Mirum Pharmaceuticals, Inc. — Q1 2023 Form 10-Q Summary
Business context and reporting period
Mirum is a biopharmaceutical company focused on rare and orphan liver diseases. The filing covers the three months ended March 31, 2023. LIVMARLI (maralixibat) was the company’s only FDA- and EMA-approved product, marketed for cholestatic pruritus associated with Alagille syndrome. The pipeline included Livmarli in progressive familial intrahepatic cholestasis and biliary atresia, and volixibat in primary sclerosing cholangitis and primary biliary cholangitis.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Product sales, net | $29.1 million | $10.9 million | +$18.2 million |
| License revenue | $2.5 million | $2.0 million | +$0.5 million |
| Total revenue | $31.6 million | $12.9 million | +$18.7 million |
| Cost of sales | $5.0 million | $2.4 million | +$2.6 million |
| Gross margin | Approximately 84.2% | Approximately 81.2% | Improved |
| Research and development | $23.5 million | $24.1 million | -$0.5 million |
| Selling, general and administrative | $30.2 million | $19.1 million | +$11.1 million |
| Loss from operations | $(27.1) million | $(32.7) million | Loss narrowed |
| Net loss | $(30.1) million | $(36.6) million | Loss narrowed by $6.5 million |
| Basic and diluted loss per share | $(0.80) | $(1.17) | Improved |
| Net cash used in operating activities | $(33.8) million | $(39.7) million | Use declined |
Reported gross margin was approximately 84.2%; management noted that pre-approval manufacturing costs had been expensed as research and development, which temporarily supported gross margins. The company expected to substantially deplete those inventories within 12 months, potentially affecting future margins.
At March 31, 2023, cash and cash equivalents were $49.4 million, short-term investments were $82.7 million, and restricted cash equivalents were $100.0 million. Total cash, cash equivalents, restricted cash equivalents and investments were $232.1 million, including amounts restricted under the RIPA. The company had an accumulated deficit of $423.0 million and a revenue interest liability of $141.7 million.
Net cash provided by investing activities was $42.0 million, primarily from $64.5 million of investment maturities, partly offset by $22.4 million of investment purchases. Financing activities provided $13.0 million, including $14.5 million of net at-the-market equity proceeds, partly offset by $2.9 million of RIPA payments.
Material changes versus the prior comparable period
- Product sales increased 167% to $29.1 million, reflecting broader commercialization of Livmarli in the United States, Europe and other international markets.
- SG&A increased 58%, driven by commercial hiring and support, higher compensation and stock-based compensation, legal and international expansion costs, and increased advertising and patient support expenses.
- R&D declined modestly as Livmarli development costs decreased following completion of the MARCH Phase 3 trial, partly offset by higher volixibat trial costs and personnel expenses.
- Cost of sales increased due primarily to higher royalties and amortization of acquired Satiogen-related intangible assets.
- Interest income rose to $2.3 million from $0.1 million because of higher yields and investment balances, while RIPA-related interest expense increased to $4.2 million.
- The company issued 658,206 shares under its at-the-market program for approximately $14.5 million of net proceeds. Shares outstanding increased to 38.0 million at March 31, 2023 from 37.0 million at December 31, 2022.
Guidance, outlook, commentary and unusual items
- Management expected Livmarli product sales to increase annually but cautioned that seasonality, international ordering patterns, reimbursement and government pricing could cause quarterly volatility.
- The company expected to report topline data from the EMBARK Phase 2b biliary atresia trial in the second half of 2023 and interim data from the VISTAS and VANTAGE Phase 2b trials of volixibat in the second half of 2023.
- An FDA supplemental application for Livmarli in PFIC had been submitted, with a December 13, 2023 PDUFA date disclosed in the risk factors. An EMA variation application was submitted in April 2023.
- In April 2023, the company issued $316.3 million of 4.00% convertible senior notes due 2029 and received approximately $305.4 million of net proceeds. The notes are senior unsecured obligations and have an initial conversion price of approximately $31.74 per share.
- In April 2023, the company used approximately $192.7 million to repurchase all future revenue interests and terminate the RIPA. The $100.0 million previously restricted cash balance became unrestricted. Accounting for the notes and RIPA repurchase had not been finalized as of the filing date.
- Management stated that existing cash, investments, Livmarli revenue and the April financing were expected to fund current operations for at least the next 12 months and beyond, while also acknowledging continuing substantial losses and potential future financing needs.
- Key risks include dependence on Livmarli, regulatory approval and clinical-trial outcomes, limited patient populations, reimbursement and pricing pressure, reliance on third-party manufacturers and distributors, intellectual-property protection, competition, dilution or debt-related liquidity constraints, and macroeconomic and supply-chain disruptions.
- No material legal proceedings or accrued loss contingencies were reported. The company stated that disclosure controls and procedures were effective as of March 31, 2023.
- The chief financial officer and principal financial officer resigned effective May 1, 2023. The chief executive officer was appointed principal financial officer, and the senior vice president, global controller, was appointed principal accounting officer.
Important facts for investors to verify
- Livmarli prescription growth, gross-to-net deductions, reimbursement access, customer concentration and sustainability of the reported gross margin.
- Regulatory outcomes and timing for PFIC, including the FDA’s December 2023 action date and the EMA review.
- Results and enrollment progress for the EMBARK, VISTAS and VANTAGE clinical programs.
- Post-April 2023 liquidity after the $192.7 million RIPA repurchase, the $305.4 million note proceeds, and the new 4.00% debt obligations.
- Accounting effects of the convertible notes and RIPA termination, which were not finalized at filing.
- Future dilution from convertible notes, equity offerings, stock awards and approximately 10.7 million anti-dilutive potential shares outstanding at March 31, 2023.
- Reliance on single distributors, a specialty pharmacy and third-party manufacturers, including the status of manufacturing transitions.
- Potential milestone, royalty and licensing payments under the Shire, Satiogen, Pfizer and Sanofi arrangements.