A class action lawsuit was filed against Marinus Pharmaceuticals, Inc. (MRNS) on June 5, 2024. The plaintiffs (shareholders) alleged that they bought MRNS stock at artificially inflated prices between March 17, 2021 and May 7, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Marinus Pharmaceuticals stock during that period can click here to learn about joining the lawsuit.
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Marinus Pharmaceuticals is a commercial-stage pharmaceutical company engaged in developing innovative therapeutics for seizure disorders. The company’s lead drug candidate, ganaxolone, is being tested to develop intravenous (IV) and oral formulations for treating severe and rare forms of epilepsy. Marinus Pharmaceuticals’ claims about the Randomized Therapy in Status Epilepticus trial (RAISE) are central to the case.
Marinus Pharmaceuticals’ Misleading Claims
The plaintiffs maintain that Marinus and two of its senior officers (Individual Defendants) deceived investors by repeatedly making false and misleading public statements about the company’s business practices and prospects during the Class Period.
As per the lawsuit, the defendants failed to clearly mention the risk of failure to meet the early stopping criteria in the RAISE trial and the impact it would have on a separate Phase 3 RAISE II trial.
Notably, the company stated in the FY22 annual report that the clinical trial endpoints for the RAISE trial were based on treatment outcomes such as initiation of anesthesia for treatment of RSE. The company did not mention anything about the risk associated with the early stopping criteria in the trial or the consequences of failing to meet the same.
Here’s How the Truth Was Revealed
The lawsuit accuses the defendants of omitting truthful information about the risk of failure to meet the early-stopping criteria in the RAISE trial and ancillary issues from SEC filings and related material.
The information became clear in a series of events that took place between April 15, 2024 and May 8, 2024. For instance, on April 15, Marinus provided the update on the Phase 3 RAISE Trial and also reported its preliminary Q1 FY24 results. In the filing, the company mentioned that the interim analysis showed that RAISE did not meet the early stopping criteria. It stated that there would be further clarity only when the trial’s final outcome was determined once the company unblinds and analyses the full data set.
Furthermore, on May 8, Marinus provided another business update. The company noted that it has stopped the Phase 3 RAISE II trial in RSE. The company added that the future development in RSE will be assessed following a review of the topline data from RAISE, expected in summer 2024. The company even stopped clinical trial enrollment in the RAISE and RAISE II trials as part of its cost-cutting initiatives.
Overall, Marinus Pharmaceuticals failed to properly caution investors about the risks associated with the failure to meet the early stopping criteria in the RAISE trial. This caused MRNS stock to plunge by over 82% on April 15, resulting in massive damages to shareholders’ returns.
