Here's Why Marinus Pharmaceuticals Is Sinking Today

What happened

Shares of Marinus Pharmaceuticals Inc. (NASDAQ: MRNS), a clinical-stage biopharmaceutical company, are sliding in response to an upcoming secondary offering. In October, the company told shareholders it had enough cash on hand to fund operations into 2020; disappointed investors have pushed the stock 17.1% lower as of 3:48 p.m. EST on Wednesday.

So what

Marinus Pharmaceuticals is developing ganaxolone, a GABAA modulator as a new type of treatment for epilepsy, and more recently postpartum depression. Back in 2016, the treatment failed to beat a placebo in a phase 3 epilepsy study, and recent phase 2 postpartum depression data wasn't thrilling enough to give the stock much lift.

The results were good enough, though, to convince Marinus to go forward with phase 3 studies that are going to get expensive. To help pay for it all, the company will offer up to 13.8 million shares of its stock. That's going to raise Marinus' outstanding share count around 34%, which will cut into shareholders' slice of profits the company might see from sales of the drug.

Now what

Postpartum depression affects around one in nine women who have given birth in the U.S., and physicians are clamoring for more effective treatment options. An eventual approval could make ganaxolone a blockbuster, but it might not be able to compete with a stronger-looking treatment the FDA is reviewing right now.

Sage Therapeutics (NASDAQ: SAGE) is waiting for the FDA to issue a decision for Zulresso -- formerly brexanolone -- that has been pushed back from December to March 2019. During a pivotal postpartum depression study, patients treated with Zulresso showed a 19.9-point HAM-D score improvement that was 5.9 points better than the placebo group when interviewed 60 hours after starting treatment. Marinus recently reported that 10 patients treated with ganaxolone showed a 16.9-point improvement at the same-length followup that was 4.2 points better than the placebo group.

Perhaps ganaxolone can differentiate itself down the line with larger studies that Marinus has planned, but its chances don't look so great right now.

10 stocks we like better than Marinus PharmaceuticalsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Marinus Pharmaceuticals wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of November 14, 2018

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.