Marinus Pharmaceuticals Inc (MRNS) 2020 Q1 法說會逐字稿

Greetings, and welcome to the Marinus Pharmaceuticals First Quarter 2020 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Sasha Damouni Ellis, Vice President, Investor Relations. Thank you. You may begin, Ms. Ellis.

Thank you. With me from Marinus are Dr. Scott Braunstein, Chief Executive Officer; Dr. Joe Hulihan, Chief Medical Officer; and Edward Smith, Chief Financial Officer.

Before we begin, I would like to remind everyone that some of the statements made today could be termed as forward-looking under the securities law. These forward-looking statements, of course, are subject to certain risk and uncertainties that are associated with our business and covered in part in the company's Form 10-K and 10-Q as filed with the Securities and Exchange Commission.

I will now turn the call over to Scott.

Thank you, Sasha. Good morning, everyone, and welcome to our first quarter 2020 business and financial update. As Sasha mentioned, today on the call, I have with me Dr. Joe Hulihan, Chief Medical Officer, who will provide updates on our clinical progress; and Ed Smith, our Chief Financial Officer, who will review our financial statements and the company's cash position. We will be available for questions at the end of the call.

Starting off today's call, I would like to acknowledge that this marks our first earnings and business update conference call. This is an important milestone that reflects the significant progress we have made and the evolution of Marinus to a company that is nearing pivotal trial data with the potential for both an NDA filing and a commercial launch. We have continued our momentum over the past few quarters with several milestones, including promising clinical data from our program in status epilepticus and important financing prior to year-end, the implementation of a broader strategic clinical plan designed to unlock the potential of ganaxolone across a range of rare seizure disorders and an encouraging interaction with the FDA that we will describe in more detail for you shortly. 2020 has already turned out to be an exciting time at Marinus, and we look forward to having our quarterly calls as an opportunity to keep our shareholders up to date and well informed.

I'd like to take a moment to acknowledge the ongoing COVID-19 pandemic. At Marinus, we have been fortunate that, as of today, we have avoided the major impacts and delays that have been so challenging for many of our colleagues across the life sciences. We are encouraged that our upcoming clinical milestones, which include top line data from our Phase III pivotal trial in CDKL5 deficiency disorder or CDD, and the initiation of our Phase II trial in tuberous sclerosis complex or TSC remain on track. I am grateful for the continued commitment and dedication of our team and our investigators. They have enabled us to successfully navigate this unprecedented and challenging time. This has been a difficult period for all of us, and our entire organization has risen to the occasion.

Before summarizing our program highlights, I would like to take a moment to share with you our evolving vision for Marinus and ganaxolone. It has been slightly over a year since I stepped in as Executive Chairman, and, as you know, roughly 9 months since assuming the full-time CEO role, we have made a series of changes to the organization that should help drive our future success. These include key leadership hires, encouraging the focus of our core skill sets, continuing to improve our clinical trial design and execution, broadening our manufacturing capabilities, driving the renewed focus on treating patients with severe forms of epilepsy and, finally, demanding a clinical trial strategy that is based on strong science and meaningful unmet clinical needs throughout the epilepsy community. We see the opportunity to be a leader in the epilepsy space, both in and out of the hospital. Equally important, we will continue to apply strong financial discipline to the business while making the appropriate investments to help us achieve a successful developmental and commercial strategy.

Later on the call, Joe will provide more detailed clinical updates, but before that, I'd like to provide some brief program highlights. Let me start off with our status epilepticus program, also referred to as status or SE. Status is a rare condition where patients are in a prolonged state of continuous or near continuous seizure activity that can lead to permanent damage to the brain and, in some cases, death. Last year, we reported encouraging data from our Phase II dose-finding study of IV ganaxolone in SE with 100% of patients achieving the primary end point, defined as prevention of progression to IV anesthetics within 24 hours of treatment initiation. In addition, we saw a rapid onset of action with a median time to SE cessation of 5 minutes across all doses evaluated. We also noted a numerical dose response trend with 100% of patients at the highest dose and at our targeted serum concentration of 500 nanograms per ml, meeting the primary end point and having no recurrence of status at the 72-hour time point. Additionally, in all patients available for follow-up, we saw no recurrence of SE up to the 4-week visit.

We are confident that ganaxolone has the potential to be a powerful new option capable of addressing the need for a safe and effective treatment for status. We believe that ganaxolone can provide a rapid onset of action and potentially play a role in preventing the devastating consequences of uncontrolled seizures. We have rapidly moved forward with our plans for a Phase III pivotal study and have made excellent progress, including a constructive end of Phase II meeting with the FDA. Joe will provide more details on our plans for the status program later in the call.

