Marinus Pharmaceuticals, Inc.
Q2 2021 Earnings Call Transcript

Published: 10 Aug 2021

[Operator:]

Greetings and welcome to the Marinus Pharmaceuticals Second Quarter 2021 Business Update Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. . 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.

[Sasha 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?

[Scott Braunstein:]

Thank you, Sasha. And welcome to our Second Quarter 2021 Business and Financial Update. Building in 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 announce that we have submitted a new drug application to the FDA for Ganaxolone for the treatment of seizures associated with CBD. 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 two 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 3 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 3 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 RSC IV dosing and method of treatment from the U.S. Patent and Trademark Office. We anticipate the patent to be formerly 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 RSC and aligns with the Phase 3 trial. We believe this patent has the potential to create meaningful shareholder value following the completion of our Phase 3 U.S. registrational study, the RAISE trial. The organization is continuing their work on other key initiatives. Plans for the CBD 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 the 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 UK 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 115 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 nonprofit 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 topline data from the open-label Phase 2 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're 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 3 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 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 site open by the end of Third Quarter, 2021, with our top-line RAISE 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 site 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 ROC. This trial is on track to launch in the first half of 2022. The Phase 2 RESET trial of adjunctive been absalon in Established Status Epilepticus or ESC, 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 who 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 2 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 we're seeing 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 anti-epileptic 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 1 studies in 2022 and ultimately, in addition 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's more likely that we will advance two 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's 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 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.

[Kimberly McCormick:]

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 if priority review designation is granted during that 60-day period. The NDA also includes a 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 or transfer the PRV to a third party. The team is actively preparing for a potential advisory committee meeting. FDA has indicated they may let Marinus know if they plan to hold an advisory committee meeting as early as at the end of the 60-days filing period. This priority review is granted. To produce a action date would be targeted for March 2022. If FDA approves the Ganaxolone NDA, DEA scheduling would then be expected within 90 - days of the approval. To system with our dataset, our recommendation in the NDA, as well as other benchmarks, we anticipate a schedule for designation. We look forward to working with the FDA. As review process, we remain focused in preparing for an 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 raised on what was required in the NDA commission with respect to the metabolite. We recently completed an activity essay for the M2 metabolite and have included results in the NDA submission as agreed with the FDA. We are planning to conduct an in vivo micronuclear test, with common analysis. I anticipate that this testing will be complete in the first quarter of 2022. We expect that if 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 for 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 plan, as part of the written responses to our request for Type B meeting to review our proposed Phase 3 trial. Although it will be a matter of review, a single pivotal Phase 3 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 to other rare orphan indications that we will pursue with oral Ganaxolone. In addition, a scientific replace meeting with EMA on the TSC program is targeted for the First Quarter of 2022. Enrollment and a Phase 3 trial is likely to begin following that meeting. As a reminder, we have submitted orphan drug designation requests to FDA and EMA. We're expecting to receive responses by the end of the Third Quarter. Turning to our trial in Established Status Epilepticus or ESE, I'm pleased to share that we've reached overall alignment with the FDA on the design for our ESE RESET trial. Additionally, we have recently received notification 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'll be further details from Joe on this. Now, I would like to turn the call over to our Chief Medical Officer, Dr. Joe Hulihan. Joe.

[Joe Hulihan:]

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 would 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 a 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 initiations and patient enrollment over the next few months. Our clinical operations and medical teams continue to have strong interactions with our site, including regularly scheduled training, case studies, and interactive educational sessions. The RSC 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. in that most notably, Ganaxolone can be initiated earlier in the course of RSC 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 one of our goals is establishing leadership in the treatment of Status Epilepticus, we were pleased to hear that our approach to studying RSC 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 2 trial of adjunctive Ganaxolone in established Status Epilepticus. The 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. ESC is earlier than RSC in the continuable Status Epilepticus. And it's defined as Status continues the 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. The participation to 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 ESET, showed that response rates to standard of care AED s are less than 50% within the first hour. We believe that 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 AED s alone. Our goal in the study is to find an effective, safe, and well-tolerated dosing regimen for Ganaxolone in ESC. The trial utilizes a novel sequential design to assess the safety and effectiveness of several doses and infusion durations with Ganaxolone. With the optimal dose regimen progressing to a double-blind Phase 2 study versus placebo. In addition, we continue to field requests from investigators for IV Ganaxolone for patients with super-refractory status epilepticus under Emergency Investigation on 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 CBD. And this submission is a very important milestone in those efforts. The NDA is supported by data from the Phase 3 medical trial. A double-blind placebo control trial that enrolled 101 patients. Those treated with Ganaxolone showed a 3.7% median reduction in 28-day major motor seizure frequency, compared to a 6.9% reduction for those receiving 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 one-year open-label extension data from the Marigold study. So far with preliminary data on 48 patients who've reached one 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 2 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. Consistent with 4-week baseline period followed by a 12-week treatment period, and a 24-week extension. We're expecting to initiate a global Phase 3 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, our 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 are also reviewing our clinical development options for Lennox-Gastaut Syndrome, which we believe will complement our work in other pediatric epilepsies as we've had several patients in our CDD and TSC studies who've carried the diagnosis of LGS. Rather than representing a clinical phenotype due to a single genetic mutation, LGS is a clinical syndrome, it 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 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.

