MARINUS PHARMACEUTICALS, INC. [MRNS] Filings

10-Q 1 mrns-20240930x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-36576

MARINUS PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware		20-0198082
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5 Radnor Corporate Center, Suite 500

100 Matsonford Rd

Radnor, PA 19087

(Address of registrant’s principal executive offices, including zip code)

Registrant’s telephone number, including area code: (484) 801-4670

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share	MRNS	Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ⌧ Yes ☐ No.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐	Accelerated filer	☐

Non-accelerated filer ☒	Smaller reporting company	☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐Yes ☒ No

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of November 5, 2024, was: 55,185,622.

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MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

INDEX TO FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2024

PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023	3
	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2024 and 2023	4
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	5
	Consolidated Statements of Stockholders’ (Deficit) Equity for the three and nine months ended September 30, 2024 and 2023	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49
Item 4.	Controls and Procedures	49

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	54
Item 5.	Other Information	54
Item 6.	Exhibits	55
	Signatures	56

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to the “Company,” “Marinus,” “we,” “us,” and “our” include Marinus Pharmaceuticals, Inc. and its wholly owned subsidiary, Marinus Pharmaceuticals Emerald Limited, an Ireland company.

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PART I

FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)



	September 30,		December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	42,184	$	120,572
Short-term investments		—		29,716
Accounts receivable, net		3,840		3,799
Inventory		6,717		2,413
Prepaid expenses and other current assets		4,660		8,746
Total current assets		57,401		165,246
Property and equipment, net		4,882		3,843
Other assets		1,341		1,819
Total assets	$	63,624	$	170,908
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	3,707	$	4,003
Current portion of notes payable		13,475		11,551
Current portion of revenue interest financing payable		3,163		2,211
Accrued expenses		14,159		22,859
Total current liabilities		34,504		40,624
Notes payable, net of deferred financing costs		41,713		61,423
Revenue interest financing payable, net of deferred financing costs		36,039		33,766
Contract liabilities, net		18,108		17,545
Other long-term liabilities		—		785
Total liabilities		130,364		154,143
Stockholders’ (deficit) equity:
Common stock, $0.001 par value; 150,000,000 shares authorized, 55,192,929 issued and 55,185,622 outstanding at September 30, 2024 and 54,585,428 issued and 54,578,121 outstanding at December 31, 2023		55		55
Additional paid-in capital		603,853		588,656
Treasury stock at cost, 7,307 shares at September 30, 2024 and December 31, 2023		—		—
Accumulated other comprehensive loss		—		(20)
Accumulated deficit		(670,648)		(571,926)
Total stockholders’ (deficit) equity		(66,740)		16,765
Total liabilities and stockholders’ (deficit) equity	$	63,624	$	170,908

See accompanying notes to consolidated financial statements.

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MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Revenue:
Product revenue, net	$	8,468	$	5,429	$	23,928	$	13,010
Federal contract revenue		56		1,891		295		10,753
Collaboration revenue		17		18		53		36
Total revenue		8,541		7,338		24,276		23,799

Expenses:
Research and development		16,334		23,661		61,349		73,006
Selling, general and administrative		12,573		14,868		47,909		45,794
Restructuring Costs		—		—		1,950		—
Cost of product revenue		714		455		2,205		1,047
Total expenses		29,621		38,984		113,413		119,847
Loss from operations		(21,080)		(31,646)		(89,137)		(96,048)
Interest income		598		1,895		3,169		6,366
Interest expense		(3,843)		(4,242)		(12,806)		(12,597)
Other income, net		100		1,021		52		1,105
Loss before income taxes		(24,225)		(32,972)		(98,722)		(101,174)

Benefit for income taxes		—		—		—		1,538
Net loss applicable to common shareholders	$	(24,225)	$	(32,972)	$	(98,722)	$	(99,636)
Per share information:
Net loss per share of common stock—basic and diluted	$	(0.42)	$	(0.61)	$	(1.73)	$	(1.89)
Basic and diluted weighted average shares outstanding		57,229,229		53,920,109		57,049,038		52,755,114
Other comprehensive income:
Unrealized gain (loss) on available-for-sale securities		—		43		20		(71)
Total comprehensive loss	$	(24,225)	$	(32,929)	$	(98,702)	$	(99,707)

See accompanying notes to consolidated financial statements.

