Among the range of central nervous system (CNS) disorders afflicting patients in the U.S. each year, status epilepticus (SE) — a condition marked by continuous seizures — accounts for 7–40 cases per 100,000 people. Mostly impacting children under the age of one or adults over 60, SE uncommonly sees novel therapeutic interventions. That’s where drugmaker Marinus Pharmaceuticals (NASDAQ:MRNS) comes into play, which is one reason why I’m bullish on the stock. Another reason is due to bullish technical trends.
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According to the FDA’s Orphan Drug Act of 1984, orphan drugs are those “intended to treat a condition affecting fewer than 200,000 people in the United States.” For that reason, these disorders receive less attention from large-cap pharmaceutical companies such as Merck (NYSE:MRK), Pfizer (NYSE:PFE), and Moderna (NASDAQ:MRNA), which often look to address widespread diseases affecting larger percentages of the population.
Enter Marinus Pharmaceutical, an orphan drugmaker with enormous upside potential. The pharmaceutical company’s stock is currently trading 87% below its all-time-high closing price of $77.52 on August 4, 2015. However, sales for its flagship SE drug, ZTAMLY, have been ramping up since receiving FDA approval in 2022.
Following the announcement of an orphan drug designation, stock prices for these drugmakers typically rise by an average of 3.36%. However, a study by the U.S. Department of Health and Human Services notes that the impact is more significant for drugs developed by smaller companies.
Whereas Merck, Pfizer, and Moderna boast market caps of $306.4 billion, $154.8 billion, and $39.3 billion, respectively, Marinus Pharmaceuticals has a modest market cap of just $534 million. And while the aforementioned Big Pharma companies produce a catalog of medicines, Marinus is primarily focused on one drug that’s already having a significant impact.
First of Its Kind
Founded in 2003, Radnor, Pennsylvania-based Marinus Pharmaceuticals has been spearheaded since 2019 by Scott Braunstein, M.D., who has amassed 30 years in the biopharma sector and also serves as Chairman of the Board. He has sat on biotech boards for over a decade and currently does so for Trevena (NASDAQ:TRVN) and Caribou Biosciences (NASDAQ:CRBU). Formerly, he spent 13 years at JPMorgan (NYSE:JPM) as portfolio manager of its Global Healthcare Fund.
Braunstein has been integral in the development of the company’s premier drug, ZTAMLY, which is the first potential treatment for SE disorders and other rare epilepsies with few to no other treatment options. Based on its late-stage study before the FDA granted approval, the drug proved to reduce seizures by a median of 30.7% for patients receiving it vs. a 6.9% reduction in the placebo group.
Not only is the flagship drug addressing a market need in the U.S., but the company recently announced its Marinus Access Program, which will enable globally-managed access to ZTAMLY “for eligible patients with seizures associated with CDKL5 deficiency disorder (CDD) in geographies where the product is not commercially available.” The plan is to first launch in select European countries in 2024 before branching out further around the globe.
At present, the drug is administered orally. However, the company has 90% of the required 82 patients enrolled in a Phase 3 trial studying the efficacy of ZTAMLY being administered intravenously. That enrollment is expected to conclude in Q1 2024.
In addition to its position in the SE novel therapeutics market, there’s also a bullish case to be made for MRNS based on the stock’s technical chart.
Bullish Patterns and Moving Averages
Not only are shares of MRNS currently trading above their 50- and 200-day moving averages (MAs), but the stock recently exhibited a bullish breakout pattern. On January 11, 2024, MRNS formed a golden cross pattern on its one-year chart, with the 50-day MA crossing over the longer-term 200-day moving average.
The last time the stock posted a golden cross was on February 28, 2023, when it went on to gain 38.84% through May 10, 2023, before the second of two sell-offs drove the price below the 200-day MA on October 8, 2023.
However, since the emergence of the second golden cross pattern on January 11, shares are down 4.5%, indicating that there could be tremendous near-term upside potential in Q1 2024. Supporting this is the fact that the stock has both a bullish moving average consensus and a bullish overall consensus on a one-month time frame based on TipRanks’ technical analysis tool.
Beyond the promise of a looming rally indicated by the emergence of a golden cross pattern, MRNS is also showing sound financials with growing sales projections.
Upcoming Earnings, Sales Projections
Marinus doesn’t announce earnings until March 5, but the company announced preliminary (unaudited) Q4 and full-year 2023 earnings on January 4, as well as forward guidance for Fiscal 2024. MRNS expects the following:
- ZTMALY Q4-2023 net product revenue between $6.5 million and $6.7 million
- ZTMALY 2023 full-year net product revenue between $19.5 million and $19.7 million
- ZTMALY 2024 full-year net product revenue between $32 million and $34 million
While the Q4-2023 consensus EPS forecast for MRNS is -$0.62 per share, the company is less than two years removed from receiving full FDA approval for ZTALMY and just announced its global distribution plan in November 2023.
Additionally, cash, cash equivalents, and short-term investments totaled $150.3 million as of December 31, 2023. This, according to the company, is more than sufficient to ensure that Marinus is able to meet its operating expenses, capital expenditure requirements, and minimum cash balance of $15 million (as required by the company’s debt facility) into Q4 2024.
Lastly, the company’s 2024 full-year projected revenue for ZTALMY represents an increase of 68.37% over 2023 as its sales and distribution network continues to be built out.
Is MRNS Stock a Buy, According to Analysts?
MRNS stock earns a Strong Buy consensus based on nine Buys, one Hold, and zero Sells assigned by analysts in the past three months. MRNS stock’s one-year average price target is $19.44, implying a sizable 96.6% gain from here, with the lowest price target at $9.00 per share and the highest at $27.00.
Institutional investors and insiders are also seemingly on board. The nine largest holders of Marinus stock each hold between 2.5 million and 5.2 million shares, including Vanguard, Blackrock (NYSE:BLK), and Suvretta Capital.
As a percentage of its outstanding shares, institutional investors hold 93.86% of MRNS. For context, Nasdaq behemoths like Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL), and Alphabet (NASDAQ:GOOGL) have 41.89%, 58.72%, and 59.26% institutional ownership, respectively.
Lastly, over the past three months, insider activity has resulted in no Sells and 13 Buys, including CEO Scott Braunstein purchasing 74,600 shares on January 18, 2024, bringing his total position to 235,362 shares.
The Takeaway
Orphan drugs can have outsized positive results for smaller drug companies looking to capitalize on niche markets for novel therapeutic interventions. That’s exactly what Marinus is looking to do following the FDA’s 2022 approval of its SE drug, ZTAMLY. With plans for global distribution and sales ramping up, analysts are bullish on the stock, with a one-year price target indicative of 96.6% upside potential. On top of this, MRNS’s technicals suggest that a rally may be underway.
