Marinus Pharmaceuticals (NASDAQ: MRNS) is a micro-cap pharmaceutical stock with multiple Wall Street analysts seeing significant upside. Both Oppenheimer and Cantor Fitzgerald recently issued or reiterated massive price targets for the company. Oppenheimer's $6 target signals that shares could rise 241% from their current $1.76 level, which is over triple-bagger potential.

Cantor Fitzgerald’s target is even more striking. The $13 price target is the highest among analysts covering Marinus. It implies that Cantor believes shares could rise by over seven times. On average, the analyst community aligns more with Oppenheimer's estimate at $6.89 per share.

Still, that’s an implied upside of 291%. However, it’s also important to note that analysts like Baird do not see much potential in the stock, with a price target of just $2.

So, what exactly does Marinus do, and what’s the deal with these massive differences in price targets? I’ll dissect those questions by diving into the company’s history and future.

ZTALMY: Generating Uninspiring Revenue

Marinus differentiates itself from many small pharmaceutical companies in a big way. It is in the commercial stage, as opposed to the clinical stage. This means that the company possesses medications approved by regulatory authorities, like the Food and Drug Administration (FDA), rather than those that researchers are studying.

This means the company can actually sell drugs and generate revenue, hence the commercial label. However, it has little to show for itself in terms of sales. Over the last four quarters, the company’s revenue has ranged from $7 million to $8 million.

The company’s primary drug, ganaxolone, marketed as ZTALMY, received FDA approval in 2022 to treat CDKL5 deficiency disorder. This very rare form of genetic epilepsy affects around 100 newborns per year. The company believes there are around 2,000 addressable pediatric patients.

Because of this, the drug's market is small, not allowing the company to capitalize significantly on its approval. Additionally, one-third of the product's revenue comes directly from Medicaid, which is U.S. government-provided healthcare for low-income individuals.

It typically has lower reimbursement rates than private insurance. That results in Marinus getting less revenue per prescription. The company’s product revenue did rise 87% year over year last quarter; however, the $7.9 million figure is still very small in absolute terms.

Failed Phase 3 Trial Causes Marinus Shares to Plunge

Marinus needs ganaxolone to get approved to treat other diseases and increase revenue. It hoped to treat refractory status epilepticus (RSE), a condition that affects around 150,000 per year, with an intravenous version of ganaxolone. However, Phase 3 trial results were disappointing, and shares dropped over 82% on the day of the April release. The company continued researching the drug, but the results in June were also disappointing.

The company is meeting with the FDA in the fourth quarter of 2024 to discuss how to proceed. However, the firm said it believes a strategic partner would better handle further research on the intravenous version of the drug. Marinus's revenue from this drug would likely be significantly reduced by working with a partner. At this point, Marinus’s ability to bring in significant revenue from treating RSE should largely be left out of the equation.

TSC Trial Results Hold the Keys for Marinus

However, the company is working to treat another disease that could save the day. The disease is Tuberous Sclerosis Complex (TSC). Marinus aims to treat it using oral ganaxolone, similar to CDKL5 deficiency disorder. However, this drug has a much larger potential market than CDKL5, affecting between 25,000 and 50,000 people in the U.S.

However, the company’s drug is only designed to help a subset of epilepsy patients. It considers its market for this drug to be around 12,700 patients, which is over six times the number of patients it sees for CDKL5.

The Phase 3 trial for treating TSC was recently completed, and the company hopes to release the results before the presidential election. If the results are positive, the drug could gain approval in late 2025 to early 2026. Analysts are setting differing price targets largely based on whether they believe the results will be positive, as they represent a massive inflection point for the firm. They could result in Marinus bringing in significant revenue in the next couple of years or force them back to the drawing board.