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MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(98,722)	$	(99,636)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		405		426
Amortization of debt issuance costs		2,278		1,659
Accretion of revenue interest financing debt, net of cash paid		2,784		4,421
Amortization of discount on short-term investments		(149)		(995)
Stock-based compensation expense		14,940		11,638
Amortization of net contract asset/liability		(1,018)		(1,259)
Noncash lease expense		112		146
Noncash lease liability		567		300
Write off of fixed assets		—		61
Write off of right-of-use assets		757		—
Changes in operating assets and liabilities:
Net contract asset/liability		1,581		2,079
Prepaid expenses and other current assets, non-current assets, inventory and accounts receivable		(1,174)		(6,290)
Accounts payable and accrued expenses		(10,116)		(3,559)
Net cash used in operating activities		(87,755)		(91,009)
Cash flows from investing activities
Proceeds from sale of property and equipment		—		9
Maturities of short-term investments		29,885		17,000
Purchases of short-term investments		—		(51,995)
Purchases of property and equipment		(1,152)		(85)
Net cash provided by (used in) investing activities		28,733		(35,071)
Cash flows from financing activities
Proceeds from exercise of stock options		257		783
Prepayments of long-term debt, including financing costs		(19,623)		—
Other cash flows from financing activities		—		(737)
Proceeds from equity offerings, net of offering costs		—		25,920
Net cash (used in) provided by financing activities		(19,366)		25,966
Net decrease in cash and cash equivalents		(78,388)		(100,114)
Cash and cash equivalents—beginning of period		120,572		240,551
Cash and cash equivalents—end of period	$	42,184	$	140,437
Supplemental disclosure of cash flow information
Unrealized gain (loss) on short-term investments	$	20	$	(71)
Financing costs	$	—	$	97
Property and equipment in accounts payable	$	221	$	—
Cash paid for interest during the period	$	7,944	$	6,540
Cash paid for income taxes during the period	$	—	$	903

See accompanying notes to consolidated financial statements.

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MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF (DEFICIT) EQUITY

(in thousands)

(unaudited)


												Accumulated
	Series A						Additional					Other				Total
	Convertible Preferred Stock			Common Stock			Paid-in		Treasury Stock			Comprehensive		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Shares	Amount		Income (Loss)		Deficit		(Deficit) Equity
Balance, December 31, 2022	4,300	$	4,043	49,642,767	$	50	$	542,428	7,307	$	—	$	—	$	(430,521)	$	116,000
Stock-based compensation expense	—		—	—		—		3,741	—		—		—		—		3,741
Net issuance of common stock in connection with the vesting of restricted stock	—		—	22,350		—		—	—		—		—		—		—
Unrealized gain on short-term investments	—		—	—		—		—	—		—		74		—		74
Net Loss	—		—	—		—		—	—		—		—		(34,730)		(34,730)
Balance, March 31, 2023	4,300	$	4,043	49,665,117	$	50	$	546,169	7,307	$	—		74	$	(465,251)	$	85,085
Stock-based compensation expense	—		—	—		—		3,891	—		—		—		—		3,891
Net issuance of common stock in connection with the vesting of restricted stock	—		—	11,625		—		—	—		—		—		—		—
Exercise of stock options	—		—	72,440		—		485	—		—		—		—		485
Conversion of convertible preferred stock into common	(4,300)		(4,043)	860,000		1		4,042	—		—		—		—		—
Unrealized loss on short-term investments	—		—	—		—		—	—		—		(188)		—		(188)
Net loss	—		—	—		—		—	—		—		—		(31,934)		(31,934)
Balance, June 30, 2023	—	$	—	50,609,182	$	51	$	554,587	7,307	$	—		(114)	$	(497,185)	$	57,339
Stock-based compensation expense	—		—	—		—		4,006	—		—		—		—		4,006
Exercise of stock options	—		—	50,338		—		298	—		—		—		—		298
Net issuance of common stock in connection with the vesting of restricted stock	—		—	224,170		—		—	—		—		—		—		—
Issuance of common stock in connection with at-the-market facility offering (average price of $7.17 per share), net of expenses of $529	—		—	3,689,800		4		25,819	—		—		—		—		25,823
Unrealized gain on short-term investments	—		—	—		—		—	—		—		43		—		43
Net income	—		—	—		—		—	—		—		—		(32,972)		(32,972)
Balance, September 30, 2023	—	$	—	54,573,490	$	55	$	584,710	7,307		—	$	(71)		(530,157)		54,537