Let's next move to our CDD program. CDD is a rare refractory form of pediatric epilepsy with limited efficacious treatments. Last quarter, we announced the completion of enrollment of the Marigold Study, our global double-blind, placebo-controlled pivotal Phase III trial, evaluating oral ganaxolone in children and young adults with CDD. Importantly, we remain on track to report top line data from the trial in Q3 of this year and have begun preparations for the potential NDA file. We have also started to build the team to help lead our commercial strategy. Our early commercial work has begun to fully evaluate the potential market opportunity for the use of ganaxolone in patients suffering from CDD as well as the possible expansion into the TSC population. We will be sharing those plans with you in greater detail should the Phase III trial meet its primary end point. We are looking forward to sharing the data set and our concurrent thinking about the program with you later this year.

As mentioned, we also have announced our plans to expand the ganaxolone franchise into TSC, which is a common cause of genetic epilepsy and a rare disorder that can affect many organs and lead to nonmalignant tumors of the brain, skin, kidneys, heart, eyes and lungs. The decision to expand into TSC was scientifically informed by our discovery of a new biomarker, allopregnanolone sulfate, or Allo-S during our Phase II study in PCDH19-related epilepsy. We believe Allo-S may be an important biomarker to predict which rare genetic epilepsies are most likely to respond to treatment with ganaxolone.

Our analyses have indicated that TSC may be one of those rare genetic epilepsies that are impacted by the abnormal production of allopregnanolone as well as other neurosteroids, thus increasing the likelihood that patients will benefit from ganaxolone treatment. We believe this mechanistically relevant biology-driven approach is an important new chapter in our strategic advancement of ganaxolone, which allows us to focus on indications with the greatest unmet medical need while also maximizing potential benefit for patients and our chance of clinical success.

As part of the larger strategic clinical plan, we have made the careful decision to transition our ongoing Phase III Violet Study to a proof-of-concept trial evaluating Allo-S as a biomarker in patients with a confirmed PCDH19 mutation. As a reminder, PCDH19 related epilepsy is a serious and rare disease characterized by variable early onset cluster seizures and comorbid cognitive and behavioral disturbances with or without accompanying intellectual disability. There were many factors that led us to limit trial enrollment, including the resources required for a global study, the episodic nature of seizures in PCDH19 patients, the potential limited commercial opportunity associated with the indication as well as the overall challenges associated with running a global pivotal study during the COVID-19 pandemic. Overall, we believe this transition will allow us to focus our capital resources on indications where there is a significant patient population that is currently underserved by available treatments. We strongly believe that this is the best use of our resources. Joe will provide additional details on our updated clinical program for PCDH19, but as part of our commitment to that community, we will continue to explore opportunities to provide ganaxolone for patients that could substantially benefit from this therapy and will no longer be eligible for the Violet Study.

Before I transition the call over to Joe for more detailed clinical updates, I'd like to spend a little time highlighting our corporate achievements for the quarter. We recently announced the formation of our Scientific Advisory Board and are fortunate to have 6 globally recognized seizure disorder experts: Dr. Husain from Duke University School of Medicine; Dr. Rogawski from UC Davis Health; Dr. Hirsch from Yale Medicine; Dr. Vaitkevicius from Brigham and Women's Hospital; Dr. Trinka from the Paracelsus Medical University and Dr. French from NYU Langone Health. While the accomplishments of the team are too long to list, I want to highlight that members of our newly formed SAB have contributed to multiple antiepileptic drug approvals, pioneered the field of neuroactive steroids and are leading the establishment of international consensus on the diagnosis and treatment of status epilepticus. We believe that the enthusiasm and participation of our scientific advisers is a testament to the potential of ganaxolone to improve outcomes of patients with severe epilepsies and look forward to leveraging their guidance and expertise on clinical development and global registration strategies as we advance ganaxolone through the clinic.

In addition, we were thrilled to announce the appointment of Sasha Damouni Ellis as Vice President of Investor Relations and Corporate Communications. Sasha brings extensive experience across diverse roles in health care and financial communications as well as issues management and executive visibility, which will be invaluable to Marinus as we look to strengthen our relationship with key stakeholders, including investors, employees, advocacy groups, patient organizations and the media. As you can see, we have put Sasha right to work.

2020 is going to be an exciting time at Marinus with pivotal trial data and the next phase of the development of ganaxolone, which will include 2 additional late-stage clinical trials. We expect continued strong execution throughout the year and look forward to the implementation of our strategic plan to unlock the potential of ganaxolone to transform the treatment paradigm for a number of severe and life-threatening epilepsies.

