that we're getting back from our KOLs that will help support us from a one-on-one strategy from a marketing and sales perspective as we get out there and really have these interactions.

And with that, our first-line leaders are being chosen for both access and sales. These access leads will be really important to get the insights from our payers early on, so that we can continue with that strategy. So I hope that wasn't duplicative on what Scott gave you, but we're thrilled where we are. We're encouraged with having this filing in, and we are on track for next year. Have a great day. Operator?

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

I have another question on CDD. It's more like a housekeeping question, Scott. You mentioned in your prepared remarks, how, I guess, your base case expectation is a schedule 4 by the DEA. In general, can you kind of talk about why schedule 4 would be a non-issue as it relates to uptick? And I guess, at what point does a stricter schedule, I guess, start to become an issue? And then for context, can you talk about what kinds of scheduling the other epilepsy drugs have received from the past including some of the gathers out there?

Well, Andrew, thanks for the question. Kim, why don't you talk a little bit first about where -- why you think we'll be scheduled 4, and then we'll turn it over to Christy for the commercial side.

Sure, Scott. So in regards to the scheduling, I think as required, we had to conduct some non-clinical and clinical due liability studies to support the NDAs permission. And based on that data and based on the fact we were comparable and saw similar effect as to volume. That supported part of our recommendation to the FDA as well as benchmark, such as brexanolone, brexanolone has a schedule for say March, June because of make and fashion, similarity with ganaxolone, that in addition to our feasibility assessment data and some data we got from our clinical studies that we conducted over the past several years that led us to make the recommendation as part of our NDA submission to propose a schedule 4. So that's kind of how we landed on that recommendation. And now it will go to DEA for further endorsement.

And Christy, do you want to talk about the commercial thinking about that?

Sure. To Kim's point, where there's several analogs to help support the schedule 4. We've anticipated this with our conversations with specialty pharmacy to understand what needs to be done from that perspective and when we put drug into the channel. They're very well versed in schedule 4 products. We don't anticipate any large hurdles to get through from a specialty perspective. The only slight thing that we need to remember is that during that scheduling period, we do have 90 days from approval to when we actually can officially market drug, which means we put drug into the channel. However, during that time, we're able to fully promote and have good communication with our physicians, understanding where the patients are, identification of the patients. So really, we have that 90-day period where we'll pause and wait for the scheduling to confirm, but it will be a schedule 4, which then will update our PI and all necessary materials that are associated.

Let me just -- yes, do you want to remind folks about EPIDIOLEX and their scheduling just as a comparator?

Is that to me Scott?

Yes.

So EPIDIOLEX initially was scheduled, schedule 5. However, subsequently, the scheduling was removed from EPIDIOLEX. So it's currently not a scheduled drug. But I don't believe that the schedule 4, I think, we're fairly consistent with our other anti-epileptic drug, and I don't anticipate or bay a barrier. And I know Christy can -- she just mentioned, I don't just see a barrier to our commercialization or uptake.

Makes sense.

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

Yes. As you've gotten into the research and really touching all the sites and everything and getting ready for this launch for CDD. Can you just give us a sense of the patients, you started to -- I think the Scott, you mentioned that as you guys have done more work, you found more patients. Give us a sense of the number of patients in the U.S. that you thought you had out there a year ago and how many you're thinking there are right now? And how many you know where they are and just how much visibility we have on that? And then second of all, just on the Orion. Just remind us some of the products that Orion has done a really good job with and impressed you to make them a partner. Have they done epilepsy before? Is it really just kind of orphan?

Thanks Marc. Let me take the second part on Orion, and then I'll flip it -- and I'll give a little bit of background on patients, and then I'll flip it over to Christy. Orion, the really nice thing about the Orion team is that they have both neurology expertise. So one of their key products is in the area of Parkinson's disease. And second is there in the ICU, and they have Precedex in Europe. They have recently branched into orphan products. And in fact, they have a leader on the commercial team who has tremendous experience with other companies with global pharmaceutical and biotech companies on the rare orphan disease side of the commercial business. So they really had all 3 parts of the puzzle from our standpoint. And as a result, they've been really great to work with. We've had strong alignment in terms of how we think about approaching European market, both from an access, reimbursement, data collection standpoint.

So I think they brought a lot of value to the table in our thinking already. And that's led to some discussions from members of Christy's team with some specific countries within Europe and how they're thinking about market access and reimbursement. So we already felt like we've had a nice jump in that regard. And we're very fortunate on the Orion side that they're bringing a lot of skill sets to the table.