Balance, December 31, 2023	—	$	—	54,578,121	$	55	$	588,656	7,307	$	—	$	(20)	$	(571,926)	$	16,765
Stock-based compensation expense	—		—	—		—		5,193	—		—		—		—		5,193
Exercise of stock options	—		—	57,665		—		257	—		—		—		—		257
Net issuance of common stock in connection with the vesting of restricted stock	—		—	295,256		—		—	—		—		—		—		—
Unrealized gain on short-term investments	—		—	—		—		—	—		—		20		—		20
Net loss	—		—	—		—		—	—		—		—		(38,669)		(38,669)
Balance, March 31, 2024	—	$	—	54,931,042	$	55	$	594,106	7,307	$	—	$	—	$	(610,595)	$	(16,434)
Stock-based compensation expense	—		—	—		—		4,917	—		—		—		—		4,917
Net issuance of common stock in connection with the vesting of restricted stock	—		—	32,877		—		—	—		—		—		—		—
Net loss	—		—	—		—		—	—		—		—		(35,828)		(35,828)
Balance, June 30, 2024	—	$	—	54,963,919	$	55	$	599,023	7,307	$	—		—	$	(646,423)	$	(47,345)
Stock-based compensation expense	—		—	—		—		4,830	—		—		—		—		4,830
Net issuance of common stock in connection with the vesting of restricted stock	—		—	221,703		—		—	—		—		—		—		—
Net loss	—		—	—		—		—	—		—		—		(24,225)		(24,225)
Balance, September 30, 2024	—	$	—	55,185,622	$	55	$	603,853	7,307		—	$	—		(670,648)		(66,740)

See accompanying notes to consolidated financial statements.

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MARINUS PHARMACEUTICALS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Description of the Business and Liquidity

We are a commercial-stage pharmaceutical company dedicated to the development of innovative therapeutics for the treatment of seizure disorders, including rare genetic epilepsies and status epilepticus (SE). On March 18, 2022, the U.S. Food and Drug Administration (FDA) approved our new drug application (NDA) for the use of ZTALMY® (ganaxolone) oral suspension CV for the treatment of seizures associated with Cyclin-dependent Kinase-like 5 (CDKL5) Deficiency Disorder (CDD) in patients two years of age and older. ZTALMY, our first FDA approved product, became available for commercial sale and shipment in the third quarter of 2022. On July 28, 2023, the European Commission (EC) granted marketing authorization for ZTALMY for the adjunctive treatment of epileptic seizures associated with CDD in patients two to 17 years of age. ZTALMY may be continued in patients 18 years of age and older. We have an exclusive collaboration agreement with Orion Corporation (Orion) for European commercialization of ganaxolone for ZTALMY. Orion has prepared for the expected commercial launches of ZTALMY in select European countries, and they have informed us that they will be considering the outcome of our strategic alternatives review we announced on October 24, 2024 before committing to launch timing and further launch preparations. On July 18, 2024, we announced that the China National Medical Products Administration has approved ganaxolone oral suspension for the treatment of epileptic seizures in patients two years of age and older with CDD. We have a collaboration agreement with Tenacia Biotechnology (Shanghai) Co., Ltd. (Tenacia) for the commercialization of ganaxolone in Mainland China, Hong Kong, Macau and Taiwan.

On October 24, 2024, we announced top-line data from our Phase 3 trial in Tuberous Sclerosis Complex (TSC) (TrustTSC). TSC is a rare, multisystem genetic disorder caused by inherited mutations in the TSC1 gene or TSC2 gene. TSC is often characterized by non-cancerous tumors, skin abnormalities, and severe neurological manifestations including refractory seizures and neurodevelopmental delays. TSC is a leading cause of genetic epilepsy. The TrustTSC trial did not meet the primary endpoint of percent change in 28-day TSC-associated seizure frequency. As a result of the TrustTSC outcome, we discontinued further ganaxolone clinical development, other than activities required by the FDA and EMA specific to post-approval commitments of Ztalmy for CDD, and have taken additional steps to reduce costs, including an approximate 45% reduction in our workforce in the fourth quarter of 2024. We also commenced a process to explore strategic alternatives with the goal of maximizing value for our stockholders and engaged Barclays as an advisor to assist in our review of strategic alternatives. There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or as to the timing of any such agreements or transactions.