With that, I would now like to turn the call over to our Chief Medical Officer, Joe Hulihan. Joe?

Thank you, Scott, and good morning, everyone. As Scott mentioned, these are exciting times at Marinus, and I'd like to update you on our clinical plans and key milestones for 2020 and beyond.

So starting off with status epilepticus. Last year, we reported encouraging positive data from our Phase II dose-finding study, and based on these results, we've rapidly advanced our plans for a Phase III registration-enabling trial. We had a highly collaborative and productive end of Phase II meeting with the FDA and can report that we've reached general alignment on key aspects of our Phase III trial design, including the primary end points, the dosing paradigm and the patient population.

The study has 2 co-primary end points, which address the major criteria for efficacy in status epilepticus, stopping status epilepticus rapidly and maintaining seizure control. The selection of these end points was informed by the findings from Phase II and give us reason to be optimistic about the outcome in Phase III.

In Phase II, we saw the median time to seizure cessation was 5 minutes and it was less than 30 minutes for all but 1 patient. So the first co-primary end point for Phase III is the proportion of patients with seizure cessation within 30 minutes without additional treatment. This end point not only reflects rapid onset of action. It also allows the physician to intervene quickly with alternative treatments, if needed.

The other co-primary end point is the percentage of patients without progression to IV anesthesia for at least 24 hours. In the Phase II study, none of the 17 patients required IV anesthesia within 24 hours of initiating treatment, which was the study's primary end point. This is meaningful as a proxy measure for control of status epilepticus and is also an important clinical and health economic end point in and of itself. Morbidity and mortality with IV anesthesia are considerable, and the need for ICU admission and prolonged hospital stays drive the cost of care.

The Phase II study also informed our dose selection for Phase III, and we have agreement from the FDA on this aspect of the study. We found that maintenance of a ganaxolone blood level of at least 500 nanograms per ml for 8 hours was a key aspect in completely controlling status. In Phase III, based on formulation improvements, we will be able to maintain ganaxolone at that target blood level for 12 hours rather than 8.

The study will enroll approximately 125 patients whose status has failed to respond to first-line treatment with a benzodiazepine and then 2 additional second line antiseizure medications, which was the average number of failed second line treatments in the Phase II study. With that number of participants, the trial will have greater than 90% power to detect a 30% difference between drug and placebo. We look forward to continued dialogue with the FDA as we finalize the trial protocol and expect patient enrollment to begin in the third quarter of this year.

I'm also pleased to share that we have already begun identifying and are readying trial sites, which will ensure the rapid initiation of patient enrollment. We expect top line data in the first half of 2022 and feel that the study will provide clinically meaningful results to guide care for a common and catastrophic neurologic emergency.

Turning to CDD. As Scott reviewed, we have completed enrollment in the Marigold Study, our pivotal Phase III study evaluating oral ganaxolone in children and young adults with CDD. As a reminder, this global double-blind, placebo-controlled trial is completed on schedule enrollment of 101 patients between the ages of 2 and 21 with a confirmed CDKL5 gene mutation. Today, I can provide an update that the discontinuation rate continues to be less than 10% and that we are encouraged by the continued high rate of enrollment in the open-label extension arm of the trial.

We are fast approaching our last patient visit and remain on track to report top line data from the trial in the third quarter of this year. We've been able to keep the required trial assessments on track despite disruptions from COVID-19 and the use of electronic seizure diaries is allowing us to access and analyze patient data remotely. We have actively begun preparations for the ND filing that would follow a successful Phase III outcome.

Moving next to tuberous sclerosis complex, or TSC, our newest clinical program, which marks the next step in our biomarker-driven strategy to target indications where we believe ganaxolone is most likely to benefit patients. As Scott said, TSC is a complex disease with diverse manifestations and is a leading cause of genetically determined epilepsy. The seizures of TSC can be one of the most difficult aspects of the illness with multiple seizure types that can change across a patient's life span and that are often treatment-resistant. And our discovery of Allo-S as a potential response biomarker was especially relevant to individuals with TSC since an imbalance in endogenous neurosteroid levels has been identified as a potential factor in seizure causation. Ganaxolone would directly target this imbalance. Our discovery of Allo-S as a potential biomarker for epilepsy has also allowed us to investigate a range of other genetic epilepsies to determine where we would expect ganaxolone to have the highest likelihood of being effective. If confirmed, this finding would realize a goal for individualized treatment, one that focuses the use of medication in those patients most likely to benefit while also preventing the challenging, often years-long journey epilepsy patients can face while searching for an effective treatment.

