Mirum Pharmaceuticals, Inc. — Q3 2022 Form 10-Q Summary
Business context and reporting period
Mirum is a clinical-stage biopharmaceutical company commercializing LIVMARLI (maralixibat) for cholestatic pruritus in patients with Alagille syndrome (ALGS). The company also develops LIVMARLI for progressive familial intrahepatic cholestasis (PFIC) and biliary atresia (BA), and volixibat for intrahepatic cholestasis of pregnancy, primary sclerosing cholangitis and primary biliary cholangitis. The filing covers the three and nine months ended September 30, 2022. LIVMARLI was FDA-approved in September 2021 and is the company’s only approved product.
Financial performance and liquidity
| Metric | Three months ended September 30 | Nine months ended September 30 |
|---|---|---|
| Product sales, net | $18.8 million | $47.2 million |
| License revenue | $0 | $2.0 million |
| Total revenue | $18.8 million | $49.2 million |
| Cost of sales | $2.9 million | $7.9 million |
| Gross margin | 84.4% | 84.0% |
| Research and development | $26.2 million | $75.7 million |
| Selling, general and administrative | $22.5 million | $62.6 million |
| Loss from operations | $(32.9) million | $(97.1) million |
| Operating margin | (175.1)% | (197.4)% |
| Net loss | $(35.7) million | $(99.2) million |
| Net loss per share | $(1.02) | $(3.03) |
Cash used in operating activities was $85.9 million for the nine months, compared with $99.6 million in the prior-year period. Investing cash outflow was $19.1 million, primarily reflecting purchases and maturities of investments. Financing cash flow was $109.4 million, including $86.4 million of net proceeds from an August 2022 public offering, $21.3 million from at-the-market equity sales and $5.3 million from equity award exercises, partly offset by $3.5 million of revenue-interest payments.
As of September 30, 2022, cash and cash equivalents were $35.8 million, short-term investments were $149.6 million and restricted cash equivalents were $100.0 million. Total cash, cash equivalents, restricted cash equivalents and investments were $285.3 million, of which $185.3 million was unrestricted. The company reported total assets of $364.3 million, total liabilities of $195.1 million and stockholders’ equity of $169.3 million.
The revenue-interest liability under the RIPA was $138.0 million. The arrangement requires tiered payments based on LIVMARLI net sales, initially 9.75% of annual net sales up to $350 million and 2.0% of sales above that threshold. The company recognized $4.0 million of RIPA-related interest expense in the quarter and $11.6 million year to date.
Material changes versus the prior comparable period
- Quarterly revenue increased by $13.8 million, as $18.8 million of LIVMARLI product sales replaced $5.0 million of prior-year license revenue.
- Nine-month revenue increased by $33.2 million to $49.2 million, driven by $47.2 million of LIVMARLI sales, partly offset by a $14.0 million decline in license revenue.
- Quarterly R&D expense decreased $4.3 million, primarily because prior-year expense included $6.3 million of Vivet collaboration funding. Product-related development spending for LIVMARLI and volixibat increased.
- Nine-month R&D expense decreased $27.9 million, mainly due to the absence of $23.2 million of prior-year license and milestone costs and $12.6 million of Vivet funding, partly offset by higher clinical development and personnel costs.
- Quarterly SG&A increased $5.2 million and nine-month SG&A increased $22.4 million, reflecting expansion of commercial, marketing, patient-support and public-company infrastructure.
- Net loss improved from $47.1 million to $35.7 million for the quarter and from $141.5 million to $99.2 million for the nine months.
- The company completed the $24.2 million Satiogen acquisition in May 2022, obtaining intellectual property related to LIVMARLI and volixibat and recording $45.0 million of net intangible assets at September 30, 2022.
- Common shares outstanding increased materially through the August public offering, at-the-market sales and the Satiogen acquisition.
Guidance, outlook, commentary and risks
Management expects LIVMARLI product sales to increase as commercialization expands, 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. The company expects continued significant operating losses as it funds commercialization, international expansion and clinical programs.
Management believes unrestricted cash, cash equivalents and investments will fund current operations for at least 12 months from the filing date. It also expects to seek additional capital through equity, debt, revenue-interest financing, collaborations, licenses or other arrangements. Additional financing may be unavailable, costly or dilutive.
Subsequent to quarter-end, in October 2022, the European CHMP adopted a positive opinion for LIVMARLI in ALGS patients two months of age and older. The filing also reports positive topline results from the MARCH Phase 3 PFIC trial in October 2022. Management expected BA topline data from the EMBARK Phase 2b trial in the second half of 2023 and interim data from volixibat trials in PSC, ICP and PBC during 2023.
Key risks include reliance on LIVMARLI as the only approved product; limited commercialization experience; uncertain market adoption, reimbursement and payer mix; reliance on third-party manufacturers, suppliers, a specialty pharmacy and a distributor; clinical-trial enrollment and efficacy risks; regulatory uncertainty for additional indications and geographies; intellectual-property and licensing risks; continuing losses and capital requirements; RIPA payment obligations and covenants; dilution from equity issuance; and potential effects from inflation, rising interest rates, supply-chain disruption, COVID-19 and geopolitical events. No material legal loss contingency was accrued, and management stated that no pending legal matter was expected to have a material adverse effect.
Important facts for investors to verify
- Verify the sustainability and quality of LIVMARLI sales, including payer mix, gross-to-net deductions, patient persistence and reimbursement coverage.
- Track whether revenue growth can outpace commercialization, R&D and SG&A spending sufficiently to reduce cash burn.
- Reconcile unrestricted liquidity with the $100.0 million of restricted cash and the $138.0 million RIPA liability.
- Assess future RIPA revenue-interest payments, effective interest expense and covenant or put-option risks.
- Confirm European Commission action following the positive CHMP opinion and the regulatory path for PFIC and BA indications.
- Evaluate results and enrollment progress for the MARCH, EMBARK, VISTAS, OHANA and VANTAGE programs.
- Monitor manufacturing capacity, sole-source dependencies, specialty-pharmacy concentration and inventory levels.
- Review dilution from the August offering, at-the-market program, equity awards and Satiogen-related contingent shares.