[Steve Pfanstiel:]

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 million and 3.7 million in federal BARDA contract revenues for the 3 and 6 months ended June 30th, 2021 respectively. As the BARDA contract was signed in September 2020, there are no revenues associated with this in the corresponding periods from the prior year. Research and development expenses increased to 18.6 million and 37.2 million for the 3 and 6 months ended June 30th, 2021, respectively, as compared to 11.8 million and 26.8 million for the same period in the prior year. The change was due primarily to start-up of the RSC Phase 3 trial, regulatory activities associated with the CDD submission, and increased R&D headcount. General and administrative expenses increased to 6.8 million and 17.2 million for the 3 and 6 months ended June 30th, 2021, respectively, as compared to 4.1 million and 8 million for the same periods 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 million and 51 million for the 3 and 6 months ended June 30th, 2021, respectively, as compared to net losses of 15.7 million and 34.3 million for the same period in the prior year. These totals include non-cash, stock-based compensation expense of 3 million and 8 million for the 3 and 6 months ended June 30th, 2021, respectively, as compared to 1.8 million and 3.7 million for the same periods in the prior year. Cash used in operating activities increased to 23 million and 39.1 million for the 3 and 6 months ended June 30th, 2021, respectively, as compared to cash used in operating activities of 16 million and 30 million for the same periods in the prior year. As of June 30th, 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 and 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.

[Scott Braunstein:]

Thanks, Steve. It has been a highly productive first half of 2021. None of this would've 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?

[Operator:]

Yes. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Joseph Thome with Cowen & Company.

[Joseph Thome:]

Hello, good morning. Thank you for taking our questions and congratulations on the progress. Maybe just a first one on the new formulations. Because the CBD indication may potentially be approved with the first-generation and you ought to be in the clinical TSC. How are you thinking about it? Is it possible to bridge the new formulation back to the initial indications or will the new formulation essentially just be for the next wave of epilepsy indications? And then second, maybe just before clarification, the in vito liquidates activity assay that was mentioned in the prepared remarks, completed in the first quarter of share. Is this necessary ahead of a decision on CDB NDA?. Thanks.

[Scott Braunstein:]

Thanks, Joe. Good morning. And let me just jump and take the second question. We -- we've had bit 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. And so we'll get that year-end and we'll be happy to supplement it should the FDA require it. And we don't see that as a major amendment, we've had that discussion. It will be a relatively brief report. On the new formulation work, it's a step-by-step process. 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. 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 bio availability 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 the 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've given 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.

[Operator:]

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

[Joon Lee:]

Hi. Thanks for the question. For the RSC trial, where are you now on enrollment and what gives you the confidence that you can complete enrolling by year-end? And with the start of RESET trial and ESC be contingent on RAISE trial in enrollment completion. And I have a follow-up.

[Scott Braunstein:]

Thanks, Joon. Our -- all of our timelines on the RSC trials, the RAISE trial, are based on -- are expected per patient, per site on a monthly basis intuition. And we're expecting, and we've been very transparent about this, we expect that our active sites will enroll somewhere between 3-6 patients per year. We have seen that early on in the trial, the sites that we expected to be high enrollment sites have really -- their -- 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. Talked to the clinical team last night, and we continue to be very enthusiastic about new sites getting open 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 aligned 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 worst 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 changed 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?

[Joon Lee:]

No, Scott. I think you've covered it.

[Scott Braunstein:]

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

[Joon Lee:]

Yes. So the question was actually included the -- whether the start of RESET trial be contingent upon getting moments RAISE. Yeah.

[Scott Braunstein:]

Yes. Sorry about that. RAISE 2, which we now got alignment with the European Regulatory Authorities, is the 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 love the opportunity to speak with Orion about the sites that we're using, CROs, sites that they had experience 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. We'll 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 talked about, were really an issue 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 in enrollment curves where they should be. And as Joe mentioned, we will have some overlaps for 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 one 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?