Our Phase II open-label trial in TSC will evaluate the safety and tolerability of adjunctive ganaxolone in approximately 30 patients from ages 2 to 65 with highly refractory seizures. Study participants will receive up to 600 milligrams in oral liquid suspension of ganaxolone 3 times a day for 12 weeks. Patients who meet eligibility criteria may continue ganaxolone treatment in a 24-week extension. The primary end point is percent reduction in monthly seizure frequency relative to baseline. In line with our biomarker strategy, we plan to analyze whether there is an association between Allo-S levels and seizure improvements. We've already made considerable progress in preparing for the initiation of this trial with 1 of the 6 planned trial sites already open. We anticipate beginning to screen and enroll patients during this quarter and do not anticipate any delays in trial progress related to COVID-19. We plan to report top line data from the study in the third quarter of 2021.

Finally, I'd like to touch on the Violet Study, our trial in PCDH19-related epilepsy. Earlier in the call, Scott detailed that we've decided to transition ongoing Phase III program to a proof-of-concept study. This study will stratify patients into 1 of 2 biomarker groups based on Allo-S levels, and they will be randomized to ganaxolone or placebo within each stratum. The trial will consist of a prospective baseline period to collect seizure data, followed by a 17-week double-blind treatment phase. Patients randomized to ganaxolone will titrate over 4 weeks to a dose of up to 600 milligrams of oral liquid suspension 3 times a day and maintain that dose for 13 weeks. We expect to complete the double-blind portion of the trial with approximately 15 to 20 patients and anticipate top line data in the first half of 2021.

With these studies, we have developed a clinical program focused on rare epilepsies with high unmet need and where we believe ganaxolone has real potential to improve patient outcomes. The next few months will see many program milestones with new data from our pivotal study and the initiation of late-stage trials, and we look forward to sharing our progress with you.

Before I turn the call over to Ed to review our financials, I'd like to sincerely thank our investigators and study site personnel whose dedication to their patients and to advancing studies that could yield new treatments has ensured the continuity of our programs despite the rapidly evolving challenges to the health care system posed by COVID-19. And most importantly, on behalf of Marinus, I would like to thank the patients and their families who participated in these trials. We are increasingly confident that our efforts will lead to meaningful improvements for patients and families who must deal with the challenges of such severe neurologic disorders.

With that, I'll turn the call over to Ed.

Thanks, Joe, and good morning, everyone. Our financial results for the first quarter of 2020 released this morning reflect the continued expenses associated with our ongoing clinical development programs for ganaxolone.

For the first quarter of 2020, R&D expenses were $15 million compared with $8.9 million for the same period in 2019. This increase in research and development expense is mostly attributable to the NDA-enabling clinical and manufacturing activities in support of our most advanced clinical program in CDD. In addition, we have begun to incur costs associated with our preparations to commence a Phase III pivotal trial in status epilepticus which are partially offset by reduced nonseizure disorder costs driven by the completion of our Phase II PPD studies last year.

General and administrative costs are consistent quarter-to-quarter, which were $3.9 million versus $3.7 million for the first quarter of this year and last, respectively. Our net loss for the first quarter of 2020 was $18.7 million or $0.32 per basic and diluted share compared with a net loss of $12.5 million or $0.24 per basic and diluted share for the same period in 2019. As of March 31, 2020, we had approximately $77.8 million in cash, cash equivalents and investments compared with approximately $91.7 million at the end of the year. Our current cash and investments, without taking into consideration any potential cash inflows to the company, provide runway into the third quarter of 2021, assuming our current scale of operations, as described earlier by Scott and Joe.

Before opening the call for questions, I'd like to thank our investors for their continued support and confidence in our programs. I also want to, of course, thank the entire management team and all Marinus employees for their hard work and dedication to our mission. We look forward to continued momentum and progress through 2020. Thank you, and with that, we will now open the call for questions.

(Operator Instructions) The first question is from Marc Goodman, SVB Leerink.

So first question is, should we assume, from the conversation about PCDH19, that this is basically a switch from that to TSC as far as a program that you're going to be pursuing over the goal line to get approval for that indication?

And second of all, can you talk about how you've avoided these COVID clinical trial issues? It just seems like everybody seems to be having trouble, and it's great to hear that you're not and you don't plan to, but can you talk about that and why it is? And there was something specifically in the press release about CDD Phase I supportive trials, no delays or there could be delays. Just -- can you just give us a little more color on what you meant there?

Sure. As we kicked it off this morning, as everyone can appreciate, Joe, myself, Ed, Sasha, are in different locations, and we're trying our best to mute our phones before we answer. So if there's a delay, we'll make sure we remind everyone.

