Mirum Pharmaceuticals, Inc. annual report, FY2023

Mirum Pharmaceuticals, Inc. — Fiscal 2023 Form 10-K Summary

Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone fourth-quarter filing. Mirum is a rare-disease biopharmaceutical company with three approved medicines: Livmarli, Cholbam and Chenodal, plus the clinical-stage candidate volixibat.

Business context

Livmarli is approved in the United States for cholestatic pruritus associated with Alagille syndrome and PFIC, and in Europe for Alagille syndrome.
Mirum acquired the Cholbam and Chenodal assets from Travere on August 31, 2023, expanding its commercial portfolio and adding CTX development potential for Chenodal.
Volixibat is being developed in Phase 2b trials for primary sclerosing cholangitis and primary biliary cholangitis.
The company had 264 full-time employees at year-end, with commercial, clinical, research, finance and business development operations in the United States, Europe and Canada.

Financial performance and liquidity

Metric	2023	2022	Change
Total revenue	$186.4 million	$77.1 million	+$109.3 million
Product sales, net	$178.9 million	$75.1 million	+$103.8 million
License revenue	$7.5 million	$2.0 million	+$5.5 million
Cost of sales	$47.0 million	$12.4 million	+$34.7 million
Gross profit	$139.3 million	$64.7 million	+$74.6 million
Gross margin	74.8%	84.0%	Down 9.2 percentage points
Research and development	$102.6 million	$106.8 million	Down $4.2 million
Selling, general and administrative	$145.9 million	$89.1 million	+$56.8 million
Loss from operations	$(109.2) million	$(131.2) million	Improved $22.1 million
Net loss	$(163.4) million	$(135.7) million	Worsened $27.8 million
Net loss per share	$(4.00)	$(4.01)	—

Livmarli sales were $141.8 million, up $66.7 million, or approximately 89%, from 2022. Bile Acid Medicines contributed $37.1 million after the August acquisition.
Gross margin declined primarily because of royalties, amortization of acquired intangible assets, inventory charges and higher product supply costs. Cost of sales included a $5.2 million charge related to excess inventory and firm minimum purchase commitments and approximately $3.9 million of increased excess and obsolete inventory reserves.
Operating expenses increased 42%, primarily because of commercial expansion, international activities, acquisition-related costs, personnel, advertising, promotion and medical affairs.
The net loss included a $49.1 million loss from terminating and repurchasing the Revenue Interest Purchase Agreement, or RIPA. Interest income increased to $13.7 million, while interest expense was $15.1 million.
Cash and cash equivalents were $286.3 million at December 31, 2023, compared with cash, restricted cash and investments of $251.7 million at December 31, 2022. Restricted cash of $100.0 million was released after the RIPA was terminated.
Net cash used in operating activities was $70.9 million, compared with $120.1 million in 2022. Net cash used in investing activities was $107.2 million, primarily reflecting the Travere acquisition and intangible-asset payments. Financing activities provided $336.6 million.
Accumulated deficit was $556.2 million. Management stated that existing cash and cash equivalents are expected to fund planned operations for at least the next 12 months.

Debt, capital structure and liquidity

Mirum issued $316.3 million of 4.00% convertible senior notes due May 2029, receiving $305.3 million of net proceeds. The notes had a net carrying amount of $306.4 million and an estimated fair value of $387.3 million at year-end.
The notes are senior unsecured obligations, pay interest semiannually and have an initial conversion price of approximately $31.74 per share. Up to approximately 9.96 million shares were reserved for potential conversion at year-end.
Mirum issued 8.0 million common shares in a private placement for net proceeds of approximately $202.2 million to help fund the Travere acquisition. It also raised approximately $14.5 million net through its prior at-the-market offering.
A new at-the-market facility permits sales of up to $200.0 million of common stock; no shares had been sold under that facility as of December 31, 2023.
Potential future obligations include up to $235.0 million of sales-based consideration for the Travere assets, licensing milestones and royalties, commercial inventory commitments and convertible-note obligations.

