What happened

Shares of Marinus Pharmaceuticals (NASDAQ:MRNS) fell over 70% today after the company announced results from an important midstage clinical trial for its only drug candidate, ganaxolone.

The experimental therapy was administered to women with postpartum depression as a six-hour infusion followed by an oral dose. That approach led to what the company called a "clinically meaningful" reduction as measured by the Hamilton Rating Scale for Depression after six hours and 24 hours. However, no difference was observed between individuals taking ganaxolone and those taking a placebo after 28 days of treatment. 

Although Marinus tried to spin the results as positive and worth further investigation, investors weren't buying it. One quick look at the competitive landscape shows why that's the case. As of 1:24 p.m. EDT on Tuesday, the stock had settled to a 68.3% loss, handing the company a market cap of just $67 million.

A finger pointing to a declining chart on a touchscreen.

Image source: Getty Images.

So what

Why are investors ignoring management's plea for patience? Well, Sage Therapeutics (NASDAQ:SAGE) earned marketing approval for Zulresso (brexanolone) to treat postpartum depression in March 2019. The drug is also administered via infusion, although the company is developing an orally administered medicine, SAGE-217, for the same indication to remove the inconvenience of a multihour infusion.

Based on the data made available today, there's just no way Marinus Pharmaceuticals and ganaxolone can compete with Sage Therapeutics and its lineup. 

Now what

Marinus is also developing ganaxolone for three separate seizure indications, two of which are in phase 3 clinical trials, but today's move suggests investors are assigning a negligible value to those programs. The company exited March with about $61 million in cash after raising money in December, which is just shy of its market cap today. Simply put, the development-stage company will need to overhaul its drug pipeline and find or acquire new drug candidates to do so. But Wall Street isn't sticking around to find out if that will happen or prove successful.

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