So let me tackle the first question, Marc, about our strategic plan, PCDH19 relative to TSC. Yes. I think you should assume that TSC, in our mind, is a program that we'd like to see move rapidly through Phase II and with a positive outcome in CDD and a strong proof-of-concept study in TSC. We would be very interested in initiating the Phase III in the first half of next year for TSC, again, if our programs all point in that direction. We're thinking about that for several reasons. We think the biomarker signal in TSC is equally strong, at least from a blood sample and data standpoint, to support the potential efficacy of ganaxolone in TSC, and we think the market is substantially larger. Our feedback with the investigator community that there's a huge amount of interest to study additional drugs in the TSC population, and we are very interested in seeing how our proof-of-concept data plays out. On the flip side, for PCDH19, as you know, Marc, this is a study that was already underway when I took over as Executive Chairman. I think in the early days of our market research work, I had some concerns about the market potential here. We saw in the clinical trial that the number of patients that were out there, we certainly could find enough to do a Phase III, but we were concerned that, ultimately, this was a much smaller market opportunity. I think I've spoken with all of you that very different than CDD, and I would say, even the TSC population, many children with PCDH19 are well controlled on their current antiseizure regimen, and it's really only a handful of patients, somewhere between 30%, 40% and 50% that wind up needing supplemental medications. And again, it's a very episodic fashion. So our decision to move away from a Phase III trial and a filing strategy with PCDH19 is really one of resource allocation.

Now that being said, Marc, I think we can really see some true proof-of-concept data from what I would now consider a Phase II study in PCDH19. We're going to continue to run that as a blinded study. We'll be able to look, at least in a good number of patients, at our results in those patients that produce very low allo levels and abnormally high allo levels. And our hope would be if all programs continue to show positive data, or at least our Phase III programs show positive data, we would strongly consider a strategy of a biomarker study in the future that included multiple genetic orphan epilepsies, PCDH19 being a part of that, to really think about a broader allo biomarker strategy and Phase IV program. So that's the logic around the switch really from PCDH19 to TSC. I think we can really condense timelines if things all work in our favor. And as we said, the market opportunity is several times larger and I think the unmet need is significantly larger as well.

On the -- and I'll ask Joe to make a few comments in a minute as well. But just to move to the COVID clinical trial issues, we have been fortunate. A lot of it is serendipity, a lot of it is timing, a lot of it is our trial designs. But from a CDD standpoint, the fact that our efficacy data is an electronic diary system that patients are doing at home, that relieves a lot of stress from a visit standpoint, patients needing to come to the hospital. That being said, our team was very early in moving to telephonic visits for the investigators. We talked about that in February, and we -- and much of that activity started to move really before businesses were closed here in the U.S. We looked at our supply chain very early in February. We had some investors at the office middle of February, and that really kind of got our minds thinking about all the things we could do. And so we feel very fortunate from a standpoint of the CDD trial that we're really in very good shape with the tail end of that trial. The efficacy data, the patient visits can all be done telephonically or at home, and so we feel very confident about the timing around that trial.

Status is a little bit of a wait-and-see, right? I mean, we are fortunate, again, end of Phase II meeting with the agency. Telephonically, we heard from the agency very quickly in terms of the final meeting minutes, and our hope and expectation is that as the world starts to open up, our ability to go into Phase III in the second half of the summer should have minimal effect. Of course, if COVID-19 reemerges and hospitals are extremely busy, that will be a real challenge. But at least where we stand today, we're feeling reasonably confident in our ability for that trial to open as we had planned. Our clinical ops team is doing an incredible job of working with sites now who want to be a part of the trial. Those numbers in terms of recruitment of our sites are right on time. So that's been -- that's -- right now, we feel very confident that as long as the world doesn't get worse, and the U.S. in particular doesn't get worse, we feel as though our Phase III plan should be on track.

In terms of the Phase I trials, there -- as many of you know, there are several supporting trials that are required for FDA approval. We, like other companies, have been affected by Phase I centers closing. But my head of clin ops, Matt Hall, and I talked about this last week, and we're seeing the Phase I centers starting to reopen. We've actually heard about one of the CROs that we use will actually put all our Phase I patients into a hotel if it all goes well. They'll be screened for COVID. They'll be placed in a hotel and then brought into a Phase I center as a potential solution. And so our expectation is that our Phase I work, which is not rate-limiting for our NDA or a filing, those trials will have a 1- to 3-month delay, but we expect them all to be back on track in the summer or the fall.

Joe, any comments on either your general thoughts about TSC, PCDH19 or clinical trial work that I didn't mention that you want to add?

Yes. Thanks, Scott. Well, I think for PCDH19 and TSC, we're going to continue as the PCDH19 study as a proof of concept. I think that one would have been more challenging to enroll and perhaps that's kind of a marker of the lesser degree perhaps of unmet need in terms of rapidity of enrollment. And I think TSC is particularly interesting in terms of the biomarker hypothesis.

