Mirum Pharmaceuticals, Inc. — Q2 2022 Form 10-Q Summary
Business context and reporting period
Mirum is a clinical-stage biopharmaceutical company focused on rare and orphan liver diseases. The filing covers the quarter and six months ended June 30, 2022. LIVMARLI (maralixibat) is the company’s only FDA-approved product, approved in September 2021 for cholestatic pruritus associated with Alagille syndrome in patients at least one year old. The pipeline includes additional Livmarli indications and volixibat for intrahepatic cholestasis of pregnancy, primary sclerosing cholangitis and primary biliary cholangitis.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Product sales, net | $17.5 million | $28.4 million |
| License revenue | $0 | $2.0 million |
| Total revenue | $17.5 million | $30.4 million |
| Cost of sales | $2.5 million | $4.9 million |
| Research and development | $25.4 million | $49.5 million |
| Selling, general and administrative | $21.0 million | $40.1 million |
| Loss from operations | $(31.4) million | $(64.2) million |
| Net loss | $(26.9) million | $(63.5) million |
| Net loss per share | $(0.84) | $(2.00) |
- Approximate gross margin was 85.6% for the quarter and 83.7% for the six months. Management cautioned that margins were favorably affected by Livmarli inventory manufactured before FDA approval being expensed through research and development rather than inventory cost.
- Approximate operating margin was negative 179.8% for the quarter and negative 211.3% for the six months; approximate net margin was negative 153.9% and negative 209.1%, respectively.
- Cash, cash equivalents and short-term investments totaled $125.0 million at June 30, 2022. An additional $100.0 million of restricted cash equivalents was held under the revenue interest financing arrangement, for total cash, cash equivalents, restricted cash equivalents and investments of approximately $225.0 million.
- Net cash used in operating activities was $59.8 million for the six months, compared with $65.4 million in the prior-year period. Investing activities provided $60.5 million, primarily from investment maturities, and financing activities provided $23.4 million, primarily from at-the-market equity sales.
- The revenue interest liability under the RIPA was $135.7 million. Interest expense related to the arrangement was $7.6 million for the six months. The RIPA requires revenue-based payments initially equal to 9.75% of annual Livmarli net sales up to $350 million and 2.0% above that threshold, subject to contractual adjustments.
- Accounts receivable increased to $14.0 million and inventory to $4.5 million, reflecting the commercial launch and scaling of Livmarli.
Material changes versus the prior comparable period
- Quarterly revenue increased $6.5 million to $17.5 million, as $17.5 million of Livmarli product sales more than offset the absence of the prior-year $11.0 million CANbridge upfront license fee.
- Six-month revenue increased $19.4 million to $30.4 million, driven by $28.4 million of Livmarli sales and a $2.0 million CANbridge regulatory milestone, compared with $11.0 million of license revenue in the prior year.
- Quarterly research and development expense decreased $9.6 million, and six-month expense decreased $23.7 million, primarily because the prior year included substantial licensing milestones and Vivet-related costs. Current-period spending increased on clinical programs for Livmarli and volixibat and on personnel.
- Selling, general and administrative expense increased $7.6 million for the quarter and $17.3 million for the six months, reflecting expanded commercial, marketing, patient-support and public-company activities.
- Net loss improved by $17.0 million for the quarter and $30.9 million for the six months. The improvement included a $6.6 million income-tax benefit from the Satiogen acquisition and favorable changes in fair value of derivative and contingent liabilities.
- In May 2022, Mirum acquired Satiogen for approximately $24.2 million, primarily obtaining intellectual property related to Livmarli and volixibat. Consideration included 609,305 issued shares, cash and contingent or held-back shares. The acquisition reduced future licensing royalty obligations but added approximately $28.1 million of intangible assets and related amortization.
- Mirum issued 1.16 million shares through its at-the-market program during the six months, generating approximately $21.3 million of net proceeds. Approximately $46.3 million remained available under the program at June 30, 2022.
Guidance, outlook, commentary and risks
- Management expects Livmarli product sales to increase but stated that the product launch remains early and that revenue trends, payer mix and gross-to-net adjustments cannot yet be predicted with certainty.
- Management expects continued substantial operating losses as it expands Livmarli commercialization, develops additional indications, advances volixibat, seeks regulatory approvals and hires personnel. The filing does not provide specific revenue, earnings or expense guidance.
- Management believes unrestricted cash, cash equivalents and investments of approximately $125.0 million at June 30, 2022 are sufficient to fund operations for at least 12 months from issuance of the interim financial statements. Additional financing may nevertheless be required to support longer-term commercialization and development plans.
- Key risks include limited commercial experience, dependence on Livmarli, small target patient populations, reimbursement and market adoption uncertainty, competition, clinical-trial enrollment and outcomes, regulatory approval for additional indications and Europe, reliance on third-party manufacturers and distributors, intellectual-property and licensing obligations, and potential dilution or restrictions from future financing.
- COVID-19, the Russia-Ukraine conflict, inflation, rising interest rates and supply-chain disruption had no significant direct financial impact reported for the six months, but management warned that future effects could affect clinical trials, manufacturing, commercialization, financing and liquidity.
- There were no accrued litigation loss contingencies, and management stated that no pending legal matters were expected to have a material adverse effect. Disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting.
Important facts for investors to verify
- Whether Livmarli sales growth and payer mix support improving gross-to-net revenue and sustainable commercial margins after pre-approval inventory benefits diminish.
- The cash-burn trajectory and the period for which unrestricted liquidity remains sufficient, excluding the $100.0 million of restricted cash.
- The economic impact and repayment timing of the RIPA, including revenue-based payments, interest accretion, covenants, security interests and potential put-option events.
- Progress, enrollment, safety and efficacy results for Livmarli trials in PFIC and biliary atresia and for volixibat programs in ICP, PSC and PBC.
- The status and outcome of European regulatory review for Livmarli and the timing of potential international commercialization.
- The integration and expected benefits of the Satiogen acquisition, including the contingent share issuance and reduction in royalty obligations.
- Future equity issuance, remaining ATM capacity, option and restricted-stock dilution, and the company’s need for additional financing.