In June 2024, we announced top-line results from our Phase 3 RAISE trial of intravenous (IV) ganaxolone for the treatment of Refractory Status Epilepticus (RSE). Status Epilepticus (SE) is a life-threatening condition characterized by continuous, prolonged seizures or rapidly recurring seizures without intervening recovery of consciousness. If SE is not treated urgently, permanent neuronal damage may occur, which contributes to high rates of morbidity and mortality. Patients with SE who do not respond to first-line benzodiazepine treatment are classified as having Established Status Epilepticus (ESE) and those who then progress to and subsequently fail at least one second-line antiepileptic drug (AED) are classified as having RSE. The top-line results from RAISE showed that the trial met its first co-primary endpoint, a statistically significant proportion of patients had status epilepticus cessation within 30 minutes of initiating IV ganaxolone compared to placebo, but failed to achieve statistical significance on its second co-primary endpoint, the proportion of patients not progressing to IV anesthesia for 36 hours following initiation of IV ganaxolone compared to placebo. We continue to analyze the full RAISE dataset and are scheduled to meet with the FDA by the end of 2024 to discuss a potential path forward for IV ganaxolone in RSE.

We had been developing ganaxolone in formulations for two different routes of administration: IV and oral. The different formulations were intended to maximize potential therapeutic applications of ganaxolone for adult and pediatric patient populations, in both acute and chronic care. While the precise mechanism by which ganaxolone exerts its therapeutic effects in the treatment of seizures is unknown, its anticonvulsant effects are thought to result from positive allosteric modulation of the gamma-aminobutyric acid type A (GABA_A) receptor in the central nervous system. Ganaxolone is a synthetic analog of allopregnanolone, an endogenous neurosteroid, and targets both synaptic and

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extrasynaptic GABA_A. This unique receptor binding profile may contribute to the anticonvulsant, antidepressant and anxiolytic effects shown by neuroactive steroids in animal models, clinical trials or both.

Liquidity

Since inception, we have incurred negative cash flows from our operations, and other than for the three months ended September 30, 2022 due to a one-time net gain from the sale of our Priority Review Voucher (PRV), we have incurred net losses. We incurred a Net loss of $98.7 million for the nine months ended September 30, 2024. There is no assurance that profitable operations will be achieved in the future, and if achieved, could be sustained on a continuing basis. Our accumulated deficit as of September 30, 2024 was $670.6 million, and we expect to incur substantial losses in future periods.

Management’s operating plan, which underlies the analysis of our ability to continue as a going concern, involves the estimation of the amount and timing of future cash inflows and outflows. Actual results could vary from the operating plan. We follow the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess our ability to continue as a going concern within one year after the date the financial statements are issued. We had Cash and cash equivalents of $42.2 million as of September 30, 2024. We believe that such amount is not sufficient to fund our operations for the one-year period after the date these financial statements are issued. As a result, there is substantial doubt about our ability to continue as a going concern through the one-year period from the date these financial statements are issued. Cost reduction activities were implemented in the second and fourth quarters of 2024, as further discussed in Note 13 and Note 14. As a result of the TrustTSC outcome announced in October 2024, we discontinued further ganaxolone clinical development, other than activities required by the FDA and EMA specific to post-approval commitments of Ztalmy for CDD, and have taken additional steps to reduce costs, including an approximate 45% reduction in our workforce in the fourth quarter of 2024. We also commenced a process to explore strategic alternatives with the goal of maximizing value for our stockholders and engaged Barclays as an advisor to assist in our review of strategic alternatives. There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or as to the timing of any such agreements or transactions.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim consolidated financial statements include the accounts of Marinus Pharmaceuticals, Inc. (a Delaware corporation) as well as the accounts of Marinus Pharmaceuticals Emerald Limited (an Ireland company incorporated in February 2021), a wholly owned subsidiary requiring consolidation. Marinus Pharmaceuticals Emerald Limited serves as a corporate presence in the European Union for regulatory purposes. The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all information and disclosures necessary for a presentation of our financial position, results of operations and cash flows in conformity with generally accepted accounting principles in the U.S. (GAAP) for annual financial statements. In the opinion of management, these unaudited interim consolidated financial statements reflect all adjustments, consisting primarily of normal recurring accruals, necessary for a fair presentation of our financial position and results of operations and cash flows for the periods presented. The results of operations for interim periods are not necessarily indicative of the results for the full year. These unaudited interim consolidated financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2023 and accompanying notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 5, 2024.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from such estimates.