For the enrollment issues with CDD, again, Scott mentioned serendipity. I mean the team enrolled that trial. The enrollment was on track, and it was completely enrolled around the time the COVID-19 problems hit. And so we were able to do the remote patient visits. We didn't need to screen any more patients. And PCDH19 was in an earlier phase. Patients needed to be screened, and that had to be done in person, but the CDD visits could be done remotely. Patients can get remote labs. And so again, the team did everything they could to get things done on time and do as much as they can remotely. And also Scott mentioned, we have the electronic seizure diary, so we can access that efficacy data remotely.

Next question is from Jay Olson, Oppenheimer.

Congrats on the progress. There's an FDA decision coming up later this year for Epidiolex for TSC. And I was wondering how you expect that to impact the treatment landscape assuming that drug is approved for TSC. And how do you expect it to impact enrollment of your TSC study and eventually differentiate ganaxolone perhaps with the Allo-S biomarker data you're collecting?

Thanks for the question, Jay. Thanks for the nice comments and appreciate you dialing in today. We did a lot of work around the TSC program at AES last December, and the feedback that we were getting from our investigators, and some of you were very comfortable with today, is that there are quite a few TSC patients already on Epidiolex. The product is either being used via prescription off-label today or quite a bit of patients through expanded access. In sites that are using Epidiolex or expanded access, they are excluded from our trial because that's part of the clinical trial design for the GW program. That's very logical and seen all the time that you can't add on to a new therapy. So all of our sites have been chosen where 100% of our physicians, our investigators are not using Epidiolex in an expanded access format. We would expect quite a few patients in our Phase II study to be on Epidiolex' background therapy. And certainly, we think that'll be very valuable in terms of the read, and we don't see the approval of Epidiolex later this year in TSC at all being a rate-limiting factor. And in fact, some of the centers that we've already talked to and have now -- will begin screening shortly, are very excited about the opportunity and they have told us they have a significant number of patients that they are interested in enrolling in the study. So we think that, that approval will not at all impact our enrollment. Joe, any other comments that you'd like to add around Epidiolex?

Yes. From a clinical standpoint, unfortunately, there are still a lot of unmet need. Every patient responds differently to medications. Our investigators tell us, as Scott mentioned, that they have patients that will qualify for the study despite the availability of Epidiolex or any other seizure medication. Seizures and TSC can be quite refractory. So I think we'll be on track for the enrollment of the study.

Great. That's very helpful. And if I could maybe squeeze in a housekeeping question about the S-3 that you filed last week. There seems to be some confusion about the common and preferred share components and the conversion. So maybe if you could please describe your plans there, that would be great.

Thanks, Jay. I'll turn it over to Ed. And Ed, do you want to take that?

Yes. I got it. Thank you, and good morning. Yes. So the S-3 that we filed last week relates to the preferred stock that we sold as part of the financing that we did in December. So essentially, it's a registration statement that covers the common stock that underlies the preferred, and the preferred that we sold in December upon both the increase in our authorized share count; and secondly, the effectiveness of that registration statement that we just filed, the preferred will, in large part, mandatorily convert into common stock. So we would expect that to occur either later this month or next month.

We have a question from Alethia Young, Cantor Fitzgerald.

Congrats on the progress. I guess, a couple. One, can you talk a little bit about the conversations you guys had with the FDA and like the [40% of that size]? Had you guys kind of expected it be in that range that you would need? Or if you can provide anything incremental there? I thought it -- I guess, I was thinking of a more lower rate, somewhere in that neighborhood.

And then with PCDH19, is it kind of a matter of just that -- I think people kind of touched on this before, just maybe with the COVID consideration, it's not the best place to put your chips, especially, say, maybe in light of the biomarker, kind of prior COVID may be proven somewhat to some degree. Then I have a follow-up, likely.

Thanks, Alethia. I will -- let me handle the PCDH19 question, and then I'll turn it over to Joe for a little bit more commentary on the FDA interaction.

And I'll just say on the FDA interaction, we're just really happy that we got to a place with the agency that we are very much aligned about the best way to move forward with this study, and it's a complex study. So it wasn't an easy interaction. And as I said, I think I'll turn it over to Joe for a little bit more commentary there.

On PCDH19, I would say a few things. Again, this was a study that has been challenging from the day that we started it. I think we realized it was going to take a lot of resources on a global scale, and certainly, that type of study in a COVID-19 environment is particularly tricky. We have a lot of great things going on at the company. And one of the decisions I had to make from an organizational standpoint is, was this a good allocation of our individual resources? Dollars aside but having our people get on planes and really have to take on some real challenges to then ultimately have a study that had -- what I would -- as I said, has limited market potential.

