Mirum Pharmaceuticals, Inc. 2023 Q3 Form 10-Q Summary
Business context and reporting period
Mirum is a commercial-stage biopharmaceutical company focused on rare and orphan liver diseases. The filing covers the three and nine months ended September 30, 2023. Its approved medicines are LIVMARLI (maralixibat), Cholbam and Chenodal; its development pipeline includes Livmarli lifecycle indications and volixibat.
On August 31, 2023, Mirum completed the acquisition of Travere Therapeutics’ bile acid portfolio, including Cholbam and Chenodal. The transaction was accounted for as an asset acquisition and added $198.5 million of developed-technology intangible assets and $12.9 million of inventory.
Key financial metrics
| Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 |
|---|---|---|---|---|
| Total revenue | $47.7 million | $18.8 million | $116.8 million | $49.2 million |
| Product sales, net | $47.7 million | $18.8 million | $109.3 million | $47.2 million |
| License revenue | — | — | $7.5 million | $2.0 million |
| Gross profit | $37.5 million | $15.8 million | $87.3 million | $39.3 million |
| Gross margin | 78.6% | 84.4% | 79.9% | 83.9% |
| Loss from operations | $(25.1) million | $(32.9) million | $(76.6) million | $(97.1) million |
| Net loss | $(23.6) million | $(35.7) million | $(127.8) million | $(99.2) million |
| Basic and diluted loss per share | $(0.57) | $(1.02) | $(3.28) | $(3.03) |
| Net cash used in operating activities | Not separately reported | Not separately reported | $(54.3) million | $(85.9) million |
Q3 product sales comprised $38.7 million from Livmarli and $9.0 million from the Bile Acid Medicines. Research and development expense was $26.1 million in Q3 and $71.7 million for the first nine months. Selling, general and administrative expense was $36.5 million in Q3 and $99.7 million for the first nine months.
At September 30, 2023, cash and cash equivalents were $303.1 million, short-term investments were $3.0 million, and total cash, cash equivalents and investments were $306.0 million. Total assets were $650.6 million, accumulated deficit was $520.6 million, and total stockholders’ equity was $269.1 million.
Debt consisted primarily of $316.3 million principal amount of 4.00% convertible senior notes due 2029, carried at $306.0 million net of discount and issuance costs. The notes had an estimated fair value of $402.5 million at September 30, 2023. The company also had approximately $2.0 million of operating lease liabilities.
Material changes versus the prior comparable period
- Revenue increased 154% in Q3 and 138% for the first nine months, driven primarily by continued Livmarli commercialization and, in Q3, one month of Bile Acid Medicines sales.
- Gross margin declined to 78.6% in Q3 from 84.4%, primarily due to acquired-inventory fair-value step-up costs, higher royalties, supply-chain costs, excess and obsolete inventory charges, and amortization of acquired intangibles.
- Q3 operating loss improved by $7.7 million despite higher operating expenses; nine-month operating loss improved by $20.5 million because revenue growth exceeded the increase in expenses.
- SG&A increased $14.0 million in Q3 and $37.1 million for the first nine months, reflecting commercial expansion, personnel, marketing, professional services and acquisition-related costs.
- R&D declined $0.1 million in Q3 and $4.1 million for the first nine months, primarily because Livmarli clinical and manufacturing-development costs fell after completion of the MARCH study, partly offset by higher volixibat program spending.
- Net loss increased for the first nine months because of a $49.1 million loss recognized on termination of the revenue interest purchase agreement, despite improved operating performance.
- Mirum issued $316.3 million of convertible notes in April 2023 and used $192.7 million of the proceeds to repurchase all future revenue interests under the RIPA. The RIPA was terminated and the prior $100.0 million restricted cash balance became available for general use.
- Mirum issued 8.0 million common shares in a private placement in August 2023, generating approximately $202.2 million of net proceeds to fund the Travere acquisition.
Cash flow, outlook and management commentary
For the first nine months, operating cash use was $54.3 million, investing cash use was $105.2 million and financing cash provided was $334.8 million. Investing cash use primarily reflected $212.8 million for the Travere acquisition and $15.0 million for a Livmarli-related license payment, partly offset by $150.0 million of investment maturities.
Management expects continued operating losses while it expands commercialization, conducts clinical trials, seeks regulatory approvals and integrates the acquired portfolio. Management believes existing cash, cash equivalents and investments will fund current operations for at least twelve months from the filing date, but states that additional financing may be needed in the future.
The FDA assigned a March 13, 2024 PDUFA date for the Livmarli PFIC supplemental application. Management planned to submit an NDA for Chenodal in CTX in the first half of 2024 and expected interim or topline data from additional clinical programs. These expectations are subject to regulatory, clinical and execution risks.
On November 2, 2023, after quarter-end, Mirum entered into an at-the-market sales agreement permitting issuance of up to $200.0 million of common stock. No shares had to be sold under the agreement, and the filing does not report any subsequent sales.
Principal risks, contingencies and unusual items
- The company relies on third parties, including certain single-source manufacturers, suppliers, distributors and a specialty pharmacy, creating supply and channel-concentration risks.
- Cholbam and Chenodal may face compounded or generic competition and have limited or no patent or non-patent exclusivity described in the filing. Chenodal’s primary CTX use is not yet FDA-approved, limiting promotion and commercial potential.
- The Travere acquisition carries up to $235.0 million of additional contingent milestone payments based on annual sales and requires integration of products, personnel, vendors and manufacturing responsibilities.
- Clinical, regulatory and reimbursement outcomes remain uncertain for Livmarli expansions, Chenodal in CTX and volixibat. Clinical trials may be delayed, fail or require additional data.
- The company expects continued losses and negative operating cash flow. Convertible notes may require cash repayment or cash settlement upon specified events or conversions, and conversion could dilute shareholders.
- Mirum reports no material pending legal proceedings and no accrued loss contingencies for litigation or government claims as of the filing date.
- Key risks include pricing and reimbursement pressure, healthcare reform, competition, intellectual-property limitations, adverse events, manufacturing disruptions, cybersecurity, foreign exchange and geopolitical or macroeconomic volatility.
- Disclosure controls and procedures were considered effective at September 30, 2023, with no material changes to internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Whether Livmarli sales growth and the newly acquired Bile Acid Medicines can produce sustainable revenue and improve gross margins after acquired-inventory step-up costs normalize.
- The timing and outcome of the FDA’s PFIC review, the planned Chenodal CTX filing and other clinical milestones.
- Cash-burn trends relative to the stated $306.0 million liquidity position and the potential need for additional financing.
- The economic impact of the $316.3 million convertible notes, including conversion dilution, cash-settlement exposure and the May 2029 maturity.
- Progress integrating Travere’s products, manufacturing and distribution arrangements, and the likelihood and timing of up to $235.0 million in contingent acquisition payments.
- Competitive, generic and regulatory-exclusivity risks for Chenodal, Cholbam and Livmarli.
- Any common-stock issuance under the $200.0 million post-quarter-end ATM facility and the resulting dilution.