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Product Revenue, net

We recognize ZTALMY revenue in accordance with ASC 606 – Revenue from contracts with customers. Our revenue recognition analysis consists of the following steps: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are capable of being distinct; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue as we satisfy each performance obligation.

Our first FDA approved product, ZTALMY, became available for commercial sale and shipment in the third quarter of 2022. We have three customers, one of which, Orsini Pharmaceutical Services, LLC (Orsini), a specialty pharmacy that dispenses ZTALMY directly to patients, represents approximately 98% of our ZTALMY revenue to date. Our contract with Orsini has a single performance obligation to deliver ZTALMY upon receipt of a purchase order, which is satisfied when Orsini receives ZTALMY. We recognize ZTALMY revenue at the point in time when control of ZTALMY is transferred to Orsini, which is upon delivery to Orsini. The transaction price that we recognize for ZTALMY revenue includes an estimate of variable consideration. Shipping and handling costs to Orsini are recorded as selling, general and administrative expenses. The components of variable consideration include:

Trade Discounts and Allowances. We provide contractual discounts, including incentive prompt payment discounts and chargebacks. Each of these potential discounts is recorded as a reduction of ZTALMY revenue and Accounts receivable in the period in which the related ZTALMY revenue is recognized. We estimate the amount of variable consideration for all discounts and allowances using the expected value method.

Product Returns and Recall. We provide for ZTALMY returns in accordance with our Return Good Policy. We estimate the amount of ZTALMY that may be returned using the expected value method, and we present this amount as a reduction of ZTALMY revenue in the period the related ZTALMY revenue is recognized. In the event of a recall, we will promptly notify Orsini and will reimburse Orsini for direct administrative expenses incurred in connection with the recall as well as the cost of replacement product.

Government Rebates. We are subject to discount obligations under state Medicaid programs, Medicare and the Tricare Retail Refund Program. We estimate reserves related to these discount programs and record these obligations in the same period the related revenue is recognized, resulting in a reduction of ZTALMY revenue.

Patient Assistance. We offer a voluntary co-pay patient assistance program intended to provide financial assistance to eligible patients with a prescription drug co-payment required by payors and coupon programs for cash payors. The calculation of the Current liability for this assistance is based on an estimate of claims and the cost per claim that we expect to receive associated with ZTALMY that has been recognized as Product revenue but remains in the distribution channel inventories at the end of each reporting period.

Federal Contract Revenue

We recognize Federal contract revenue from the BARDA Contract in the period in which the allowable research and development expenses are incurred, and receivables associated with this revenue are included within Accounts receivable, net on our interim consolidated balance sheets. This revenue is not within the scope of ASC 606 – Revenue from contracts with customers.

Collaboration and Licensing Revenue

We may enter into collaboration and licensing arrangements for research and development, manufacturing, and commercialization activities with counterparties for the development and commercialization of our product candidates. These arrangements may contain multiple components, such as (i) licenses, (ii) research and development activities, and (iii) the manufacturing of certain material. Payments pursuant to these arrangements may include non-refundable and

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refundable payments, payments upon the achievement of significant regulatory, development and commercial milestones, sales of product at certain agreed-upon amounts, and royalties on product sales. The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under a collaboration agreement, we perform the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are capable of being distinct; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue as we satisfy each performance obligation.

We must develop estimates and assumptions that require judgment to determine the underlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the stand-alone selling price may include such estimates as forecasted revenues and costs, development timelines, discount rates and probabilities of regulatory and commercial success. We also apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, assessing the recognition and future reversal of variable consideration and determining and applying appropriate methods of measuring progress for performance obligations satisfied over time.