On the U.S. side of CDD, and by the way, we're already seeing a changing landscape in a good way in Europe around CDD. We just talked to a U.K. center that became a recent center of excellence, and they've gone from having 2 patients in our Phase III CDD trial to now 20 identified CDKL5 patients, and they believe that number is going to grow. So almost everything we talk about, I think, in the U.S., we're seeing that changing dynamic in Europe as well. On the U.S. side, quick and dirty, we believe about 100 kids are born in the U.S. every year with CDKL5, almost all of them, given the severity of their illness, are going to be diagnosed within the first year of age or recommended for genetic testing. So there's a very high likelihood that, that incidence number we're capturing many of those patients.

And as a reminder, our Phase III data set and the largest global CDD data set, the average age of a patient is 6 years old, aligning with what's being done in the genetic testing world. And so we feel very confident, particularly in that younger population being identified, being referred to centers of excellence. And maybe I'll just stop there, Christy, and kind of turn the rest over to you.

Sure. So just as a quick reminder, there are 8 CDD centers of excellence across the United States and 40 total really key epilepsy centers. We've continued to really, really focus on market research just to test our assumptions. And it's fun when I get to call Scott and say it's better than we thought, right? So we continue to have really deep KOL involvement that has a significant number of patients but what they're doing and what we're finding is they're working very closely with their key local pediatric neurologists and epileptologists to really best treat these patients. I think that COVID will give us an interesting perspective of how patients are being treated in the virtual environment, which is supportive of us. We will have a small sales team.

So in order for us to get to these 8 CDD centers and 40 overall large epilepsy centers, it will be much, much easier and how physicians are engaging with folks. So again, these patients are really concentrated in these large centers, potentially treated locally at some level as well, but we're getting really great feedback and where all of them are.

So in total in the U.S., do you think there how many patients right now?

It's really hard to say. I'll remind you that the ICD-10 code is only about 6 to 10 months old. Gosh, the time is -- I think it was at the end of last summer. So we're not 100% sure, but we do believe it's been about 1 in 40,000. I'll remind you that we're just looking at the pediatric population right now. So really looking between 2 in 4,000 pediatric patients right now because we will not be looking at those adult probably undiagnosed patients for this time being.

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

This is [Naina] on for Atlethia. We were wondering if you could just share more on the TSC Phase III proposed design and also for the top line update in the third quarter. Can you please share any details on what will be disclosed? And how we should think about expectations?

Joe, why don't I turn the call -- turn the question over to you.

Sure. Yes, the Phase III TSC study, it's a fairly standard design, very much like the CDD study. Patients have, in this case, they'll have a 4-week baseline and then be treated for 16 weeks on ganaxolone placebo, same titration schedule, 4-week titration, 12 weeks of maintenance. And the endpoint is going to be the same endpoint as a percent reduction in major seizures. The seizure types are a little bit different. The seizure types in TSC, most of the seizures are focal, which is not the case with CDD. So that's one thing that will be interesting in looking at in the Phase II data when we see it. And again, it's a 23 -- 22, 23 patients, single-arm, open-label.

And so I think there are going to be a number of things we'll look at. We'll look at not just the magnitude of effect, really, with that number of patients, there could be pretty wide confidence intervals around the effect we've seen, a lot of variability. So as long as within that variability, we see a good chance for response and then response by seizure type. But the initial top line results will be the first set of data but we'll continue to explore the data and see if it has the implications for design of the Phase III. Yes. So does that answer your question [Naina]?

Yes, it does.

Okay. Let me just add on to Joe. We certainly are going to be very, very keen on looking at response rates in young patients who are on Afinitor as well as the entire patient cohort that's previously on EPIDIOLEX. So we're thinking about the Phase III as a refractory study, effectively, a third line study, and we want to make sure that the -- we're seeing reasonable and real responses in those patients. That would be the only thing I'd add to Joe's commentary.

And I'll add, I'm really very happy we've done this Phase II. We've learned a lot. We recently had an SAB Board. We've got a lot of insights. If you go back and look at the 2 trial designs for both Novartis for the Afinitor study and the GW study. There are some differences in that study design. And I think we're trying to be extremely thoughtful about appropriate design and thrilled to have Dr. Joe our house epileptologists, Dr. Arroyo, who just joined our Board with great epilepsy background.

And so we'll be quite thoughtful if we need to make any tweaks to the study design, but certainly very happy that we're aligned with the agency and feel like we have a really nice paradigm going forward as well, right? I think it's really important to say if the agency, and if we move forward with CDD and the agency grants us approval, we now have a paradigm of a single study as a potential registration strategy across the board in some of these rare epilepsies. So that was very comforting. And again, a lot of people ask us about our interactions with the FDA, and Kim has done an awesome job, but we continue to have very constructive dialogue. We're transparent. We're forward-thinking with them. And in general, we've been really happy with their interactions with us. Operator, why don't we go to another question. We have time for one more.

