Marinus Hammered As Its Phase II Post-Partum Depression Studies Come Up Short

Marinus (MRNS) has been a controversial stock for some time, as the company looked to challenge Sage’s (SAGE) Zulresso with its “similar but different” compound ganaxolone, and questions about the efficacy of the drug and its chronic clinical timeline slips dogged the stock. Writing about the shares in late September of 2018, I very nearly top-ticked the stock and the shares declined sharply into the end of 2018 on growing doubts about both the post-partum and epilepsy pipelines before recovering into the mid-single-digits through April of this year.

With Phase II data in hand, the market certainly thinks that Marinus has little-to-no chance of seriously challenging Sage, and looking at the data I’m forced to concur. Maybe there’s a path here for the IV-only form of ganaxolone in severe PPD patients, but I think it will be a very steep climb to get any traction on Sage, particularly with the Phase III results of Sage’s oral drug SAGE-217, and I think the oral-only approach is likewise a non-starter.

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Marinus Hammered As Its Phase II Post-Partum Depression Studies Come Up Short

Where Does Lundbeck Go After A Brutal Round Trip?

I had suggested investors lighten up on Danish drugmaker H. Lundbeck A/S (OTCPK:HLUYY) (LUN.KO) earlier this year, and I wish I had fully followed my own advice and sold out my position, rather than just meaningfully reducing it. Between ongoing disappointments in the performance of its new drug portfolio and the crushing disappointment of its only novel late-stage asset, Lundbeck shares have plunged almost 50% from the mid-year high and now sit down about 10% for trailing 12 months (and back where it was at in late 2016).

At this point I think there is an argument that Lundbeck shares are undervalued, but that will be a tough argument to sell to the Street given the company’s virtually empty late-stage cupboard and the ongoing challenges in its portfolio of recently-approved drugs. On the plus side, Lundbeck has a clean balance sheet and should generate significant cash flow in the coming years, giving management a better set of options to boost the portfolio and near-term performance.

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Where Does Lundbeck Go After A Brutal Round Trip?

Marinus Looks Like More Than A Me-Too

Developing safe and effective drugs is hard, and doing so in the CNS space is even harder than normal. Add in worries that your lead (and only) drug is just a “me-too” product doomed to languish in the shadow of a celebrated advance in the field, and I suppose it makes sense that Marinus (MRNS) would have well-above average volatility.

I may be fundamentally mistaken, but I believe Marinus’s drug ganaxolone is more than just an attempt to hitch a ride on the coattails of Sage Therapeutics’ (SAGE) lead drug brexanolone. While Sage will likely enjoy a meaningful head start getting its drug to market in post-partum depression, I don’t believe that lead will cripple Marinus, and I believe there’s still upside here if ganaxolone proves to be a respectable second-place finisher.

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Marinus Looks Like More Than A Me-Too