Short-term Investments

We classify our Short-term investments as available-for-sale securities, which include U.S. government agency debt securities and U.S. treasury debt securities with original maturities of greater than three months. These securities are carried at fair market value, with unrealized gains and losses reported in Other comprehensive loss and Accumulated other comprehensive income (loss) within stockholders’ equity (deficit). We did not have any investments as of September 30, 2024. All of our investments were short-term in nature as of September 30, 2023.

Accounts Receivable, net

Net trade receivables related to ZTALMY sales, which are recorded in Accounts receivable, net on the consolidated balance sheets, were approximately $3.3 million and $2.6 million as of September 30, 2024 and December 31, 2023, respectively. As of both September 30, 2024 and December 31, 2023, we had no allowance for doubtful accounts. An allowance for doubtful accounts is determined based on our assessment of the credit worthiness and financial condition of our customers, aging of receivables, as well as the general economic environment. Any allowance would reduce the net receivables to the amount that is expected to be collected. We have three customers, one of which, Orsini Pharmaceutical Services, LLC (Orsini), a specialty pharmacy that dispenses ZTALMY directly to patients, represents approximately 98% of our ZTALMY revenue to date. Payment terms for Orsini are 30 days from the shipment date.

Excluding net trade receivables, Accounts receivable, net represents amounts due to us under the BARDA contract for valid expenditures expected to be reimbursed to us under the terms of the BARDA contract and current amounts due to us from Orion under the collaboration agreement (Note 12).

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Inventory

Inventories are recorded using actual costs and may consist of raw materials (ganaxolone API), work in process and finished goods. We began capitalizing Inventory related to ZTALMY subsequent to the March 2022 FDA approval of ZTALMY, as the related costs were expected to be recoverable through the commercialization and subsequent sale of ZTALMY. Prior to FDA approval of ZTALMY, costs estimated at approximately $2.0 million for commercially saleable product and materials were incurred and included in Research and development expenses. As a result, Cost of product revenues related to ZTALMY initially reflected a lower average per unit cost of materials and continued to do so into the second quarter of 2024, as previously expensed inventory was utilized for commercial production and sold to customers. We expect Cost of product revenues related to ZTALMY to begin to reflect the current on-going average per unit cost of materials for the remainder of 2024 and thereafter.

Debt Issuance Costs

Debt issuance costs incurred in connection with Note payable (Note 10) and Revenue interest financing payable (Note 11) are amortized to Interest expense over the term of the respective financing arrangement using the effective-interest method. Debt issuance costs, net of related amortization, are deducted from the carrying value of the related debt.

Contract Liabilities, net

When consideration is received, or such consideration is unconditionally due, from a customer prior to completing our performance obligation to the customer under the terms of a contract, a Contract liability is recorded. Contract liabilities expected to be recognized as revenue or a reduction of expense within the 12 months following the balance sheet date are classified as Current liabilities. Contract liabilities not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as Long-term liabilities. In accordance with ASC 210-20, our Contract liabilities were partially offset by our Contract assets at September 30, 2024, as further discussed in Note 12.

Liability Related to Revenue Interest Financing and Non-Cash Interest Expense

In October 2022, we recognized a liability related to the Revenue Interest Financing Agreement with Sagard Healthcare Royalty Partners, LP (Sagard) under ASC 470-10 Debt and ASC 835-30 Interest - Imputation of Interest. The initial funds received by us from Sagard pursuant to the terms of the Revenue Interest Financing Agreement were recorded as a liability and will be accreted under the effective interest method upon the estimated amount of future royalty payments to be made pursuant to the Revenue Interest Financing Agreement. The issuance costs were recorded as a direct deduction to the carrying amount of the liability and will be amortized under the effective interest method over the estimated period the liability will be repaid. We estimated the total amount of future product revenue to be generated over the life of the Revenue Interest Financing Agreement, and a significant increase or decrease in these estimates could materially impact the liability balance and the related Interest expense. If the timing or amounts of any estimated future revenue and related payments change, we will prospectively adjust the effective interest and the related amortization of the liability and related issuance costs. The liability related to the Revenue Interest Financing Agreement with Sagard is further discussed in Note 11.