Material changes versus the prior comparable period

Revenue more than doubled, driven by continued Livmarli commercialization, international partner orders and the partial-year contribution from Cholbam and Chenodal.
R&D spending decreased modestly as Livmarli development activities declined after completion of the MARCH Phase 3 trial, partially offset by ongoing volixibat trials and higher personnel costs.
SG&A increased substantially as Mirum expanded its commercial infrastructure and integrated the Bile Acid Medicines.
The company replaced the RIPA revenue-interest financing with convertible debt, eliminating the revenue-interest liability but recording a $49.1 million extinguishment loss.
Total assets increased to $646.6 million from $352.9 million, primarily because of higher cash and $252.9 million of net intangible assets, including the acquired Bile Acid Portfolio technology.
Common shares outstanding increased to 46.7 million at year-end from 37.0 million, primarily reflecting the private placement, equity compensation and other share issuances.

Guidance, outlook and management commentary

Management expects annual product sales to continue increasing, although quarterly revenue may fluctuate because of distributor purchasing patterns, government orders, prescription mix and gross-to-net adjustments.
Management expects continued net losses as Mirum commercializes its approved medicines, conducts clinical trials, seeks regulatory approvals and potentially makes milestone payments.
Expected 2024 milestones include an NDA submission for Chenodal in CTX, interim analyses from the VISTAS and VANTAGE Phase 2b trials for volixibat, and further international regulatory activity for Livmarli.
The filing reports that, after year-end, the FDA approved Livmarli for PFIC patients five years of age and older on March 13, 2024. Mirum expects to accrue and pay a $10.0 million Shire regulatory milestone related to that approval.
Mirum submitted an additional U.S. application for a higher-concentration Livmarli formulation intended to support treatment of younger PFIC patients, with a decision expected later in 2024. The company also expected an EMA decision on PFIC in the first half of 2024.
In December 2023, the Phase 2b EMBARK trial of Livmarli in biliary atresia did not meet its primary or key secondary endpoints, making the program a significant development setback.

Key risks, contingencies and unusual items

Mirum remains unprofitable and dependent on future product growth, financing capacity and successful regulatory and clinical outcomes.
The company relies on third parties for manufacturing, clinical research, distribution and specialty-pharmacy services, including single-source or concentrated suppliers and channels.
Chenodal is primarily used as the standard of care for CTX but is not FDA-approved or promotable for that indication; FDA approval remains necessary to support broader commercial development.
Chenodal and Cholbam lack meaningful current patent or non-patent exclusivity and face potential compounded and generic competition.
Livmarli relies primarily on method-of-use and formulation patents rather than composition-of-matter patent protection. Licensing arrangements also require royalties, milestones and diligence obligations.
The Travere acquisition involved significant valuation assumptions. The acquired developed-technology intangible asset was recorded at $198.5 million using projected revenues, expenses and discount rates. Up to $235.0 million of additional consideration may become payable based on sales.
Management and the auditor identified material weaknesses in internal control over financial reporting involving inventory existence and valuation, firm purchase commitments, and management review controls supporting the fair value of acquired developed technology. The auditor issued an adverse opinion on internal control effectiveness, although it issued an unqualified opinion on the financial statements.
Management stated that no material legal claims were pending and that no loss contingencies were considered probable or reasonably estimable, but ordinary-course commercial, intellectual-property and employment claims remain possible.

Investor verification checklist

Verify the sustainability and quarterly composition of Livmarli sales, including U.S. gross-to-net deductions, international distributor orders and the contribution from Cholbam and Chenodal.
Track 2024 regulatory outcomes for Livmarli PFIC expansion, the higher-concentration formulation and the Chenodal CTX NDA.
Assess interim and eventual results from the VISTAS and VANTAGE trials for volixibat, including whether the data support registrational development.
Reconcile cash burn with the stated liquidity runway and monitor potential use of the $200.0 million ATM facility.
Evaluate dilution and potential cash obligations from the convertible notes, potential conversion shares, stock-based compensation and Travere sales milestones.
Monitor gross-margin recovery as acquired inventory is sold and as inventory reserves, firm purchase commitments, royalties and intangible amortization normalize.
Follow remediation of the material weaknesses and confirm whether controls over inventory and acquisition-related valuation become effective.
Review manufacturing transfers, specialty-pharmacy concentration, supplier continuity and exposure to generic competition.