Mirum Pharmaceuticals, Inc. — Form 10-Q Summary
Reporting period: Three months ended March 31, 2022; unaudited interim results compared with the three months ended March 31, 2021. Mirum is a clinical-stage and commercial biopharmaceutical company focused on rare and orphan liver diseases. LIVMARLI (maralixibat) was FDA-approved in September 2021 for cholestatic pruritus in patients with Alagille syndrome age one and older and was commercially launched in the United States.
Financial Results and Position
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Product sales, net | $10.9 million | $0 | +$10.9 million |
| License revenue | $2.0 million | $0 | +$2.0 million |
| Total revenue | $12.9 million | $0 | +$12.9 million |
| Cost of sales | $2.4 million | $0 | +$2.4 million |
| Research and development | $24.1 million | $38.1 million | Down $14.0 million |
| Selling, general and administrative | $19.1 million | $9.5 million | Up $9.6 million |
| Loss from operations | $(32.7) million | $(47.6) million | Improved $14.9 million |
| Net loss | $(36.6) million | $(50.5) million | Improved $13.9 million |
| Basic and diluted loss per share | $(1.17) | $(1.68) | Improved $0.51 |
| Net cash used in operations | $(39.7) million | $(25.2) million | Use increased $14.5 million |
Margins: Gross profit was approximately $10.5 million, representing an approximately 81% gross margin. The operating margin was approximately negative 254% and the net margin approximately negative 284%, reflecting substantial investment in commercialization and clinical development. Management cautions that early gross margins were elevated because certain Livmarli inventory costs had been expensed as research and development before FDA approval.
- Cash and cash equivalents were $46.3 million at March 31, 2022, compared with $31.3 million at December 31, 2021.
- Short-term investments were $93.6 million; restricted cash equivalents were $100.0 million. Total cash, cash equivalents, restricted cash equivalents and investments were approximately $239.9 million, including the restricted amount.
- Management reported approximately $139.9 million of unrestricted cash, cash equivalents and investments and believes this is sufficient to fund operations for at least twelve months from issuance of the financial statements.
- Revenue interest liability under the RIPA was $132.9 million, up from $129.9 million at year-end 2021. Q1 interest expense under the arrangement was $3.8 million, and $0.8 million of revenue interest payments were made.
- Stockholders’ equity was $108.9 million, down from $120.2 million at December 31, 2021; accumulated deficit was $293.8 million.
- Cash flows benefited from $36.5 million of investment maturities and $18.1 million of financing proceeds, including $17.4 million net from an at-the-market equity offering. The company issued 995,897 shares during the quarter.
Material Changes Versus Q1 2021
- Revenue began with the U.S. commercialization of Livmarli, with $10.9 million of net product sales. License revenue of $2.0 million resulted from a CANbridge regulatory milestone.
- Research and development expense declined primarily because Q1 2021 included $17.0 million of development milestone payments; Q1 2022 had no comparable milestone payments. Volixibat development spending increased by $1.4 million.
- Selling, general and administrative expense increased 102%, driven by commercial-launch personnel, marketing and consulting costs, international expansion and public-company requirements.
- Operating cash use increased despite the lower net loss, principally because of a $6.3 million final payment under the terminated Vivet collaboration, lower accrued liabilities, and a $4.6 million increase in accounts receivable associated with Livmarli sales.
- Shares outstanding increased, and potential dilution expanded: options and restricted stock units outstanding rose to approximately 8.6 million from 6.9 million at December 31, 2021.
Outlook, Commentary and Risks
- Management expects Livmarli product sales to increase as commercial activities expand but stated that the launch is early, payor mix and gross-to-net adjustments remain difficult to estimate, and revenue cannot yet be predicted with certainty.
- The company expects continued substantial operating losses as it funds Livmarli commercialization, additional indications for Livmarli, volixibat clinical programs, regulatory activities, international expansion and additional personnel.
- Livmarli is being developed for progressive familial intrahepatic cholestasis and biliary atresia. Volixibat is being developed for intrahepatic cholestasis of pregnancy, primary sclerosing cholangitis and primary biliary cholangitis.
- Mirum had submitted an application to the EMA for Livmarli in Alagille syndrome and expected potential approval in the fourth quarter of 2022; the filing noted that approval was uncertain and subject to regulatory review.
- The company relies entirely on third parties for drug substance, manufacturing, packaging and distribution, including certain sole-source suppliers. Supply interruptions, quality failures, regulatory inspections or capacity constraints could impair commercialization.
- Commercial success depends on physician and patient adoption, adequate reimbursement, specialty-pharmacy and distributor performance, pricing pressure, patient-assistance costs and the small rare-disease patient populations.
- Clinical and regulatory risks include enrollment delays, uncertain efficacy and safety outcomes, subjective pruritus endpoints, potential adverse events, changing regulatory requirements and the possibility that additional studies will be required.
- The RIPA gives purchasers revenue interests initially equal to 9.75% of annual Livmarli net sales up to $350 million and 2.0% of sales above that threshold, subject to contractual adjustments and an overall payment cap or earlier termination. It also includes covenants, security interests and put-option provisions that could accelerate obligations upon specified events.
- COVID-19 had no significant direct financial impact in Q1 2022 according to management, but remains a potential source of clinical, supply-chain, regulatory, workforce and capital-markets disruption.
- No loss contingency was accrued for pending claims, and management stated that no material legal proceedings were currently expected to adversely affect results, financial condition or cash flows.
Important Facts for Investors to Verify
- Durability and quality of Livmarli demand, including prescription volume, payer mix, rebates, co-pay assistance and net realized pricing.
- Whether current unrestricted liquidity can fund planned commercialization and clinical programs without additional dilutive or economically costly financing.
- Progress, enrollment, safety and efficacy results for Livmarli’s PFIC and biliary-atresia programs and for volixibat.
- Status and timing of European and other international regulatory reviews and the related commercialization requirements.
- Availability, redundancy and regulatory compliance of third-party manufacturing and distribution arrangements.
- RIPA cash obligations, interest accretion, covenant compliance and the effect of future Livmarli sales on repayment timing.
- Expansion of operating expenses and stock-based compensation relative to revenue growth, particularly as launch and international activities scale.