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3. Cash, Cash Equivalents and Short-Term Investments

As of September 30, 2024, our Cash and cash equivalents included $1.1 million of cash accounts in banking institutions and $41.1 million in money market funds. As of December 31, 2023, our Cash and cash equivalents included $1.3 million of cash accounts in banking institutions and $119.3 million in money market funds. Our Cash and cash equivalents are maintained in federally insured financial institutions in excess of the federally insured limit. Included in Other assets at December 31, 2023 was $0.2 million of accrued interest receivable related to our Short-term investments. At September 30, 2024, we had no accrued interest receivable or Short-term investments.

The following table provides details regarding our portfolio of Short-term investments (in thousands) as of December 31, 2023:


	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2023
U.S. Treasury securities	$	26,852	$	138	$	(155)	$	26,835
U.S. Government Agency securities		2,884		31		(34)		2,881
Total	$	29,736	$	169	$	(189)	$	29,716

4. Fair Value Measurements

FASB accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (the exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. In determining fair value, we use quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources.

The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

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Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities.

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Level 2 — Valuations based on observable inputs and quoted prices in active markets for similar assets and liabilities.

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Level 3 — Valuations based on inputs that are unobservable and models that are significant to the overall fair value measurement.

If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. As of September 30, 2024 and December 31, 2023, all of our financial assets and liabilities were classified as Level 1 or Level 2 valuations.

We estimate the fair values of our financial instruments categorized as Level 2 in the fair value hierarchy, including U.S. Treasury securities and U.S. Government Agency securities, by taking into consideration valuations obtained from third-party pricing services. The pricing services use industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar securities, benchmark yields, issuer credit spreads, benchmark securities, and other observable inputs. We obtain a single price for each financial instrument and do not adjust the prices obtained from the pricing service.

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The following fair value hierarchy table presents information about each major category of our financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	Level 1		Level 2		Level 3		Total
September 30, 2024
Assets
Cash	$	1,092	$	—	$	—	$	1,092
Money market funds (cash equivalents)		41,092		—		—		41,092
U.S. Treasury securities		—		—		—		—
Total assets	$	42,184	$	—	$	—	$	42,184
December 31, 2023
Assets
Cash	$	1,255	$	—	$	—	$	1,255
Money market funds (cash equivalents)		119,317		—		—		119,317
U.S. Treasury securities		—		26,835		—		26,835
Agency securities		—		2,881		—		2,881
Total assets	$	120,572	$	29,716	$	—	$	150,288

5. Inventory

Inventories are stated at actual costs and consisted of the following (in thousands):


	September 30,		December 31,
	2024		2023
Raw materials	$	4,806	$	436
Work in process		1,560		1,075
Finished goods		351		902
Total Inventories	$	6,717	$	2,413

6. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

MARINUS PHARMACEUTICALS, INC. [MRNS] Filings
10-Q	[2024-11-12]
10-Q	[2024-08-13]
10-Q	[2024-05-08]
10-K	[2024-03-05]
10-Q	[2023-11-07]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-09]
10-Q	[2022-11-07]
10-Q	[2022-08-11]
10-Q	[2022-05-12]
10-K	[2022-03-24]
10-Q	[2021-11-09]
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10-Q	[2021-05-17]
10-K	[2021-03-09]
10-Q	[2020-11-09]
10-Q	[2020-08-06]
10-Q	[2020-05-04]
10-K	[2020-03-16]
10-Q	[2019-11-06]
10-Q	[2019-08-08]
10-Q	[2019-05-01]
10-K	[2019-03-12]
10-Q	[2018-10-29]
10-Q	[2018-08-03]
10-Q	[2018-05-02]
10-K	[2018-03-07]
10-Q	[2017-10-31]
10-Q	[2017-08-01]
10-Q	[2017-05-01]
10-K	[2017-03-13]
10-Q	[2016-11-08]
10-Q	[2016-08-09]
10-Q	[2016-05-02]
10-K	[2016-03-07]
10-Q	[2015-10-29]
10-Q	[2015-08-04]
10-Q	[2015-05-14]
10-K	[2015-03-12]
10-Q	[2014-11-13]
10-Q	[2014-09-12]
S-1	[2014-05-12]