Mirum Pharmaceuticals, Inc. — Q2 2020 Form 10-Q Summary
Business context and reporting period
Mirum is a clinical-stage biopharmaceutical company developing maralixibat and volixibat for rare cholestatic liver diseases. The filing covers the quarter and six months ended June 30, 2020; it was filed August 6, 2020. The company had no approved products and no product revenue.
Financial performance and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Research and development expense | $18.6 million, versus $11.6 million | $35.9 million, versus $16.5 million |
| General and administrative expense | $5.0 million, versus $2.4 million | $9.7 million, versus $3.8 million |
| Total operating expenses | $23.6 million, versus $14.0 million | $45.6 million, versus $20.2 million |
| Net loss | $23.3 million, versus $13.6 million | $44.6 million, versus $19.5 million |
| Net loss per share | $0.93, versus $5.31 | $1.79, versus $7.70 |
| Net cash used in operating activities | Not separately provided | $35.3 million, versus $10.4 million |
- Revenue was zero; management expects no product revenue unless and until a product receives regulatory approval and is commercialized.
- Gross margin and operating margin are not meaningful because the company had no product sales. Operating loss was $23.6 million for the quarter and $45.6 million for the six months.
- Cash, cash equivalents and investments totaled $149.3 million at June 30, 2020, including $83.0 million of cash and cash equivalents and $66.3 million of short-term investments.
- Accumulated deficit was $114.5 million. The company had no debt; reported liabilities primarily consisted of operating lease liabilities totaling $3.5 million and current operating obligations.
- Cash increased $71.1 million during the first six months, primarily from $44.7 million of net proceeds from the January 2020 follow-on offering and investment maturities and paydowns.
- Stock-based compensation was $3.0 million for the quarter and $5.5 million for the six months.
Material changes versus the prior comparable periods
- Quarterly research and development expense increased $7.0 million, principally due to manufacturing and NDA-registration activities, higher personnel costs, clinical-trial expenses and consulting activity. The increase was partly offset by the absence of the $3.0 million development milestone expense recorded in the second quarter of 2019.
- Six-month research and development expense increased $19.4 million, driven by manufacturing, clinical trials, personnel, consulting and regulatory activities. The prior-year period included $3.0 million of development milestones and $0.4 million of Shire transition-services expense.
- General and administrative expense increased $2.6 million for the quarter and $6.0 million for the six months, reflecting higher personnel and stock-based compensation, public-company costs, professional fees and commercial preparation activities.
- The January 2020 follow-on offering added 2.4 million common shares and generated $44.7 million of net proceeds, increasing liquidity but diluting existing holders.
- Cash used in operations increased substantially as development activities expanded, while investing cash flow shifted from a $58.4 million use in the first half of 2019 to a $61.7 million source in the first half of 2020 due primarily to investment maturities and paydowns.
Guidance, outlook, risks and unusual items
- Management stated that available cash, cash equivalents and investments should fund current operations for at least the next 12 months, but expects substantial additional losses and negative operating cash flow for the foreseeable future.
- Management planned to begin a rolling NDA submission for maralixibat for Alagille syndrome in the third quarter of 2020, complete the submission in the first quarter of 2021 and potentially launch in the second half of 2021. It also planned an EMA marketing authorization application for PFIC2 in the fourth quarter of 2020.
- COVID-19 affected patient enrollment and clinical-trial conduct, including the Phase 3 MARCH trial. The company withdrew guidance on initiation and enrollment timing for maralixibat and volixibat trials, although it did not expect COVID-19 to affect the projected ALGS NDA submission timing as of the filing date.
- Key risks include clinical-trial failure or delay, limited patient populations, regulatory rejection or restricted labeling, manufacturing and supply-chain dependence, COVID-19 disruptions, competition, intellectual-property challenges and the need for additional financing.
- License agreements require potential future milestone payments of up to $109.5 million for maralixibat under the Shire agreement, additional indication-based payments, potential volixibat milestones, royalties and other payments to Shire, Satiogen, Pfizer and Sanofi. No additional milestones were accrued as of June 30, 2020 because they were not considered probable.
- The company reported no material pending legal proceedings and no off-balance-sheet arrangements.
Most important facts for investors to verify
- Progress, enrollment and data quality in the Phase 3 MARCH trial and other maralixibat and volixibat studies.
- Timing and completeness of the planned ALGS NDA and PFIC2 EMA submission, including required clinical, manufacturing and stability data.
- Cash burn, investment balances and the expected duration of the $149.3 million liquidity position relative to development and commercialization spending.
- COVID-19 effects on clinical enrollment, regulatory review, manufacturing, suppliers and future financing access.
- Potential milestone, royalty and licensing obligations, as well as dilution from future equity financing and outstanding equity awards.
- Safety signals, including liver-enzyme elevations and gastrointestinal adverse events, and the implications for labeling or approval.