Mirum Pharmaceuticals, Inc. — Form 10-Q Summary
Business Context and Reporting Period
Mirum Pharmaceuticals is a clinical-stage biopharmaceutical company developing maralixibat and volixibat for rare cholestatic liver diseases. The filing covers the quarter and nine months ended September 30, 2019. The company was incorporated in May 2018, began significant operations in November 2018, has no approved products, and has generated no product revenue.
During the period, Mirum completed its initial public offering (IPO), advanced the Phase 3 MARCH-PFIC trial of maralixibat, and continued preparations for additional clinical programs.
Key Financial Metrics
| Metric | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 |
|---|---|---|
| Product revenue | $0 | $0 |
| Research and development expense | $12.2 million | $28.6 million |
| General and administrative expense | $3.7 million | $7.5 million |
| Total operating expenses | $15.9 million | $36.1 million |
| Loss from operations | $15.9 million | $36.1 million |
| Interest income | $0.8 million | $1.5 million |
| Net loss | $15.1 million | $34.6 million |
| Net loss per basic and diluted share | $0.84 | $4.47 |
| Net cash used in operating activities | Not separately provided for the quarter | $25.7 million |
At September 30, 2019, cash and cash equivalents were $30.8 million, short-term investments were $95.4 million, and long-term investments were $27.3 million. Cash, cash equivalents and investments totaled approximately $153.6 million. Total assets were $158.3 million, total liabilities were $12.1 million, and stockholders’ equity was $146.2 million. The filing reports no debt financing outstanding; liabilities primarily consisted of accounts payable, accrued expenses and operating lease liabilities.
Operating cash use was $25.7 million for the first nine months. Investing cash use was $122.6 million, primarily from purchases of available-for-sale investments. Financing cash inflow was $127.2 million, including $67.2 million of net IPO proceeds and $60.0 million from the Series A preferred stock financing. The company had an accumulated deficit of $51.9 million.
Gross operating margin and net margin are not meaningful because the company has no product revenue. Stock-based compensation was $2.1 million in the quarter and $4.0 million for the nine-month period.
Material Changes Versus the Prior Comparable Period
- Third-quarter net loss increased to $15.1 million from $0.1 million in the comparable 2018 period; nine-month net loss increased to $34.6 million from $0.1 million for the period from May 2, 2018 through September 30, 2018.
- Third-quarter research and development expense increased by $12.2 million to $12.2 million, primarily due to maralixibat clinical trial and manufacturing costs, increased personnel costs, consulting, and nonclinical activities.
- Third-quarter general and administrative expense increased by $3.6 million to $3.7 million, reflecting increased staffing, stock-based compensation, public-company expenses and professional fees.
- The company completed its IPO on July 22, 2019, selling 5.0 million shares at $15.00 per share and receiving $67.2 million in net proceeds.
- All Series A preferred stock converted into 14.97 million common shares at the IPO, and 1.86 million shares of redeemable common stock were reclassified into permanent equity.
- Cash and investments increased materially from $52.0 million of cash at December 31, 2018 to approximately $153.6 million at September 30, 2019, primarily due to equity financings, although cash and cash equivalents alone declined to $30.8 million as funds were invested.
- In July 2019, the company paid $2.5 million to Shire and $0.5 million to Satiogen after achieving a development milestone related to initiating the Phase 3 MARCH-PFIC trial.
Guidance, Outlook, Risks and Unusual Items
Management expects to complete enrollment in MARCH-PFIC in the second quarter of 2020 and report topline Phase 3 data in late 2020. It expects to initiate Phase 2 trials of volixibat in 2020 and report clinical data in 2022. The company was in discussions with the FDA regarding whether existing Phase 2 data could support an NDA submission for pruritus associated with Alagille syndrome; no agreement had been reached.
Management expects substantial additional losses as clinical development, regulatory, manufacturing, hiring, intellectual property and public-company costs increase. The company states that existing cash, cash equivalents and investments should fund operations for at least twelve months from the issuance date of the financial statements, but additional financing will be required to continue development and potential commercialization. Future financing could dilute stockholders, impose restrictive covenants or require the company to relinquish rights to its product candidates.
- Clinical trials may fail, experience enrollment or manufacturing delays, or produce results that do not support regulatory approval.
- FDA or foreign regulators may require additional trials or may limit an approval to a narrower indication or patient population.
- Maralixibat has been associated with gastrointestinal events and certain liver-related laboratory abnormalities; higher future doses may increase safety risks.
- The company relies on third parties for clinical research, manufacturing and key intellectual property licenses. Failure to maintain these relationships or satisfy license obligations could delay or prevent development.
- License arrangements include potential future milestone payments of up to $109.5 million for certain maralixibat milestones, additional indication-related payments, volixibat milestones, sales milestones and tiered royalties. Timing and likelihood of most payments were not estimable and were not accrued.
- The company operates in a highly competitive market with limited patient populations and potential competition from other ASBT inhibitors, gene therapies and off-label treatments.
- The company holds significant cash and investments at one financial institution above federally insured limits and is exposed to interest-rate, foreign-currency, regulatory, intellectual-property and product-liability risks.
- The filing reports no material pending legal proceedings and no off-balance-sheet arrangements.
Important Facts for Investors to Verify
- Validate the timing, enrollment status and topline data expectations for MARCH-PFIC and the development plan for volixibat.
- Review FDA and EMA feedback regarding the sufficiency of Phase 2 data and proposed registrational programs for ALGS, PFIC and other indications.
- Monitor quarterly operating cash burn, investment balances and the period over which the stated liquidity runway remains adequate.
- Assess future milestone, royalty and licensing obligations under the Shire, Satiogen, Pfizer and Sanofi agreements.
- Evaluate clinical safety, efficacy and patient-enrollment results, particularly for pruritus endpoints and liver-related adverse events.
- Consider dilution from outstanding options, future equity financings and the company’s equity incentive plans.