[Joon Lee:]

Yes. Yes. Thank you very much. That's exactly what I wanted to understand. Thank you.

[Scott Braunstein:]

Absolutely. Operator, next question.

[Operator:]

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

[Douglas Tsao:]

Hi. Good morning. Thanks for taking the questions. Just -- maybe since you put Christy online, provide an update on the pre-commercialization activities for the Company and what you've been able to accomplish so far, and if you gear up ahead of the potential launch. Thank you.

[Scott Braunstein:]

Christy, why don't you jump right in? Christy, do you want to jump right in? Did you hear that question?

[Sasha Damouni Ellis:]

I thought she's --

[Scott Braunstein:]

I think we're having some technical issues, Doug. So would you --

[Douglas Tsao:]

Okay.

[Scott Braunstein:]

Do you want me to get -- let's see.

[Douglas Tsao:]

You can take it.

[Scott Braunstein:]

Sure. Christy 's 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. 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 five 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 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 at AES. We'll have abstracts. We'll see if we're live. In fact, I talked to the team yesterday about preparing for a 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 Delta virus, but we will certainly be ready for all forms of communication If 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 their audio is down today. Christy, are you still out to account?

[Christy Shafer:]

I am not. I am now back on.

[Scott Braunstein:]

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

[Christy Shafer:]

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've 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 onboard 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 the 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.

[Douglas Tsao:]

Okay, great. Thank you so much.

[Christy Shafer:]

Have a great day.

[Operator:]

Your next --

[Christy Shafer:]

Operator?

[Operator:]

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

[Andrew Tsai:]

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

[Scott Braunstein:]

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 for and then we'll turn it over to Christy for the commercial side.

[Kimberly McCormick:]

Sure, Scott. Thanks. So in regards to the scheduling, I think, as required we had to conduct non-clinical and clinical abuse Liability study to support the NDA submission. And based on that data, and based on the fact we were compared to arable at similar effect as to volume, that supported part of our recommendations to the FDA. As well as benchmarks, such as has a schedule for that much too because of the metric batch and similarity with Ganaxolone, that additions to our view assessment data and some data we saw from our clinical studies we conducted over the past several years, that led us to make the recommendation as part of our NDA submission to prepare the schedule for. So that's kind of how we went on that recommendation. And now, it will go to DEA for further endorsement.

[Scott Braunstein:]

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

[Christy Shafer:]

Sure. To Kim's point whether it's several analogs to help support the Schedule IV. 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 IV products. We don't anticipate any large hurdles to get here 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 the drug, which means 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 had that 90-day period where we'll pause and wait for that scheduling to confirm that it will be a Schedule IV which when -- then we'll update RPI and all of necessary materials that are associated.

[Andrew Tsai:]

Great. Thank you --

[Scott Braunstein:]

Yeah, do you want to remind folks about EPIDIOLEX and their scheduling, just as a comparator?

[Kimberly McCormick:]

Is that to me Scott?

[Scott Braunstein:]

Yeah.

[Kimberly McCormick:]

EPIDIOLEX, initially, was schedule side. However, subsequently, the scheduling was removed from a EPIDIOLEX. So it's currently not a scheduled drug, but I don't believe that's the schedule is working. We're fairly consistent with other antiepileptic drug, and I don't anticipate there'll be a barrier I know because you can -- I should have mentioned, there's a barrier to our commercialization or update.

[Andrew Tsai:]

Makes sense. Thanks.

[Operator:]

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

[Marc Goodman:]

Yeah. 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 it was Scott, you mentioned that as you guys have done more work, you've found a more patients. Give us a sense of the number of patients in the U.S. that you've thought you had out there a year ago and how many you're thinking they are there now, and how may 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 that impressed you to make them a partner. Have they done epilepsy before as it really just off them? Thanks.

[Scott Braunstein:]

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 they're in the ICU and they have Precedex in Europe. They are -- 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 the European market, both from an access reimbursement data collection standpoint. I think they've brought a lot of value to disable an RSC team 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 feel 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 tables -- table. On this U.S. side of CDD, and by the way, we're already seeing the changing landscape in a good way in Europe around CDD. We just talked to a UK center that became a recent center of excellence and they've done from having 2 patients in our Phase 3 CDD trial to now 20 identified CDKL5 patients, and they believe that number is going to grow. So almost everything we talked 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, are recommended for genetic testing. So there's a very high likelihood that that incidence number were capturing many of those patients. And as a reminder, our Phase 3 data set and the largest global CDD dataset, the average age of a patient's 6-years-old, aligning with what's being done in the genetic testing world. And so we feel very confident, particularly that younger population is being identified, being referred to centers of excellence. And maybe I'll just stop there, Christy, and kind of turn the rest over for you -- to you.

