Mirum Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Three and six months ended June 30, 2023; filed August 7, 2023. Mirum is a commercial-stage biopharmaceutical company focused on rare and orphan liver diseases. LIVMARLI (maralixibat) is its only FDA- and EMA-approved product, currently marketed for cholestatic pruritus associated with Alagille syndrome. The development pipeline includes LIVMARLI for additional indications and volixibat for primary sclerosing cholangitis and primary biliary cholangitis.
Financial Performance and Liquidity
| Metric | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 |
|---|---|---|---|---|
| Product sales, net | $32.5 million | $17.5 million | $61.6 million | $28.4 million |
| License revenue | $5.0 million | — | $7.5 million | $2.0 million |
| Total revenue | $37.5 million | $17.5 million | $69.1 million | $30.4 million |
| Gross profit | $30.7 million | $15.0 million | $57.3 million | $25.4 million |
| Gross margin | 81.8% | 85.6% | 82.9% | 83.7% |
| Loss from operations | $(24.3) million | $(31.4) million | $(51.4) million | $(64.2) million |
| Net loss | $(74.0) million | $(26.9) million | $(104.2) million | $(63.5) million |
| Net loss per share | $(1.94) | $(0.84) | $(2.75) | $(2.00) |
- Q2 total revenue increased 114.5%, driven by higher LIVMARLI sales and a $5.0 million CANbridge regulatory milestone. Six-month revenue increased 127.5%.
- Q2 operating margin improved to approximately negative 64.7% from negative 179.8%; six-month operating margin improved to approximately negative 74.4% from negative 211.3%.
- Net loss increased primarily because of a $49.1 million loss on termination of the Revenue Interest Purchase Agreement, or RIPA. Excluding this unusual item, reported profitability would have been materially better, although the company remained loss-making.
- Research and development expense declined 13.5% in Q2 and 8.0% for the six-month period, mainly because the MARCH Phase 3 trial was completed in 2022. Selling, general and administrative expense increased 57.1% in Q2 and 57.6% year to date to support LIVMARLI commercialization and international expansion.
- Cash used in operating activities was $36.1 million for the six months ended June 30, 2023, compared with $59.8 million in the prior-year period.
- Investing activities provided $77.6 million, primarily from $120.0 million of investment maturities, partly offset by investment purchases and a $15.0 million licensing-related intangible asset payment.
- Financing activities provided $127.7 million, including $305.3 million of net convertible-note proceeds, partially offset by $192.7 million paid to repurchase future RIPA revenue interests.
- At June 30, 2023, cash and cash equivalents were $297.2 million and short-term investments were $32.7 million, for total cash, cash equivalents and investments of approximately $330.0 million. The company reported an accumulated deficit of $497.0 million.
Material Changes Versus the Prior Comparable Period
- LIVMARLI product sales increased to $32.5 million in Q2 from $17.5 million and to $61.6 million for the first six months from $28.4 million, reflecting continued U.S. commercialization and sales in Europe and other international markets.
- License revenue increased because CANbridge achieved a $5.0 million regulatory milestone in Q2 and GC Biopharma achieved a $2.5 million regulatory milestone earlier in 2023.
- In April 2023, Mirum issued $316.3 million principal amount of 4.00% convertible senior notes due 2029, with $305.3 million of net proceeds. The notes had a $305.6 million net carrying amount at June 30, 2023 and an initial conversion price of approximately $31.74 per share.
- Mirum used $192.7 million of the note proceeds to repurchase all future RIPA revenue interests. The RIPA was terminated, and $100.0 million of previously restricted cash became available for general use. The transaction generated the $49.1 million accounting loss.
- Shares outstanding increased to 38.2 million at June 30, 2023 from 37.0 million at December 31, 2022. Potential dilution included approximately 10.0 million shares issuable upon conversion of the notes, in addition to equity awards.
Guidance, Outlook, Risks and Unusual Items
- Management expects LIVMARLI product sales to continue increasing annually, although seasonality, international ordering patterns, reimbursement, prescription mix and periodic distributor orders may cause quarterly volatility.
- Management expects continued operating losses as it commercializes LIVMARLI, funds clinical trials, seeks regulatory approvals and potentially makes licensing or milestone payments. No specific revenue, earnings or profitability guidance was provided.
- Management expects topline data from the EMBARK Phase 2b biliary atresia trial in the second half of 2023, interim analyses from the VISTAS Phase 2b PSC trial and VANTAGE Phase 2b PBC trial in the second half of 2023, and FDA action on the PFIC supplemental application with a stated PDUFA date of December 13, 2023.
- On July 16, 2023, after quarter-end, Mirum agreed to acquire substantially all assets related to Travere’s Chenodal and Cholbam businesses for up to $445.0 million in cash: $210.0 million at closing and up to $235.0 million tied to future sales milestones. Closing was expected in the third quarter of 2023 and remained subject to customary conditions, including antitrust clearance.
- Concurrent subscription agreements contemplated approximately $210.0 million of common-stock financing at $26.25 per share, conditional on completion of the Travere asset purchase. The transaction would result in substantial equity dilution.
- Management stated that existing cash, cash equivalents and investments were expected to fund current operations for at least the next twelve months, including the company’s planned activities. The filing also states that additional financing may be required and may not be available on acceptable terms.
- Key risks include reliance on a single approved product, regulatory approval and clinical-trial risk, pricing and reimbursement pressure, third-party manufacturing and distribution concentration, intellectual-property challenges, competition from other IBAT inhibitors and gene therapies, convertible-debt obligations, potential dilution and execution risk related to the Travere acquisition.
- The company relies on a single U.S. specialty pharmacy and distributor for LIVMARLI sales and a single distributor in certain international markets. Certain materials and manufacturing relationships are also single-source or concentrated.
- No material legal proceedings or accrued loss contingencies were reported. Disclosure controls and procedures were assessed as effective, with no material changes to internal control over financial reporting during the quarter.
Investor Verification Checklist
- Verify the sustainability and geographic mix of LIVMARLI sales, including gross-to-net deductions, reimbursement access, distributor inventory and customer concentration.
- Assess whether the $330.0 million liquidity balance adequately covers ongoing operating losses, the $210.0 million Travere closing payment and future development or milestone obligations.
- Review the terms, conversion triggers, potential share dilution and cash settlement requirements of the $316.3 million convertible notes due 2029.
- Confirm completion, financing and integration status of the Travere asset purchase and evaluate the probability and timing of the contingent payments.
- Monitor FDA and EMA decisions for LIVMARLI in PFIC and the results and regulatory implications of the BA, PSC and PBC programs.
- Evaluate the effect of higher selling, general and administrative costs, royalties, inventory charges and amortization on future gross margins and operating leverage.
- Review manufacturing, specialty-pharmacy and distributor dependencies, intellectual-property protections and competitive developments involving other IBAT inhibitors.