Brian Skorney from Baird.

I guess I just wanted to get a little more color on the second-generation formulations. I think I heard you say the word prodrug in the prepared remarks. So I was just wondering, are you looking at actual changes in chemical structure to the API? Or just sort of changes in accepting that are more kind of standard formulations? Or maybe characterize that and also how we kind of think about that projecting to possible new chemical entity and new patents and also what if any, sort of 505(b)(2) pathway references can you utilize in the development of the novel formulations?

Thanks, Brian. And we'll take one more question after you. I really appreciate the question. So we are pursuing both novel formulations from an excipient standpoint and prodrugs. There's been a little bit of work with prodrugs in the past, but we've made a much larger effort. We've made some fantastic progress. We've had -- and we're certainly building an intellectual portfolio around that. We would expect, at least where we are today with the prodrug that it very well could take some additional preclinical work as we move to a final prodrug formulation. So I would actually say, I'm thinking today that our prodrug technology will likely be a third-generation step in the process. It's -- we're hopeful that we could have a prodrug in the clinic in '22. But as of today, the first program and very likely the second that we feel confident about is an excipient-based improved solubility, a set of formulations. And quite honestly, I think this is going to be we have the opportunity to, step 1, improve bioavailability with TID dosing still being very much the first step.

And I think our second step, where I'm really interested in utilizing the prodrug would be in either BID or SR formulations that would really improve dosing, simplify dosing regimens for patients. And so we're going to work to that goal. It may be with an excipient-based formulation. I think we've already -- we -- I can also share with you, we're building some early intellectual property around both of the formulation that we're moving into the clinic in '22. So I think all -- right now, all 3 programs, and we're working on a fourth program today will have incrementally meaningful or has the potential for having incrementally meaning intellectual property. But to your point, I think we're just planning that the prodrug could take a bit longer to do all the necessarily -- all the necessary preclinical work if, in fact, we're able to pursue an NTE pathway.

And right now, that's my hope and expectation. There has been a lot of recent changes to the way the FDA thinks about produgs. We're very familiar with that, those recent decisions and FDA guidelines. And with that being said, I'm still quite enthusiastic that there is a potential path to NCE for us with what we're doing in the prodrug space. I hope that was helpful.

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

Congrats on all the progress. Can you maybe talk about the prevalence of LGS in the U.S. and Europe? And what are some of the key unmet needs in that patient population? And what maybe some of the efficacy endpoints might look like in your Phase II trial? And then separately, it seems like Marinus would be eligible for a rare pediatric disease priority review voucher assuming your approval next year in CDD. Can you just talk about your plans for that voucher?

Joe, why don't we have Steve talk a little bit about the voucher, and then I'll flip it over to you for LGS.

Okay.

Jay. Yes. So we would expect that as a part of the CDD approval from the FDA, we would receive a rare pediatric voucher. I think when we look at our pipeline and kind of the value to us of that, we would look at that more as something we would monetize and use to further strengthen the balance sheet. So -- and that's something we think we could turn pretty quickly. So if we got approval early next year, we with a very good value out in the marketplace that's held pretty steady. So that's our thinking on the use of the pediatric voucher at this point.

So -- and the syndrome is a range of different seizure types, developmental disabilities, and a particular pattern on EEG called slow spike and wave. They have the same needs as a lot of other developmental epileptic encephalopathies. They require a lot of supportive care, sometimes institutional care. They're usually fairly significantly disabled. And like some of the other epileptic encephalopathies, they have drop seizures, which can cause injury. They have a range of behavioral problems. The unmet need in terms of seizure treatment despite recent availability and in there are several drugs approved for Lennox-Gastaut.

Unfortunately, there's still a considerable unmet need. And the majority of patients with Lennox-Gastaut still have uncontrolled seizures. And so there's going to be a need there, and we think it could be a real complement to the other available therapies to have ganaxolone available for those children and adults.

Well, I think we're going to wrap, operator. I want to thank everyone for jumping on the call this morning. I know it's a busy time and an earnings season, and thank you for all the questions. And I just want to finish that how proud I am, the work that the team is doing. The regulatory teams had some great wins this quarter. Christy, as she mentioned, building her team and our clinical operations team working through really difficult times out there. So appreciate everyone's support, and look forward to following up live. Have a good day, everyone.

Ladies and gentlemen, thank you for participating in today's conference call. You may now disconnect.