[Christy Shafer:]

Sure. So just as a quick reminder, there are 8 CDD centers of excellence across the U.S., 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 fine 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 neurologist and epileptologist 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 in how physicians are engaging with folks. 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 in where all of them are.

[Marc Goodman:]

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

[Christy Shafer:]

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

[Marc Goodman:]

Thank you.

[Operator:]

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

[Nina:]

Hi, good morning. This is Nina on for Alethia. Thanks for taking our questions. We are wondering if you could just share more on the TSC Phase 3 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. Thank you.

[Scott Braunstein:]

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

[Joe Hulihan:]

Sure. Yeah. The Phase 3 TSC study, it's a fairly standard design, very much like the CDD study. Patients have, in this case, to have a 4-week baseline and then be treated for 16 weeks on actual or placebo, same titration schedule. 4-week titration, 12 weeks of maintenance. And the endpoint, it's 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 vocal, which is not the case with CDD. So that's one thing we'll be interested in looking at in the Phase 2 data when we see it. And again, it's 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 will look at not just the magnitude of effect, really with that number of patients there could be pretty wide competency levels around the effect we've seen, a lot of variability. So as long as within that variability we see a good chance for a 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 has the implications for the design with Phase 3. Yep. So does that answer your question, Nina?

[Nina:]

Yes, it does. Thank you.

[Scott Braunstein:]

Okay. Let me just add on to Joe. We certainly are going to be 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 this Phase 3 as a refractory study, effectively, a third line study, and we want to make sure that they -- we'll see reasonable and real responses in those patients. That would be the only thing I'd add to Joe's commentary. And I will add, I'm really very happy we've done this Phase 2. We've learned a lot. We recently had an SAB Board. We've gotten a lot of insights. If you go back and look at the 2 trial designs for both Novartis for these Centaur study and the GW study, there are some differences in that study design. And we're trying to be extremely thoughtful about appropriate design and I'm thrilled to have Dr. Joe, our house epileptologist, 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 I 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're -- 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's done an awesome job, but we continue to have very constructive dialog, 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.

[Operator:]

Brian Skorney from Baird.

[Brian Skorney:]

Hey. Good morning, everyone. And thanks for fitting me in. I guess I was hoping 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 on acceptance that are more kind of standard formulations, or maybe characterize that? And to also how we kind of think about that, projecting to possible new chemical entity and new patents. And also, what if any, sort of 505B2 pathway references can you utilize in the development of the novel formulations? Thanks.

[Scott Braunstein:]

Thanks, Bryan. 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 has 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 s, 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, in step one, improve bioavailability with TID dosing still being very much the first step. And I think our second step, where I'm really interested in, in utilizing the prodrug s, would be in either BID or SR formulations. That would really improve dosing, simplified dosing regimens for patients. And so we're going to work to that goal. Maybe with it, 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 to 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, we're just planning that the Prodrug could take a bit longer to do all necessary pre-clinical work if in fact we are able to pursue an NCE 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 prodrugs. And were very familiar with that -- those recent decisions and FDA guidelines. And with that being said, I'm still quite enthusiastic that there's a potential path to NCE for us with our -- with what we're doing in the prodrug space. Hope that was helpful.

[Operator:]

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

[Jay Olson:]

Well, hey. Congrats on all the progress and thanks for taking our questions. 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 2 trials? And then separately, it seems like Marinus would be eligible for a rare pediatric disease priority review voucher, assuming you get approval next year in CDD. Can you just talk about your plans for that voucher? Thank you.

[Scott Braunstein:]

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?

[Joe Hulihan:]

Okay.

[Steve Pfanstiel:]

Yeah. Good morning, 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 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 would try and probably quickly monetize that, strengthen the balance sheet and use that to fund continued development. When we look at the value, there's 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.

[Joe Hulihan:]

So --

[Steve Pfanstiel:]

We're talking about LGS?

[Joe Hulihan:]

Yeah. So in terms of frequency of LGS, they're about 40,000 or 50,000 children and adults in the U.S. with Lennox-Gastaut Syndrome. And syndrome is a range of different seizure types developmental disabilities in 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, 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 compliment to the other available therapies to have Ganaxolone available for those children and adults.

[Jay Olson:]

Great, thank you for taking the questions.

[Scott Braunstein:]

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

[Operator:]

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