Now that being said, we think the biomarker signal is still very important and very real. I think what we saw in PCDH19 has unequivocally driven us to TSC. And I think what we're seeing in all 3 of our programs, and you'll see it in our new slide deck that'll come out later this morning, you can see that all of these disease states really clump, so to speak, in terms of the underproduction of allopregnanolone in this young population. And so we believe there is a real signal there. No question, PCDH19 drove us to TSC, and no question, we still think it can be a part of the story. But today, where we are from a people standpoint, from a resource standpoint, we think that training that study through a proof-of-concept study is the right decision for the company.

And as I mentioned earlier to Marc's question, I think we can quickly accelerate the TSC program into a Phase III on the heels. And should we see a positive Phase III in CDD, and certainly, we'll have proof-of-concept data in-house around year-end and be able to share with you on TSC early next year, but we'll be looking very aggressively to move that program forward -- and should we see positive signals from our other trials earlier. Let me turn over the FDA question to Joe. Joe, you want to take that?

Sure. Yes. No, we had a collegial -- I'd call it, collegial discussion with the FDA about the trial design. And we gained, I think, agreement on the major outlines of the study. I think we're working out details at this point. It's a complex trial. It's not a well-worn path. But it was a collaborative meeting with suggestions from the FDA about, "Did you consider this and that?" And so I was very pleased with the outcome of the meeting. We're continuing to talk with the FDA. And hopefully, I think we'll have the final protocol -- the protocol finalized soon, and we look forward to sharing all the details once we do.

And then can I ask a follow-up? Is there an analog in the trial that you mentioned?

For status, no. And you asked about the sample size. Yes. I think we -- I think we're still having the same sample size calculation, and I think we'll -- that's holding true and that we'll be able to enroll. Again, hopefully, as Scott mentioned, there -- if there's -- COVID-19 comes -- there's a recurrence, we'll have to address that. But I think we're in good shape in that regard.

The next question is from Douglas Tsao, H.C. Wainwright.

Just in terms of the status trial, I know coming out of Phase II, just given the results, there was sort of a thought of trying to incorporate treatment of some patients a little bit earlier. It sounds like in terms of the initial thoughts on the Phase III, it's going to be very similar in terms of patients needing to have failed a couple of other antiepileptics so -- as well as benzodiazepine. Is that just sort of trying to go with the replicated study that had incredibly strong results? Or were there some other thoughts in terms of the ability to execute a trial, just given COVID-19 that might be a little bit more complex?

Thanks, Doug. I'll kick it off, and then I'll turn it over to Joe as well. I think, first and foremost, we were surprised in the Phase II, Doug, that our Phase II design allowed intervention after one failed therapy, one failed antiepileptic. And we were somewhat surprised that 14 out of 17 of those patients failed at least 2 prior antiepileptics and, in most cases, benzodiazepines, where the mean was about 2.9 prior treatments.

Part of our thinking for this Phase III is we want to really show the value proposition, the health economic impact. And I -- we feel very confident, particularly given the data in the public domain and all our experience now with the medical community, that if these patients have failed a benzodiazepine and 2 prior antiepileptics, their probability of responding to a fourth agent is extremely low, and that's really driving our thinking around the placebo rate. So as we think about a placebo or a delta of 30%, I think we can very well absorb a much higher placebo rate than we would expect to see in the real-world setting, and that was, I think, a critical piece of the thinking.

I think the other piece that is -- that's the real-world out there. When you talk to any one of these epileptologists or neurointensivists, what you see is after a benzodiazepine, you'll get a single agent and then typically a second agent of a different class. It may start with a sodium channel offer and then move to a nonsodium channel blocker as an example. And so I think that's the real-world that we are living in, and we want to actually run the trial that's a very real world.

Before I turn over to Joe for his comments, I think you're bringing up a really important point, Doug, that where we're starting is not where we want to end up. So give or take, we know that there are somewhere between 30,000 and 40,000 refractory patients in the U.S. but the status market is significantly larger than that, north of 100,000. It's the second largest neurologic emergency in the United States behind stroke. And when we look at the ESETT data as an example, 3 drugs that are commonly used today, none of those drugs have more than a 50% response rate, slightly below that. And so we believe we have a drug that has a substantially higher rate of success in the sickest patients. And ultimately, this drug, in our view, should move up into frontline and second-line therapy. But we think the right way to do that is to run the registration trial as a refractory population and then build on that with a Phase IV program in first and second line patients. And by the way, that's a different study. That's really an emergency room study, while our Phase III will be a neuro ICU study. So I'll stop there. Joe, any other comments that you'd like to add?

