Mirum Pharmaceuticals, Inc. — Q1 2024 Form 10-Q Summary
Business context and reporting period
Mirum is a rare-disease biopharmaceutical company with three approved medicines: LIVMARLI, Cholbam and Chenodal. The filing covers the three months ended March 31, 2024, and was filed May 8, 2024. The company also develops volixibat for primary sclerosing cholangitis and primary biliary cholangitis, and is pursuing lifecycle opportunities for LIVMARLI.
Following the August 2023 acquisition of Travere’s bile acid portfolio, Mirum now commercializes Cholbam and Chenodal in addition to LIVMARLI. The company operates as one reportable segment.
Financial results and key metrics
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Total revenue | $69.2 million | $31.6 million | +$37.6 million |
| Product sales, net | $68.9 million | $29.1 million | +$39.8 million |
| License and other revenue | $0.3 million | $2.5 million | -$2.2 million |
| Gross profit | $51.4 million | $24.1 million | +$27.0 million |
| Gross margin | 74.2% | 76.0% | Decreased |
| Loss from operations | $(26.5) million | $(27.1) million | Improved $0.7 million |
| Operating margin | (38.2%) | (85.9%) | Improved |
| Net loss | $(25.3) million | $(30.1) million | Improved $4.9 million |
| Basic and diluted loss per share | $(0.54) | $(0.80) | Improved |
| Cash flow from operations | $15.2 million provided | $18.8 million used | +$34.0 million |
Product sales comprised $42.8 million from LIVMARLI and $26.1 million from the Bile Acid Medicines. U.S. product sales were $56.1 million and rest-of-world sales were $12.8 million.
Cost of sales increased to $17.8 million from $5.0 million, primarily due to amortization of acquired intangible assets, higher royalties, acquired inventory costs and increased commercial supply-chain expenses. Research and development expense rose to $32.2 million from $23.5 million, while selling, general and administrative expense rose to $45.6 million from $30.2 million. Stock-based compensation was $11.5 million, compared with $8.6 million in the prior-year quarter.
Interest income increased to $3.6 million, while interest expense decreased to $3.6 million from $4.2 million because the revenue interest purchase agreement was repurchased and terminated in April 2023. Other income was $1.8 million, primarily from unrealized foreign-exchange gains, versus other expense of $0.8 million in Q1 2023.
Balance sheet, debt and liquidity
- Cash and cash equivalents were $302.8 million at March 31, 2024, compared with $286.3 million at December 31, 2023.
- Accounts receivable decreased to $55.0 million from $68.0 million, primarily reflecting collection timing.
- Total assets were $652.0 million and stockholders’ equity was $234.6 million.
- Convertible notes had a principal amount of $316.3 million and a net carrying amount of $306.8 million. The notes bear interest at 4.00% and mature in May 2029; their estimated fair value was $357.8 million.
- The company had no revenue interest liability remaining after terminating the arrangement in April 2023.
- Management believes existing cash and cash equivalents provide sufficient resources to fund operations for at least twelve months from the financial statement issuance date.
- The company maintains a $200.0 million at-the-market equity facility but had issued no shares under it as of March 31, 2024.
Material changes versus the prior comparable period
- Revenue more than doubled, primarily because Q1 2024 included sales of Cholbam and Chenodal following the Travere acquisition.
- LIVMARLI product sales increased 47% to $42.8 million.
- Operating loss narrowed modestly despite substantially higher commercial, research and development and administrative spending.
- Operating cash flow turned positive, largely due to improved collections and increases in accounts payable and accrued liabilities.
- The company paid the $10.0 million milestone accrued for FDA approval of LIVMARLI for PFIC in April 2024.
- Intangible assets increased to $257.4 million, including a $10.0 million commercial milestone recorded during the quarter.
- The company entered into a new approximately 36,300-square-foot office lease with approximately $10.8 million of base rent over approximately five years; commencement was expected in Q2 2024.
- The prior-year cash flow statement was revised to classify a $15.0 million Livmarli milestone payment as investing rather than operating cash flow. Management deemed the error immaterial.
Guidance, outlook, commentary and risks
Management expects annual product sales to increase, although quarterly results may fluctuate because of distributor ordering patterns, reimbursement and payor mix, international pricing negotiations and periodic government orders. The company expects continued net losses as it expands commercialization, conducts clinical trials, seeks additional regulatory approvals and may make future milestone payments.
- Management expected an EMA recommendation in the first half of 2024 regarding the LIVMARLI PFIC label expansion in Europe.
- Mirum planned to submit a Chenodal NDA for CTX in the first half of 2024 following positive topline RESTORE results.
- The company expected interim analyses or data from the VISTAS Phase 2b PSC trial and VANTAGE Phase 2b PBC trial in the first half of 2024.
- Chenodal’s use for CTX is not an approved indication; the FDA has recognized medical necessity, but Mirum cannot market or promote Chenodal for CTX unless approved.
- Cholbam and Chenodal face immediate competition from compounded and generic entrants because their products lack current patent or non-patent exclusivity.
- Mirum relies on third parties for manufacturing and distribution, including a single U.S. specialty pharmacy and distributor and certain sole-source suppliers.
- The Bile Acid Portfolio Acquisition includes up to $235.0 million of additional milestone payments based on annual sales and requires tiered royalties on product sales.
- Material weaknesses in internal control over financial reporting remained unresolved as of March 31, 2024. The weaknesses relate primarily to inventory controls and management review controls over prospective financial information used to value acquired developed technology. Disclosure controls and procedures were therefore deemed ineffective.
- The company may require additional financing. Future equity or convertible debt financing could dilute shareholders, while debt financing could increase fixed obligations and restrictions.
Most important facts for investors to verify
- Whether LIVMARLI growth and the acquired Bile Acid Medicines can sustain revenue growth despite reimbursement pressure, generic competition and quarterly distributor variability.
- The timing and outcome of the EMA PFIC label decision and the Chenodal CTX NDA.
- Interim VISTAS and VANTAGE data and their implications for volixibat’s development path.
- The gross-margin effect of acquired inventory step-up amortization, royalties and future milestone payments.
- Progress and testing evidence supporting remediation of the identified material weaknesses.
- Cash burn, operating cash flow sustainability and the company’s ability to fund operations, milestone obligations and the 2029 convertible notes.
- Manufacturing and distribution transitions for LIVMARLI, Cholbam and Chenodal, including dependence on single-source providers.
- Potential dilution from the convertible notes, equity compensation, the $200.0 million ATM facility and future financing needs.