SVB Leerink starts Marinus Pharma at OP; PT $10

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SVB Leerink launched coverage of Marinus Pharmaceuticals (NASDAQ:MRNS) with an “outperform” rating and sum-of-the-parts price target of $10. The stock closed at $3.66 on Feb. 5.

Analyst Marc Goodman writes that his investment thesis is four-fold. “We believe Marinus can successfully monetize its depression franchise, which is in part de-risked by the clinical trial success at both Marinus and Sage Therapeutics (NASDAQ:SAGE), through a partnership or a more expensive but doable go-it-alone strategy.”

Marinus and Sage are developing similar drugs in the CNS space. However, Sage’s pipeline is larger and further ahead than Marinus’.

He said Marinus’ emerging epilepsy franchise, which includes two and probably three pivotal programs by the second half of 2019/first half of 2020 is underappreciated as investor focus has been on the company’s post-partum depression franchise.

“We like the epilepsy space and the company’s genetically-driven, biomarker-focused development strategy, which should not only increase both regulatory and commercialization success in CDKL5/PCDH19 populations, but also drive off-label usage in a broader population of refractory epilepsy patients who are positive for this biomarker,” he added.

Mr. Goodman also said there appears to be an “arbitrage opportunity” between valuations of Sage, which has a market cap of $6.9-billion and Marinus’ $192-million, given that both companies have very similar products.

“And, why shouldn’t Marinus’ ganaxolone [drug candidate] work in major depressive disorder like SAGE’s oral SAGE-217, even when acknowledging that Sage has a better internal discovery engine, a more diversified pipeline, and is further along in development of its key asset,” he added.

Stephen Kilmer