Not -- no, not a whole lot, Scott. The point at which we're intervening in the trial, people will be on the brink of having to go to IV anesthesia. And so if the study treatment works, we avert progression to IV anesthesia. Patients who don't respond, patients on placebo, they can be rapidly escalated to the next level of care. So -- and the data suggested, as Scott mentioned, the response at that point in the progression of care is low. The study population is very similar to Phase II. The ideologies, we've modified that slightly, but essentially, the study population is very close to Phase II.

And just as a follow-up to that, Joe, maybe are there any sort of changes versus the Phase II sort of based on learnings that you think are worth highlighting just in terms of enhancing the probability success, and just given the results that you saw in that Phase II study, not a lot of room for improvement. But just curious, what types of things that you might have changed.

Well, the drug dosing is probably the most relevant thing to your question. So in Phase II, the data, we were lucky to have data that showed us that the key thing in terms of efficacy, more so than a total daily dose, was maintaining a target blood level, and patients who maintained the target blood level, 500 nanograms per ml or above, for -- there were 3 groups. One group maintained that level for 4 hours. Another group maintained it for 8 hours. The third group didn't achieve that blood level at all during the infusion. The group that maintained the blood level for 8 hours did better. I mean status was controlled very well in all groups, but we had continuous EEG. And looking at the EEG, that 8-hour infusion did better in controlling EEG activity. So in Phase III, because we have a new formulation, we can actually extend that to 12 hours. And that'll, we hope, give us a better chance of "breaking the seizures," or breaking the status. Any of the early in care or latent care, the idea is to interrupt the abnormal circuitry and allow the brain to reset, whether it's a benzodiazepine, that's given and clears very quickly, but hopefully, it will break the status or, on the other end, IV anesthesia that's kept on board for 24 hours or longer. Obviously, you don't continue it forever. You keep the patient under anesthesia for a certain period of time and then lighten it and hopefully you've broken the status. So we're hoping that, that 12 hours rather than 8 hours would give us an even better chance to intervene and stop the status. And I think that's the major difference, yes.

Okay. Great. And then just one -- maybe one follow-up on the epilepsy program. Does it sound like after CDD, you're going to really focus much more on the sort of the allo biomarker sort of pathway? And how do you envision that from pursuing that from a regulatory standpoint?

I think that it fits within the personalized medicine bucket. As Scott mentioned, depending on the signal from CDD, we may look more broadly at the biomarker across the developmental epilepsies, the genetic epilepsies and to further study the Allo-S hypothesis. And so between CDD and TSC, I think that will inform us well about what we do next in terms of where we go with pediatric developmental epilepsy.

My apologies that we didn't get to a few more calls. But we'll be available all after -- all day and afternoon to take questions later today. So operator, one more question, please.

We have a question from Michael Higgins, Ladenburg Thalmann.

Congrats on the continued progress despite the challenging conditions. A couple of quick questions on the pipeline development. On Marigold, you mentioned the enrollment into the open-label extension is high. Can you give us some more detail as to how high that is, what rate it might be?

Thanks, Michael. I think starting off, I'd say we would expect in any study where there's not a lot of opportunities or treatments out there for children with a bad seizure disorder, we would expect the open-label numbers to be high. We're not giving those numbers specifically, but certainly, there's nothing that we've seen on the open-label side that makes us -- gives us reason for concern. And I think we have to take those results cautiously. I think on the discontinuation side, and that's an important one that we're also looking at, and we know the side effects and the tolerability of the drug extremely well. And again, we're very happy that we're not seeing anything that's surprising there. And I think one of the things we had in our trial design was a lot of flexibility around dosing, and so it's something, I think, the investigator community is very comfortable with as well. So it's all we're going to say right now, Michael, but thanks for the question.

And operator, I'm going to just go to closing remarks. Okay? So I just want to thank you all for joining us today for our first quarterly conference call. 2020 will be an exciting milestone rich year for Marinus, and we thank you all for your continued support and confidence. We look forward to providing updates in the coming months as we advance ganaxolone to a potentially transformative treatment for rare and seizure disorders. Sasha has an upcoming event that she wanted to discuss with you, Sasha?

Thanks, Scott. So on June 30, we will be showcasing our clinical efforts of ganaxolone to improve the current treatment landscape, and we'll highlight commercial updates and potential pipeline expansion opportunities during our virtual R&D Day. The event will include presentations from Marinus management, key opinion leaders and advocacy group. Thank you, everyone, for joining the call today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and be safe out there.